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GRESB 2018: over, not done with!

With GRESB over we talked to a number of staff across our business to get a view on experiences faced, whilst it was still fresh in the team’s mind.


Supporting the team for our busiest ever GRESB season.

Paul Sutcliffe – Director

I’ve lost count of the number of GRESB submissions I have supported over the years. I do know that this year at EVORA we supported around 70 submissions, from a broad array of clients (covering sector Number 1s through to first time participants). Our busiest ever GRESB season!

Whilst we represent a broad array of participants with different fund structures and objectives, we do see some common themes. Our clients universally want to ensure that:

  1. Sustainability policies and practices are effective and appropriate for their organisations
  2. Their GRESB submission correctly and accurately reflects their true sustainability position.

There is a clear recognition and acceptance that GRESB is a one size fits all approach. To use a sloppy analogy – sometimes the shoe fits perfectly, other times it’s a bit loose, sometimes too tight, but everyone can still walk in it.

With the GRESB deadline of 12 noon Eastern US time fast approaching, I prepared myself for some long nights. I needn’t have worried though. Our team and clients mobilised, focused, used SIERA (our sustainability software platform) and worked hard to get everything in on time. Final confirmation, of the last submission (for me) came from the last of my clients early on Saturday morning. I breathed a sigh of relief. I had a weekend to enjoy!

One last thing. GRESB has been able to galvanize the industry and drive forward the sustainability agenda. Our industry should work with this and in particular, reflect when the results come out in September. I am a strong believer that GRESB should be used to inform, not drive individual organisational ESG agendas.


Time flies when it’s your first GRESB year!

Katie Brown – Junior Sustainability Consultant

As this was my first year supporting GRESB, there was a lot to grasp and a lot to learn, fast! The time flew, and on reflection preparation is key. Some elements of the submission would have been extremely challenging and time intensive to complete without the help of our SIERA software. We would not have been able to support so many submissions without it. It was important to plan well and communicate early – time well invested should be reflected in an accurate (and higher) GRESB score.

Some elements of the submission would have been extremely challenging and time intensive to complete without the help of our SIERA software. We would not have been able to support so many submissions without it.

I have been impressed that despite the focus on environmental performance of assets forming a core element of the survey, there is a broad spectrum of the sustainability agenda covered, with attention also on social and governance topics including health and safety, management, policies, and supply chains, just to name a few! Also, the inclusion of the health and wellbeing module, and this year a new module on resilience, brings to the forefront important and emerging ESG trends.

The GRESB survey promotes much needed transparency of the sustainability efforts by businesses in the real estate sector, both as a benchmarking tool and providing greater visibility for investors, but also provides a great opportunity to guide and inform more ambitious and rigorous ESG strategies going forward.


It’s all about the data.

Nick Hogg – Associate Director (SIERA Software)

As those that have participated in the GRESB submission process will know, the amount of information and effort that can be required to provide a seemingly straight forward number in answering a GRESB question can be sometimes underestimated. The Performance Indicators is an aspect where this can challenge participants due to sheer quantum of data that might need to be handled across all the impact areas for an entity, not least with more participants submitting data at asset level.

Across all the submissions we were supporting on this year we found that SIERA handled over half a million datapoints through the Asset level interface alone. We have blogged before that GRESB have allowed the automated transfer of Performance Indicator (PI) data from sustainability management software systems, such as SIERA, directly into the GRESB portal for the last few years. We found this automated transfer of data through SIERA vital, not just in trying to make the complexity of reporting more efficient but essential in establishing a robust and transparent method of reporting asset level data.

Across all the submissions we were supporting on this year we found that SIERA handled over half a million datapoints through the Asset level interface alone.

We introduced additional functionality in SIERA this year to further automate the calculation of energy, GHG and water intensity and have plans to continue expansion of SIERA’s GRESB capability over the coming months.


Submissions are done, but it’s not over!

Louise Russell –  Senior Sustainability Consultant

This will have been my fourth year supporting GRESB clients. I support a variety of clients each at a different stage on their sustainability journey.  Existing clients who are already hot on sustainability continue to maintain leading positions principally due to their wider sustainability programmes which we support during the year. For them, GRESB is useful to benchmark the position of their various funds against peers and internally. However, GRESB is not the driver and broader sustainability as well as responsible investing is something that is taken very seriously.

For my clients that were newcomers to GRESB this was the first time that they as an organisation considered what sustainability means to them. Clients are often surprised by what is already in place within their organisations albeit via an unstructured approach. Where we assist is coordinating the various stakeholders to collate the responses. Whilst we never advise that a sustainability strategy should be GRESB driven it does act as a gateway for those approaching sustainability for the first time.

The key to this is starting early especially for those clients that report in calendar year, waiting until the results come out in September will only allow just over three months to December to make improvements before the GRESB reporting year is over.

Now that we are post-GRESB these same clients are looking to build on their existing processes, formalise their sustainability strategy and put in place a sustainability programme that will deliver an improved score in 2019. The key to this is starting early especially for those clients that report in calendar year, waiting until the results come out in September will only allow just over three months to December to make improvements before the GRESB reporting year is over.

If you have anymore questions about the content of this blog or GRESB in general, get in touch and our team of experts will be happy to help.


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier 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.

GRESB Survey: We answer your questions

With many of us currently knee-deep in spreadsheets for this year’s GRESB submissions, we took some time out to speak with one of our Consultants and ask your questions about the GRESB survey.

About the survey

GRESB is an investor-driven assessment of sustainability performance, that gives Real Estate and Infrastructure funds of all shapes and sizes the opportunity to measure and showcase their performance on a range of environmental, social, and governance issues, and compare themselves to similar entities in the industry.

