Financing the Future: Embedding Sustainability in Real Estate Investment Strategy

Discussion with Laurent Carlier

With over three decades of experience in finance, real estate and ESG strategy, Laurent Carlier has held leadership positions across various industries, including the investment, services and property development sectors. His extensive background includes roles at Unilever, Sanofi, Sodexo, Befimmo (a listed REIT), and now as a Partner at Earnest Partners, a boutique debt capital advisory firm. In this interview, Carlier shares insights from his transition into sustainable real estate financing, unpacking how ESG metrics, circular construction, and collaborative governance models are redefining long-term value creation in Europe’s urban landscape.

Rethinking Viability: Making the Circular Model Work

Carlier challenges the conventional comparison between traditional and circular real estate projects, proposing instead a universal standard of sustainability for future development. “All real estate projects must evolve toward a more sustainable approach”, he emphasizes. For him, energy efficiency, material reuse, and biodiversity must become non-negotiable components of any viable investment.

He recalls the ZIN project at Befimmo—a 120,000 m2 mixed redevelopment in Brussels—as a landmark in circular thinking. "We kept the structure of the previous building instead of demolishing it, even though it was more expensive". Sustainability became a key focus  of the project and ecological ideas were implemented from the design. “90% of the removed materials were reused or recycled, including wall segments repurposed in nearby schools”. Though economically challenging, this approach dramatically reduced CO2 emissions and embodied carbon.

Yet financial models still struggle to catch up. Reused materials are rarely valued at market rates, and the operational logistics complexity can deter developers. Carlier insists on incremental ambition: "You have to go as far as possible with each new project, learn from experience, and build partnerships with companies focused on circularity".

Strategic Alignment: ESG as a Prerequisite for Long-Term Value

Successful ESG integration, Carlier notes, begins with stakeholder alignment. He outlines a strategic triad: anticipating client expectations, complying with evolving regulations, and securing financing under greener conditions. "At the start of the project, you must understand what tenants will need five years from now, not just today", he says.

Certification frameworks like BREEAM (Europe), LEED (US), and WELL (user comfort) have become standard requirements for multinationals leasing office space. Developers who ignore these benchmarks risk underperformance. “Banks are also under pressure from the European Central Bank to greenify their credit portfolios”, he adds. "If your project lacks ambition, financing it will become impossible".

Future-proofing is not just about compliance, it’s a hedge against reinvestment costs. "If you anticipate future regulations now, you avoid retrofitting your building at great expense later", Carlier warns. Long-term ESG strategy must be embedded from the start to avoid becoming an operational and financial liability.

Governance in Transition: Structuring Oversight for Sustainable Change

For real estate companies at different maturity levels, Carlier suggests tailored governance models to embed ESG transformation. In early-stage companies, he advocates for dedicated ESG committees, potentially involving external experts. "But be careful" -he cautions- "Other board members might think ESG isn’t their concern anymore".

He recommends eventually integrating ESG into core board structures: the audit and risk committee overseeing sustainability reporting; the strategy committee embedding ESG into growth plans. “Execution belongs to management, but the board must monitor and incentivize performance”, Carlier stresses.

This balance between oversight and execution depends on a strong management team, led by a Chief Sustainability Officer. The board’s role is to ensure alignment between ESG goals and strategic delivery: "Every board member should be trained on sustainability and conscious of their responsibility".

Capital Innovation: Structuring the Future of Urban Districts

Carlier sees blended finance models as one key to unlocking ambitious large-scale circular developments. “Senior bank loans could be combined with mezzanine debt from public investment institutions that support the project for its  societal value ”, he suggests. This layered approach helps offset the added costs of circularity and affordability.

Public-sector support for startups developing bio-based materials or reuse logistics is also crucial. “Collecting, storing, and redistributing salvaged materials is a complex, underfunded process—We need more innovation funding to make it scalable".

Finally, local authorities play a strategic role by defining mixed-use zoning plans. These frameworks guide private developers and incentivize urban density over suburban sprawl. "If cities don’t maintain affordability while fighting non-compliance, they risk hollowing out their cores", he warns. The goal must be equilibrium—social, financial, and environmental.

Quantifying Risk: Valuation Tools for Circular Assets

Investors must understand the timeline for when a building becomes “stranded.” Carlier points to CRREM (Carbon Risk Real Estate Monitor), which estimates how long a building’s emissions performance aligns with Paris Agreement targets. “It tells you if retrofits will be necessary in five years—and you can deduct what that means for valuation”.

Sustainable buildings attract better tenants and command higher rents. This improves the risk-return ratio and enables lower capitalization rates in valuation models. "Appraisers are conservative, but they’re beginning to assign real financial value to sustainability".

Future-proofing also boosts liquidity. “You don’t want to own a building you can’t lease or sell because it’s not aligned with regulation or market demand. The best buildings are not just green. They’re financially resilient”, he concludes.

Boardroom Imperatives: Turning Ambition Into Strategy

Boards and CFOs must ensure sustainability ambitions are not disconnected from financial reality. Carlier cautions against unchecked optimism: “Many boards set net-zero targets without estimating the investment required. That leads to disappointment or greenwashing".

He recommends using the science-based targets (SBTi) methodology to align ESG commitments with financial projections. “Define a trajectory based on your portfolio and test its (financial) feasibility”, he advises. This includes setting acquisition criteria that assess the current performance of new assets and their potential impact on the defined trajectory.

Boards should tie executive bonuses not only to financial KPIs but also to ESG milestones. Carlier advises that three-year planning cycles work best and if needed, present different scenarios—optimistic and realistic—to help the board make informed, pragmatic choices.

The Role of Advisors: Guiding Clients Toward Ambition

At Earnest Partners, Carlier helps mid-sized firms align with EU green taxonomy, even if they’re not (yet) regulated under CSRD. “Banks won’t wait for regulation, they already prefer lending to companies that show clear ESG ambition", he notes.

In some cases, he supports clients by highlighting  their tenants’ sustainability goals and the risks of non-alignment. For example, a fitness chain that requires all future gyms to run on green energy and to be in performance buildings. While not a technical assessor, Carlier connects clients with experts to evaluate and monitor their portfolios. "Sometimes I just help push the client one step further. When they choose to invest in a better EPC rating despite the cost, I know I’ve done my job".

From Vision to Viability

Sustainability in real estate is no longer a future trend. Carlier’s reflections have shown the importance of moving beyond just aspirations and making projects real. This is a present-day imperative that demands concrete strategy, cross-sector collaboration, and rigorous financial alignment. For executives navigating this evolving terrain, the challenge lies not only in setting bold goals but in embedding them across governance, investment, and operations.

Carlier leaves us with three parting insights that align with what has been his experience as a CFO and as a consultant in Real Estate:

• First, avoid greenwashing by aligning ambition with financial realism. 
• Second, adopt a learning mindset—test circular solutions on smaller projects, build partnerships, and scale what works. 
• And third, recognize that collaboration is essential: whether with suppliers, public institutions, or even competitors.

"We share energy systems between buildings. Why not share knowledge too?"

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