Benchmarking

Viewpoint - 14/10/2019

GRESB The sustainability benchmark chosen by investors

An international benchmark that has gradually grown in prominence is the Global Real Estate Sustainability Benchmark (GRESB).

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Increasingly, organisations involved in real estate are searching for an external framework to help them understand and assess the sustainability of their properties. Sustainability has risen up the agenda for all businesses, from those investing in real estate right through to the tenants who will use the completed building.

An international benchmark that has gradually grown in prominence is the Global Real Estate Sustainability Benchmark (GRESB). Since it was established, GRESB has grown to encompass all aspects of environmental, social and governance performance. Now in its tenth year, GRESB’s benchmarks and data cover $4.5 trillion in real estate and infrastructure value and is used by more than 100 institutional investors when making real estate decisions. It is widely considered to be the highest benchmark for sustainability in real estate.

GRESB has widened its reach as investors increased their attention on how their money is being invested. Today, investors are not only asking landlords and developers to participate but are asking to know their score. Developing a strategy to improve that score is critical.

How GRESB works

GRESB was established in 2009 by a group of large pension funds keen to access comparable and reliable data on the performance of their investments. Information gathered reflects what investors consider to be important when assessing the sustainability of real asset investments and is analysed using GRESB’s own technology platform.

For real estate assets, the GRESB assessment evaluates performance against seven sustainability aspects using about 50 indicators. Aspects include management, environmental policies and disclosure, environment management systems and stakeholder engagement. Indicators range from building materials used and energy consumption to management procedures and employee wellbeing.

Once assessed, participants are rated against their peers and given a selection of actions they could follow to improve their score. Over time, this helps a business to build up a sustainability strategy as well as an opportunity to communicate this. The business received a rating from 1-5 stars, giving scope to improve. 

How LSH can help

LSH has been working with clients on their sustainability strategies for more than a decade. From developing a sustainability strategy to collecting data and supporting their submission, our team advises on all aspects of the assessment process. We have a great track record of improving GRESB scores year on year.

One of our larger clients, a £1.8 billion fund with a wide portfolio, was ranked fourth in its category this year, which is an excellent result. Overall, the fund’s score has increased by 103% since 2013 and it has outperformed its peer group in all seven benchmark aspects.

One of the best elements to the GRESB process is the ability to create a clear strategy for improvement. We will continue to work with this fund to improve their score year on year.

For more information about how LSH can help your business to achieve a GRESB score, or to improve on an existing score, get in touch.

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