What is GRESB?
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 toward a sustainable future for real estate.
What is GRESB, and what do they do?
GRESB is an organization that produces internationally-recognized benchmarks to track environmental, social and governance (ESG) performance of commercial real estate and infrastructure.
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 organization launched in 2009, GRESB was an acronym for “Global Real Estate Sustainability Benchmark.” However, in 2015 the organization expanded their interests beyond sustainable real estate, into the ESG performance of infrastructure including roads, railways, electricity distribution and communication systems. 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 2021, more than 1,200 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 2021 was more than USD 5.3 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 uses 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-recognized 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 that explain the intent of each indicator, the response requirements, scoring information and explanations of terminology used. For an additional fee, GRESB also offers an optional Response Check following submission, which involves a detailed review of responses and a one-hour call from the validation team to discuss any queries or concerns.
What do participants receive from GRESB?
Based on the data collected, GRESB produces four ESG industry benchmarks annually: the 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 provides companies with suggested actions to improve their ESG standing, and it encourages a dialogue on ESG between companies, managers and investors. In addition to 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 IBM Envizi support GRESB?
The GRESB Real Estate Assessment requires participants to report ESG data at the 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.
What’s new in 2022
In 2021, GRESB introduced a new estimation methodology, and many organizations had difficulty determining if the data they were reporting met the strict new reporting requirements. To support organizations through this change, Envizi released a new feature in 2022 to help assess data quality in accordance with the estimation methodology as laid out in the GRESB 2022 Real Estate Reference Guide. Updated questions are also now available to capture updated asset data, including building certifications, efficiency measures and reporting characteristics.
Having an accurate ESG reporting system in place which keeps up with these changes to GRESB reporting requirements can significantly speed up and simplify the process of submitting a GRESB assessment.
What is GRESB?
GRESB is an organization that provides ESG assessments and sustainability benchmarks for commercial real estate and infrastructure. They are globally recognized and driven by investors.
What does GRESB stand for?
Formally, GRESB stood for Global Real Estate Sustainability Benchmark. However, this applied when the organization started in 2009, and was primarily focused 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 validates this data and provides 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 1 April to 1 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 1 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 1 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 from three categories: management, performance and development. The green star is only available to real estate participants, not infrastructure, and is based on absolute performance.
What is GRESB working on now?
In November 2021, GRESB announced the establishment of the GRESB Foundation—a non-profit which independently owns and governs the GRESB Standards. The new governance structure includes standards committees, expert resource groups and working groups to support the increased growth in existing and emerging markets.