Canadian participation in the GRESB global assessment and benchmark for the ESG (environmental, social, governance) performance of commercial real estate portfolios grew in step with worldwide trends in 2024. This year, 85 Canadian real estate entities reported, up from 80 in 2023 — joining 2,138 other participants from 79 other countries.
The newly released 2024 results draw from 208,000 individual assets, collectively valued at approximately USD $7 trillion. This year’s global average score — derived from a series of variously weighted metrics for asset-level performance and portfolio-level policies — remains unchanged from last year, at 78 out of a possible 100 points. (Further breaking down to a performance score of 79 per cent and a management score of 91 per cent.) Yet, that’s nevertheless viewed as progress given a 23 per cent year-over-year increase in the number of assets under consideration and the introduction of new reporting criteria and benchmarking methodologies, reflective of the GRESB mandate to push continuous improvement.
Among key changes, reporting entities were asked to supply more details about how they are responding to physical and transitional climate risk and a new formula was introduced for allocating the up to 8.5 points available for building certifications. The latter introduced a discount factor for each year out from the certification date, resulting in a lower average score for that indicator than in 2023.
“Across the board, entities generally lost some points. This occurred across all regions, although it was more pronounced in some than others,” Chris Pyke, chief innovation officer with GRESB, noted earlier this week during a webinar in conjunction with release of the 2024 results.
Entities earning a five-star rating, representing the top 20 per cent of participants, ranged from scores of 97.09 to 87.58. This year, the average score at the five-star level was 90.38. GRESB four-star achievers, in the next quintile down, averaged 84.53 points, while the average three-star rating closely approximated the global median, at 78.75 points.
“We want to celebrate another year when real estate and infrastructure participants continued to raise the bar for management and real-world performance despite economic and, in some cases, political headwinds,” Pyke asserted. “Participants set more ambitious performance targets. They increased data coverage. They improved operational efficiency. They made greater use of renewable energy and demonstrated more comprehensive efforts to manage physical and transitional risk.”
Regionally, the Australia/New Zealand combo continues to outperform its global peers — translating into an average management score of 96 per cent and an average performance score of 84 per cent. Asia, the Americas and Europe follow respectively from there. The 32 reporting entities with globally diversified portfolios also fall roughly in the same range as the global, Americas and European averages, behind Asia and Australia/New Zealand.
The largest block of participating portfolios is located in Europe, equating to about 48 per cent of reporting entities. The Americas offer up the next largest contingent with 588 or about 26 per cent of reporting entities in 2024, up from 555 participants in 2023. The largest share of those — 456 — are located in the United States.
The Canadian average is not parsed out of GRESB’s publicly released results for the Americas. However, speaking at a Toronto event just a day ahead of the official announcement, GRESB senior director Dan Winters expressed confidence that Canada would emerge as the hemisphere’s top performer for the 10th consecutive year. In doing so, Canadian participants would collectively surpass average scores of 91 per cent for management and 84 per cent for performance.
This year marks GRESB’s 15th anniversary, and Canada boasts some long-time participants in addition to the recent surge of newbies that have contributed to its 157 per cent gain in reporting entities thus far this decade. “We were started in 2009 by a number of major pension plans, with tremendous support from the Canadians along the way,” Winters affirmed.
