Expert Guide on ESG in Real Estate in Croatia

Developer

Investor

Owner

The Long-term Strategy for the Reconstruction of the National Building Stock by 2050 aims to contribute to achieving the ambitious climate target of reducing greenhouse gas emissions by 55% by 2030. In accordance with the Climate Change Adaptation Strategy, Croatia aims for climate neutrality by 2040, while its main goal is to emphasize the importance of addressing climate change and integrating climate adaptation into policies to reduce vulnerability to its effects. The Renewable Energy Sources and High-Efficiency Cogeneration Act promotes renewable heating, phasing out fossil fuels by 2035/2040. 

The Air Protection Act (Zakon o zaštiti zraka) and its implementing bylaws set emission limits, which are to be reviewed by independent experts.  

The Law on the Croatian Energy Efficiency Fund (Zakon o Fondu za zaštitu okoliša i energetsku učinkovitost) as well as the Building Act (Zakon o gradnji) provide a basis for implementation of various programmes and incentives to support energy-efficient renovations and green building projects, all in accordance with the National Environmental Strategy, the National Environmental Action Plan, the Energy Development Strategy and the Energy Development Strategy Implementation Programme. 

Real estate developers need to continuously monitor the ever-changing ESG regulations at both the EU and national levels. These regulations present various challenges, including stringent energy efficiency requirements outlined in the Building Act, as well as the Renewable Energy Sources and High-Efficiency Cogeneration Act. Compliance with these laws often leads to expensive retrofitting, which can significantly affect development expenses and feasibility. Additionally, developers must navigate a complex landscape that includes adhering to social compliance standards, tenant rights, safety regulations, and sustainable practices, all within the framework of ESG laws. Striking the right balance among these factors, managing costs effectively, and ensuring property performance are of utmost importance. 

The selection of a project site plays a crucial role in achieving energy efficiency and ensuring compliance with ESG standards in real estate development. You should be aware of: 

Spatial Planning Act (Zakon o prostornom uređenju): For instance, this Act prescribes special zones called spatial constraints (prostor ograničenja) where it is forbidden to build certain types of buildings and/or plants. 

Regional Development Act (Zakon o regionalnom razvoju Republike Hrvatske): The construction guidelines prioritize harmonious and balanced development of the state, ensuring the protection and preservation of the natural environment and the diversity of cultural wealth, all in accordance with the principles of sustainable development. 

Register of Contaminated Sites (Registar onečišćivača Republike Hrvatske): The register identifies locations that pose health and environmental risks, providing essential information for the site selection process. 

Building Act (Zakon o gradnji): Regulates permits, energy efficiency standards, and ESG considerations such as the installation of solar panels or electric vehicle charging infrastructure. 

Environmental Protection Act (Zakon o zaštiti okoliša): This act mandates assessments of environmental impact for specific property projects, evaluating factors such as biodiversity, air quality, noise levels, and more. Mitigation measures are determined in accordance with regional plans and zoning regulations to address potential impacts. 

On the EU level, the concept of nearly zero-energy buildings (NZEB) was introduced through directives such as the Energy Performance of Buildings Directive (2010/31/EU) and the Energy Efficiency Directive (2012/27/EU). The Building Act (Zakon o gradnji) has transposed the NZEB requirements. The Croatian Parliament adopted the Energy Strategy of the Republic of Croatia, including a plan to invest between EUR 24.38 billion and EUR 31.79 billion in energy renovation of buildings and construction of NZEB, which is between 48.5% and 51.9% of total investments. 

Different types of incentives are granted through tax breaks, utility fee reductions (which can vary between different municipalities and regions), and direct non-refundable grants sourced from the emission allowances allocated by the Energy Efficiency Fund. 

Properties situated in hazard-prone zones often encounter usage limitations due to natural risks. Land planning strives to mitigate these hazards when outright exclusion is not feasible. Natural hazards include floods, earthquakes, landslides, and more, which can directly affect properties, particularly in hazard-prone areas. Information about risks is obtained from multiple sources, including spatial plans, location permits, geotechnical studies, etc. There are various construction standards and regulations that are applied in areas exposed to natural hazards such as earthquakes, floods, landslides, and forest fires. 

According to the Environmental Protection Act and the Regulation on Environmental Impact Assessment, environmental impact assessment is mandatory for specific types of construction (e.g. waste treatment facilities, railroads, power plants, pipelines, and more), and for construction for which this obligation is determined during the process of establishing the need for an environmental impact assessment. 