Real Estate and Infrastructure funds participate in two separate GRESB Surveys which, whilst having a different set of questions, have a similar structure and cover many of the same core ESG issues. At EVORA we have in-house experts on both surveys, so if you’re looking for assistance with your submission or just want some more information, then give this blog a read to get the basics and feel free get in touch if you want to know more.


Q.  How long is the overall submission process to the GRESB portal? Is there a timeline for the submission process?

The final GRESB deadline is July 1st, but a submission doesn’t come together over night! I would say that, to allow time for careful completion of the portal and a proper review, you generally need to have started collating data and evidence in March and you want the pieces in place by early June.

GRESB also offer a ‘Response Check’, where a GRESB employee will evaluate your response and help ensure you’re not going to miss out on points through mis-completion or insufficient evidence. The deadline for this is June 8thso, whilst you don’t have to be finished at this juncture, you want to be most of the way there to get the maximum benefit from the Check.

Q. What kind of evidence do I need to prepare before the GRESB portal opens?

To uphold the credibility of GRESB, a large amount of supporting evidence is required throughout the Survey, and rightly so. Certain indicators are entity specific, such as tenant surveys, risk assessments and completion of technical building audits, whereas others do allow responses from the Organisation / investment manager, such as employee and governance issues.

The key thing here is to make sure people on all levels are well-informed of what GRESB entails for them and that, linking back to the previous question, you start getting organised early!

Q. What is the most efficient way of collating and submitting to the GRESB portal if I have an international portfolio? 

At 25.6%, the Performance Indicators section carries the greatest weight of all the Aspects. Therefore, whilst it is often a challenge to organise, the hard work is heavily rewarded by GRESB. I would highly recommend that you get some purpose-built environmental data management software such as ours, SIERA, which is designed with GRESB in mind and can produce an import sheet which can be uploaded straight onto the GRESB Portal. Data collection programmes can be at all levels of temporal granularity, from a one-off annual request ahead of GRESB, to half-hourly data imports into our M&T module.

Q.  How can I improve my GRESB scores?

Each entity is a little bit different and will be stronger and weaker in different areas, however these are some general areas that you can target:

  • Get an EMS – Having an Environmental Management System in place not only scores points directly on the GRESB Survey, but has the indirect effect of planning and guiding your ESG strategies to be as effective as possible.
  • Sort your data – As outlined above, PI data is a huge part of the Survey so it’s worth the effort of organising it. EVORA’s bespoke environmental data management software, SIERA, is perfect for minimising effort and maximising performance in these elements of GRESB.
  • Green Building Certifications – with a global average of just 46 out of 100 last year, the Certifications aspect is a common weakness for participants. At EVORA, we have in-house BREEAM, WELL, LEED and Fitwel Assessors, so get in touch if you’re interested in certification to bolster your GRESB score and reap the wider benefits of certification.

Read more about our research and how to improve your score in this blog.

Q.  Can you make a submission without disclosing the results?

A cornerstone of GRESB, as an investor-driven sustainability assessment, is that the results can be made visible to investors. However, there is a “Grace Period” for first time participants allowing them to opt-out of sharing  result whilst they get to grips with the Survey.

Q.  Can I only submit my evidence and responses in English?

Responses do have to be made in English, however, GRESB will allow you to submit foreign language documents as evidence. In these circumstances, be sure to clearly indicate in the open text boxes provided exactly where in the document the relevant information is held, along with a thorough summary of content. This will help ensure nothing is missed or misinterpreted.

Q. What happens after I make my submission?

GRESB’s response validation process takes place in July and August, with the official results released at a series of events across the world in September. You will also receive your Benchmark Report at this point, which gives you the full breakdown of how you did on each Dimension, Aspect, and Indicator. Off the back of this, EVORA offers a “GRESB Gap Analysis” to new and existing clients, where one of our in-house experts will evaluate your performance and pick out key opportunities for improvement, and can then help implement them. In truth, for top GRESB performers, the process never really stops! The Survey really rewards comprehensive, sustained sustainability programmes.


Year-on-year the GRESB survey is becoming increasingly comprehensive. This year increased scrutiny has been placed on some existing questions, such as asking that Green Building Certification ratings be provided, some new questions have been added, and every participant will be subject to at least a low-level of validation. Furthermore, the currently optional Health & Wellbeing and Resilience modules are set to be built into the main Survey next year and in three years respectively. I expect this trend of increasing complexity and moving goalposts to continue as investor demands expand and change, so having an experienced GRESB consultant to provide support will become increasingly important.

Here at EVORA, we are entering our seventh year assisting with GRESB submissions, and have acquired a great knowledge base in this time to help maximise your GRESB performance. We have experience of delivering more than 150 submissions, including a number of 5 Star submissions and Sector Leader status.

In conclusion, I think the key takeaways for a successful GRESB submission is to: make sure everyone on all level is well informed and knows their role, start your submission early, use SIERA, and get an experienced consultant on board to help out.

If you have anymore questions about the content of this blog or GRESB in general, get in touch and our team of experts will be happy to help.


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier 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.

Why sustainability cannot be ignored by the real estate industry

A key motivation when we started this business was for sustainability to be seen and accepted as a valuable asset management tool by the property industry. Seven years on, has our goal been achieved? Read on!


What is sustainability in Real Estate?

Sustainability can mean many different things to many different people so to keep it simple, I see sustainability in Real Estate as delivering enduring value. For the real estate industry, ultimately, for a building to be sustainable it needs to be occupied both now and for the foreseeable future, delivering an acceptable return to the investors.

Delivering value comes down to the key drivers of occupancy, rent, lease length and covenant strength so if a sustainable approach can enhance any of those key elements it will deliver value, in the same way as any other asset management tool. That has been my approach for the last seven years although I hope some of our methodologies have matured!

