Canadian participants in the Global Real Estate Sustainability Benchmark (GRESB) are gaining ground on the perennial front-runners from Australia/New Zealand, narrowing the gap in their scores to just three points for 2017. Two new respondents undertook the rigorous reporting exercise, which plots portfolio-wide ESG (environmental, social, governance) intent, practices and outcomes, boosting Canada’s numbers to 18 organizations that collectively achieved an average score of 70 out of a possible 100 points — up from 66 in 2016. Meanwhile, Australia/New Zealand’s 73 average was a one-point drop from the previous year.
Many other participants — collectively encompassing 850 entities in 62 countries holding US $3.7 trillion in assets — also made gains, as the global average score climbed three points from 2016 to this year’s 63. North America, with 18 Canadian and 186 American participants, was the most improved among the continental regions, making a five-point step up to attain an average score of 64.
“Canada is dragging the U.S. along,” said Dan Winters, GRESB’s head in the Americas, who was in Toronto for the results presentation earlier this month.
Notably, the North American average was just 47 five years ago (Canada’s average score was 55 in the same year). This year, Canadian GRESB participants exceeded the North American average in all seven of GRESB’s ESG aspects — broadly characterized as Management & Policy, equating to 28 per cent of the total score, and Implementation & Measurement, making up the greater portion of available points.
“Canada outperforms on Implementation & Measurement due to expansive energy/water/waste data collection and more green building certifications,” the GRESB 2017 snapshot of results notes. Nevertheless, Winters reminded attendees that continuous improvement is an inherent performance expectation that doesn’t necessarily merit effusive congratulations.
“GRESB is a dynamic benchmark,” he advised. “We are making progress as a big community so we might have to make it harder.”
His oversight area stretched further this year with 11 South American organizations now taking part. This, along with three African participants, broadens the continental representation of the database, which also includes 66 respondents from Australia/New Zealand, 124 from Asia, 433 from Europe and nine globally diversified funds.
Winters typified participants’ involvement as a journey that often begins as a means to comply with their own corporate sustainability and responsibility requirements, gets fuelled by competitiveness, and becomes a revelation of GRESB’s risk management potential and business value. A survey of the 58 investor members — including AIMco, HOOPP, Ivanhoé Cambridge, Ontario Teachers, Oxford Properties Group and Presima in Canada — who have comprehensive access to the data, revealed that 94 per cent of them consider GRESB results in their investment process, while more than one-third set specific targets for GRESB performance.
“The old mantra about what you measure, you manage — that’s passé,” Winters asserted. “It’s: what you measure, you improve.”
That’s a hypothesis Paul Finkbeiner, president of GWL Realty Advisors, reiterates while promoting the company’s 2017 status as the North American leader for office/industrial portfolios. “We view the management of environmental, social and governance factors as part of our duty to our clients, being important to reducing long-term risk and improving our financial outcomes,” he says.
Numerically, Canadian participants account for about two per cent of all reporting entities, but their share of overall asset value once again reflects the clout of Canada’s key institutional owners. North American assets are collectively pegged at more than US $2.3 trillion versus about US $804 billion in assets in Europe and US $164 billion worth in Australia/New Zealand.
“The dominant numbers (of participants) come from the Europeans. ESG is what they do,” Winters observed. “Here in North America, that’s where the money is.”