Why you should carry out a sustainability audit on your real estate portfolio

From financial to sustainability audits

Auditing financial statements is a standard practice, entrusted to professionals who comply with strict and clearly defined standards. However, auditors are expanding this practice to new areas such as nonfinancial information, particularly sustainability, which companies are increasingly including in their disclosures.

This is a significant shift in the world of auditing and reporting, meaning that the exact requirements imposed on financial information should now be applied to sustainability indicators. Even in a cautious US regulatory environment, where federal mandates advance slowly and sometimes face pushback, investor expectations, tenant pressure, and risk exposures are reinforcing the value of verifiable sustainability data. For example, the SEC’s 2024 climate disclosure rule, though scaled back, still requires large public companies to disclose material climate-related risks, reflecting a growing demand for clarity and comparability in sustainability-related disclosures.

Navigating the evolving regulatory landscape

There is a growing demand for investment strategies and portfolios that demonstrate long-term resilience and alignment with sustainability. In the United States, while federal-level regulation remains cautious, asset managers are increasingly affected by state-level mandates, such as California’s SB 261 and SB 253, which require large companies to disclose climate-related financial risk and greenhouse gas emissions.

Read more: The US approach to sustainability in real estate

Beyond regulation, indirect market pressures are significant. Institutional investors, insurers, and municipalities are tightening expectations around building performance and transparency. Many asset managers now use frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) to structure their internal reporting, even when not yet legally required.

Aside from what might be perceived as a constraint, applying the same standards to sustainability indicators is excellent news for the market. Deepki is convinced that this is the right way forward to further recognize the importance of these indicators and to continually improve their reliability.

What is a sustainability audit?

A sustainability audit assesses how a company’s operations, assets, and strategy align with environmental and social performance criteria that increasingly influence financial value. In the real estate sector, this includes evaluating how properties manage energy, water, and emissions, as well as their exposure to climate and natural risks, and how these factors influence leasing, insurance, and investment outcomes.

While this remains a new exercise for many asset managers, it mirrors the rigor of traditional financial audits, applying it to areas like resource efficiency, physical risk exposure, and regulatory readiness.

The diverse landscape of sustainability audits

The current landscape includes a growing number of sustainability reporting obligations. Frameworks such as the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the European Sustainability Reporting Standards (ESRS) often form the basis for audit engagements. Meanwhile, there is increasing alignment with TCFD recommendations, which focus on climate risk, governance, and scenario analysis.

In the United States, sustainability indicators are also increasingly influencing financial decision-making:

• Insurers are incorporating environmental and resilience risks into underwriting decisions, as highlighted by Marsh McLennan.
• Tenants are paying premiums for sustainable properties. CBRE’s 2023 Viewpoint on Building Performance Standards highlights that tenants are increasingly favoring buildings that meet performance-based codes, with leasing trends reflecting a growing preference for assets aligned with energy efficiency and carbon transparency.
• Mounting climate risks and tenant demand are reshaping lease markets. JLL reports that energy-efficient and low-carbon buildings are becoming increasingly essential for income and resilience.

Sustainability audits that identify inefficiencies, such as poor energy performance, excessive water use, or outdated infrastructure, not only support resilience strategies but also enable direct operational cost savings and increased asset value.

Reinforcing your climate strategy

When conducting a sustainability audit, companies must assess their climate strategy and determine whether it is sufficient in light of the evolving climate risks they face. For real estate owners and managers in the US, this includes exposure to region-specific threats such as hurricanes in the Southeast, wildfires in the West, and increasing flood risks in coastal and inland areas.

Read more: The cost of climate inaction in real estate: insurance, risk, and value on the line

The Urban Land Institute (ULI) has emphasized the importance of factoring climate resilience into underwriting and acquisition strategies as investor scrutiny sharpens around physical risk and asset durability. These factors increasingly translate into real financial exposures through higher insurance premiums, downtime losses, or decreased liquidity in risk-prone markets.

Conclusion

The need to make real estate portfolios more resilient and cost-efficient is becoming increasingly urgent. Auditing sustainability data brings transparency, reliability, and credibility to performance monitoring and external reporting. These audits also help asset managers anticipate and mitigate risk, uncover operational savings, and respond effectively to market and stakeholder expectations.

Deepki supports this transformation by helping real estate players collect and process environmental and building data at scale, providing the structured insights needed to carry out robust sustainability audits. In a market where risk management and financial performance go hand in hand, sustainability audits are not only good governance—they’re sound business.