The move makes clear winners of GRESB (the Global Real Estate Sustainability Benchmark) and GBCI (the Green Building Certification Institute): they now have almost total dominion over building- and commercial real estate company-level green certifications and rankings. Arguments for and against the merger have since cropped up. While healthy dialogue will help us get to stronger, more transparent and ultimately more valuable measures of non-financial performance, this post is not about taking sides.
Instead, it’s a look at the merger’s practical impacts on Survey Respondents. From this point of view, the merger is a decidedly good thing. Here’s why:
In order to win the trust of those who would disclose (Survey participants) and purchase its data (Investors), GRESB needed to bring more rigor to its auditing and assurance processes. At its core, this is what the merger is all about. GRESB and GBCI drive this point home in their joint press release: “GBCI’s established expertise providing rigorous third-party review, verification and training, will be extended to the GRESB Survey… Together, GBCI and GRESB will provide investors with reliable information to inform global real estate investment decisions.” (emphasis mine)
But improved rigor doesn’t just build trust in GRESB’s scores and rankings, it’s also a prerequisite of any credible measure of non-financial performance for the global commercial real estate industry. And this is the (unicorn?) data point for which we’re all searching. As rigor increases, GRESB will be in a better position to sift through its haystack of asset- and entity-level information to tell us what truly matters, why and by how much.
This gets to the other benefit of the merger: deeper and higher quality data sets. GBCI’s market visibility and credibility should expand GRESB’s reach. As it ensnares more respondents and increases its Survey sample size, data depth and robustness should similarly improve, helping drive more accurate measures of financial performance. Consequently, investors who fret they’re buying reports filled with dubious data should be assuaged.
As investor confidence in the Benchmark grows, Survey participants can take comfort that a more stable and sophisticated GRESB will translate to more accurate scores and rankings. More accurate scores will carry greater currency with investors, which means the time and expense of sustainability reporting will be worth it. Ultimately, as incentives and market signals for sustainability performance become clearer, companies will devote more resources to taking action on sustainability as opposed to merely disclosing it which, of course, is the whole point. It’s also the moment at which Survey respondents get greatest benefit from participating in GRESB.
While these outcomes are by no means assured—much hard work remains in front of the newly wed organizations—some practical impacts are highly likely:
- GBCI will bring enhanced rigor to GRESB’s methodology as well as its data collection and assurance processes.
- Greater rigor will enhance the value of GRESB Survey results.
- More robust scores and rankings mean investors will use them to scrutinize financial performance.
- Greater investor scrutiny will raise the stakes and lead to fiercer competition.
In other words, the bar will get higher.