Sustainability is far more than managing energy, water and waste. Don’t get me wrong, these are important aspects, which can reduce the operating costs of a building and improve its resilience, all of which should be attractive to the occupiers.

Does this deliver quantitative returns?

The answer is not obvious in Europe, although the award-winning study entitled “Decomposing the Value Effects of Sustainable Real Estate Investment: International Evidence” measured the impact of sustainable investment on the value and performance of listed real estate investment firms (REITs) and found that strong sustainability practices are associated with superior investment performance.

More importantly, if you ignore sustainability you marginalise your ability to attract the broadest scope of occupiers, potentially those most likely to have the best covenant strength who often also have the strongest CSR credentials. We have experienced, on a number of occasions, corporates matching this profile, willing to commit to longer leases for buildings which have excellent green credentials. This is of course not a one size fits all.

What does this mean?

At a regulatory level, in the UK it is now unlawful to let a building if it does not have a minimum EPC energy rating of an E. In addition E rated properties may still be at risk from MEES regulations. This is significant. For the first time we have energy efficiency regulation that impacts rental income and value. It will be interesting to see if this transitions into Europe in the future.

Interestingly though, we have seen greater uptake of sustainability through voluntary reporting than enforced regulation. GRESB, the global sustainability benchmark survey has mobilised the real estate industry over the last few years with 850 portfolios participating in 2017, representing more than USD$3.7 trillion in assets under management. GRESB is investor driven, to assess the environmental, social, governance (ESG) performance of their investment managers, where many see ESG as a fiduciary duty to protect and enhance future value of their investments. It is also interesting to note that research in July 2017 by Dirk Brounen and Maarten van der Spek identified a return premium of 3% between the highest and lowest GRESB scoring participants.

What practically should we be thinking about for the future?

So there appears to be some quantitative correlation to performance if enough research is done. But what practically should we be thinking about for the future?

For me, the three big impacts to plan for will be climatic change, technological advances and a generational shift in behaviour. I’m not going to dwell on climate change but the combination of rapidly advancing technology with a changing work culture will see a move away from honest work for honest pay to meaningful work in a meaningful environment. The advent of health and wellbeing to deliver a ‘meaningful environment’ is already upon us and my instinct tells me this will be the new face of sustainability, which will mobilise the industry far more quickly than just measuring energy.


To speak to a member of the team about how we can support you, please contact us.

GRESB Support 2018

GRESB reporting season for real estate and infrastructure participants is here again, and as a GRESB Premier Partner, EVORA is recognised as a leader in the provision of GRESB support, including training and strategic insight.

We have provided GRESB support for the last six years, and in 2017 we directly supported over 50 submissions from organisations that represent a cross section of the European property industry. We have helped clients get on the GRESB ladder and have equally supported clients to be market leaders.

We sit on a number of GRESB benchmark committees and our close working relationship with GRESB ensures that we are prepared and aware of future changes.

With our experience and expertise in this ever-emerging market sector, we ran a webinar last week with participants across Europe on our end to end service Titled “How to overcome GRESB challenges and achieve your best score”.

In this session we shared valuable insights and tips in a 5-point GRESB strategy, to increase awareness on how to get the best out of the reporting process and how you can align GRESB ratings with your long-term sustainability strategy.


Five point GRESB strategy

Our GRESB strategy covered an action plan for a seamless GRESB submission process. A quick recap is set out below.

  1. Plan your next GRESB submission in advance. Map out a plan on who to talk to, what to ask and which evidence you need to provide.
  2. Reduce the complexity of reporting by engaging in a streamlined process with your property managers. At EVORA, our consultants provide asset-level templates to property managers, to help in the collation of asset-based questions such as technical assessments, tenant engagement and efficiency measures.
  3. Improve scoring, where appropriate. Don’t miss out on easy points, discounting your reporting efforts by not meeting validation requirements. Read more here on our GRESB verification blog on how to ensure your response is accurate and acceptable by GRESB.
  4. Focus on data integrity and performance. Our proprietary software SIERA ensures that the process of data management is transparent, accurate and robust.
  5. Finally set actions for future success. GRESB addresses several key areas of an EMS within their survey such as management responsibilities, communication, training, objectives and, importantly, the results they are delivering. Developing an EMS therefore seems an appropriate approach to score well in GRESB. Find out here how a Plan-Do-Check-Act (EMS) approach can impact your GRESB score.

Final thoughts for GRESB success in 2018;

  • Start early / now!
  • Engage with internal colleagues and external stakeholders
  • Understand indicator intent and scoring requirements
  • Gather evidence and identify alignment to requirements
  • To make it easy on yourself and others – get in touch and our team of experts will be happy to help.

Request the webinar recording


GRESB Premier PartnerWe are perfectly positioned to provide GRESB support. View our official Premier 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.

GRESB Infrastructure Survey: What is it?

EVORA is now entering its seventh year of helping entities produce GRESB Real Estate Survey submissions, and with each passing cycle we have accrued more expertise, expanded our client base, and become leaders in the field. Last year we provided comprehensive support to 26 funds and general support to many others, and this year the figure is set to get even higher as we gain greater recognition for our expertise.

But GRESB offers more than just the Real Estate Survey, and for 2018 we have expanded our scope of services to include the GRESB Infrastructure Survey.


What is the GRESB Infrastructure Survey?

Much like its real estate equivalent, the GRESB Infrastructure Survey is an investor-driven assessment of ESG (Environmental-Social-Governance) performance for entities.

