GRESB assesses and benchmarks the ESG performance of real assets, providing standardized and validated data to capital markets. We were established in 2009 by a group of large pension funds who wanted to have access to reliable data on the ESG performance of their real estate investments. In 2015, a group of ten founding infrastructure investors came together to establish the GRESB Infrastructure Assessments. In the intervening years, GRESB has grown to become the leading Environmental, Social and Governance (ESG) benchmark for real estate and infrastructure investments across the world.
Our efforts over the last 10 years have focussed on collaborating with the industry to define a common approach to ESG measurement and reporting and building a high-quality data ecosystem to support it. Read our “10 years of GRESB” report for more details. This heritage, plus four years of reporting on GRESB infrastructure, provides a strong foundation for the future. We are now entering a new phase of work where we will place more focus on performance data quality and scoring in the Assessments and benchmarks. The restructuring of our 2020 Assessments into separate Management and Performance Components is an important step in enabling us to support this new phase of work.
The annual Assessment development process is informed by in-house data analysis, market research, detailed gap analysis/alignment work, feedback from Assessment users and strong participation from our governance groups (described conceptually in the figure below). This approach ensures that our Assessments and benchmarks are shaped and driven by the stakeholders we serve and helps move the entire industry closer to our shared vision of sustainable real assets.
April – November 2019: Internal review and gap analysis between the most important industry standards and the Assessments. This involved:
- Mapping ESG topics and metrics covered by other reporting standards and frameworks relevant to our stakeholders;
- Identifying areas of potential alignment between those topics and our Assessment;
- Reviewing and analysing the current responses to all indicators;
- Reviewing which indicators and metrics were of limited analytical value or of limited interest to investors, and evaluating whether these would be kept or amended.
November 2019 – January 2020: Engagement with our governance groups, the Infrastructure Advisory Board and the Infrastructure Benchmark Committee, to discuss the proposed changes and to generate further input into the Assessments.
January 2020: Incorporating final comments and publishing the pre-release of the 2020 Fund and Asset Assessments.
Mindful of how the GRESB Infrastructure Assessments have developed over the last four years, changes this year are incremental, and focused on ensuring that the Assessments are fit for purpose and ready to support a greater focus on performance over the next few years. The Fund Assessment has been further aligned to the Asset and Real Estate Assessments. Similar to the Real Estate Assessment, the Asset Assessment has been split into distinct Management and Performance Components. The Management Component has been streamlined with some indicators merged or removed. In addition, the integrated materiality assessment has been refined.
The Fund Assessment now consists of a Management Component only, with the scores of the fund’s underlying assets informing the fund’s performance score. The Asset Assessment consists of both a Management and Performance Component. Assets can complete either Component, but will only obtain a GRESB Score if they submit both Components.
Overall, the 2020 Assessments provide more consistency between Infrastructure and Real Estate and an improved alignment with other relevant standards and frameworks. The Assessments also lay the groundwork for us to provide new data and analytical tools in the GRESB portal and support a further evolution in data quality.
The Fund Assessment has been reviewed and further aligned with the Asset Assessment and the GRESB Real Estate Assessment. The Fund Assessment will consist of a Management Component, called the Management Component – Infrastructure Fund, which is aligned with the Management Component in the Asset Assessment. The Performance Component of the Fund Assessment will simply comprise the Asset Assessments for the underlying assets. The new Management Component – Infrastructure Fund has been split into five aspects:
- Risk Management
- Stakeholder Engagement
Changes relating to content
New indicators have been added in employee engagement, reflecting the importance of these stakeholders to the ESG performance of funds. The new indicators will not be scored in 2020. The indicator on ESG monitoring has been removed since this monitoring is better reflected in the assessments of the underlying assets. For the same alignment reasons, several metrics have been added, changed or removed.
Fund score names
In order to clarify the use of the various Fund scores, their names have been revised. Funds completing the Management Component will obtain a Management Component Score – Infrastructure Fund. If more than 25% of their underlying assets complete both the Asset Management and Performance Components, the average aggregated GRESB Scores for those assets will provide the Performance Component Score for the Infrastructure Fund.
The Assessment has been split into Management and Performance Components, which in turn have been organized into new aspects to better represent the underlying indicators. The result is improved alignment with other reporting standards and frameworks and more consistency between the Real Estate and Infrastructure Assessments.
