GRESB

The ESG Benchmark for Real Assets

Search Results for: results 2015

A Sneak Preview of the 2015 GRESB Results: Global Leadership and a Record-Breaking Response

By

GRESB has a simple but powerful mission: Create better built environments by enabling institutional investors with actionable information about environmental, social, and governance (ESG) performance on their real estate investments. GRESB carries out this mission with a systematic process to assess, score, and benchmark property companies and funds around the world. GRESB members use this information to inform their investments and improve their portfolios.

In 2015, GRESB hit important new milestones (exact numbers to follow on September 2):

  • The most respondents ever: Over 700 reporting entities
  • The largest aggregate value ever: More than USD 2.3 trillion
  • The most Green Stars ever: 350 entities

The 2015 GRESB assessment provides unique insights into global trends in ESG management and performance. The results reflect two essential dimensions of performance: Management & Policy and Implementation & Measurement. The Management & Policy dimension is the foundation for effective action, including plans, assessments, and the organizational infrastructure required to collect and analyze data. The Implementation & Measurement dimension offers information about specific actions and operational achievements, including performance indicators for energy, greenhouse gas emissions, water, and waste. This year findings are summarized with respect to critical global issues (“themes”), including energy, water, waste, climate change, and human health.

A few highlights of trends between 2014 and 2015 include (just a teaser…):

  • Sustainability requirements for procurement: 76% from 65%
  • Building commissioning: increased to 35% from 8%
  • Monitoring of employee health and safety: 71% from 48%
  • Sustainability requirements in standard lease contracts: 61% from 43%
  • Climate change risk assessments for standing investments: 58% from 45%

These, and many more plans, processes, and actions contributed to significant overall improvements in energy efficiency, reduction in water consumption, and increased renewable energy generation.

Taken together, the 2015 GRESB results provide a clear picture of a global industry making steady progress to institutionalize the management of ESG issues. Trends indicate convergence around a core set of management practices and illustrate engagement across all property types and geographic regions. This shows progress toward GRESB’s mission of promoting better buildings for people and the environment.

This article was written by Chris Pyke.

2019 GRESB Results Photo Round up

By

The 2019 GRESB Results events period is almost over- with 22 events being held across 4 continents and 14 countries. More insights can be found across our social media channels, and the programs, as well as slides from the presentations, are all publicly available.

New York City

London

Sydney

Our first three 2019 GRESB Real Estate Results events all kicked off with a full house!

New York City

From the left:
Dan Winters – Head of Americas, GRESB
Anna Murray – Vice President, Sustainable Investing, BentallGreenOak
Sander Paul van Tongeren – Co-Founder & Managing Director, GRESB
Steven Hason – Head of Americas Real Estate and Infrastructure, APG
Dean A. Shigenaga – CFO, Alexandria Real Estate Equities, Inc.

Photo Credit: Alexandria Real Estate Equities, Inc.

London

Panelists at our Real Estate event in London included representatives from GRESB, Cushman & Wakefield, Aegon Asset Management, Siemens Smart Infrastructure, and Landsec

Sydney

Our Head of Asia Pacific, Ruben Langbroek, presenting GRESB’s 10 years of impact

Hong Kong

Our Director of Real Estate, Roxana Isaiu, presenting the 2019 GRESB Real Estate Results

Panel discussion with representatives from Manulife Investment Management, New World Development Company, GRESB and BNP Paribas Asset Management

Singapore

In a live poll, the majority of attendees believed the main driver of ESG integration in the real estate sector over the last decade is represented by the increased awareness and understanding of risks and opportunities

Stockholm

Our panelists included (from the left)
Johanna Jeansson – Nordic Economist, Bloomberg
Kübra Ayata – Projektledare Teknikutveckling, Vasakronan
Maria Sandell – Head of Sustainability, Kungsleden
Filip Elland – Head of Sustainability, Castellum

San Francisco

Our Head of Americas, Dan Winters, and our Director of Americas, Neil Pegram, presenting GRESB’s 10 years of impact

Data quality panel with representatives from Morgan Stanley, USAA Real Estate, Boston Properties, and Measurabl

Copenhagen

A case study presented by Andreas Stang, Senior Portfolio Manager and Head of ESG at PFA

Some of our Sector Leaders

Rotterdam
GRESB Real Estate Results Event in Rotterdam – CBRE Dutch Office Fund
London
GRESB Infrastructure Results Event in London – OIESGA
Sydney
GRESB Infrastructure Results Event in Sydney – AMP Capital and Australia Pacific Airports
London
GRESB Infrastructure Results Event in London – Macquarie

New York City
GRESB Infrastructure Results Event in New York City – Pinedale Energy Partners
Paris
GRESB Real Estate Results Event in Paris – Cegereal

London

Panel discussion moderated by our Head of EMEA, Josien Piek.
Panelists included representatives from Equity Vantage Infrastructure, BlackRock, UPP, and GLOBALVIA

Brussels

Our Co-founder and Managing Director, Sander Paul van Tongeren, presenting the 2019 GRESB Real Estate Results

Beijing

Our 2019 GRESB Real Estate results event hosted by Cushman & Wakefield

New York City

Johan Pfeiffer, Managing Director and Operating Partner at Morgan Stanley, introducing the event’s program

Sydney

In a live poll, the majority of attendees believed that the most pivotal moment related to ESG in Infrastructure in the last 10 years was the Paris Agreement at COP in 2015

Netherlands

Our Director of Infrastructure, Rick Walters, presenting the 2019 GRESB Infrastructure Results in Zeist

Paris

Ludovic Chambe, Sustainable Development and CSR Director at CBRE

Charles van Thiel, Real Estate Associate at GRESB, presenting the 2019 GRESB Real Estate Results for the French Market

Tokyo

A full house for our last 2019 GRESB Results event in Asia!

2019 GRESB Real Estate Results

Contents

Global Coverage Aspects Developer Health & Well-being Validation Resilience Public Disclosure Americas Asia Europe Oceania Sector Leaders

DOWNLOAD 2019 SNAPSHOT

GRESB GLOBAL ESG COVERAGE

GLOBAL

The industry has taken great strides in recent years to increase ESG data coverage at the portfolio level, and underscore this with improved reporting at the asset level. In 2019, 89% of entities reported their environmental performance data at the asset level. This represents more than 66,000 assets of the total 100,000 assets covered by the benchmark.

1,005 property companies, real estate investment trusts (REITs), funds, and developers participated in the 2019 GRESB Real Estate Assessment, an increase of 12% on the previous year.

The listed real estate dataset covers 240 entities, representing about 65% of the market capitalization of the major developed listed real estate indices. Together with GRESB Public Disclosure data (an additional 425 listed entities), GRESB datasets cover all major developed listed real estate indices.

The non-listed real estate dataset covers 723 private entities, representing 75 of IPE Real Assets’ Top 100 Real Estate Investment Managers (participating with at least one entity) and 47 of PERE 100: institutional capital’s top manager picks.

The 2019 global average GRESB Score increased to 72, up from 68 in 2018. Listed entities still outperform their private counterparts, but the gap has narrowed significantly.

  • Average GRESB Score – Listed entities: 73 (2018: 69)
  • Average GRESB Score – Private entities: 72 (2018: 67)

The regional breakdown of GRESB Scores shows Oceania (80.9) continuing to lead the world. The Scores for Europe (70.7), Americas (72.1) and Asia (72.7) have clustered, showing only small differences in performance.

Competition is highest among GRESB 4 Star entities, where a GRESB Score difference of only 6.4 points separates the highest from the lowest-performing entity. By comparison, GRESB 1 Star entities have a 59.2 point differential and an average score of 58 (56 in 2018). The GRESB 1 Star cohort is comprised of a relatively large group of first-time participants, many of whom are using the 2019 reporting period to familiarize themselves with the GRESB Assessment and identify future priorities.

 Top LimitBottom Limit(Difference)Average ScoreAverage IMAverage MP
5* Rated Entities98.285.213.189.788.493.3
4* Rated Entities85.278.86.482.080.087.7
3* Rated Entities78.870.78.175.072.582.1
2* Rated Entities70.661.39.366.352.078.5
1* Rated Entities61.22.159.247.144.156.6

86% of GRESB Real Estate participants received the “Green Star” status, an increase from 78% in 2018. This means they obtained a GRESB Score higher than 50 on both dimensions (Implementation & Measurement and Management & Policy), signaling an integrated approach on ESG issues.

GRESB is connecting companies and funds at the beginning of their sustainability journey with a community of leaders, helping them to close the performance gap. First-time participants enter the benchmark with an all-time high score: 58. The average GRESB Score of the 42 entities who have been consistently reporting for 10 years is 84 (80 in 2018).

