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What did we learn from our first EVORA Insight’s lunch on the topic of how ESG is being integrated into investment decision-making?

The gap in expectations between the leaders and the majority of investment managers is huge. Even the leaders don’t think they are doing anywhere near enough. To be honest, it’s a little disheartening.

Organisational change and capacity building is being hampered by structural changes, which cannot be solved by each firm on their own. For instance, the historically low price of gas as a common fossil fuel, compared to electricity which can be net zero carbon, presents an affordability challenge. Also, the lack of availability of standardised and simplified ESG data to inform investment decisions and to understand the underlying risks. To gather ESG data, particularly for a whole building, is still a time-intensive process requiring active engagement with tenants and other stakeholders, without regulatory support in many countries.

However, there are choices that companies can make to include ESG factors as standard practice. To include ESG representation in the IC and to decide on ESG “red lines”. More often than not, assets are being acquired with little or no considerations of ESG risks and opportunities pre-transition. For some funds, this is the only opportunity to incorporate these factors and budget accordingly, particularly when future income could be compromised. Notwithstanding the need for ESG data to be readily available at the time of the transaction, during a period in the market when there is an insufficient supply of properties to meet the demands of available capital allowing little time to consider non-financial considerations.

We ask our clients to think about ESG over the timeframe of two hold periods – to consider how ESG will be priced into the exit value. There is little room to do this effectively under present market conditions, in part due to the uncertainty of how to interpret financial impacts of climate projections, and because pricing in that risk may result in losing the deal. There is anecdotal evidence of buyers winning and losing deals with risk-adjusted pricing, which most often appears to be through the incorporation of the costs of decarbonisation/adaptation measures or an adjustment to the cap rate at exit as a proxy for perceived future risk. More observational data is needed to understand under what conditions these price adjustments are and are not resulting in winning deals.

Some companies know that the reliance on GRESB ratings and EPC data, which don’t measure actual performance, is insufficient to understand the underlying risks and opportunities. Making the right investment decisions requires technical and operational insights, when there is a shortage of these skills and to get the right experience it requires support from multiple consultancies. However, it seems inevitable that certifications and ratings will continue to be used as a short cut.

With the background of the environmental sciences telling us that we are running out of time to tackle the global issues of climate change, destruction of biodiversity, and pollution of the land, water and air. Social inequalities are generating unrest in our communities. It has left us wondering how do we change the philosophical principles on which real asset investment has been grown on over the last 50-60 years. Is the only way forward a ratcheting up of regulations to force change, which would require proactive involvement from investment managers in policy discussions for finance, sustainability and buildings to be successful?

Over the last couple of years there have been reasons for optimism that real estate investment and finance is starting to change for the better, these include market indicators like:

  • Investor pressure to explain ESG and climate risk policies is increasing and tougher questions are being asked, although how this information is used in unclear
  • More individuals throughout real estate investment firms, and outside of the traditional sustainability team, are being required to take responsibility for ESG
  • ESG and climate risk are showing up on performance objectives for more staff
  • Valuers are starting to query for data on EPC ratings to incorporate into valuations, and market analysts are using this information to review income projections. 

So, looking ahead to 2050. When people look back to this period of change happening today and see what an exciting time we have lived through, will you be one of those who can say that you joined us to push ESG integration forwards successfully or will the transition come too late given the scale of the changes we have to make?

Insights into the GRESB Infrastructure Assessment and Key Changes for 2021

By Matthew Brundle and Natalie Sinha.

Globally, the demand for public and private sector investment into infrastructure is growing, alongside increased demand for investors to have robust environmental, social and governance (ESG) information for managing risk and opportunities within their portfolios.  Whilst Real Estate investments have benefited from a number of reporting frameworks and guidelines, historically, there has been an information gap for investors on the ESG performance of infrastructure assets.  

The GRESB Infrastructure survey was first launched in 2016, 5 years after its Real Estate counterpart. It provides a globally established tool to benchmark the ESG performance of infrastructure asset portfolios. The survey allows participation from a huge variety of sectors, including Utilities, Power Generation, Social Infrastructure and Transport amongst others.  The annual survey consists of individual Asset Assessments which can be reported individually or consolidated into a Fund Assessment with other portfolio assets.

Since its launch, participation in GRESB infrastructure has grown substantially. In 2020, participation in the Infrastructure Fund Assessment increased by 10% year on year to cover 118 funds while the Infrastructure Asset Assessment grew by 8% to include 426 assets (2019: 393) with total AUM £579billion (see figure 1). Transport, Renewable Power and the Social Infrastructure sectors have the highest representation as these sectors historically attract greater public scrutiny. Data Infrastructure had the highest growth increasing from 21% to 38%, likely reflecting the growing importance of this sector in modernizing society and economies. Energy and Water Resources also grew significantly while most other sectors were stable.

