GRESB Real Estate
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An introduction to GRESB and the GRESB Real Estate Assessment
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GRESB Real Estate
- 1. Real Estate Sustainability Benchmarking December, 2018
- 2. 2 V I S I O N M I S S I O N Sustainable Real Assets GRESB assesses and benchmarks the ESG performance of real assets, providing standardized and validated data to capital markets ASSESSMENTS W o r k i n g i n c o l l a b o r a t i o n w i t h t h e i n d u s t r y, w e d e f i n e t h e b e n c h m a r k f o r s u s t a i n a b i l i t y p e r f o r m a n c e i n r e a l a s s e t s TECHNOLOGY O u r t e c h n o l o g y p l a t f o r m a p p l i e s b e s t p r a c t i c e s i n d a t a s c i e n c e t o v a l i d a t e , s c o r e a n d b e n c h m a r k E S G p e r f o r m a n c e d a t a STAKEHOLDER S W e c o n v e n e a g l o b a l c o m m u n i t y o f o r g a n i z a t i o n s w o r k i n g t o g e t h e r t o a c h i e v e a s h a r e d v i s i o n o f s u s t a i n a b l e r e a l S T R AT E G Y P I L L A R S
- 3. GRESB is a collaborative ESG Data Platform INVESTORS GRESB ASSESSMENT MANAGER S I N V E S T O R P E R S P E C T I V E E S G AN AL Y T I C S E S G AN AL Y T I C S E S G P E R F O R M AN C E D AT A
- 4. GRESB Real Estate - Regional Coverage Total number of participants/total value (USD billions, 2018) Real Estate coverage: USD 3.5 trillion
- 5. LISTED REAL ESTATE MARKET COVERAGE in % of market capitalization Europe 78.02% North America 58.40% Asia Pacific 49.47% Total 61.21% GRESB 2018 LISTED REAL ESTATE COVERAGE
- 6. Institutional Investor Members - Examples Over 75 institutional investor members – combined total AuM USD 18 trillion 6
- 7. Assessment Characteristics • Management & Policy (MP) • Implementation & Measurement (IM) Addresses two dimensions: 1 Questionnaire “ASSESSMENT" 6 Categories “ASPECTS“ 65 Questions “INDICATORS” Robust Assessment of Sustainability Performance
- 8. GRESB Benchmark Reports Peer-benchmarking and actionable business intelligence towards participating managers 8 _________ _________ __ _________ _ _________ _ _________ _________ __ _________ _ … _________ _________ __ _________ _ _________ _ _________ _________ __ _________ _
- 9. 2013 2011 2012 2014 2015 2016 2018 Global Average 2017 GRESB Aggregate Real Estate Results
- 10. 2013 2011 2012 2014 2015 2016 2018 Global Average 2017 GRESB Aggregate Real Estate Results
- 11. 78% Green Stars GRESB Real Estate Results
- 12. Competition in the top right-hand corner Europe Asia North America Australia/NZ
- 13. GRESB Real Estate Results: Europe Europe
- 14. GRESB Universe (Like-for-like) GRESB Universe Target UN SDG Target 7.3 (2.6%) 2017 Aggregated Data: alignment with SDG 7
- 15. 0 25 75 50 100 2010 2020 2030 2040 2050 GRESB Universe (Like-for-like) actuals 2017 UN SDG 13 Target GRESB Universe Target Aggregated Data: alignment with SDG 13
- 16. Conclusion • Sustainability Benchmarking addresses the agency problem between investors and managers • It brings together relevant Environmental and Social data measured in a standardized way • With good coverage, it allows for peer benchmarking with regard to sub-sectors and geographies • GRESB is the ESG Benchmark for Real Assets • Please check us out at www.gresb.com or give us a call!
- 17. GET THE GRESB NEWSLETTER gresb.com/newsletter • Stay up to date with the latest news from GRESB • Be the first to receive ESG data for the real asset sector • Learn about the issues investors consider to be critical to the sustainability performance of real asset investments
Editor's Notes
- GRESB has been serving institutional investors since 2009 GRESB reporting platform facilitates communication between investors and funds/companies on all ESG-related topics.
- GRESB facilities communication between institutional investors and the managers that are responsible for giving them investment returns on their assets.