 DiversifiedRetailOfficeIndustrialResidentialHotelsHealthcareOtherDiversified - Office/RetailDiversified - Office/IndustrialDiversified - Office/ResidentialStorage
% 5* 10%29%33%13%15%12%13%35%17%15%14%0%
% 4*17%24%21%19%22%12%25%6%26%12%7%17%
% 3*24%15%17%21%18%35%13%29%19%21%31%0%
% 2*31%14%15%15%16%24%6%12%21%21%34%0%
% 1*17%18%13%31%30%18%44%18%17%30%14%83%

DEFINING SDG MATErIality

There is an emerging recognition among GRESB Investor Members that the UN Sustainable Development Goals (SDGs) provide a useful reference point for both guiding the intent and measuring the impact of their investments. We have defined SDG materiality for real assets which provides the foundation for our work with our governance groups to agree upon a standardized set of metrics to track the contribution of real estate and infrastructure investment towards achieving the goals.

GRESB performed the mapping exercise with a top-down approach, first beginning with the alignment to the goal, then to the target, and lastly to the indicator. The alignment was ranked on a 0-3 scale (0- “Not aligned”;  3 – “Aligned”)

In addition to the alignment mapping, we analyzed which SDGs are the most frequently addressed in public reporting by GRESB participants. The highlighted SDGs in the image are the most material to the real estate sector.

Sustainability Aspects

The GRESB Assessment is structured into seven unique sustainability Aspects, together with a separate Aspect for New Construction & Major Renovations. The 2019 data shows notable year-on-year improvements in all Aspects with the exception of Management, which remains unchanged. A selection of insights per Aspect is shown below.

Over 90% of GRESB participants now have multiple ESG objectives that are fully integrated into their business strategy. The majority have established management structures to support execution on these ESG objectives:

  • 73% have a dedicated employee for whom sustainability is the core responsibility (2018: 69%)
  • 97% have an employee for whom sustainability is among their responsibilities (2018: 96%)
  • 69% have annual performance targets that incorporate ESG issues, which are linked with financial consequences (2018: 57%)

In 2019, the majority of GRESB participants use external consultants (79%), compared to less than 30% in 2012. Organizations typically engage a third-party for specialized services, such as data management. 

This data is also increasingly being tracked using external data management systems. 74% of participants used an external data management system, often provided by one of GRESB’s Data Partners.

98% of 2019 participants have a sustainability task force in place. Notably, 62% of the task forces include a representative from the Board of Directors. 

88% of participants have annual performance targets for employees related to ESG, but only 45% provided sufficient evidence to validate this claim. 41% have members of the Board of Directors with financially-linked ESG performance targets, while 30% have similarly structured targets for members of the senior management team.

SDG 5 focuses on women’s full and effective participation and equal opportunities for leadership at all levels of decision making.

Participants are increasingly monitoring the diversity of governance bodies and employees, with 91% doing so in the 2019 Assessment. Gender ratio is the most commonly tracked diversity metric across all regions, with 77% of participants reporting.

Globally, the gender ratio of governance bodies is 26% women to 74% men. In Oceania, women represent 31% of governance body members, compared to 16% in Asia.

Diversity can also be tracked by looking at age groups, gender pay gap and racial diversity: 

  • The Americas have both the highest proportion of employees under 30 and over 50 years old. 
  • Participants from the Americas consider racial diversity to be a material indicator with 12% higher reporting than other regions. 
  • The largest discrepancy between regions is in tracking the gender pay gap. 81% of participants in Oceania track this metric, compared to 38% in the Americas.

SDG target 12.6 encourages organizations to integrate sustainability information into their reporting cycle.

The GRESB universe has consistently improved ESG disclosures, with 97% of participants reporting their ESG actions and/or performance in 2019:

  • 79% of participants have stand-alone sustainability reports in 2019, compared to 68% in 2017.
  • Entity-level sustainability report disclosures increased from 33% to 46%.
  • ESG reporting in annual reports increased from 63% of participants in 2017 to 69% in 2019.
  • 88% have a dedicated ESG section on their corporate website.

The 2019 results find larger numbers of participants making public commitments to a broader number of ESG leadership standards or groups:

  • The United Nations-supported Principles for Responsible Investment (PRI) continues to be the most widely adopted ESG leadership framework.
  • The recommendations by the Task Force on Climate-related Financial Disclosures (TCFD) have seen rapid market adoption since their release in 2016. In 2018, 179 entities reported a public commitment to support the TCFD. The 2019 GRESB results show that 38% of GRESB participants (i.e. 363 entities managed by 130 organizations) are now publicly supporting the TCFD. Out of these 130 organizations, 73 are listed companies.
  • Many GRESB participants are active in Better Buildings Partnerships (BBPs). BBPs operate globally, working with cities to improve building-related resilience and energy efficiency.
  • Other ESG leadership initiatives GRESB participants included are: The Carbon Disclosure Project (CDP), Climate Action 100, Investors Group on Climate Change (IGCC), Sustainability Accounting Standards Board (SASB), Climate Bonds Partners Program, FTSE4Good, PFA21: Principles for Financial Action for the 21st century, Portfolio Decarbonisation Coalition, WorldGBC Net Zero Buildings Commitment.

SDG 8 encourages organizations to take immediate and effective measures to eradicate child and forced labor, and end modern slavery and human trafficking.

GRESB participants have increasingly adopted child and forced labor policies over the past three years. As shown in the chart, these topics are also increasingly included in organizational risk assessments. This trend aligns with policies implemented by the UK and Australian Governments mandating companies to disclose steps taken to combat Modern Slavery.

SDG 9 intents to upgrade and retrofit infrastructure and industries to make these sustainable by 2030. SDG 7 aims to ensure access to affordable, reliable, sustainable and modern energy for all.

The GRESB universe is contributing to SDG9 by implementing efficiency measures, which in turn impact energy, water, waste and carbon emissions.

94% of entities have implemented energy efficiency measures during the last four years. Beyond the typical retrofit of lighting systems to LED or upgrades to HVAC systems, what sets entities apart are some of the more innovative actions that have been taken:

  • The increasing numbers of electric vehicles, especially in Europe, creates a growing demand for EV charging stations. GRESB participants are responding by installing EV charging stations at their properties, with some participants even creating a brand around their EV infrastructure.
  • The increased use of natural daylight by way of skylight installations is leading to higher energy efficiencies. Solar reflective film on building windows and air curtains in doorways are frequently reported by GRESB participants. Some participants operate night walks to identify lights that have been left on inadvertently.
  • Regarding water efficiency, 87% of entities have implemented measures to decrease water use at the asset-level. The most common actions taken by participants include the installation of efficient fixtures with occupancy sensors, xeriscaping and drip irrigation. Retrofitting older toilets to reduce water consumption is frequently reported which, in turn, generates less waste because the toilets are reused. Some of the more innovative measures reported include leak detection systems (with some participants using QR codes to report leaks), pay-to-use toilets and rainfall gauges to reduce water consumption for landscaping purposes.
  • Waste efficiency measures have been implemented by 86% of entities during the last four years. Beyond the standard increase in recycling programs, waste signage, and on-site composting, some entities have begun to use more innovative measures to increase the proportion of waste diverted from landfills. Bin right-sizing, which reduces the overall number of trips made by hauler services, has seen an increase, as well as e-waste recycling programs that remove hazardous materials used in electronics from being added to landfills.
  • Participants have also introduced coffee-cup recycling programs to prevent single-use cups that are typically not recyclable from making it to the landfill. Water refill stations have been consistently introduced in assets which decreases the demand for single-use water bottles. In addition, in some entities, even something as small as cigarette waste now has a recycling program.

The charts shows the main methods used by participants to monitor energy and water consumption data, as reported over the years 2017-2019. The different methods have an impact on the timeliness and reliability of the collected data.

Smart meters provide almost instantaneous meter readings, require no manual intervention and can lead to significant savings. That’s why more entities choose this method today – 44% used Automatic Meter Readings (AMR) to track energy consumption in 2019, up from 39% in 2017. For water consumption, 24% of entities reported AMR data in 2017, which increased to 27% in 2019. These positive signals suggest that the real estate industry sees the need for reliable utility data and is willing to invest in technology that facilitates access to it. 

Alternative methods, which are typically less reliable and more prone to error, include engagement with utility providers or tenants. Access to tenant consumption data remains one of the biggest challenges in the real estate industry. In many markets, tenants have no legal obligation to share this data with their landlords. As a result, in many instances, the sharing of tenant consumption data is agreed via specific clauses included in lease contracts (commonly known as “green leases”).


In order for investors to fully understand the environmental impact of their real estate investment, managers need to report on the whole building, including common areas and tenant space. The GRESB results show that full data coverage for environmental performance indicators remains a challenge for participants.

