Information Regarding 2024 Real Estate Score Changes

GRESB – guided by the volunteer leaders of the GRESB Foundation – is committed to rigorous assessment of real asset sustainability. This includes “raising the bar” to meet the evolving expectations of investors, managers, and key stakeholders.

• The 2024 Real Estate Benchmark reflects this ongoing effort. The 2024 Benchmark includes new criteria and analytical methods. Specific changes in the Standard were approved by the GRESB Foundation and announced over the last year.
• The aggregate impact of these changes is modest, resulting in a small average decrease in total scores (2-3 points). However, it is also clear that impacts on individual entities can be significant, reflecting a combination of factors, including changes in Standards, analytical methods, and entity-specific characteristics (e.g., building certification age). The cumulative impacts of these factors could not be fully analyzed or anticipated until new data became available this summer.
• Our efforts to implement these changes, while necessary and aligned with our goals, presented unforeseen challenges for both GRESB and participants. GRESB understands that this created uncertainty and delay. The entire team is focused and dedicated to addressing the situation fully, and GRESB staff are ready to assist all Members.

Going forward, GRESB remains fully committed to providing enhanced transparency about the motivation, implementation, and impact of Benchmark changes. This includes technical information in Benchmark Reports and supporting materials to assist in interpretation and communication.  Participants are encouraged to review the information below and contact GRESB for support ([email protected]).

The GRESB Foundation governs the GRESB Real Estate and Infrastructure Standards. The Foundation determines requirements for indicators, metrics, and their relative weights. GRESB implements their requirements through Scoring Models and displays within Benchmark Reports and supporting materials. Changes in indicators, metrics, and weights ultimately drive changes in benchmark scores and ratings. Year-over-year changes are necessary to serve a dynamic market, but they also create challenges interpreting benchmark scores and ratings over time.

For a more detailed explanation of these changes, please see a message from GRESB’s Management Board and guidance on changes to the 2024 Real Estate Benchmark.

Key points:

• GRESB Standard changes had a significant impact on overall scores. This includes mitigating the unsustainable upward trends in scores and improving differentiation among entities. These changes also resulted in a net decrease in average total scores by <2 points.
• Overall GRESB 2024 scores are not directly comparable to previous years. Due to these changes, overall scores should not be directly compared to previous years. Changes in most individual indicators and metrics remain directly comparable and a useful assessment of relative strengths and weaknesses.
• GRESB is taking action to inform managers and investors. Changes in the 2024 GRESB Standards directly reflect investor priorities expressed through Foundation members. All investor members have been informed about the scope of these changes and, going forward, GRESB will provide updates on scoring impact. This will include specific guidance to help investors understand scoring changes.

Building certifications

• Challenge: Investors believe green building certifications lose value over time.
• Change: GRESB now discounts the value of building certifications over time, increasing the relative value of new certifications.
• Impact: Funds with older certifications receive fewer points. Portfolios with recently obtained certifications receive more points. Relative rankings and performance will be reflected in peer groups.

Country-specific benchmarking

• Challenge: Investors want greater specificity in peer comparisons. Comparisons to broad regions (e.g., “the Americas”) were viewed as insufficient.
• Change: GRESB introduced country-specific benchmarking for all key performance indicators. New scores are based on asset-specific performance within a country-level group.
• Impact: Country groups may be more or less competitive than regions. Net changes in score will depend on the geographic distribution of assets and the relative competitiveness of the country and region. Impact will vary by entity.

Please note that, as every year, scores and rankings are still subject to change during the Review Period when the Assessment Correction is still open.

For more information about these changes, please see the message from GRESB’s Management Board and guidance on changes to the 2024 Real Estate Benchmark.

For additional information on the 2024 Real Estate Assessment, please contact Member Success or refer to:

• The 2024 GRESB Reference Guide
• Scoring Documents