The Management Component will focus on management and processes and be pitched at the organizational level. The Performance Component will focus on measuring performance and be pitched at the asset level.
The Management Component is suitable for any type of infrastructure company, asset and investment strategy. It is validated, scored and peer-benchmarked using the globally recognized GRESB methodology, and can be completed individually or in combination with the Performance Component. Each Component determines an individual score, but only entities that submit both Components will receive a GRESB Score and GRESB Rating.
Materiality approach refined
The integrated materiality assessment is a fundamental element of the Asset Assessment and tailors each Assessment to the particular characteristics of the participating asset. A thorough review of the materiality approach resulted in new ESG issues, materiality factors and sectors being added, and weightings being refined for certain ESG issues.
Importantly, the materiality threshold has been lifted from ‘No relevanceʼ to ‘Low relevanceʼ so that issues deemed of ‘No relevanceʼ or ‘Low relevanceʼ will no longer be scored (previously ‘Low relevance issues were scored). This reduces the number of indicators that need to be addressed by participants and lowers the reporting burden.
The description of reporting boundaries has been clarified by providing checklists of ancillary activities, allowing for exceptions for particular indicators to be more easily reported. These descriptions are essential to allow reporting boundaries to be further standardized in the future, thereby facilitating benchmarks based on fair comparisons.
The validation process has been reviewed and improved in 2020. There will be a heavier focus on automatic validation of all indicators using rules and (for the first time in the Infrastructure Assessment) outlier checks. Manual validation will focus on the most relevant indicators and remove the need for evidence upload for less important indicators. The indicators and evidence that will be manually validated will be defined and consistently applied from year to year.
Asset score names
Assets completing the Management Component – Infrastructure Asset will receive a Management Component Score – Infrastructure Asset. They will only obtain an overall GRESB Score – Infrastructure Asset if they also complete the Performance Component – Infrastructure Asset.
Participants will have the flexibility to complete either or both Management and Performance Components. New participants might start with the Management Component only, as a simple assessment with low reporting burden. This will assist with growing participation, for example in emerging markets. Some participants may only want to complete the Performance Component, to use the assessment for reporting their performance data only. Importantly, the premier measurement of ESG performance for investors will remain the full GRESB Assessment (i.e. Management plus Performance Components). This will be emphasized in our communications to prevent any intentional or accidental greenwashing.
In the GRESB Model, the Management Component score will replace the Management & Policy (MP) score and the Performance Component score will replace the Implementation & Measurement (IM) score.
The Management Component – Infrastructure Asset has been restructured into five aspects. The new aspects align with the Real Estate Assessment and external sustainability frameworks where practical. The new aspects have been mapped to the 2019 indicators and aspects, enabling comparisons over time;
- Risk Management
- Stakeholder Engagement
Changes relating to content
Several indicators were amended, from slight name changes, added or removed metrics, to changes to the structure of indicators.
The Performance Component – Infrastructure Asset comprises the 2019 aspects on Performance Indicators and Certifications & Awards, as well as the 2019 indicators on employee training (formerly MA7) and implementation of actions (formerly RO4). The Component has been restructured in alignment with the 2020 Real Estate Assessment into twelve aspects:
- Output & Impact
- Health & Safety
- Greenhouse Gas Emissions
- Air Pollution
- Biodiversity & Habitat
- Certifications & Awards
Materiality approach refined
With the lifting of the materiality threshold, the number of indicators that need to be addressed in the Performance Component will be reduced for most participants. This should mean a significant reduction in reporting burden. Indicators that are not material may still be reported on, on a purely optional basis.
Reporting on implementation of actions (formerly RO4) has been split into separate Environmental, Social and Governance indicators for more structured communication of the implementation of measures and actions. The indicators on customer and employee satisfaction programs (formerly PI9.1 and PI10.1) have been removed since these actions can be reported under implementation.
All metrics have been reviewed against external standards and frameworks such as CDP, DJSI and GRI. As a result, several metrics have been renamed, modified or removed for better alignment.
Questions have been added on the external review of quantitative data to enable us to further improve data quality. The new questions will be unscored.
The Assessment Pre-Release is now available:
While we do not anticipate making any material changes, we reserve the right to make modifications prior to the official start of the 2020 reporting period on April 1 and the official release of the 2020 Infrastructure Assessment. We will publicly announce any such modifications.
