How Can GRESB Help to Deliver Fund Performance? Key Highlights from Our Exclusive Event
Read this post for some exclusive updates from GRESB that were announced during the event, and to find out how you can make sure you don’t miss out on attending our future events.
On Tuesday 15th November 2016, EVORA ran an important industry event considering the impact GRESB (the Global Real Estate Sustainability Benchmark) is having on the real estate industry. Over 60 attendees from more than 50 commercial real estate firms attended.
As a business that works solely with the real estate sector in providing practical sustainability solutions, EVORA has seen the meteoric rise of GRESB since its initiation six years ago. In fact, we have been working with GRESB and supporting our clients in the completion of the survey since 2011 – we are also a GRESB Premier Partner – and this year we were involved in the completion of 41 submissions. So it’s fair to say that GRESB is a subject that’s close to our hearts!
There is no doubt that GRESB has had a major impact in mobilizing the real estate industry to embrace the issues of sustainability. From its humble beginnings in 2010, 2016 saw 759 participants complete the survey representing US$2.8 trillion of asset value. However, the benchmark survey is complex and challenging to complete and GRESB pretty much has a monopoly in this area of benchmarking the sustainability performance of real estate portfolios.
[clickToTweet tweet=”There’s no doubt @GRESB has mobilized the CRE sector to embrace the issues of sustainability.” quote=”There is no doubt that GRESB has had a major impact in mobilizing the real estate industry to embrace the issues of sustainability.”]
And it was with this in mind, that we decided to run this exclusive invitation-only event, kindly hosted by TH Real Estate and chaired by Sarah Ratcliffe, Programme Director at the BBP, which considered ‘How Can GRESB Help to Deliver Fund Performance?’.
Great representation from industry leaders
We had five outstanding speakers from the industry, each with their own experiences and opinions of GRESB: Abigail Dean, Head of Sustainability at TH Real Estate; Dan Grandage, Head of Sustainability at Aberdeen Asset Management; Mathieu Elshout, Investment Director at PGGM; Erik Ruane, formerly Head of Development and Head of Sustainability at a leading pan-European, real estate fund management group; and last but by no means least, our own Paul Sutcliffe, co-Founder and Director at EVORA.
The results of our pre-event survey
Paul presented the results from our pre-event survey completed by the participants, which provided some interesting findings.
Firstly, the majority agreed that GRESB is both investor-driven and important to investors, which should be no surprise, since this was the original intention of GRESB.
Of greater note, was the far smaller proportion who thought their GRESB rating fairly reflected their sustainability performance and accurately reflected the key issues, highlighting that many respondents feel that greater alignment is required.
[clickToTweet tweet=”Does your @GRESB rating fairly reflect your overall #sustainability performance?” quote=”Do you think your GRESB rating fairly reflects your overall sustainability performance?”]
Opinions of the Speakers
1. The Benefits
Paul kicked off by re-enforcing that GRESB is a force for good, driving change and focusing on participation. He also highlighted the alignment of the survey to a best practice management system approach (Plan/Do/Check/Act), which from our own experiences, support in driving performance – see our well-received thought leadership piece by Ed Gabbitas on this:
Environmental Management Systems: Plan-Do-Check-Act…Deliver?
Abigail highlighted that GRESB had pushed the industry to improve, whilst enhancing investor insight. Dan and Mathieu also said it supported fund strategy and post-performance evaluation, helping in year-on-year objective and target setting for the funds. Importantly, Erik highlighted that at a more practical level, GRESB had promoted wider utility data collection enabling the funds to better understand performance both at portfolio and asset level.
[clickToTweet tweet=”@GRESB has promoted wider utility #data collection enabling funds to better understand performance.” quote=”GRESB has promoted wider utility data collection enabling funds to better understand performance both at portfolio and asset level.”]
2. The Challenges
What did the speakers see as the challenges? Paul and Abigail highlighted that scoring rewards the wrong behaviour by being more about coverage of data than efficient buildings, and year-on-year improvements rather than absolute performance. Another key issue was the risk of chasing GRESB points, which may not add value to the fund.
A consistent theme from all the presenters was that one size did not fit all, with specific reference to opportunistic and value add funds that can struggle to perform well in the survey, a key area Sander Paul of GRESB picked up on in the Q&A – keep reading!
A Lively Q&A Session
Presentations were followed by a lively Q&A discussion with a panel that included Sander Paul van Tongeren, Head of EMEA and co-founder of GRESB, and Olivia Muir, European Analyst at UBS. Olivia, highlighted from an investor perspective the importance of GRESB to provide a due diligence tool for the capital markets, but accepted that the GRESB performance data had to be re-worked to provide appropriate outputs.
Our attendees heard it first! Exciting updates for 2018, direct from GRESB
Sander Paul agreed that one size fits all is not ideal. He advised 2017 would be a period of stability for the GRESB Real Estate Assessment with minor updates, but that there would be changes going forward. GRESB is exploring property type supplements, where ESG-performance would be aligned to the specific nuances of different property types, and potentially regional supplements as well.
New industry working groups will be set up in early 2017 to support in the development of the 2018 GRESB Real Estate Assessment.
However, he did highlight that GRESB also offers a Developer Assessment, which might be applicable to some of the opportunistic and value add funds that consider development activities to be their core business. It is a stand-alone assessment that contains a selection of questions from the Real Estate Assessment.
Sander Paul also spoke of the importance of optimising property portfolios to reduce their environmental impacts to counter the significant risks of climate change. He expressed the need for disruptive technologies to help achieve this, including innovative software solutions, an area we have majored on with the development of our unique real estate focused sustainability management software, SIERA.
Comments were also made that the GRESB scoring had been opaque. Sander Paul advised that the GRESB validation process and scoring model is now available here, and also on their website.
[clickToTweet tweet=”The @GRESB validation process and scoring model is now available on their website.” quote=”The GRESB validation process and scoring model is now available on their website.”]
A great wrap-up by Sarah Ratcliffe
In summing up, Sarah Ratcliffe provided a fantastic analogy of the evolution of GRESB, comparing it to a child growing up and currently being a teenager; slightly spotty, with a number of imperfections and a bit awkward, but with lots of potential!
I’d agree with this and I certainly do believe in GRESB’s potential. However, as an industry, the onus is upon us to ensure that GRESB not only transforms through mobilising the real estate sector, but also that the content – and hence the scoring – is absolutely aligned to material sustainability issues that can impact on fund performance both now and in the future.
This was an invitation-only event to those on our mailing list.
If you did not receive an invitation but would have liked to attend, please click here to join our mailing list now.
To talk to us about GRESB support in 2017, implementing an EMS, or to request a demo of SIERA, please get in touch.
- Environmental Management Systems: Plan-Do-Check-Act…Deliver?
- Why Firms Choose EVORA for Expert GRESB Support
- GRESB Data Automation: Ensuring Seamless Does Not Result in Senseless
- How We Use Big Data to Add Value to Our Clients’ Assets
- SIERA Sustainability Software by Numbers – An Infographic
GRESB also offers an ESG Masterclass which focuses on interpretation of the annual GRESB Real Estate Assessment results and the various reporting and benchmarking tools available to real estate investors, companies and fund managers. The program addresses all material aspects of ESG in real estate investment portfolios as covered by the GRESB Real Estate Assessment.