Investing in Green Buildings : How sustainability factors influence investment decisions in the European real estate market?

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Investing in Green Buildings

How sustainability factors influence investment decisions in the European real

estate market?

BACHELOR THESIS

THESIS WITHIN: Business Administration NUMBER OF CREDITS: 15 ECTS

PROGRAMME OF STUDY: International Management & Marketing Management AUTHORS: Seyedamirhossein Alavidehkordi, Saara Emilia Rautio, Matei-Andrei Stancu TUTOR: Jasna Pocek

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Bachelor Thesis in Business Administration

Title: Investing in Green Building - How sustainability factors influence investment decisions in the European real estate market

Authors: Seyedamirhossein Alavidehkordi, Saara Emilia Rautio, Matei-Andrei Stancu

Tutor: Jasna Pocek

Date: 2021-05-24

Key terms: Green Building, Sustainability Factors, European Real Estate Market, BREEAM, LEED, Property Certifications

Abstract

Background: The concept of sustainability has been applied to almost all industries and business areas in recent decades. Many researchers and journalists have addressed the importance of sustainability in real estate and construction. Not only have numerous countries adopted sustainable construction techniques and begun using green building materials, but it has also become increasingly important to have sustainable facility

management, sustainable real estate valuation techniques, and a significant movement toward sustainable real estate investments on the investment side.

Purpose: Many real estate companies in Finland, Romania, and Sweden are interested in investing in "green" buildings. The purpose of this study was to find out what is driving these investments, whether it is investors' personal consciousness, the overall market trend, or the premium that they would earn from investing in green building. The main focus was set especially on the certification market and whether these sustainability factors add value to the investment. The aim was to better understand the reasons for investing in green real estate and look further into the difference in value between certified sustainable real estate and how it affects investment decisions.

Method: The following thesis was conducted by qualitative research with an inductive approach to gain a deeper understanding of companies' motivations for investing in green building. Semi-structured interviews with seven industry professionals were obtained within the European real estate sector.

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Conclusion: According to the research, real estate investors in the European market are most interested in buying green buildings because of their potential to generate higher income and the buildings' own sustainability. The main premium they expect from such investments is lower life cycle costs and better returns on investment. Both the literature review and empirical research confirmed this conclusion.

Acknowledgement

The researchers would like to express their gratitude to everyone involved in writing this thesis; without you, this research would not have been possible.

First and foremost, a special thank you to our tutor Jasna Pocek who guided us throughout the research process. Her expertise and feedback provided us a lot of useful insight and tips that helped us transform the thesis into its final form.

Secondly, a big thank you to all of our interviewees who contributed their time and

knowledge to our research during these rather strange times. Without their valuable insights, this research would never have been possible.

Thirdly, we would like to thank the opposing groups for challenging us with valuable discussions and providing constructive feedback during the seminars.

Lastly, the researchers would like to express their gratitude to all lecturers who led workshops on thesis writing and other related topics, as their contributions were precious and helpful throughout the process.

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Green building is the practice of creating structures and using environmentally responsible and resource-efficient processes throughout a building's life-cycle in design, construction, operation, maintenance, renovation, and deconstruction. The classical building design issues of economy, utility, durability, and comfort are expanded and complemented by this practice. Green buildings are designed to reduce the overall effect of the built environment on human health and the natural environment by efficiently utilizing energy, water, and other resources and reducing waste, pollution, and environmental degradation. A sustainable or

high-performance building is also known as a green building. (U.S. Environmental Protection Agency 2010)

BREEAM

BREEAM is the world's first environmental assessment method and rating system for

buildings, launched in 1990. A BREEAM assessment uses recognized performance measures, set against established benchmarks, to evaluate a building's specification, design,

construction, and use. The measures used represent a broad range of categories and criteria from energy to ecology. They include aspects related to energy and water use, the internal environment (health and well-being), pollution, transport, materials, waste, ecology, and management processes. BREEAM Europe has six different rating levels: Unclassified, Pass, Good, Very good, Excellent, and Outstanding (BREEAM, 2021).

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LEED

LEED, or Leadership in Energy and Environmental Design, is an internationally- recognized green building certification system. It was developed by the U.S. Green Building Council (USGBC) in March 2000. It provides building owners and operators with a framework for identifying and implementing practical and measurable green building design, construction, operations, and maintenance solutions. LEED promotes sustainable building and

development practices through a suite of rating systems that recognize projects that implement better environmental and health performance strategies. LEED 2009 has four different levels of certifications which are Certified, Silver, Gold, and Platinum. (U.S. Green Building Council 2011)

Zero energy building

A zero-energy building is a residential or commercial structure that uses almost no energy. The net-zero building generates as much electricity as it uses over the course of a year. Performance gains are matched with energy needs met using renewable energy technologies in such a building.

Investor

In this research an investor refers to a property owner or companies who own the properties.

Introduction

1.1. Background

In 2015, 195 countries announced their intention to ratify the Paris Agreement and retain global warming well below 2 degrees Celsius compared to pre-industrial levels (UNFCCC, 2015). Despite stated political will and scientific consensus, currently announced nationally

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agreed contributions under the Paris Agreement are expected to result in a global temperature increase of 2.7-3.7 degrees Celsius (Dagnet et al. 2016). This becoming a reality, the effects on global natural systems and livelihoods would be detrimental (IPCC, 2014). One of the most common ways to achieve the target is to reduce Greenhouse Gas (GHG) emissions by enacting appropriate policies (OECD, 2003). On the other hand, climate issues may be approached by motivating investors to engage in more sustainable and "green'' investment projects. A rapid transformation of the built environment will be crucial to changing this trajectory. In the coming years, this green transformation would necessitate massive infrastructure investments worldwide, driving the construction of green buildings (OECD, 2017a, p 18).

Experts and institutional investors are increasingly regarding Green building investment as a tool for mitigating environmental effects and achieving energy efficiency, emissions

reduction, and corporate social responsibility in the ongoing debate on global climate change (Miller et al. 2010; Chequt & Eichholtz 2013:1-22; Aliagha et al. 2013;3(11):471-8; Kok, 2014). The growing evidence that the building sector is a major consumer of resources and energy, accounting for about 44 percent of society's total material usage and a significant proportion of more than 50 percent of primary resources, drives the change to green building (Nelms et al. 2005). Accordingly, green buildings are often referred to as healthy, safe, comfortable, and environmentally sustainable buildings, therefore promoting the green building concept to become a primary theme of modern construction (Darko & Chan, 2016). Green building concept being established in the construction world, The Building Research Establishment's Environmental Assessment Method (BREEAM) was created in 1990 to evaluate buildings in a more detailed and comprehensive manner (BREEAM, 2021).

