November 15, 2022
How Big is the Global Real Estate Sustainability Benchmark?
For commercial real estate companies/owners, benchmarking sustainability performance is vital in helping stakeholders make their decisions to work with you. Sustainability is at the centre of the green building drive, which is rooted in the desire to make the world a better place. With more stakeholders demanding properties with positive environmental, social, and governance (ESG) impacts, you cannot afford to be left behind. One way of doing this is by using the Global Real Estate Sustainability Benchmark (GRESB). GRESB is one of the biggest ESG frameworks, which helps to provide a way for systematic evaluation of buildings for sustainability. We can liken it to other models, such as the Task-force for Climate-related Financial Disclosures (TFCD) and the Global Reporting Initiative (GRI). So, if you are in the real estate business, this is one of the crucial tools to have in your portfolio. Keep reading to learn more about GRESB, including how big it is, its rating, and tips for improving your building's score.
What is GRESB?
To understand the application of GRESB, it is crucial to step back and establish what ESG is. ESG is a set of standards for evaluating a company’s non-financial information in relation to its environmental, social, and governance structures. It offers the structures that stakeholders, from investors to lenders, use to screen investments for different purposes. For example, commercial property companies set clear guidelines for improving their environmental performance by cutting down pollutants, reducing emissions, and lowering their energy use.
GRESB is an independent organisation that provides data on ESG performance and peer benchmarks for managers and investors to help them improve decision-making, industry engagement, and intelligence. As a transparent and mission-driven organisation, GRESB gives actionable ESG data to the financial markets. They collect, validate, score, and benchmark sustainability data to give business intelligence, tools, and reporting solutions.
As a real estate manager, you can rely on the GRESB framework to simplify the sustainability journey. This can give your real estate a competitive advantage to outshine competitors on the market. It also comes in handy for compliance purposes because regulators, local authorities, and international organisations are all focused on making the planet more sustainable. A high GRESB rating can also help your company comply with different laws in your industry.
How Big is the GRESB Benchmark?
Since 2009 when GRESB was established, it has recorded tremendous growth. It has now become one of the leading ESG benchmarks for properties and infrastructure in the world. Each year, it evaluates and benchmarks the sustainability performance of different assets based on material issues.
In 2022, the GRESB ESG benchmark grew pretty fast to cover over USD8.6 trillion worth of assets under management. This represents a huge growth from USD 6.4 trillion reported in 2021. With the commitment and dedication of its global team, GRESB expects to grow even bigger in the coming years.
According to the Senior Managing Director of GRESB, Julie Lurie, the goal and commitment of the organisation have helped it race ahead of competitors. Their focus is targeting the entire asset’s lifecycle to be able to give a better picture of its sustainability for comparison by stakeholders. This means that investors in real estate can now look at GRESB reports without worrying about greenwashing.
GRESB Sustainability Score
Whether you have an old or new property, it is crucial to ensure it gets a high GRESB score so that investors can notice. GRESB score is the overall measure of an asset’s sustainability performance. It is presented as a percentage, which runs from zero to 100. If your property is rated more than 80%, that is an impressive score. 66% is considered average, while anything below 50% is poor.
To determine the score of your company, GRESB compares the information you provide with the global benchmarks. First, you need to get the right GRESB tools for data collection. The information you provide has to cover a wide range of ESG considerations, such as water use, energy saving, and the entire building’s life cycle, which are automatically scored by GRESB. Each item is assessed individually and the overall company score is determined by calculating the average.
The most impressive thing about GRESB is that it does not condemn property after scoring. However, GRESB tools offer a wide range of actionable information for improving sustainability. For example, you might be assisted with new energy-saving strategies to transform your house into a green building. When you prepare an ESG plan, GRESB helps to define the path to follow and achieve clearly set ESG objectives.
Expert Tips for Improving Your GRESB Score and ESG Disclosure
As GRESB becomes the new norm in the real estate industry, the big question for property managers and owners is, “how do you improve the score?” Check out these seven expert suggestions that you can use to improve your GRESB score and ESG disclosure.
- Start as Early as Possible
One fact about sustainability is that it is a journey. In the real estate industry, this means having ample data that can help your company to be compared with peers. Therefore, it is prudent to get started as early as possible so that GRESB can have ample data to rate every area and the entire company. The best time to consider is a combined period of two years of data gathering on matters of sustainability.
