gresb | sustainability in real estate
TRANSCRIPT
SUSTAINABILITY IN REAL ESTATE: ADVANCING PORTFOLIOS USING GRESB
Stephanie Barr, August 2016
INSTITUTE FOR THE BUILT ENVIRONMENT
IBE is based at Colorado State University. We form
interdisciplinary teams of faculty, students and
off-campus professionals to take research to practice.
OUR MISSIONADVANCE THE
DEVELOPMENT OF HEALTHY, THRIVING
BUILT ENVIRONMENTS.
PROVIDE THOUGHT LEADERSHIP
OPTIMIZE TEAMS & PROJECT PERFORMANCE
DEVELOP LEADERS
WHAT WE DO
TONIGHT’S KEY POINTS1. What is the Global Real Estate Sustainability Benchmark and why
should you care?2. How does GRESB work, what does it measure, and who is it for?3. How does LEED NC & EBOM certification overlap with GRESB?4. How will GRESB impact the building design & construction industry?
5. Anything I missed?
2015 ESG RESEARCH FINDINGSGRESB.COM/INSIGHTS
Companies with superior ESG practices receive market benefitsAn updated literature review by Gordon Clark et al. indicated that 90% of empirical studies found that strong sustainability standards lower the cost of capital and in 80% of studies strong sustainability practices are positively correlated with superior stock price performance.
2015 ESG RESEARCH FINDINGSGRESB.COM/INSIGHTS
Sustainable property features lower default riskResearchers Xudong An and Gary Pivo documented that certain sustainability features, including energy efficiency, walkability, and proximity to fixed-rail transit, significantly reduce default risk in CMBS loans.
2015 ESG RESEARCH FINDINGSGRESB.COM/INSIGHTS
Consideration of ESG improves risk-adjusted returnsResearchers Natalie Trunow and Joshua Linder found empirical evidence that incorporating ESG factors into investment decisions improves the investment selection process and enhances risk-adjusted returns.
2015 ESG RESEARCH FINDINGSGRESB.COM/INSIGHTS
Higher GRESB ratings correlate to superior financial performanceA University of Cambridge study commissioned by the Carbon War Room and the Rocky Mountain Institute, found that, adjusted for risk, there is a significant link between portfolio sustainability indicators and REIT stock market performance.
A STRONG SUSTAINABILITY PROGRAM INDICATES A FIRM HAS THEIR HOUSE IN ORDER.
TRUST SOPHISTICATION
REPUTATION RETURNS
THE GLOBAL REAL ESTATE SUSTAINABILITY BENCHMARKFounded in 2009, GRESB is an industry-driven organization committed to assessing the ESG performance of real assets globally, including real estate portfolios and infrastructure assets. GRESB is headquartered in the Netherlands & is a subsidiary of GBCI.
BOARD
PURPOSEGRESB was built on behalf of large institutional investors to provide consistent, comparative, benchmarked data on ESG indicators.
Increased scrutiny demands benchmarking not green messaging.
“Investors are gathering together and demanding better sustainability data. They need standardized, comprehensive information that is consistent over time.”
– The Economist, 2014
WHO SHOULD PARTICIPATE?GRESB collects data at the portfolio level for: listed property companies, private property funds, developers, and real estate investors.
The GRESB Assessment is applicable across regions and property types.
HARRISON STREETReal Estate Capital
INVESTOR
DEVELOPER OWNER/ OPERATOR
THE SURVEY
SURVEY ASPECTS & WEIGHTING
SURVEY ASPECTS & WEIGHTING
Management & Policy
9% 9% 12%
30%Implementation & Measurement
9% 25% 25%11%
70%
CERTIFICATIONS & ENERGY AWARDSGreen building certifications are 11% of GRESB scoring.• Pressure from investors will drive
certifications on new developments
• Fund & asset managers will drive existing building improvements & energy ratings.
2015 SURVEY RESULTS
INTEPRETATION OF PLOTGreen StarScored above 50 in both axis.
Shows leadership and maturity of fund/entity.
INTEPRETATION OF PLOTGreen TalkerScored above 50 in Management & Policy, but low in Implementation & Measurement.
Shows the organization is sophisticated but hasn’t implemented measure yet. A good place to be for a new fund.
INTEPRETATION OF PLOT
“Green Starter”
Green StarterScored above 50 in Implementation & Measurement and low in Management & Policy.
Shows opportunity. The organization is filling out GRESB, that displays interest and possible commitment to improving.
INTEPRETATION OF PLOTGreen Walker
Honestly, they just got lucky.
Without the policy and management practices this implementation success will be difficult to sustain.
FINAL THOUGHTS• Capital is starting to drive sustainability efforts. This top down pressure is
exciting.• Research continues to tie sustainability to higher returns – this trend isn’t
going away.• GRESB allows for apples to apples, quantitative comparison of funds and
moves us beyond greenwashing.• GRESB’s integration into the USGBC Green Business Certification Institute
suite will support further refinement and growth of the program.• For savvy investors, particularly institutional capital, funds that complete
GRESB are seen as having competitive differentiation, while funds that don’t are viewed with risk and uncertainty.