Much of the content is also very similar, however the setup of the Infrastructure Survey is quite different from that of GRESB Real Estate, as it is broken down into two sub-surveys: 1) the Fund Assessment and 2) the Asset Assessment.

The Fund Assessment is a relatively small element of the overall survey, and focuses on ESG policies and principles, persons responsible for ESG issues, and the monitoring and mitigation of ESG risks, at the entity level.

Meanwhile, it is the Asset Assessment that is broken down into the familiar Management, Policy & Disclosure, Risks & Opportunities, Monitoring & EMS, Stakeholder Engagement, Performance Indicators, and Certification & Awards modules, albeit with differences in the questions themselves and the distribution of points compared to GRESB Real Estate. Additional content includes questions relating specifically to biodiversity and air pollutants in the Performance Indicators section, whilst there is for example less focus on certification.

An optional Resilience module has also been introduced for GRESB Real Estate and GRESB Infrastructure in 2018 – you can read more about it here.


Asset Assessments – Weighted Asset Average

You are free to submit a standalone Fund Assessment without asset-level evaluation if you wish. However, to get an overall GRESB Infrastructure score you must also complete the Asset Assessment for at least 25% of your portfolio (usually weighted by GAV). Furthermore, there is an advantage to completing Asset Assessments for as many assets as possible, as your scores are collated into a Weighted Asset Average (WAA) where assets that did not complete an Asset Assessment score zero.

Your WAA is worth 70% of the final GRESB score, with the Fund Assessment making up the other 30%. A simple example calculation is provided below:

GRESB Infrastructure Survey - WAA table

Combined with an example Fund Assessment score of 76, the overall GRESB score would be:

(56   x  70%)   +   (76  x   30%)   =   62

Which represents:

(WAA Score x Asset Assessment Weighting) + (Fund Score x Fund Assessment Weighting) = Overall Score

The GRESB Infrastructure Survey is comprehensive in its coverage of ESG content, whilst also allowing a wide range of infrastructure assets, from airports to schools to toll roads to windfarms, to be compared. ESG issues matter for all forms of built infrastructure, and GRESB provides an ideal platform to meet investor and public demand for improved sustainable performance.


If you think GRESB Infrastructure might be for you, then get in touch and our team of experts will be happy to help.

 


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier 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.

GRESB Resilience Module: will you survive and thrive in the face of systems disruption?

When you hear the word resilience you might think of an activist like Martin Luther King, an explorer such as Ranulph Fiennes, or an athlete akin to Mo Farah.

In all walks of life it is an admirable and desirable quality, but the meaning it carries in the field of commercial property is perhaps not as well defined or understood as it needs to be given the increasing role it is expected to play in securing long-term success.


GRESB is recognising the importance of resilience in real estate portfolios by introducing a brand new module for the 2018 GRESB survey. Much like the Health & Wellbeing module that came before it, the GRESB Resilience module will standalone and evolve over the next 3 years with the intention of subsequently integrating it into the main GRESB survey.

But what is it that makes real estate resilient?

What is it that makes companies and funds resilient?

And what is it that will make you GRESB resilient?


What is resilience?

The exact definition of resilience in a sustainability context is not yet fully agreed, however the IPCC defines it as:

“The ability of a system and its component parts to anticipate, absorb, accommodate, or recover from the effects of a hazardous event in a timely and efficient manner, including through ensuring the preservation, restoration, or improvement of its essential basic structures and functions”.

Meanwhile, GRESB defines it as:

“The capacity of companies and funds to survive and thrive in the face of social and environmental shocks and stressors”.

In short, how well equipped is your organisation to deal with big events that disrupt systems (floods, fires, earthquakes, terrorist attacks etc.), and the stressors that make you more susceptible to harm when events do occur (poverty, environmental degradation, aging infrastructure etc.)?


The GRESB resilience module

The GRESB Resilience module has been kept fairly simple this year, asking basic-level questions on the involvement of management and stakeholders in resilience-related decisions, on asset and business operational risk reporting, on strategies for the management of risk, and, interestingly, to “describe your response to three illustrative, disruptive, extreme, or catastrophic events or near misses during the reporting period”. I am intrigued to see what kind of responses come in for this last one.

I am confident that the Resilience module will follow the projected path of the Health & Wellbeing and ultimately become a part of the main survey. Firstly, because the probability of these system shocks is indisputably growing for many issues (e.g. climate change, terrorism, I.T. security) and secondly, because of the potentially huge environmental, social, and financial consequences that could result from failing to invest in resilience.

Exactly how the module will look in a few years’ time is hard to say, with GRESB using this year to gauge the current state of play in the industry. I doubt it will progress to any kind of individual asset-level evaluation any time soon given the multitude of uncertainties in resilience modelling and the unique situation every asset is in with regards to external shocks and stresses. Instead, I expect it will likely remain procedural, focussing on how organisations go about identifying, assessing, and mitigating risks in their portfolio, and how they are communicating these risks to different parties. However, we wait with intrigue to see how this new reporting element develops.


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier 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 about GRESB support.

GRESB Verification: Why it’s important our Top Tips for success

One of the more notable changes that GRESB has introduced for the 2018 survey is their approach for verifying participant’s answers.

Starting in 2018, GRESB (or more accurately, their parent company GBCI), will perform a deep dive (termed Validation Plus) on all participants for a subset of questions and indicators. Previously, the approach was to select 25% of participants for a detailed review of an entire response.


GRESB Verification – why do we need it?

The rationale for validating responses is simple to comprehend. If unchecked, there is a risk that some respondents may stretch the truth and overplay an entities performance and/or practices for ESG management. Checking all participants on the same subset of indicators creates a more level playing field, which should be to the benefit of sustainability leaders who can easily demonstrate and disclosure their performance. However, the check is still very light touch as, typically speaking, only one document needs to be uploaded to indicate how ESG is implemented / managed across a fund; one example of good practice may be the exception and not the rule for some.