Additional green building ranking tools, such as the Leadership in Environmental and Energy Design Leadership (LEED), were created due to this. According to Doan et al. (2017),

BREEAM is currently the most dominant rating system. Furthermore, these rating tools assess green buildings using a variety of criteria. Green rating systems typically concentrate on criteria such as indoor environment quality, energy, and material (Doan et al., 2017;

Illankoon et al., 2017). Nonetheless, most of these green building rating tools assess buildings in two phases. One phase is when the building is being designed and the other when the building is being used.

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In this research, the focus is on investing in Green Building in the European market. The topic will be discovered from the investor's perspective, and the different sustainability factors' influence on investment decisions will further be explored in the following sections of this research. Emphasis will be placed on the drivers of the green investments, whether it is investors' personal consciousness, the overall market trend, or the premium that they would earn from investing in green building. The main focus will be set especially on the

certification market and whether these sustainability factors add value to the investment. The aim is to better understand the reasons for investing in green real estate and look further into the difference in value between certified sustainable real estate and how it affects investment decisions. The research is conducted by inductive approach, and semi-structured interviews have been held in order to compare the literature review on empirical findings.

1.2. Problem

Green buildings are becoming increasingly common in the commercial real estate sector. For a variety of factors, both occupiers and investors are becoming increasingly involved in sustainable real estate. To begin with, several companies are attempting to pursue a pattern of socially responsible investments, with the primary motivation being environmental and sustainability concerns (Pivo, 2005; Berry and Junkus, 2012). Other factors, such as the willingness of companies to choose “green” buildings, can affect their behavior.

In many previous research, it has been recognized that how the different sustainability factors influence the investment decisions in green buildings has been understudied. Accordingly, the key reasons that are increasing the overall value of green buildings as an investment should be further evaluated. The gap was found to be in the investor’s perception of different

certification levels and whether they are willing to invest money into buildings with different certification levels (Ding et al., 2018).

1.3. Purpose

The purpose of this study is to find out what is driving the investments in green building, whether it is investors' personal consciousness, the overall market trend, or the premium that

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they would earn from investing in green building. The main focus was set especially on the certification market and whether these sustainability factors add value to the investment. The aim was to better understand the reasons for investing in green real estate and look further into the difference in value between certified sustainable real estate and how it affects investment decisions.

1.4. Research questions

Research questions have been designed to guide the research in order to achieve the research goal. The following are the research questions:

RQ1: How sustainability factors influence investment decisions in European real estate market?

RQ2: What are the key reasons that are increasing the overall value of green buildings as an investment?

RQ2.1: What are the benefits of investing in sustainable real estate/ green buildings for an investor?

RQ2.2: In what ways certificates affect the overall value of sustainable real estate investments.

1.5. Scope of the research

In this thesis, the focus will be on direct, green real estate investments. Instead of indirect investments, the direct investments were only considered since they necessitated a greater level of involvement from companies in the physical characteristics of the building. The geographical scope of this study will be limited to a few European countries. The countries from the empirical data will be gathered are Finland, Romania, and Sweden. Interviews with foreign and domestic real estate actors who work in the countries in question form the basis of the empirical research.

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In this study, the terms "sustainable" and "green," as well as terms "investor" and "property owner," are used interchangeably.

1.6 Structure of the Report

This thesis is divided into three parts. Each segment represents a distinct stage in

investigating the most important sustainability factors in the real estate and green building sector. An introductory section, an empirical section, and a discussion section make up all three parts.

The introductory section informs the reader about the importance of this research and depicts current issues in the real estate industry. The history of the topic, the research methodology, and the literature review are all included in this section. The study begins by explaining the context for potential events, but the literature review of recent publications provides a more detailed image of the research goal. The literature review takes the reader on a

straightforward path from sustainability to investing in green building, ensuring that they understand the factors affecting the investments in green real estate. This section also includes the research problem, aim, scope, and structure.

The empirical study of this research is the second phase. All interviews are extensively reviewed to provide definitive responses to specific research questions. Finally, the issues posed during the interviews are studied and compared to the literature reviewed. The conclusion of the research and main findings are also included. The validity of the research data and procedures and guidelines for future research are discussed at the conclusion of this thesis.

2. Frame of reference

The frame of reference begins with the method of constructing the frame of reference.

Thereafter, sustainability and investing in green building's overall aspects are presented. The frame of reference concludes with an explanation of the current criticism of the existing body of research and the identified gaps.

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2.1 Method of constructing the frame of reference

The sources for this analysis were deliberately chosen for their publicity value, importance, reputation, and trustworthiness. Primarily, the most fundamental hypotheses have been chosen based on their inclusion in the ABS Journal 2018, which is a journal ranked for its content and relevance in terms of effects. The journals are ranked from 1 to 4, with 4 being the highest. The majority of the publications used in this study are ranked between third and fourth. Additional secondary data points include Primo and Google Scholar, where the majority of publications have been peer-reviewed to ensure their high validity. In terms of publication importance, the authors attempted to use recently published papers wherever possible; but, in some situations, older articles were still used because they were deemed important and few newer studies in the same topic were discovered. To ensure the reliability of the slightly older references, the authors verified that they had been quoted several times and that the authors were known. In order to find relevant articles this study uses these keywords: Real Estate, Sustainability, Green Buildings, Investing in Greenbuilding, Building certifications in European market, BREEAM, LEED, Real estate rating.

2.2 Real estate market

Real estate is usually referred to as land coupled with any other tangible improvements that are installed upon it according to the Association of the Bar of the City of New York (2017). Improvements include man-made objects such as buildings, roads, fences, etc. Unimproved real estate refers to vacant land (Association of the Bar of the City of New York, 2017). A market is a mechanism through which goods and services are voluntarily exchanged among different owners (Miller et al, 2007). In a 2018 study, Gaca defines the real estate market as unique, due to its qualities that distinguish it from other goods. These characteristics are complexity, stability in place, durability, and diversity. (Gaca, 2018)

The real estate market can be divided into 2 sections, the commercial real estate (CRE) and the residential real estate (RRE). As the name suggests, commercial real estate refers to property that is used by businesses for business-related purposes while residential real estate’s main purpose is to provide a living space. In their 2017 study, Dierick and Point note that

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there are serious definitional problems of data scarcity and data comparability for the commercial real estate sector compared to the residential one. In order to tackle the

classification issue, they provide a categorization in the form of a decisional tree as can be seen in the figure below:

Figure 1: Decisional Tree Residential Real Estate/Commercial Real Estate Source: Dierick, F. & Point, E. (2017)

2.2.1 Sustainable real estate in a relation to global trends

Over the past decades, sustainability and socially responsible activities generally have been successfully combined into corporate strategies and deliberated now as a value-driver for companies in the long run (Caiias & Bienert, 2011). There is no exception for the real estate industry trend for going green; according to Nelson (2008), due to the globalization of the property market and increasing popularity among global investors, green building and paying attention to sustainable activities have become a worldwide trend.

