How Investors Are Setting the Sustainability Agenda 

Who is driving the sustainability agenda in real assets today? Increasingly, it’s the investors themselves. Major institutional investors now see environmental and social factors as integral to protecting value, not just a PR exercise. 

This marks a shift in expectations – real asset managers are under pressure to deliver tangible sustainability outcomes if they want to attract capital. European investors have historically led on these demands, but now many North American and Asian investors are also setting strict standards.  

Fiduciary Duty in Open-Ended and Close-Ended Funds 

Asset owners and investors can’t afford to focus solely on short-term gains without factoring in long-term sustainability risks, and the sustainability conversation has shifted from good-will to financial materiality. Industry experts are increasingly recognising that ignoring sustainability risks can be seen a breach of fiduciary duty, since unmanaged environmental or social issues can negatively affect exit-value and long-term returns. But the ease of implementing these changes can vary depending on fund type. 

Legacy closed-ended funds often didn’t plan for sustainability. So trying to add new measures now can be difficult, mainly because the budget wasn’t set aside from the start. But even in those older funds, investors are more aware that sustainability affects exit value. So even if it wasn’t part of the original plan, there’s growing pressure to act to avoid price chipping on exit.  

“The traditional mindset with closed-ended funds was that you don’t do anything new because you’ve already raised the money, spent it on the buildings, and plan to sell them according to the original business plan. The thinking was: the more you spend, the less you get out. 

But that view is starting to feel outdated. Yes, you still need to be careful about how much CapEx you commit, but you also have to consider what happens on exit. If the asset looks underinvested compared to the plan, buyers might chip away at the price. You also have to think about the buyer’s buyer – two hold periods – which can influence how value is perceived. It’s about preserving value on exit, and it comes down to risk management and doing what’s right for the building.”, says Ed Gabbitas, EVORA’s co-founder and Regional Managing Director (North America). 

Open-ended funds, on the other hand, typically have longer time horizons and are better positioned to plan and deliver sustainability measures. These investors expect more deliberate, long-term strategies.  

Different Markets, Different Pressures 

Regional differences shape how investors influence sustainability strategy. Europe’s real asset market is relatively mature on sustainability matters, and strong regulatory drivers like SFDR and CSRD has set a high bar for transparency and performance.  

In contrast, the U.S. market is more fragmented. Rules vary by state and city, and the topic has even become politicised in some regions. But U.S. real asset investors are still responding to the same underlying forces: physical climate risks (like wildfires or floods), increasing energy and insurance prices, and global investor expectations.  

So while EU investors tend to be driven by regulatory certainty and a longer history of ESG integration, U.S. investors operate in a patchwork landscape – but one where market pressure and local laws are quickly raising the bar.  

“Sustainability is being used as a tool to preserve or enhance value – often tied to terminal cap rates. But there’s also pressure to deliver on the promises made to investors, which can carry just as much weight”, says Paul Sutcliffe, EVORA’s co-founder and Regional Managing Director (UKROI). 

Investors Want Proof, Not Promises 

Investors are no longer satisfied bold pledges. They want to understand specifics on costs, who pays, and what value interventions will bring. Both our U.S. and EU teams have heard clients face detailed questions about the price of upgrades and replacements. Achieving net zero carbon often requires significant upfront investment for building upgrades, and stakeholders want to know these investments will pay off.  

“Investors do help shape the outcomes, but it’s a joint effort with the managers who need to explain how much it’s going to cost, and whether that cost is acceptable based on the returns investors are willing to take. 

It really comes down to having solid information: what needs to be done, how much it will cost beyond what’s already in the business plan, and whether that added spend offers good value for the investor. And all of that depends on having reliable data to back it up.“, says Ed Gabbitas. 

The practical takeaway is simple. If you propose a decarbonisation plan, tie it to cash flow, cap-ex timing, and the likely sale price. Show how the work lowers operating costs today, and avoids a value cut tomorrow. When the figures line up, investors sign off – because protecting the exit is protecting their return. The good news is that aligning sustainability with investment imperatives creates a win-win: portfolios become more resilient and attractive, and investors see their fiduciary requirements fulfilled.  

From Investor Pressure to Practical Strategy  

The rise of investor influence is injecting a healthy dose of pragmatism into sustainability strategies. The message from investors on both sides of the pond is consistent; focus on real risks and opportunities, and deliver results that protect value.  

Sustainability is not a fringe initiative; it’s a core part of asset management strategy, demanded by those who control the capital. By addressing sustainability initiatives in terms of risk-adjusted returns and backing them with solid data, real asset investors and managers can have an honest, peer-level dialogue about what’s achievable. This approach moves the conversation away from abstract pledges and toward market realities – like safeguarding exit values, reducing operating costs, and ensuring assets remain competitive in a changing world. 

EVORA helps real asset investors turn sustainability into a value driver. Through our 4D approach (Drivers, Design, Delivery, Disclosure) we build sustainability strategies that are practical, measurable, and aligned with your investment goals. Whether you’re adhering to local legislations, planning CapEx, or preparing for exit, we help you make informed decisions that protect and grow asset value. And our SIERA software ensures you have the data to back it up. 

Reach out to us to learn more.