AMSTERDAM, October 15, 2021: GRESB – the global environmental, social and governance (ESG) benchmark for capital markets – has released the results of its 2021 Assessments. Full results can be found for the 2021 Real Estate Assessment Results (and Real Estate Sector Leaders) and the 2021 Infrastructure Assessment Results (and Infrastructure Sector Leaders).
Key real estate insights
- The 2021 benchmark saw the largest ever growth in total numbers, with 1,520 entities now participating worldwide, with significant growth focused in Europe
- Average GRESB scores increased to 73 for the Standing Investments Benchmark and 79 in the Development Benchmark, following last year’s assessment restructure
- Oceania continues to lead the way, with the highest regional average score of 79 in the Standing Benchmark and 84 in the Development Benchmark
- Significant performance improvements were noted in GHG emission, water and waste reductions, a result of both Covid-19 and continued investment in improving efficiencies
Key infrastructure insights
- This year saw the largest ever increase in asset participation, with 558 assets now reporting, and the second largest increase in fund participation, now at 149
- Funds completing both assessment components jumped 41% to 106, that is funds obtaining a GRESB Fund Score reflecting overall ESG performance at the portfolio level
- While few assets have net zero targets, recent commitments by managers representing 40% of reporting assets are expected to drive significant increases in the years ahead
- Asset participation growth was led by Renewable Power, with a 65% increase from 2020
- Significant regional growth in asset participation was seen in the Americas (35%) and Asia (48%)
Overall, the gross asset value reporting to GRESB has increased by more than 50% since 2019
“Across the globe, organizations are demonstrating a deep commitment to ESG integration while making important strides towards a more sustainable future for us all,” said Sebastien Roussotte, CEO of GRESB. “ESG transparency and improving overall performance have never been more important, and it is inspiring to see such a high level of dedication across industries.”
Real Estate Results
Participation in the Real Estate Benchmark grew by 24% this year, to 1,520. This is the highest percentage increase the assessment has seen since 2012 and the highest ever increase in total numbers. The benchmark now covers $5.7 trillion of AuM (up from $4.8 trillion) and nearly 117,000 individual assets.
Growth has been driven mainly by Europe, which saw massive growth for the second year in a row and now accounts for nearly half of the entire benchmark. High continued growth in Europe is likely driven by both investor interest in ESG data and the industry’s focus on and attention to emerging regulations. The group of listed entities grew by 20% while the non-listed group grew by 25%. The Real Estate Benchmark now covers 49 of PERE’s Top 100 Fund Managers and has 69% coverage of the main global listed real estate indices.
While average GRESB scores in 2020 were affected by last year’s assessment restructure, this year saw renewed score improvements. The average Standing Investments Benchmark score is 73 and the average Development Benchmark score is 79. Oceania continues to lead the way with averages scores of 79 and 84, respectively.
Participants improved on scores across nearly every aspect of the assessment. Score improvement was particularly high in Data Monitoring & Review (a 9% average increase), underlying increased global efforts to improve verification of performance data. On the development side, the most improvement was seen in Materials, highlighting more focus on material selection and embodied carbon tracking in developments and renovations.
The global impact of the Covid-19 pandemic is noticeably reflected in performance scores. This year’s benchmark shows unprecedented reductions in utility usage, with like-for-like reductions in energy consumption, GHG emissions and water usage nearly threefold from previous years. These reductions were most pronounced in Asia, which saw decreases in energy consumption (8%), GHG emissions (10%) and water consumption (11%). To complement the Real Estate Assessment this year, GRESB surveyed Members and Partners on how Covid-19 has affected portfolio performance. Results showed that these sizable reductions are not solely attributable to the pandemic – participants are also making significant improvements engaging tenants and implementing efficiency measures.
“This year, participation in the GRESB Real Estate Assessment jumped an impressive 24% to 1,520 portfolios across the globe,” said Charles van Thiel, Director of Real Estate at GRESB. “The industry continues to make impressive strides, deepening its commitment to ESG transparency and focusing on improving sustainability performance.”
Despite the continued challenges posed by Covid-19, total participation in the Infrastructure Fund Assessment grew by 26%, to 149 funds completing the Management Component. The number of infrastructure funds completing both the Management and Performance components of the Infrastructure Fund Assessment grew by 41% to 106. The Infrastructure Benchmark now covers $343 billion of AuM at the fund level and $738 billion of AuM at the asset level.
The fund assessment covers over 30% of the IPE Real Assets Top 100 Infrastructure Investment Managers and over a third of the Infrastructure Investor Top 50, based on participation with at least one fund.
Participation in the Infrastructure Asset Assessment grew by 31% to cover 558 assets. While most assets are based in Europe, significant relative growth in participation numbers came from the Americas (105 to 142) and Asia (21 to 31). The assessment now covers 33 of the 34 industry sectors and 2,096 facilities across 69 countries.
The average percentage of individual assets within funds reporting to GRESB continues to grow, which is now up to 83%. This increase shows that infrastructure managers are moving closer to asset-level reporting. By sector, Renewable Power saw the highest growth in participation (65%), followed by Environmental Services (64%), Transport (44%) and Network Utilities (27%).
When it comes to GRESB scores, both funds and assets saw significant increases this year, similar to the impressive increases seen in 2020. On average, overall GRESB scores and component scores increased from 5 to 15 points. At the fund level, thirteen entities scored the maximum 100 for the Management Component, while only two saw score decreases.
For assets, the average GRESB score increase was 10 points, largely coming from the Performance Component. By asset type, Diversified and Network Utilities are the top performing assets, with average GRESB scores of 80 and 79, respectively. The asset types that improved the most since last year were Social Infrastructure, with a 22 point increase, and Diversified, with a 20 point increase.
The 2021 Infrastructure Asset Assessment shows continued improvement in target setting across all performance indicators, suggesting future improvements in performance that will follow. Among infrastructure assets and funds, Diversity has shown little to no improvement. While the average fund has an employee gender ratio of 40:60 between women and men, only 28% of funds’ governance and management roles are filled by women.
As net zero is a growing interest in the industry, GRESB analysed the target setting that fund managers have committed to for their underlying portfolios. We found that – while Scope 1 and 2 GHG targets are often set by managers for at least one asset in their fund (57%) – only 23% of funds participating in the assessment have an asset in their portfolio with a net zero target. Even fewer (9%) have set science-based targets. That said, fund managers representing just over 40% of all our reporting assets became signatories to the “Net Zero Asset Managers” commitment in December 2020. We expect that in the coming years the number of net zero targets will spike, as assessment reporting reflects these recent commitments.
“The infrastructure industry continues to make significant progress in its approach to ESG, with GRESB participation growing year over year,” said Roussotte. “We are proud to see the industry deepen its commitment to ESG transparency and continue improving overall performance.”
Tyler Guthrie, Director of Communications, GRESB