[clickToTweet tweet=”Validation is not in place to trip people up or create unnecessary burden. It is an action that GRESB must take to ensure the ratings it gives to participants are credible.” quote=”Validation is not in place to trip people up or create unnecessary burden. It is an action that GRESB must take to ensure the ratings it gives to participants are credible.”]

Validation is not in place to trip people up or create unnecessary burden. It is an action that GRESB must take to ensure the ratings it gives to participants are credible. Why is this important? From the outset, GRESB has stated it is an investor driven organisation. If investors are being fed inaccurate information, then they may not be able to accurately identify good ESG strategies from mediocre or non-existent ones. Investor confidence will suffer as a result and GRESB will fizzle out.

It was fascinating to learn about Danone’s (the yoghurt people) announcement in their Financial report issued last month. In it they stated an agreement for “tying financing cost and environmental and social performance”. The interest paid on their €2billlion credit facility, syndicated by 12 international banks no less, would be impacted upwards or downwards on the basis of ESG performances, as measured by independent third parties.  Additional factors other than ESG are also considered.

WOW! Wouldn’t this raise the bar for GRESB submissions if an entities credit rating and / or credit facility was linked to the number of Green Stars GRESB issued each year!


GRESB verification – Top Tips

So how can you ensure your GRESB response is accurate and that evidence submitted is accepted by GRESB?

We set out below, our six top-tips.

  1. Read the guidance document – GRESB is transparent on the scoring requirements for each indicator. Participants should familiarise themselves with the guidance document to ensure they understand what is required for each response.
  2. Get advice – if you don’t have the time or inclination to read the 264 page guidance book, get expert help from EVORA. We have had visibility of 98 assessments so far and as such have significant experience. I’m looking forward to passing the century mark this year (and most probably the double hundred!)
  3. Focus on data integrity – the Performance Indicator section now carries the highest weighting of any section (termed Aspect by GRESB) at 25.6%. Asset level data is at the heart of this section and data transparency and accuracy is key. Look out for my colleague Chris Bennett’s blog on how SIERA delivers on data integrity.
  4. Communicate early– GRESB is a comprehensive multi-disciplinary survey. It is highly unlikely that one person will have the answer to all questions. Participants should be aware of internal and external stakeholders they need to involve in the process and communicate requirements to them early.
  5. Take time over evidence – sourcing evidence, signposting content via the Upload Template, and preparing / splitting / merging pdfs takes time. It is worthwhile taking the time to keep accurate records, as this can help deliver efficiencies for future years. It is also worthwhile taking time to ensure that signposting GRESB to relevant evidence is accurate. This includes hyperlinks and ‘deep link’. Broken links are the responsibility of the participant and will be interpreted as the absence of evidence.
  6. A global benchmark? Finally, your assessment response must be submitted in English. For a Global benchmark this seems a little harsh for the many non-English speaking participants and I know from experience that it is a major frustration. Uploaded evidence does not need to be translated entirely. However, a thorough summary of the content, sufficient to convey that each requirement has been met, should be provided in English. This will add time and /or cost for many participants.

Following my advice will ensure your ESG strategies are assessed accurately by GRESB. I have seen many responses (not completed by EVORA!) marked down for not following guidance.


We are hosting a webinar on 19th April titled How to overcome GRESB challenges and achieve your best score.  Join us to hear insights on how to save time, reduce complexity and align GRESB ratings with your sustainability strategy.

Click here for more details.

 


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier 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.

Transparency and the business case for ESG in Real Estate

Last month we ran a thought leadership event on ‘Real Estate Sustainability: Planning for 2018 & Beyond’ kindly hosted by our client Schroders.

Two key themes were raised by the speakers and the panellists, which are certainly not mutually exclusive. The first was setting out the business case for ESG in Real Estate and the second was the issue of transparency.


Evolution of GRESB for 2018

Sander Paul van Tongeren, Managing Director of GRESB kicked off with 2018 updates for GRESB. Increased transparency is being introduced through ‘Validation Plus’ applied to a sample of indicators for all participants (as opposed to a sample of participants). Ensuring quality of submissions through greater transparency is essential for the ongoing credibility of the survey.

Sander Paul made it clear that GRESB is increasingly focussing on the asset level.  The GRESB Assessment at the fund level will be strengthened by adding asset level data.

In addition, Sander Paul made it clear that GRESB is increasingly focussing on the asset level.  The GRESB Assessment at the fund level will be strengthened by adding asset level data. This will necessitate the collection of asset level data where the transparency of that data has been evaluated, i.e. has it come from a trusted source, and its quality identified through adequate validation. This is where sophisticated software systems such as SIERA will become fundamental in receiving asset & meter level data with automated validation functionality to ensure the completeness and quality of the data, which will support high scores in GRESB.


Transparency through public disclosure

Ed Gabbitas of EVORA presented the findings of a recent research paper identifying that strong sustainability practices combined with public disclosure are associated with superior investment returns. The award-winning research found that “sustainable” Real Estate Investment Trusts (REITs) benefited from higher rental income and lower interest expenses, resulting in increased cash distribution to shareholders. A lower risk profile was also identified attracting higher premiums to Net Asset Value (NAV). Transparency through public disclosure was found to be a key facilitator of driving improvement.

Overall, a 3% fund return uplift was observed between the lowest and highest GRESB scoring funds.

Ed went on to highlight research to evaluate if strong GRESB performance correlates to enhanced fund returns for non-listed funds. Overall, a 3% fund return uplift was observed between the lowest and highest GRESB scoring funds. These finding are clearly helpful enabling the capital markets to use GRESB as a broad indicator of fund quality in their evaluation.