According to Ionascu et al. (2020), we have to know that the real estate industry consumes more than forty per cent of the global energy annually and produces more than twenty

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percent greenhouse gas from its buildings. In addition to these numbers, we have to address that the real estate sector uses forty per cent of raw materials globally and generates

twenty-five per cent of the solid waste. Therefore, sustainability is a real challenge for companies in the real estate market and becomes a core activity among construction and green buildings in the industry. In the case of Europe, Caiias et al. (2012) stated that real estate sectors in Europe generate thirty-five per cent greenhouse emissions and consume forty-five per cent of the energy.

Although the trend in green building and sustainable activities in the real estate market has been increasing in the last few decades, a gap can be seen between sustainable activities and acting towards sustainability. This gap is recognized since there is a lack in the strategy, culture, and tools needed to turn promises into actual actions among the industry players (Ionascu et al., 2020).

2.2.2 Core drivers in the sustainable property market

As we mentioned before, the real estate sector caused the vast majority of the greenhouse gas emissions and consumed many natural resources (Holness, 2009). Additionally, Nelson (2008) argued that globalization and ease in the flow of information had increased the awareness of the environmental impacts of the real estate industry among the public. He argued that although the environmental forces' impact does not play a significant role in forcing the industry to shift towards sustainability, this awareness has increased the demand from the public to increase investment in sustainable constructions and buildings generally. The other primary driver in the sustainable property market is governments where it can directly impact the market by three primary techniques. These techniques, according to Nelson (2008), are:

● “regulation of what buildings can be constructed and how they are to be managed – typically, promulgated through building codes or via the light of transparency, by requiring building owners to post energy or other environmental performance scores.

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● taxation and environmental regulation that alters market dynamics – by raising the cost of inefficiency through taxes, an emission trading system or subsidizing moves to more sustainable buildings; and,

● the occupancy and construction of their own facilities – which can set market

standards since in most countries the federal government represents the single largest tenant and developer." (p.8)

Nelson (2008) also argued that governments could indirectly influence the actual state market by increasing the public's awareness about the benefits of sustainability in the property sectors.

Another key driver to push companies in the actual state sector to shift sustainability is tenants and demand from customers. Darko et al. (2017) argued that besides the cost limitation, customers and the public would influence the real estate market to practice sustainability in their projects if the public becomes more aware of the benefits and see the bigger picture of sustainable actions long term. According to Darko et al. (2017), education and better information flow play a significant role in increasing public awareness and rising consumer demand.

2.2.3 Key drivers in sustainable real estate

In the literature review study conducted by Falkenbach, Lindholm and Schleich (2010), a framework of key drivers was identified. In this study, key drivers are divided into three categories which are external level drivers, corporate level drivers and property level drivers. Each driver explained separately, and they have found only one key driver in the corporate level which is image benefits.

External drivers discussed at the international level were the Kyoto Protocol and the UN Principles for Responsible Investment are the most important global initiatives. Additionally, much national legislation is directed at home energy efficiency, CO2 elimination, and waste management. The rules put a heavy burden on taxpayers, affecting all stakeholders. Other than policies, many countries are adopting green building incentives. This also requires subsidies for refurbishing old stock, as well as tax exemptions for green developments, including the LEED certification for Arlington's Green Building Incentive Program (Falkenbach et al. 2010)

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One main corporation-level engine could be seen in the image benefits. Recognizing that sustainability has been a major issue for industry and the environment causes good reputation benefits for the company. Newell's (2008) study examines property corporations' approaches to sustainability. He learns that companies will show their commitment to the environment and society by producing corporate social responsibility and carbon disclosure reports. According to Newell (2008), sustainability efforts allow property companies to stand out as leaders in the sustainability revolution. He states that leading real estate companies actively promote their environmental stewardship, thereby being able to attract substantial media interest. Sustainable property companies additionally benefited from inclusion in global sustainability indices.

At the property level perspective, To make a business case for sustainable buildings, it is essential to have credible data on their effect on economic cash flows. Thus, when assessing the economic factors of sustainability, the rent premium associated with renewable or accredited assets is a critical factor to consider (Falkenbach et al. 2010).

Apart from leasing rates, reduced maintenance costs are seen as a factor in supporting sustainable buildings. While advancements in sustainable real estate, there are relatively few researches examining the impact of sustainability on operating expenses (Falkenbach et al. 2010).

The probability of an investment can be affected by a number of factors. Reduced costs in sustainable buildings are also addressed in terms of reduced chance of obsolescence or vacancy. Reduced obsolescence or future-proofing versus the risks associated with non-green buildings being more common. According to regulations and customer demands,

uncertainties arise in all sorts of ways, such as increased cost of retrofitting non-sustainable homes, as well as increased cost of reduced targets and increased penalties for greenhouse gas emissions and electricity consumption (Falkenbach et al. 2010).

2.2.4 Factors limiting the sustainable property investment

Even though the sustainable property market has seen unprecedented growth and has been a growing trend of the past decades, there are still shortcomings that limit Sustainable Property Investment, thus making the sustainable business suffer.

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In a study penned by Nelson (2010), he identifies five different limiting factors that can limit the growth and fast adoption of green buildings.

1. Lack of comprehensive and transparent operating and transaction data needed to form the basis in real estate investment decision making

2. A lack of universal standards for green building

3. The agency problem, that shows the misalignment between owner costs and tenant benefits

4. The issue between current costs and future benefits 5. Longer earn-back period of green improvements

These limiting factors can be attributed to limiting the sustainable property investment along with other factors such as high transaction costs, information knowledge, gaps in belief, insufficient participation by international organizations, a high cost to integrate clean energy sources, regulatory risk, unclear intellectual property, etc (Hoen, 2014).

