The GRESB deadline has finally passed, but what does it really mean for the CRE industry?

The deadline for the Global Real Estate Sustainability Benchmark (GRESB) is finally over. This was quite possibly one of the most time-consuming benchmarks that property companies have had to advise on and its use is growing all the time. But is it really helping?

GRESB is the extra financial rating project which first came off the ground as a university research project to define environment and social governance for the property industry. It represents an alternative way to measure how green a developer’s portfolio is in an attempt to combat climate change. But what’s particularly interesting about this benchmark is that many organisations that outperform others under GRESB, underperform when looking at the environmental performance of individual assets.

Who is using GRESB?

Since its inception, the number of GRESB members has grown from a forward-thinking group of a dozen property companies to more than 850 organisations, representing more than $3.7bn of property assets globally.

GRESB has been a huge catalyst for the uptake of responsible investment measures in the commercial property sector and has been deployed far and wide in a surprisingly short period of time. Over the last three years property asset management funds were required to complete the GRESB survey which involves gathering a huge amount of data around sustainable performance. 

And while a high number of asset managers are proud of achieving a high GRESB score, most of them tell us that it does not directly improve the performance of assets. GRESB is a good checklist of practice measures around responsible property investment and management, but it doesn’t necessarily provide any indication of how green an asset is.

How to enhance GRESB data management?

GRESB management takes a lot of time and for most organisations that have slick performance monitoring programmes it is relatively easy to pull together. For others, however, data is collated at the very last minute, and the quality of the information is often inaccurate and includes estimates. This jeopardises the overall quality of the scheme, as the benchmarking exercise can only work if recoverable and robust data is used by everyone.

Installing smart meters is the backbone of robust energy management systems. The technology is reliable, affordable and yields to significant savings. And the ease of installation does prompt the question, why are asset managers not choosing to install smart meters in all their properties?

It would allow them to retrieve all the energy data across their portfolios in 30 seconds and save a huge amount of time. If CAPEX is an issue, then the organisation should consider the savings related to the identification of anomalies and the time spent by sustainability advisers in trying to retrieve GRESB data.

The value of GRESB for the commercial real estate

GRESB proved to be a significant accelerator for the implementation of responsible management tools within asset management firms but should it provide a tool that will measure the performance of assets to better respond to occupiers’ needs?

Submitting a survey costs a lot of money and time to get the information ready. For some companies this amount could be sufficient to invest in renewable energy, electric car charging points, LED lighting and other tangible environmental improvements to attract better tenants, increase rental income, reduce operating costs and save the planet at the same time.

What’s next?

While GRESB started as a collaborative free of charge initiative, the costs related to GRESB have recently increased. The data submitted to GRESB could benefit the entire industry and really should be widely accessible to every organisation that contributes towards it.

The real estate sector consumes 40% of the world’s energy. GRESB has certainly contributed towards a more sustainable CRE sector and will have an even greater role to play in the future should it evolve in accordance to market requirements. But this next step will very much depend on the route the organisation wishes to take.

Etienne Cadestin managing director at Longevity Partners