What lawyers should know about “Global Real Estate Sustainability Benchmark”
June 8, 2016
Mid Atlantic Real Estate Journal
Types : Bylined Articles
Global Real Estate Sustainability Benchmark – or “GRESB” as it is commonly known – is emerging as the leading way for the commercial real estate industry to report sustainability performance on a portfolio basis. It is an annual survey of environmental, social, and governance (“ESG”) data that is evaluated on year-over-year performance and then ranked against the organization’s peers. GRESB is different than standards like LEED and Energy Star that look at the environmental design and performance of individual buildings. With GRESB, sustainability is pushed beyond individual assets up to the portfolio level.
The goal of GRESB is to establish standards for collecting and reporting investment grade ESG data that companies and investors can use as a performance indicator for commercial real estate portfolios. According to researchers, green buildings mean lower risk and higher returns for investors. P. Eichholtz, N. Kok and J. Quigley, The Economics of Green Building, 95 The Rev. of Econ. & Stat., 50-63 (2013). The fundamental idea is that this concept holds true on a portfolio level, and GRESB quantifies ESG data, giving investors a reliable means to evaluate ESG performance. In essence, a high GRESB ranking is a theoretical proxy for overall business health and a signal for better long-term financial performance of a portfolio.
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