Advancing Climate-Aligned Real Estate Valuation in Canada: From Research to Market Readiness
For the past two years, Affine Climate Solutions has been working alongside five Canadian financial institutions through the Banking on Buildings Program to answer a critical question:
How do we create stronger financial incentives for climate-aligned buildings?
As financial institutions explore ways to support energy efficiency, emissions reductions, and building resilience through their lending and investment activities, one challenge has surfaced repeatedly: if climate-aligned building performance is not reflected in valuation practices, it becomes difficult to consistently recognize those benefits within financial decision-making. Advancing sustainable valuation could help create the conditions needed for preferential financing and other market incentives by better linking building performance to financial value.
While building owners are increasingly investing in sustainability measures, the Canadian valuation system has not yet fully evolved to account for the risks and opportunities associated with the transition to a low-carbon economy.
Recognizing this gap, Affine set out to better understand the role financial institutions can play in advancing sustainable valuation in Canada. Through research and expert engagement, we assessed international approaches to sustainable valuation, barriers in the Canadian market, and practical pathways for moving the industry forward.
This work culminated in two important milestones:
The release of our report, Advancing Climate-Aligned Real Estate Valuation in Canada: Pathways to Action Based Upon Market Signals and International Insights.
An industry workshop held on April 15, 2026, hosted by RBC, which brought together more than 70 stakeholders from across the real estate finance ecosystem.
Together, the research and workshop provide a clearer picture of where the Canadian market stands today—and what it will take to move sustainable valuation from concept to practice.
Why valuation matters
Valuation influences lending decisions, investment strategies, risk management practices, and capital allocation across the real estate sector.
As climate-related risks become more material, valuation is increasingly viewed as a mechanism for translating building performance into financial value. International evidence suggests that sustainability characteristics can influence operating costs, tenant demand, resilience, and exposure to future transition risks. At the same time, inefficient assets may face growing risks related to obsolescence, rising costs, and declining competitiveness.
Yet Canadian valuation practices remain largely dependent on historical market evidence, making it difficult to consistently assess emerging climate-related risks and opportunities.
What we learned
Our research examined sustainable valuation approaches in jurisdictions including the United Kingdom, Europe, Australia, and the United States.
A key finding was that sustainable valuation does not require entirely new valuation methodologies. Instead, it involves improving existing approaches to better account for factors that increasingly affect asset performance and risk.
The research identified four key conditions required to support sustainable valuation adoption in Canada:
Strong market demand from lenders, investors, and building owners.
Reliable, comparable, and accessible building performance data.
Practical integration into existing valuation processes.
Standards, guidance, and training for valuators.
These findings suggest that sustainable valuation is as much a market transformation challenge as it is a technical one.
Insights from financial institutions and industry stakeholders
Throughout the Banking on Buildings Program and the April workshop, participants consistently identified valuation as a critical link between building performance and financing outcomes.
Without valuation processes that recognize climate-related risks and opportunities, lenders face challenges in demonstrating the long-term financial benefits of climate-aligned assets. This can limit the effectiveness of preferential financing products and reduce incentives for building owners to invest in performance improvements.
Workshop participants also emphasized that value may emerge more clearly through the avoidance of downside risk than through immediate pricing premiums. Protecting against future obsolescence, vacancy pressures, rising operating costs, and regulatory exposure was viewed as a significant driver of value preservation.
While barriers remain, the discussions revealed growing momentum and broad support for a phased approach that allows sustainable valuation practices to evolve alongside improving data, benchmarking requirements, and industry capacity.
What happens next
One of the clearest conclusions from both the research and workshop is that Canada is entering a market preparation phase.
The industry increasingly understands the need for climate-aligned valuation, but widespread implementation will require collaboration among lenders, valuators, building owners, regulators, and industry associations. Progress will depend on creating market demand, strengthening data infrastructure, building industry capacity, and developing practical frameworks that can be integrated into existing valuation practices.
Through the Banking on Buildings Program, Affine will continue working with financial institutions and industry partners to support this transition and advance practical pathways for sustainable valuation adoption in Canada.
As climate considerations become increasingly relevant to asset performance and financial decision-making, sustainable valuation represents an important opportunity to improve risk pricing, strengthen market transparency, and help unlock investment in high-performing, climate-aligned buildings.
Read the Advancing Climate-Aligned Real Estate Valuation in Canada report