For the past three years GRESB has been trialling voluntary reporting in its new Climate Resilience module, recognising the importance of this topic.  Reporting to the Resilience Module has steadily increased with 126 funds and assets participating in 2020.  From 2021 onward it will become a mandatory scored module as GRESB seeks to align the scheme with both UN PRI requirements and the recommendations of TCFD.

Figure 1 – growth of GRESB Infrastructure participation 2016- 2020

GRESB Infrastructure Overview

Figure 2 – GRESB overview showing how the scheme is structured

The GRESB Infrastructure Asset Assessment is split into two components: Management and Performance. In contrast to Real Estate, the scoring of the survey is largely determined by an initial ‘Materiality Survey’ which uses 17 questions to rank 46 ESG issues according to how relevant they are to the asset: high, medium, low or no relevance. Focusing on the materially relevant ESG areas is necessary to create peer groups for comparative assessment in such a broad investment category.  In parallel to the Real Estate Survey, the Management section covers areas such as Leadership, Policies, Reporting, Risk Management and Stakeholder Engagement. The Performance component awards points for data reporting of metrics which are determined as relevant issues through the materiality survey.

Changes to GRESB Infrastructure 2021 and the Integration of the Resilience Module

GRESB have pre-released the questions for the 2021 Infrastructure survey, for both the Fund and Asset level assessments as well as an overview of the key indicators. For 2021, the Infrastructure Assessments have been kept stable with relatively few changes. The scoring mechanisms for the Fund and Asset surveys have now been released, ahead of the reporting window opening in early April 2021. Initially, GRESB intended to add a Development Component into the Asset Assessment, to enable better reporting and benchmarking for assets (projects) in development (in design or construction). However, this is no longer going to be incorporated into this year’s survey but may be introduced in 2022.

The most substantial change is that the Resilience Module, which was optional in previous years, has been integrated into the Assessments and is now mandatory. These questions have been incorporated into both the Fund and Asset level assessments. This change helps facilitate Taskforce on Climate Related Financial Disclosures (TCFD) aligned reporting for all participants. Although these questions are not currently scored, this is likely to change in future years. The following five new indicators on Resilience have been added to the Risk Management section:

IndicatorQuestion – Climate-related Risk Management
RM3  Resilience of strategy to climate-related risks Does the entity’s strategy incorporate resilience to climate-related risks? If yes: Does the process of evaluating the resilience of the entity’s strategy involve the use of scenario analysis?
RM4.1  Transition risk identification   Does the entity have a systematic process for identifying material transition risks? (Policy and Legal, Technology, Market, Reputation)
RM4.2Transition risk impact assessment

Does the entity have a systematic process to assess the impact of material risks on the business and/or financials of the entity?
RM4.3Physical Risk Identification   Does the entity have a systematic process for identifying material physical risks?
RM4.4Physical risk impact assessment   Does the entity have a systematic process for the assessment of impact from material physical climate risks on the business and/or financials of the entity?
Table 1: GRESB resilience mandatory questions 2021

These questions will mean that Infrastructure assets and funds need to begin to understand how they will be impacted by physical and transitional climate change risk. In GRESB 2020, there was a 60% growth rate in assets and funds reporting under the voluntary Resilience module (figure 4, below). However, there was a reduction in the average scores achieved (figure 5). GRESB analysis concluded that this was due to increased reporting, but it signals that respondents found the questions challenging. This is likely to be the case in the GRESB 2021 reporting window when the questions are made mandatory.

Figure 4: GRESB data showing increasing participation in the Resilience module by fund and asset 2018-2020
Figure 5: GRESB data showing decreasing scoring in the Resilience module by fund and asset 2018-2020

EVORA considers it is likely that further climate resilience questions will be incorporated into the GRESB Infrastructure survey in future years, and therefore it is imperative that Infrastructure investors and operators start by carrying out a gap analysis of their existing funds and assets in line with TCFD requirements. This requires engaging all areas of the business to understand the implications of climate risk and opportunities, followed by the development of a roadmap towards full TCFD alignment. In terms of full TCFD disclosure, GRESB submissions in themselves will not suffice: a separate risk appraisal and forward-looking analysis is required.

