GRESB’s ESG performance indicator gets investor backing

The Amsterdam-based benchmarking organization’s latest evaluation, which has received support from APG and PGGM, is intended for real estate firms that have begun to adopt sustainability practices.

GRESB, the global benchmark for real assets, has launched an ESG evaluation for real estate funds and companies that are beginning to incorporate sustainability practices into their operations.

GRESB Real Estate Pre-Assessment is a standalone test for firms with new mandates that are immediately seeking strong ESG performance and those with existing real estate vehicles that have begun to embrace sustainability.

Increasing numbers of investors are directing real estate capital towards funds and companies that are proactively measuring and managing ESG risks and opportunities. The trend has fuelled demand for ESG reporting across an ever-widening set of through-cycle real estate investment strategies.

The concept has been designed to address this demand, GRESB said, by providing a preliminary ESG assessment comprising a subset of indicators from the full GRESB Real Estate Assessment.

Participants report to GRESB on this subset of indicators – which focus on management and policy aspects and exclude property level information – and are scored on each indicator. The pre-assessment consequently helps to gauge performance for the selected indicators. The data is validated, scored and benchmarked using the globally recognized GRESB methodology.

The pre-assessment also requires a lower commitment of time and resources and can be used as a stepping stone for participation in the organization’s full assessment. Some of the private equity real estate industry’s most well-known investors have praised the concept. Mathieu Elshout, senior director of European private real estate at PGGM, said the Dutch pension fund requires all non-listed property investments to participate in the GRESB Real Estate Assessment, demonstrating the importance of ESG performance for all its investments.

“The GRESB Pre-assessment serves a valuable role in our due diligence process for future investments as well as for investments in markets that are at an early stage of the ESG movement,” Elshout added.

Meanwhile, Patrick Kanters, managing director of global real estate and infrastructure at APG Asset Management, said: “The pre-assessments give us the required ESG performance insight of our investments, and with this newly launched concept, we get the opportunity to receive the necessary information ahead of the decision-making related to new private real estate investments.”

The pre-assessment can be performed at any time between October 23 and April 1 next year. Once submitted, the data is validated, scored and benchmarked using the globally-recognized GRESB.

“The ESG landscape has shifted considerably, and we’re constantly working to help real estate fund managers and property companies adjust to the new market realities and to meet the expectations from investors,” a spokesman for GRESB said.

“The pre-assessment is simply the next crucial step on the road to helping all real estate companies and funds to obtain an ESG evaluation against a global standard in every stage of the investment cycle,” he added.