ESG ratings lead to better financial performance

Murray Birt, Senior ESG Strategist at Deutsche Bank advised there had been more than 2000 academic studies since 1970, seeking to identify if there is a link between ESG and financial performance – clearly not a new endeavour! The findings demonstrated high ESG ratings correlated to better financial performance across multiple asset classes and regions.

Neither this, or the immediate impact of global physical climate change, which Murray also highlighted, have had a major impact on the uptake by the real estate industry, to accelerate energy efficiency in buildings. The answer – improved and increased European wide policy requiring corporate disclosure and greater transparency to promote the setting and delivery of long term objectives to address climate risk.


Social Value and Impact Investing

Finally, Debbie Hobbs, Head of Sustainability at L&G Real Assets presented on the importance of Social Value and Impact Investing, ensuring investments generate a beneficial social impact as well as a financial return. Debbie presented research highlighting that nine out of ten millennials believe the success of a business should be measured by more than just financial performance and 60% of millennials want to join companies that have a societal purpose. Fundamentally transparency of impacts and social engagement is becoming a necessity, both in the way funds invest and corporates run their businesses.

60% of millennials want to join companies that have a societal purpose.

Anecdotally, we have recently been recruiting for a number of positions at EVORA, and remarkably, so far, every candidate interviewed has highlighted EVORA Giving, which focusses on our social side of sustainability, as a key element that has attracted them to apply to EVORA.


Transparency and the business case for ESG

So, going back to our two key themes. Firstly, transparency is clearly the new buzz word and for many good reasons it should help bring quality, clarity and progression of the ESG agenda.

[clickToTweet tweet=”A decade ago I saw sustainability almost as a leap of faith for many – now I see it as a leap of common sense. ” quote=”A decade ago I saw sustainability almost as a leap of faith for many – now I see it as a leap of common sense. “]

And what about the link between ESG and fund performance? – well research, which has been ongoing since the 1970s, has shown that there is direct correlation. Will that put the debate to bed? I doubt it. But as I said in my closing remarks at the event, a decade ago I saw sustainability almost as a leap of faith for many – now I see it as a leap of common sense. So let’s stop putting our energies into trying to prove its worth and instead make our buildings and the world we live in more sustainable.


If you have any questions about the event or would like to speak to us about how we can support you with your GRESB submission for 2018, please get in touch with the team.

 


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier 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.

Changes to GRESB 2018 Real Estate Survey Part 2 – The Detail

Last week, my colleague Paul Sutcliffe penned a blog briefly setting out the headline changes to the GRESB 2018 Real Estate Survey.  Having had a bit more time to digest these updates, below I provide a detailed look at how the survey has changed this year. I also outline some key practical considerations.

Unlike Paul’s blog, this one is very much aimed at those working closely with the GRESB RE survey. For those that fit this bill (btw, lucky you/us!), please do read on and don’t hesitate to get in touch if you would like to discuss any of these changes further.


Entity and reporting characteristics – Composition of the entity’s standing investments during the reporting period (RC5.1)

Change: It will no longer be possible to report in units. Rather all property types will need to report in sq. ft. or m2.  

EVORA comment: This may present a challenge to many respondents as for certain property types, floor area surveys are often not available (e.g. hotels, student accommodation and car parks). In some instances, there may be other sources of information that can be used. For buildings (i.e. not car parks), this can include the EPC certificate. In most cases an area is also likely to be stated on insurance documents. Where necessary, entities may need to make assumptions to convert units into areas. For this, we suggest looking to country-specific planning regulations, which may have minimum space requirements – e.g. for car parks.


Management – Inclusion of ESG factors in annual performance targets of employees (2017: Q6)

Change: An additional sub-question has been added to this indicator, asking whether performance against these targets have ‘financial’ and or ‘non-financial consequences’. The list of possible ‘employee’ types has also been reduced from nine down to four (remaining options: ‘All employees’; ’Board of Directors’; ‘Senior Management Team’; and, ‘Other’). A requirement for a supporting evidence upload has been added.

EVORA comment: According to the pre-release, the scoring of this question has not changed, suggesting that the new ‘financial’ / ‘non-financial consequences’ differentiation is for information only. Therefore, we do not anticipate this question causing additional stress for respondents compared with last year. However, this change does hint at a wider trend seen across the ESG industry towards favouring a link between sustainability performance and financial incentives. Perhaps this is something we will see GRESB adopt in future versions of the survey.


Policy and Disclosure – Policies in place that address governance issues (2017: Q9)

Change: The list of governance issues that could be covered by an entity’s policies has been expanded; new options include data protection & privacy, fiduciary duty, fraud, political contributions, and whistleblower protection. The number of points awarded to this question has increased, from 1 to 2 points.

EVORA comment: Our expectation is that for larger reporting organisations few if any of these options will present a significant challenge. However, for smaller investment houses we wonder if for one or more of these new selections it may be difficult to provide the necessary documentary evidence to demonstrate that such issues are covered by a formal policy. We note that the full question includes an extensive list of options and it is not necessary to select all in order to obtain full marks. For anyone with particular concerns, we suggest doing a gap analysis against the full question.


Policy and Disclosure – *NEW INDICATOR* – Monitoring diversity (i.e. C-suite, Board, Management Committee)

Change: A new indicator has been added that asks if and how respondents monitor diversity amongst its governance bodies. The indicator will not be scored and will be for reporting purposes only in 2018.

