SEPTEMBER 14, 2016 | ROGER LEBLANC
If your firm hasn’t already worked with GRESB (Global Real Estate Sustainability Benchmark) you likely soon will.
GRESB, as the name says, benchmarks sustainability across real estate portfolios and is becoming an increasingly important factor in which firms investors choose to support. (Not familiar with GRESB? This summary guide can get you up to speed.)
Last week, GRESB released their annual assessment results and some key, global trends have emerged signaling changes in the industry.
Trend #1: Investors Crave Transparency
Investors are increasingly looking for transparency into a group’s operations – not just their financials – before investing. Why? Sustainability performance is proving to be a leading indicator of financial and overall performance. Demands of better sustainability performance and transparency for investors is a big reason for the continued growth in GRESB participation in.
In 2016 759 real estate companies/investment firms supplied data to GRESB, encompassing 66,000 assets across 63 countries. This represents a 7% improvement in the number of participants over last year’s report. The more groups that are reporting to GRESB, the more investors will expect.
Groups like Kilroy Realty, Prologis, and Macerich are already leveraging 2016’s results for positive publicity. Sustainability reporting is no longer a new normal for real estate, it’s an accepted norm.
Trend #2: Transparency leads to better Sustainability
The benefits of transparency, however, go beyond just investors. Sustainability benchmarks and transparency have actually been driving higher performance. The 2016 GRESB scores improved across all major categories, including energy, water, carbon emissions, and waste reduction. Notably, 90% of the groups reporting to GRESB have carbon management plans, resulting in a 2% annual decrease in CO2 emissions, equal to taking 704,464 cars off of the road.
The results are proving that the model of GRESB is working: the more reporting the higher the performance. Companies who have been reporting to GRESB for seven years outperform the average assets by 12 points. Overall the scores improved from 54 to 60 from last year, showing an upward trend of real estate groups taking sustainability management seriously. With the ratification of the Paris Climate Deal by the US this month, expect this trend to sky rocket.
Trend #3: Companies Meeting Transparency Through New Metering Technology
To meet GRESB standards and other benchmark requirements, the industry is shifting towards a new automated collection of information. This year, 50% of GRESB participants reported using automatic meter readings to track their energy consumption. In other words, the top environmentally accredited companies are trusting energy management systems for their data-driven solutions.
The other half of respondents are still relying on manual-visual readings or invoices to track energy use. Manual processes introduce inefficiencies, human error, and energy waste from the delay in response to equipment failures or scheduling errors. Energy monitoring is a big area where real estate has the opportunity to grow, and will help continue to drive improvements in GRESB scores for 2017.
Image from GRESB Global 2016 Snapshot
What This Means for You
With investors demanding transparency more than ever before, 2016 was a banner year for the GRESB report. Investors are driving this demand as the link between sustainability performance and financial performance becomes solidified. Owners are meeting this transparency demand by measuring energy consumption with automated meter reading and energy management systems. This trend is only just beginning.
Aquicore is a GRESB Premier Partner as a Data Provider. Talk to us about GRESB or to request a demo, click here.