Sustainability is an integral part of the real estate industry, following an increasing demand for environmentally responsible building designs and operations. To meet this demand, real estate investors and operators need to be proactive in measuring and improving sustainability performance in their properties. This is where GRESB, the Global Real Estate Sustainability Benchmark, comes in. In this blog post, we provide a comprehensive guide on the GRESB RE Benchmark and the GRESB Development Benchmark, tying them to the owner-operator’s investment thesis. Keep reading to dive deep into what these benchmarks are about and the benefits they bring.
What is GRESB?
GRESB is an investor-driven organization that assesses the sustainability performance of real estate portfolios and global assets. Reporting to GRESB promotes transparency, knowledge sharing, and benchmarking to encourage sustainability best practices in the real estate industry. GRESB provides performance assessments, benchmarks, and data analytics to investors who seek to integrate ESG (Environmental, Social, and Governance) criteria into their investment decisions.
What is the GRESB RE Benchmark?
The GRESB RE Benchmark assesses the sustainability performance of listed and non-listed real estate portfolios. The RE benchmark evaluates a portfolio’s ESG strategies, management, and performance against peers in the industry. The measured ESG indicators include energy consumption, GHG emissions, water usage, waste generation, and social responsibility. The GRESB RE Benchmark also provides a comparison of a portfolio’s overall sustainability performance with the industry average, providing insight into a portfolio’s strengths and weaknesses.
What is the GRESB Development Benchmark?
The GRESB Development Benchmark assesses the sustainability performance of real estate development projects that are in various stages of completion. The benchmark evaluates a project’s planning, design, and construction stages, as well as its post-construction operations. Similar to the GRESB RE Benchmark, the GRESB Development Benchmark measures a project’s ESG indicators such as energy efficiency, water conservation, materials selection, and community engagement. It also provides a comparison of a project’s sustainability performance with industry peers.
Core/Core-Plus Buy-and-Hold vs. Value-Add
The GRESB RE Benchmark and the GRESB Development Benchmark have different implications for owner-operators depending on their investment thesis. For owner-operators pursuing core/core-plus buy-and-hold strategies, the GRESB RE Benchmark provides a valuable tool to assess their portfolios’ long-term sustainability performance. The GRESB Development Benchmark, on the other hand, may not be as relevant to core/core-plus buy-and-hold strategies, as they primarily focus on existing portfolios. This benchmark is part of the GRESB Real Estate Assessment, which serves as a global ESG standard for property companies and funds.
The Development Benchmark specifically focuses on new construction and major renovation projects. It helps investors understand the sustainability performance of these projects, including how they manage ESG risks and opportunities during the design, construction, and operation phases of a building’s life cycle.
The benchmark generates a score based on several factors, including energy use, emissions, water use, waste management, and social impact among others. This score allows investors to compare the ESG performance of different development projects and make informed investment decisions.
Owner-operators pursuing value-add strategies can use benchmarks as a tool to evaluate the sustainability of their acquisition targets. Value-add strategies aim to renovate and/or reposition assets to improve profitability. By using GRESB criteria, owner-operators can incorporate sustainability performance into their investment decision-making process.
Benefits of GRESB Benchmarking
GRESB benchmarking provides several benefits to real estate investors and operators. Firstly, it offers a framework for sustainability reporting and performance improvement, which helps to enhance the quality of the asset portfolio. Secondly, it provides investors with reliable and comparable data on ESG performance, enabling them to make informed investment decisions. Lastly, GRESB benchmarking allows investors to identify gaps in their sustainability performance and develop strategies to improve these areas.
Summary
GRESB has become an essential tool for real estate investors and operators worldwide, providing valuable insights into sustainable practices in the industry. The GRESB benchmarks – RE Benchmark and Development Benchmark – are designed to evaluate the sustainability performance of portfolios and development projects. By incorporating GRESB criteria into their investment decision-making process, owner-operators can drive sustainable practices and promote environmentally responsible real estate operations.