It is prudent also to have accurate data on your company data to get the right rating. For example, if you have targeted cutting down on emissions, clearly demonstrate the plan for reduction, key performance indicators, and achievements over time. The investor interested in your green building should be able to look back and verify the information that makes the asset sustainable.
- Reduce Waste from the Building
Every building generates waste in its lifecycle. When this waste finds its way into the environment, it can have serious implications on different systems like the water system and human health. Therefore, your green building will only attract a high GRESB rating if it has clear structures and systems for reducing its waste.
During the construction phase, the goal of waste minimization can be achieved by the careful selection of long-lasting materials and technology. Where possible, make sure the materials used by the company are recycled to help extend their utility. Once completed, green buildings should feature clear strategies for waste management. This can include things such as on-site wastewater treatment, bins that allow waste categorization by users, and clear signage.
- Cut Down Carbon Footprint
GRESB, like other frameworks, puts a lot of emphasis on global warming. In its rating, GHG emissions take about 10% of the overall score. Therefore, this is a crucial area of target if you want to enjoy a high score. Remember that cutting down carbon footprint requires accurate calculations of all emissions in the Scope 1, Scope 2, and Scope 3 categories. Also, you need to demonstrate that the focus on cutting down emissions is progressive to help the planet achieve the goal of net zero carbon by 2050 or earlier.
- Green Policies
One fact about sustainability is that it only works when you have a clear policy and a plan. GRESB appreciates this and gives firms with no policies low ratings. The idea behind this is that failure to have a clear policy will likely result in the loss of momentum for sustainability. For example, a company that fails to assess its ESG impacts is likely to simply pick some actions to demonstrate it is green. However, ESG is not likely to become a central agenda in decision-making.
Consider crafting a clear green policy that defines the standards that the company is supposed to achieve. It should also highlight areas of action, key performance indicators, and objectives. For example, your ESG policy might set the minimum waste levels and rules for engagement with suppliers. This policy would ensure that you only work with companies committed to sustainability. Remember that you can always work with experts at Climate Fresk for collaboration and support in ESG policies and strategies for your company.
- Support Greening Initiatives
When designers and managers work on buildings, they put a lot of emphasis on the environment. How you impact the environment at all stages of a building lifecycle is crucial in determining the GRESB rating. One notable thing about ESG is that it provides you with a free hand in selecting the activities of interest to make a bigger impact. Therefore, you can work on both on-site and off-site initiatives to help green the planet.
In your properties, you can ensure there is enough space for plants. For example, building facades can be designed to hold green plants, corridors can take more potted plants, and offices can feature live plants. These not only help to improve aesthetic appeal but also improve air quality and sink carbon dioxide from the atmosphere.
Another option you might want to undertake to improve your GRESB rating is supporting initiatives away from the location of the real estate. This is crucial for companies that want to help remove a bigger chunk of carbon dioxide from the atmosphere. For example, supporting tree planting in the topics can help improve carbon sequestration and avert the looming dangers of global warming. Make sure your goals, targets, and data for such greening initiatives are clear in the ESG plan.
- Reduce Energy Use of the Building
Energy saving is another important area in the GRESB rating, and it is important to have impactful initiatives. When you cut down energy use, it helps to reduce the overall expenses for the real estate company. In return, you are sure of higher profitability, which is crucial for investors when selecting the properties of interest. Energy saving also helps to reduce carbon footprint and improve the working environment.
One of the best strategies for energy saving in buildings is using CONTINEWM. This is a modern device that is fitted in the front part of the heat exchanger, and it helps to reduce resistance to airflow. It works by producing negative charges that reduce the creation of positive electrostatic charges that are created by moving air and rotating parts. In addition to helping cut down energy use (up to an average of 25% savings on your AC bill), CONTINEWM also helps to eliminate odours and reduce the cost of maintenance.
Other suggestions for energy-saving options to transform your house into a green building include installing energy saving lighting fixtures, a smart energy management system and a shift to renewable energy.
This post has demonstrated that GRESB has grown pretty fast to become one of the biggest ESG frameworks. It offers an excellent grading system with accurate assessment sustainability that helps the property market win trust of stakeholders. We have highlighted a list of things that you can do to get a higher rating and win the support of stakeholders. If you want to get more from your properties, it is time to work with GRESB.