Volume 36—Real Estate

Industry-based Guidance on implementing

Climate-related Disclosures

June 2023

IFRS S2

IFRS

® Sustainability Disclosure Standard

International Sustainability Standards Board

This Industry-based Guidance accompanies IFRS S2 Climate related Disclosures (published

June 2023; see separate booklet) and is issued by the International Sustainability

Standards Board (ISSB).

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IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

Introduction

This volume is part of the Industry-based Guidance on Implementing IFRS S2 Climate-related

Disclosures. This guidance suggests possible ways to apply some of the disclosure requirements in

IFRS S2 but does not create additional requirements.

This volume suggests possible ways to identify, measure and disclose information about

climate-related risks and opportunities that are associated with particular business

models, economic activities and other common features that characterise participation in

this industry.

This industry-based guidance has been derived from Sustainability Accounting Standards

Board (SASB) Standards, which are maintained by the International Sustainability

Standards Board (ISSB). The metric codes used in SASB Standards have been included for

ease of reference. For additional context regarding the industry-based guidance contained

in this volume, including structure and terminology, application and illustrative

examples, refer to Section III of the Accompanying Guidance to IFRS S2.

IFRS S2 INDUSTRY-BASED GUIDANCE

Volume 36—Real Estate

Industry Description

Real Estate industry entities own, develop and operate income-producing real estate

assets. Entities in this industry commonly are structured as real estate investment trusts

(REITs) and operate in a wide range of real estate industry segments, including

residential, retail, office, health care, industrial and hotel properties. REITs typically

participate in direct real estate asset ownership, thereby providing investors with the

opportunity to obtain real estate exposure without direct asset ownership and

management. Although REITs often concentrate on individual Real Estate industry

segments, many REITs diversify investments across multiple property types.

Sustainability Disclosure Topics & Metrics

Table 1. Sustainability Disclosure Topics & Metrics

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Energy

Management

Energy consumption data coverage as

a percentage of total floor area, by

property sector

Quantitative

Percentage

(%) by floor

area

IF-RE-130a.1

(1) Total energy consumed by portfolio

area with data coverage, (2) percentage

grid electricity and (3) percentage

renewable, by property sector

Quantitative

Gigajoules

(GJ),

Percentage

(%)

IF-RE-130a.2

Like-for-like percentage change in

energy consumption for the portfolio

area with data coverage, by property

sector

Quantitative

Percentage

(%)

IF-RE-130a.3

Percentage of eligible portfolio that

(1) has an energy rating and (2) is

certified to ENERGY STAR, by property

sector

Quantitative

Percentage

(%) by floor

area

IF-RE-130a.4

Description of how building energy

management considerations are

integrated into property investment

analysis and operational strategy

Discussion

and Analysis

n/a

IF-RE-130a.5

continued...

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

...continued

TOPIC

METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Water

Management

Water withdrawal data coverage as a

percentage of (1) total floor area and

(2) floor area in regions with High or

Extremely High Baseline Water Stress,

by property sector

Quantitative

Percentage

(%) by floor

area

IF-RE-140a.1

(1) Total water withdrawn by portfolio

area with data coverage and

(2) percentage in regions with High or

Extremely High Baseline Water Stress,

by property sector

Quantitative

Thousand

cubic metres

(m³),

Percentage

(%)

IF-RE-140a.2

Like-for-like percentage change in water

withdrawn for portfolio area with data

coverage, by property sector

Quantitative

Percentage

(%)

IF-RE-140a.3

Description of water management risks

and discussion of strategies and

practices to mitigate those risks

Discussion

and Analysis

n/a

IF-RE-140a.4

Management

of Tenant

Sustainability

Impacts

(1) Percentage of new leases that

contain a cost recovery clause for

resource efficiency-related capital

improvements and (2) associated

leased floor area, by property sector

Quantitative

Percentage

(%) by floor

area, Square

metres (m²)

IF-RE-410a.1

Percentage of tenants that are

separately metered or submetered for

(1) grid electricity consumption and

(2) water withdrawals, by property

sector

Quantitative

Percentage

(%) by floor

area

IF-RE-410a.2

Discussion of approach to measuring,

incentivising and improving

sustainability impacts of tenants

Discussion

and Analysis

n/a

IF-RE-410a.3

Climate

Change

Adaptation

Area of properties located in 100-year

flood zones, by property sector

Quantitative

Square

metres (m²)

IF-RE-450a.1

Description of climate change risk

exposure analysis, degree of systematic

portfolio exposure, and strategies for

mitigating risks

Discussion

and Analysis

n/a

IF-RE-450a.2

Table 2. Activity Metrics

ACTIVITY METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Number of assets, by property sector 49

Quantitative

Number

IF-RE-000.A

continued...

