GRESB Reporting: Who, What, Why, and How
- April 12, 2017
Despite the lack of federal energy reporting mandates, the US real estate industry is very familiar with both voluntary and locally mandated energy reporting, primarily through ENERGY STAR (roughly 45% of the market participates).
While ENERGY STAR offers some insights into property energy performance vs. peers, it stops short of evaluating the entire environmental, social, and governance performance of the assets. Over the past few years, a more comprehensive reporting standard, the Global Real Estate Sustainability Benchmark (GRESB), has become more and more popular with real estate companies, funds, investors, and banks. In 2016, more than $2.8 trillion in asset value across 66,000 properties benchmarked through GRESB reporting to track and disclose their sustainability performance. Read on to learn more about GRESB, who participates, why you should consider participating, and how to participate in the future.
What is GRESB Reporting?
GRESB is an organization driven by investors who are committed to evaluating the environmental, social and governance (ESG) performance of real assets, which includes real estate. “It uses systematic assessment, objective scoring, and peer benchmarking to provide asset-level operational performance data.” The 2016 GRESB Snapshot- North America shows that leading real estate companies are working to advance their ESG performance, which includes reducing greenhouse gas emissions, diverting waste, and conserving water and energy. “Leading North American companies are rewarded with more efficient, more desirable properties, while their investors benefit from higher returns and lower risk.” Based on a 5-star scoring system representing the portfolio’s rank against its peers, the benchmark is used as a tool to improve the performance of real estate portfolios and the global real-estate property sector (and attract capital from investors).
Data is collected at the portfolio level for private property funds and developers, property companies, and direct real estate investors. Additionally, GRESB data is used by about 60 pension funds and their fiduciaries, representing more than $7.5 trillion in assets under management.
Top reason to participate: your competitors are participating and pension funds, banks, and institutional investors are requiring GRESB participation in order to attract their money.
- “To protect shareholder value by evaluating and improving the sustainability performance of real assets (real estate).”
- “To provide institutional investors with actionable information and the tools needed to accurately monitor and manage the sustainability risks of real estate and infrastructure investments and to prepare for increasingly rigorous environmental, social and governance obligations.”
- “Benchmarking sustainability performance helps generate and strengthen the market forces needed to bring environmental, social and governance issues to the forefront of business decision-making. By participating in GRESB’s annual assessments, companies and funds are able to better manage portfolios, funds and assets in the face of more volatile energy prices, stricter legislation to combat climate change, increased energy efficiency requirements and changing preferences of corporate tenants.”
- “Benchmark results provide member companies with the opportunity to identify areas for improved sustainability performance, both in absolute terms and relative to industry peers.”
- “Leading companies are rewarded with more efficient, more desirable properties, while their investors benefit from higher returns and lower risk.”
How Can I Participate?
- Review GRESB’s company and fund manager membership guide
- Become a GRESB member
- Work with a GRESB Premier Partner (such as us at EnergyWatch) to increase the speed and accuracy of your reporting. By integrating directly with GRESB through their API, EnergyWatch’s watchwire platform automatically gathers and uploads the performance indicators to the GRESB real estate assessment.
- Opt for the first year grace period to 1) familiarize yourself with GRESB reporting, and 2) not disclose your results to investors.
In subsequent years, your GRESB score will be disclosed to your company’s investors that are GRESB members (for private firms), or to all GRESB fund members who invest in publicly traded real estate companies (for publicly listed firms).