© Vastgoedmarkt
From left to right: Jeroen Broersma (Madaster), Elger Groenland (Drees & Sommer) and Vince Limpens (EPEA).

The challenge is both complex and urgent. Among other things, the EU Taxonomy requires property investors to show what percentage of their outstanding capital they have invested in green categories. Drees & Sommer, alongside EPEA and Madaster, provide insight into how sustainable a development or existing building is, as revealed at Provada 2022.

This Provada session was organized in collaboration with Vastgoedmarkt.

How do you make a catch-all term like ‘Sustainability’ tangible and measurable in the real estate sector? Exactly how green are your investments? And more importantly, how can you, as a real estate investor, embrace and even accelerate the circular economy? These questions are a crucial focus of the EU Taxonomy: the European classification system for sustainable activities of businesses and governments, which, among other things, is intended to boost investment funds of around 10 trillion Euros in a more sustainable direction. That is, if you can get through and understand the taxonomy, which is no easy feat. “It's roughly 1,100 pages and consists of two volumes, which will take you months,” says Elger Groenland, Head of Real Estate Consulting at Drees & Sommer Netherlands, a property consultancy and project management firm. "Besides, not everything in the taxonomy has been fully detailed and clarified." During a session at Provada, Drees & Sommer, EPEA and Madaster gave participants advice on what they can do today to respond to changing legislation and regulations related to this EU Taxonomy.

Compliance with the EU Taxonomy
During the last Provada back in October 2021, a developer approached Groenland. A German investor had asked the developer to demonstrate that a specific investment was, in fact, sustainable so he would know which fund to allocate the investment. The developer could not respond to that question. It took the combination of products and services offered by Drees & Sommer, EPEA, and Madaster to give him the necessary insight and argumentation to convince the investor. And that is precisely what these three companies do: show investors, developers, and manufacturers to what extent a project is or can become compliant with the EU Taxonomy and enable them to objectively determine for each building, neighborhood, area, and project what is sustainable and what is not. Madaster is a platform acting as a management tool in this process, says Managing Director Jeroen Broersma. “We provide an objective view of the actual situation of a building and enable someone to make the right decisions as early as the design phase, for example.”

Madaster: a registration platform and management tool at the same time
Broersma explains how it works: “Within Madaster – which can be described as the land register for materials – you can register the materials and products used in a building. Every building is a collection of all kinds of materials and products. By combining various data sources, the registration offers insight into, among other things, CO2, circularity, toxicity, removability, and, last but not least, the residual financial value of a building's materials. The result is a transferable, digital building record. Moreover, it is not just a registration platform, but also a tool that allows you to monitor and manage the building throughout its entire lifecycle, based on validated data, both at building and portfolio level.”

EPEA, founder of Cradle to Cradle®
EPEA, a subsidiary of Drees & Sommer, provides the validated data and has extensive knowledge of building products and materials. The company uses Cradle to Cradle® and the circular economy as its guiding principles, says Vince Limpens, Real Estate Consultant at EPEA. “How are we currently managing our resources? We mine them first, which is a costly and time-consuming process. Then we use them for a relatively short time in, among other things, buildings. And then we burn them again. In my opinion, this is a textbook example of poor design and costly production. We believe in circularity: from molecule to building to metropolis and back to a molecule. A building with this kind of sustainable footprint offers additional value in many ways. Think of new revenue models through increased sales and rental prices. Additionally, consider the indirect benefits of a healthy work environment, such as lower absenteeism costs, as has been demonstrated by several studies. This is exactly how the EU Taxonomy works, i.e., it rates buildings on their positive, sustainable contribution to the future. Our data highlights the opportunities and possibilities regarding the materials used and their recycling potential.”

Assessments and strategies
The real estate consultants at Drees & Sommer use the tools and data of Madaster and EPEA to perform complete 360-degree assessments. “These assessments allow us to assess both new developments and existing properties,” Groenland explains. “Building plans, technical descriptions, current energy consumption, information on materials including toxicity, energy labels, etcetera: we use all this data as input for assessing real estate according to the KPIs of the EU Taxonomy. These include KPIs related to the transition to a circular economy. The assessment shows whether a building does or does not yet meet such a KPI. The advantages for investors are self-evident. For example, when conducting a purchase inspection, these results can help determine which fund the investment will fit.” However, Drees & Sommer's services involve much more than just assessments. “We advise on the strategy that can be followed after an assessment, including the roadmap towards 2030 and 2050 or an exit strategy.” As far as Drees & Sommer, EPEA and Madaster are concerned, this roadmap should always have a shared objective: better and more sustainable construction and the creation of (added) value for buildings.

If you want to learn more about this topic, you can also read our interview with Groenland, Limpens, and Broersma


Elger GroenlandHead of Real Estate Consulting