Interview with Dr Victoria Taranu, Senior Researcher at BPIE 

 
Decarbonising buildings in line with the EU’s 2030 and 2050 climate and renewable energy targets requires mobilising private finance, including impact investing.  

As part of the H2020 project syn.ikia, BPIE led the development of the MBx tool – “MB” stands for Multiple Benefits of sustainable real estate projects, including renovations of existing buildings. It is the first tool of its kind to be freely available for investors and policymakers that uses evidence-based methods for investments in real estate projects to quantify social and environmental impacts.  

Victoria Taranu, Senior Researcher at BPIE and the syn.ikia project manager, tells us about the MBx tool and explains the importance of aligning finance with climate and energy policy goals to successfully decarbonise our buildings. 
 

What is the MBx tool and who is it for? 

The tool was created in direct response to policymakers and investors emphasising that a dedicated and robust method for internalising social and environmental externalities in cost-benefit analysis was missing.  

Sustainable projects in real estate include ambitious new developments and holistic renovations that aim for positive energy buildings and neighbourhoods. Even though both of these require higher upfront costs, they bring numerous long-term benefits to homeowners and wider society.  

While the current Environment, Social and Governance (ESG) Finance framework does encourage sustainable investments in real estate, investors, asset managers and policymakers need evidence-based and commonly accepted methodologies to assess the ESG aspects of projects. Available online for free, the MBx tool is designed to guide these and other stakeholders through investment decisions, delivering results that quantify social welfare, micro-economic and environmental co-benefits in monetary (€) terms. The Social Cost-Benefit Analysis (S-CBA) method centres around internalising externalities in comparing the return-on-investment of sustainable versus business-as-usual projects. Before MBx, no tool was incorporating these elements into cost-benefit calculations for real estate projects. 

In the context of energy efficiency, renewable energy and sustainable mobility investments, “multiple benefits” refers to non-energy related benefits for residents and society. These include health co-benefits, avoided costs in grid upgrades, increased property values, improved rentability of properties and lower vacancy costs. For example, health co-benefits are related to lower rates of respiratory or circulatory illnesses, resulting in lower private and public expenditure in healthcare.  

Broadly, the tool compares different levels of ambition of a sustainable project against business-as-usual scenarios and assesses whether the long-term benefits outweigh the costs.  
 

What is the neighbourhood approach and why does it matter? 

The MBx tool can be used for individual buildings, as well as neighbourhood renovations and new developments. The neighbourhood approach can be a means to achieve climate, energy and social policy goals by finding place-based solutions that fit the local socio-economic context. Results include decarbonisation of the building stock, deployment of renewables and electrification of heating, demand side management and flexibility, circularity in the construction sector, energy poverty alleviation and climate adaptation – all at a far larger scale than would be achieved at the scale of individual buildings.  

This holistic approach integrates building with neighbourhood infrastructure and sustainable mobility. Tackling climate mitigation, adaptation and urban regeneration in this multi-faceted way avoids lock-in effects (short-term measures that create long-term barriers for subsequent steps in those processes), optimises the financial and human resources needed for otherwise repeated single interventions. This also aligns seamlessly with the Renovation Wave’s call for an integrated, participatory and neighbourhood-centred approach. 

It’s important to keep the scale and scope of neighbourhood projects in mind: they require investments in private, commercial and public energy renovations of buildings, as well as shared renewable energy and flexibility assets, sustainable mobility, alongside infrastructure upgrades, greenery, accessibility of public spaces and urban regeneration. Configuring the solutions and the ambition level of such projects is place-based and must answer wider policy objectives such as trajectories for implementing progressive renovation (EPBD), local heating and cooling plans (Energy Efficiency Directive) and renewable acceleration areas (Renewable Energy Directive). 

Compared to single apartment buildings or houses, neighbourhood-wide renovations provide a range of communal spaces, services and facilities, such as shared heat pumps, solar PV panels, heat and electric storage, and electric vehicle charging stations. These additional benefits to demand-side flexibility are possible due to the aggregation of energy storage and integrated energy management, which ultimately generate greater energy savings and economic benefits for individual homeowners.  

Additionally, the integrated energy management is optimised by complementary use patterns of residential, commercial and public buildings, resulting in lower energy demand. Besides shared investments in energy assets, neighbours can benefit from shared services, such as rental of electric vehicles, electric bicycles, and common spaces with greenery, water and biodiversity.  

So, while holistic district renovations are more costly in the short term, they generate substantial long-term economic, social, and environmental benefits. To make these projects more financially viable and scalable, there is a growing need to reduce reliance on public funding and actively leverage private finance, ensuring broader and more sustainable investment in the transition to climate-neutral neighbourhoods. The MBx tool provides evidence-based methods to help investors identify these kinds of ESG investment opportunities, and future-proof real estate assets and neighbourhoods.  
 

What was BPIE’s role in bringing the tool to life?  

BPIE, including our former research colleague Zuhaib Batra, led the theoretical conceptualisation on the multiple benefit framework within the syn.ikia project, as well as the translation of it into a user-friendly web-based calculation tool. IREC and ABUD contributed to the theoretical framework, and Niki Gaitani from NTNU was the project coordinator. 

The novelty of the tool lies in two aspects:  

Firstly, as already mentioned, it shifts from an individual to a neighbourhood level approach. Previous studies of co-benefits of energy efficiency focused on building renovation, while the MBx can be used both for building and neighbourhood interventions. This means it includes, for example, the health co-benefits of sustainable mobility.  

Another novelty lies in the monetisation of the multiple benefits of sustainable real estate, to be used in cost-benefit analyses. This requires translating the theoretical framework of co-benefits into a practical decision-making tool to support investments and policymaking. This approach is fundamental for investors managing, for example, pension or ESG funds, as these prioritise an impact return rather than a financial return.  

How do you see the MBx tool evolving? What’s next for empowering investment in truly sustainable real estate? 

The current version of the MBx tool quantifies climate mitigation measures, such as building energy efficiency, renewable energy and sustainable mobility. The tool could be further developed to assess the multiple benefits of climate adaptation measures, for example, the health co-benefits of nature-based solutions against extreme heat in urban areas. 

Another important aspect for the financial sector is the quantification of climate risks and the avoided costs resulting from climate hazards if adaptation measures are implemented in a timely manner. BPIE is currently working on a framework that integrates the co-benefits of both climate mitigation and adaptation measures, as well as their synergies, at the neighbourhood scale.