The Waste Management Act (Zakon o gospodarenju otpadom) is the central act of waste management legislation in Croatia. It places significant emphasis on various aspects of waste management, including the separate collection, storage, transport, and treatment of waste. Priority is given to recycling recyclable materials when it is ecologically appropriate and feasible to do so. 

To guide and implement waste management practices, Croatia has issued regulations, directives and instructions on waste management in specific circumstances and for specific types of waste. In the context of new construction projects, there is a mandatory requirement for waste separation, necessitating the segregation of specific materials directly at the construction site, depending on specific local rules. 

Regulations are designed to ensure the safety of workers, protect the environment, and promote responsible construction practices. Some of the key safety rules and regulations include: 

Worker safety: Workers are obligated to undergo training on safe work practices and the use of safety equipment. 

Occupational safety and health regulations: Safety requirements for construction activities, including the use of personal protective equipment, machinery safety, and hazard identification and mitigation. 

Waste management: Construction sites should typically segregate and manage waste materials appropriately. 

Environmental regulations: Construction projects need to include measures to protect the environment, such as erosion control, proper disposal of construction waste, and measures to prevent contamination of soil and water. 

The primary system used is the Energy Performance Certificate (Energetski certifikat). This certificate is a standardized document that provides information about the energy efficiency of a building and can impact the property valuation. It is required for property sales, rentals, and leases. 

Other certificates, such as LEED, BREEAM, Passive House Certification or Green Building Labels, assess diverse criteria including sustainability, energy efficiency, materials, and air quality. They can indicate ESG compliance and make the case for green financing under the EU Taxonomy Regulation. However, they are not yet widespread in Croatia and are not mandatory.  

Requirements are primarily driven by EU directives and national regulations. The Energy Performance Certificate (Energetski certifikat) provides insight into a building's energy efficiency, and it is graded from A+ (most efficient) to G (least efficient). It is required for property sales, rentals, and leases. Croatia promotes the use of renewable energy sources for heating, such as solar thermal and heat pumps, as part of the strategy to reduce emissions. New buildings or significant renovations typically require Energy Performance Certificates. Residential building certificates assess various factors like heating demand, primary energy demand, CO2 emissions, the energy performance factor, water heating demand, heating energy demand, cooling demand, ventilation and air conditioning demand, electrical lighting demand, external envelope thermal demand, water supply demand, and final energy demand. While no specific heating types are banned, heating demand plays a pivotal role for the certificate and in property valuation

Installation of alternative energy supply systems, such as rooftop PV systems, typically requires permits and authorizations from local authorities and grid operators. The specific permits needed may vary depending on the size and capacity of the PV system. Depending on the size and location of the PV system, it may be subject to environmental impact assessment requirements, which is more common for larger installations. The EU Solar Rooftops Initiative sets forth a gradual approach to the installation of solar energy systems across different building categories, commencing with new public, commercial, and residential structures. The legal obligations pertaining to PV systems on new buildings are rooted in the EU's Energy Efficiency of Buildings Regulation, which is integrated into the Building Act.  

Depending on the location and type of charging point installation, permits or authorizations are required from local authorities or grid operators. 

As of 2020, the Croatian Building Act prescribes mandatory electric vehicle charging infrastructure in new and existing buildings, with variations depending on the type of building and number of apartments in the building. 

No – however, the contracting authority must refuse the bid if it determines that it is extremely low because it does not comply with applicable obligations under national and international environmental, social and labour law that the tenderer must comply with, including collective bargaining agreements, in particular the obligation to pay the contracted salary. Moreover, the contracting authority is allowed (but not obligated) to impose specific conditions for the performance of the contract related to environmental, social and labour law. 

Third-country workers refers to non-EEA and Swiss nationals. The Foreign Nationals Act (Zakon o strancima) regulates the entry of foreign workers into the labour market, among other things. Before applying for a residence and work permit, the employer is obligated to perform or request a labour market test and get clearance from the Croatian Employment Service (Hrvatski zavod za zapošljavanje). However, in certain cases (e.g. labour shortages), exceptions may apply, and the permit can be obtained without conducting a labour market test. 

