Energy efficiency will gain standing in the 2025 GRESB assessment when the global benchmark for ESG performance of commercial real estate portfolios introduces revised scoring for its energy performance metric. The move to assign energy efficiency scores to individual assets within benchmark participants’ portfolios reflects the GRESB mandates to push continuous ESG improvement and accelerate decarbonization, and is made possible through its increasingly sophisticated database.
“The idea of rating energy efficiency is not necessarily all that novel. However, given the geographic scope, the diversity of property types, the types of people we’re talking to, we have never overtly done it before,” Chris Pyke, GRESB’s chief innovation officer, advised during a recent webinar sponsored by the Open Standards Consortium for Real Estate (OSCRE). “We have made some strategic decisions to do that using our own data as a benchmark because of the lack of globally comparable things that we could use. We will demonstrate some methods this fall and we will incorporate them into next year’s standards.”
For now, GRESB number-crunchers are working to produce the 2024 results slated to be released in the fall. Participation grew again in this 15th year of the benchmark with more than 2,200 real estate entities — encompassing roughly 210,000 individual assets worldwide — submitting information to meet the July 1 deadline.
This is the fifth year that the assessment exercise has required asset-level information for operational performance metrics related to energy, greenhouse gas (GHG) emissions, water and waste, which underpins the capability for the pending energy-efficiency rating. Also speaking in the webinar, GRESB’s director of strategic initiatives, Dan Winters, suggested the focus on asset-level reporting galvanized industry action, and has done so with expedient timing given the rise of market-driven and mandated disclosure requirements thus far this decade.
“In 2018, we announced that asset-level data would be required in 2020, and that really moved the market forward on rolling up the sleeves and being able to access this data, and to look at it and say: Is it timely? Is it quality? Where does it come from?” he maintained.
As it relates to energy performance, GRESB participants have been uploading information related to each building’s consumption, metering, year-over-year changes and quotient of renewable supply. At the macro level, energy performance is worth up to 14 points of a 100-point total score. (GHG and water are each worth up to seven points, while waste maxes out at four points.)
“We have rated improvement; we have rated data coverage; we have collected intensity metrics and those types of things, but we have never explicitly rated energy efficiency at the asset level,” Pyke said. “That is going to drive an ever-greater priority on operational energy efficiency within the benchmark. Operational energy performance, operational energy data and its interpretation are really coming to the forefront next year.”
Looking to the future, he expects there will be reporting requirements related to electricity grid-integration and refrigerants once they can be tied to measurable data points. It’s part of the larger decarbonization agenda, which has spurred the formation of a net-zero working group (including four Canadian representatives in the 23-member group) within the GRESB Foundation.
Collaborating for platform-agnostic data exchange
It’s also in sync with what’s characterized as a “perennial effort” to adhere to, promote and improve credible, consistent approaches to collecting, managing, integrating and interpreting data. “Data will continue to be central to GRESB’s ability to fulfil and enhance its mission,” the GRESB Foundation’s 2024 roadmap report affirms.
OSCRE is very much an ally in that endeavour. The organization’s energy management data standard, released last year, is the first of three environmental data standards intended to forge unity, interoperability and quality control in an increasingly dense tangle of metrics, data system providers and reporting demands. The water data standard has now been released for consultation prior to finalization, and development of a waste data standard is set to follow.
“Recently, we were talking with a CDO (chief data officer) who said: We collect information across 40 different platforms. I think that’s more the norm than the exception,” recounted Lisa Stanley, chief executive officer of OSCRE. “As we look at what has been an onslaught of legislative and regulatory mandates occurring in the U.S. and elsewhere, the responsibility and accountability for reporting is growing to the point that many, many organizations are trying to figure out: How do we find the resources to do all this?”
The new OSCRE environmental data standards align with the reporting parameters of GRESB, the Carbon Risk Real Estate Monitor (CRREM) and three other ESG-related platforms. Stanley describes her organization as a “convenor” of the standards development process that brings together a wide range of stakeholders, including investment managers, corporate owners and occupiers, data management providers, consulting firms and software developers.
“They come together with a common focus to create more value in a way that is platform-agnostic,” she reported. “There’s a lot more interest in collaboration because it is both strengthening the data that’s reported, as well as the value that is provided to the customers.”
Winters stressed that GRESB’s investor partners are seeking the same rigour that they expect from financial data, as ESG-related non-financial information becomes increasingly material to charting investment performance. Meanwhile, Pyke underscored that GRESB is embedded in econometric analysis, which may be removed from what some onlookers perceive as the “feel-good” aspects of ESG.
“When we don’t have adequate material non-financial information, that failure is reflected in a misallocation of risk and resources. Our effort at GRESB is to provide that necessary non-financial material information to allow people to make risk-adjusted investments and to fix those allocation problems,” he submitted. “That really pushes down to an emphasis on data quality and asset-level information.”