The chart shows the distribution of energy data coverage (in %) from 2015. The yearly averages – shown in the color-coded boxes on the middle-left -show that participants have steadily improved their data coverage over the last four years. In 2019, the average coverage is 68.4%, an increase of 8.9 percentage points compared to 2015.

The progressive curves on the chart provide a more granular perspective. At the bottom left, the curves track participants with zero data coverage over the years. This share has decreased from 12.8% in 2015 to 3.4% in 2019. In contrast, the share of participants with 100% portfolio data coverage has remained stable since 2015, indicating that overall improvement primarily comes from managers with low initial data coverage.

  • After three years of consecutive reductions, global like-for-like energy consumption increased by 0.20%.
  • Global GHG emissions fell by 2.66%, a lower rate than the 4.91% reduction in the previous year. This slower reduction rate will not be enough to meet the 1.5-degree target set out by the Paris Climate Agreement.
  • Water consumption is down slightly in 2019 (0.12%).

The past six years have been transformational for ESG data quality in the real estate industry. While submitting ESG data for third-party review was still limited in 2014, it is now considered to be common practice when it comes to energy and water data. In 2019, only 15% of reported energy data and 23% of water data is not externally reviewed, a notable improvement in just six years.

Of the three levels of third-party reviews, only external verification and assurance are required to be carried out in line with globally recognized standards.

In 2019, only 38% of energy data and 29% of water data was subject to third-party review in line with a recognized verification/assurance standard, which suggests significant potential for improving the overall data quality within the global real estate sector.

The most widely adopted standards are ISO 14064-3, ISAE 3000 and AA1000AS. Interestingly, whilst ISO 14064-3 was initially created to set principles for verifying GHG data, its requirements for selecting validators, determining the approach, and preparing validation statements widely serves as guidance when it comes to reviewing water usage data. ISAE 3000 is generally applied for sustainability audits of non-financial information, thereby requiring the involvement of accredited auditors. AA1000AS was set up as the first sustainability assurance standard and provides a platform to align the non-financial aspects of sustainability with financial reporting and assurance.

Any type of review or interaction with the data meant to filter out errors, identify outliers or identify unusual patterns, has added value to the final dataset. However, it is worth mentioning that among the three levels of third-party reviews  (i.e. check, verification, assurance), only external verification and assurance are required to be carried out in line with globally recognized standards.

Most verification and assurance standards consist of quality guidelines underpinning the process of collecting and checking data through systematic, independent and documented process against predefined criteria. Such verification and assurance services can only be provided by accredited professionals, which also makes the provision of supporting evidence more straightforward compared to the other level. 

The vast majority of participants that claim to assure their data can also support their statement through clear, standardized supporting evidence. The assurance process is well defined and understood in the industry, whereas data verification or data checks are often misinterpreted. 

The most common reasons why supporting evidence for “Data verification” and “Data checks” was not accepted:

  • Referred to the wrong consumption type (e.g., documents demonstrating the external check of water data uploaded in the energy section)
  • Did not include any mention of the data verification standard used
  • Did not include a third party statement (i.e., the involvement of a third party is not evidenced) 
  • Were not specific to the reporting entity (i.e., generic descriptions of data verification)
  • Were not specific to the reporting period (i.e., documents referring to reporting year 2017, 2016, or older)
  • Insufficient or inadequate translation of documents provided in languages other than English

See more information on validation

SDG Target 7.3 aspires to double the energy efficiency improvement rate of the global economy by 2030. In order to meet this target, energy efficiency will need to improve with a 2.6% annual rate between 2010 and 2030.

The chart shows actual like-for-like energy consumption by GRESB participants falling behind the SDG target for the first time since 2010. In addition, the aggregated energy efficiency targets for 2019-2030 are not ambitious enough to meet the SDG Target 7.3. On a more positive point, more GRESB participants have set energy efficiency improvement targets: 79% in 2019 compared to 71% last year.

We see a great opportunity for the real estate sector to leverage these transparency efforts and take bolder actions to improve energy efficiency profiles ensuring alignment with national and global goals.

Two industry-leading initiatives in which companies pledge to reduce carbon emissions are the Science-Based Targets initiative (SBTi) and the WorldGBC’s Net Zero Commitment. Of the 29 GRESB managers listed on the SBTi website committed to setting Science-Based Targets, 18 have set targets that were approved by SBTi.

Additionally, nine entities have committed to the WorldGBC’s Net Zero Commitment, pledging to have net zero carbon operating emissions by 2030. Notably, GRESB has identified three net-zero portfolios in the 2019 benchmark. Of all participants this year, only 29 have set targets to be net zero by 2030.

In April 2019, New York City introduced an ambitious law to curb GHG emissions of real estate properties larger than 25,000 sq ft, requiring them to cut emissions by at least 40% by 2030 and 80% by 2050.

What makes this law unique is that it sets GHG intensity targets for individual occupancy types in the future as well as an associated penalty (USD 268 per tCO2 emitted) if buildings emit more than their allotted amount. The law puts in place property-specific intensity targets for the periods 2024 through 2029 and 2030 through 2034. In this way it enables property investors to model their future carbon costs in a “do nothing” scenario.

Methodology: GRESB has modeled estimated targets from 2034 onwards , needed to achieve an average target of 0.0014 tCO2 e/sf/yr by 2050. To understand how many assets face a “stranding risk”, GRESB property types can be matched against the NYC Occupancy types for which emission targets have been set. Next, carbon intensities for NYC buildings in the 2019 GRESB Asset Database with 100% energy consumption data coverage were calculated using the GHG coefficient numbers predefined in the law. As GRESB only collects aggregated information on fuels and district heating and cooling, GRESB reported fuels were multiplied by the natural gas emissions factor (in terms of kWh), and district heating & cooling consumption values were multiplied by the district heating emission factor, which could lead to a slight underestimation of carbon risk.

The chart shows that GRESB buildings with 100% energy consumption data coverage will likely face limited “stranding risk” in the first few years that the penalty is imposed (2024-2029). However, the number of assets not in compliance with the limit will increase substantially in later years.

As the NYC carbon reduction case study shows, property managers and owners who fail to decarbonize will face penalties if governments and regulators continue to enact on reducing impacts on climate change.

Penalties can either be direct (as in the case of NYC) or indirect through increased pricing of energy consumption. In Europe, many laws intended to improve the carbon profile of buildings set targets in the relative near term. For example, in the Netherlands, office buildings need to have a minimum energy label C by 2023 or they cannot be let out. Similarly, in the UK privately let buildings need a minimum EPC level of C since 2018 (pending exceptions, and a more stringent 2020 deadline).

Against this background, the logical next step is to calculate long term climate transition risks faced by real estate portfolios by developing a climate science-based model based on alignment with the Paris Climate Agreement. The EU-funded Carbon Risk Real Estate Monitor (CRREM) is developing a property type-specific model based on this approach for the European commercial real estate sector. In its first public report, CRREM states that the sector will need to decarbonize by 91% by 2050 in order to align with the 1.5-degree Scenario.

By applying the CRREM model to GRESB participants who have reported asset data, we have projected the transition risk inherent within participating European commercial real estate portfolios with 100% energy consumption data coverage. The preliminary results, based on reported carbon data show a gradual increase in stranding risk over time. By 2030, 29.67% % of Office, Retail, Hotel and Healthcare portfolios will be stranded, which will rise to 74.22% % by 2050. A further analysis is underway that takes into account grid decarbonization.

More results will be available later in 2019

While the use of certification schemes is becoming more common, the fraction of total portfolio floor area covered is still low. Only 8.8% of the total floor area represented by the +100,000 assets covered in the 2019 GRESB benchmark is certified at the time of construction and 15.8% when operational.

With 48% floor area coverage, Hotel leads other property types in certified floor area, narrowly ahead of Office. Industrial and Healthcare have significantly lower building certification rates.

The charts breakdown coverage by the different certification schemes. The first chart is for construction/design and the second operational certification.

Construction/design certification – View larger chart
operational certification – View larger chart

The most widely used certification scheme is LEED, followed by BREEAM and Green Star. In certain markets and for certain property types, local certifications are used more frequently. 

CASBEE, DBJ and BCA Green Mark dominate the Asian market in most property sectors, while BREEAM, HQE and DGNB are preferred in Europe. BOMA’s high levels of adoption in American Industrial places the certification in the leading position for the Industrial sector globally.

Over the past years, topic-specific certification schemes have emerged, most notably focused on health and well-being. WELL (administered by the International Well Being Institute, “IWBI”) and Fitwel (administered by the Center for Active Design) have been raising awareness of how buildings can improve the well-being of occupants. Nevertheless, the number of certified buildings remains low: only 39 certified projects are covered by the 2019 GRESB benchmark.

