GRESB: A Deep Dive Prior to the Portal Opening

About GRESB

Global Real Estate Sustainability Benchmark for real estate assets that evaluates performance against three ESG Components – Management, Performance, and Development

• Provides standardized and validated ESG data to the capital markets
• Aligning with international reporting frameworks, such as TCFD, GRI and PRI, reducing duplicative efforts. 
• Investors receive actionable information and tools to monitor and manage the ESG risks and opportunities of their investments
• Participants receive comparative business intelligence on where they stand against their peers, a roadmap to improve their ESG performance and a communication platform to engage with investors.
• By industry, for industry organization, managed by a foundation of investors members.

Approach:

Providing actionable and transparent Environmental, Social and Governance (ESG) data to financial markets

ESG Ecosystem:

In the ESG ecosystem, GRESB acts as a rating/ranker and an industry benchmark. While standards will help give you a broad framework and provide some flexibility, raters, and rankers help to benchmark you against peers and provide definitive scores and methodologies.

2023 Timelines: 

The GRESB Portal opens on April 1, 2023

Scoring Methodology

Structure:

For those just getting started with GRESB reporting, the early years of data collection and reporting can be a difficult undertaking. Understanding the way GRESB is structured is important in the planning process. 

The assessment takes a holistic view of your ESG approach. The 2023 Real Estate Assessment is structured in three components: Management, Performance and Development. At the end, it is possible for your company to have 2 benchmark reports if your firm chooses to report based on standing investments and new buildings. The management component is required for both, tackling the questions of how your business handles risk and who is responsible for it, policies, and leadership. For standing investments, the performance component is required, tackling the assets that you own, how they are operating, GHG, energy, water, and waste metrics, tenant engagement, and building certifications. For new buildings, the development component is required, dealing with the policies around development, requirements for aligning with certifications, etc. 

Scoring Examples:

GRESB metrics table giving a sense of the weight of each sub-component: 

Takeaways: On the Performance side, energy at a 14% weight is the biggest single category in the entire assessment. It is important to note that the majority of that 14% score and weight is based on whether you have access to the data, not necessarily how energy intensive or efficient the operation is. On the management side, stakeholder engagement is the largest weighted category. This deals with how well you are externally communicating the data, initiatives, and reporting.

Valuable Insights

Participants are able to get back valuable insights after reporting to GRESB, including: 

• Gap Analysis: The peer group allocation shows where you fall amongst your peers on every single question in the GRESB assessment, ultimately providing intelligence as to where you could improve and where the industry as a whole is moving. Peer groups are determined by location, property type, listed/private. 
• Data Concerns: Data coverage impacts up to 30% of your entire GRESB score in order to incentivize firms to increase data coverage. 

Improving Scores

The GRESB benchmark changes year over year in order to push firms to improve based on the average of the former year’s scores. The benchmark is only contingent on other similar types of assets so firms will not be unfairly compared across diverse portfolios. Being as transparent as possible, as realistic as possible, and in touch with where the industry is at today (aka where the benchmark could fall) is key to improving the score you receive each year.

The biggest opportunity for improving scores overall:

Focusing on the Waste category: last year the average waste score was 47.5%, indicating the most room for improvement across the board is in this area. 

Focusing on Data Coverage:  Scores are skewed in favor of overall disclosure (data coverage and access) over performance. The easiest win is to get more data, and have better data coverage than your peers.

Understanding the Emissions and Consumption Data Weights of GRESB:

*Red boxes = directly addressed and measured by us at WatchWire

How WatchWire Can Help Report to GRESB

Watchwire has been a GRESB Premiere Data Provider for the past 6 years, working with the top GRESB participants and award recipients. We provide access to the API for the GRESB portal and the asset template that is updated each year and prefilled right out of Watchwire. This ensures that reporting the energy, water, waste, and emissions data to GRESB is a smooth process. We also allow our clients to identify data coverage issues using missing bills heat maps and audit reports in order to understand what part of data acquisition needs to be prioritized. 

It can also be generally hard to get data from tenants, whether or not you are a triple net lease or office-centered portfolio, etc. Our solution of virtual invoices and shadow metering can help with this (installing interval metering at the sites where you cannot access the invoice data so you can pull in that data on a timed basis).