Key challenges for participants

A core component of successful environmental management involves having structured Management Systems. Figure 3, below, shows that the GRESB performance of funds which have active Environmental Management System programmes score consistently higher across the performance themes. This highlights the importance of applying EMS principles to infrastructure assets and funds.

One observation we have made from working with infrastructure assets is that, due to complex investment structures, assets tend not to have asset specific Management Systems, with a tendency to rely on corporate level commitments and documentation to drive ESG issues.  This potentially leaves assets passively managing ESG and not proactively driving forward improvement plans.  Historically GRESB has simply encouraged assets and funds to acknowledge ESG as an issue and awarded points accordingly.  However, each year the scheme progressively tightens its requirements by awarding points for demonstrable improvements in performance and having long term improvement targets. Therefore, having a dedicated ESG programme active at asset level will soon become the essential for GRESB success.

EVORA has been providing GRESB support since its inception and we are proud to be GRESB Global Partners.  Our experience has shown us that clients who proactively engage with the process of GRESB each year, by using it to continually drive ESG improvements over time, do the best.  EVORA therefore encourage all participants to consider GRESB as ‘a journey, not an event’.

Performance data for Infrastructure assets

GRESB are making strides in the right direction by beginning to incorporate questions on climate resilience aligned to TCFD, but the existing survey is not infallible. The current Infrastructure survey is particularly strong on the Management section, however the Performance section, which tracks numerical data, does not currently require evidence to be submitted or data assurance. At EVORA, we advocate a further drive towards assured performance data to ensure the data is reliable, accurate and externally verified. This will add extra credibility to the overall survey.  

In contrast, the Real Estate survey requires tools for data management to ensure integrity and quality.  Data management is so important that EVORA developed its own software platform, SIERA, to help dynamically manage data collection, and provide quality checks and validation. We envisage data within the infrastructure survey requiring a similar data intelligence tool to manage data flows which will bring parity between the two schemes.

A further point of note is the subtle but necessary move from simple retrospective data reporting to predictive scenario analysis. This switch is most notable for forecasting pathways to Net Zero, which has become essential for forward-looking investors seeking to align to Paris Climate Change Agreement.  But is also beginning to be applied to other ESG themes for those wishing to deliver against UN SDG’s as GRESB have introduced some new impact reporting questions into the 2021 survey. In respect of Net Zero Carbon pathway modelling, Real Estate can use the Carbon Risk Real Estate Monitor (CRREM) tool to assess asset stranding risk. However, there is currently no equivalent tool for Infrastructure, despite the fact significant decarbonisation will be required for Infrastructure assets and funds.

GRESB Infrastructure Public Disclosure

GRESB has recently partnered with the Global Listed Infrastructure Organisation (GLIO) and have launched a new ESG Index (January 2020) [1], which is being introduced this year.  The index is the first of its kind and intends to address ESG issues in the investment process to gain a deeper insight into the risks and opportunities that materially impact the value and performance of infrastructure investments. GRESB Infrastructure Public Disclosure is unique in its focus to measure only material ESG disclosures by listed infrastructure companies and vehicles. The evaluation is based on a set of indicators aligned with the GRESB Infrastructure Asset Assessment, allowing for a comparison of ESG disclosure performance between GRESB participants and select non-participants. It also provides investors with a resource hub to access ESG disclosure documents across their full investment portfolio.

With the index comes the need for increased transparency and information around listed infrastructure ESG performance, and it can be assumed the two schemes will progressively align to drive integrated financial and ESG reporting. GRESB have released guidance on the Infrastructure Public Disclosure, which explains how it works alongside the annual survey, with similar timelines for data collection, validation and results. 

GRESB Infrastructure Public Disclosure data is initially collected by the GRESB team for selected companies, including the entire GLIO Global Coverage Index as well as both 2020 GRESB Infrastructure Asset Assessment participants and non-participants. It consists of four Aspects: Governance of Sustainability, Implementation, Operational Performance and Stakeholder Engagement. Together, these Aspects contribute towards a Public Disclosure Level, expressed through an A to E sliding scale. The index includes 30 indicators, covering four Aspects. Each indicator is scored between zero and full points, depending on the availability of evidence and selected answer options. Combined, these indicators add up to a maximum of 100 points. Constituents receive a GRESB Infrastructure Public Disclosure Level, from A to E, based on the following scale:

GRESB Infrastructure Public Disclosure LevelNumber of points receivedGLIO/GRESB Index Band
A80-10090-100%
B60-7970-80%
C40-5950-60%
D20-3930-40%
E0-1910-20%

The scheme is brand new but marks an initiative in the market which will, in time, improve ESG data quality enabling investors to have greater surety of asset and fund performance.  The index is free to register and use for all GLIO or GRESB members.  Further information on the index can be obtained here.

