The Business Case for Green Certification — Beyond the Plaque

How LEED, EDGE, and TREES are shifting from marketing tools to financial instruments across South East Asia

For most of its history, green building certification has been treated as a communications exercise. A plaque in the lobby. A line in a brochure. A credential that signals intent without necessarily affecting the numbers that matter to investors and developers.

That framing is now out of date. Across South East Asia, green certification is being repriced, not as a sustainability credential, but as a financial instrument with measurable effects on rental income, occupancy, financing costs, and long-term asset value.

The rent premium is real and it is growing

The most direct financial signal is the rent premium. Drawing on data from 3,089 Grade A office buildings across 14 cities in Asia, JLL research found that when location, building age, and amenity factors are held constant, assets with green credentials generate more occupier demand and achieve rental premiums. A separate analysis covering nine cities in the Asia Pacific found that green-certified buildings are achieving a rent premium of around 10 percent over non-certified equivalents.

Bangkok offers a telling example. According to JLL Thailand, over 70 percent of new leases in Bangkok's prime office market were signed to buildings with green credentials, while those buildings accounted for only 39 percent of gross floor area, and they are achieving rental premiums in the range of 4 percent to 11 percent compared to non-certified buildings.

Demand is outpacing supply across the region. The same JLL Thailand research shows that, if possible, occupiers in the region would like to get almost half of their portfolios accredited. A separate JLL study on Kuala Lumpur found that 87 percent of occupiers in the Asia Pacific envision their office portfolios being 100 percent green certified by 2030. For building owners, an undersupplied market for green space is a structural advantage, one that is directly legible in rent rolls.

The occupancy effect and the brown discount

The premium does not only show up in rents. A 2009 study of United States office buildings by McAllister and Fuerst found that, controlling for differences in age, height, building class, and quality, occupancy rates were approximately 8 percent higher in LEED-labelled offices than in non-labelled equivalents. This finding is specific to that period of the United States market and has not been consistently replicated since, so it should be read as historical evidence of the mechanism rather than a current South East Asian benchmark.

The inverse dynamic is increasingly visible in the region today. Buildings without green credentials are beginning to suffer what analysts refer to as a brown discount. Savills research finds that buildings without ESG upgrades may face value gaps of up to 30 percent against high-performing peers. As green certification moves from differentiator to baseline expectation, non-certified assets face a growing leasing and valuation disadvantage.

The shift in tenant expectations has been reinforced by changing occupier priorities. CBRE's Asia Pacific research found that high quality premium office space in city centres and ESG-compliant buildings remained highly sought after by occupiers in the Asia Pacific. This is not a niche preference from a small segment of the market. Technology firms, banks, financial services companies, and multinational corporations are increasingly making green-certified space a procurement requirement, driven by their own ESG commitments and science-based target obligations.

Green certification as a financing advantage

The financial logic of certification extends beyond the tenant relationship into the capital stack. Green bonds have emerged as a meaningful financing channel for certified buildings in South East Asia, and the trajectory is upward.

According to research published by the Asian Development Bank Institute, a relatively large proportion of green bond proceeds in ASEAN have been channelled to financing green buildings, and the importance of green bonds as a funding source for green buildings in ASEAN is projected to increase. In Singapore, given the early adoption of green buildings since the introduction of the BCA Green Mark Scheme in 2005, green bonds have primarily been used to finance certified buildings. In 2024, Vietnam saw its first green bond issued by a private commercial bank, with IFC subscribing 50 million US dollars to help the bank increase its financing of green assets, including green buildings, renewable energy, and energy efficiency.

In 2024, green bonds accounted for two thirds of all sustainable corporate bonds issued in Asia, making them the dominant type of sustainable bond issued by corporations in the region that year. For developers and building owners with certified assets, this creates access to a financing channel that is both growing and, in many cases, offered at preferential terms. The certification is the proof point that unlocks the instrument.

