2023 Real Estate Assessment Results

The real estate industry continues to undergo a remarkable transformation. What once lacked a common language and a standardized approach to measuring and reporting on ESG performance has now evolved into a global movement, with 2,084 real estate entities representing USD 7.2 trillion GAV reporting their ESG data through GRESB in 2023. Movement has been swift and progress significant, but is the industry moving fast enough to meet its climate goals?

In regions with strong participation like Europe and the US, there’s steady growth indicating maturity and widespread adoption of the benchmark. Meanwhile, in emerging regions such as Oceania and Asia, we observe a rapid acceleration in growth. Europe recorded the highest number of new participants (up from 907 to 1,013), while Oceania had the largest percentage increase, with 23%.

• The US saw the highest number of new 2023 entities from any country with 53
• Taiwan jumped from 1 to 10 entities, marking a 900% year-over-year increase
• Canada saw a large increase of 36% and 21 entities
• Korean participation increased by 56%

GRESB Scores and the data they are built from help investors and other stakeholders understand the relative performance and risk of an asset or a group of assets within a fund or company. The trend is visible in the below two-component graph, showcasing management policies on the y-axis and implementation performance on the x-axis. The top-performing entities are positioned in the upper right quadrant. As time progresses, this quadrant has become more densely populated, indicating a positive shift in both management and performance among real asset companies and funds. This signifies genuine improvement in the industry.

The clustering of top performers presents a developmental challenge for the industry, necessitating innovative strategies to differentiate these leaders and encourage further improvements in both practice and performance. Development of the GRESB standards will involve initiatives aimed at deepening awareness regarding the actions and accomplishments of these market leaders. Have a look at our manager case studies for some examples.

Independent studies have demonstrated that companies and funds with high GRESB scores outperform their counterparts as investments, with both GRESB participation and performance being significant predictors of fund returns. The graphic below shows average GRESB score by starting year of assessment participants. On average, GRESB participants see a 10-percentage point increase in their GRESB score during their second year of reporting.

During the early years of GRESB, emphasis was placed on enhancing data coverage, ensuring participants could collect and disclose a growing portion of their ESG data consistently. Presently, the focus has shifted towards enhancing performance by boosting energy efficiency and reducing overall emissions. The objective is to recognize achievements that drive substantial, enduring transformations within the real estate sector.

The overarching trend we observe across regions and sectors is that organizations appear to find it easier to achieve gender diversity among employees than in strategic governance roles. Progress in gender diversity is generally slow, reflecting the complexity of inclusion and diversity issues, which require a more nuanced understanding than more easily measurable ESG factors like energy consumption.

Recent changes to the 2023 GRESB Standards have enabled us to monitor net-zero progress and track information on net-zero policies, commitments, and targets for the first time.

• In 2023, 72% of global real estate participants have a net-zero policy in place, with 93% of participants in Oceania reporting a net-zero policy, followed by Asia and Europe with 78% and 77%, respectively.
• Despite this positive momentum, it’s important to note that while most participants have taken steps towards achieving net-zero objectives, only 56% of global participants have made a public net-zero commitment and 50% have established a net-zero target.

Derived from GRESB’s Transition Risk Report, the graph depicted below compiles the performance data of the entire GRESB universe concerning the CRREM pathways. It showcases the aggregated floor area and greenhouse gas (GHG) intensity of all operational assets reported to GRESB, comparing them against their respective CRREM pathways. In cases where energy consumption data was unavailable, GRESB’s Estimation Model and GHG calculation methodology were used to fill the gaps.

The GRESB Rating is determined by the GRESB Score and its position within the quintiles of all participants in the GRESB Assessment, with the model being calibrated annually. Entities in the top quintile receive a GRESB 5 Star rating, while those in the bottom quintile receive a GRESB 1 Star rating, and so on.

Because the GRESB Rating is calculated in comparison to the global performance of reporting entities, it provides a clear indication of your standing on a global scale. GRESB 5 Stars represents the highest rating, acknowledging you as an industry leader. Each year, 20% of entities achieve a GRESB 5 Star rating. You can use the GRESB Rating Logo in your communications.

• Categories are unique combinations of sector, region and nature of ownership. Each category requires a minimum of 6 entities.
• Sector Leaders are determined for each region (Regional Sector Leaders) and globally (Global Sector Leaders), taking legal status into account. It is possible for the same entity to be recognized as both a Regional Sector Leader and a Global Sector Leader, and it is possible for an entity to only be recognized as a Sector Leader for a particular legal status (listed or non-listed)
• The entity with the top score, as well as the entities with a score within 1 point of the top score in a category will be recognized as Sector Leaders.
• The consequence of this approach is that some categories will have a single Sector Leader, while other categories will have multiple.
• Global Sector Leaders refer to the best performing entities globally across both legal statuses (listed and non-listed)
• Regional Sector Leaders refer to the best performing entities per region across both legal statuses (listed and non-listed)