The ESG outlook: What’s next for 2025?
A new year invites reflection on what the next 12 months might hold. Before looking ahead to 2025, let’s reflect on some major ESG developments from 2024
8 minutes to read
Let’s recap
Last year, I published five key trends that I thought would have heightened interest in 2024; these were:
1. Retrofit revolution: Upgrading poor-performing properties to meet ESG goals with innovative financing and focus on reuse over rebuild.
2. A spotlight on embodied carbon: Tackling construction emissions with better measurement and education as operational carbon decreases.
3. Renewable energy to be supercharged: Fast-tracking renewables with grid reforms, rooftop solar, and better battery storage.
4. Resilience and adaption in the conversation: Designing buildings to handle extreme climates while staying net-zero-ready.
5. Social becomes a greater focus: Prioritising health, wellbeing, and social impact in building design and measurement.
2024 marked significant progress in many of these areas, yet the year is on track to become the warmest year ever recorded, according to the World Meteorological Organization. Last year kicked off with the rollout of Biodiversity Net Gain, requiring developers to demonstrate how they will increase biodiversity by at least 10%. As yet, the level of demand has been limited, but could this grow?
The new government set ambitious renewable energy targets and has already approved large-scale solar projects. They have also begun consulting on overhauling EPCs and introducing stricter Minimum Energy Efficiency Standards for the domestic rental sector—though clarity for commercial properties is still lacking.
The Science Based Targets initiative (SBTi) launched the Building Sector Science-Based Target-Setting Criteria, also known as the "Buildings Criteria", in August. The new criteria aims to improve accountability to ensure that companies buying, selling, developing and managing buildings account for operational and embodied greenhouse gas (GHG) emissions. The SBTi calls this the ‘whole building approach’, which the aim of aligning the sector with net-zero targets. In September, the pilot Net Zero Carbon Buildings Standard was published, defining what it truly means to be net zero. And finally, the year closed with COP29, where nations hammered out new climate finance goals, finalised carbon trading rules, and inched forward on emission reduction commitments.
New year, new trends?
2025, the Year of the Snake, symbolises transformation, resilience, and adaptability—qualities that will define the year as businesses navigate the final stretch toward the widely adopted 2030 net zero target. With just five years remaining, companies will increase their efforts to reduce carbon emissions while undergoing transformative changes, demonstrating resilience in the face of challenges and adapting to evolving sustainability demands.
Many of the trends identified in 2024 still ring true, yet the five for 2025 take this a step further.
#1 Energy Use Intensity: Data as the new currency
The importance of one metric–Energy Use Intensity (EUI)–is rising as it forms a key part of investment decisions. In our 2023 ESG Property Investor survey, almost 70% required energy data before the acquisition, which feeds into CRREM analysis, which can highlight the ‘stranding risk’ of an asset. Accurate and verifiable data will likely become necessary to future-proof asset liquidity. France has introduced mandatory data-sharing requirements whereby landlords and tenants submit annual energy consumption data for tertiary (commercial) spaces.
We could see great transparency in this respect, yet this will rely on more metering and smart building information to not only collect the data but also optimise efficiency. Increased data sharing is essential—both between occupiers and landlords through potential green leases and on a broader, public scale—to build a comprehensive picture of energy usage and efficiency.
Current measures like Energy Performance Certificates (EPCs) provide only theoretical energy use, while Display Energy Certificates (DECs), which measure actual performance, are limited to public buildings. In 2025, with the government seeking views on reforming EPCs, this may shift.
For property owners, it’s critical to reduce energy costs and lower emissions. In addition, EU Taxonomy, CRREM and other regulations and benchmarks are required by many investors, potentially providing liquidity. For occupiers, it creates opportunities to lower energy bills, enhance comfort, and contribute to sustainability through smarter workplace practices and strategies.
#2 Retrofit revolution: Momentum to build
Linking to the first trend, with improved energy efficiency as a key goal, the retrofit revolution is set to continue, albeit with a potential easing of timelines. The industry had largely assumed the 2021 consultation on Minimum Energy Efficiency Standards (MEES) would enforce an EPC B-rating requirement by 2030. Yet, more rumblings have indicated the timing could be delayed.
The UK government’s consultation for improving EPC assessments is intended to make energy efficiency a higher priority across both residential and commercial property markets. In the domestic market, the government has stated the intention to bring stricter MEES for the private rental sector, reaching the EPC C minimum by 2030. However, the consultation leaves key questions unanswered regarding the timing of any stricter non-domestic MEES.