Future directions for GRESB Infrastructure

GRESB have stated that they will continue to shift the emphasis and scoring from management and transparency to performance to meet the needs of the investors and society. The annual survey is expected to track and respond to the wider ESG landscape, which comprises legislative changes such as the latest EU regulations, including sustainable finance (SFDR). This also includes initiatives and global agreements such as the UN Sustainable Development Goals. These drivers of change are already embedded into GRESB and will continue to gain greater prominence within the future schemes. Impact and outcome reporting are also expected to become a future area of performance measurement and asset differentiation, for which many infrastructure assets are well placed to achieve good outcomes.

There is no doubt that the GRESB Infrastructure survey will continue to grow in importance and provide valuable ESG information to investors. The addition of the GRESB Infrastructure Public Disclosure adds a new dimension to the scheme, placing emphasis on publicly available information. Infrastructure Assets and Funds will be required as a minimum to have well-established Environmental Management Systems in place with targets for improving their performance, as well as looking towards more mature sustainability strategies which incorporate climate resilience and TCFD alongside the UN’s SDGs. GRESB reporting will continue to play a role in helping infrastructure assets in contributing to a more sustainable future, placing an increasingly high expectation on the sustainability approaches of participants. 

If you would like to discuss GRESB Infrastructure or wider sustainability support, contact the team at infrastructure@evoraglobal.com


[1] https://www.glio.org/esg

GRESB + SIERA = Success

Sustainability data can be complex. It can show many interesting patterns and insightful trends about energy usage, but at the same time be hard to manage.  The ability to use sustainability data to reduce energy usage by seeing the impact of actions is one of its most powerful features. Connecting those patterns and trends to actions leads to results.

GRESB provides a way of thinking about sustainability data which focuses effort on certain areas and types of energy consumption. SIERA is the sustainability software solution by EVORA for managing asset portfolio data to help achieve sustainability goals. SIERA provides a way of seeing those areas and types of energy consumption by organising consumption, meters, properties, and funds to make it easier to understand. That’s why EVORA sustainability consultants use it get the best out of the data, and easily see patterns which otherwise would be hidden.

But GRESB provides its own challenges. Submitting data to GRESB involves making sure the data is correct, accurate and above all reflects the performance of a property and ultimately a portfolio.

GRESB can be challenging to get right

For those who submit to GRESB, there’s a lot of data to prepare – a lot of ducks to get into rows if you will. One of the first hurdles is making sure that your asset data is correct, that floor areas add up correctly and that the consumption, waste or emissions make sense to GRESB. There’s wide range of categories and ownership to consider, and things like where emissions are generated and who consumes them.

In short, it can easily become somewhat of a mountain of information to organise. GRESB provide a website and a spreadsheet you can use to upload data. The website points out where things don’t add up correctly and you work through the errors until they’re all gone.

GRESB also provides the ability to use software to upload your data. This method is very similar to the website except errors are sent to the software instead of the GRESB webpage. SIERA uses this method to direct the wealth of asset data it contains about assets in the portfolios and funds managed by EVORA consultants.

This connection means SIERA can take advantage of its own intelligence to make it easier to prepare for GRESB.

SIERA makes things clearer

SIERA is a platform whose main aim is to make sustainability data more manageable and the intelligence within it easier to see. It shines at tasks like GRESB mainly because it already contains a lot of the data required for a GRESB submission. SIERA uses this data to show the patterns, monitor the impact of actions and to look for potential improvements.

SIERA has a wide range of different ways of showing the data, each taking a different slice of the data to show a pattern. Having so many different views on the data makes it much easier to understand the data which gets sent to GRESB.

Asset-level reporting becomes easy

This year GRESB changed how data is reported. Before it was fund-level, meaning the total consumption and usage of all assets in a fund was submitted. This year it became asset-level. This means the energy and performance of each individual asset is submitted. As you can imagine, this means much more detail is needed and a finer grain of accuracy than before.

Luckily for SIERA users this didn’t pose a problem. SIERA already recorded data at the meter level so this change didn’t cause a problem.

Qualitative survey answers add colour

GRESB doesn’t just focus on utility readings. It also asks a range of questions about the social initiatives, engagements and technical assessments done for each asset. This qualitative data helps to show how a building is being managed and what social programs are taking place to increase the sustainability of an asset.

SIERA captures this data using surveys. SIERA surveys capture exactly the qualitative data that GRESB asks about. Surveys can be sent out to building and property managers for each asset and contain a range of questions about the asset and its management.