According to a study by Tran, Thi & Do, Nhung & Vu, Thi & Do, Nguyen. (2020), the most significant difficulty is access to capital for green investment projects and identifying the government as a key player in this issue. This limiting factor along with the other several ones identified and due to the challenges imposed by the market participants (such as, but not limited to: the government, investors, financial intermediaries) still impede green investment options.

A need for better policy making was identified constantly among the literature, and Yang & Yang (2015) survey that analyzed sustainable housing in Australia identified it as a main issue affecting sustainable investing among the respondents of their survey.

Duong and Trang (2019) argue that five motivations affect more than 60% of the green investment decision process. With the key motivator being Competition in the Market, the other four are Scarcity of Fuel, New Government Regulations, Smart Technology and Knowledge and Innovation.

2.2.5 The risks of not investing in green

For a high-growth market such as the real estate market, fast adoption of new strategies and techniques can play a major role in a company’s survival. The immediateness that

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sustainability imposes is no stranger to fast adoption and is not an exception within the property market. A multitude of risks can be identified for investors not adopting green building as identified by Nelson (2008). Such risks are of environmental, market and regulatory nature and are due to grow in significance with the passing of time. For the environmental nature, risks of using outdated building techniques can result in property damage due to the ever-changing climate that the planet is currently facing. Natural calamities are no longer freak occurrences and can pose major risks to buildings. As time goes by, more and more governments adopt harsh regulatory measures in order to encourage green building, thus, a regulatory risk arises from not adopting sustainable building practices and designs. The market risks may be one of the most obvious issues encountered, rising green standards risk making non-green buildings obsolete, as more and more of the market trends in the way of sustainability. Higher costs of operating as well as the stigma that a lack of sustainable infrastructure brings can deter potential clients away from non-sustainable properties. (CB Richard Ellis 2009; Nelson 2008)

Steadily increasing energy prices coupled with rapid growth of demand have caused the European market to turn to energy efficient properties and sustainable building practices. This growth can be observed in the graph inserted below, which displays the growth of both

energy and gas prices in the United Kingdom for a period of 10 years.

Figure 2: 10 Year Power and Gas Domestic Price Index & long term trend* (According to 2013 data from British Gas, SSE & NPower; Guy Thompson 2013)

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The inability of certain investors to adapt to the new standards is one of the highest risks faced and a lack of vision can harm adoption in local markets and slow down development of key sustainable infrastructure. (Nelson, 2008)

2.2.6 Radical green

The term “Radical Green” is relatively new and refers to the emerging trend of “second generation green buildings”, these buildings should “provide significant improvements on today’s first generation green buildings” (Kibert & Grosskopf, 2006). Kibert and Grosskopf (2006) note that current green buildings are less integrated with the ecological system as the new radical green buildings create a synergistic relationship between human and natural environments.

In Finland, the Swedish building company Skanska has been observing the transition to green buildings and has chosen to classify buildings through different shades of green. The lightest green simply meets government standards and doesn’t implement additional measures. The slightly deeper green tackles standards for energy, water, material and carbon emission but

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from a wider perspective than what it is asked for, going the extra step to ensure its sustainability. The darkest shade of green goes beyond the mentioned regulations and is planned with the future in mind, as this type of building is the most “future-proof” type of building, allowing for sustainable criteria such as : zero net consumption of primary energy, zero level of construction waste, eco-friendly materials, minimizing the use of clean water (Nousiainen 2011).

Due to the current economic and social unrest, growing concerns about rising energy prices, and increased incentives by governments to build sustainably, the concept of “Net Zero Energy Buildings” has seen a powerful increase over the last decade (Steven Winter Associates, 2016). A 2017 study by the US Office of Energy Efficiency & Renewable Energy has found that the biggest energy consumers are buildings. (US Office of Energy Efficiency & Renewable Energy, 2017)

Net zero energy buildings are the answer of the real estate industry to the growing energy prices and the sustainability movement & the public pressure it comes with. In short, a net zero energy building is a building that has an energy utility bill of $0 over the course of a year, however, other metrics such as net zero site energy or net zero source energy can come into play.

These types of buildings are a first step towards next-generation green buildings. A net zero building has a much lower environmental impact than traditional, “first-generation green buildings” through the use of sustainable design and efficient building ways.

A radical green building does not only incorporate the ecological aspect but also the social one. People have to want to work and occupy such a space and the synergy mentioned above is crucial to this aspect. The key to creating a radical green building is to allow for a natural inclusion of the social aspect while respecting the ecological one (Steven Winter Associates, 2016).

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2.2.7 The future of the sustainable values

In order to be able to understand where the future of sustainable values is heading we have to look back on how sustainability has grown into the global trend that we are now so aware of and why it has been such a defining movement for the last decades.

One defining decision that has helped contribute to the diffusion of the world “sustainable” worldwide, has been the adoption of the UN’s sustainable development goals (Bastianoni et al, 2019).

SDGs in their recent form are a universal set of goals, targets and indicators that UN member states will use to frame their agendas and policies over the next 15 years. SDGs follow, and expand on, the Millennium development goals (MDGs), which were agreed by governments in 2000 (Hák et al, 2016).

These targets together with their promotion by widely known companies such as Coca-Cola, GAP, GE, Nike, etc. are some of the most recognizable elements of the sustainability

movement and have been one of the main motors of the trend. (Nelson J, 2017)

One of the key questions that has arisen from the sustainability movement is how this trend can affect business. Differing beliefs on this can sometimes conflict between members of different organizations, however, a common ground was found in a survey in which 502 managers from nine different companies in five distinct sectors (FMCGs, chemicals, telecommunications, aerospace, and electric utilities) took part, which was conducted

between 2007 and 2009. The question that was asked in the survey was “How would you say most managers in your company think about sustainability and corporate social responsibility (CSR)?” and the common ground that was found was that no single meaning of

CSR/sustainability predominates. (Laszlo, C. and Cooperrider, D.L., 2010)

In business, creating sustainable value is, for the purpose of this part, the dynamic state that occurs when an organization creates value for both its stakeholders and shareholders.

(Freeman, 1984). Due to the situation of today’s marketplace, in which public expectation for human health and health of the environment is at an all-time high (Huang et al, 2010)

companies which understand the value of creating sustainable value are seen as creating competitive advantage. Those with the knowledge and competencies to create sustainable value are finding more loyal customers, a greater ability to hire and retain talent (Glavas, 2009), better media coverage, stronger partnerships with nongovernmental organizations

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(NGOs), and regulators who are more willing to collaborate in shaping industry standards (Laszlo, 2008).