Croatia implemented Directive (EU) 2019/882 on the accessibility requirements for products and services through the Technical Regulation on Ensuring Accessibility of Buildings for Persons with Disabilities and Reduced Mobility (Pravilnik o osiguranju pristupačnosti građevina osobama s invaliditetom i smanjene pokretljivosti), which will enter into force on 28 June 2025. Until that date, people with disabilities and reduced mobility are entitled to the following, according to the existing regulation: 

Accessible entrance: Buildings should have accessible entrances (e.g. ramps, barrier-free walkways, etc.) that allow persons with disabilities and reduced mobility to easily enter and exit the building.  

Accessible sanitary facilities: Sanitary facilities in buildings should be adapted for persons with disabilities. 

Accessible elevators and lifts: In multi-storey buildings, elevators and lifts should be accessible to persons with disabilities. 

Signage and signalling: Buildings should have proper signage and signalling to facilitate the movement of persons with disabilities. 

Adaptations for the blind and visually impaired: Buildings should have appropriate adaptations for the blind and visually impaired, including tactile markings and audible signals at traffic lights. 

Adaptations for the deaf and hard of hearing: Buildings should be equipped for persons with hearing impairments, including informational signage and sound amplification devices. 

arking adaptations: Parking areas should have a designated number of parking spaces reserved for persons with disabilities. 

Education and information: Buildings providing public services should ensure that information is available and accessible to persons with disabilities. 

Planning and design: The regulation also imposes obligations on the planning and design of new buildings with regard to accessibility. 

The Long-term Strategy for the Reconstruction of the National Building Stock by 2050 aims to contribute to achieving the ambitious climate target of reducing greenhouse gas emissions by 55% by 2030. In accordance with the Climate Change Adaptation Strategy, Croatia aims for climate neutrality by 2040, while its main goal is to emphasize the importance of addressing climate change and integrating climate adaptation into policies to reduce vulnerability to its effects. The Renewable Energy Sources and High-Efficiency Cogeneration Act promotes renewable heating, phasing out fossil fuels by 2035/2040. 

The Air Protection Act (Zakon o zaštiti zraka) and its implementing bylaws set emission limits, which are to be reviewed by independent experts.  

The Law on the Croatian Energy Efficiency Fund (Zakon o Fondu za zaštitu okoliša i energetsku učinkovitost) as well as the Building Act (Zakon o gradnji) provide a basis for implementation of various programmes and incentives to support energy-efficient renovations and green building projects, all in accordance with the National Environmental Strategy, the National Environmental Action Plan, the Energy Development Strategy and the Energy Development Strategy Implementation Programme. 

The most pressing legal challenge for investors in real estate is to stay informed about EU and national legislation in relation to ESG, since there are many different areas and legal acts that impose different obligations, which include the following aspects: 

Energy efficiency and emissions: Strict energy and sustainability standards prescribed in the Building Act and the Renewable Energy Sources and High-Efficiency Cogeneration Act require adherence, resulting in costly retrofits that impact on investors decisions. 

Tenant rights and social considerations: Investors need to find a balance between social norms, health and safety regulations, and ESG practices, while aligning them with the investment objectives. 

Liability and due diligence: Investors will need to conduct due diligence as imperative for assessing ESG-related risks before purchasing a property, including evaluating environmental and social liabilities. 

Sustainability disclosure and reporting: Complying with the EU Taxonomy Regulation and reporting on ESG performance are increasingly expected practices. Croatia's transposition of directives like the Corporate Sustainability Reporting Directive is currently pending. 

Green financing: Meeting the criteria for green investments presents challenges due to the EU Taxonomy Regulation, which mandates ESG integration into financing decisions. 

The selection of a project site plays a crucial role in achieving energy efficiency and ensuring compliance with ESG standards in real estate development. You should be aware of: 

Spatial Planning Act (Zakon o prostornom uređenju): For instance, this Act prescribes special zones called spatial constraints (prostor ograničenja) where it is forbidden to build certain types of buildings and/or plants. 

Regional Development Act (Zakon o regionalnom razvoju Republike Hrvatske): The construction guidelines prioritize harmonious and balanced development of the state, ensuring the protection and preservation of the natural environment and the diversity of cultural wealth, all in accordance with the principles of sustainable development. 

Register of Contaminated Sites (Registar onečišćivača Republike Hrvatske): The register identifies locations that pose health and environmental risks, providing essential information for the site selection process. 