SIERA automatically prepares the answers for the GRESB questions which focus on the building management. Where it can, SIERA also uses data it already has to save time for anyone submitting data to GRESB. For example, rather than ask every property manager if a building uses automatic meter readings, SIERA simply looks at the meters in the asset and checks itself.

No GRESB errors doesn’t always mean correct

Once the asset data has been checked for any updates, SIERA displays the whole GRESB submission in one page. This table makes errors or unexpected variances stand out so you can quickly correct any potential mistakes.

EVORA consultants use SIERA to prepare submissions for clients. On top of that, because they’re experts in their field, they use it to see where adjustments might be necessary.

GRESB show where data doesn’t add up using errors and outliers. This helps to make sure data like floor area coverage is correct, but it doesn’t highlight poorly organised data. EVORA consultants know to look for variances which may indicate problems like consumption data that has been incorrectly allocated to the wrong area of the building.

EVORA uses SIERA to achieve higher GRESB scores

Using these SIERA features make GRESB easier to get right, but they also make it easier to get higher scores. EVORA consultants use the fine-grain control of SIERA and the data visualisations and views to get the most out of the data, and correct issues before they get to GRESB.

Whilst other sustainability software can also prepare submissions for GRESB, SIERA ensures that the data is both in its best form, and used to get real results. Once the GRESB period is over EVORA consultants use the data to feedback to clients to help guide which actions will achieve an asset’s sustainability goals.

This combination of EVORA + SIERA explains how EVORA helped a number of our clients achieve GRESB global sector leadership and Hines Europe to achieve 100% in its Resilience score.

If you are interested in finding out more, get in touch with the team at contactus@evoraglobal.com.

Fourth Consecutive Year Sector Leader Status for Hines in the 2020 GRESB Real Estate Survey

EVORA Global is incredibly proud to have supported Hines pan European Core Fund (HECF) in achieving GRESB European Diversified Fund Sector Leader for an unprecedented fourth year in a row.

GRESB, one of the leading ESG benchmarks for real estate and infrastructure investments across the world, has named HECF one of the “best of the best” in sustainability leadership across the real estate sector.

Achievements this year include 100% Sustainability Certificate coverage across the portfolio, as well as a 15.7% reduction in landlord-controlled energy use and a 23.8% reduction in landlord-controlled greenhouse gas emissions since 2016, for like-for-like assets. The Fund also ensured that at all landlord-controlled electricity supplies were either transferred to 100% renewable energy sources, or scheduled to transfer as early as possible in 2020.

HECF also ranked first out of all global 412 GRESB participants which participated in the optional Resilience module, demonstrating the portfolio’s ability to future-proof the value of its assets over time.

This is an incredible achievement and highlights Hines commitment to ESG. Congratulations to everyone involved!

“We are once again delighted on behalf of our client for these numerous excellent outcomes. It is great to have both Hines’ and EVORA’s hard work validated in this way. It’s a strong partnership that clearly brings great things out of one another. And now we must turn our attention to next year and beyond because – of course – there is still plenty more progress to make within ESG!”

Oli Pye, Director EVORA

“I wanted to take a moment to thank the EVORA team for all of the hard work, diligence and creativity throughout the year to deliver these outstanding GRESB results. As the impact of climate change accelerates, so should our ESG efforts, and I am happy to say that as a team we have been able to keep our eye on the ball and prepare the HECF portfolio in order to stay one step ahead.  I look forward to continuing to sharpen our pencils as we move forward.”

Daniel Chang, Managing Director, Hines

How can ESG help deliver better infrastructure?

Infrastructure is vital for living comfortable, convenient modern lives.  Every day, infrastructure systems are working beneath the ground, on the land, and above our heads. Each morning, when you turn on the tap, power up your computer, or step outside to travel to work, you are interacting with infrastructure.  Infrastructure has a life of its own and without it our modern lives would be very different.

Infrastructure is a huge area of investment globally which attracts both government and private sector funding. Due to its size and complexity, it often requires a complex mix of investment strategies including debt, equity and bonds.  Infrastructure assets, alongside real estate, are categorised as real asset investments and therefore they share similar Environmental, Social and Governance (ESG) risks and opportunities.  However, the scale and complexity of infrastructure assets can create some unique challenges.

The United Nations predicts that population growth will continue, reaching 9.7billion people on the planet by 2050. Much of this population growth will be in urban areas, and infrastructure provisions will need to grow alongside the population. As a result of the continued and growing demand for infrastructure provisions, infrastructure assets have significant potential to positively affect the environment and society. These assets will also play a role in creating a successful and resilient response to the challenges of a changing climate, as well as being affected by climate change themselves.

