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GRESB Debt Survey Shines Light On Sustainability Practices Of Real Estate Lenders

The real estate industry added another letter to the Alphabet Soup of sustainability reporting standards with the introduction of GRESB’s Debt Survey. The Global Real Estate Sustainability Benchmark better known as GRESB announced the new survey last month. It’s goal: capture the influence and impact of debt in the commercial real estate market (lending, finance, credit) and pair this information with that of its survey of real estate owners to complete the missing piece of the sustainability puzzle.

GRESB debt survey pyramid.
The Real Estate Investment Pyramid ©GRESB

The Survey is designed to evaluate and benchmark, but also to guide, the sustainability engagement and performance of real estate lenders. The deadline for the GRESB Debt Survey is August 21, 2015 – leaving three more weeks for lenders to show investors the actions they’ve taken on ESG issues thus far.

Who’s it for? Real estate lenders.

Is the information disclosed public or private? 1st year is confidential. Fund investors can view data after 1st year.

What’s the Survey ask? Portfolio-level qualitative sustainability KPIs and a small amount of quantitative performance data.

How’s it scored? Scoring is opaque, but respondents are benchmarked against “peer groups”.

Why should I participate? Show investors how your lending practices drive sustainability performance and increase risk-adjusted returns.

Effort required relative to GRESB’s traditional investor survey? Much less. Measurabl users estimate about 2 hours overall.

Sara Anzinger, GRESB’s debt expert, points out that “managing downside risk is critical to delivering a risk-adjusted return because sustainability risks can adversely impact collateral value and a borrower’s ability to fully repay their obligations.” But you don’t have to take GRESB’s word for it, a recent study conducted on 80,000 CMBS loans found 20-30% lower default rates associated with ENERGY STAR labeled and LEED certified buildings.

GRESB debt survey process
The GRESB Debt Survey process.

Christopher Botten of the UK based Better Buildings Partnership adds a European investor’s perspective by breaking down the debt Survey to six aspects of sustainability that drive investor decisions. The first three aspects are fairly generic and aimed at the lender’s organization overall. The last three aspects are tailored specifically to the debt fund:

1. Management: Is sustainability integrated into the lender’s overall business strategy and decision making process?

2. Policy & Disclosure: Do sustainability policies exist and are they transparent?

3. Risks: Are risks related to corruption and bribery assessed?

4. Due Diligence: Is sustainability considered part of the lending process?

5. Monitoring: Are the sustainability risks of the existing loan book continually monitored?

6. Opportunities: Did the lender integrate any sustainability policies that go beyond risk management?

Still not sure if the GRESB debt survey could impact you?  We are including a free needs analysis for the GRESB debt survey if you claim your free account with Measurabl. Simply click the Get Started button below to start the conversation with our expert team.