GRESB Rankings Explained: Reporting for Sustainable Real Estate Investment
19 April, 2021
This guide to sustainable real estate investment reporting breaks down GRESB Assessments, GRESB rankings, the GRESB Green Star, and alternatives to GRESB.
Written by Rio ESG
What is GRESB?
The Global ESG Benchmark for Real Assets, known as GRESB, is an investor-led organisation that assesses and benchmarks the environmental, social, and governance (ESG) performance of real estate and infrastructure entities.
GRESB helps those working with real assets report on ESG, and helps investors and other stakeholders assess the ESG performance of developers, REITs, and other entities.
When it first launched in 2009, GRESB was called the Global Real Estate Sustainability Benchmark; it currently goes only by its acronym, as the organisation focuses on more than just real estate.
GRESB is the leading ESG framework for real assets, and its long-term vision is to help the real asset investment industry become a leader in sustainability.
What are GRESB Assessments?
GRESB Assessments are ESG questionnaires that property companies, developers, asset managers, and others complete on a yearly basis. The answers are self-reported, and then validated by GRESB.
Assessments cover a wide range of ESG-related topics, including management policies, environmental impact, and stakeholder engagement. Assessments are tailored to specific categories of real asset: Real estate, infrastructure, and infrastructure funds.
Participation is growing year over year, showing that investors are becoming more interested in real asset organisations that can demonstrate outstanding ESG performance.
How are GRESB Assessments scored?
To receive a score, an organisation must self-report data in either the GRESB Real Estate Assessment or a GRESB Infrastructure Assessment.
GRESB then validates the assessment and scores, ranks, and benchmarks the self-reported information.
The Assessment results in several key data points:
A GRESB Score, which is a percentage that measures an entity’s ESG performance in absolute terms.
A GRESB Rating, which ranks an entity compared to its competitors and peers. The rating is calculated relative to the global performance of all reporting entities: GRESB 5 Stars is the highest ranking, going to the top 20% of participants each year.
A summary analysis of performance, showing strengths and weaknesses in areas like leadership, policies, risk management, health and safety, greenhouse gas emissions, building certifications, and stakeholder engagement.
The GRESB Green Star, a rating system introduced in 2016, is given only to real estate assessment participants with a score higher than 50% of the points allocated to each relevant component. That is: Top performers in management and policy, as well as implementation and measurement.
Unlike the GRESB Rating, which is a relative rating, the GRESB Green Star is a rating on absolute performance.
Are there alternatives to GRESB?
There are many ESG frameworks that provide general guidance for entities across sectors. Some also break down their frameworks by specific sector.
For example, The Sustainability Accounting Standards Board (SASB) framework puts forth specific standards for eight industries in the infrastructure sector, including real estate.
However, GRESB remains the only framework designed specifically for real estate and infrastructure, and it’s considered the gold standard for entities in those industries.
For many organisations, it will make sense to use GRESB in conjunction with other popular frameworks to get a more complete picture of ESG performance.
Businesses can simplify managing multiple reporting frameworks using ESG software like Rio.
Rio acts as a central hub for your sustainability data, allowing you to track financial, compliance, and governance information at the transaction level. You can use Rio’s sustainability governance features like the legislation library, reporting and disclosure frameworks, and ESG policy tools to help you develop your standards and manage your progress.
Not sure which reporting frameworks are right for you? Download our ESG Framework Guide.