GRESB Reporting: An assessment of your ESG Real Estate

Sustainability reporting in commercial real estate (CRE) can be a minefield. With no universal metric for judging a business’s commitment to reducing its environmental impact, it is often a challenge to understand precisely the extent to which organizations meet their targets.

The European Union is in the process of standardizing rules with its own European Sustainability Reporting Standards (ESRS), which will likely simplify environmental, social, and corporate governance (ESG) reporting for CRE businesses across Europe.

But where does this leave the rest of the world? The Global Real Estate Sustainability Benchmark (GRESB) aims to bridge the gap as a leading independent organization that collects and verifies ESG data across a business’s real estate portfolio. Its comprehensive methodology provides clarity and certainty for investors, creating a more transparent landscape for all involved.

Is GRESB the best reporting benchmark for your CRE business? This article will dive deeper into its methodology to explain how GRESB assesses ESG data and how your business can nail its reporting techniques to attract and retain the support of investors and key business stakeholders.

What does a GRESB assessment look like?

In 2023, more than 2,000 real estate companies and developers with a combined $7.2 trillion worth of assets undertook a GRESB real estate assessment. While the organization’s assessment frameworks also assess infrastructure funds and more bespoke ESG reports for infrastructure assets, its real estate assessment is the primary test for the CRE sector, and its tests cover 170,000+ assets globally.

Typically, your business will present its ESG data to GRESB every year between April 1st and July 1st. GRESB will then thoroughly assess your business’s sustainability record across the real estate portfolio, aligning your data with various international reporting frameworks, including Global Reporting (GRI) and the Sustainability Accounting Standards Board (SASB). Naturally, this will be specific to your market requirements, and GRESB can adapt framework measurements to their clients’ reporting needs.

After completing a GRESB real estate assessment, the organization will award your business with two benchmarks.

• The GRESB Real Estate Benchmark, which analyzes how your real estate business is performing against its ESG goals.
• The GRESB Development Benchmark, which measures ESG performance during the design, build, and renovation of a real estate project.

Components of GRESB Real Estate Assessment

When analyzing your organization’s ESG data, GRESB considers three key areas. These are as follows:

• Management Component – a measurement of your organization’s leadership and strategy, primarily focusing on best practices for social and corporate governance.
• Performance Component – a measurement of your portfolio’s functional performance, factoring in environmental goals including energy use, water use, and GHG emissions.
• Development Component (if applicable) — a measurement of ESG issues during the construction and refurbishment of assets across your portfolio.

Some CRE organizations, including real estate investment trusts (REIT) and investment funds, will be in the business of development, GRESB offers the flexibility to award businesses either the Real Estate or Development benchmark award as applicable to their requirement.

Benefits of GRESB assessment

Effective sustainability reporting is now vital to the success of a CRE organization. It is no longer enough just to be a sustainable business — investors and stakeholders need to trust that ESG data is being reported accurately and that industry best practices are being followed.

GRESB’s Real Estate Assessments are useful for CRE businesses, as they send a clear message to investors that your organization takes ESG reporting seriously. A 2023 poll by ERM found that 94% of investors use ESG ratings, and half of investors directly integrate ESG ratings into their investment process.

Clémentine Pacitti, Group Head of CSR at Klépierre, a French CRE manager of shopping centers across Europe, believes that GRESB supports their organization in meeting their ESG goals. She says:

“The advantage of GRESB is that it is based on the most important multi-sector ESG reporting frameworks, (and) we have seen investors’ expectations grow over the years and GRESB has proven a very useful bridge between issuers and investors, enabling us to discuss ESG performance on an objective basis”.

How can my CRE organization pass its GRESB assessment?

Each organization will have its own challenges in delivering on its ESG goals. As just one example, 72% of global real estate businesses certified by GRESB had a net-zero policy in place, yet just 50% explicitly set targets to meet this aim.

But how can your business become certified by GRESB, and what does success look like? Every year, GRESB updates its Real Estate Standard, to keep pace with the changing landscape of the sector. It publishes its detailed methodology and scoring process publicly, to support businesses in submitting the highest-quality data

What is a good score on GRESB?

Ratings are awarded based on how your organization compares to all other GRESB-certified businesses. Every year, GRESB awards a 5-star rating to the top 20% of companies with the highest score. In 2023, the upper limit was a score of 97.43, and the lowest was 6.91.

A score of 81.5 or better will be enough to be rated as a 4-star organization, and therefore in the top 40% of GRESB-rated real estate businesses.

Best practices when submitting your GRESB Assessment

Whether your business is established at producing ESG reports and gaining certification, or you’re new to the CRE space, sustainability reporting is a constant improvement process. According to GRESB’s 2023 assessment figures, participants see a 10% improvement in their scores on average between their first and second year of reporting.

But how can your organization nail its GRESB assessment? Here are a few pointers to help simplify the process and ensure your CRE business earns the highest rating it can.

• • Start early: While the reporting window runs from April 1 until July 1, your organization should aim to have all relevant data and evidence gathered beforehand.
  • Upskill team members to report in line with GRESB methodology: Effective sustainability reporting requires collaboration across teams to gather all relevant information. GRESB provides a range of online training materials to help your team understand its methodology and bring everyone up to speed with its requirements.

• Engage honestly: Always be transparent with your data and respond to GRESB requests promptly, explaining any reasons for non-reporting of particular categories with honesty.

• Review GRESB feedback for improvement: Securing a 5-star rating is a long-term process that can take years, so engage with assessment feedback methodically and identify areas for improvement within your organization’s portfolio.

Using Certify to capture GRESB portfolio ratings

ProptechOS has a vision to support CRE organizations in delivering effective sustainability reports and accelerate plans to meet their ESG goals. We have created Certify — an automated certification and compliance tool to help your business stay on top of the data behind your CRE portfolio.

From social and corporate governance policies to compliance certificates and utility data, Certify puts all relevant ESG data into one place to simplify the reporting process. If your organization is applying for GRESB certification, our tool simplifies data collection and reporting, with everything in one place to meet reporting deadlines.

Your CRE business can sign up for a free trial today.