Blog

The evolution of GRESB – Getting to business value

Last week, Quinn & Partners’ Tony Pringle was in New York City for the annual GRESB results release. Here he reports on GRESB’s continued growth and explains how your company can use the survey to create business value.

 

Eight years in: GRESB continues to gain momentum

GRESB – the Global Real Estate Sustainability Benchmark – has increased 20% annually since it launched in 2010. In 2017, 850 companies and funds participated, representing 77,000 assets and $3.7 trillion in real estate value.

Although North America still lags behind Europe in number of participants, it has almost three times the asset value, demonstrating that the assessment is well established in Canada and the US.

In public markets, GRESB participants represent the majority of market value, covering 54% of North America, 70% in Europe, and 50% in Asia-Pacific. To fill in the gaps, GRESB now scores non-participating companies based on publicly disclosed Environmental, social and governance (ESG) information. Although these scores are not as robust, they give investor members a full market picture. Including disclosure from non-participants also allows GRESB to compete with other ESG ranking organizations. Since GRESB’s suite of assessments also includes real estate debt and infrastructure, it provides investors a one-stop-shop for ESG data in real asset portfolios.

GRESB’s continued relevance is driven in large part by investors. GRESB is supported by 66 investor members, representing $17 trillion in assets under management – more than double the value of last year’s GRESB members. In a survey of these investor members, 94% stated they use GRESB data in their investment process, and two thirds stated they either mandate or strongly encourage participation from all the funds they invest in.

But transparency still trumps performance for investors: Only 35% of investor members set performance targets for GRESB, and these targets relate to participation or year-on-year improvement.

 

“The [GRESB] process makes us better.” 

This was the opening statement from James Kennedy, Managing Director of Asset Management at JP Morgan Chase at last week’s results release. Kennedy’s view was echoed by the sector leaders, demonstrating that investors alone aren’t driving GRESB participation. Curiosity, competition and companies’ desire to find business value appear to be equally important.

This sentiment was echoed by the sector leaders, who provided examples of how they turn GRESB questions into business value. Prologis, who’s conversations around tenant engagement have led them to develop a customer sustainability advisory council, is a prime example of innovating GRESB questions into business value.

“Internal conversations initiated by GRESB participation have made Boston Properties a stronger, more purposeful organization.” – Ben Meyers, Manager of Sustainability at Boston Properties.

Checking off a box in the GRESB survey doesn’t deliver value – that comes from developing an approach and executing a program to address a material industry E, S or G topic. GRESB’s true value, then, lies in using the survey as a change management tool to spark internal discussions and action plans around topics such as sustainable development, health and wellness, climate risk and resilience and tenant and community engagement. These are issues that span across departments.

For example, conversations on industrial property data with one client led to collaboration between property management, leasing, communications and operations to engage industrial tenants and green the standard lease. As more companies strive for GRESB leadership and check off more boxes, differentiation comes with execution, not score.

 

The stages of GRESB – From GRESB NYC results presentations

Source: 2017 GRESB results

 

What’s next: The assessment continues to evolve

“The test is getting harder” according to GRESB’s head of North America, Dan Winters. The leadership pack is getting more crowded as companies advance their practices and the assessment will change more in 2018 as a result.

Questions on sustainability management will dig deeper to identify companies with more sophisticated sustainability governance. Some of the questions from the voluntary health and wellness assessment will be integrated into the main survey. And there will be greater emphasis on providing property level performance data.

 

Recommendations for success

Having supported 12 GRESB submissions in 2017, with 10 Green Stars and one country leader, Quinn & Partners has learned a few tricks to improve score results and identify business value.

