What is GRESB (the Global Real Estate Sustainability Benchmark)?

Posted in on Feb 28 2023, by Hollie McHughHollie McHugh

What is GRESB?

GRESB (Global Real Estate Sustainability Benchmark) is an international sustainability assessment organisation that is transforming the way that the real estate and infrastructure sectors evaluate, compare and improve the environmental, social and governance (ESG) performance of their investments - regardless of the property type. It's perhaps the most popular of all ESG rating systems among infrastructure companies, infrastructure funds, real estate funds, and private property funds that want to invest in sustainable buildings.

GRESB provides a comprehensive framework for assessing and measuring the ESG performance of real estate and infrastructure portfolios and provides investors with the data and benchmarking tools they need to make better-informed investment decisions.

Why is GRESB important?

GRESB is significant because it offers a thorough and uniform global standard for evaluating and monitoring the sustainability performance of real estate assets. It makes it possible for owners, managers, and investors to gauge, comprehend, and enhance their portfolios' sustainability performance. With more than 1,000 investors and $5 trillion in assets under management, GRESB is acknowledged as the most popular sustainability benchmark for the real estate industry.

The benefits of having GRESB are numerous. GRESB helps investors assess the ESG strategy and environmental performance of their portfolios and infrastructure and identify areas of improvement. Through the GRESB assessment, investors can identify risks, opportunities and areas of improvement, and can compare their performance to peers.

What are the GRESB?

Real estate investors and asset managers, as well as real estate developers, can compare the environmental, social, and governance (ESG) performance of their portfolio assets using the GRESB, which are sustainability performance measures and benchmarking tools. The benchmarks offer an open and comparable evaluation of ESG performance across various real estate asset classes and geographical regions.

Who is GRESB applicable to?

GRESB is relevant to commercial real estate and infrastructure portfolios, including listed and non-listed funds, real estate investment trusts, private equity, and direct investments that want to have net zero buildings. GRESB assessment is the most widely used sustainability reporting and assessment tool in the real estate and infrastructure industry and is used by more than 900 institutional investors representing over $22 trillion in assets.

The GRESB Evaluation

The Assessment Consists of Two Parts

1.  The GRESB Real Estate Assessment

This is a survey-based assessment designed to measure the sustainability performance of a real estate company or portfolio. The survey covers the ESG topics that are most relevant to the real estate sector such as energy consumption, water consumption, waste management, occupational health and safety, and tenant engagement. The survey is completed by the portfolio or company and is then evaluated by GRESB.

2. GRESB Real Estate Benchmark

This is a comprehensive benchmarking tool that allows real estate investors to compare their performance against the real estate industry, region, and peers. The Benchmark is based on the results from the GRESB Real Estate Assessment and provides investors with an overview of their sustainability efforts and performance, and insights into areas for improvement.

When is the GRESB Evaluation Performed?

This is an annual assessment. The real estate assessment cycle for GRESB runs from 1 April to 1 July. Assessment submissions outside of these dates won't be allowed because this cycle is fixed. On September 1, preliminary results are made accessible to participants. There is subsequently a month-long review period during which participants can ask GRESB for a review. On October 1st, the final results are released.

What is a GRESB Green Star?

Property companies that receive a score of more than 50% on the pertinent assessment criteria from three categories are awarded a GRESB green star. The three components are the management component, the performance component, and the development component.

The management component

This component reviews the leadership practices, sustainability initiatives, policies, risk management, and stakeholder engagement activities undertaken.

The performance component

The performance component measures the ESG performance from asset-level data. Analytical tools, such as CoolPlanetOS, can assist investment managers in creating benchmark reports, setting measurable goals, and providing an accurate report of both the environmental and the financial performance of decarbonisation projects in buildings.

The development component

This component is focused on the design and renovation of buildings undertaken by the real estate company to lower GHG emissions.

Green building certifications are based on absolute performance and are only available to real estate participants—not infrastructure.

Looking for ways to increase your GRESB rating, decarbonize buildings and generally lower your carbon emissions? Watch our masterclass to learn how.