If you’re in the real estate and infrastructure sectors, you may already be participating in sustainability initiatives in your industry. Maybe your buildings have LEED accreditations, or your fleet vehicles have switched to greener energy sources.
The progress you have made is vital, however, the challenge in every industry is to report your sustainability efforts in a way that is meaningful and useful for investors. They need to see not only your progression over time, but also be able to benchmark you against other similar organizations within their portfolio.
Environmental Social and Governance (ESG) reporting is a tool investors use to track sustainability among portfolio companies. In the real estate and infrastructure sectors, one option is to use the Global Real Estate Sustainability Benchmark, or GRESB reporting program.
In this article, we explore how using a standard tailored specifically to real estate and infrastructure can simplify reporting, and explain how to reduce the workload for your sustainability team.
Why Choose GRESB?
From the outset, selecting an ESG standard designed specifically for your industry helps reduce your reporting burden. Rather than sifting through each element of an environmental, social, and governance standard to determine which issues are material to your business – and to your investors – selecting an industry-specific standard ensures that work has largely been done for you.
For the real estate and infrastructure sectors, the standard of choice is GRESB. By providing an established and verified framework for ESG reporting, it allows reporting organizations to standardize data collection and, more importantly, to benchmark their performance against the industry.
In fact, in 2023, over 2,000 real estate entities representing US $7.2 trillion were reporting their ESG data through GRESB.
The benefits for reporting companies is significant, not least because they have access to a number of features to help them better understand their ESG performance. These include:
- A scorecard so you can compare your efforts and success to that of your peers
- A benchmark report to better understand the industry
- A portfolio analysis tool so you can slice and dice data and compare across geographic regions
- A data exporter so you can incorporate it into other modeling and reports
What’s more, GRESB reporting also integrates with other ESG standards and frameworks, so you can streamline your efforts if you’re required to report to more than one program. For example GRESB is currently working on integration solutions with the SFDR in the EU, and with the TCFD in the US.
What is GRESB Reporting?
In order to generate its valuable benchmarks, GRESB conducts three assessments:
1. Real Estate Assessment
2. Infrastructure Fund Assessment
3. Infrastructure Asset Assessment
Let’s dive in and take a look at these assessments in a little more detail.
Real Estate Assessment
There are three components to the real estate assessment focusing on Management, Performance and Development.
The Management Component considers the organizational level and measures elements like strategy and leadership. It requires documentation on policies and processes, as well as details on risk management and stakeholder engagement.
The Performance Component looks across the organization’s portfolio performance. This highly quantifiable component looks at environmental considerations like energy consumption, GHG emissions, water consumption and waste.
The Development Component considers ESG risks and opportunities during design, construction and renovation. As such, it may not be applicable to every location each year, but can significantly impact performance from one year to the next, depending on how many projects are undertaken.
Infrastructure Asset Assessment
The Infrastructure Asset Assessment is available to both single and multi-asset operators. If your assets are part of a larger infrastructure fund, using the Infrastructure Asset Assessment is one way you can help to meet the 25% minimum participation target for the Performance Component of the Infrastructure Fund Assessment.
The Infrastructure Asset Assessment measures ESG performance for a wide variety of infrastructure sectors, and weights considerations differently based on your sector. Applicable sectors include:
- Data Infrastructure
- Energy & Water Resources
- Environmental Services
- Network Utilities
- Power generation (excluding Renewables)
- Renewable Power
- Social Infrastructure
- Transport
Like the Infrastructure Fund Assessment, the Infrastructure Asset Assessment includes two components: Management and Performance.
As with the other assessments, the Management Component measures strategy and leadership management, policies and processes, risk management and stakeholder engagement. It assesses ESG performance at the organizational level.
Designed for infrastructure companies with operational assets, the Performance Component measures ESG activities at the asset level. In total, the Performance Component comprises twelve aspects including:
- Implementation
- Output & Impact
- Health & Safety
- Energy
- Greenhouse Gas Emissions
- Air Pollution
- Water
- Waste
- Biodiversity & Habitat
- Employees
- Customers
- Certifications & Awards
When Are GRESB Reports Due?
Regardless of which assessment your organization or fund is reporting to, reports are due each year in the spring, with the reporting window open between April 1 and July 1. Once data is submitted, it undergoes a multi-level validation process before it is scored and benchmarked.
If you are able to submit your report before June 1, you can request a Response Check from GRESB. This is a high-level review of your report to look for errors and ensure the submission is complete. While organizations are not required to complete a Response Check prior to submitting their final report, this can greatly reduce mistakes and wasted time filing updates later, while increasing overall data quality.
How To Make ESG Reporting Work for You
If you need to report to GRESB or other ESG frameworks this year, you’re already on the clock. Preparing a baseline ESG report can be a time consuming task, not to mention the fact that once you’ve provided data to GRESB and investors once, the expectation is you’ll provide ongoing updates for the benchmark each year.
It can be a steep learning curve. You’ll need to gather information at both the organizational and asset level. This means pulling data from leadership, HR, purchasing, operations and maintenance, and funneling through a central sustainability team to build the report. It’s not uncommon for this team to also have other responsibilities, so they can’t spend all their time reading up on the latest ESG standards and chasing after information requests.
A software solution like the AMCS Sustainability Platform can help make ESG reporting work for you. It’s designed to comply with the standard requirements of the GRESB assessments. It also uses a cloud-based data collection platform, so each team can enter data directly, rather than information getting lost in a tangle of spreadsheets and emails. Our platform will even integrate directly with utilities and internet-of-things connected equipment to pull the data it needs.
By using a platform such as this, you’ll be able to streamline and customize your reports to share with programs like GRESB, as well as other investors and stakeholders. You’ll also be able to update data each year, or as you need to, ensuring comparable results to track your progress. If you have ESG deadlines looming, or if you’ve already started building your report and need help tackling the workload, AMCS can help. Reach out to one of our advisors today to get started.