- Through its assessments. GRESB covers about 3.5t USD in 2018 - which represents (only for the listed environment) about 61% of the total listed market. This is still relatively low, and on top of thst we can reasonably assume that this percentage is significantly lower on the private side. The point here is to say that we need to take this conversation outside this room (which is if you think about it a self-selected group of leaders), and turn it into an accessible target for the real estate industry at large. ----- Market coverage is important, but not everything. We also need to ask ourselves what still needs to be captured and improved upon, to be able to tick that “Sustainability” box.
- Currently, over 70 institutional investors use GRESB data for positive screening, and for engagement with their managers. Combined, they represent an impressive USD 17 trillion in institutional capital, seeking responsible investments opportunities in the real estate sector.
- Our terminology
- On the same graph, we have added the lines representing the quintiles of the entire GRESB universe. As a quick reminder, as we a lot of questions on this: these lines are determined through our dynamic benchmarking model, and separate participants that received 1, 2, 3, 4,and 5 stars. Depending on where your entity stands with regards to these lines, it will receive a certain number of stars – no matter the peer group. Looking at how clustered the companies are (at the background), let’s take closer look at them.
- What we notice is that most of the companies now manage to achieve at least 50% of their score on both dimensions of the GRESB model (IM and MP). In other words, 78% of the entire GRESB population is labelled as Green Stars. So what does that tell us? On one hand, this tells us that ESG conversations are no longer at the level of “Should we do ESG?“ and “Why should we do ESG“ but rather now at the level of “How, and especially how WELL should we implement ESG“? If that population of companies are leading the way in terms of ESG and represent the vast majority of real estate portoflios this year, let‘s have a closer look at them.
- From a regional points of view. It‘s not new that Australia continues to lead the regional comparison, however what we see for the first time Asia is clearly catching up. Even if scores of EU companies increased compared to last year, Asian and North American companies increase in larger proportions. We should keep in mind that the number of participants in Europe being significantly higher in Europe than in any other regions in the world, moving the European average forward require the contribution of a higher number of companies, while other regions with small response rate such as Asia can be subject to higher sample bias (self-selected leaders).
- When digging into the region Europe, we observe than France is pretty close to the European average - with ahead of it 4 countries BE, IT, NL and SE. In this case we should note that due to a very low response rate in BE and IT (respectively 2 and 3) we can reasonably assume that both are subject to strong select biais skewing the averages up. While the NL and SE (42 and 19 participants vs. 27 in FR) leading the European average is quite in line with our prior years observations. Number of participants: FR: 27 BE: 2 IT: 3 NL: 43 SE: 19
- And finally, the most important criteria for a building to be considered a sustainable is to be efficient. Efficiency can be measure from various anglais, such as Energy, GHG, Water and Waste. This year we focussed on Energy and GHG in order to assess whether the GRESB RE participants are efficient enough to be considered sustainable. Concerning energy: we have used in our analysis LFL actual data as well as targets set by the RE universe in order to estimate what will the future the energy consumption look like. We have then compared these estimates with the target set by the UNSDG 7.3 which states that energy efficiency needs to improve by 2.6% annually between 2010 and 2030. While actual values seem to be in line with the target in 2017 (-2.74 vs -2.6), we observe that aggregate targets of participants are not ambitious enough in the long-term to meet the SDG 7.3 requirements. In addition to this, what is more alarming is that 29% of the participants do not have any target whatsoever. Improvement vs 33% in 2016 but still not sufficient.
- We have carried out the same exercise for Greenhouse gas emissions where SDG13 sets a target that by 2050, emissions must be 40-70% lower than 2010 levels. Based on our calculations, the long term greenhouse gas emission reduction targets set by GRESB participants are generally in line with the more ambitious SDG13 requirement to reduce overall emissions by 70% by 2050. The intention is there, now we need make sure to track this accurately and stay on track. To recap – we agree that in addition to increasing our market share to cover a very significant part of the real estate industry, we want healthy buildings and we know we want them to be resilient, and efficient. Now… assuming that a building 1. is covered by the Real Estate Assessment, and 2. Healthy, Resilient, and Efficient – what makes us able to state that this building is SUSTAINABLE? How can we be 100% sure we can make a statement on that building? The only way is, to be able to collect reliable, complete, and accurate data on that very building. And this is something we have already started: some of you must have quite some time filling in our Asset-level spreadsheet in order to report your consumption data at asset-level. Thank you again for that.