Note to IF-RE-000.A – Number of assets shall include the number of distinct real estate property

or building assets and is aligned with the 2018 GRESB Real Estate Assessment Reference Guide.

Number of assets shall be disclosed separately for each portion of the entity’s portfolio where

properties are classified into sectors that are aligned with the FTSE Nareit Classification

Structure. The total number of assets reported across all sectors can exceed the actual number

of assets due to the fact that mixed-use assets can be reported in multiple sectors.

IFRS S2 INDUSTRY-BASED GUIDANCE

...continued

ACTIVITY METRIC

CATEGORY

UNIT OF

MEASURE

CODE

Leasable floor area, by property sector 50

Quantitative

Square

metres (m²)

IF-RE-000.B

Percentage of indirectly managed assets, by property

sector 51

Quantitative

Percentage

(%) by floor

area

IF-RE-000.C

Average occupancy rate, by property sector 52

Quantitative

Percentage

(%)

IF-RE-000.D

Energy Management

Topic Summary

Real estate assets consume significant amounts of energy for space heating, ventilating,

air conditioning, water heating, lighting and using equipment and appliances. The type

and magnitude of energy used and strategies for energy management are dependent

upon the real estate asset class, among other factors. Generally, grid electricity is the

predominant form of consumed energy, though on-site fuel combustion and renewable

energy production also serve important roles. Energy costs may be borne by entities or

property occupants; either way, energy management is a significant industry issue. To

the extent that the real estate owner assumes direct responsibility for energy costs, such

costs often represent significant operating costs, indicating the importance of energy

management. Energy pricing volatility and a general trend of electricity price increases,

energy-related regulations, potentially wide variations in energy performance in existing

building stock, and opportunities for efficiency improvements through economically

attractive capital investments all show the importance of energy management. Energy

costs assumed by occupants, either in whole or in part, are nonetheless likely to affect

entities through various channels. Building energy performance is a notable driver of

tenant demand, because it allows them to control operating costs, mitigate potential

environmental impacts, and, often just as importantly, maintain a reputation for

resource conservation. Additionally, real estate owners may be exposed to energy-related

regulations even if energy costs are the occupants’ responsibility. Overall, entities that

effectively manage asset energy performance may realise reduced operating costs and

regulatory risks, as well as increased tenant demand, rental rates and occupancy rates—

all of which drive revenue and asset value appreciation. Improving energy performance is

Note to IF-RE-000.B – Leasable floor area shall be disclosed separately for each portion of the

entity’s portfolio where properties are classified into sectors that are aligned with the FTSE

Nareit Classification Structure. Number of units may be used in place of floor area in the

Apartments and Lodging/Resorts property sectors when floor area is not available.

Note to IF-RE-000.C –The definition of “indirectly managed assets” is solely based on the

landlord/tenant relationship and is aligned with the 2018 GRESB Real Estate Assessment

Reference Guide: “Where a single tenant has the sole authority to introduce and implement

operating and/or environmental policies and measures, the tenant should be assumed to have

operational control, so [the asset] should be considered to be an Indirectly Managed Asset.”

Percentage of indirectly managed assets shall be disclosed separately for each portion of the

entity’s portfolio where properties are classified into sectors that are aligned with the FTSE

Nareit Classification Structure.

Note to IF-RE-000.D – Average occupancy rate shall be disclosed separately for each portion of

the entity’s portfolio where properties are classified into sectors that are aligned with the FTSE

Nareit Classification Structure.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

dependent upon property type and location, target tenant market, local building codes,

physical and legal opportunities to deploy distributed renewable energy, the ability to

measure consumption, and existing building stock, among other factors.

Metrics

IF-RE-130a.1. Energy consumption data coverage as a percentage of total floor

area, by property sector

The entity shall disclose the percentage of its portfolio, based on total gross floor

area, with complete energy consumption data coverage.

1.1

Gross floor area is defined as the total property area in square metres,

measured between the principal exterior surfaces of the enclosing fixed

walls of the building(s).

1.1.1

Leasable floor area may be used in place of gross floor area if gross

floor area is not available for the relevant area of the portfolio (for

example, a building with an unknown gross floor but a known

leasable floor area).

1.1.2

Number of units may be used in place of floor area in the

Apartments and Lodging/Resorts property sectors.

1.2

Floor area is considered to have complete energy consumption data

coverage when the entity obtains energy consumption data (for example,

energy types and amounts consumed) for all types of energy consumed in

the relevant floor area during the reporting period, regardless of when

such data was obtained.

