Energy Performance of Real Estate―Ideal vs. Reality, vol.2
ClimateriskofCASBEE-RE-CertifiedProperties asrevealedthroughcomparisonwithCRREMPathways
Keyinsights
1
Domesticgreenbuildingcertificationsdonotfully addressclimate-change risks
WithsustainabilityinformationdisclosureandGRESB gainingtraction,CASBEE-RE*1 hasbecome increasinglyestablished.However,investorssensitive toclimateriskutilizeCRREMPathways*2,which evaluateGHGemissionintensityandenergy consumptionintensity.
2
Greenbuildingcertificationswithlenientenergy evaluationstandardscannotadequatelycapture climatechangerisk
InCASBEE-RE,energyperformanceisonlyone componentoftheevaluationcriteria,andthe standards*3 areslightlydated(basedonDECCdata*4).
Thismakesitanevaluationsystemwhereeven buildingswithhighenergyconsumptioncaneasily obtainhigh-rankcertification.
*1CASBEE-RE(CASBEEforRealEstate)is themostwidelyadoptedgreenbuildingcertificationinJapan.
3
Disclosureofactualenergyconsumptionand transition tocertificationsystemsthateffectively evaluateconsumptionreductionareneeded
Morethanhalfoftheofficebuildingsthathave obtainedcurrentCASBEE-REalreadymisalignedwith theCRREMPathwayasof2025.Toadvancereal estatedecarbonization,mechanismsareneededthat properlyevaluateenergyconsumptionreductionand reductionefforts.
*2CRREM(CarbonRiskRealEstateMonitor)publishes “Pathways”forGHGemission reductionalignedwiththeParisAgreement‘s1.5℃target."Misalignment"fromthePathwayindicateshighclimaterisk.
*3CASBEE-REevaluatesenergyperformanceonafive-levelscalebasedontherelativepositionwithinthedistribution ofannualprimaryenergyconsumptionperfloorareaoftheDECCbuildings.
*4DECC(DatabaseforEnergyConsumptionofCommercialBuildings)is adatabaseofenergyconsumption,waterconsumption,andotherdataforover44,000 non-residentialbuildings inJapan.Whilethestudyperiodspansfiscalyears2007–2018, the datasetincludesdataonlyuptofiscalyear2017.
Introduction
Greenbuildingcertificationexistsasasystemfor evaluatingthecomprehensiveenvironmental performanceofrealestate.Themostwidelyadopted certificationgloballyisLEED,with123,942certified projectsworldwide(377inJapan)asofend-2025.In Japan,CASBEE-REismostwidelyadopted,with2,933 propertiescertified(rankS:1,166;rankA:1,685;rank B+:76;rankB:6)asofend-2025.
Whilegreenbuildingcertificationsincludeenergyrelatedevaluationaspartoftheircriteria,evaluation
standardsdifferbysystem.LEEDO+Mv4.1*5 referencesactualperformancedatafromcertified propertiesworldwideandisbasedonvaluesabovea certainstandard,whereasCASBEE-REreferences DECCdata,whichincludesbothnewandold conventionalbuildings,andcannotbeconsidered stringent.
*5LEEDO+M(BuildingOperationsandMaintenance)v4.1iscertificationfor existingbuildingoperationsandmaintenancelaunchedin2018. In2024,to acceleratedecarbonizationduringbuilding operations,thev4.1EnergyUpdate waslaunched,maintainingv4.1but withstricterenergystandardsonly.
Fig.1MajorGreenBuildingCertificationsUsedinJapan
RealEstate ClimateRisk inESG Investment
Asmandatorydisclosureofsustainabilityinformation advances,realestate-relatedbusinesscompaniesare obtainingthird-partycertificationssuchasgreen buildingcertificationsasevidenceofthe environmentalperformanceofpropertiestheyown orlease,toaddcredibilitytotheirdeclaredESG informationdisclosures.
Realestateassetmanagementcompaniesneedto renewcertificationsafteracquisition,astheirGRESB*6 ratingsareaffectedbytheratioofgreen-certified propertyassetvaluetototalassetvalueunder managementandthetimeelapsedsince certification.
