2018 GRESB Real Estate Results | Auckland
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October 10, 2018 Hosted by Bayleys in partnership with NZGBC, CoreNet Global | New Zealand Chapter, and ANZ, and supported by RIAA.
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2018 GRESB Real Estate Results | Auckland
- 1. 2018 RESULTS Sustainable Real Assets Hosted by: In partnership with: Supported by:
- 2. 2018 RESULTS Sustainable Real Assets 903 entities 64 countries 79,000 assets $3.5 trillion GAV
- 4. Stressors & Shocks Environmental Social Physical Economic Technological Regulatory Impact Asset Value Employees Tenants Environment Communities Businesses Supply Chain Managing Risks…
- 5. …While Enhancing Returns General Benefits Regulatory compliance Reduced environmental impact Business continuity/resilience Improved occupant health and well- being, tenant satisfaction, and productivity Financial Benefits Lower operating costs Higher rental level potential Lower vacancy levels Higher capital values Increased asset liquidity Sustainable Real Assets
- 6. GRESB Assessment ESG DISCLOSURE PERFORMANCE MEASUREMENT PEER BENCHMARKING PROPERTY COMPANIES | REITs | FUND MANAGERS | DEVELOPERS
- 7. GRESB Investor Members Institutional Capital: USD 18 trillion
- 8. Driving Positive Market Transformation Property Manager/ Facility Manager Capital Market Organization Portfolio Building Institutional Investors CAPITAL REITs/ Private Equity COMMITMENT Fund Manager/ Portfolio Manager
- 9. 2018 RESULTS Sustainable Real Assets 903 entities 64 countries 79,000 assets $3.5 trillion GAV
- 10. Increased Transparency 903 198 GRESB Response Rate Development
- 11. 2013 2011 2012 2014 2015 2016 2018 Global Average 2017 Improved Performance GRESB Score Development
- 12. Oceania region in the lead… Europe Asia North America Oceania
- 13. Management (92) Policy & Disclosure (85) Risks & Opportunities (82) Monitoring & EMS (81) Performance Indicators (62) Building Certifications (67) Stakeholder Engagement (80) …but there’s room for improvement
- 14. Health & Well-being Resilient EfficientConnected Efficient Certified Business continuity Positive social impact Landlord-tenant collaboration AccessibleMonitored Sustainable Real Assets Certified
- 16. GRESB Universe (Like-for-Like) GRESB Universe Target SDG Target 7.3 (2.6%) Efficient 2017 Energy Efficiency Improvements
- 17. GRESB Universe (Like-for-like) GRESB Universe Target SDG Target 7.3 (2.6%) Efficient 2017 [10%] Absolute [30%] Like-for-like [29%] No target [31%] Intensity based Energy Efficiency Target Setting
- 20. “REITs with higher GRESB ratings deliver higher returns per unit of risk” “A 10 point higher GRESB Score corresponds with 34 basis points higher annual fund return” A Positive Business Case…
- 21. 2018 Investors are driving ESG transparency in order to protect and enhance shareholder value The industry has demonstrated strong commitment to increase transparency and improve performance Leadership on ESG unlocks access to institutional capital seeking sustainable real asset investments
- 23. 2018 RESULTS Sustainable Real Assets Hosted by: In partnership with: Supported by:
- 24. PANEL DISCUSSION MODERATOR: Andrew Eagles Chief Executive Officer, NZGBC PANELLISTS: Arti Prasad Senior Investment Strategist, Responsible Investment, NZ Superannuation Fund Alain McKinney Senior Development Manager, Precinct Properties Rod Aitken, Chairman, CoreNet Global Ruben Langbroek Head of Asia Pacific, GRESB
- 25. 2018 RESULTS Sustainable Real Assets Hosted by: In partnership with: Supported by:
Editor's Notes
- Just this week, the world’s leading climate scientists have warned there is only a dozen years for global warming to be kept to a maximum of 1.5C. If not, there will be significant risks of drought, floods, extreme heat and poverty for hundreds of millions of people.