Due to the pivotal role infrastructure assets hold in meeting current and future demand, and their centrality in addressing climate change, they have varied and wide ranging stakeholder interest groups with high levels of expectation when it comes to ESG delivery.  For this reason, EVORA are seeing many investors coalesce and gravitate toward the United Nations Sustainable Development Goals (UN SDGs) as a suitable framework that addresses stakeholders concerns and which they know and understand.  Increasingly, there is a growing expectation that implementing effective ESG strategies aligned to the UN SDG’S which address the associated risks and opportunities and link actions to outcomes is becoming the minimum requirement.

This year, the Covid-19 pandemic has profoundly impacted the global economy, causing many to take stock, reflect and consider the future of society. We face dual crises: responding to the pandemic and addressing and responding to environmental and social challenges, including climate change. In a post-Covid world, infrastructure can be central to addressing these multiple challenges. This has been solidified by both the UK Government and the new US administration pledging to place investment in infrastructure at the heart of their ‘build back better’ programs. 

So why look at infrastructure now? Firstly, investment in infrastructure development is urgently needed to replace aging and poorly performing assets with assets fit for the 21st century that positively address the climate crisis.  Secondly, infrastructure assets are fundamentally about investing in future generations but also, crucially, provide much needed jobs today, thereby providing an excellent way to rebuild and diversify regional and national economies.  With these factors in mind, having robust ESG management becomes essential in managing outcomes as well as demonstrating effective use of funding vehicles.

In the recent Aviva Real Assets Study 2020 [1], in which global institutions were asked about their views on ESG post-COVID, the overwhelming response showed ESG as front and centre for investors’ concerns. 81% of respondents stated that ESG objectives and delivering on sustainability is a primary duty of their organisations.  Furthermore, 91% of global insurance and pension fund investors are now committed to delivering Net Zero.  As a result, infrastructure assets in all its various classes and forms are the foundation for how the Net Zero commitment will be realised.  The Aviva survey also indicates that ESG has evolved in its sophistication and needs to be considered as a balanced a score card between the ‘E’ and ‘S’ and not simply about environmental risk management that has been the focus in the past.

So how can the ESG and sustainability agenda be delivered in practice?  There are a variety of excellent reporting frameworks, such as GRESB and the UN Principles for Responsible Investment (PRI), for investors to work within which provide globally recognised frameworks which set a baseline for benchmarking performance.  Launched in 2016, GRESB Infrastructure continues to grow in popularity, with over 426 assets totalling $579billion assets under management participating in 2020.  As the scheme evolves, greater focus is given to performance outcomes rather than just good intentions.  Now more than ever, it is imperative for investors to analyse, understand and seek ways to optimise ESG performance in their investments. Reporting is a great place to start.

We have been working with closely with investors over the past decade to deliver best-in-class ESG practices, helping them strive to constantly do better by setting ever more ambitious targets to improve ESG performance. EVORA can help you understand and optimise your infrastructure ESG approach. If you are interested in finding out more, contact the team at infrastructure@evoraglobal.com.


[1] https://www.avivainvestors.com/en-gb/capabilities/real-assets/real-assets-studies/real-assets-study-2020/

GRESB 2020 Scoring – Headline Changes

Along with the announcement that the deadline for GRESB submissions this year has been shifted back until the 1st August, GRESB have also released the scoring methodology for this year’s submission. The headline changes are outlined below:

Total Score

The scoring has reduced from 130 credits available down to 100, meaning that each credit is worth more in 2020 relative to 2019. The reduction to 100 credits overall makes it easier to evaluate and review impacts of certain questions. It is important to understand that although a lot of questions have seen a reduction in number of points available, the percentage contribution to the overall survey has in most instances remained the same. Key changes to scoring contribution from individual questions are summarised below.

Data Assurance

Points awarded for the assurance of energy, GHG, water and waste data has increased from 2% in 2019 up to 6% for the 2020 submission. This is a big shift in emphasis on the quality of utility data reported, and presumably in support of GRESB and the wider industry’s increasing focus on ‘investment grade’ ESG data.

Disclosure

The relative importance of disclosure,  for example via an entity level sustainability report,  has increased 22% compared to 2019.

Energy & GHG data

Points have increased regarding energy and associated greenhouse gas emission data from 15% up to 21%. This means successful efforts to collect energy data, preferably sourced via renewable contracts, across the whole portfolio will return a higher reward. It’s important to note that the amount assigned to energy has actually decreased but GHG has increased by a greater amount.