Meanwhile,theindicatorscommonlyusedby overseasinvestorsforinvestmentdecisionsare CRREMPathways,whichevaluateGHGemission intensity(emissionsperfloorarea)andenergy consumptionintensity(consumptionperfloorarea) foreachproperty.Propertiesjudgedtohavehigh climateriskbasedontheseindicators,evenifthey haveobtainedthelocalgreenbuildingcertification, willlikelyberequiredtotakeaction.
Overseas investors generally use CRREM Pathways to assess climate risks not fully evaluated by Japanese green building certifications
CRREMpublishes"Pathways"forGHGemissionsand energyconsumptionreductionthrough2050,by country*7 andsector,alignedwiththeParis Agreement's1.5°Ctarget.BycomparingpropertyspecificdatawiththePathwayusingCRREM'srisk assessmenttool,onecanconfirmtheeconomic burdenofbeingmisalignedwiththePathway(i.e., failingtoachieveGHGemissiontargets)andthe timingandextentofrenovationworknecessaryto avoidtheriskofpropertyvalueimpairmentdueto Pathwaymisalignment.
*6GRESB(GlobalRealEstateSustainabilityBenchmark)isatoolforannually evaluatingandbenchmarkingtheESGperformanceandprogressofrealestate andinfrastructurecompaniesandfunds.
*7InconstructingJapan’sCRREMPathways,theDECC(DatabaseforEnergy ConsumptionofCommercialBuildings)oftheJapanSustainableBuilding Consortiumisreferencedasbasicdata(energyintensity –startingvalue [kWh/m²·year])forJapanesecommercialrealestate.DECCpublishes building attributeinformation,energyconsumption,waterconsumption,etc.for buildings surveyedfromfiscalyears2007to2018. ItisJapan'sonlyoperational energyconsumptiondatabaseregisteredafterthird-partyverification.
02
Understanding Japan’s RealSituation through CASBEE-RE× CRREM
AccordingtoCRREM(v.2.05),Japanneedstoreduce GHGemissionintensitysignificantlymorethan countriessuchastheUnitedStates,Germany,South Korea,China,andFrance.Intheofficesector,GHG emissionsneedtobereducedfrom91kgCO2e/m²/yr in2020to34kgCO2e/m²/yrin2030,5kgCO2e/m²/yr in2040,and1kgCO2e/m²/yrin2050.
from GHG Emissions of CASBEE
Properties Reveals the "Warning Year" of Rising Climate Risk
CASBEE-REisacomprehensiveenvironmental performanceevaluationsystemoperatedbythe InstituteforBuildingEnvironmentandEnergy Conservation(IBECs).Itevaluatesbuildingsthathave beencompletedforoneyearormoreon:(a)Energy use/GHGemissions,(b)Wateruse,(c) Materials/Safety,(d)Biodiversity/Landuse,and(e) Indoorenvironment.Comparedtoconventional CASBEEusedbydesignprofessionals,evaluation itemsarenarrowedtominimumessential,makingit atoolintendedforusebystakeholdersinrealestate transactionssuchasowners,tenants,investors,and realestatecompanies.
CASBEE-RE-certifiedpropertieshavetheirevaluation resultspublishedontheIBECswebsite.WithDECC datanotupdatedsincefiscalyear2017andno replacementsystemyetavailable,CASBEE-RE evaluationresultscontainingactualenergy consumptiondataarevaluable.Weanalyzedhow theseevaluationresultswouldbeassessedby CRREMPathwaysandexaminedtheclimaterisksof CASBEE-RE-Certifiedproperties. Deriving CRREM Pathway Misalignment
AreCASBEEREProperties Energy Efficient Enough?
Asofend-2025,thereareapproximately1,000office buildingswithvalidCASBEE-RE.Ofthese,58%have obtainedrankS,40%rankA,and2%rankB+.In CASBEE-RE,clearingallrequiredevaluationitems resultsinrankB(50points),withhigherperformance leadingtoB+(≧60points),A(≧66points),andS(≧ 78points).Sincemanybusinessesdonotobtain certificationiftheydonotreachrankAinpreliminary assessment*8,mostcertifiedpropertiesarerankSorA.
