If you reported your ESG (environmental, social, governance) data to GRESB this year, you may have noticed that the format looked substantially different. In fact, the assessment was restructured to focus on what GRESB deemed most material to the real estate industry. Those sweeping changes spurred changes to the scoring methodology that will potentially affect this year’s scores. According to GRESB, those changes will likely result in a slight decrease across the board.
Though the changes to GRESB are predicted to affect all reporters equally, this can be a bit jarring to teams whose GRESB scores have steadily increased in previous years. Now is the time to gain a better understanding of what’s ahead so you can prepare your team and inform your stakeholders.
Schedule a free GRESB score debrief with one of our experts
Changes to the GRESB Assessment Scoring
This year, GRESB restructured the assessment to include separate Management, Performance, and Development components. For a refresher on what the changes were, check out our blog post, “Important Updates to the GRESB 2020 Real Estate Assessment.”
Until now, GRESB scores have focused mainly on ESG management and transparency. Over the next five years, the emphasis will shift to ESG performance. GRESB hopes to achieve this in a few ways:
- Asset-level reporting is now mandatory. For the first time, GRESB is requiring not only utility data to be reported at the asset level, but also projects, assessments, certifications, and ratings. By asking for this raw, asset-level data, GRESB is applying its own rules for how the data will be aggregated to ensure that the information reported is more comparable than when reporters provided their own aggregates.
- Peer groups might change. GRESB introduced a number of new property types this year, so assets could be benchmarked against different sets of buildings.
- Performance indicators are now standardized. The goal here is to garner higher quality data and provide better comparisons among peers. Moving forward, standardized metrics will better highlight a fund’s performance against targets and year-over-year improvements.
- Management indicators have been thinned out. GRESB eliminated some of the indicators in the Management component, retaining the ones that are easy to report, measure, and validate, and garner the most investor interest.
As mentioned, GRESB scores might be slightly lower than expected this year. The organization predicts that the “impact [of the changes] on this year’s GRESB score will be limited, but participants can expect an average decrease of a few points in the Performance and Development scores.” Changes will affect everyone, however: “The scoring impact is consistent across sectors, regions and types of entities.”
So what should you do now? Here are three things to keep in mind as you prepare to receive and share your score:
- The GRESB scores released on October 1 are preliminary. This year, to strengthen the reliability of its assessments and benchmark results, GRESB introduced a monthlong review period. From October 1–15, participants will be able to submit a review request to GRESB using a dedicated form, for a fee.
- Final scores will be released November 1. Results will be later than usual to accommodate the October review period.
- Measurabl is here to help. Each year we offer customers a free, one-on-one debrief with one of our experts on GRESB to provide key insights and ways you can improve your ESG performance. This year, we’re offering this service to non-subscribers for a limited time.
We know firsthand that submitting a GRESB assessment is a massive undertaking, especially when the structure has changed—not to mention, while facing business disruptions associated with a global pandemic. In 2020, we helped users submit nearly 200 GRESB Real Estate Assessments for industry leaders and novice reporters alike. We know how important it is for reporters to receive a substantial ROI from their GRESB assessments. That’s why we take the time to provide our customers with detailed feedback, including an analysis of data gaps, areas in which they excel, and ways to improve their scores for next year.
Change isn’t always easy, but it’s necessary to keep up with our dynamic industry. The ESG movement is quickly evolving within real estate, as investors broaden their focus from environmental impact to social and governance factors that can affect the financial outcomes and long-term performance of real assets. As stakeholder demands evolve, so will the metrics that measure ESG performance. Companies best positioned to withstand these changes are the ones that own and control their ESG data so they can meet stakeholder demands, no matter how they choose to disclose it.