Building Act (Zakon o gradnji): Regulates permits, energy efficiency standards, and ESG considerations such as the installation of solar panels or electric vehicle charging infrastructure. 

Environmental Protection Act (Zakon o zaštiti okoliša): This act mandates assessments of environmental impact for specific property projects, evaluating factors such as biodiversity, air quality, noise levels, and more. Mitigation measures are determined in accordance with regional plans and zoning regulations to address potential impacts. 

On the EU level, the concept of nearly zero-energy buildings (NZEB) was introduced through directives such as the Energy Performance of Buildings Directive (2010/31/EU) and the Energy Efficiency Directive (2012/27/EU). The Building Act (Zakon o gradnji) has transposed the NZEB requirements. The Croatian Parliament adopted the Energy Strategy of the Republic of Croatia, including a plan to invest between EUR 24.38 billion and EUR 31.79 billion in energy renovation of buildings and construction of NZEB, which is between 48.5% and 51.9% of total investments. 

Different types of incentives are granted through tax breaks, utility fee reductions (which can vary between different municipalities and regions), and direct non-refundable grants sourced from the emission allowances allocated by the Energy Efficiency Fund. 

The increasing significance of ESG factors has the effect of raising the cost and complexity of real estate financing when environmentally sustainable options for lenders are not available. To earn the "environmentally sustainable" designation, investments must conform to the criteria outlined in the EU Taxonomy Regulation (2020/852), which was established by the EU to define environmental standards for investments and bolster sustainable finance. The assessment of sustainability relies on specific delegated acts that accompany the Taxonomy Regulation. In the real estate sector, the EU Taxonomy Climate Delegated Act encompasses a range of activities, including new construction, renovations, maintenance, repair, and property acquisition. 

Some of the main challenges that investors may face are: 

Expanded due diligence scope: Comprehensive ESG due diligence is important while evaluating potential risks and liabilities associated with a property. This includes assessing compliance with regulations, conducting contamination evaluations, and evaluating energy efficiency to effectively mitigate future environmental liabilities. 

Legal and regulatory compliance: Compliance with the specific legal framework that relates to the land plots, zoning, and environmental regulations is essential to avoid legal complications. 

Enhanced warranty and liability framework: ESG considerations significantly influence warranty and liability provisions. Key factors include transparent ESG disclosures, adherence to circular economy principles, compliance with legal requirements, certifications, sustainability practices, and understanding the impact of ESG on property value upon exit. 

Energy efficiency and retrofitting: Investors are obligated to evaluate the energy efficiency of properties and identify retrofitting requirements to meet energy targets. 

Green financing and property valuation: Securing green financing and accurately appraising the ESG attributes of a property is a complex endeavour. Navigating diverse valuation methods and collaborating with lenders who prioritize ESG considerations is essential. 

The primary system used is the Energy Performance Certificate (Energetski certifikat). This certificate is a standardized document that provides information about the energy efficiency of a building and can impact the property valuation. It is required for property sales, rentals, and leases. 

Other certificates, such as LEED, BREEAM, Passive House Certification or Green Building Labels, assess diverse criteria including sustainability, energy efficiency, materials, and air quality. They can indicate ESG compliance and make the case for green financing under the EU Taxonomy Regulation. However, they are not yet widespread in Croatia and are not mandatory.  

Requirements are primarily driven by EU directives and national regulations. The Energy Performance Certificate (Energetski certifikat) provides insight into a building's energy efficiency, and it is graded from A+ (most efficient) to G (least efficient). It is required for property sales, rentals, and leases. Croatia promotes the use of renewable energy sources for heating, such as solar thermal and heat pumps, as part of the strategy to reduce emissions. New buildings or significant renovations typically require Energy Performance Certificates. Residential building certificates assess various factors like heating demand, primary energy demand, CO2 emissions, the energy performance factor, water heating demand, heating energy demand, cooling demand, ventilation and air conditioning demand, electrical lighting demand, external envelope thermal demand, water supply demand, and final energy demand. While no specific heating types are banned, heating demand plays a pivotal role for the certificate and in property valuation. 