The Resilience Module will run for the third year and will continue being offered as an optional supplement to both the Infrastructure Fund and Asset Assessments. The Module is scored separately and does not influence other scores.
The road ahead
Looking ahead, we will continue to work with our governance groups and industry stakeholders to further develop the Assessments, benchmark methodology and the resulting analytics.
Changing emphasis from Management to Performance
Over the coming years, the emphasis of the Assessments will shift to having a greater focus on performance. This will be achieved through four main mechanisms:
- Performance indicators scoring will place less prominence on reporting and transparency to focus more on absolute and relative performance.
- Performance indicator metrics will be standardized to allow for better benchmarking, moving to metrics that allow absolute and relative comparisons to be made, rewarding actual performance based on intensity metrics, and assessing performance against suitable targets and/or year on year improvements.
- The weightings within the overall Assessment will move from a ratio of 50:50 between Management:Performance in 2020 towards a 30:70 ratio, placing increasing weighting on performance indicators and certifications.
- As the weighting emphasis moves, we will continuously evaluate the relevance of indicators in the Management Component, retaining only those that add the most value (i.e. where the indicators differentiate between participants, where investors have most interest, where the metrics are easy to report, measure and validate, and/or where the score weighting remains significant).
These changes will take place progressively and be clearly flagged in advance to give time for the industry to understand and adjust to expectations. Simultaneously, we will use the performance metrics to enable reporting of impacts in alignment with the UN Sustainable Development Goals.
Reducing reporting burden
We will continue to make further improvements to reduce the reporting burden, including:
- Continuing to improve alignment with the most relevant industry reporting frameworks such as PRI, CDP, DJSI (RobecoSAM), GRI, SASB and IFC. GRESB has built relationships with these organizations and will continue to explore opportunities for further streamlining of our assessments.
- Automating data transfer from the participant side through greater use of spreadsheets and data APIs. Whilst this requires some investment from GRESB, data partners and participants in the short term, it will ultimately streamline the processing of data and reporting inputs, requiring far less human intervention and ultimately reducing both resource requirements and the risk of errors.
Transparency is one of GRESB’s core values. We have had considerable feedback on the need for greater transparency of our own practices and we have responded by publishing our entire Assessment methodology and scoring documentation. We will continue to provide even greater transparency to assist participants to better understand our requirements and processes and thereby enable them to report more accurately and get more direct and immediate feedback on their ESG performance.
Changes will include:
- Providing the scoring details upfront with the Assessment Reference Guides and in the Portal.
- In the longer term, providing draft scoring within the Portal so that participants can see their draft (unvalidated) score ‘as they go’, thus providing immediate feedback and enabling them to ask ‘what-if’ questions.
- Providing details of the validation decisions in the benchmark report including what was validated at what level and why.
- Providing immediate feedback on calculated variables derived from assessment inputs such as intensity metrics. In this way, participants will be immediately aware of their performance and can use this to start thinking about how to improve their performance immediately, rather than waiting until the results are released. This also provides a check for them on their inputs, since these calculated variables should be more comparable to their peers than their raw absolute metric inputs.
More flexible outputs
Consistent with developments in the world of ‘big data’, GRESB investor members are seeking to use their data in more varied and flexible ways. We will provide both tailored solutions around specific products and greater flexibility for advanced users in the future. These outputs will be developed through close engagement with investors to include:
- Customized impact analyses and peer group comparisons
- Enhanced portfolio analysis including footprinting based on aggregated asset data
- Tailored reports on portfolios aligned with key reporting frameworks
More insight on participant performance
To provide more insights on participant performance GRESB will:
- Standardize the metrics to ensure that all participants within each sector are reporting comparable data. This includes developing standards for boundaries and assumptions and ensuring that data is accurate at asset level.
- Improve data cleaning mechanisms such as outlier checks and pre-validation to minimize participant entry errors.
- Add new indicators where needed to address emerging material issues, such as:
- Carbon footprinting and net zero carbon
- Data availability and quality
- Social impact
- Social licence (using external, rather than self-reported data)
- Supply chain (including Modern Slavery)
For more information about the future development of the GRESB Infrastructure Assessments and our priorities to achieve our shared vision of sustainable real assets, click here.