While Rank S and A Account for 98%,
Focusing on Actual Energy Consumption Reveals a Different Picture
Source:JLL,IBECs
JLLconductedanalyses(I)-(III)belowonthe aforementionedofficestoinvestigatetheactualstate ofclimaterisk.
(I)ScoreDistributionofPrimaryEnergyConsumption Intensity.ForCASBEE-RE-certifiedproperties,we identifiedtherelationshipbetweencertificationrankand scoresofactualprimaryenergyconsumptionintensity.
(II)FrequencyDistributionofPrimaryEnergy ConsumptionIntensity. Basedonactualprimary energyuseandemissionintensityrecordedinCASBEEREevaluationresults,weidentifiedhowmanyproperties existateachprimaryenergyconsumptionintensitylevel range.
(III)TheYearofDeviationfromCRREM
DecarbonisationPathway.BasedonGHGemissions recordedinCASBEE-REevaluationresults,weestimated theyearwheneachpropertywillbemisalignedwith CRREMPathwayandidentifiedtherelationshipbetween CASBEE-RErankandtheyearofdeviation.
*8AprocessinwhichaCASBEE-REAssessororsimilarprofessionalconductsa simplesimulationanddiagnosisofatargetproperty'senvironmental performancebeforeapplyingforcertification.
(I) Score Distribution of Primary Energy Consumption Intensity
Fig.4ScoreDistributionofCASBEE-RE-CertifiedPropertiesbyCompletionYearRange
Energy performance is not easily reflected in CASBEE-RE ranking
AnalysisResults
➢ Nocorrelationisobservedbetweenthe scoresofprimaryenergyconsumption intensityandtotalscores,andCASBEE rankdoesnotnecessarilyreflectenergy performancelevels.
➢ Newerbuildingsdonotnecessarilyhave higherenergyperformance.Evennewly constructedofficesthatobtainedrankS orAhavecaseswhereactualprimary energyconsumptionscoresareonly1-2 points.
InCASBEE-REscores, Energyuse/GHGemissions allocationis35pointsoutof100,with25pointsfor calculatedprimaryenergy/carbon intensity,5pointsfor measuredprimaryenergy/carbon intensity,and5points fornaturalenergyutilizationrate.Buildingswithout calculatedvaluescanbeevaluatedbymeasuredvalues, andmanyprojectsusemeasuredvaluesforevaluation.
CASBEE-REv.2024,whichreflectsrevisionstoenergy evaluationtocomply withtherevisedBuildingEnergy EfficiencyAct,hasbeenreleased, butmodificationsto measuredenergy useremainminorfromtheprevious version.
Fig.4ScoreDistributionofCASBEE-RE-CertifiedPropertiesbyCompletionYearRange
(II) Distribution of Primary Energy Consumption Intensity
Fig.5EnergyPerformanceofCASBEE-RE-CertifiedPropertiesand
Number of properties
The chart above shows how many CASBEE-RE-certified properties exist at each primary energy consumption intensity level, color-coded by floor area category The horizontal axis represents primary energy consumption intensity classes, and the vertical axis represents the number of properties in each class. Level classifications shown in the chart are set based on position in the frequency distribution of primary energy consumption intensity by building scale in the DECC building group (five levelsfromLevel5forthetop25%with lowintensitytoLevel1forthebottom10%with highintensity),withlowerintensityreceivinghigherevaluation
Source: JLL,IBECs
Energy performance assessment under CASBEE-RE tends to be Overstated
AnalysisResults
➢ 84%ofCASBEE-RE-certifiedproperties havehighlyevaluatedenergy consumptionintensityatLevel4orabove basedonDECCdata.
➢ However,Level4orabovedoesnotmean theydonotbemisalignedwithCRREM EnergyReductionPathway.ThisLevel classificationisarelativeevaluation basedonprimaryenergyconsumption intensityoftheDECCbuildings,andDECC containsenergyconsumptiondatain fiscalyear2017andearlierforbuildings constructedinfiscalyear2017andearlier, includingmanyolderbuildingswithhigh energyconsumptionintensity.