Installation of alternative energy supply systems, such as rooftop PV systems, typically requires permits and authorizations from local authorities and grid operators. The specific permits needed may vary depending on the size and capacity of the PV system. Depending on the size and location of the PV system, it may be subject to environmental impact assessment requirements, which is more common for larger installations. The EU Solar Rooftops Initiative sets forth a gradual approach to the installation of solar energy systems across different building categories, commencing with new public, commercial, and residential structures. The legal obligations pertaining to PV systems on new buildings are rooted in the EU's Energy Efficiency of Buildings Regulation, which is integrated into the Building Act.  

Depending on the location and type of charging point installation, permits or authorizations are required from local authorities or grid operators. 

As of 2020, the Croatian Building Act prescribes mandatory electric vehicle charging infrastructure in new and existing buildings, with variations depending on the type of building and number of apartments in the building. 

The Corporate Sustainability Due Diligence Directive (CSDDD) aims to enhance sustainability in corporate activities and requires specific companies to carry out thorough due diligence of their supply chains to identify and mitigate environmental and social risks. As the CSDDD is currently in the drafting phase, it does not impose specific obligations on real estate investors in Croatia. Unlike some other countries, such as Germany with its Supply Chain Act (Lieferkettengesetz), Croatia has not introduced national legislation addressing the issues covered by the CSDDD. 

Croatia mandates ESG reporting in accordance with the EU Non-Financial Reporting Directive (NFRD), incorporated into its Accounting Act (Zakon o računovodstvu). The obligations apply to: 

1. Publicly significant firms with limited reporting duties. 
2. Large entities that exceed at least two of the following thresholds: EUR 20 million in balance sheet total, EUR 40 million in revenue, or an average of 250 employees (with limited reporting duties). 
3. Large publicly significant firms with an average of 500 or more employees, subject to full reporting obligations under the NFRD. 

Furthermore, pending the transposition of the Corporate Sustainability Reporting Directive (CSRD) into Croatian law, these reporting obligations are expected to expand. 

Real estate investors may also find themselves requiring ESG compliance reporting due to the EU Taxonomy Regulation. Additionally, real estate funds must address Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector concerning the disclosure of ESG criteria for green property projects. 

The Long-term Strategy for the Reconstruction of the National Building Stock by 2050 aims to contribute to achieving the ambitious climate target of reducing greenhouse gas emissions by 55% by 2030. In accordance with the Climate Change Adaptation Strategy Croatia aims for climate neutrality by 2040, while its main goal is to emphasize the importance of addressing climate change and integrating climate adaptation into policies to reduce vulnerability to its effects. The Renewable Energy Sources and High-Efficiency Cogeneration Act promotes renewable heating, phasing out fossil fuels by 2035/2040. 

The Air Protection Act (Zakon o zaštiti zraka) and its implementing bylaws set emission limits, which are to be reviewed by independent experts.  

The Law on the Croatian Energy Efficiency Fund (Zakon o Fondu za zaštitu okoliša i energetsku učinkovitost) as well as the Building Act (Zakon o gradnji) provide a basis for implementation of various programmes and incentives to support energy-efficient renovations and green building projects, all in accordance with the National Environmental Strategy, the National Environmental Action Plan, the Energy Development Strategy and the Energy Development Strategy Implementation Programme. 

The most pressing legal challenge for owners and operators of real estate is to stay informed about EU and national legislation in relation to ESG, since there are many different areas and legal acts that impose different obligations, which include the following aspects: 

Energy efficiency and emissions: Strict energy and sustainability standards prescribed in the Building Act and the Renewable Energy Sources and High-Efficiency Cogeneration Act require adherence, resulting in costly retrofits that impact on investors decisions. 

Tenant rights and social considerations: Owners and operators will need to find a balance between social norms, health and safety regulations, and ESG practices, while aligning them with their objectives. 

Liability and due diligence: Due diligence is imperative for assessing ESG-related risks before purchasing a property, including evaluating environmental and social liabilities. 

Sustainability disclosure and reporting: Complying with the EU Taxonomy Regulation and reporting on ESG performance are increasingly expected practices. Croatia's transposition of directives like the Corporate Sustainability Reporting Directive is currently pending. 

Green financing: Meeting the criteria for green investments presents challenges due to the EU Taxonomy Regulation, which mandates ESG integration into financing decisions. 

The selection of a project site plays a crucial role in achieving energy efficiency and ensuring compliance with ESG standards in real estate development. You should be aware of: 

Spatial Planning Act (Zakon o prostornom uređenju): For instance, this Act prescribes special zones called spatial constraints (prostor ograničenja) where it is forbidden to build certain types of buildings and/or plants. 