Water & Waste data

The contribution of water and waste was previously 3% and 2%, respectively. These have increased to 7% & 4%. This mirrors the importance being placed on data coverage and compliments the increase in Energy and GHG points.

Environmental/social risk assessments

This question has decreased from contributing 3% to 1% in 2020 which is likely the result of high marks being achieved in previous years and therefore the relevance of this question to ESG benchmarking reducing.

If you would like to understand more regarding the scoring methodology and key implications for your upcoming submissions, please get in touch.


EVORA are perfectly positioned to provide GRESB support after supporting 73 funds to submit to GRESB in 2019, including 25 funds located outside the UK. View our official Global Partner profile.

We can work with you to complete the submission and understand your scoring, as well as develop a sustainability plan that will improve your future GRESB performance and align with your organisation’s key environmental objectives.

Contact us to see how we can help you.

Getting ready for GRESB season – Reporting tips and tricks

GRESB is imminently approaching! Which for a lot of us in the ESG (Environmental, Social & Governance) industry, it means getting ready to report all the relevant activities that have been undertaken by funds over the course of the past year. In order to smoothen your reporting process and evidence collection, I have looked to outline some tips and tricks which will hopefully help you successfully deliver this year’s submission.

Establishing what’s new

GRESB, as you would suspect, is not a static survey, with improvements and updates added each year which seek to adapt to and follow the rapidly changing ESG market. As such, the first tip I can give you is to start with the basics and review what has changed. Once you have identified high-level changes both in evidence requirements and topics covered, you can then begin to look at establishing the evidence available in order to answer each of the questions. If you are unable to sufficiently support your answer with available evidence on current practices or perhaps are not achieving the marks you would expect, then you can begin to plan ahead for next year. Remember, if you are reporting on calendar year, we are already a few months into the GRESB 2021 reporting period, so you might have limited time to establish and develop new policies and practices!

Getting organized

Good organization is the epitome of so many things in life, and GRESB is no exception. It’s very easy to have a quick skim read of the GRESB survey and think that you send out a couple of emails and all will be rosy. That’s not the case I can assure you! An approach I have found successful is to identify at an early stage who your key stakeholders are and set out the information that each stakeholder will be required to provide. Early engagement will be helpful for your colleagues, as they will have oversight of information that will need to be provided further down the line, it also helps you avoid that last-minute panic over missing information. Using project management techniques, such as Gantt charts or online systems such as Microsoft Project can also help you get organized and keep track of everyone’s tasks and deadlines.

Gathering asset information

The performance section of the 2020 GRESB submission is worth a whopping 70% of the total marks, and therefore deserves plenty of attention. A key element is the coverage questions focusing on, asset-specific energy, water and waste efficiency measures, technical audits and Green Building Certificates, that have been implemented and carried out in the past three years (Note that Green Building Certificates are not time-bound). Logically, the smaller the portfolio the easier it will be to keep track of asset-level activities, but for those with high asset numbers it becomes increasingly difficult. Gathering asset information is often conducted by sending out spreadsheets, although this can result in multiple versions of spreadsheets floating about, which is something to be careful about. An alternative approach is utilizing online surveys that mitigate the risks associated with multiple spreadsheets.

Figure 1: Using a Data Management System to collate and store asset level initiatives

A hot tip is focus in on some key assets, for examples those that have recently undergone refurbishments, where a lot of asset initiatives are likely to have taken place. Remember to think ahead to next year’s submission and how you can utilize information collected for previous submissions.

Getting savvy with utility data

GRESB has a range of requirements in relation to how utility data is reported, and you can easily feel overwhelmed when dealing with large data sets where it’s vital that the outputs are accurate. Its good practice to review utility consumption at the most granular level time permits. I recommend reviewing utility data at a meter level, as it enables you to clearly identify gaps and inconsistencies and presents you with a clear picture of consumption patterns for each supply and building area. Automatically, this greater visibility will benefit you when having to provide a clear explanation to GRESB on sector-level variances and unusual intensities.

Figure 2: Using a Data Management System to automatically alert variances at meter and asset 

In light of all these observations, a data management system is proven to be able to simplify and demystify the whole utility reporting process and can help monitor, track and review consumption throughout the year. Why do the heavy lifting yourself when a computer can do it for you after all?

Hopefully, I have conveyed some useful tips for approaching GRESB this year and I will leave you with a parting quote to motivate you to get organized!