With regulation one of the key drivers to retrofit, as discussed in Part 1 of Meeting the Commercial Retrofit Challenge series, the trend has been set in motion. It will continue, given the functional, physical and financial drivers. Low-cost upgrades that require minimal disruption might be overlooked while failing to act during strategic moments—like lease renewals—could result in more complex and costly refurbishments down the line. A proactive approach is essential to capitalise on these moments and avoid falling behind. Explore more on this topic in our latest series: Meeting the Commercial Property Retrofit Challenge – Part 1: Defining a Strategy and Part 2: Building the Business Case for Action.
#3 Reuse: Embodied carbon and repurposing assets
Following on from Trends #1 and #2, we have embodied carbon. The introduction of the RICS Whole Life Carbon Assessment (WLCA) standard, 2nd edition, July 2024, saw a more formalised and structured assessment. This took greater strides with the pilot Net Zero Carbon Buildings Standard, which defined what it truly means to be net zero with the inclusion of embodied carbon.
The retrofit-first approach is garnering attention and prominence within planning policies as it is noted for its lower embodied carbon impact, and we are likely to see this continue. Where retrofit may not be viable, see Meeting the Commercial Property Retrofit Challenge series, there is likely to be more repurposing activity where assets undergo a change of use and reconfiguration. The optimal use depends on asset-specific considerations, including the economic DNA. There are more practical considerations and discussions over the barriers in the UK Cities DNA series – with a ’keys to the kingdom’ map on the ideal journey.
Not only from an asset owner perspective, but occupiers are increasingly considering the embodied carbon impact alongside the total carbon impact of whether to ‘stay or go’ in their current property. Therefore, undertaking scenario analysis can help inform decisions.
#4 Renewable energy generation: Powering ahead
Grid connection issues have long been a bottleneck for renewable energy projects, but a shake-up is on the horizon. The government’s newly announced Clean Power 2030 Action Plan aims to tackle these issues head-on. Central to the plan is a shift from the outdated “first come, first served” system to a more efficient “first ready, first connected” approach. This change prioritises developers who already have planning permissions and land agreements in place, potentially accelerating their connection timelines. Small-scale projects, meanwhile, will largely bypass this new process, further reducing delays.
Despite these promising reforms, the scale of the problem is daunting: a 750GW backlog of projects still awaits connection. The big question remains—will these measures be enough to clear the gridlock and meet the ambitious renewable energy targets?
For solar and wind energy, the reforms could not come at a better time. Grid capacity constraints and delays have been major hurdles for expanding renewables, but fixing these could unlock significant growth. Solar photovoltaics (PV), including rooftop and car park installations, stand to gain momentum, while offshore and onshore wind remain cost leaders. By 2025, wind power is projected to be 61% cheaper than gas, with solar close behind, making renewables a clear winner in the UK’s energy mix, according to a report by the Department for Energy Security and Net Zero (DESNZ). With greater grid capacity and fewer connection restraints, this could be good news for renewables.
#5 EVs: Shifting gears
Government policies could create substantial opportunities for real estate owners: the ZEV Mandate (Zero-Emissions Vehicle) has been mooted to reinstate the ban on the sale of purely internal combustion engine (ICE) vehicles from 2030, with hybrids potentially allowed until 2035. To meet these targets, the UK must rapidly increase the adoption of Electric Vehicles (EVs) and expand its EV charging infrastructure. By 2030, the UK is projected to have more than 325,000 public EV chargers—over five times the mid-2024 total. This rapid rollout, particularly of fast and ultra-fast chargers, aims to alleviate range anxiety and other charging concerns, which remain a deterrent for over half of prospective EV buyers, according to DriveElectric.
Keeping the current and future EVs on the move will be critical in 2025 (and beyond). For property owners, strategically identifying locations within their portfolios that are well-positioned for EV charger installations could unlock new income streams and secure their position in a rapidly evolving market. We’ve identified key opportunity hotspots here.
Elsewhere…
We’ll be closely monitoring how nature is integrated into real estate strategies, particularly as we near the one-year mark since the first adopters of the Taskforce for Nature-related Financial Disclosures and the Biodiversity Net Gain policy were announced. Meanwhile, social considerations continue to gain traction, as highlighted in our 2024 trends—but significant progress is still needed. As social frameworks become more deeply embedded in investments and asset portfolios, standardising metrics and improving transparency will be essential.