Asset-level reporting: fundamental for evaluating Real Estate Performance

Since its establishment 10 years ago, GRESB has been at the heart of a collaborative effort to build consensus on what constitutes ESG materiality in the real estate sector, define standardized metrics, and develop a consistent approach to measuring and reporting on ESG performance. It’s a communal effort and we are grateful to be supported by a powerful global ecosystem of investors, lenders, managers, service providers and industry bodies working to improve ESG transparency across the world.

We are now entering a new phase of industry development where greater ESG transparency must be a means to improve the ESG performance of the underlying assets in real estate portfolios. Where real progress towards improving operational performance is the priority, not transparency for its own sake. 

This shift comes in response to changing demand from the investor community, who increasingly expect managers to be able to monitor their assets directly, on the basis of real, reliable ESG performance data. This higher-resolution data will enable us to provide more granular and reliable ESG data and benchmarks, unlock a new generation of performance insights from asset-level up, and support a systematic tracking of industry progress against sector-specific targets, as well as local and global goals.

1. More granular and reliable ESG data and benchmarks

Asset-level reporting will facilitate the next evolution in data accessibility and reliability in the GRESB Assessments and Benchmarks. We are introducing a new asset-level validation process and implementing more automated error and outlier checks. The algorithms are iterative and will “learn” from the feedback provided by our participants on an on-going basis. The result will provide access to consolidated ESG performance at the portfolio level that is underscored by improved data quality at the asset level.

More data does not have to mean a higher reporting burden. We host an increasing number of API connections with GRESB Data Partners and are continuously investing in state-of-the-art tools to facilitate new levels of data sharing and a more seamless reporting experience.  

With ESG data becoming increasingly relevant in investment decision making, index products, loans, bonds and commercial agreements, it is our responsibility to ensure a fair and robust benchmarking process, eliminating blind spots and creating comparable performance baselines that the industry can rely on. 

2. A new generation of performance insights 

As the reported data becomes more granular, we gain exponential visibility into how the assets operate and can provide a more rigorous analysis of ESG performance. Having asset-level data as the baseline for analysis will open up a deeper understanding of exposure to environmental risks and help to uncover the sources of improvements in a portfolio as well as the links to future portfolio performance.

It will also enable consistent calculations of intensities and performance against targets, without the issue of embedded methodological differences. In addition, overlaying fundamentals, such as building location and age, will enable a deeper and more sophisticated analysis of portfolio resilience and performance.  

As part of this work, we are upgrading the Asset Portal to enable managers to assess the exposure of their assets to specific ESG risks. These new services are based on integrating geo-coded asset data with third-party geospatial risk datasets and will be accessible entirely at the discretion of managers. Our 2019 collaboration with Verisk Maplecroft on the Climate Risk & Resilience Scorecard, which focuses on physical climate risk data, is an early example of this approach. Going forward, these integrations will be available directly in the Portal, and will expand to include financial and other third-party datasets.

3. Systematic tracking of industry progress against local and global goals

Asset-level data can be aggregated to the city, country, region and global level, enabling a bottom-up, systematic understanding of what needs to be done to address the sustainability challenge. It enables an analysis of the bigger picture, the aggregate story, about how well the industry is progressing against key goals and global targets such as the United Nations Sustainable Development Goals (UN SDGs), the Paris Climate Agreement, World Green Building Council (WorldGBC) Net Zero targets, as well as other more local targets and sector-specific goals.

The 2020 GRESB Real Estate Assessment will include an integration with the Carbon Risk Real Estate Monitor (CRREM) methodology to show real estate carbon transition pathways at both asset and portfolio level to remain within 1.5 and 2.0 degrees of warming. These pathways will be an important tool to understand and mitigate the long-term systemic risk associated with the retrofit investments required to transition to a low carbon economy.