2.3 Green building

Before the global financial crisis in 2008, green building was a trend among companies; the green building market increased but mainly because of the demand for "greenwashing" among companies where companies exaggerated their environmental practices to gain profit (Nelson, 2010). Due to the financial crisis and collapse in the economy, particularly in the real estate market, the green movement among companies and investors dropped

dramatically. Christensen (2017) argued that the financial crisis in 2008 created an era in which stakeholders saw sustainable practices with skepticism and forced companies to no longer see sustainability as a social good. Instead, stakeholders expected companies to see sustainability as a positive impact on their financial bottom-line. As recovery started, more and more companies realized the importance of their environmental footprints in the market and started to practice green activities in the market and saw the marketing opportunity from the profitability point of view since the demand for the green building had raised (Nelson, 2010).

Since the market recovery, environmental and energy issues have received greater attention from the public and society as urbanization has developed (Si, 2016; Zhang, 2017).

Accordingly, it is seen to promote buildings that are healthy, safe, comfortable, and

environmentally sustainable; the promotion and implementation of the green building concept have become a primary theme of modern construction (Darko et al., 2016). Differences in economic development, geographical surroundings, resource availability, and other factors have made it difficult for academics to have a mutual definition of green buildings in the literature (Hwang et al., 2012). Within the literature, “green building” & “sustainable

building” are distinguished based on the idea that “sustainable building” is a concept focusing on higher urban planning and offering creative, functional technical quality (Schumann, 2010, according to Lutzendorf and Lorenz 2007/2008, p.60).

Green buildings are difficult to describe since the term is still evolving and a variety of viewpoints exist. The World Green Building Council (WorldGBC) is a global network of

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green building councils with over 70 member countries. It claims that different countries and regions have different characteristics, such as history, culture, traditions, diverse climate conditions, various building styles and ages, and environmental, economic, and social

priorities, all of which influence GB methods (WGBC, 2018). Though the green building has, in recent years, been better determined as a technology (Darko et al., 2016) and certificates have been advancing the trend of green buildings, more and more developers have started focusing on how to be able to create value for their customers.

A need for commonly recognized specific features of green buildings has arisen from the globalization of the industry and the exponential growth of the sustainability movement; thus, in 2008, Nelson gathered the main features of a green building, with the thoughts of

McCartney (2007). These main features are an attempt at creating a foundation of criteria that can be commonly recognized globally and that can help classify a building as a “green

building.” It is important to note, however, that due to the unicity of the real estate market, it is unlikely that two buildings will have the same features. This issue is tackled by certificates such as LEED & BREEAM on which we are going to take a closer look at in the coming chapters.

The main features recognized by Nelson (2008) are illustrated in the following table.

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2.3.1 Investing in Green Building

Environmental issues are becoming much more influential and critical to business strategies. As a society, people expect businesses to take on more environmental and social

responsibility. Companies can produce economic returns or competitive advantages by taking a few simple steps to protect the environment. However, only a few companies in each industry can convert environmental investments into competitive advantages (Jørgensen S., 2019).

For a long time, academics, managers, and the general public have been fascinated by the possibility that businesses will benefit from environmental investments, or as Orsato, R. 2006 describes it, "the win-win hypothesis." Academics have been looking for correlations

between environmental investments and business variables like market share and stock prices for a long time. They have also shown that there is a business case for sustainability.

Investing in green buildings benefits not only the environment but the stakeholders (Orsato, R. 2006). According to Kolbe et al. (2013) and Geltner et al. (2006), the first step in this process is to estimate future cash flows from the investment since the purpose of investment is to profit from a real estate's ability to generate profits. Adjustment "for timing differences among expected streams of benefits flowing from investment alternatives" is the next phase they address (Kolbe et al., 2013:13). Investors place a higher value on assets that can generate income sooner than other assets. The asset's level of risk is determined as the final major step in the decision-making process. The lower the value of a property, the more alienated the return on investment is from the investment decision as it becomes riskier. Since most investors are risk-averse, they expect a higher final return on a riskier asset (Kolbe et al., 2013; Geltner et al., 2006).

A growing number of companies are focusing on "green" real estate (Geiger et al., 2013, Temmink, 2010, Nappi-Choulet and Decamps, 2013). There are a variety of opinions on this investment behavior. According to Geiger et al. (2013: 75), these investments are the result of investors seeking additional returns on their investments. They emphasize that while "ethical consumerism has been a key driver of growth, with investors paying a premium for products that align with their personal values" and that investors are interested in the "positive intrinsic value of sustainable properties," it is a misconception that investors would give up a portion of their money and future profits to invest in a green asset.

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According to Martin and Gossett (2013), tenants profit more from green buildings than owners. They use the example of an energy-efficient building, in which the owner is responsible for energy efficiency upgrades, and occupants benefit in terms of energy and, thus, money savings. Sustainable buildings typically have higher rents and occupancy, which can be interesting for investors while also providing a noticeable interest for occupiers

(Martin and Gossett, 2013). Although "green" real estate has a higher rent premium, investors must contend with the high value of such assets. Sustainable real estate is already a costly asset, but due to a scarcity of private resources and limited access to leverage, it can be a barrier for investors. Although the green building has been seen as a forward-looking investment, the construction costs of a green building remain higher than a conventional building. In socially responsible real estate investments, these considerations may serve as a deterrent (Nappi-Choulet and Decamps, 2013 and Martin and Gossett, 2013).

"A blend of regulatory, financial, and voluntary interventions will address barriers that prevent greater private investment in green buildings, including voluntary rating systems, building codes, tailored financial incentives and greater action by utilities." (The World Bank, 2017). According to the International Finance Corporation (IFC) and the World Bank, the historic Paris Agreement on Climate Change would continue to open up prospects for climate investments. According to the report, green building investment accumulated 388 billion dollars in 2015, and it will be worth at least 3.4 trillion dollars by 2025. Accordingly, the World Bank predicts annual market growth of 1.2 percent and increased opportunities in the sector (The World Bank, 2017).

2.3.2 Green Building Certification Market

A variety of environmental certification measures have been established around the world in parallel with the global progress in sustainability awareness. Building environmental

certification systems, also referred to as green building certifications, have become common in the real estate sector over the last decade, and many countries have developed domestic assessment methods (Cole and Jose Valdebenito 2013). Despite the fact that domestic methods have the advantage of promoting green building activities tailored to particular climates and cultures, Cole and Jose Valdebenito (2013) recognize a growing aspiration in the global market for standardized assessment methods.