SDG 8 encourages to protect labor rights and promote safe and secure working environments for all workers

Safety training and monitoring on the rise

In line with SDG 8, the GRESB universe has consistently improved in providing safety training on social issues. Employee safety training increased by 12%, customer/tenant safety training by 10% and community safety training by 8%.

Regionally, Oceania leads with 86% of entities providing training on safety issues. Europe lags Oceania by around 20 percentage points for both community safety and customer/tenant safety training.

95% of participants monitor at least one metric related to employee safety. Once again, Oceania leads with 99% of entities monitoring employee safety compared to 88% in the Americas.

Of the 82% of entities who administer work-station and/or workplace checks in 2019, an average of 89% of employees are covered, which contributes to a healthier and safer individual working environment. 71% of Asian entities have work-station checks compared to 90% of European entities.

Absentee rates have the largest regional discrepancy of any monitoring method with 87% of entities in Oceania tracking the metric compared to only 40% of entities from the Americas. 81% of Asian entities and 78% of European entities monitor absenteeism.

Monitoring injury rates increased notably year-on-year, with 53% of all entities tracking this, compared to only 40% in 2018. 68% of Asian entities monitor injury rates compared to 45% of European entities.

87% of entities have occupational safety requirements in procurement processes which supports increased safety throughout the supply chain. This is up from 68% in 2017.

Progress being made in community engagement and impact monitoring

79% of participants monitor impact on the community, an 8% increase over 2018. Local residents’ well-being is the most widely monitored area of impact with 57% of participants tracking this, up 6% from last year.

93% of participants have a community engagement program that includes sustainability-specific issues. Of these participants, 88% support charities and community groups, while 71% have community health and well-being programs, showing the largest year-on-year increase at 8%.

Employee Satisfaction Survey

In 2019, 90% of participants administered employee satisfaction surveys within the last 4 years, up from 86% in 2018. Internal surveys were administered at a rate of 30% compared to third-party surveys at 67%. Interestingly, the split between internal and third-party surveys is almost identical to tenant satisfaction surveys. 

The percentage of employees covered by both internal and third-party surveys is 93% and 97% respectively with the average survey response rate being just over 80% for both survey types. Survey response rates are much higher for employee satisfaction surveys than for tenant satisfaction surveys. 


Net Promoter Score is an increasingly popular metric of gauging employee satisfaction which measures employee loyalty by asking how likely are you to recommend this company to friends and colleagues. 25% of participants measured Net Promoter Score in 2018.

When it comes to follow-up actions from the survey, 90% of participants have a program in place to improve its employee satisfaction based on the results of the survey. Each improvement program saw increases year over year and is further detailed in the Employee Satisfaction Survey Engagement visual.

Tenant Satisfaction Survey

81% of participants administered tenant satisfaction surveys in the last 4 years, up from 75% the year prior. Internal surveys were administered at a rate of 22% compared to third-party surveys at 59%. 

The percentage of tenants covered by internal surveys is 70% and third-party surveys is 75%.

When looking at overall survey response rates, there are additional challenges for tenant satisfaction surveys over employee satisfaction surveys. There is a 23% decrease in response rate for internal surveys and a 31% decrease for third-party surveys when comparing tenant and employee surveys.

Internal surveys see an overall survey response rate of 70% compared to only 51% for third party surveys. For tenant satisfaction surveys, it’s also interesting to see that third-party surveys see significantly less survey response rates than internal surveys. 

Net Promoter Score saw increased for tenant satisfaction surveys as well, although it is not as popular of a metric in gauging overall satisfaction for tenants. Other quantitative metrics all saw increases and is further detailed in the Tenant Satisfaction Survey Metrics visual.


84% of participants have a program in place to improve tenant satisfaction based on the outcomes of the survey with feedback sessions with asset/property managers being the most popular with 81%. 

The New Construction & Major Renovations (NC&MR) Aspect of the GRESB Real Estate Assessment evaluates ESG management during the design, construction, and renovation of buildings.

In 2019, 420 entities representing 1.6 billion m2 provided information about the ESG performance of their development activities. This includes the 41 participants completing the GRESB Developer Assessment.

See Developer Assessment Results

DEVELOPER ASSESSMENT

Globally, most new construction activity is seen in the Residential sector (347 million m2), particularly in Multi-family assets (217 million m2). This represents a 28% increase compared to 2018.

The property sector with most redevelopment activity is Retail, with a total of 109 million m2 reported to be under major renovation. These figures are mainly representative of a handful of large North American REITs with a focus on Shopping Centers.

While North American shopping malls are being renovated, more industrial assets are being built from the ground up. More specifically, 195 million m2 of industrial assets came online in 2018 in North America (or will become operational in the short term). 

96% of GRESB participants with development activities have a sustainability strategy in place for their projects. These strategies mainly account for energy and water conservation measures and waste management. Supply chain and resilience strategies are still missing from the general approach of 35% of GRESB participants.

85% have sustainability criteria as part of their site selection process – brownfield redevelopment sites and sites with good connection to multi-modal transit networks are most common.    

These practices are representative of a positive trend observed for the past years. In 2014, only 60% entities had waste management policies during the development stage, while in 2019, 91% promote on-site efficient waste management. 

90% of participants align their projects with green building rating standards. In addition, 45% of participants with development projects require a specific level of certification for more than 75% of their projects under development.

For the 51% of GRESB participants that choose to design on-site renewable energy generation solutions in their development projects, solar remains the most widely used source (92% of participants)

Notably, 14% of participants with development activities design their projects in accordance with net-zero energy standards.

81% of participants assess the socio-economic impact of their development activities. More specifically, 61% of reporting entities measure local residents’ well-being, while 35% look at their impact on livability scores. Overall, the socio-economic impact of assets is being more intentionally addressed during the development phase compared to the operational phase.

HEALTH & WELL-BEING

Ensuring healthy lives and the promotion of health & well-being has been identified as a global aspiration through SDG 3.

While health has traditionally been viewed as the responsibility of the healthcare sector, social, economic and environmental factors –  referred to as the social determinants of health – have a larger impact than clinical care.

As creators of the built environment, the real estate industry is well-positioned to address key health determinants in their approach to real estate development and management.

Over the past few years, leading real estate companies have begun to view health and well-being as a new mechanism of competitive differentiation and an explicit area of potential risk reduction and value creation. Leading companies have structured their health and well-being programs to cover employees, tenants, communities and supply chains.

Health Industry Partners

GRESB participants who completed the module in previous years demonstrate a larger commitment to having a holistic health promotion process for their stakeholders compared to participants who did not participate in the module. The difference in response rates is not large which shows that health and well-being has become a relevant issue for the industry, and it’s encouraging to see the consistent market uptake of health and well-being strategies.

Overall, 11% more participants have programs in place to address health and well-being of employees as compared to tenants/customers.

Looking at the individual methods, the discrepancies can be over 20% between the two stakeholder groups. Complete and integrated processes for health promotion help entities take targeted, efficient action to create value and manage risks associated with population health and well-being.

The building industry has a long history of explicitly considering occupational and building safety in their business operations. As such, policies focused on safety are becoming more institutionalized.

This year, 95% of participants have a policy focused on occupational safety, up from 91% in 2018. Similarly, participants with policies focused on the safety of assets for tenants increased from 66% to 78%. Commonly seen throughout health and well-being related indicators, internal actions related to employees are more established than external actions related to customers/tenants. Between the two stakeholder groups, there is a 22% difference when looking at health and well-being policies compared to a 17% difference in safety policies.

Participants are implementing a variety of actions to promote tenant health and well-being. The specific strategies used varies by property type.

Managers of hotel portfolios outperform other property types on eight of the eleven actions covered in the Assessment. Retail managers use strategies focused on indoor air quality at higher rates, while healthcare managers, which include senior care, take the lead in strategies focused on healthy eating and indoor lighting. 

71% of participants globally include community health and well-being in their approach to community engagement. Many participants also address key social determinants of health with 65% creating local jobs and 71% making enhancements to local public spaces. Efforts focused on resilience are less developed, with 48% of all GRESB participants including resilience in their community engagement efforts. However, this isn’t the case in Oceania, where almost 70% of entities consider community resilience. 

When looking at community monitoring methods, 78% of participants monitor impact on local communities, while 56% report monitoring impact on community health and well-being. Other relevant measures include the impact on housing affordability, crime, livability, walkability and the amount of local income generated. The use of specific measures varies by region. Oceania and Asia both lead in monitoring impact on community well-being. Oceania also leads on monitoring impact on crime levels and local income generated.  

