Insights into the ever-changing, but ever-important, commercial real estate reporting benchmark.
The world of sustainability reporting should come with an acronym guide. CDP, DJSI, GRI, oh my!
Not only can it can be difficult for organizations to decode the dialect, but figuring out where and when to report can be a challenge.
And now there’s another acronym in the soup: GRESB.
What does it mean? What does it measure? And, most importantly, why should companies care? Here’s an overview to shed some light on this relatively new reporting survey.
GRESB, which stands for Global Real Estate Sustainability Benchmark, was launched in 2009 and is a for-profit, industry-driven organization committed to helping real-estate investors assess the performance of portfolios and infrastructure assets. The organization has risen to prominence the last few years and now has more than 190 members (about 60 of these members are pension funds and fiduciaries) that use GRESB data in their investment management and engagement processes. The benchmark is used by institutional investors to optimize their risk/return profile with a long-term aim of improving the sustainability performance of their portfolio and the global property sector at large.
What’s the process?
Every year, GRESB sends out a survey to collect information on different sustainability measures. These measures include energy and water use, as well as waste and carbon outputs. And new this year, survey participants can report on health and well-being to highlight related programs and activities. This is indicative of the fact that the survey continues to evolve — to provide investors with the most relevant data. Companies have three months to collect all necessary information and submit it to GRESB, which then vets each submission and publishes results in September. Here’s more information on the process.
How does it work?
In 2015, the survey had 56 questions in total – 42 of which were structured into seven unique sustainability aspects (e.g., Policy & Disclosure and Building Certification), along with 14 questions specific to new construction and major renovations.
Based on the responses, companies receive a score from 0 to 100, calculated by an automated system after the data is validated. Since the scoring methodology is not public, there is not an exact rubric. However, there is a “GRESB Guidance” document that offers an indication of points assigned to the questions. Also, there are adjustments based on sectors since GRESB recognizes that different property types have unique characteristics. Participants are assigned to a peer group as well, based on their legal status (public or private).
As mentioned, however, annual updates are the norm so organizations can expect the 2016 survey to change somewhat. The majority of the assessment is consistent with last year, but GRESB noted industry trends and developments that need to be addressed. This has led to a streamlined survey with fewer indicators and improved data quality. The survey portal itself has been updated and enhanced to ensure efficient and accurate submissions.
GRESB has helped create a global community that is transforming the commercial real estate space. Each member is able to benchmark itself against more than 700 reporting entities, and receive credit and recognition for its success. Credit means money — financiers, endowments and pension funds all use GRESB’s annual survey to gauge sustainability performance. With growing recognition that sustainability and climate action are business drivers, not reporting could mean missing out on significant investments.
In 2015, the GRESB community reduced GHG emissions by 3 percent, energy consumption by 2.9 percent and water use by 1.7 percent. It also increased on-site renewable generation by more than 60 percent from 2014 levels.
“Investors today are looking for companies with a high ESG performance and GRESB rating. In fact, from what we’ve seen, companies with GRESB ratings have higher valuations and a larger pool of interested investors. GRESB’s goal is to provide investors with the ESG information they need to make more informed investment decisions.” – Nils Kok, CEO, GRESB (via GRESB)
The GRESB portal is open as of April 1 and it closes July 1. Companies have three months to gather and submit the required data, which will help define the global standard for environmental, social and governance reporting, and benchmarking of infrastructure investments.
It may be time to embrace GRESB and add it to the reporting vocabulary. Not only does it mean joining an organization that’s reshaping commercial real estate, but there could be investment dollars at stake.