“Start where you are. Use what you have. Do what you can.”

Arthur Ashe

This article was originally published on GRESB Insights

GRESB 2020: Three Key Changes

Each year, GRESB works with its members and key industry stakeholders to update the assessment and address the material issues within Environmental, Social and Governance (ESG) performance of real estate investments.

Below we outline three of the key changes following the release of the 2020 GRESB Real Estate Reference Guide ahead of the GRESB assessment portal opening on the 1st April.


1. Structure

For 2020, separate components have been introduced to the Real Estate Assessment for Management, Performance and Development. The Management and Performance components replace the Management & Policy and Implementation & Measurement components from previous GRESB iterations.

The core component of Management is required for all participants, with the type of investment (standing or development) influencing the secondary component required. Separate benchmark reports will be issued for standing investments and development investments. As shown below:

GRESB Real Estate Reporting Structure
Figure 1 – GRESB Real Estate Reporting Structure. Source: GRESB 2020 Real Estate Reference Guide.

The 2020 inclusion of the Development component is a result of a merger of the previous ‘New Construction and Major Renovation’ module and the separate ‘Developer Assessment’ module. GRESB participants with development projects will now have a better understanding of their ESG performance and be able to compare with their peers.

Previously, the Development Benchmark only included developers, however funds with both standing investments and development projects will be included in both the Standing Investments Benchmark and the Development Benchmark – receiving two Benchmark Reports to reflect their performance in each component. The component weighting for each category in 2020 is outlined below for standing investment and developments:

GRESB Real Estate Assessment Scoring Methodology

Figure 2 – GRESB Real Estate Assessment Scoring Methodology. Source: GRESB, 2020 Real Estate Indicator Summary.

2. Assessment Review Period

GRESB has also introduced a Review Period into the assessment timeline with the aim of strengthening the reliability of participant responses and the subsequent benchmark results. The review period will begin on the 1st September when all participants will receive their preliminary GRESB results for 2020. Participants will be able to submit a review request before 15th September to GRESB using the Review Form. Final results are released to participants and investor members on the 1st October.


3. Asset Focus

GRESB has continued to develop further sector definitions to enable accurate and relevant comparisons with peers. Additional property types have been introduced for 2020 which will allow in the future for more granular benchmarking of asset performance. In addition, the terminology of ‘direct’ and ‘indirectly’ managed assets has also been removed.

The timeframe for asset energy, water and waste efficiency initiatives and technical building assessments has also been reduced from four to three years. This change has highlighted the importance that GRESB places on continual improvement.

Another major change is the removal of intensities calculations, which will be a relief for many parties who have previously had to manually calculate these figures! 


EVORA are perfectly positioned to provide GRESB support after supporting 73 funds to submit to GRESB in 2019, including 25 funds located outside the UK. View our official Global Partner profile.

We can work with you to complete the submission and understand your scoring, as well as develop a sustainability plan that will improve your future GRESB performance and align with your organisation’s key environmental objectives.

Contact us to see how we can help you.

EVORA Insights: GRESB and Data Quality

Interview with Ragnar Martens, Director IT and Analytics

With GRESB submissions now over for another year, many of us in the industry can breathe a (small) sigh of relief.

EVORA Associate Director, Nick Hogg, took some time to talk with Ragnar Martens, Director IT and Analytics at GRESB about GRESB and data quality.

With ESG influencing ever more investment decisions, it’s more important than ever that stakeholders can continue to rely on the ESG benchmarks they engage with. Listen to Ragnar’s insights on why he thinks it’s incumbent upon participants and data partners to work together to define the standards for reporting and how this could be achieved.

You can watch the full video here:

EVORA is a recognised leader in the provision of ESG strategy and professional sustainability services to the real estate investment industry across Europe.

Contact us today to discuss your sustainability needs.

EVORA Insights: The future of GRESB and the real estate industry

Interview with Roxana Isaiu, Director Real Estate, GRESB

With GRESB submissions now over for another year, many of us in the industry can breathe a (small) sigh of relief.

EVORA Director and co-founder, Ed Gabbitas, took some time out to speak with Roxana Isaiu, Director Real Estate, GRESB to chat about the future of GRESB and what the real estate industry should be focussing on.

Listen to Roxana’s insights on what the big issues are for the industry, why a shift towards performance is going to be essential and whether GRESB should be leading the industry or just capturing what’s already been done.

You can watch the full video here:

EVORA is a recognised leader in the provision of ESG strategy and professional sustainability services to the real estate investment industry across Europe.

Contact us today to discuss your sustainability needs.

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