1.2.1

If such data is unavailable for one or more types of energy

consumed, the relevant floor area shall be considered to have

incomplete energy consumption data coverage.

1.3

The percentage shall be calculated as the portfolio gross floor area with

complete energy consumption data coverage divided by the total portfolio

gross floor area for which energy is used.

1.4

The scope of energy consumption includes energy from all sources,

including energy purchased from sources external to the entity and its

tenants, and energy produced by the entity or its tenants (self-generated).

For example, direct fuel use, purchased electricity and heating, cooling

and steam energy are all included within the scope of energy

consumption.

The entity shall disclose energy consumption data coverage separately for each

property type in its portfolio, where properties are classified into sectors aligned

with the FTSE EPRA Nareit Global Real Estate Index property sector classification

system.

The entity may discuss the data coverage comprehensiveness if there are coverage

variations by energy type. For example, if a portion of floor area consumes

electricity and natural gas and the entity has energy consumption data coverage

for electricity but not natural gas, the entity has incomplete energy consumption

IFRS S2 INDUSTRY-BASED GUIDANCE

data coverage. However, the entity may disclose the portion of total portfolio

gross floor area that has partial energy consumption data coverage.

The entity may describe energy consumption data coverage variations, including

the factors that influence them.

4.1

Variations in energy consumption data coverage may occur based on

distinctions which may include:

4.1.1

Base Building, Tenant Space and Whole Building

4.1.2

Energy Purchased by the Landlord and energy Purchased by

Tenants

4.1.3

Managed Assets and Indirectly Managed Assets

4.1.4

Geographical markets

4.2

Relevant factors that influence energy consumption data coverage may

include:

4.2.1

Geographical markets and the applicable enabling or inhibiting

laws, regulations and policies within such markets, including

utilities policies

4.2.2

Administrative

logistical

barriers

obtaining

energy

consumption data (for example, lack of integration of utilities’ data

reporting systems)

4.2.3

Tenant demands around privacy or the proprietary nature of

energy consumption data

4.2.4

Property sectors or other more nuanced classifications of property

types

4.2.5

Lease structures, including the length of leases, access to energy

consumption data by the entity, and the entity's ability to

influence energy management performance of Tenant Spaces

4.2.6

The entity’s belief that obtaining Tenant Space energy consumption

data may negatively impact tenant demand

The following terms are defined according to the 2018 GRESB Real Estate

Assessment Reference Guide:

5.1

Base Building is defined as the energy consumed in supplying central

building services to lettable/leasable areas and common areas.

5.2

Tenant Space is defined as the lettable floor area (both vacant and let/

leased areas) that is, or can be, occupied by tenants.

5.3

Whole Building is defined as the energy used by tenants and Base Building

services to lettable/leasable and common spaces. This should include all

energy supplied to the building for the operation of the building and the

tenant space.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

5.4

Purchased by Landlord is defined as the energy purchased by the landlord

but consumed by the tenant. This can include energy purchased by the

landlord but used for vacant space.

5.5

Purchased by Tenant is defined as the energy purchased by the tenant.

Typically, this is data outside the entity's immediate control.

5.6

Managed Assets and Indirectly Managed Assets are defined as follows: ‘This

definition of Managed assets and the definition of Indirectly Managed

assets are solely based on the landlord/tenant relationship. [Managed and

Indirectly Managed Assets are] assets or buildings for which the landlord is

determined to have ‘operational control’, where operational control is

defined as having the ability to introduce and implement operating and/or

environmental policies and measures. In case both the landlord and tenant

have the authority to introduce and implement any or all the policies

mentioned above, the asset or building should be reported as a Managed

asset. Where a single tenant has the sole authority to introduce and

implement operating and/or environmental policies and measures, the

tenant should be assumed to have operational control, so it should be

considered to be an Indirectly Managed asset.’

The entity shall consider the 2018 GRESB Real Estate Assessment Reference Guide

as a normative reference, thus any updates made year-on-year shall be considered

updates to this guidance.

IF-RE-130a.2. (1) Total energy consumed by portfolio area with data coverage,

(2) percentage grid electricity and (3) percentage renewable, by property sector

The entity shall disclose (1) total energy consumption by the portfolio area for

which energy consumption data coverage is available as an aggregate figure, in

gigajoules (GJ) or their multiples, where:

1.1

The scope of disclosure includes all property area in the entity’s portfolio

for which energy consumption data coverage is available, regardless of

whether the Tenant Space or Base Building consumes the energy

(including outdoor, exterior and parking areas) and which party pays for

energy expenses.

1.2

The scope of disclosure excludes the portion of energy consumed by the

portfolio area for which energy consumption data is unavailable.

