What 2024 can teach us to improve 2025

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.

GRESB’s annual results announcement is always an excellent indicator of the general trends across the property and finance sectors. And while some will be celebrating the results of 12 months of sustained effort being reflected in relatively high scores and rankings, many may be looking at their results wondering what they can do to improve them.

Two things stand out in the trends showcased in GRESB’s global results data—firstly, the embodied carbon space is moving very quickly. 29% of reporting entities included an embodied carbon target in their net-zero target progress reporting. This is positive for those asset owners and funds that are invested in long-term assets, as retaining existing buildings and stewarding them is a key strategy for reducing additional embodied carbon.

For developers of new assets, setting achievable targets in this regard is much harder. Conventional demolish-rebuild developments or any new construction using high-carbon materials such as concrete, virgin steel, aluminum, and glazing in large volumes will struggle to identify and meet appropriate reduction targets unless design, procurement, and delivery approaches change.

There is also a shift in how entities are addressing and reporting on climate change matters. While emissions reduction and science-based targets alignment remain fundamental, 94% of reporting real estate entities globally have now undertaken climate risk assessments. This also shows the investor community and real asset funds are already preparing for mandatory reporting on climate-related risks.

The next step beyond understanding the risk landscape will be planning for adaptation and resilience. Standard approaches around risk and resilience have generally focused on insurability, however, as climate impacts continue to escalate, non-insurable risks and the human and operational costs of climate change will need to be foregrounded.

Adaptation also offers enormous opportunities for innovation across organizational policies, operations, assets, and procurement. For example, adaptation could incorporate localizing supply chains to reduce vulnerability to climate impacts across multiple geographies; installing renewable energy storage and island-mode capability on assets; or upgrading passive performance of buildings to improve extreme heat resilience.

Another emerging trend is the growing number of participants that are looking at nature-related risks and opportunities. Given the Taskforce for Nature-Related Disclosures (TNFD) has only been on the radar for a few years—compared to over a decade for climate-related disclosures—this shows the investor community is paying attention to the mega-trends.

Overall, it is clear GRESB reporting is driving change and incentivizing positive impact. For organizations looking to demonstrate their commitment to ESG best practice, it also provides a tangible, visible, and comparable set of benchmarks for success.

For entities new to GRESB reporting or those who are keen to improve their scores, there are a few key areas worth looking at. Low-scoring areas or areas with no scores are where there may be easy wins, and in general, if you are aiming to make improvements for this reporting year that ends on December 31, or for next year, 2025, actions that involve the lowest capital spend and are largely within your immediate control and influence are generally the most feasible.

One of these might be, for example, aligning your ESG and sustainability strategy and targets with a credible framework such as the United Nations Sustainable Development Goals (UNSDGs), CDP, GRI, Climate Active, TNFD, UN Global Compact, UN Principles for Responsible Investment (PRI) and/or  Science-based Targets Initiative(SBTi) criteria including SBTi for Nature, SBTi for Buildings and SBTi for emissions reduction. The advantage here is both gaining points for GRESB reporting and gaining measurable and actionable steps and guideposts for what progress looks like.

In a similar vein, if your climate reporting to date has been confined largely to emissions, undertaking a climate risk analysis will both gain you points and provide useful insight to inform next steps. After all, how can we effectively plan action if we do not know the risks we are trying to mitigate, adapt to, or eliminate?

It also means that you will be ready for mandatory reporting—even if your organization is not due to commence in the current or coming financial years, starting now is always wise. Also, if your stakeholders such as tenants, clients, or suppliers include organizations that are now required to report on climate-related financial risks under the AASB rules, being able to contribute to their data may become essential. Equally, having effective stakeholder consultation processes can gain you some points in your GRESB reporting, so that’s a win-win.

As an emerging area of reporting nature impacts may seem intimidating. However, establishing policies, setting targets, and doing a risk analysis of impacts including pollution, biodiversity loss/gain, and supplier environmental credentials around nature impacts is a solid first step. Again, mapping the risk landscape also highlights where the opportunities for positive impact exist.

Data collection generally is an area where there are points to be won. While data on energy and water consumption is being collected and reported by the majority of Australia and New Zealand GRESB Participants, having granular data on electricity use, generation source for electricity and gas use at the individual asset level is best practice. This data also provides the basis for planning for asset electrification, as it indicates where the most significant gas use is occurring, which helps prioritize asset retrofits within a portfolio.

Targeting the most carbon-intensive assets first will make the most significant contribution to overall organizational emissions reduction, and then translate into higher scores in GRESB reporting.

Waste data remains an area where we need to see progress. In 2024, 62.9% of Oceania reporting entities included waste data. That means there’s a large tranche of assets and funds that have an opportunity to improve their scores by starting to gather that data and report it.

The social indicators are another low-cost opportunity for improving scores. Stakeholder engagement falls within this scope, as do diversity and inclusion policies and metrics.

For example, diversity metrics include both the executive level and whole-of-organization data on gender and cultural indicators. There are potential alignments there with developing a Reconciliation Action Plan and other initiatives that contribute to a tangible social value approach. Stakeholder engagement can be a motivation for engaging in more effective dialogue with tenants or communities within which you operate.

Seeing the synergies between the items that gain GRESB points and actionable ESG insights and practical positive impact strategies is ultimately where the real value is created from measurement, target setting, and reporting.

This article was written by Katarina Persson, Sustainability Consultant at Cundall.