GRESB Australia: The Investor's Guide to Future-Proofing Real Estate

In 2023, GRESB assessed over 2,000 property companies, REITs, and developers with a combined total of US$7.2 Trillion in Gross Asset Value (GAV). Just a decade earlier, these figures stood at 56 companies and $2.1 trillion in GAV.

What does this near-four-fold increase in GAV mean?

It depicts a positive and exponential shift towards Environmental & Social Governance (ESG) amongst many organisations. More importantly, it underscores the critical need for a standardised way to benchmark assets and portfolios in order to compare and contrast their performance. GRESB reporting is now that industry tool of choice. 

While an exact return on investment for GRESB reporting is difficult to paint due to the differing amounts of investment from client to client, Kieran Seal, CBRE’s ESG Consultant, remains adamant of its business case strengths. 

“Having experienced cases where fund managers and their portfolios are required to submit and demonstrate improvements in GRESB by their investors, we can certainly expect there to be a significant ROI on reporting to GRESB, given the expected amount of investment involved and the relatively small reporting fees for GRESB.” 

What is GRESB? 

Global Real Estate Sustainability Benchmark (GRESB) was first introduced in 2009 at a time when ESG was primarily a box-ticking exercise. Sustainability was rarely a critical consideration when it came to investing and benchmarking, but public and institutional attitudes have shifted dramatically.  

Today’s GRESB methodology is a self-reporting exercise combining both a qualitative questionnaire and a detailed asset-level spreadsheet covering an expansive range of ESG topics.  

It assesses and distils complex information into a clear set of metrics and graphics, embodied by its simple star rating system which positions portfolios and assets on a scale of 1 to 5 stars based on the quintile position in the GRESB universe.  

It is this simplicity and effective communication of performance which has drawn more investors to GRESB. As a result, it is now common for investors to place robust targets surrounding GRESB performance for asset managers, which in turn is helping to drive increased performance in the wider built environment.  

Benefits of GRESB 

GRESB is highly regarded for its granular peer-group comparisons, according to Seal.   

“These comparisons can provide valuable insight into how portfolios and assets are performing relative to similar portfolios based on location, listed status, investment style and property type. They are also crucial for encouraging the continual improvement of a portfolio’s ESG performance. Fundamentally, the GRESB methodology emphasises that today’s complacency simply isn’t enough, which is the right mindset to have when tackling issues around the climate crisis.” 

GRESB provides organisations with the following benefits: 

• Effective benchmarking: GRESB provides a platform to assess the sustainability performance of real estate investments, giving participants insights into how they compare with their peers and industry standards. 
• Building investor confidence: GRESB allows companies to showcase their sustainability accomplishments and commitments to investors via a universally recognised platform. This type of communication can help reinforce investor confidence and increase ESG-focused investments. 
• Improved performance: GRESB analysis and evaluation allows companies to identify potential improvements in their sustainability strategy and practices. This feedback can assist organisations with enhancing their own ESG performance in the future. 
• Improved marketability: GRESB can make good business sense. Reaching a high GRESB rating or showing annual improvements can help companies boost their profile as a sustainability leader. This status can provide a competitive edge and further improve stakeholder engagement. 
• Globally aligned reporting: GRESB reporting is aligned with international sustainability models to ensure that organisations can effectively comprehend the complex landscape of ESG regulations and voluntary reporting standards.  

At CBRE, ESG specialists like Seal support clients by preparing responses that identify crucial gaps in their qualitative response. These can cover areas such as policy, risk management processes and stakeholder engagement while also supporting them with documentation review and policy drafting.  

“Beyond the qualitative elements, we support clients with asset-level enhancements via both audits and green building certifications. Our team collectively possess a range of qualifications from NABERS to Green Star and WELL accredited professionals. 

“This diverse talent in the space allows us to provide insights into a building’s performance across energy, water, waste and other critical sustainability concepts. It also allows us to recommend pathways to improvement for each stage of an asset’s lifecycle.  

“This not only has a positive impact on multiple indicators in the GRESB assessment, but more importantly helps drive decarbonisation and improved performance at the asset level.”  

Demonstrating CBRE’s real-time knowledge on GRESB is the team’s discovery of a recurring theme around the latest assessments. 

“Data coverage across portfolios has become a key focal point for our clients. This is not only due to its weighting in the GRESB assessment, but also its importance to other exercises including mandatory and voluntary disclosures and reporting of progress against net zero targets,” explains Seal.  

“It shows that having a complete and accurate understanding of a portfolio’s carbon impact is the priority first step in developing decarbonisation action plans. This trend is driving the increase in coverage of both landlord and tenant data which coincides with the Pacific rollout of ESG data platform, Deepki - a tool designed to aid landlords with identifying gaps and anomalies in their collected environmental data.” 

GRESB accredited professionals leading the way 

GRESB’s annual real estate assessment found that Australian companies dominated the global and regional sectors across Oceania. Oceania was also named the fastest growing region in the global ESG and infrastructure benchmarking survey while ranking first for having net-zero policies in place. It’s a sign that local GRESB participants are more dedicated and aware of data quality, showing their commitment to demonstrating transparency and sustainability across their assets and portfolios.  

CBRE is proud to be aligned with this movement alongside the announcement of Kieran Seal as the first GRESB Accredited Professional in APAC. The program sets a high standard for individuals skilled in collecting, managing, and reporting on ESG data within the GRESB Real Estate Assessment. Its framework is meticulously crafted to elevate industry standards and foster sustainable practices in the real assets sector. 

“I’m looking forward to utilising these credentials to continue supporting our clients in APAC with their ESG benchmarking and reporting initiatives, but also in developing and designing sustainable buildings which promote the health and wellbeing of their occupants and the wider community,” says Seal.  

“At CBRE, we are using our past GRESB experience to help clients maximise their potential, identify opportunities for asset level improvement and mitigating risks, whilst simultaneously considering their business drivers and how GRESB integrates with their overall sustainability strategy to achieve desired reporting outcomes. By taking this pragmatic approach, our clients can facilitate future investments and promote resilience in their assets to help shape a more sustainable future.”