Unlocking investor confidence: Real estate’s path to enhanced data quality

Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.

95% of investors use ESG data for real estate investment decisions. Yet 87% of investors believe that sustainability performance figures from real estate companies contain greenwashing. When it comes to ESG reporting, most asset managers have some form of advanced cloud service in place to track energy performance. Unquestionably, these platforms play a significant role in automating the ESG duties – as long as they have the data.

A mere 57% of real estate companies have comprehensive data management strategy in place. 76% rely on Excel spreadsheets while simultaneously admitting their excessive reliance on the tool. Real estate organizations continue to struggle to keep data strategies moving forward. Some of the main obstacles include the lack of technology integration, consolidation or standardized data sets from multiple external sources, the lack of resources, data quality, and inadequate systems. As a result, inconsistencies and data quality issues become a herculean task. The reporting not only suffers from inadequate energy consumption tracking but also deters investors from trusting asset owners with their capital.

Failing and error-prone metering devices, Excel sheets from multiple sites in multiple countries from multiple facility operatives who are alien to ESG reporting and uncooperative tenants – this is the day-to-day of an ESG professional without an energy automation system in place. And these individuals are not alone in the market: According to KPMG, 61% of real estate companies struggle with data centralization.

On the long run, the commitment to net zero is even harder to master, when granularity in data measuring is missing. Only a handful of market players are aware that every EV-charging-station, every fridge, every light bulb, and every toilet flush eventually contribute to emission rates – for better or worse. The remaining businesses can only guess the effective energy usage by extrapolating incomplete data from energy suppliers. With rising energy costs and a lack of transparency these conglomerates book record profits in return.

Benchmarking organizations like CRREM, BREEAM, and GRESB, place great importance on data quality and quantity. In the GRESB benchmarks a complete data set alone contributes 17.5 out of 100 potential points in their scoring. In its Risk & Opportunity section – 12% of the score – sustainability data is key to prove the organizations capacity on decision-making and mitigating business hazards. Again, 9% goes back to having a structured data management system in place. PRI has frequently stressed the need for real estate companies to report on their energy consumption and greenhouse gas emissions and to demonstrate data-based climate risk management. According to their assumptions, efficient energy data management not only enhances reporting accuracy but also empowers companies to make informed decisions, drive cost savings, mitigate risks, and demonstrate their commitment to a more sustainable future. However, more than half struggle with standardized and qualified data sources.

While regulators seem to fail in paving a way, industry leaders and organizations are calling for improved energy data management strategies to address concerns. GRESB’s Real Estate Reference Guide or CRREMs Risk Assessment Reference Guide both provide comprehensive guidelines to improve data quality, reporting consistency, and alignment with sustainability goals.

The market is acknowledging the urgency of improving energy data management practices. Industry leaders like CBRE and WDP have shown that embracing standardized data collection methodologies, leveraging advanced technologies for automated data capture and analysis, and collaborating with industry initiatives, will ultimately lead to sustainable consumption and less time wasted on reporting. In this age of data and sustainability, real estate businesses easily fall behind those who walk the extra mile.

In the rapidly evolving landscape of asset management, harnessing the power of energy data management isn’t simply a tool for efficiency; it’s a crucial factor in demonstrating the commitment to sustainable business practices. An incomplete or imprecise data portfolio isn’t just an operational pitfall; it’s a potential roadblock to the path of success in an increasingly ESG-focused world.

Considering the perspective of investors with their ever-growing emphasis on sustainability and responsible practices – how would they understand the sustainability efforts if the reporting doesn’t reflect the full data spectrum of the portfolio?

This article was written by Vishal Arora, Sales Director at nanoGrid.