GRESB (Global Real Estate Sustainability Benchmark)

The built environment is responsible for 37% of CO2 emissions globally. As climate risks escalate, growing awareness among investors and stakeholders is driving a continuous demand for sustainable business practices in this sector. The Global Real Estate Sustainability Benchmark (GRESB) plays a critical role through its framework of measurement and analysis of ESG data in real estate and infrastructure.

GRESB is a mission-driven and industry-led organization that provides actionable and transparent ESG data to financial markets. By collecting, validating, scoring, and benchmarking ESG data, GRESB provides business intelligence, engagement tools, and regulatory reporting solutions for investors, asset managers, and the broader industry. Its assessments enable asset owners to track and report their ESG performance, ensuring transparency and accountability to investors and stakeholders.

GRESB offers several assessments to evaluate ESG performance in real estate and infrastructure:
1. Real Estate Assessment: Evaluates ESG performance of real estate portfolios, including publicly listed property companies, private real estate funds, and direct real estate investments covering aspects such as energy efficiency, carbon emissions, water usage, etc.
2. Infrastructure Asset Assessment: Measures ESG performance at the individual infrastructure asset level. Applicable to assets like transport, energy, telecom, and social infrastructure.
3. Infrastructure Fund Assessment: Provides the basis for systematic reporting, objective scoring and peer benchmarking of the ESG management and performance of
infrastructure funds.
4. Infrastructure Development Asset Assessment: Tailored for infrastructure projects in the development or construction phase. Focuses on design, construction practices, supply chain management, etc.

GRESB’s Real Estate Assessment consists of three components:
Management: Measures strategy, leadership, policies, risk management, and stakeholder engagement.
Performance: Evaluates portfolio performance based on asset-level data, covering energy, GHG emissions, water, waste, etc.
Development: Assesses ESG factors in building design, construction, and renovation phases.

The Real Estate Assessment generates two benchmarks:
Real Estate (Standing investment) Benchmark – Evaluates management and performance aspects.
Development Benchmark – Assesses management and development aspects.

GRESB utilizes an ESG scoring system, providing a numerical metric from 0 to 100. The scoring methodology employs a weighted system: a 30% management component, common to both standing investments and development assessments. The remaining 70% varies depending on the assessment type. For standing investments, this 70% performance component assesses the operational ESG performance of existing assets. In the development assessment, the 70% development component evaluates ESG performance during project design, construction, and certification, etc.

In addition to the numerical ESG score, GRESB employs a 1 to 5-star rating system. A 5-star rating signifies exceptional ESG leadership, enabling investors and stakeholders to quickly benchmark a company’s standing against its peers.

A strong GRESB rating enhances investor confidence and helps real estate and infrastructure companies understand their sustainability performance. As ESG data tracking and benchmarking become crucial, companies should proactively measure their impact.