As we move further into 2025, the intersection of Environmental, Social, and Governance (ESG) considerations with the real estate sector—across Poland, the EU, and globally—is set to evolve significantly. Partner Sebastian Janicki (Real Estate | ESG | Environment) explores the key challenges shaping the future of real estate sustainability...
Poland: A Growing Focus on Sustainable and Affordable Housing
In Poland, demand for eco-friendly housing is expected to rise sharply as buyers, investors, and banks increasingly prioritise sustainability. The focus is on properties that incorporate smart technologies and energy-efficient solutions, aligning with growing consumer demand for sustainable living options.
Government incentives, including the termination of subsidies for coal and gas boilers (effective from 1 January 2025), as well as programmes under the National Recovery Plan (KPO) supporting heat pumps, energy storage, solar panels, and biomass (with applications open from January 2025), will accelerate this trend. Other green building practices and energy-efficient homes will further encourage developers to achieve the highest environmental and energy efficiency ratings. (The regulation on energy classes will come into effect in 2026.)
Smart home technologies are also anticipated to become the norm in new residential developments, aligning with the broader push towards sustainability.
At the same time, affordable housing initiatives will gain momentum, with the Polish government committing significant funds to support new projects. The National Fund for Environmental Protection and Water Management (NFOŚiGW) plans to allocate around PLN 8 billion in 2025 for subsidies for home thermal modernisation and the replacement of outdated heating systems. ESG principles are likely to play a key role in these efforts, ensuring that developments meet both housing needs and sustainability standards.
ESG and Real Estate Trends Across the EU
Across the European Union, stringent decarbonisation requirements and shifting occupier demands are reshaping the real estate market. Timber, particularly cross-laminated timber, is increasingly being used in commercial real estate due to its ability to sequester carbon and significantly reduce a building's carbon footprint compared with traditional materials like concrete and steel.
Following a significant increase in green building certifications during the first decade of their adoption, international methodologies such as BREEAM and LEED have transitioned from being leading standards and strategic targets to becoming key tools for implementing sustainability strategies and decarbonisation goals.
Europe's real estate market is undergoing a wave of transformation, requiring investors and property owners to ensure properties remain occupiable from an ESG compliance perspective. Between 60% and 75% of buildings would need to undergo substantial renovation, requiring a total capital outlay of at least EUR 160–200 billion. This is where ESG-based lending and green loans come into play, as banks have traditionally been dominant participants in the EU credit market. Many industry players now recognise that ESG compliance is no longer optional but essential for maintaining a competitive edge. The drive towards net-zero emissions will see developers increasingly adopting circular economy principles and energy-efficient designs as standard practice.
The social aspect of ESG is also gaining prominence, with greater emphasis on diversity and inclusion within workplaces and local communities. As awareness of corporate social responsibility grows, real estate firms will need to engage more actively with stakeholders to enhance their social impact.
A Global Perspective: ESG's Growing Influence on Investment Decisions
Worldwide, the real estate sector is under mounting pressure to integrate ESG factors into investment strategies. Concerns related to climate change—including mitigation and adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems—are influencing property valuations. Investors are increasingly demanding comprehensive ESG credentials before committing to transactions. The adoption of renewable energy solutions is expected to become a key investment criterion in the coming years.
Conclusion: Preparing for a Transformative Year
In 2025, ESG will continue to shape real estate markets in Poland, the EU, and beyond. Legal practitioners must stay ahead of these developments to provide informed guidance to clients navigating this evolving regulatory and commercial landscape.
Originally Published 19 February 2025
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