  • Start early: Have a plan in place to get going as soon as the pre-survey is released in January
  • Provide time to prepare for reporting for improved results: Give properties a pre-emptive head’s up, especially third-party managed properties
  • Start conversations that bridge silos: Set up meetings with multiple departments for questions pertaining to risk assessments, tenant engagement, community engagement, and health and well-being
  • Don’t wait for September’s results to plan for next year’s improvement: Develop action plans during the GRESB process in April
  • For non-participants, review the survey and do a gap analysis: Consider participating or at least identify areas where you can create value for your customers and company

For more information, please contact Tony Pringle (tony@quinnandpartners.com).

Tony Pringle is a Co-founder and Partner at management consultancy Quinn & Partners. He is Quinn & Partners’ lead on Global Real Estate Sustainability Benchmark (GRESB) services for real estate, infrastructure and mortgage investors. He is also a member of multiple GRESB Technical Working Groups and supports GRESB training.

CANADIAN COMMERCIAL REAL ESTATE: THEORY, PRACTICE, STRATEGY

TDC Final Cover

Francisca Quinn was proud to join a group of leading sustainability and real estate professionals in contributing content to Chapter 5, Sustainability in Real Estate, of “Canadian Commercial Real Estate: Theory, Practice, Strategy”. The textbook was published in 2016 by the Real Property Association of Canada (REALPac) and written by its CEO, S. Michael Brooks. It is the first comprehensive literature on Canadian commercial real estate.

Chapter 5 provides a thorough overview of the evolving context of sustainability in commercial real estate. Specifically, the chapter explains material sustainability impacts of the real estate industry, green building certification and sustainability disclosure.

The textbook is currently used at Ryerson University in its real estate project capstone course.

QUINN & PARTNERS AND HOOPP JOINT RECIPIENTS OF THE 2017 REX GREEN AWARD

TDC Final Cover  TDC Final Cover

Quinn & Partners was proud to share the 2017 Real Estate Excellence (REX) Green Award of the Year with the Healthcare of Ontario Pension Plan (HOOPP) for advancing sustainability in real estate with the one-of-a-kind Leadership in Environmental Advancement Program (LEAP).

The REX Awards are presented by The Commercial Real Estate Development Association (NAIOP) and celebrate the achievements of the office, industrial, retail and mixed-use real estate industry in Toronto. The Green Award of the Year recognizes excellence, innovation and achievement in sustainable real estate projects, initiatives, processes or community contributions.

TDC Final Cover

QUINN & PARTNERS IS A B CORP AND A BEST FOR THE WORLD HONOUREE!

Quinn & Partner is a certified B Corporation. B Corps are certified by B Lab, a non-profit organization, to meet rigorous standards of social and environmental performance, accountability and transparency. We are joining more than 2,100 certified B Corps around the world and 150 in Canada that are using the power of business to solve environmental and social problems. The certification allows us to differentiate by “walking the talk” and communicates our commitment to responsible business practices to our clients, employees and the broader business community. Quinn & Partners currently has the fourth highest score of B Corp certified Canadian sustainability consulting.

 

In 2019 – for the third consecutive year – Quinn & Partners received the B Corp Best For The World: Overall, Changemakers and Workers honors. Being a Best For The World Honoree distinguishes us as we’re scoring within the top 10th percentile of almost 3,000 certified B Corps globally. This recognition demonstrates our continued commitment to using responsible business practices for positive change.

LEAP CONFERENCE AND AWARDS

TDC Final Cover

For the past three years, Quinn & Partners has supported the Healthcare of Ontario Pension Plan’s (HOOPP) Leadership in Environmental Advancement Program (LEAP). LEAP convenes senior representatives from HOOPP Real Estate’s investment and management partner companies and consists of a conference, innovation pitch and awards ceremony all centred around sustainability leadership.

After attending LEAP in 2015, executives from one of HOOPP’s management companies were motivated to commit to a sustainability strategy for the company which is in place today. In 2016, that company set energy reduction targets for all its properties – across all client mandates.

LEAP has been recognized by several prominent awards, including being named a Clean50 Top15 Project for 2016. LEAP also won the NAIOP REX Green Award of the Year for 2016.