Integrating Environmental, Social and Governance (ESG) Criteria into Commercial Property Valuation Evidence From Valuers in Sweden and Sri Lanka

Environmental, Social, and Governance (ESG) factors are becoming increasingly relevant in commercial property markets. This growing focus on ESG is driven by both regulatory requirements and market demand. This study examines how ESG considerations are incorporated into commercial property valuation, drawing on valuation theory, stakeholder theory and institutional theory as its theoretical foundation. The purpose of this study is to examine how commercial property valuers use ESG factors in their valuation practice, the challenges they face during this process, and the strategies that can support the integration of ESG factors into commercial property valuation.
A mixed method approach was used, including document analysis, a questionnaire survey, and semi-structured interviews with RICS qualified valuers. The findings suggest that environmental factors are the most influential ESG dimension in commercial property valuation, while social factors receive moderate attention and governance factors are given the least consideration. The study also finds that ESG is often reflected qualitatively in valuation reports rather than being directly quantified in valuation calculations. The main identified challenges include a lack of reliable ESG data, limited market evidence, difficulties in quantifying ESG impact, and a lack of standardized methods. The results further show that valuers in Sweden exhibit relatively higher ESG awareness, but still encounter challenges in practical integration, whereas ESG usage in Sri Lanka is still at an early stage and is applied less consistently in the market. This study concludes that ESG is becoming an important part of commercial property valuation in both Sweden and Sri Lanka, even though its practical application is still at a learning stage and requires better data availability, clearer methodologies, and stronger professional guidance.

Environmental factors, Social factors, Governance factors

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