Transition risk is broadly defined as those risks that arise as a result of the global transition toward a low-carbon economy. The Task Force on Climate-related Financial Disclosures (TCFD) delineates transition risk into four categories: policy and legal; technology; market; and reputation. Each category can be of greater or lesser importance depending on the sector under consideration. In the case of real estate management, policy risk is generally considered to be the predominant transition risk to an asset or portfolio.
The Transition Risk Report is currently available to GRESB Real Estate Participant Members that completed the 2021 GRESB Real Estate Assessment.
GRESB Real Estate Participants who purchase the Transition Risk Report will have unlimited access to the relevant year’s report through the GRESB Portal. If you purchase a report in February, it will be populated with last year’s data. When the GRESB Results are released in the fall, you will automatically receive the updated version of the Transition Risk Report.
No, GRESB Investor Members cannot see Transition Risk Reports of individual entities through the GRESB Portal.
If you would like to share your report with investors, you can do so outside of the GRESB Portal. It is not currently possible to share the report through the Portal.
Currently, the Transition Risk Report is only available for Participants of the GRESB Real Estate Assessment. The report may become available for non-Participants in the future.
The Transition Risk Report is built from asset-level data reported by Participants as part of the GRESB Real Estate Assessment. Where necessary, the reports are also complemented by estimations using GRESB asset-level dataset. The report also makes use of CRREM’s global decarbonization pathways.
The GHG emissions of the portfolio are calculated using the location-based approach.
Both the CRREM pathways as well as the bottom-up performance aggregations are property type and country specific.
GHG offsets as well as the purchase of off-site renewable energy are not factored into the assessment of transition risk.
The current version of the Transition Risk Report provides an assessment based on a do-nothing scenario from the participant’s side. Any future plans for improving the efficiency of the assets will be reflected in future versions of the Transition Risk Report, once the energy reductions have materialized.
The Transition Risk Report uses CRREM’s forward-looking GHG emission factors, which have built in assumptions for local grid decarbonization.
While commitment is a necessary first step, much focus has now been rightly shifted toward execution, and financial actors and real estate operators alike are in need of credible tools and standards that are able to put their assets and portfolios into the context of these high-level commitments.
As climate-related risks (both transition and physical) become increasingly recognized as material factors for consideration in financial decision-making and planning, global standard-setting institutions, financial institutions and even regulatory authorities are looking to the TCFD as the basis for climate-related reporting. The TCFD recommends the disclosure of scenario analysis exercises to be used in the contextualization of the resilience of an organization’s strategy to climate-related issues.
As the management and disclosure of transition risks become mainstream, the estimation of such risks at the asset and portfolio level will become a key aspect of risk identification and assessment processes. Such capabilities will serve as the basis for TCFD-aligned disclosures and other regulatory requirements, such as SFDR.