EVORA comment: As with the previous indicator, we anticipate that larger (particularly listed) respondents will already be doing some or all of this – e.g. for certain countries / organisations this may already be a legislative requirement (e.g. EU non-financial reporting directive). For other, likely smaller, entities this indicator may require additional work and raise questions around the sensitivity of this information. We recommend engaging the relevant stakeholders (e.g. C-suite, HR department) as early as possible to work through any sensitivities and, if determined appropriate, a strategy for collecting this information. It is worth noting that for GRESB the pattern is often that new questions are introduced as ‘optional’ or for ‘reporting purposes only’ in year one, but from year two or three, they often become scored.


Policy and Disclosure – *NEW INDICATOR* – Commitments to ESG leadership initiatives

Change: A new indicator has been added that asks which third-party standards or groups respondents are members of / signatories to (e.g. IIGCC, PRI, RE 100, science based targets, TCFD, UNGC). The indicator will not be scored and will be for reporting purposes only in 2018.

EVORA comment: We have mixed feelings about this indicator because as worthy as these initiatives are, we feel that many are more appropriate for larger organisations that typically have more resources available to manage membership/alignment to these schemes. As mentioned above, ‘reporting purposes only’ questions often become scored in subsequent years.

Please note: We have experience support client’s alignment to various such initiatives and would be very happy to provide you with a complementary briefing on the opportunities and challenges presented by each of these initiatives. Contact us.


Policy and Disclosure – *NEW INDICATOR* – Process for communicating ESG-related misconduct, penalties, incidents or accidents

Change: A new indicator has been added that asks if respondents have a process for communicating ESG-related misconduct, penalties, incidents or accidents and if so, which stakeholders are included in the process. The indicator will not be scored and will be for reporting purposes only in 2018. However, according to GRESB this information may be used “as criteria for the recognition of 2018 Sector Leaders”.

EVORA comment: We anticipate that this indicator will be acceptable to most respondents.


Risk and Opportunities – Asset-level environmental and/or social risk assessments of standing investments during the last three years (2017: Q15.2)

Change: This indicator now requires reporting of ‘percentage (%) portfolio covered’ for each type of risk assessment. This indicator also now requires reporting of the third-party standard to which risk assessments are aligned (e.g. ISO 31000). Responses will be scored according to the issues selected and their respective % portfolio coverage. The open text box will no longer be scored and alignment to a third-party standard will not be scored (only required for reporting purposes).

EVORA comment: We can understand the rationale for this change, however, we have concerns over the additional reporting burden this will present for entities with larger portfolios. We note that some options are likely to be easy to determine a % coverage e.g. ‘GHG emissions’ and ‘regulatory risk’. Conversely, other options may require asset-by-asset consideration, such as ‘contamination’ and ‘flood risk’.


Risk and Opportunities –  Implementation of measures during the last four years to improve waste management (2017: Q19)

Change: This indicator remains the same as last year, however, it will be scored (whereas last year it was for reporting purposes only). This indicator will attract a maximum of one point.

EVORA comment: We agree with the principle behind this update, which increases the importance of and therefore focus on implementation of waste management improvement measures. This brings waste and resource management in line with the energy and water versions of this question and further shifts the overall balance of GRESB towards measuring / incentivising green ‘walk’, as well as ‘talk’.


Stakeholder Engagement – Employee and tenant satisfaction surveys (2017: Q34.1 & Q37.1)

Change: An additional sub-question has been added to this indicator, asking if and what ‘quantitative metrics’ were included in the surveys (e.g. overall satisfaction score). This new sub-question will not be scored and will be for reporting purposes only in 2018.

EVORA comment: This is a logical evolution to this question and should be borne in mind by anyone designing a satisfaction survey. Ultimately, it should improve quantification of what has historically been a largely qualitative issue.


Stakeholder Engagement – Monitoring of compliance with sustainability-specific requirements in lease contracts (2017: Q39.2)

Change: An open text box has been added to enable GRESB to further validate the approach taken by respondents to monitoring compliance with green lease clauses. Last year, this question was for reporting purposes only; however, this year it will attract a maximum of one point.

EVORA comment: In our view, this is another logical evolution to the survey. However, we do note that the process behind tracking green leases may not provide sufficient information on the number, depth and strength of green clauses in place.


Stakeholder Engagement – *NEW INDICATOR* – Engaging with supply chains to ensure ESG requirements are met

Change: A new indicator has been added that asks if respondents engage with supply chains to ensure ESG requirements are met. If ‘yes’ is selected, respondents are asked to describe the process in an open text box. The indicator will not be scored and will be for reporting purposes only in 2018.

EVORA comment: We anticipate that this indicator will be acceptable to most respondents and note an overlap with a subsequent question on monitoring supply chain compliance with ESG requirements.


Stakeholder Engagement – *NEW INDICATOR* – Stakeholder grievance mechanism

Change: A new indicator has been added that asks if respondents have a formal process for stakeholders to communicate grievances. If ‘yes’ is selected, respondents are asked to select from a list of ‘characteristics’ of the grievance process (e.g. rights compatible, transparent) and stakeholders that the process applies to (e.g. community, contractors). The indicator will not be scored and will be for reporting purposes only in 2018.

EVORA comment: As with most of the other new indicators, we anticipate that larger respondents will already be doing some or all of this. For other, likely smaller, entities these processes are less likely to be formalised and therefore demonstrating compliance may require additional work.


Performance indicators – Landlord versus tenant data collection and coverage (2017: Q25.1 & 27.1)

Change: Although tenant energy/water consumption data is still requested, GRESB have committed to reducing the weighting it receives within the scoring and benchmarking of the ‘data coverage’ element of responses. Correspondingly, they will shift the emphasis onto data coverage of the landlord-controlled energy and water supplies.

