CapitaLand Investment, a Singapore-based real estate investment manager, has introduced the “Return on Sustainability” (RoS) framework to assess the financial impact of sustainability-focused investments.
The framework aims to bridge the gap between environmental commitments and measurable financial outcomes. As climate-related regulations intensify and carbon pricing becomes more widespread, tools like RoS are gaining traction among asset managers and investors seeking clearer assessments of environmental expenditures.
RoS incorporates metrics such as green capital expenditures (capex), utility savings, rent premiums, and asset valuations to estimate potential financial returns on sustainable projects. It also includes breakeven analysis across portfolios to assess the viability of integrating low-carbon measures into asset development and redevelopment plans.
According to the company, the framework is intended to align financial strategies with environmental targets, helping evaluate risks such as carbon taxes and rising insurance premiums. The tool complements CapitaLand’s internal shadow carbon pricing mechanism, introduced in 2021, which aids in appraising climate-related risks and opportunities during capital allocation.
Data from CapitaLand’s recent sustainability report shows increased renewable energy usage and a rise in green leases, reflecting the organisation’s broader efforts to embed sustainability into its operations.
In addition to environmental considerations, the report notes progress in diversity initiatives, with women making up 30% of the company’s board and 37% of senior management roles.
CapitaLand plans to further develop the RoS framework and explore additional methods to evaluate climate-related financial risks, reflecting a broader trend of integrating sustainability into long-term financial planning across the real estate sector.