1.2.1

If energy consumption data is unavailable for Tenant Space or

Whole Building for a property but is available for the Base

Building, then the entity shall disclose this energy consumption

data.

1.3

The scope of energy consumption includes energy from all sources,

including energy purchased from sources external to the entity and its

tenants, and energy produced by the entity or its tenants (self-generated).

For example, direct fuel use, purchased electricity, and heating, cooling

and steam energy all are included within the scope of energy

consumption.

IFRS S2 INDUSTRY-BASED GUIDANCE

1.4

In calculating energy consumption from fuels and biofuels, the entity shall

use higher heating values (HHV), also known as gross calorific values

(GCV), which are directly measured or taken from the Intergovernmental

Panel on Climate Change (IPCC).

The entity shall disclose (2) the percentage of energy consumed that was supplied

from grid electricity.

2.1

The percentage shall be calculated as purchased grid electricity

consumption divided by total energy consumption.

The entity shall disclose (3) the percentage of energy it consumed that was

renewable energy.

3.1

Renewable energy is defined as energy from sources that are replenished

at a rate greater than or equal to their rate of depletion, such as

geothermal, wind, solar, hydro and biomass.

3.2

The percentage shall be calculated as renewable energy consumed divided

by total energy consumed.

3.3

The scope of renewable energy includes renewable fuel the entity

consumed, renewable energy the entity directly produced and renewable

energy the entity purchased, if purchased through a renewable power

purchase agreement (PPA) that explicitly includes renewable energy

certificates (RECs) or Guarantees of Origin (GOs), a Green‐e Energy

Certified utility or supplier program, or other green power products that

explicitly include RECs or GOs, or for which Green‐e Energy Certified RECs

are paired with grid electricity.

3.3.1

For any renewable electricity generated on-site, any RECs and GOs

must be retained (not sold) and retired or cancelled on behalf of the

entity for the entity to claim them as renewable energy.

3.3.2

For renewable PPAs and green power products, the agreement

must explicitly include and convey that RECs and GOs be retained

or replaced and retired or cancelled on behalf of the entity for the

entity to claim them as renewable energy.

3.3.3

The renewable portion of the electricity grid mix that is outside of

the control or influence of the entity is excluded from the scope of

renewable energy.

3.4

For the purposes of this disclosure, the scope of renewable energy from

biomass sources is limited to: materials certified to a third-party standard

(for example, Forest Stewardship Council, Sustainable Forest Initiative,

Programme for the Endorsement of Forest Certification, or American Tree

Farm System), materials considered eligible sources of supply according to

the Green-e Framework for Renewable Energy Certification, Version 1.0 (2017) or

Green-e regional standards, or materials eligible for an applicable

jurisdictional renewable portfolio standard.

IFRS S2 CLIMATE-RELATED DISCLOSURES–JUNE 2023

The entity shall apply conversion factors consistently for all data reported under

this disclosure, such as the use of HHVs for fuel usage (including biofuels) and

conversion of kilowatt hours (kWh) to GJ (for energy data, including electricity

from solar or wind energy).

Energy consumption data shall be disclosed by (a) Base Building and (b) Tenant

Space, or (c) Whole Building, or a combination of these.

The entity shall disclose (1) total energy consumption, (2) percentage grid

electricity, and (3) percentage renewable energy, separately for each property type

in its portfolio where properties are classified into sectors aligned with the FTSE

EPRA Nareit Global Real Estate Index property sector classification system.

The entity may describe the variations in energy consumption.

7.1

Variations in energy consumption data coverage may occur based on

distinctions which may include:

7.1.1

Base Building, Tenant Space and Whole Building

7.1.2

Energy Purchased by the Landlord and energy Purchased by

Tenants

7.1.3

Managed Assets and Indirectly Managed Assets

7.1.4

Geographical markets

The following terms are defined according to the 2018 GRESB Real Estate

Assessment Reference Guide:

8.1

Base Building is defined as the energy consumed in supplying central

building services to lettable/leasable areas and common areas.

8.2

Tenant Space is defined as the lettable floor area (both vacant and let/

leased areas) that is, or can be, occupied by tenants.

8.3

Whole Building is defined as the energy used by tenants and Base Building

services to lettable/leasable and common spaces. This should include all

energy supplied to the building for the operation of the building and the

tenant space.

8.4

Purchased by Landlord is defined as the energy purchased by the landlord

but consumed by the tenant. This can include energy purchased by the

landlord but used for vacant space.

8.5

Purchased by Tenant is defined as the energy purchased by the tenant.

Typically, this is data outside the entity's immediate control.

8.6