EVORA comment: We fully support this update and have been lobbying GRESB on the issue for a while. For us it makes complete sense to focus scoring on what the landlord has control over, rather than their tenant activities, which they often have little ability to influence (particularly for certain property/portfolio types – e.g. industrial/logistics, FRIs).


Performance indicators – Like for like data coverage area (2017: Q25.1 & 27.1)

Change: Respondents will now have to report on the size of the ‘like for like’ portfolio reported within the energy and water consumption data tables.

EVORA comment: We support this update and note that this should not add additional reporting burden for those using a good asset-level data collection and validation software tool, such as SIERA.


Performance indicators – Like for like consumption trends (2017: Q25.1 & 27.1)

Change: The scoring of reported energy and water consumption trends for the ‘like for like’ portfolio has changed. Last year all three points available for this indicator were attributed to the direction and scale of the consumption trends. From this year, one point will be awarded for data availability and only two points attributed to the consumption trend.

EVORA comment: This change should provide investors with greater clarity on the proportion of the portfolio that is driving change. However, as the like-for-like consumption trend is the only truly ‘performance based’ indicator, in our view, stealing points from the consumption trend aspect and giving them to data coverage is not entirely progressive.


Performance indicators – Scope 3 emissions (2017: Q26.1)

Change: Reporting of Scope 3 greenhouse gas (GHG) emissions has become mandatory. In the context of GRESB, Scope 3 emissions include those associated with energy consumption in tenant areas and/or indirectly managed assets. From this year, Scope 3 emissions will be included in the scoring and benchmarking of responses, both in terms of data coverage and the ‘like for like’ consumption trend.

EVORA comment: We understand the principle behind this update, however we question the intention to score the Scope 3 like for like consumption trend, as well as data coverage. This is because, as mentioned above, generally tenant energy consumption and therefore GHG footprint is beyond the landlord’s control. As above, we note that this should not add additional reporting burden for those using a good asset-level data collection and validation software tool, such as SIERA.


Building Certifications – Green building certificates during design/construction/renovation or operation (2017: Q30.1 & 30.2)

Change: There is an expansion to the scope of these questions to include a requirement to provide certification levels/scores achieved (in addition to the overall schemes applied). This element will not be scored in 2018; it will be for reporting purposes only.

EVORA comment: We are supportive of this update and again, note that this should not add additional reporting burden for anyone using a good asset-level data collection and validation software tool, such as SIERA.


To find out how EVORA can help you to navigate GRESB, whether you are a first timer or an experienced respondent, then please get in touch.

 


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier 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.

 

Changes to GRESB 2018 Real Estate Survey Part 1 – The Headlines

The GRESB pre-survey was published today (15th February).  As expected, a number of changes have been made to both the question-set and the process.

Over the course of the next couple of days we will review these changes in detail, before coming back to you with a more comprehensive summary in a separate blog. For now, please see the headlines below.


Changes to the questions for GRESB 2018

  • Enhanced validation – The three tier validation process (All Participant Check; Validation Plus; and, Validation Interviews) continues, however, from this year the All Participant Check will be extended and will be applied to all responses for a select number of questions (previously only 25% of responses were subject to this level of check).
  • Reduced reporting burden – There are a reduced number of mandatory open text boxes (but with more opportunity to provide context).
  • Green building certificates – There is an expansion to the scope of the Green Building Certificate questions, including a requirement to provide certification levels/scores achieved (in addition to portfolio coverage).
  • Scope 3 – Mandatory reporting of scope 3 emissions is introduced, covering emissions associated with tenant areas and/or indirectly managed assets.
  • Like for like consumption – There is a requirement to define the floor area associated with like-for-like portfolios.
  • Asset level data – GRESB continues its increased focus on data quality, by making additional points available for respondents submitting asset-level energy, carbon, water, waste data.
  • Health and wellbeing – 2018 will be the final year of the Health & Wellbeing module.
  • Resilience – A new resilience module is launched.

Changes to the process

  • Fee – There will be a participation fee introduced for non-members. This will not be applicable to first time participants submitting under the ‘Grace Period’ or participants from non-OECD countries.
  • Scorecards/Benchmark Reports – All participants will receive a Scorecard and Benchmark Report for all of their submissions.
  • Response Check – The Response Check is available on request from April 1 to June 8, 2018 subject to available resources.

The changes have been implemented to improve accuracy of data collection and to push the industry further towards sustainability performance improvement.  EVORA already supports its clients in both of these areas. Our expert sustainability consultants and engineers advise clients across the piece – from strategy through implementation to reporting. Furthermore, we use our proprietary software platform SIERA to collect and validate client data at meter and asset level.


What next? Tips to get you started

If you are involved in the GRESB process, we recommend that you start planning for the submission process now. Some practical tips to get you started:

  • Changes to GRESB – Review the new question set as soon as possible. Consider the changes (there is an overview at the start) and how you will develop your response to address these –  now.  GRESB 2018 includes text boxes to provide additional context to your answers – how and where will you use this option?
  • Changes to your entity – For previous participants consider last year’s results – responses should truly reflect the processes, procedures and performance of the funds and portfolios you manage.  Was anything missed from previous submissions?  Have you changed any processes and procedures relevant to the GRESB survey?
  • Evidence – Identify what evidence is required (including, but not limited to, audits and assessments, implementation of improvements, performance data and building certification). Establish how this can be collected and liaise directly with property management teams.
  • Plan, Do, Deliver – Establish and follow a detailed submission plan.

As mentioned, we are in the process of reviewing the new question set in detail and will publish more information shortly – so keep an eye out for updates.


To find out how EVORA can help you to navigate GRESB, whether you are a first timer or an experienced respondent, then please get in touch.

The full survey can be found here.

 


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier 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.