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The most popular assessment methods are LEED and BREEAM, LEED being U.S. based and BREEAM from the U.K. The German DGNB, Finnish Promise, French HQE, Italian

Protocolla Itaca, Portuguese Lider A, and Spanish VERDE are some of the other European instruments. Although they are all labeled environmental or sustainability certifications, they include different aspects of sustainability and have different points of emphasis. The Kyoto Protocol and the U.N. Principles of Responsible Investment are two of the most relevant international initiatives. Furthermore, most countries' national legislation focuses on energy conservation in buildings, carbon emissions, waste management, and other issues. Both major stakeholder groups are impacted by these regulatory mandates, which result in higher

business costs for investors (Falkenbach et al., 2010).

The request for standardization and brand recognition has aided in the increased global use of the two most well-known building environmental certification systems, the Building

Research Establishment Environmental Assessment Process (BREEAM) and Leadership in Energy and Environmental Design (LEED).

2.3.2.1 BREEAM

BREEAM is a British certification system administered by the Building Research

Establishment Global (BRE Global), launched in 1990 and has since expanded to become one of the world's most influential green building market practices (BREEAM, 2021).

Professional BREEAM assessors process BREEAM certification; it is strongly advised that an assessor be appointed early in the design process to assist and make suggestions to let the project cost-effectively achieve the desired rating. If all criteria are met, and energy efficiency is validated by computer modeling, the building receives a BREEAM certificate when it is constructed.

BREEAM can certify almost any type of building and has a variety of assessment schemes to do so. In countries such as the United Kingdom, Germany, the Netherlands, Norway, Spain, Sweden, and Austria, BREEAM has local adaptations; countries without local adaptations can use one of the four BREEAM International schemes mentioned in Table 2 (Olsson, 2013).

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Each of the four schemes has its own manual, which contains a range of technical

information and details on credit allocation and assessment. The technical details are divided into ten categories (Table 3), with mandatory criteria for each category that must be met to receive the final certification.

Table 3: area descriptions in BREEAM assessment. Own illustration.

BREEAM uses a point-based rating scale with a percentage weighting system; for example, if a project receives 5 out of 10 points for energy, the energy category receives a 9.5 percent score. Each category is calculated and accumulated, with 100 being the highest possible score. BREEAM can adjust the requirements based on local priorities thanks to the weighting system.

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Pass, Good, Very Good, Excellent, and Outstanding are the six levels of BREEAM

classification, as shown in Table 4. A project must be re-evaluated after a year to receive the outstanding rating (BREEAM Manual, 2021).

Table 4: BREEAM classification levels (BREEAM, 2021).Own illustration.

BREEAM is the most used certificate in the European market, accounting for 80% of the market share for sustainable building certifications (Doan et al., 2017).

2.3.2.2 LEED

The US Green Building Council (USGBC) established LEED in 2000 to provide a national standard in the United States, and it has since grown in popularity around the world. Today, LEED is one of the most widely used green building rating standards globally (LEED, 2021), and local adaptations of LEED are available in several countries. As seen in Table 5, the most recent version of LEED was published in 2013. Currently, the rating system has five main groups, each of which contains ten rating schemes. These schemes can be used to certify residential buildings, public buildings, significant renovations, and retrofitting of existing buildings.

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Different green features of a building will earn different points under the LEED framework, a point-based system. LEED projects gain points by obtaining prerequisites and credits for building excellence in various areas, ranging from the integrative process to indoor

environmental quality. The LEED certification level of a project is determined by the number of points it receives. A project receives one of four LEED rating levels based on the number of credits it receives: Certified, Silver, Gold, or Platinum. If a building's LEED score is between 40 and 49, it receives a basic LEED certification. The points necessary for LEED Silver and Gold certifications are 50–59 and 60–79, respectively. LEED Platinum is the highest level of LEED certification, given to buildings with 80 or more points (Doan et al., 2017).

Projects must fulfill prerequisites and earn points in each of the LEED credit categories. The following are the basic credit categories for LEED certification: Energy and Atmosphere, Indoor Environmental Quality, Innovation in Design, Materials and Resources, Sustainable Sites, Regional Priority, and Water Efficiency.

The rating is composed of minimum and maximum requirements for building design and life cycle efficiency, with the aim of reducing the effect on the US Environmental Protection Agency's regionally critical environmental categories (EPA). The rating is promoted for

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prevalent use around the world, but it has been criticized for its lack of regional elasticity (Suzer, 2015).

2.3.3 Green Leases and the trend in Europe

According to Kok et al. (2010), the European lease structure is a major problem that stymies environmental performance initiatives. The most popular lease type in European commercial property markets is a net lease contract, which makes the user responsible for the building's energy costs. The use of a green lease is becoming increasingly important in any commercial green building operation, as more real estate investors recognize the value of incorporating sustainability into their investment strategy. The goals of the lease parties, their expectations regarding certifications, running and maintaining the space, and their priorities regarding increased costs associated with certain green leasing principles are all taken into account in an effective green lease. Both the landlord and the tenant will benefit from improved management and lower running costs if they both behave responsibly in terms of the most effective use of materials and resources (Šindelárová, 2011)

According to Freeman Jr. (2008), core elements of green leases can be allocated and

prioritized differently depending on the lease parties' agreement. A green lease considers the building's rules and regulations, such as how tenants can use the space and what duties each party must complete. The lease also specifies how the building's recycling and waste disposal will be managed and who is responsible for what. As a green lease allows for establishing rules and regulations for tenant improvements, all parties are responsible for the building's repair and maintenance. According to Freeman Jr., a green lease agreement provides a list of how operating costs will be split between the tenant and the landlord in proportion to their respective obligations in the building. A green lease considers a summary of the services offered, such as cleaning and janitorial services, as well as who is responsible for organizing and operating them. Based on their experience with a LEED-certified building in Finland, Skanska, a Swedish commercial construction company, has stressed the importance of calculating and setting goals to get tenants interested in the green lease (Nousiainen 2011). Šindelárová (2011), in her paper, stresses that there is no standardized concept of what constitutes a green lease. She explains how green leases can differ in color from light to dark. The light green contains only statements of goal, the mid-green contains a schedule of

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building management criteria, and the deep or dark green contains fines, financial sanctions, or rent reductions. Šindelárová also reflects the advantages that green leases can obtain. Compared to traditional commercial leases, the commercial green leases tend to have a more positive impact on net operating income. Improvements save the tenant money and increase the landlord's future investment value. The building would become more appealing to tenants as a result.