- It’s not limited to climate change. There’s a wide range of shocks and stressors that create risks to human health and well-being; to social equity; and to the environment. But importantly, they will also impact real estate organisation, portfolio and building performance. And because this directly affects investment outcomes, investors increasingly require their managers to disclose how these risks are addressed.
- The GRESB Assessment covers a wide range of environmental, social and governance issues that are material to investors. The Assessment looks at how real estate companies and funds are managing environmental, social and governance (ESG) related risks, and how they are utilizing upside opportunities. We provide an industry-specific framework for ESG disclosure, performance measurement, and peer benchmarking.
- Currently, some 80 institutional investors use GRESB data for positive screening and responsible investing, and for engagement with their managers. Combined, they represent an impressive USD 18 trillion in institutional capital, seeking responsible investment opportunities in the real estate sector.
- And these institutional investors hold the key for positive market transformation, because they have the money. By using that firepower to allocate capital to property companies, funds and portfolios that perform well on ESG issues, investors create bottom-up commitment. So, let’s have a look at what that commitment looked like according to the 2018 GRESB results.
- Increased transparency: We started back in 2010 with almost 200 participants. This year, we have global and regional results events across all six continents, while the number of participants has grown to over 900. It shows the real estate market’s preparedness to disclose material ESG performance information to its stakeholders. But evenly important, is also shows the willingness to share sustainability practices with the wider industry, so they can be adopted, and ultimately lead to higher performance.
- This is a global transformation: a transformation to more transparency, and to improved ESG performance. This is illustrated in the GRESB Model, which shows two axes: a strategic approach and an operational approach to sustainability.
- And as in previous years, this region is leading this movement. So, congratulations!
- But, there still is room for improvement. Certainly here in New Zealand, where the response rate is relatively low.
- Importantly, the investment community that w represent believes that buildings need to meet a large number of criteria in order to be truly sustainable. When investors think of investment-grade buildings of the future, they want them to be certified, efficient, healthy, resilient, etc. So let’s have a look at where the industry stands on two of these criteria: certifications and energy efficiency.
- Publicly disclosed asset-level building certifications and ratings lead to better understanding and appreciation of high-performing buildings. For investors, this is equally important, which is why GRESB recognizes and awards points for obtained green building certifications, incl. Green Star (Performance) and NABERSNZ. Approximately 11% of the total floor area of assets has a green building certification awarded for design, construction or refurbishment. Almost twice as many participants obtained an operational building certification. Offices showed the highest percentage of floor area being certified or rated. However, it is clear that more building certifications and ratings are needed to truly understand how the real estate sector performs and is developing.
- When looking at the Sustainable Development Goals, GRESB participants are in line with the target, which is to double global rate of energy efficiency improvements by 2030. Of course, we will keep tracking further improvements of the global sector, certainly as more governments will commit to legally binding targets.
- - What is surprising (and a bit disconcerting), is that almost one third of benchmark participants does not set any targets whatsoever. - And as the Chinese say: “Rúguǒ nǐ bù gǎibiàn fāngxiàng, nǐ kěnéng huì zuìzhōng zǒuxiàng qiánjìn de fāngxiàng” - Or in English: If you do not set direction, you may end up where you are heading.” Which most likely isn’t a very pleasant destination for these parties.
- So, what all of this information allows us to do, is not just benchmark your ESG performance, but create transparency on your commitment to improve. By benchmarking your ESG performance, and disclosing this to your stakeholders, you have an incentive to get better.
- This is backed by our long-term participants. They have shown to not only make continuous performance improvements, but are also leading those that have started later. And as their sustainability practices are shared with the market, it allows first-year participants to adopt these, and to start at an increasingly higher level. This really shows the transformative power of transparency.
- …and looking at this year’s GRESB result we can conclude that: 1. Investors will increasingly require disclosure on material ESG issues, in order to protect and enhance shareholder value. 2. The real estate sector has responded to this investor demand, and has shown commitment to increase transparency and improve performance. However, there’s room for further improvement! 3. Real estate companies and funds that demonstrate leadership on ESG will be able to unlock capital seeking responsible investments
- So, what’s next? There’s only one desired outcome: sustainable real assets and portfolios.