Energy performance of real estate―Ideal vs. Reality

• Domestic green building certifications do not fully address climate-change risks. With sustainability information disclosure and GRESB gaining traction, CASBEE-RE^*1 has become increasingly established. However, investors sensitive to climate risk utilize CRREM Pathways^*2, which evaluate GHG emission intensity and energy consumption intensity.

• Green building certifications with lenient energy evaluation standards cannot adequately capture climate-change risks. In CASBEE-RE, energy performance is only one component of the evaluation criteria, and the standards^*3 are slightly dated (based on DECC data^*4). This makes it an evaluation system where even buildings with high energy consumption can easily obtain high-rank certification.

• Disclosure of actual energy consumption and transition to certification systems that effectively evaluate consumption reduction are needed. More than half of the office buildings that have obtained current CASBEE-RE already misaligned with the CRREM Pathway as of 2025. To advance real estate decarbonization, mechanisms are needed that properly evaluate energy consumption reduction and reduction efforts.

^*1 CASBEE-RE (CASBEE for Real Estate) is the most widely adopted green building certification in Japan.

^*2 CRREM (Carbon Risk Real Estate Monitor) publishes “Pathways” for GHG emission reduction aligned with the Paris Agreement‘s 1.5℃ target. "Misalignment" from the Pathway indicates high climate risk.

^*3 CASBEE-RE evaluates energy performance on a five-level scale based on the relative position within the distribution of annual primary energy consumption per floor area of the DECC buildings.

^*4 DECC (Database for Energy Consumption of Commercial Buildings) is a database of energy consumption, water consumption, and other data for over 44,000 non-residential buildings in Japan. While the study period spans fiscal years 2007–2018, the dataset includes data only up to fiscal year 2017.

As mandatory disclosure of sustainability information advances, real estate-related business companies are obtaining third-party certifications such as green building certifications as evidence of the environmental performance of properties they own or lease, to add credibility to their declared ESG information disclosures.

Real estate asset management companies need to renew certifications after acquisition, as their GRESB ratings are affected by the ratio of green-certified property asset value to total asset value under management and the time elapsed since certification.

Meanwhile, the indicators commonly used by overseas investors for investment decisions are CRREM Pathways, which evaluate GHG emission intensity (emissions per floor area) and energy consumption intensity (consumption per floor area) for each property. Properties judged to have high climate risk based on these indicators, even if they have obtained the local green building certification, will likely be required to take action.

CASBEE-RE is a comprehensive environmental performance evaluation system operated by the Institute for Building Environment and Energy Conservation (IBECs). It evaluates buildings that have been completed for one year or more on: (a) Energy use/GHG emissions, (b) Water use, (c) Materials/Safety, (d) Biodiversity/Land use, and (e) Indoor environment. Compared to conventional CASBEE used by design professionals, evaluation items are narrowed to minimum essential, making it a tool intended for use by stakeholders in real estate transactions such as owners, tenants, investors, and real estate companies.

CASBEE-RE-certified properties have their evaluation results published on the IBECs website. With DECC data not updated since fiscal year 2017 and no replacement system yet available, CASBEE-RE evaluation results containing actual energy consumption data are valuable. We analyzed how these evaluation results would be assessed by CRREM Pathways and examined the climate risks of CASBEE-RE-Certified properties.

As of end-2025, there are approximately 1,000 office buildings with valid CASBEE-RE. Of these, 58% have obtained rank S, 40% rank A, and 2% rank B+. In CASBEE-RE, clearing all required evaluation items results in rank B (50 points), with higher performance leading to B+ (≧ 60 points), A (≧ 66 points), and S (≧ 78 points). Since many businesses do not obtain certification if they do not reach rank A in preliminary assessment, most certified properties are rank S or A.

JLL conducted analyses (I)-(III) below on the aforementioned offices to investigate the actual state of climate risk.

(I) Score distribution of primary energy consumption intensity: For CASBEE-RE-certified properties, we identified the relationship between certification rank and scores of actual primary energy consumption intensity.

(II) Frequency distribution of primary energy consumption intensity: Based on actual primary energy use and emission intensity recorded in CASBEE-RE evaluation results, we identified how many properties exist at each primary energy consumption intensity level range.

(III) The year of deviation from CRREM decarbonisation pathway: Based on GHG emissions recorded in CASBEE-RE evaluation results, we estimated the year when each property will be misaligned with CRREM Pathway and identified the relationship between CASBEE-RE rank and the year of deviation.

※ Analysis Results (I) and (II) are included in the full report available for download at the bottom of this page.

• By 2025, 53% of CASBEE-RE-certified offices have already deviated from CRREM Pathway.
• By 2026, 60% of S-ranked properties and 80% of A-ranked properties will deviate from the pathway, if no measures are taken.
• Even S-ranked properties began deviating in 2020, reaching similar level of cumulative % as A-ranked properties with only 1-2 years delay.

While green building certifications are gaining momentum, there are significant concerns about whether certified properties are suitable for ESG investment and whether they carry climate risks. By analyzing how GHG emissions from CASBEE-RE-certified offices are evaluated based on CRREM Pathways, JLL found that more than half of the properties had already reached the year of deviation by 2025, and by 2026, 60% of S-ranked and 80% of A-ranked properties will have reached their year of deviation.

While adjustments may be needed to CRREM’s somewhat overly idealistic approach, Japan, lagging behind the rest of the world, needs to improve energy performance as quickly as possible. To properly evaluate energy consumption reduction efforts, systems for disclosing actual energy consumption are expected to be established, and current CASBEE-RE is expected to evolve into a system that evaluates properties based on more stringent standards like LEED, while maintaining its comprehensiveness and convenience.