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What it Takes to Achieve Investment Grade ESG Data

ESG reporting has evolved quickly over a short period of time. It has gained a foothold in the CRE industry over the last few years, and we have only recently begun to distinguish ESG (environmental, social, governance) from sustainability

Change has been rapid: Now, the discussion has pivoted to data quality. Stakeholders are no longer asking “Do you have ESG data available?” but “How did you collect it?” and moreover, “Why should we trust it?” For ESG reporters who still record and track information manually, these questions become increasingly difficult to answer. Unless you have a technology solution in place to automate data collection, data integrity is difficult to verify, and human error is likely to creep in.

ESG data serves as the foundation for any sustainability program, providing a transparent and quantifiable way for companies to measure and communicate their progress toward carbon reduction, diversity, and other overarching goals. Firms are increasingly expected to report ESG performance to benchmarks like GRESB. Stakeholders also underscore the importance of ESG data: Investors rely on it to make informed decisions about which firms to fund, and discerning tenants with their own sustainability goals use this information to decide which buildings to occupy. 

No matter how the data is being used, one thing is true in all cases: Quality is everything. Simply reporting whatever ESG data a firm has on hand is no longer sufficient. Companies need to be transparent and intentional about the integrity and consistency of their data. 

So what does it take for ESG data to be considered investment grade? The criteria is notably similar to the principles that guide credit ratings agencies: Investment grade data must be timely, accurate, complete, and auditable

Read: How to Get Investment Grade Data

ESG data that meets all of these requirements is difficult to collect manually. For example, tracking a building’s energy consumption requires pulling from utility bills on a monthly basis. And energy is rarely a single line item, as CRE assets can be powered by a number of sources including renewable ones like solar, hydro, and wind. 

Then there’s the multiplier effect: Real estate companies need to collect this data from hundreds or even thousands of buildings across an entire portfolio. Pulling information from monthly statements across multiple properties, large portfolios, and separately managed real estate funds makes the task of getting investment grade data even more complex. 

Whether you’re a multinational real estate company or a mid-level firm with room to grow, collecting disparate data from a variety of sources and ensuring quality across your entire portfolio proves next to impossible without the help of technology. Having a single platform to automatically pull data in from disparate sources, flag errors and inconsistencies, and offer real insights into your ESG performance not only makes life easier—it will help you deliver the level of quality that your stakeholders expect. 

To gain a deeper understanding of investment grade data and how your company can achieve it, check out our latest eBook, Striving for Investment Grade Data [no download required]. 

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