Sustainability is moving up on the agenda in global real estate sector

The global real estate sector is intensifying its focus on sustainability: 88 percent of property companies and funds now dedicate resources to manage the sustainability performance of their assets. There is an increase in both the amount and the quality of sustainability reporting, explains Executive Director Nils Kok in a video interview on the 2012 GRESB Report, released today by the Global Real Estate Sustainability Benchmark (GRESB). It analyses sustainability data from almost 450 property companies and funds (36,000 properties) around the world, representing US$1,300 billion in global assets under management.

GRESB’s analysis of the survey data shows that 80 percent of respondents have an articulated vision or strategy on sustainability, and a senior manager had the ultimate responsibility for sustainability issues at 92 percent of the respondents. For 2012, the main policy focus is energy consumption (at 81 percent), which is a slight increase from 2011 when it was 75 percent. Importantly, 60 percent of the respondents now collect and report energy consumption data, as compared to just 34 percent in 2011. On a like-for-like basis, the greenhouse gas emissions of 171 property companies and funds decreased by 6 percent. Green building certification is becoming more prevalent in the sector, with 51 percent of the respondents including green building certificates in their portfolios.

Room for improvement

Apart from these promising trends, the GRESB data show there are several areas where property companies and funds can make substantial improvements. 40 percent of the property companies and funds (labeled “Green Starters” by GRESB) provide a limited disclosure of sustainability performance towards the investment community. The recording of energy data remains limited: more than half of the respondents collect energy data for less than 10 percent of their portfolio.

There is still limited progress in sustainability performance beyond energy efficiency. Engagement with tenants is implemented by half of the property companies and funds (86 percent of the respondents in Australia), whereas sustainability is integrated in contracts for external suppliers/service vendors by 55 percent of the respondents. Also, only a third of the respondents have started regularly conducting risk assessments on climate change risks. Regulatory and financial risks related to sustainability are conducted by over half of the respondents.

Informed discussions

“The data collected by GRESB provide a base for informed discussions between institutional owners of real estate and their property companies and investment managers regarding the sustainability of existing investments,” says Nils Kok, GRESB’s Executive Director. GRESB’s global membership includes more than 35 institutional real estate investors and investment managers, all major real estate industry associations, and a large number of consultants and product vendors. With investors pushing for more transparency, participation in the 2012 GRESB Survey increased by 30 percent as compared to 2011.

References

This article may be reproduced according to our terms of use with attribution (and link, if online) to fsinsight.org. To be cited in book reviews as: “Sustainability is moving up on the agenda in global real estate sector”, Nils Kok, fsinsight.org, September 6, 2012.