As someone with an interest in sustainable real estate and infrastructure, you may have come across the term ‘GRESB’, and be wondering – exactly what is GRESB? In this article, we’ll explain the key things you need to know about GRESB, and why their reporting is an important tool in working towards a sustainable future for real estate.
What is GRESB, and what do they do?
Participants in GRESB assessments submit asset-level data relating to ESG indicators. In return, they receive detailed business intelligence of their comparative performance against their peers, as well as suggested actions they can take to improve their sustainability performance, and better communicate on the subject with investors. Investors use GRESB’s industry benchmarks and analytical tools to assess the ESG performance of their portfolios, engage with property managers, and meet increasingly demanding ESG reporting obligations.
When the organisation launched in 2009, GRESB was an acronym for ‘Global Real Estate Sustainability Benchmark’. However, in 2015 the organisation expanded their interests into the ESG performance of infrastructure – including roads, railways, electricity distribution and communication systems – as well as sustainable real estate. To reflect their new, wider interests, GRESB adopted the word as their name, and no longer use it as an acronym.
Why GRESB matters
In 2020, more than 1200 property companies, real estate investment trusts (REITs) and funds participated in the real estate benchmark, with over 120 investors using GRESB data to stay informed on their investments, and make decisions relating to the ESG performance of their portfolio. The asset value covered by GRESB in 2020 was more than USD $4.8 trillion.
Increasingly, investors in commercial real estate are looking for ESG data to assess new investments. If you’re a real estate company or infrastructure operator, GRESB scoring offers you a chance to showcase the quality of your assets. It’s therefore in your best interest to become familiar with GRESB rankings and assessments.
How is GRESB structured
GRESB releases surveys to real estate operators every year. Through these surveys, they gather data on building management, performance, climate risk and stakeholder engagement, and validate this data through a multi-stage process. GRESB then use this to create their industry benchmarks, which are externally published and widely circulated.
There are 2 complementary GRESB assessments; a Fund assessment and an Asset assessment. These are designed to be completed by infrastructure funds and portfolio companies respectively. Both assessments address the main aspects of ESG performance in real estate, as considered by investors. They are aligned with internationally-recognised sustainability reporting standards, such as the UN Principles for Responsible Investment (PRI), the Global Reporting Initiative (GRI) and the Paris Climate Agreement.
The evaluation is based on a set of ESG indicators, across Management, Performance and Development components. The Management component looks at leadership and strategy, policies, risk management, and stakeholder engagement. The Performance component measures the entity’s ESG performance from asset-level data, and the Development component is concerned with the design, construction and renovation of buildings, and the operator’s efforts to address ESG concerns during these processes.
In the surveys, participants are asked to report on energy, GHG, waste, water and building certification at asset level. Indicator topics include data and social infrastructure, transport, environmental services, network utilities, and the generation of renewable power. All asset-level data submitted is confidential, and will only be used to validate the wider portfolio report.
Guidelines are available which explain the intent of each indicator, the response requirements, scoring information and explanations of terminology used. For an additional fee, GRESB also offer an optional Response Check following submission, which involves a detailed review of responses and a 1-hour call from the validation team, to discuss any queries or concerns.
What do participants receive from GRESB?
Based on the data collected, GRESB produce four ESG industry benchmarks annually: Real Estate Benchmark, Real Estate Development Benchmark, Infrastructure Fund Benchmark and Infrastructure Asset Benchmark. The recent introduction of the Development Benchmark offers participants with development projects and activities a better understanding of their ESG performance. All participants in the assessments are scored against the relevant benchmarks.
Real estate operators will receive overall scores relating to their performance, including GRESB Ratings and GRESB Scores, and also have the option of purchasing a full Benchmark Report. In this, they can expect detailed asset and indicator-level analysis of their current ESG performance, and intelligence on how they are performing against their peers (operators with a similar location, sector and investment type to themselves).
GRESB also provide companies with suggested actions to improve their ESG standing, and encourage a dialogue on ESG between companies, managers and investors. As well as a platform to engage with property managers, investors receive access to ESG data and disclosure documents across their investment portfolio. They can use the single ESG framework provided by GRESB to assess and compare the performance of their real estate assets.
How does Envizi support GRESB
The GRESB Real Estate Assessment requires participants to report ESG data at asset level. In order to respond to the Performance Indicators component of the GRESB assessment, companies must compile asset-level data such as stakeholder engagement, green building certification and automatic asset categorization.
Sustainability data management and reporting systems that are aligned with GRESB, such as Envizi, can help companies to extract, compile and manage the energy, emissions, waste and water data that is needed for the GRESB Asset Level Data Spreadsheet.
Having an accurate ESG reporting system in place can significantly speed up and simplify the process of submitting a GRESB assessment.
What is GRESB?
GRESB is an organisation which provides ESG assessments and sustainability benchmarks for commercial real estate and infrastructure. They are globally-recognised, and driven by investors.
What does GRESB stand for?
Formally, GRESB stood for Global Real Estate Sustainability Benchmark. However, this applied when the organisation started in 2009, and was primarily focussed on real estate. As they evolved and branched out into infrastructure, GRESB moved away from the acronym, and it is now simply the name of their company.
What is a GRESB assessment?
GRESB assessments collect data on sustainability best practices for infrastructure and real estate companies around the world. Operators submit data through a secure online portal, answering questions relating to building management, performance indicators and energy usage across their assets. GRESB then validate this data, and provide the operator with a benchmark score of where they stand against their industry peers.
When is the GRESB assessment conducted?
GRESB’s real estate assessment cycle runs from 1st April to 1st July each year. This is a fixed cycle, and assessment submissions will not be accepted outside of these dates. Preliminary results are made available to participants on 1st September, and there is then a month-long review period, during which participants can submit review requests to GRESB. The final results are published on 1st October.
What is a GRESB green star?
A GRESB green star is an accolade provided to real estate companies who achieve a score of more than 50% in the relevant assessment criteria, out of Management, Performance and Development. The green star is only available to real estate participants, not infrastructure, and is based on absolute performance. Full details of GRESB’s scoring system can be found here.
What is GRESB working on now?
As of November 2020, GRESB are under new ownership, and are working to establish the non-profit GRESB Foundation, which will independently own and govern GRESB standards. They are planning for growth in emerging markets, and are aiming to offer increased support to participants in GRESB assessments.