Regional Development Act (Zakon o regionalnom razvoju Republike Hrvatske): The construction guidelines prioritize harmonious and balanced development of the state, ensuring the protection and preservation of the natural environment and the diversity of cultural wealth, all in accordance with the principles of sustainable development. 

Register of Contaminated Sites (Registar onečišćivača Republike Hrvatske): The register identifies locations that pose health and environmental risks, providing essential information for the site selection process. 

Building Act (Zakon o gradnji): Regulates permits, energy efficiency standards, and ESG considerations such as the installation of solar panels or electric vehicle charging infrastructure. 

Environmental Protection Act (Zakon o zaštiti okoliša): This act mandates assessments of environmental impact for specific property projects, evaluating factors such as biodiversity, air quality, noise levels, and more. Mitigation measures are determined in accordance with regional plans and zoning regulations to address potential impacts. 

On the EU level, the concept of nearly zero-energy buildings (NZEB) was introduced through directives such as the Energy Performance of Buildings Directive (2010/31/EU) and the Energy Efficiency Directive (2012/27/EU). The Building Act (Zakon o gradnji) has transposed the NZEB requirements. The Croatian Parliament adopted the Energy Strategy of the Republic of Croatia, including a plan to invest between EUR 24.38 billion and EUR 31.79 billion in energy renovation of buildings and construction of NZEB, which is between 48.5% and 51.9% of total investments. 

Different types of incentives are granted through tax breaks, utility fee reductions (which can vary between different municipalities and regions), and direct non-refundable grants sourced from the emission allowances allocated by the Energy Efficiency Fund. 

Properties situated in hazard-prone zones encounter usage restrictions due to the presence of natural risks. The objective of land planning is to reduce these risks, since natural hazards like floods, landslides, and more pose threats to both human lives and property. These events can have a significant impact on properties, particularly when they are located in hazard-prone areas. Information about risks is obtained from multiple sources, including spatial plans, location permits, geotechnical studies, etc. The frequency of such events necessitates more frequent updates to ordinances, expert reports, and hazard zone plans, which can affect the accuracy of these documents (depending on the expert report's date). 

The Waste Management Act (Zakon o gospodarenju otpadom) is the central act of waste management legislation in Croatia. It places significant emphasis on various aspects of waste management, including the separate collection, storage, transport, and treatment of waste. Priority is given to recycling recyclable materials when it is ecologically appropriate and feasible to do so. 

To guide and implement waste management practices, Croatia has issued regulations, directives and instructions on waste management in specific circumstances and for specific types of waste. In the context of new construction projects, there is a mandatory requirement for waste separation, necessitating the segregation of specific materials directly at the construction site, depending on specific local rules. 

Owners are typically responsible for ensuring that their properties meet safety standards, and that any necessary maintenance or repairs are carried out to address safety concerns, as well as environmental health, as regulated by law and municipal acts and rules. 

While green lease clauses, such as those related to reporting power usage to landlords, are generally enforceable, their application can vary based on lease terms, the parties involved, and the framework of consumer protection laws. Having that in mind, green lease terms must align with energy efficiency objectives and adhere to the principles of consumer protection, respecting the legal provisions outlined in the Croatian Consumer Protection Act (Zakon o zaštiti potrošača), including data privacy requirements. 

The primary system used is the Energy Performance Certificate (Energetski certifikat). This certificate is a standardized document that provides information about the energy efficiency of a building and can impact the property valuation. It is required for property sales, rentals, and leases. 

Other certificates, such as LEED, BREEAM, Passive House Certification or Green Building Labels, assess diverse criteria including sustainability, energy efficiency, materials, and air quality. They can indicate ESG compliance and make the case for green financing under the EU Taxonomy Regulation. However, they are not yet widespread in Croatia and are not mandatory.   

