Multinational construction company Lendlease topped the GRESB 2020 Real Estate Results this week, as participation in the environmental, social and governance (ESG) benchmark leapt 22 per cent.
Despite a turbulent year marred by COVID-19, involvement in the 2020 GRESB Real Estate Benchmark accelerated to cover 1229 portfolios – compared to 1005 last year – worth more than $4.8 trillion USD.
Reflecting the growing recognition that the UN Sustainable Development Goals provide a useful reference point for members measuring the impact of their investments, environmental performance indicators were reported at asset-level for more than 96,000 assets across 64 countries.
The results provide “intelligence” on where businesses stand against their counterparts, as well as insight into the actions they can take to improve their ESG performance.
GRESB’s head of Asia Pacific Ruben Langbroek said year-on-year growth was up 19 per cent in the Oceania region, with more than 90 participants in the benchmark, proving ESG transparency and improvement opportunities are “top of mind for industry stakeholders – now more than ever”.
“The pandemic has shown the massive impact that acute shocks have on our economy, communities, and the real estate sector,” he said.
“It has also reminded us of the need to rapidly scale up investments in resilience, as this will allow us to better manage and mitigate these impacts. And because they affect investment outcomes, Australian investors are now assessing the ability of their managers to plan for and respond to these shocks alongside more chronic stresses, including climate change.
“This is illustrated by a year-on-year growth of over 70 per cent in participation in the GRESB Resilience Module.”
Mr Langbroek asserted the transition to a net-zero economy and a sustainable financial system has already begun, pointing to a string of initiatives including GBCA’s Carbon Positive Roadmap for buildings, and the Australian Sustainable Finance Roadmap.
“Meanwhile, we are seeing the first contours of a new leadership by Australian GRESB participants, with some funds and assets already operating at net zero. There are also an increasing number of managers committing to become net zero in the near future,” he said.
The private sector led the growth trend, with participation growing 32 per cent to cover 953 non-listed portfolios in comparison to 723 in 2019.
Reporting from REITs and property companies increased 13 per cent on the previous year from 240 to 271.
“While we still have many challenges to overcome on our way to a more sustainable future, it’s inspiring to see this collective commitment to ESG transparency and collaboration from across the global real estate industry,” Roxana Isaiu, director of Real Estate at GRESB, said.
Lendlease was highlighted a leader in the industrial, office and retail investment sector along with Dexus group and the Goodman Group.
Lendlease was also named a leader in the office, retail and residential development sector, with Frasers Property Australia also highlighted as a high performer in the residential real estate development sector.
Australia continues to lag behind Europe and America in transparency, with Europe recording the highest number of new entities participating in the benchmark, while the USA remains the largest in dollar terms globally.
“The Australian Sustainable Finance Roadmap states that ‘at the heart of the transition is the need for collaboration, by all industry stakeholders’, indeed, our combined efforts are required to advance towards the collective goal of improved ESG performance,” Mr Langbroek said.
“GRESB’s recently announced new governance structure is integral to us achieving this goal. It will facilitate deeper industry involvement, while ensuring the independence of the GRESB standards, now and into the future.”
This year observed a global reduction in energy consumption of two per cent. While this decrease can be seen across all regions, Europe recorded the largest reduction of 3.2 per cent.
Global GHG emissions and water consumption also fell by three per cent and 1.5 per cent, respectively.
Earlier in the month, the organisation reported the industry is “maturing in its approach to ESG and is strongly focused on improving performance”, especially in the infrastructure sector.
Rick Walters, director of infrastructure at GRESB, said with reporting now in its fifth year, the heightened focus on improving performance is encouraging.
“Despite the clear challenges presented by the COVID-19 crisis, participation in GRESB still grew, and scores leapt by 10 to 15 points on average for both Funds and Assets,” he said. One asset even achieved a first-ever maximum score of 100.
“We acknowledge the extra challenges faced this year, and we thank the new and returning participants for their diligence and commitment to reporting and engaging on ESG.”
As infrastructure development continues to prove a strong point of pandemic recovery plans globally, Mr Walters said he looks forward to supporting participants and investment members in the “transformation towards sustainable infrastructure”.
“Proper integration of ESG in infrastructure investment provides the best assurance that the recovery will be effective and fair,” he said.
“It will enable issues like climate change and inequality to be addressed so that as we come out of this crisis, we are on our way to addressing and preventing the next, and building a better and fairer world.”