What each framework offers

LEED is the globally recognised standard with the deepest track record of generating premium-bearing assets. Its credit framework covers energy, water, materials, indoor environmental quality, and site conditions, with rating levels from Certified through to Platinum. The correlation between LEED certification and rental premiums in Asia is well documented in the JLL Thailand research cited above, with LEED Platinum buildings commanding the highest premiums in the markets where supply of top-tier certified stock is most constrained.

EDGE, developed by IFC and certified by GBCI, requires a minimum projected reduction of 20 percent in energy use, water use, and embodied carbon in materials compared to a standard local building. It is positioned as an accessible entry point for developers in emerging markets across South East Asia, with a streamlined process, free software, and modest certification costs. For projects where LEED may be operationally complex or commercially difficult to justify, EDGE provides a credible, internationally recognised baseline that satisfies green bond eligibility criteria and increasingly satisfies institutional tenant ESG requirements.

TREES, Thailand's own green building certification standard, was established in 2012 by the Thai Green Building Institute, an entity created by the Engineering Institute of Thailand under Royal Patronage and the Association of Siamese Architects under Royal Patronage. TREES was designed specifically for the Thai context, covering building management, site and landscape, water conservation, energy and atmosphere, materials and resources, indoor environmental quality, environmental protection, and green innovation.

It offers certification across new construction, core and shell, and existing buildings, with levels ranging from Certified to Platinum. Thailand currently has 479 LEED and TREES-certified buildings, and TREES increasingly sits alongside LEED or WELL as part of a dual-certification strategy for projects seeking both local regulatory alignment and international market positioning.

The regulatory trajectory across the region

The market shift is being reinforced by regulation moving in the same direction across each major market.

In Singapore, the Mandatory Energy Improvement regime, coming into effect in the third quarter of 2025, requires owners of energy-intensive buildings to appoint a qualified professional to carry out energy audits and propose improvement works. Singapore has set a target of achieving net-zero emissions by 2050, and existing buildings, which account for over 20 percent of the country's carbon emissions, are central to that trajectory. Buildings that already hold green certification are better positioned to meet incoming requirements at lower incremental cost.

In Indonesia, the Ministry of Public Works and Housing launched the National Roadmap for Green Building Implementation in October 2024, providing guidelines and performance targets for decarbonising the building sector. Indonesia's building sector accounted for 23 percent of total energy consumption in 2021 and is expected to contribute 40 percent by 2030, creating urgent pressure for building-level performance improvements.

In Vietnam, the green building market has grown rapidly. More than 160 additional buildings were certified in 2024 alone, bringing the total to around 550 to 560 certified buildings under LEED, LOTUS, EDGE, and Green Mark. Vietnam has reached 780 green buildings, the highest count among South East Asian markets, with retrofit increasingly identified as the most efficient strategy for improving the value and compliance standing of existing stock.

In Thailand, TREES provides a locally calibrated framework alongside international certifications, with the Thai Green Building Institute continuing to develop standards suited to the specific conditions of the Thai building sector and climate.

Across the region, the regulatory direction is consistent: mandatory disclosure, minimum performance standards, and increasing alignment with net-zero pathways. Buildings that are already certified are not just ahead of the curve. They are ahead of the compliance cost.

The practical implication for developers and asset owners

Green certification began as a voluntary signal. It is becoming a market condition. The evidence across South East Asia now shows consistent rent premiums, a financing environment that increasingly favours certified assets through green bonds and loans, and a regulatory environment that is tightening around building performance.

The question for developers and asset owners is no longer whether certification can deliver a return. The question is which framework is most appropriate for the asset, the market, and the financing structure, and how early in the project lifecycle that decision is made.

The earlier the decision, the lower the cost. The later it is left, the more it resembles compliance rather than strategy.

Sources:

• UN Tourism. World Tourism Barometer. Available at: UN Tourism – World Tourism Barometer

• Asian Development Bank (ADB). Climate Risk and Resilience in Southeast Asia. Available at: Asian Development Bank – Climate Risk and Resilience in Southeast Asia

• World Economic Forum (WEF). Global Risks Report. Available at: World Economic Forum – Global Risks Report