Integrating Environmental, Social And Governance (ESG) Measures In Real Estate Development Projects: Context German Real Estate Sector

ESG measures are gaining importance in German real estate development due to growing ESG-related challenges and evolving legislation. Investors and financiers now view ESG measures as a key decision criterion in real estate projects. However, despite numerous drivers, a standardised approach to ESG measures integration has yet to be established. Although research on ESG and real estate is growing, the project-level integration of ESG measures in real estate development remains underexplored. This study addresses this gap by investigating ESG measures integration from a developer-focussed and practitioner-focussed perspective. It aims to identify key ESG measures, examine their perceived benefits and establish how they can be integrated into the development process to enhance project success.
To achieve this, a multi-method qualitative approach was adopted, departing from the predominantly quantitative methods common in ESG and real estate. Guided by an interpretivist philosophy, the study draws on a literature-derived conceptual framework, 20 semi-structured interviews with senior practitioners and three focus groups with ten participants to verify and refine the proposed ESG measures integration framework.
The findings show that ESG remains conceptually ambiguous in both literature and practice. ESG measures focussed on energy efficiency were identified as key in the environmental pillar. However, no dominant measures emerged for the social or governance pillars. ESG measures are more likely to gain practical relevance when they are linked to identifiable tangible or intangible benefits, such as improved competitiveness. Although the literature highlights additional benefits, they appear less familiar to practitioners. Several integration challenges and integration factors at both company-level and project-level were identified.
The study contributes to ESG research by shifting attention from company-level and portfolio-level ESG analysis towards project-level and practitioner-focussed ESG integration. It contributes to real estate development theory by extending existing process-based models through ESG measures, benefits and integration factors. The proposed framework provides a developer-focussed and practice-oriented approach for integrating ESG measures into German real estate development and linking them to project success.