UPDATED: Australian property companies have dominated the 2019 GRESB results, cementing the region’s big end of town as global leaders in real estate sustainability for the ninth year in a row.
Over 1000 property companies, REITs, funds and developers participated in this year’s GRESB, the global benchmark for environmental, social and governance (ESG) performance of real assets. More than 500 infrastructure funds and assets also participated.
The results, released on Monday, showed an industry tracking in the right direction. Globally, the average score increased from 68 in 2018 to 72 in 2019.
But the results also revealed a slow down in like-for-like greenhouse gas emission reductions from the year before (2.66 per cent in 2019 compared with 4.91 per cent the year before).
This sluggish reduction rate will not be enough to meet the Paris Climate Agreement target of 1.5 degree warming, according to the benchmarking tool.
Head of GRESB Asia Pacific Ruben Langbroek told The Fifth Estate that there’s room for improvement on a number of performance indicators, including alignment with global carbon reduction and energy goals.
He also says that property companies could do better by providing full building data but recognises the challenges associated with accessing tenant data.
Australia’s GRESB dominance continues
Mr Langbroek congratulated Australia for leading the other regions for the ninth year in a row.
Lendlease’s Australian Prime Property Fund Commercial (office-private) and its Australian Prime Property Fund Retail (retail-private) were among Australia’s top global leaders for this year, achieving the highest scores globally for their sectors (“overall global sector leaders”).
Dexus Wholesale Property Fund was recognised as an overall global sector leader (diversified-office/retail), as was Frasers Property Australia for its Frasers Property Australia Pty Ltd – Development Assets portfolio (developer-residential).
Goodman Group topped the overall global results for the developer-industrial sector.
The global sector leaders (achieved highest score for the combination of nature of ownership and sector) are: Dexus Office Trust (office – listed), Frasers Logistics & Industrial Trust, Frasers Logistics & Industrial Asset Management Pte. Ltd (industrial – listed), Frasers Property Australia Pty Ltd – Investment Properties, Frasers Property Australia Pty Ltd (diversified – office/industrial) and Stockland (diversified – office/retail – listed).
- The results are available on the GRESB website.
For participants in the Oceania region, there was a 2.6 per cent like-for-like reduction in energy consumption, and a 3.3 per cent reduction in greenhouse gas emissions. However, there was a 2.6 per cent increase in water consumption.
Around 87 per cent of participants in the region have set long-term environmental impact reduction targets compared to 82 per cent globally.
What’s new for GRESB?
One of the key changes to GRESB over the past few years is the launch of the Resilience Module in 2018. The module provides investors and participating companies and funds with information about climate risk and resilience.
Participation in the new module almost doubled in its second year. This followed updates to the module in 2019 to better align with the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD), a voluntary reporting initiative.
According to GRESB, this jump in participation signals “an increasing awareness of the need to respond to investor attention on climate risks and resilience”.
It is a promising start but there’s more work to be done in this space, with only 25 per cent of participants in this module reporting comprehensive programs with activities including governance, risk management, business strategy, and measurement.
The other 75 per cent reported “highly variable programs” that frequently “lacked any activity in one or more of the core categories recommended by the TCFD”.
The global benchmarking tool has been updated in recent years to include a stronger focus on human health and wellness.
GRESB also now encourages participants to report at the asset level, although the results are still compiled at the portfolio level. As many as 66,000 assets were reported at this level out of the more than 100,000 assets that participated.
Update: A previous version of this article stated that Dexus Wholesale Property Fund was recognised as a global sector leader (diversified-office/retail). It was instead recognised as an overall global sector leader