➢ Infact,whencomparingGHGemission intensityofCASBEE-RE-certified propertieswithCRREMDecarbonisation Pathway,asshownonthenextpage,80% ofpropertiesdeviatewithin1-2years.
Fig.5EnergyPerformanceofCASBEE-RE-CertifiedPropertiesandLevelBasedonDECC
Fig.6YearofdeviationandCASBEE-RECertificationranking
Fig.6PathwayMisalignmentYearforCASBEE-RE-CertifiedPropertiesby
By2026, 80%of rankApropertieswilldeviatefromthePathway
By2026, 60%of rankSpropertieswilldeviatefromthePathway
60% of S-ranked properties deviate from CRREM Pathway by
2026
AnalysisResults
➢ By2025,53%ofCASBEE-RE-certifiedoffices havealreadydeviatedfromCRREMPathway.
➢ By2026,60%ofS-rankedpropertiesand 80%ofA-rankedpropertieswilldeviatefrom thepathway,ifnomeasuresaretaken.
➢ EvenS-rankedpropertiesbegandeviating in2020,reachingsimilarlevelof cumulative%asA-rankedpropertieswith only1-2yearsdelay.
Energyperformance evaluationsofCASBEE-REisbased onDECCdatainfiscalyear2017andearlier,making evaluationresultstendtobehigh.Meanwhile,CRREMis updatedwithnewdataeveryfewyears,thusmany propertieswithhighCASBEE-REevaluationsstillbe misalignedwithCRREMPathways.
JLLrevealedinlastyear’sanalysisthat73%ofofficesin DECChadreachedtheirmisalignmentyearby2025,and theratiowouldreach80%in2026.
ManyofficesforwhichJLLhasconductedenergy diagnosticshavealreadybeenmisalignedwith CRREM Pathways.However, forpropertiesusingonlyelectricity asenergy sourcewithenergy-efficient equipmentsuch asheatpumpsinstalled,themisalignmentyeartendsto belater.
Conclusion
Whilegreenbuildingcertificationsaregaining momentum,therearesignificantconcerns aboutwhethercertifiedpropertiesaresuitable forESGinvestmentandwhethertheycarry climaterisks.ByanalyzinghowGHGemissions fromCASBEE-RE-certifiedofficesareevaluated basedonCRREMPathways,JLLfoundthat morethanhalfofthepropertieshadalready reachedtheyearofdeviationby2025,andby 2026,60%ofS-rankedand80%ofA-ranked propertieswillhavereachedtheiryearof deviation.
WhileadjustmentsmaybeneededtoCRREM’s somewhatoverlyidealisticapproach,Japan, laggingbehindtherestoftheworld,needsto improveenergyperformanceasquicklyas possible.Toproperlyevaluateenergy consumptionreductionefforts,systemsfor disclosingactualenergyconsumptionare expectedtobeestablished,andcurrent CASBEE-REisexpectedtoevolveintoasystem thatevaluatespropertiesbasedonmore stringentstandardslikeLEED,while maintainingitscomprehensivenessand convenience.
Researchauthors
HiroshiOkubo
HeadofResearch
Reserach
APAC/Japan
hiroshi.okubo@jll.com
TomomiKemmochi Senior Manager Research
APAC/Japan
tomomi.kemmochi@jll.com
TofindoutmoreaboutJLLservices,contact:
JinMatsumoto
HeadofESS
Energy andSustainabilityServices (ESS)
APAC/Japan
jin.matsumoto@jll.com
HayatoNishihiro
Director
Energy andSustainabilityServices (ESS)
APAC/Japan
hayato.nishihiro@jll.com
MakiWatanabe Director
Energy andSustainabilityServices (ESS)
APAC/Japan
maki.watanabe@jll.com
KanaeHaga
Manager
Energy andSustainabilityServices (ESS)
APAC/Japan
Kanae.haga@jll.com
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