While many participating companies and funds have established comprehensive approaches to employee, tenant, and community health and well-being, programs are not yet uniform or standardized across entities

Looking at all the available health-related policies and strategies, the top 25% of participating funds have implemented 80% of available actions, while the bottom 25% have implemented an average of only 26% of them.

Leading companies have comprehensive programs informed by an intentional health promotion process including policy, needs assessment, action and monitoring for health and well-being. Lagging companies have disjointed, incomplete processes for health.

Report: Health & Well-being in Real Estate

Market trends for health promotion as a new focus within ESG reporting

Drawing on findings from three years of data gathered by the GRESB Health & Well-being Module, the report provides real estate companies and investors with insights on the current state of practice and guidance on how to increase consideration of health and well-being within their approach to ESG.

The report also provides context for the decision by GRESB, in collaboration with the Green Health Partnership, to integrate health and well-being indicators from the Module into the core 2019 GRESB Real Estate Assessment.

The GRESB Health and Well-being Results were developed in collaboration with the Green Health Partnership, a research and development initiative of the University of Virginia School of Medicine and the U.S. Green Building Council supported by a grant from the Robert Wood Johnson Foundation.

Validation PROCESS and Data Standard

An open and transparent data validation process is an important part of GRESB’s annual benchmarking process. GRESB operates a three-tier validation process (All Participant Check, Validation Plus, Validation Interview). Over the past years, the topics covered by the validation process and the scope of work for Validation Plus and Validation Interviews have increased significantly. The validation process is carried out by GBCI.

GRESB checks:

  • The existence and content of answers to open text boxes.
  • The additional information provided to Assessment Indicators, e.g.third-party organization names, assurance, audit, certification and verification standards and ‘other’ answers.
  • The documents uploaded as supporting evidence for the answers provided.
  • Automated outlier and consistency checks of performance data including energy and water consumption, GHG emissions and waste generation.
  • GRESB identifies reported consumption values as outliers if the corresponding consumption intensity (consumption/area) and/or its change over time is abnormal relative to all reported data for a particular property type.

Supporting evidence is evaluated on the validity of the document relative to the requirements stated in the guidance for the indicator, including the actual reference to selected answer options. In order to be accepted, the provided evidence should meet the requirements as stipulated in this Reference Guide.

22,345

Human Validated Decisions

1,982

Automated Outliers

27,056

Documents uploaded as supporting evidence

The outcomes of the 2019 Validation Plus process are presented below. 93% of the total 27,056 pieces of supporting evidence uploaded were accepted, following the predefined validation rules.

In cases where the supporting evidence is not accepted, the indicator is assigned a score of 0.

The most common reasons why supporting evidence was not accepted is because the document:

MA5: ESG factors included in performance targets

  • Refers to future ambitions to address ESG issues in employee performance targets (i.e. the answer does not reflect the reporting period)
  • Is an annual report or a sustainability report that identifies the organizational ESG targets, not linked to any group or subgroup of employees
  • Does not identify the ESG issues used to evaluate the annual employee performance, but presents an overview of social initiatives carried throughout the reporting period
  • Includes blanket statements that refer to “eligible employees” or “case by case basis” applicability 

PD1: Policy on environmental issues

  • Does not refer to reporting period (e.g. they are dated in May 2019 and do not include information about previous versions)
  • Contains insufficient or inadequate translation of information provided in languages other than English
  • Is too generic to be able to confirm any of the issues selected from the pre-defined answers list

PD5.1: Disclosure of ESG performance

Annual report

  • Does not refer to reporting period (i.e. documents dated as far back as 2015)
  • Is not an annual report, but an ESG brochure, company statement or other type of document
  • Is a link to the dedicated section on company website, quarterly report or ESG reporting to investors (i.e. duplicate to other answer options)
  • Contains insufficient or inadequate translation of information provided in languages other than English

Sustainability report

  • Is not a standalone sustainability report, but a section in the annual report
  • Contains insufficient or inadequate translation of information provided in languages other than English
  • Does not reflect the applicability level identified (e.g. partial points are assigned to reports prepared at group level, when the identified reporting level is “entity”)

Integrated report

  • Does not include any reference to the IIRC framework, which defines integrated reporting
  • Contains insufficient or inadequate translation of information provided in languages other than English

Dedicated section on company website

  • Links are not accessible and cannot be identified in more than 3 clicks

Section in entity reporting to investors

  • Contains insufficient or inadequate translation of information provided in languages other than English
  • Does not refer to the reporting entity
  • Does not refer to reporting period 

RO3.1: Due diligence on new acquisitions

  • Does not refer to reporting period (e.g. they are dated in May 2019 and do not include information about previous versions)
  • Contains insufficient or inadequate translation of information provided in languages other than English
  • Is too generic to be able to confirm any of the issues selected from the pre-defined answers list
  • Contains evidence for less than 20% selected issues from the pre-defined answers list

ME1: Environmental management systems (EMS)

  • Is not an EMS document, but a checklist of environmental issues, acquisitions checklists, asset level reports prepared by property management, building certification statements, GRI / EPRA reports, etc
  • Contains insufficient or inadequate translation of information provided in languages other than English

SE4.1: ESG specific requirements in the procurement process 

  • Is too generic to be able to confirm any of the issues selected from the pre-defined answers list
  • Contains insufficient or inadequate translation of information provided in languages other than English
  • Is a generic statement prepared by third party advisors that does not refer to the reporting entity
A close up of a map Description automatically generated
A screenshot of text Description automatically generated

GRESB identifies reported consumption values as outliers, if the corresponding consumption intensity (consumption/area) and/or its change over time is abnormal relative to all reported data for the particular property type. Through an in-house developed statistical program, GRESB groups and benchmarks values within their property type, which allows for the identification of consumption values that fall outside normally observed ranges. Beyond reviewing the intensity of consumption, the like-for-like development of consumption over a two-year period is also used to identify abnormal data points.

Users who receive these outlier messages are alerted so as to engage an internal data review process to identify the cause of the very low consumption level prior to final submission. All participants are offered the opportunity to explain outliers; importantly, the GRESB systems are not designed to reject the submission, only to highlight the outlier for investigation by the participant so as to provide an explanation. GRESB outlier checks are meant to flag extremes — unusually low or high values as compared to independent market benchmarks, as well as to GRESB historic data. Our systems are specifically designed to draw participant attention to potential errors before final submission and require additional context where necessary. In this case, the explanation provided was not deemed sufficient to explain the values submitted. 

Real Estate:
Human validated: 22,345
Pre-validated: 4,422
Automatic validation: 15,072
Automated outliers: 1,982

 Open text boxes“Other” answersEvidence piecesOutliers
Total #5 3119 47227 0561982
Accepted81%
Duplicates3%
Not accepted16%
Full points91%93%
Partial points5%2%
No points4%5%
Accepted, Normal11%
Accepted, Abnormal57%
Not Accepted32%

Developer:
Human validated: 738
Pre-validated: 148
Automatic validation: 491

 Open text boxes“Other” answersEvidence pieces
Total #235250892
Accepted72%
Duplicates7%
Not accepted22%
Full points89%
Partial points2%

As part of its ongoing commitment to data quality, GRESB initiated a Technical Working Group (TWG) in late 2018 with the goal of developing a GRESB Data Standard. As a first step towards the development of this standard, GRESB designed a Data Quality Survey together with the TWG. This optional, unscored survey was open to GRESB Data Partners and Participants in the Real Estate Assessment that use the GRESB Asset Portal during the normal GRESB reporting period, April to July 2019.

A primary aim of this survey is to work towards the development of the GRESB Data Standard. An important secondary goal is research-oriented: to understand the current landscape of ESG data systems and investigate how to improve the overall quality and trustworthiness of ESG data in the future. This research will be used to inform the development of future versions of the survey and the standard.

13 Data Partners and 3 Real Estate Participants completed this year’s Data Quality Survey. Those 13 Data Partners supported about one third of Real Estate Assessment submissions in 2019. To recognize these respondents, a badge has been to the Benchmark Reports of the Real Estate Participants who completed the survey. A badge has also been added to the Benchmark Reports of Participants whose submission was supported by a Data Partner that completed the survey.

From the responses to this survey, it is clear that all of the participants take ESG data quality seriously. All of the responses describe measures in place to ensure that the ESG data in their systems is accurate, complete, timely, and traceable. The majority of data systems track multiple metrics of data quality, such as the number of missing meter readings vs. expected, or the expected value of a reading based on past readings. The majority of systems also automatically identify and flag missing or anomalous data, and then follow up with the data sources for clarification or rectification. Half of the data systems cross-validate their ESG data, by comparing, for example, automatic or manual meter readings against monthly or quarterly invoices.

Overall, the responses to this year’s survey indicate that GRESB Partners and Participants not only acknowledge the importance of data quality in ESG data, but also have robust, sophisticated methods in place to ensure that their ESG data reported to GRESB is of high quality.

