European Taxonomy requires tailored renovation advice 

Achieving a climate-neutral Europe by 2050 is a monumental challenge, but the European Taxonomy provides a clear pathway to make it a reality. Can it truly help us get there?

Yannic Kotnik explains: "The Taxonomy is a powerful tool to direct investments toward sustainable projects. Knowing that buildings are responsible for 40% of energy consumption and 36% of CO₂ emissions in the EU, the role of both new construction and renovation is pivotal in achieving these targets”.

However, the requirements of the EU Taxonomy slightly differ amongst players in function of the interests. At one side we have the general contractor and project developer which are covered by “Construction of new buildings” and “Renovation of existing buildings”. Depending on the type of project, those activities covers transversal domains such as energy performance, circularity, biodiversity, water appliances, pollution prevention and climate resilience. 

Yannic emphasizes, "The role of the developer and construction companies is to create future-proof buildings that align with the Green Deal objectives, integrating sustainable design principles right from the start." 

On the other side the EU Taxonomy focusses on investors and real estate asset owners, by being aligned in the “Acquisition and ownership of buildings” activity. The emphasis is not just on constructing new, efficient buildings but also on upgrading existing ones to meet future sustainability standards. Therefore requirements in this category is more focussed on in-use energy performances and climate resilience. 

Yannic elaborates: "Under this activity, buildings must achieve an energy performance label A or rank among the top 15% of the building stock. The aim is to boost energy efficiency, reduce emissions, and ensure buildings are resilient to climate challenges."

So, the Taxonomy is primarily intended to encourage climate-neutral investments?

Yannic Kotnik: Precisely. It primarily acts as a benchmark to determine which economic activities are environmentally sustainable. This helps facilitate investments to build a climate-neutral, climate-resilient, and resource-efficient economy. Practically speaking, it is a list of activities deemed “sustainable,” including the technical criteria to evaluate them as such. The European Taxonomy is already seen within the real estate sector as a promising tool to mobilize capital flows toward environmentally sustainable economic activities over the long term. 

What criteria determine if an activity qualifies as sustainable?

Yannic Kotnik: There are currently six key environmental objectives to classify an activity as “sustainable.” 

To be considered sustainable, an activity must substantially contribute to one of these six goals while ensuring it does not cause significant harm to the others. 

The EU Taxonomy is a game-changer for companies, acting as the first tool to link financial and non-financial performance through clear, measurable criteria. It enhances transparency and credibility, helping businesses demonstrate their sustainability commitments while strengthening their financial market position. 

By aligning with the Taxonomy, companies gain: 

• Easier access to financing by meeting investor sustainability standards. 
• Long-term competitiveness through alignment with European sustainability goals. 

Does PULSE use the Taxonomy to persuade investors and asset managers to make targeted investments? 

Thibaut Mahieu: “Absolutely. At PULSE, the EU Taxonomy is a key tool for guiding our clients toward sustainable and strategic investments. The focus lies on two critical criteria: climate change mitigation and adaptation to climate change. 

Climate change mitigation centers on reducing greenhouse gas (GHG) emissions to slow global warming. This involves transitioning to renewable energy sources, such as solar panels, and improving energy efficiency by lowering energy consumption. To align with Taxonomy standards, buildings must achieve an energy performance label A or rank in the top 15% for energy performance—an urgent requirement in markets like Brussels, where 75% of office buildings remain energy obsolete (EPB C or lower).

Climate change adaptation, on the other hand, focuses on enhancing resilience to extreme weather events, such as floods and heatwaves. Key measures include improving building insulation, integrating solar protections to manage rising temperatures, and implementing nature-based solutions like green roofs, which mitigate rainfall impacts while enhancing environmental integration. 

By addressing both short-term mitigation measures and long-term adaptation strategies, PULSE  helps investors and asset managers future-proof their properties. We focus on actionable and pragmatic solutions that not only comply with European standards but also enhance the long-term value and sustainability of real estate assets, concludes Thibaut.

Are investors looking for quick wins or long-term strategies? 

Thibaut Mahieu: Both, in fact. It depends on the objectives of investors and owners. Some plan to let their properties over the long term, while others are looking for a quicker sale. For quick wins, we focus on energy efficiency improvements such as installing solar panels or relamping, with a short payback period. For long-term scenarios, they need to prepare their buildings with measures such as heat pumps and building insulation improvements. 

As mentioned earlier, under the Climate change mitigation category, the Taxonomy requires buildings to achieve an energy performance label A or rank among the top 15% for energy performance. Isn’t that challenging to determine? 

Thibaut Mahieu: "It is challenging, as new renovations continually shift the benchmark, and energy labeling varies significantly across regions. For example: 

• Wallonia: There is no EPB certification for non-residential existing buildings, making it difficult to assess whether a building meets A-label standards or ranks among the top 15%. 
• Brussels: Brussels Environment provides a list of the top 15% of energy-efficient buildings and has established a benchmark for energy consumption norms at 121 kWh/m²/year (FR / NL). This standard, introduced in 2020, has remained unchanged since. 
• Flanders: While non-residential buildings do have labels, they are based on the proportion of renewable energy used rather than specific primary energy consumption, adding further complexity to comparisons."

Does PULSE  provide advice to all building owners, or is there a threshold? 

Thibaut Mahieu: Ideally, we focus on buildings with a minimum area around 5,000 m². We also make clients aware that tenants increasingly demand better standards for energy consumption, climate mitigation, and well-being. This includes aligning with certifications such as the BREEAM-In- Use label.

Given the aging property portfolio, PULSE  has many opportunities to develop tailored advice for clients. What is the greatest challenge?  

Thibaut Mahieu: The main challenge lies in making the right choices. Many owners and investors lack clarity about their buildings’ energy performance or associated risks. Once we map these out, the next step is to prioritize actions. Establishing priorities and linking them to concrete measures is the most critical challenge. However, we have already provided tailored advice to many clients, and we are confident that more clients will become “ambassadors”, encouraging their peers in the sector to collaborate with us.