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Three ways to improve your GRESB score

Commercial Real Estate By Madlen Jannaschk, Associate, Sustainability – 12 September 2022

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Madlen Jannaschk

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The first week of September was a milestone time on the property calendar: it was the week where property owners around the world received their initial report from the Global Real Estate Sustainability Benchmarking (GRESB) framework. For some, it may have been a welcome validation of all the effort they put into improving their corporate governance practices and the performance of their assets. For others, it may have revealed multiple areas such as corporate policies, engagement with stakeholders or asset environmental performance where they are out-ranked by their peers.

These preliminary scores however are not the end of the race. GRESB generally reports on calendar year data, so while the preliminary report in September does indicate where they are likely to sit in the peer-based rankings for their sector when those are announced publicly in October, everyone still has a three-month window to swiftly address some performance gaps to ensure the data reported next year reflects meaningful improvements.

“One of the benefits of the GRESB framework is it indicates where action will deliver tangible gains.”

The data and information reported to GRESB encompasses environmental performance, social values and governance dimensions – the fundamentals of ESG. That is one of the reasons GRESB rankings and GRESB scorecards and reporting are increasingly used as a due diligence lens by investors, financial organisations and major tenants. A property portfolio with a high GRESB ranking is likely to be well-managed, future-fit and support occupant wellbeing – all key indicators for entities that themselves has a strong commitment to ESG.

Often when people review their first preliminary report it can be overwhelming. The cold, hard facts can even seem a little brutal, especially if there had previously been little insight into asset performance and corporate ESG targets, tracking and management

The intent of this is to provide asset owners or portfolio managers with a clear, unfiltered picture of what needs to be fixed. The preliminary report with its indicator summaries and breakdowns compared to peer averages provides valuable insight into what needs to be achieved to improve overall performance for the following review.

With just under three months to gain ground, here are three areas we suggest will offer excellent rewards for effort.

1. Stakeholder engagement

To improve points in the management component, stakeholder engagement is an area where low scoring entities have frequently been historically weak but can enact positive initiatives quickly.

Stakeholder engagement means working with staff and tenants. Whether an entity is a small company that is sole occupant of a small building, or the property is a multistorey tower with multiple tenants, there are valuable points to be gained. Some engagement indicators for tenant engagement are scored by portfolio area – as in the number of square metres of net lettable area (NLA) covered - and others by the number of tenants approached. If working on the area-based indicators, it works well to start with the largest tenants and then work down the list to the smallest ones.

A stakeholder satisfaction survey (whether internal or external) is a crucial initial step that will address the engagement criteria and score points for next year’s reporting. A comprehensive survey should include health and wellbeing and questions around the satisfaction people have (or do not have) with their workplace (for staff) or the building (for tenants) and its amenities and functionality. The survey should also ask for improvement suggestions and be designed to allow tracking progress over time.

Responses and feedback from the Survey will also provide the asset owner a clear picture of what tenants and staff need and want and can contribute towards point improvements in both the Tenants & Community and Stakeholder Engagement section.

“Stakeholder engagement is an area where low scoring entities have frequently been historically weak but can enact positive initiatives quickly.”

2. Data Coverage

Data can achieve 19.5 points from a section worth 70 points, almost 30%! Of that 19.5 points, some are available for ‘data coverage’ across energy, water and waste data in the Performance Component. Data coverage means the number of square meters in a building that data is available for, and it includes base building and tenants.

It’s important here to ensure all base building data is available. If there are gaps, work with the facilities managers to obtain the data, for example through meter readings. Also, engage with tenants (see above) and ask for their data.

As a long-term plan, embedded networks and smart meters can help to gain automated whole building data, especially for properties with many smaller tenancies like shopping centres.

Gaining operational building data also gains points, whether that is through a comprehensive building audit across energy, water and waste, or a more long-term strategy involving installing strategic building controls, sensors and an analytics platform to capture and report on the data. The benefit of having data is that it also facilitates setting effective targets for improvement.

3. Building ratings

Gaining operational building ratings, like either a Green Star performance rating or multiple NABERS ratings gains 8.5 points on the scorecard. Green Star Performance ratings can be done in a time and cost-effective way by only rating energy and water credits to gain a low rating. For GRESB, it does not affect the score if the rating is low, it is the commitment involved in obtaining one that wins the points.

As a longer-term strategy, an energy audit is a logical place to start to improve both data coverage and like-for-like performance for GRESB as well as a Green Star Performance rating. A sound audit will also include information on opportunities for improving energy performance and the ballpark payback periods for those measures based on projected energy savings. So not only do you achieve GRESB points, you also garner insights for operational cost savings from reduced energy expenses.

For small tenancies or small buildings that are not obligated to get NABERS ratings under the Commercial Buildings Disclosure Act, an audit still delivers these benefits. Any building, even without obtaining a NABERS rating, can attain points by mapping out a pathway for energy upgrades and efficiency improvements and identifying the easy wins that can be implemented quickly.

The other purpose of the energy audit for any asset is the greenhouse gas emissions calculation that is part of the GRESB scorecard is based on energy use.

“The final thing to keep in mind with GRESB is it is not a set-and-forget ranking.”

Long term goals

The final thing to keep in mind with GRESB is it is not a set-and-forget ranking. Because it is based on comparison of peers within specific sectors, any participant who treads water in terms of asset performance may find that next year, they have slipped behind. So, it is a powerful approach to support continuous improvement of existing buildings, and also improvement of the way those buildings serve the people who work and live in them.

Another very important area where a win can be had within the final quarter of the year is in improving the management of a business or building. The Governance category can be addressed through using tools such as WELL, implementing transparent performance reporting or committing to a scheme such as the Science-Based Targets Initiative (SBTi) for carbon emissions reductions.

An organisation should also have a holistic long term ESG strategy and implementation plan that includes climate targets, climate risks and opportunities, targets around social aspects, engagement and supply chain. The strategy should be published, and progress be tracked transparently.

All the initiatives outlined above are framed with a view to improving a GRESB score. But beyond the reporting, anything an organisation does, whether involving their assets or with their management strategy and approach, should aim high for corporate social responsibility. A robust ESG strategy is a fundamental of a well-run business and should be seen through the lens of long-term value-adding and the happiness and wellbeing of staff.