GRESB Global Partners

RESILIENCE AND TCFD HIGHLIGHTS

In 2018, GRESB launched the Resilience Module to provide investors and participating companies and funds with information about climate risk and resilience. The Resilience Module is a three-year effort that will ultimately lead to new indicators in the core GRESB Real Estate and Infrastructure Assessments. In 2019, the Resilience Module was revised to increase alignment with the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD).

TCFD CATEGORYRESILIENCE MODULE INDICATORS
GovernanceRS1: Senior employee responsible for climate risk and resilience
RS2: Systematic process for communication and review
StrategyRS6: Resilience-related business strategies for new construction, standin assets, and acquisitions
Risk ManagementRS3: Systematic processes to assess transition risk
RS4: Systematic processes to assess social risk
RS5: Systematic processes to assess physical risk
Metrics and TargetsRS3: Systematic processes to assess transition risk (process includes target)
RS4: Systematic processes to assess social risk (process includes target)
RS5: Systematic processes to assess physical risk (process includes target)
RS7: Specific climate risk and resilience targets
RS8: Resilience-related performance measurement and metrics

Sharp increase in participation

Participation in the voluntary Resilience Module increased by 96% to 316 entities in 2019, up from 150 entities in 2018. This increase also reflects a broader range of entity-types, including infrastructure funds and property developers.

Responses to the eight core Resilience Module indicators indicate broad-based action to understand and manage climate risk and resilience.

The majority of participants report having dedicated leadership, systematic risk assessment, aligned business strategies, and at least some level of performance measurement.

However, reported actions vary significantly between entities. Some entities report comprehensive programs, while many have a more limited range of activities.  

The responses also provide a snapshot of activity with respect to TCFD recommendations. The top quartile of entities report action in each of the top-level TCFD categories, while the trailing quartile report action in only one or two categories. Again, this illustrates significant variance in the comprehensiveness of climate risk and resilience-related activities. 

Responses to the 2019 Resilience Module provide initial insights about the state of the industry with respect to climate risk and resilience, including:

  1. Engagement on climate risk and resilience is increasing rapidly among real asset investors, companies, and funds. Participation in the GRESB Resilience Module more than doubled since 2018.
  2. Interest, expertise, and engagement on climate risk and resilience varies widely across the industry. Consequently, real asset investors can not assume that companies are taking action to understand or mitigate climate-related risks.
  3. Approximately 25% of Resilience Module participants reported comprehensive programs with activities including governance, risk management, business strategy, and measurement.
  4. The remaining 75% of participants reported highly variable programs, often lacking any activity in one or more of the core categories recommended by the TCFD.
  5. Most entities report some level of climate-risk and resilience-related governance activities, while entities with comprehensive programs also report coordinated business strategies, targets, and performance metrics. 

These observations show an industry in transition. There is a rapid increase in awareness about the relevance of climate risk and resilience. However, practices vary widely, and institutional investors will need to engage with their investments to understand management strategies and performance goals.

It is important to note critical limitations in available information. The new Resilience Module data provide clear, comparable indicators for the existence and breadth of climate-risk and resilience activities. However, it is not yet possible to robustly evaluate the quality of risk management activities, such as the assessment of relevant risks and direct connections to asset-level mitigation measures. This will be a focus of indicator development for 2020. 

A more comprehensive analysis of results will be provided later in 2019.

PUBLIC DISCLOSURE

2019 is the third year GRESB has evaluated the ESG transparency levels of listed companies and REITs through GRESB Public Disclosure. In this year’s analysis – available to all GRESB Investor Members subscribed to listed real estate data – the scope of the universe was extended to also cover listed property companies and REITs active outside of developed markets.

GRESB Public Disclosure consists of 22 indicators that collectively contribute to a maximum of 70 points. Constituents are then assigned a GRESB Public Disclosure Level from A to E based upon the points they received. The complete 2019 guidance and scoring methodology is available here.  

Media and Research Partner

In 2019, constituents received an average of 35 points out of 70. This is higher than in 2018, when the average number of points received was 33 out of 70. The points increased despite a slightly more stringent scoring methodology and the increased scope of the universe.

The average score conceals the strong disparity in the distribution of GRESB Public Disclosure Levels. REITs and listed property companies either disclose a significant amount on ESG, or fairly little, which is reflected in a high allocation of E and A scores at both ends of the scoring spectrum (25.9% and 25.2% respectively).  

Similarly to last year, GRESB Real Estate Participants vastly outperformed listed property companies and REITs that did not participate in the 2019 Assessment. 61.5% of GRESB Participants disclosed at the highest A-level, in this year’s analysis, compared to 51.7% last year.

Asia

  • J-REITs scores only second to France in ESG transparency, receiving an average of 52.2 points out of 70. This is especially remarkable as 59 Japanese REITs were assessed, representing the highest sample, second to the United States.
  • Asia lags other regions when it comes to renewable energy consumption disclosures.

Europe

  • Regionally, Europe scores the highest in ESG transparency. European REITs and listed property companies received an average of 43.4 points out of 70. 
  • The 13 French REITs and listed property companies that were assessed scored the highest globally, receiving an average of 61.5. This high score reflects Article 173 of the law on energy transition and green growth, introduced after COP21 in 2015, requiring listed companies to report their ESG performance.
  • The 3 Irish REITs and listed property companies showed the highest increases in transparency.
  • 64.3% of European entities disclose using the EPRA Sustainability Best Practice Recommendations (sBPRs). 

Americas

  • North America and South America are the weakest regions when it comes to ESG disclosure performance, scoring an average of 26.3 & 24.3 points (out of 70) respectively.
  • 6 US REITs and listed property companies disclose ESG information using the SASB-standard.

Oceania

  • Australia shows a high disparity in the level of ESG disclosures. 13 Australian REITs and listed property companies disclose at the highest level, A, while another 12 disclose at the lowest level E.
  • Oceania takes the lead in terms of disclosing using the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and Global Reporting Initiative (GRI) Standards.

AMERICAS

REGIONAL RESULTS HIGHLIGHTS

Americas Industry Partners

Americas Partners

ASIA

REGIONAL RESULTS HIGHLIGHTS

Asia Industry Partners

Asia Partners

EUROPE

REGIONAL RESULTS HIGHLIGHTS

Europe Industry Partners

Europe Partners

OCEANIA

REGIONAL RESULTS HIGHLIGHTS

Oceania Industry Partners

Oceania Partners

2019 REAL ESTATE SECTOR LEADERS

GRESB Sector Leader Awards recognize the best performers annually from across the GRESB Assessments. Achieving sector leader status is recognition of best practice ESG performance. We congratulate the 2019 GRESB Real Estate Sector Leaders.

