New report shows REITs and private equity real estate funds embracing sustainability practices

GRESB, the global standard for portfolio-level sustainability assessment in the real estate sector, released its 2015 data and industry report, based on an assessment of 707 property companies and private equity real estate funds, representing 61,000 assets and USD$2.3 trillion in asset value. The report provides new insights regarding the energy and sustainability performance of the global real estate industry, documenting a 3 per cent reduction in greenhouse emissions in 2014, a 50 per cent increase in on-site renewable energy generation, and a 19 per cent improvement in overall ESG performance.

The global property industry is at the heart of critical global issues that include resource constraints, climate change, and urbanization. There is strong evidence that more sustainably designed and operated buildings can provide solutions to these challenging issues, while also creating value for real estate investors and shareholders.

The 2015 GRESB Report provides new data showing that the global real estate sector is increasingly integrating environmental, social and governance considerations into corporate policies and business strategy. Critically, the data also shows that policy and strategy are backed by actual implementation of energy and water efficiency programs, and demonstrable improvements in sustainability performance.

Report Highlights:

  • More property companies and funds report on sustainability: 707 companies and funds, representing USD$2.3 trillion and 61,000 assets;
  • Better environmental performance: on average, the sector achieved a 3.04 per cent reduction in GHG emissions, 2.87 per cent reduction in energy consumption, and a 1.65 per cent reduction in water use;
  • Growth in renewables: on-site renewable energy generation of 445GWh, an increase from 296GWh in 2014

North American REITs and private equity funds slightly trailed the global market, with an average sustainability score of 44 compared to the global GRESB average of 46. With North America facing a long-term challenge in preparing for changing climate conditions, there is an acute need to understand and manage climate-related risks to individual properties and entire portfolios. The 2015 GRESB results indicate that the North American companies and funds are taking action to address climate risk and resilience. 88 per cent of participants reported having sustainability policies and a growing fraction of these policies include specific provisions addressing climate risk (36 per cent) and resilience (26 per cent). Severe and prolonged drought across western North America has also brought attention to the importance of water conservation and sustainable water supply management. 86 per cent of North American property companies and funds implemented water efficiency improvements for standing investments within the last four years.

“The 2015 GRESB Report and data show that the global property industry is taking sustainability issues seriously, making them a core part of business strategies. In North America, this is reflected in portfolio-wide efforts to save energy, conserve water, and enhance resilience. The recent gains across the commercial real estate sector are impressive, yet in absolute terms, the sector’s environmental impact remains significant and more work remains to be done,” says Chris Pyke, COO of GRESB.

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