Why Real Estate and Infrastructure Companies Should Respond to GRESB

As the world sees continually increasing ESG disclosure requirements and new voluntary reporting frameworks, it may be challenging to determine where to start and position yourself to demonstrate leadership. Among the various ESG assessments, there is one that stands out: GRESB.

GRESB is a leading global ESG assessment for financial markets, which has been substantially adopted by the real estate and infrastructure sectors. In 2023 alone, GRESB had a global reach of over 2,000 real estate participants, including REITs, funds, developers, and over 800 infrastructure funds and asset operators, representing over $8.8 trillion of assets under management.  

Much of GRESB’s value comes from its robust benchmark, which includes data on over 170,000 properties covering over 75 markets, including the Americas, EMEA, and APAC. This rich dataset allows for more accurate peer comparisons that can be customized at the property sub-type, country, and investment strategy level – among many other criteria. Due to the comprehensive and relevant topics covered in the assessment, over 150 institutional and financial investors use GRESB to compare the ESG performance of their investments to make informed decisions. 

Although there may be many other drivers for companies to implement an ESG program, GRESB finds its place by providing structure to an ESG program and placing a heavy emphasis on peer comparison to drive ESG programs forward and encourage continuous innovation. 

Why Begin Responding to GRESB 

GRESB is an exceptional tool for effectively and efficiently communicating to investors your ESG commitments and performance, as it provides the foundational building blocks of an ESG program built right into the assessment. Whether you are at the beginning of your ESG journey or want to ensure all gaps are filled to remain competitive, the typical journey for a first-time GRESB respondent may cover the following: 

• Identify the key team players and develop processes to make decisions on ESG, climate, and health and well-being decisions 

• Develop key environmental, social, and governance policies covering relevant topics that can be executed on 

• Establish processes and identify potential risk exposure to environmental, climate, social, and governance risks 

• Create a robust stakeholder engagement program covering employees, tenants, communities, and the supply chain 

Whether you are beginning to develop your formal ESG program, or it is well established, GRESB is a useful tool for all participants to get a detailed view of how they compare against their peers. Beginning in 2023, GRESB now lets participants select which peers they end up being compared – and ranked – against. We have seen participants utilize this powerful feature to understand where they may be a leader or a laggard amongst their peers, and to select more “aspirational” peers to see what enhancements may be needed to their ESG program to become an industry leader.  

How GRESB Supports Strong Data Management Processes  

Compared to other assessments, GRESB is one of the most comprehensive and rigorous assessments when it comes to reporting data. Over 40% of the total GRESB score comes from performance-related data. This data comes directly from each individual property owned by the submitting company or fund. While collecting property-level data may be a daunting task, having a detailed understanding of the underlying data is critical in having a meaningful impact on a portfolio’s performance, which GRESB rewards participants accordingly.  

In the current scoring structure, GRESB awards the most points for data coverage, so the more whole building data collected for energy, GHG emissions, water, and waste, the more likely it is to have a higher performing submission. Although there is a heavy emphasis on collecting and disclosing data, GRESB also awards points for how efficient the buildings are. In coming years, we anticipate that GRESB will tilt the scales from awarding more points for data coverage to awarding more points for more efficient, high performing buildings. This is keeping in line with investor expectations and growing regulatory requirements for high performing, low emitting buildings. 

Since so much of the success of a GRESB submission relies on data, we often work with GRESB participants to understand their current data management processes and help refine systems. Through one partnership with a participant, we: 

• Developed custom data collection tools 

• Consolidated data collection processes to improve data quality concerns 

• Identified gaps in data accuracy and availability 

• Improved overall data management procedures which resulted in increasing data coverage by over 40% 

The increase in data coverage not only translated to an increased GRESB score, but more importantly, greater reliability in the underlying data to make informed operational and investment decisions.  

Why Continue Responding to GRESB 

GRESB can be used to attract and retain highly sought after investors. With significant buy-in from institutional and financial investors, GRESB is an effective way to streamline communication about your ESG program and performance to your existing investor base and to attract prospective new investors, unlocking additional capital. Some investors have strict requirements where they won’t consider investing if a company is not responding to GRESB, while others may place even more rigid requirements to achieve a certain score or ranking. Not responding to GRESB may mean losing out on potential capital.