Property TypeName
Residential - PrivateAccess Development Partnership, LGIM Real Assets
Healthcare - PrivateAchmea Dutch Health Care Property Fund, Syntrus Achmea Real Estate & Finance
Office - PrivateAustralian Prime Property Fund Commercial, Lendlease
Retail - PrivateAustralian Prime Property Fund Retail, Lendlease
Residential - ListedAvalonBay Communities, Inc.
Storage/ParkingBig Yellow Plc
Hotels - PrivateBouwinvest Dutch Institutional Hotel Fund N.V., Bouwinvest REIM
Diversified - ListedCapitaLand Limited, CapitaLand Group
Diversified - Office/Industrial - ListedCastellum AB
Office - ListedDexus Office Trust, Dexus Property Group
Diversified - Office/Retail - PrivateDexus Wholesale Property Fund, Dexus Property Group
Industrial - ListedFrasers Logistics & Industrial Trust, Frasers Logistics & Industrial Asset Management Pte. Ltd.
Diversified - Office/Industrial - PrivateFrasers Property Australia Pty Ltd - Investment Properties, Frasers Property Australia Pty Ltd
Diversified - PrivateHines Master Fund Management Company S.a.r.l., Hines Real Estate Master FCP-FIS
Hotels - ListedHost Hotels & Resorts, Inc.
Diversified - Office/Residential - PrivateJ.P. Morgan U.S. Value Add, J.P. Morgan Asset Management
Diversified - Office/Residential - ListedJBG SMITH
Other - PrivateRegent Street, The Crown Estate
Diversified - Office/Retail - ListedStockland
Other - ListedSwire Properties Limited
Industrial - PrivateUBS German Logistics Fund, UBS Asset Management
Retail - ListedUnibail-Rodamco-Westfield
Developer - ResidentialFrasers Property Australia Pty Ltd - Development Assets, Frasers Property Australia Pty Ltd
Developer - OfficeSkanska Commercial Development Nordic, Skanska Commercial Development Nordic
Developer - DiversifiedKeppel Land Limited, Keppel Land Limited
Developer - IndustrialGoodman Group (GMG), Goodman Group
Entity is an Overall Global Sector Leader (Achieved highest score for its sector)
Entity is a Global Sector Leader (Achieved highest score for the combination of nature of ownership and sector)
Entity is an Overall Regional Sector Leader (Achieved highest score for the combination of region and sector)
Entity is a Regional Sector Leader (Achieved highest score for the combination of nature of ownership, region and sector)
Property TypeName
Residential - ListedAvalonBay Communities, Inc.
Office - PrivateCommonWealth Partners
Residential - PrivateGS Chelsea Co-Investment, LP, Greystar Real Estate Partners
Industrial - PrivateInstitutional Logistics Partners managed by BentallGreenOak
Retail - PrivateIvanhoe Cambridge - managed portfolio
Diversified - Office/Residential - PrivateJ.P. Morgan U.S. Value Add, J.P. Morgan Asset Management
Office - ListedKilroy Realty Corporation
Diversified - PrivateBentallGreenOak’s Diversified US Property Fund
Diversified - Office/Retail - PrivateOxford Properties Group (OMERS)
Industrial - ListedPrologis
Retail - ListedThe Macerich Company
Entity is an Overall Global Sector Leader (Achieved highest score for its sector)
Entity is a Global Sector Leader (Achieved highest score for the combination of nature of ownership and sector)
Entity is an Overall Regional Sector Leader (Achieved highest score for the combination of region and sector)
Entity is a Regional Sector Leader (Achieved highest score for the combination of nature of ownership, region and sector)
Property TypeName
Diversified - Office/Retail, ListedActivia Properties Inc., TLC REIT Management Inc.
Diversified - ListedCapitaLand Limited, CapitaLand Group
Retail - ListedCapitaLand Mall Trust, CapitaLand Mall Trust Management Limited
Office - ListedCity Developments Limited
Industrial - PrivateGoodman Japan Core Partnership (GJCP), Goodman Group
Office - PrivateIGIS Private Real Estate Investment Trust No. 35, IGIS Asset Management
Retail - PrivateLendlease Asian Retail Investment Fund 1, Lendlease
Residential - ListedNippon Accommodations Fund, Mitsui Fudosan Accommodations Fund Management Co., Ltd.
Industrial - ListedNippon Prologis REIT, Inc., Prologis
Diversified - PrivateNomura Real Estate Private REIT, Inc., Nomura Real Estate Asset Management Co., Ltd.
Diversified - Office/Residential - ListedSekisui House Reit, Inc., Sekisui House Asset Management, Ltd.
Developer - ResidentialWhite Peak Real Estate Investment, White Peak Group
Entity is an Overall Global Sector Leader (Achieved highest score for its sector)
Entity is a Global Sector Leader (Achieved highest score for the combination of nature of ownership and sector)
Entity is an Overall Regional Sector Leader (Achieved highest score for the combination of region and sector)
Entity is a Regional Sector Leader (Achieved highest score for the combination of nature of ownership, region and sector)
Property TypeName
Residential - PrivateAccess Development Partnership, LGIM Real Assets
Healthcare - PrivateAchmea Dutch Health Care Property Fund, Syntrus Achmea Real Estate & Finance
Diversified - Office/Residential - PrivateBlackRock Europe Property Fund IV, BlackRock
Hotels - PrivateBouwinvest Dutch Institutional Hotel Fund N.V., Bouwinvest REIM
Diversified - Office/IndustrialCastellum AB
Office - PrivateCBRE Dutch Office Fund, CBRE Global Investors
Retail - PrivateCBRE Retail Property Fund Iberica L.P., CBRE Global Investors
Office - ListedCegereal
Diversified - PrivateHines Master Fund Management Company S.a.r.l., Hines Real Estate Master FCP-FIS
Diversified - ListedIcade
Diversified - Office/Retail - ListedLand Securities Group PLC
Other - PrivateRegent Street, The Crown Estate
Diversified - Office/Retail - PrivateSponda Plc
Diversified - Office/Industrial - PrivateStorebrand Eiendomsfond Norge KS, Storebrand Asset Management AS
Residential - ListedThe UNITE Group Plc
Industrial - PrivateUBS German Logistics Fund, UBS Asset Management
Retail - ListedUnibail-Rodamco-Westfield
Entity is an Overall Global Sector Leader (Achieved highest score for its sector)
Entity is a Global Sector Leader (Achieved highest score for the combination of nature of ownership and sector)
Entity is an Overall Regional Sector Leader (Achieved highest score for the combination of region and sector)
Entity is a Regional Sector Leader (Achieved highest score for the combination of nature of ownership, region and sector)
Property TypeName
Office - PrivateAustralian Prime Property Fund Commercial, Lendlease
Industrial - PrivateAustralian Prime Property Fund Industrial, Lendlease
Retail - PrivateAustralian Prime Property Fund Retail, Lendlease
Diversified - Office/Retail - PrivateDexus Wholesale Property Fund, Dexus Property Group
IndustrialFrasers Logistics & Industrial Trust, Frasers Logistics & Industrial Asset Management Pte. Ltd.
Diversified - Office/Industrial - PrivateFrasers Property Australia Pty Ltd - Investment Properties, Frasers Property Australia Pty Ltd
Entity is an Overall Global Sector Leader (Achieved highest score for its sector)
Entity is a Global Sector Leader (Achieved highest score for the combination of nature of ownership and sector)
Entity is an Overall Regional Sector Leader (Achieved highest score for the combination of region and sector)
Entity is a Regional Sector Leader (Achieved highest score for the combination of nature of ownership, region and sector)

2016 GRESB Real Estate Assessment: What You Need to Know about Your Results

By

The 2016 GRESB data has been available for over a month, and judging from the phone calls and emails received by the GRESB Helpdesk, the 750+ entities who submitted their ESG data are busy evaluating their performance and writing internal reports explaining how they did. At the same time, the GRESB team has been playing the supporting role in untangling the GRESB results. With this post, I would like to share some observations on some of the most frequent questions that come up.

How to read and communicate my results?

First things first: GRESB analyzes the ESG performance of real estate portfolios, regardless of how big or small they are in terms of number of assets, value or floor area, whether they’re listed or private, regionally diversified or locally focused. While it is true that 25% of the GRESB Score is given by governance indicators, it is worth clarifying that the GRESB Score should not be interpreted as a stamp of approval for a fund manager or an organization as a whole – or at least, not without looking at an array of other indicators (not least financial track record).

That said, a proper interpretation of results implies a narrative that goes beyond the one number (i.e. the GRESB Score) that puts your portfolio on the map. If you’ve participated in the GRESB Real Estate Assessment before, you’re probably most interested in the historical trend, as well as in your individual performance development on the E(nvironmental), S(ocial) and G(overnance) aspects. Once that’s clear, take it one step further and look into the story told by your development on the seven Sustainability Aspects (or eight, if you reported on development activities). The Reference Guide will help you with that — pay attention to the intent of each aspect.

In 2016, GRESB also introduced the GRESB Rating as a tool for high-level differentiation on the ESG performance of real estate companies and funds. The rating is calculated relative to the global performance of reporting entities, which means you now know exactly where you stand on a global scale. On an absolute level, entities with scores higher than 50 on both the Implementation & Measurement and the Management & Policy dimensions are still rated a “Green Star” and can communicate their position as such. The only difference as compared to last year is that the designation is not accompanied by a Green Star logo.

We’re disappointed by our results this year, how will we explain this to our investors?

First of all, it is important to analyze the “why” (and maybe take a step back, what does “disappointing” really mean?). It is safe to assume that anyone who scored below their expectations will fall into this category, so let’s break down the issue into a few probable scenarios:

1. We scored worse than last year, even though we didn’t do anything different

The very nature of a benchmark means that unvarying efforts do not guarantee unvarying results. This, coupled with changes in the benchmarking sample, may lead to deviations from the expected outcomes. In a few cases, I’ve been told that participants were able to estimate their scores exactly. This is due to a good understanding of the initial requirements, as well as an honest evaluation of their own input.

Something else worth mentioning here is the quality of reporting. Overall, the industry is getting better at “taking the test,” but accurate representation of performance through detailed checks and detailed supporting evidence should not be underestimated.

2. We dropped in scores because we were selected for Validation Plus

In 2016, the GRESB data quality control team performed a thorough analysis of the supporting evidence provided by more than 150 entities. Being selected for Validation Plus is in no way a punishment for any portfolio, as the Assessment Portal makes the selection randomly at the moment of submission. Yes, being subject to a detailed data quality check increases the possibility of GRESB finding incomplete information. No, this is not unfair. All submittals should be prepared in such a way that Validation Plus or Site Visits do not pose a threat to the final scores.