Requirements are primarily driven by EU directives and national regulations. The Energy Performance Certificate (Energetski certifikat) provides insight into a building's energy efficiency, and it is graded from A+ (most efficient) to G (least efficient). It is required for property sales, rentals, and leases. Croatia promotes the use of renewable energy sources for heating, such as solar thermal and heat pumps, as part of the strategy to reduce emissions. New buildings or significant renovations typically require Energy Performance Certificates. Residential building certificates assess various factors like heating demand, primary energy demand, CO2 emissions, the energy performance factor, water heating demand, heating energy demand, cooling demand, ventilation and air conditioning demand, electrical lighting demand, external envelope thermal demand, water supply demand, and final energy demand. While no specific heating types are banned, heating demand plays a pivotal role for the certificate and in property valuation

Installation of alternative energy supply systems, such as rooftop PV systems, typically requires permits and authorizations from local authorities and grid operators. The specific permits needed may vary depending on the size and capacity of the PV system. Depending on the size and location of the PV system, it may be subject to environmental impact assessment requirements, which is more common for larger installations. The EU Solar Rooftops Initiative sets forth a gradual approach to the installation of solar energy systems across different building categories, commencing with new public, commercial, and residential structures. The legal obligations pertaining to PV systems on new buildings are rooted in the EU's Energy Efficiency of Buildings Regulation, which is integrated into the Building Act.   

Depending on the location and type of charging point installation, permits or authorizations are required from local authorities or grid operators. 

As of 2020, the Croatian Building Act prescribes mandatory electric vehicle charging infrastructure in new and existing buildings, with variations depending on the type of building and number of apartments in the building. 

No – however, the contracting authority must refuse the bid if it determines that it is extremely low because it does not comply with applicable obligations under national and international environmental, social and labour law that the tenderer must comply with, including collective bargaining agreements, in particular the obligation to pay the contracted salary. Moreover, the contracting authority is allowed (but not obliged) to impose specific conditions for the performance of the contract related to environmental, social and labour law. 

The Corporate Sustainability Due Diligence Directive (CSDDD) aims to enhance sustainability in corporate activities and requires specific companies to carry out thorough due diligence of their supply chains to identify and mitigate environmental and social risks. As the CSDDD is currently in the drafting phase, it does not impose specific obligations on real estate investors in Croatia. Unlike some other countries, such as Germany with its Supply Chain Act (Lieferkettengesetz), Croatia has not introduced national legislation addressing the issues covered by the CSDDD. 

Croatia mandates ESG reporting in accordance with the EU Non-Financial Reporting Directive (NFRD), incorporated into its Accounting Act (Zakon o računovodstvu). The obligations apply to: 

1. Publicly significant firms with limited reporting duties. 
2. Large entities that exceed at least two of the following thresholds: EUR 20 million in balance sheet total, EUR 40 million in revenue, or an average of 250 employees (with limited reporting duties). 
3. Large publicly significant firms with an average of 500 or more employees, subject to full reporting obligations under the NFRD. 

Furthermore, pending the transposition of the Corporate Sustainability Reporting Directive (CSRD) into Croatian law, these reporting obligations are expected to expand. 

Real estate investors may also find themselves requiring ESG compliance reporting due to the EU Taxonomy Regulation. Additionally, real estate funds must address Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector concerning the disclosure of ESG criteria for green property projects. 

Croatia implemented Directive (EU) 2019/882 on the accessibility requirements for products and services through the Technical Regulation on Ensuring Accessibility of Buildings for Persons with Disabilities and Reduced Mobility (Pravilnik o osiguranju pristupačnosti građevina osobama s invaliditetom i smanjene pokretljivosti), which will enter into force on 28 June 2025. Until that date, people with disabilities and reduced mobility are entitled to the following, according to the existing regulation: 

Accessible entrance: Buildings should have accessible entrances (e.g. ramps, barrier-free walkways, etc.) that allow persons with disabilities and reduced mobility to easily enter and exit the building.  

Accessible sanitary facilities: Sanitary facilities in buildings should be adapted for persons with disabilities. 

Accessible elevators and lifts: In multi-storey buildings, elevators and lifts should be accessible to persons with disabilities. 

Signage and signalling: Buildings should have proper signage and signalling to facilitate the movement of persons with disabilities. 

Adaptations for the blind and visually Impaired: Buildings should have appropriate adaptations for the blind and visually impaired, including tactile markings and audible signals at traffic lights. 

Adaptations for the deaf and hard of hearing: Buildings should be equipped for persons with hearing impairments, including informational signage and sound amplification devices. 

Parking adaptations: Parking areas should have a designated number of parking spaces reserved for persons with disabilities. 

Education and information: Buildings providing public services should ensure that information is available and accessible to persons with disabilities. 

Planning and design: The regulation also imposes obligations on the planning and design of new buildings with regard to accessibility.