FreepikThe Tangible ROI of ESG in the Indian Warehousing Sector
How sustainability initiatives in India's logistics sector evolved from a simple cost to a core driver of financial returns and tenant value
November 14, 2025Real Estate
Written by:Jorge Aguinaga
Key Takeaways
- ESG is no longer a discretionary cost but a firm mandate from investors, who insist on it as a requirement for deploying capital.
- Compliance is tied directly to finance, with investors linking borrowing costs to sustainability targets, such as imposing penalties for failing to meet certification deadlines.
- The value of ESG extends to tenant stickiness, as operational savings from energy and water management lower the occupier's costs, creating a long-term benefit for the asset owner.
Implementing ESG in warehousing used to be a tough sell, with developers understandably questioning the high cost, but that debate is now over.
ESG has evolved from a basic cost centre into a standard, necessary specification that delivers measurable, tangible returns. This major shift is driven by two key forces: investors and clients.
One platform shared during India GRI 2025, a potent example where a major institutional investor links borrowing costs directly to ESG performance.
If that platform fails to meet its certification targets on time, such as getting 40% of its assets EDGE certified by 2027, its interest rate goes up by 10 basis points.
On large-scale borrowings, this provides a substantial and direct financial penalty for non-compliance.
This value extends far beyond just securing the initial lease by creating long-term tenant stickiness. ESG initiatives deliver this value in two primary ways: first, by generating direct, new revenue through add-ons like solar power, and second, by creating huge operational cost savings through advanced water and energy management systems.
These savings are effectively passed on to the occupier, lowering their total occupancy cost. This in turn boosts tenant retention and long-term asset value.
Ultimately, strong ESG performance has become integral to a warehouse's exit valuation, proving that what was once a debatable cost is now a fundamental component of value.
The data shows the green building premium has collapsed from 17% in 2001 to just 1-2% for a high-platinum-rated commercial building today. This minimal investment is not a lost cost, as it pays for itself in only one to two years through energy and water savings.
These strategic insights were shared during India GRI 2025 panel discussion “Building for the Exit: REITs, IPOs & InvITs - What’s the Right Track for India’s Warehousing Platforms?”.
The session was moderated by Hemant Prabhu, COO - Industrial & Logistics at Hiranandani Group, and featured reflections from leading experts including Abhay Goyal, Chief Investment Officer at Logicap Investment Advisers; Abhijit Malkani, CEO of ESR India; Alok Jain, Managing Director at Blackstone; Girish Singhi, Founder of Crest Capital Management; Krishnan Iyer, CEO of NDR InVIT; Pallavi Bhargava, Senior Director at CDPQ; R K Narayan, President - Strategy & Business Development at Horizon Parks; and Rohit Hegde, Managing Director of KSH Infra.
Access all takeaways and C-level insights in the exclusive India GRI 2025 Spotlight report.
ESG has evolved from a basic cost centre into a standard, necessary specification that delivers measurable, tangible returns. This major shift is driven by two key forces: investors and clients.
Capital Mandates
The strongest push is coming from capital, as investors are no longer just asking about sustainability but are insisting on it as a firm requirement for deploying funds. This requirement is now tied directly to finance.One platform shared during India GRI 2025, a potent example where a major institutional investor links borrowing costs directly to ESG performance.
If that platform fails to meet its certification targets on time, such as getting 40% of its assets EDGE certified by 2027, its interest rate goes up by 10 basis points.
On large-scale borrowings, this provides a substantial and direct financial penalty for non-compliance.
Clients Costs and Stickiness
Client demand is the second major driver. This is especially true for multinational tenants, who consider a landlord's ESG compliance a must-have part of their criteria. Because of this, sustainability features are now part of the standard design process from day one.This value extends far beyond just securing the initial lease by creating long-term tenant stickiness. ESG initiatives deliver this value in two primary ways: first, by generating direct, new revenue through add-ons like solar power, and second, by creating huge operational cost savings through advanced water and energy management systems.
These savings are effectively passed on to the occupier, lowering their total occupancy cost. This in turn boosts tenant retention and long-term asset value.
Ultimately, strong ESG performance has become integral to a warehouse's exit valuation, proving that what was once a debatable cost is now a fundamental component of value.
The Data on Net-Value
This strategic shift from cost to value is seen across Indian real estate, and as detailed in the recent GRI Hub News article - How Indian Real Estate is turning Net-Zero Goals into Net-Value Gains - the old perception of high costs is now a myth.The data shows the green building premium has collapsed from 17% in 2001 to just 1-2% for a high-platinum-rated commercial building today. This minimal investment is not a lost cost, as it pays for itself in only one to two years through energy and water savings.
These strategic insights were shared during India GRI 2025 panel discussion “Building for the Exit: REITs, IPOs & InvITs - What’s the Right Track for India’s Warehousing Platforms?”.
The session was moderated by Hemant Prabhu, COO - Industrial & Logistics at Hiranandani Group, and featured reflections from leading experts including Abhay Goyal, Chief Investment Officer at Logicap Investment Advisers; Abhijit Malkani, CEO of ESR India; Alok Jain, Managing Director at Blackstone; Girish Singhi, Founder of Crest Capital Management; Krishnan Iyer, CEO of NDR InVIT; Pallavi Bhargava, Senior Director at CDPQ; R K Narayan, President - Strategy & Business Development at Horizon Parks; and Rohit Hegde, Managing Director of KSH Infra.
Access all takeaways and C-level insights in the exclusive India GRI 2025 Spotlight report.