2.3.4 Green Financing and Green Bonds

Green bonds, like conventional bonds, are a form of fixed-income debt instrument (Talbot, 2017). The main difference is that green bond issuers agree to use the proceeds of the bonds to finance environment-conscious initiatives such as biodiversity conservation or climate mitigation (OECD 2017b; UNDP 2016). In 2008, the World Bank, in conjunction with the Swedish bank SEB, launched the first "green" bond. This bond set a precedent for potential issuers and established the basis for market practice by establishing a framework defining how qualified projects were selected and the conditions for the use of proceeds and getting it reviewed by an external actor (SOU, 2017). For several years, multilateral development banks made most issuance of the green bonds, the market remaining small (Talbot, 2017). The market began taking off in 2013, when Vasakronan, a Swedish real estate company, issued the first corporate green bond, and several US states and Canadian provinces joined the green bond market (SOU, 2017).

Although the concept of green bonds is still relatively new and lacks a standardized certifying entity, in academia, the definition of what forms a green bond is still somewhat indistinct (Horsch 2017). Previous research has also sparked controversy about the concept's proper labeling, with some proposing that the new asset class be named climate bonds rather than green bonds (Mathews and Kidney 2010). Nonetheless, the following academic papers seem to have settled the debate (Grene 2015; Read 2016; Horsch 2017) and issuers such as the World Bank, which has been using the term "green bonds" since the first issue in 2008. There is no agreed-upon concept of what it means to be "green in the green bond industry." Market participants have established voluntary standards, guidelines, and certifications and new and fragmented national regulations on green bond label standardization (Talbot, 2017). While not being compulsory, the Green Bond Principles (GBP) has become standard practice

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in the market (CBI, 2017a). Developed by 13 banks, the Green Bond Principles were

released by the International Capital Market Association (ICMA) in 2014 (SOU, 2017, 165). The GBP has four key components. The first principle, the use of proceeds, states that funds generated by green bonds should be used for initiatives that benefit the environment. The GBP offers a taxonomy with an indicative but not comprehensive list of project categories that could be funded with green bonds for this reason. Renewable energy, climate adaptation, and energy-efficient buildings are representations of broad categories. Second, the framework by which issuers select green projects should be clearly stated, along with the criteria that define which projects are eligible. Third, to ensure transparency, the funds should be monitored and managed separately. Fourth, the impact of projects should constantly be monitored by the issuer, reporting the effects to investors. Furthermore, the green bond framework, which outlines the above principles, ideally would be reviewed externally (ICMA, 2017b).

Green bonds may provide financial benefits to issuers, such as attracting new investors and offering a marginally lower interest rate (OECD, 2017b; SOU, 2017). Furthermore, there is anecdotal evidence of organizational benefits such as improved cross-departmental

interactions and a greater emphasis on sustainability issues. However, there have been concerns that the benefits are not tangible enough to generate environmental additionality (Shishlov, Morel & Cochran, 2016). Additionally, the lack of standards could lead to the financing of low-environmental-integrity projects through green bonds (De Nederlandsche Bank, 2017; Shishlov, Morel & Cochran, 2016; HLEG, 2018). This is a particularly important issue since states and supranational entities are increasingly looking to intervene in the green bond market to accelerate its expansion (SOU, 2017) and create standard procedures and definitions for green bonds (HLEG, 2018).

3. Research method

This segment introduces the study's research paradigm and methodology. Following the overall research design identification, the section justifies an explanation of the data

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collection and data analysis methods used. Following that, the study's sample is introduced. Finally, ethical considerations for enhancing trustworthiness are shown.

3.1 Research methodology

3.1.1 Research Paradigm

When contemplating conducting a study, the researcher should establish the research's fundamental starting point and raise various critical questions required for developing a suitable research philosophy. According to Holden and Lynch (2004), the essential issue is "Why research?" The author starts by stating that the researcher's scientific philosophy is founded on his or her fundamental assumptions about science and existence. If these basic understandings and acceptance of reality's stance are developed, a research model may take shape (Lowndes et al., 2018). According to Kothari (2004), the object of science is to discover answers to questions through the application of scientific methods. It is fair to assume every analysis has a distinct objective, while the overarching goal of accurate science is to ascertain the yet-to-be-discovered reality. Similarly, the fundamental motive for

undertaking research can vary and may include personal gain, a desire to confront an obstacle, a desire to serve humanity, or a desire to gain academic pleasure (Kothari, 2004). Collis & Hussey (2014) identify positivism and interpretivism as two major divisions within the research framework. Implementing any of these paradigms necessitates the researcher making fundamental assumptions about social realities, which serve as the foundation for the research framework. Positivism asserts that existence exists independently of us and is verifiable by observational evidence such as experiments. This type of study is typically objective and does not require the researcher to make any subjective judgments about the topic (Collis & Hussey, 2014). This perspective evolved from a skepticism founded on the other model (interpretivism), which assumes that our investigation of social phenomena affects them. As a result, it is contextual and influenced by individual values and experiences (Collis & Hussey, 2014). In order to best serve this study, an interpretive approach will be used, as the object of data collection and interpretation is to discover information that cannot be evaluated under the premise that all participants will have identical responses.

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3.1.2 Choice of methodology

There are three types of analysis approaches deductive, inductive, and abductive. An inductive approach will be applied in this study. Dubois & Gadde (2002) state that the inductive method begins with gathering relevant information, continues with data collection and concludes with creating a hypothesis based on the collected evidence. Additionally, Saunders et al. (2016) note that inference is a suitable technique where the analysis is new or has not been progressed substantially and where researchers plan to use qualitative

approaches. Additionally, it would be possible to produce new data and information through small samples, as inductive analysis emphasizes (Collis & Hussey, 2014). Thus, the critical distinction between inductive and deductive approaches is that the inductive approach begins with findings/observations and progresses to theory, while the deductive approach begins with theory and progresses to findings/observations (Bryman, 2012). The study's objective is to develop an interpretation of an individual's thoughts and emotions, and an inductive approach enables an open mind and the generation of more nuanced responses (Azungah, 2018). Thus, the framework would be to formulate a research query within the given subject, to gather the requisite information to conduct an interview, to observe the gathered data, and finally, to make conclusions and recommendations for future research.

This study would apply the Falkenbach, Lindholm, and Schleich (2010) principle, in which the authors classify main drivers into three categories (External, Corporate and property). The study acknowledges that these three theories have an impact on decisions on sustainable real estate investment. As a result, this hypothesis will not be tested; rather, it will serve as a foundation for the architecture and investigation of the "how" and "what" facets of the market that have had the most effects, with the goal of developing a more complete understanding of sustainable real estate. With this in mind, an inductive approach would be used, with the aim of gaining new knowledge in mind.