3. Our portfolio changed a lot, there was very little data we could collect for 2015

Changes in portfolio structure may impact the availability of absolute Performance Indicators data. However, these situations will not lead to drastic drops in performance. Variations in scores determined by variations in the underlying assets should be explained to investors accordingly.

4. We dropped in scores because our peer group changed since last year

The overall score is formed by a selection of non-benchmarked indicators (the number of points obtained depends only on your individual performance and reporting against the Reference Guide requirements) and a selection of benchmarked indicators (the number of points obtained depends on your performance per property type).

Year on year, GRESB aims to create more granular and meaningful peer groups. Property type and regional allocation of assets, as well as the legal status of the entity are the main criteria for peer group allocation, but additional criteria are applied depending on the sample size. If you would still like to know how you perform relative to the previous year’s peer group, the improvement badge in the Historical Trend will help you out (Note: If the size of the peer group falls below four peers, no historical trend is provided for that year).

These are some of the questions that come up every day. If you need more help, the Results Review is a new GRESB Real Estate service that we offer to participants upon request. Any participating entity can opt for a review, as long as they have a Benchmark Report (which can be obtained either as part of GRESB Membership or purchased separately).

You could view this as a “sister” service to the Response Checks that we offer in spring, in advance of the Assessment submission. The difference is, of course, that we focus on results, the validation decisions for each indicator and an interpretation of the overall results. GRESB does not consult participants on the implementation of projects or governance procedures that could ultimately lead to an increase in performance (our Partners provide such services) but helps them understand their position relative to peers. In fact, this is the kind of support we have always offered, but packaged in a more formal and structured way.

Our team is always available at info@gresb.com if you need additional support.

This article is written by Roxana Isaiu, Director, ESG & Real Estate at GRESB.

ESG Investing Enticed by Outperformance

By

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect GRESB’s position.

The future of ESG investing in North America will be driven by the carrot rather than the stick during the next few years, but don’t discount the possibility that governments may bring out the stick in the absence of tangible progress on climate change.

The carrot is the growing evidence of the potential for outperformance through the integration of materiality and outcomes-focused environmental, social, and Governance (ESG) metrics into the investment process. The stick is regulation that forces investment managers to disclose their portfolio’s climate risks and how their decisions support greenhouse gas (GHG) reductions.

Climate change risk has become the number one ESG concern in 2019, demonstrated by statements from the Bank of Canada, issues raised in the federal election and, the skyrocketing number of news articles (See Chart 1).

Focus On Material ESG Factors

Cathrine De Coninck-Lopez, global head of ESG at Invesco, says that disclosure of a company’s climate change risk exposures will become “table stakes” going forward. Investors need to understand if physical risks (e.g., flood, fire or drought) and/or transitional risks (e.g., carbon taxes, falling demand, fossil-free alternatives) are material to a company’s future profitability.

Other than climate change, “investors only want to know what is material,” she says. As a result, the ESG factors for each industry identified as material by the Sustainability Accounting Standards Board (SASB) is an important change. “The SASB reporting is a great initiative,” she says. “There aren’t hundreds of things that matter in an industry. Likely, there are just 10.”

The SASB approach means that investors can get a clear idea of the outcomes produced by ESG investments. The fact that it covers all industries means that all asset classes, rather than just equities, can report on their material outcomes.

The ESG strategy of investing in firms that score highly on SASB’s material factors can drive outperformance in equities (See Chart 2), according to recent research published by Harvard Business School.1

Real estate is another asset class where there is a demonstrated relationship between returns and high sustainability scores. The real estate ESG standard is GRESB and its material factors – energy usage, GHG emissions, water usage and waste production – overlap with SASB’s real estate factors.

Virtuous Relationship

Recent academic research shows that private real estate funds with high GRESB scores have consistently outperformed funds with low scores, with a return difference of about three percent annually between the best and worst-performing GRESB deciles between 2011 and 2015.2

Peter Cuthbert, global head of real estate at Fiera Capital, says initially the ESG program was undertaken in an ad-hoc manner. Now the discipline of GRESB reporting – which quantifies annual reductions in resource use and GHGs – creates a focus on improving metrics yearly. Through improvements in energy use, all the professionals involved in building management can see the virtuous relationship between fighting climate change and driving a profit. “Capital programs in our buildings that reduce energy and other resources result in real savings,” he says.

Cuthbert says that because buildings are a major contributor to GHG emissions globally, “greening” buildings means that the private sector is taking the lead on addressing climate change. “The only way climate change is going to get solved is through people and industry – like the kinds of things we are doing in real estate.”

Dan Winters, head of the Americas for GRESB, says that many real estate companies are cutting their costs and driving profits as they improve their GRESB score. Good environmental performance helps drive revenue by attracting tenants who are willing to pay above-average rents for efficient, green-certified buildings. “Outperformance in real estate is likely driven by the same factors as other asset classes. Companies that are well-managed score well in ESG reporting,” he says.

Winters doesn’t expect participation in GRESB (or any other ESG reporting standards) becoming mandatory in North American in the foreseeable future. While adoption of GRESB is much slower in the U.S. than in Europe, Canada, or parts of Asia, he is hopeful that either investor pressure to report on ESG, or competition between fund managers, will spur increased participation.

Stick Looms Large

In Europe and the UK, politicians have already decided the aggressive GHG reductions required to cap temperature increases at the 1.5 percent target, or the large and systemic threat to investments of not reaching that goal, require the “stick” of government action.

“Although regulation of ESG has not come to North America yet, it is the reality in Europe and the nature of that regulation is still evolving,” says De Coninck-Lopez. And some U.S. city and state governments are leading with regulation to reduce GHGs in the absence of U.S. federal action on climate change, she adds.

A good example of the potential for the “stick” is New York City’s ‘Climate Mobilization Act.’ This new law requires cuts in carbon pollution from buildings by 40 percent by 2030. This could impact Canadian institutional investors who invest in New York property with U.S. managers, especially those with no ESG program.

Even with broadening support for sustainability programs to increase the focus on ‘E’ and evidence that sustainability is paying off in the form of returns and results, voluntary ESG going forward likely depends on how well the scale and pace of investments respond to the risk of climate change.

William Grubbs, portfolio manager of the Invesco U.S. core real estate fund, says that office tenants find the greatest value in energy efficiency retrofits of older buildings.  There was a win for the company and tenants when a recent retrofit brought an old all-electric building up to modern standards. This Boston, MA, property’s high energy bills were cut by new LEDs light fixtures and adjustments to the building’s heating, ventilation, and cooling systems. The retrofit earned LEED Existing Building Gold certification and a good score by Energy Star. “We got the costs down so that it was competitive with the market,” says Grubbs.  

Catherine Ann Marshall

Catherine Ann Marshall is principal consultant at RealAlts. c.marshall@realalts.com

    1. Corporate Sustainability: First Evidence on Materiality, Harvard Business School Working Paper, 2015. Mo Khan, George Serafeim and Aaron Yoori.

    2. Sustainable Insights in Private Equity Performance: Evidence from the European Non-listed Real Estate Fund Market. Published by TIAS (Tilburg University and Eindhoven University of Technology), 2017. S. Dirk Brounen and Maarten van der Spek

    2020 GRESB Infrastructure Assessments Development

    By

    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.

    Development Process

    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.

    Infrastructure Fund

    Structural changes

    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:

    • Leadership
    • Policies
    • Reporting
    • 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.

    Infrastructure Asset

    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.

    Reporting boundaries

    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.

    Validation

    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.

    Scoring changes

    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.

    Management Component

    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;

    • Leadership
    • Policies
    • Reporting
    • 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.

    Performance Component

    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:

    • Implementation
    • Output & Impact
    • Health & Safety
    • Energy
    • Greenhouse Gas Emissions
    • Air Pollution
    • Water
    • Waste
    • Biodiversity & Habitat
    • Employees
    • Customers
    • 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. 

    Assessment Pre-Release

    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:

    1. Performance indicators scoring will place less prominence on reporting and transparency to focus more on absolute and relative performance.
    2. 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.
    3. 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. 
    4. 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.

    Increasing transparency

    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:
      1. Carbon footprinting and net zero carbon
      2. Data availability and quality
      3. Social impact
      4. Social licence (using external, rather than self-reported data)
      5. Supply chain (including Modern Slavery)
      6. Digitalization

    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.

    Directory

    GRESB Investor Members

    GRESB Participant Members

    GRESB Partners

    GRESB Industry Partners

    Resources

    Investor Guidance

    Participant Guidance

    View all Resources

    2020 Assessment Timeline

    Get updates

    Sign up for GRESB news and updates on advancing sustainability best practices in real assets.

    Follow us