I, like many others, will be excited to receive the 2017 GRESB results when they are released tomorrow, 6th September. The rating approach, often simplified by how many Green Stars have been achieved, veils the trials, tribulations and efforts undertaken over the past year (or longer in many cases) to prepare for and complete the survey.
Whilst I eagerly await gratifying news on how our clients fared for their past efforts, I am certainly more enthusiastic about collaborating on future programmes that will deliver value to their portfolios through making buildings productive, profitable and resilient to change.
In a previous blog, I introduced how the framework of an Environmental Management System (EMS) structured according to ISO’s Plan-Do-Check-Act methodology, is central to implementing successful real estate sustainability strategies that also result in better than peer average GRESB results.
In this blog, I introduce how insights into future developments of the GRESB survey will also provide that same win-win result of enhanced portfolio sustainability performance and GRESB ratings.
The Performance Indicator – a three-layer approach
The Performance Indicator (PI) ‘aspect’ is one of seven aspects in the GRESB survey. It holds joint top weighting, at 25%, with the Stakeholder Engagement aspect. Arguably, it is the Performance Indicator aspect that can best portray (to investors) how portfolios are performing and, importantly, contributing towards meeting the ambitious international targets set in the Paris Agreement. The PI aspect allows participants to set out their long-term sustainability targets together with quantitative disclosures on data coverage, like-for-like change and intensity values (KPIs) for energy, water, waste and carbon impacts.
A concern, however, is that the current approach does not provide investors with sufficient comparability of portfolio performance. This concern is underpinned by the fact that the current GRESB scoring approach rewards data coverage more highly than like-for-like change (concerning only year-on-year change, which certainly has limitations), but moreover, that no points are awarded for long-term changes to portfolio intensity values, such as kilowatt hours per metre square of lettable space. Only the methodology used to calculate intensities is scored, rather than the change in intensity values over time. The reason for this is likely due to a lack of data transparency and potential accuracy issues that stem from portfolio level, rather than asset level, reporting.Current discussions indicate that GRESB is willing to introduce an additional scoring element for participants that can disclosure transparent and accurate asset level data.Click To Tweet
GRESB recognises these issues and has set out to address them through a series of benchmarking committees, which EVORA participants in. Current discussions indicate that GRESB is willing to introduce an additional scoring element for participants that can disclose transparent and accurate asset level data. I expect GRESB to introduce their three-layer approach to Performance Indicator scoring in the 2018 or 2019 survey. This approach is set out below:
- All assets are evaluated on Transparency, based on data availability
- Only assets with high transparency levels can be evaluated on data Quality, given the external forms of data assurance or internal capabilities of data analysis (asset level data checks)
- Only assets with high data quality can be evaluated on Performance, most likely driven by like-for-like and intensities values.
Enhanced scoring methodology
GRESB is seeking to enhance its scoring methodology with the objective that only assets with high quality data are benchmarked to ensure fairness. This strategic change may assist in providing investors with more certainty on sustainability performance and comparability between portfolios.GRESB is seeking to enhance their scoring methodology with the objective that only assets with high quality data are benchmarked to ensure fairnessClick To Tweet
Requesting asset level data will undoubtedly increase the reporting burden for a number of participants – most notably those who painstakingly enter portfolio level data directly into the portal.
Data can already be submitted at the asset level, either via an API link or the Asset Level Interface. However, this function is not used by all participants and furthermore, if you do not have the benefit of a sustainability software platform, such as SIERA (which seamlessly updates the PI sections using the Asset Level Interface), then data collection and analysis will remain a manual, laborious task.
So why bother?
As mentioned above, the reward of additional points will be a sufficient driver for many. However, GRESB aside, let’s not forget that to make any notable impact on the performance of a portfolio, it is essential to have asset level data (or preferably meter level data) available in a format that can be easily accessed, interpreted and communicated to Asset and Property Management Teams in order to effectively manage sustainability impacts across a portfolio.
For more information on using data management systems to enhance portfolio performance see here.
Whilst some may see this change as GRESB introducing additional challenges and reporting burdens, I applaud their ambition in seeking to drive change in the real estate industry through promoting the availability and disclosure of investment grade asset-level data.
I applaud their ambition in seeking to drive change in the real estate industry through promoting the availability and disclosure of investment grade asset-level data.
It is important to reiterate that reporting asset, or even meter level data, doesn’t have to be a burden. Many participants, including all our clients benefitted from using the direct interface provided by SIERA to seamlessly update the required field in the Performance Indicator section and additionally, to review opportunities to make their buildings productive, profitable and resilient to change.
What’s next? Plan-Do-Check-Act
Reverting to the Plan-Do-Check-Act methodology, I recommend that Fund, Asset and/or Property Managers review if they can effectively understand and manage sustainability impacts at asset and meter level using existing programmes. Where there is any doubt, I encourage stakeholders to:
- Plan – start early and identify what you can meter already and what you would like to meter
- Do – implement an appropriate metering strategy according to the value proposition of doing so
- Check – utilise the powerful Monitoring & Targeting, and reporting tools provided by SEIRA
- Act – use the investment grade data obtained through SIERA to drive improvements across your portfolio(s)