3.1.3 Qualitative Method

Since this study intends to understand the effect’s sustainability implementation and

sustainable real estate have on the European real estate sector; therefore, quantitative research is not proffered because the intention is to deepen understanding around a phenomenon—this study conducted in qualitative research. Qualitative research is more concerned with data that

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cannot be measured, and it is used for exploring and understanding a particular situation, where the researcher has to make interpretations of the meaning of the data. Mixed methods research involves gathering quantitative and qualitative data using distinct designs (Creswell, 2014). Hoepfl (1997) stated that “qualitative research can also be used to gain new

perspectives on things about which much is already known, or to gain more in-depth information that may be difficult to convey quantitatively” (p.49) According to Malhotra (1996), the primary purpose of the qualitative research is to get an in-depth understanding of people’s opinions, behaviours, and motivations around a phenomenon. Since the intention is to understand people’s attitudes and perceptions around a phenomenon, data should be gathered as non-numerical, so qualitative is a preferred method in these researches. (Creswell, 2013)

3.2 Data collection

This article makes use of primary data. To collect the data this study conducted interviews from seven experts in the real estate industry. Qualitative interviews (semi-structured interviews) serve as the primary source of evidence. Primary data is material that has been collected directly from the source. There are several methods for gathering this data.

Interviews, focus groups, polls, and studies are only a few examples (Collis & Hussey, 2014). Concentrating on interviews may be done in person, over the internet, in groups, or by email. By conducting interviews, the researcher can elicit historical data and control the questions posed (Creswell, 2009). Structured, semi-structured, or unstructured interviews are all possible (Saunders et al., 2012). A semi-structured interview would have some questions written in advance, but additional questions will be created during the interview, making it a very versatile choice (Collis & Hussey, 2014). Semi-structured interviews are used to elicit information about "why," not just "what" and "how." As a result, semi-structured interviews are ideal for exploratory research, as they offer valuable history and qualitative information (Saunders et al., 2012). To delve further into the subject and examine the borrower's

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motivations and causes and involve business experts, semi-structured interviews are chosen. Thus, it enables a deeper examination of "why" real estate investors invest in green building and the use of alternative interview questions for interviewees. Seven semi-structured interviews were used to gather primary data.

3.2.1 Interview questions

It was discussed in the previous section that semi-structured interviews were chosen. The semi-structured methodology falls between the structured and unstructured approaches in that specific predetermined questions act as a jumping-off point. As a result, this solution seemed to be the most fitting. The authors desired an open dialogue with the subject but needed some prepared questions. By preparing several questions in advance, the writers may generate additional ones that are more tailored to each interviewee (Saunders et al., 2009).

Additionally, the semi-structured technique is deemed necessary when conducting interpretive analysis, so managers consulted may directly attribute meaning to particular events. Interviewers should refrain from asking closed questions, as open questions

encourage interviewees to express their thoughts and views more fully. Thus, this interview approach is suitable for this research because to understand strategic renewal from the viewpoint of middle managers, it is essential to identify fundamental attitudes, traits, and habits (Saunders et al., 2009; Yin, 2003). Table 6 shows the list of interviews and shows the language and in which way the interviews were held. Due to the Pandemi, most of the interviews were held online. Moreover, the list of questions attached to the end of this study (See Appendix 1). The interviews were held in two countries, Finland and Sweden,

interviewing industry professionals in three different countries; Finland, Romania and Sweden. The experts chosen for this research were selected based on their professional qualifications and reputation in the real estate industry. The experts were contacted through professional contacts.

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3.2.2 Data Analysis

The primary data in this research were analyzed using a thematic approach. Thematic analysis is the method of identifying and interpreting trends in qualitative data in order to identify recurrent themes (Braun & Clarke, 2006). The aim of conducting a thematic analysis in this thesis was to produce a high-quality qualitative data analysis. To adhere to the

inductive analysis approach, the objective was to produce core codes and themes from the interviews in order to later create and present a conceptual model (Erlingsson & Brysiewicz, 2017).

A thematic analysis was the most appropriate method for this study since the semi-structured interviews inquired about people's perspectives and viewpoints on the chosen and

investigated subject (Braun & Clarke, 2006). A thematic analysis entails the generation of codes and themes from interviews, primarily by defining the underlying system of definitions (Taylor & Ussher, 2001). Additionally, the following sequential steps were used in the

thematic analysis:

The analysts familiarize themselves with the data in the first phase of the thematic research. To do this, the writers listened to recorded interviews separately and then meticulously transcribed each interview one at a time. The authors read and re-read the transcriptions of the interviews after they were completed, as well as taking individual notes on the records. The authors then performed a systematic coding of the results. This was accomplished by the

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identification of overlapping themes in the transcribed data from the interviews. The third stage included the writers developing themes based on the coding. Braun & Clarke (2006) assert that the creation of coding and themes is often driven by the study's research issue. However, the reviewers considered the themes' authenticity and durability. That is, the writers skipped and edited the themes until they were pleased with each one. This was undertaken to answer the study query and to collect the most relevant details for the results section (Braun & Clarke, 2006). After considering the common themes in the data collected, generic names for each were created. The topics in this analysis were classified into groups, which serve as subheadings in the findings section below. Additionally, in the final phase of the thematic study, the authors reported and identified the data gathered in a structured manner, following the interview guide's structure and looking for comparisons, as well as doing an analysis of previously collected data. This enables the authors to respond to the research question in a formal and logical manner, allowing the reader to develop a deeper understanding of the topic.

3.3 Reliability and Validity

Credibility in the research is all about confidence in the data collected and later in analyzing the data. The first thing that researchers should consider regarding credibility starts with decisions about the area of the study, literature review, interviews and the method to collect data. Participants for the interviews chosen were diverse based on their experience, age, and gender. According to Collis & Hussey (2014), researchers should ensure that all data is described and explained accurately. To ensure the validity of data collection, researchers in this study ensured that no irrelevant data are included in the analysis process and made sure that the most relevant data are not excluded from the study.

3.4 Ethics

It is tremendously essential for researchers to make sure that the research is conducted ethically and morally. To be ethical, we need to ask for permissions and inform interviewees about the study's purpose and scope in advance. In this study, researchers contacted potential participants through emails and social media such as LinkedIn. The first researcher

Investing in Green Buildings : How sustainability factors influence investment decisions in the European real estate market?