Pumpkin Spice & GRESB Results
GRESB scores will be released November 16, now is the time to start thinking about your 2022 score
Every spring, those of us in GRESB reporting portfolios begin gathering last years data, documenting our governance, and putting together the story that our funds investors will review to determine our impact. The tricky part is, if you wait until spring to start thinking about your GRESB strategy, you have already missed the biggest opportunity to impact it.
For those not familiar with GRESB, the Global Real Estate Sustainability Benchmark (GRESB) is a critical tool used by investors to evaluate the environmental, social, and governance (ESG) performance of their funds. In 2019, this represented over 100,000 assets representing more then 1,000 entities in 64 countries and covering 4.1 trillion in real estate gross asset value. While there are other important reporting frameworks such as the UNPRI (United Nations Principles for Responsible Investment), perhaps no other annual real estate sustainability reporting scheme carries the weight of GRESB with real estate investors.
A backward looking assessment, GRESB evaluates the performance for the prior year. Thus when the Covid-19 Pandemic shut down life as we know it this past spring, and managers started asking what would be the impact on our GRESB performance this reporting period, we were able to say it won’t impact this year - but next year will be a completely different story.
The Spring 2021 GRESB reporting period will include data that in multi-family real estate saw communities remain fully occupied, all day, every day for multiple months depending on the area. Those residents who used to leave the property and spend 8-10 hours away from the property remained on site, which will make energy consumption, water use and waste disposal look very different when conducting a year over year comparison.
Those portfolios with year over year reduction targets will be hard pressed to to produce in the 2021 reporting period. Also with 11 months of the reporting period already passed, the opportunity to meaningfully impact 2021 scores has likely passed.
However, now is precisely the correct time to be thinking about 2022. What can you do in 2021 that will impact your 2021 performance and get your scores back on track? How can your fund differentiate itself from other funds.
Over the month of November, I will be taking a deeper dive into three areas that helps separate your fund performance from other funds:
Green Certifications
Data Coverage
Energy Performance
With the 2020 GRESB results delayed until November, we have to rely on 2019 results, results that actually refer to 2018 data. This lack of contemporary data means that we are going to have to make some assumptions for developing a 2022 strategy. Yet, that is the first step - deciding to develop a strategy. A written plan, with “SMART” Goals to guide your fund towards the expected environmental performance that your investors demand.
To manage performance, we must measure performance. While this may be self-evident, in multi-family real estate measuring performance can be tricky. Data is key to measurement, and data simply is not always the easiest to obtain. Contemporary actionable data is even a bigger challenge. Because of this, any sustainability strategy must rest on a foundation of data
When we refer to data coverage in terms of GRESB and differentiating yourself, obtain, tracking and benchmarking the energy, water and waste performance of your property is exactly what data coverage is referring to.
A growing number of US Cities, Counties and States have enacted building energy disclosure laws which forced energy utilities to provide aggregate building energy consumption date, but while that list is rapidly growing, it still covers only a fraction of the jurisdictions across the United States.
Once the energy performance of the building is obtained, we can compare that performance against like buildings and determine if the asset is consuming energy efficiently or inefficiently. Within the EnergyStar Portfolio Manager, this performance is expressed in the form of a 0-100 score, with 50 being average.
Those properties that perform at a score of 75 or above can, with engineering confirmation, obtain an “Energy Star Certification”. This is one of the many “green certifications” that assets can obtain to differentiate their performance against peer assets.
Finally, the achievement of setting and achieving energy, water, and waste goals can help set an asset apart from other assets. Just as green certifications rely on data to verify their performance, demonstrating a reduction in energy or water use is also reliant on the presence of data. The caveat being to effectively reduce consumption and know if the property is on track towards reduction goals, more frequent data is needed.
Tools such as Bright Power’s EnergyScorecards provide property level reporting to educate the property management if their property is on track or not on track to contribute towards the portfolio’s reduction goals. This level of reporting includes an analysis of the energy and water consumption and the origin of that consumption allowing for a more forensic evaluation. If a property can determine the specific issue that is preventing them from meeting their goals, there is an opportunity to correct the issue and implement energy efficiency measures to get the property back on track before an extended period of time has passed.
You can help reduce the impact of the built environment by sharing this blog with your peers. Together we can impact the 39% of greenhouse gasses attributed to the built environment. It starts with awareness and we succeed with teamwork.
Stay well!
Chris Laughman is the author of the ThirtyNine Blog, a blog dedicated to reducing the impact of the built environment. When not blogging, Chris is helping multifamily properties reduce their energy and water impact as a senior account manager at Bright Power. A full service energy strategy company, Bright Power is a leading provider of energy efficiency, renewable energy and energy management solutions for the real estate industry. We use our Find-Fix-Follow approach to Find the best opportunities across a real estate portfolio, deploy the Fixes on specific assets, and Follow to ensure long term value, always optimizing for your financial and sustainability goals. Contact me at claughman@brightpower.com for more information