Navigating Sustainability: Insights from BREEAM and GRESB Leaders

 

The discussion — moderated by BREEAM’s U.S. Director of Operations Breana Wheeler — went on to highlight the significant alignment between the 2024 GRESB Real Estate Standard & Reference Guide and BREEAM In-Use Version 6 criteria, further emphasizing key considerations that the market and its investors consider material.  

Informed by decades of experience in the real estate and sustainability sectors, the panelists offered up valuable insights, including:       

1. As a global organization, GRESB creates a systematic way to assess, compare, and engage with sustainable investments across various regions over time — however, finding consensus presents a set of unique challenges.  

“Getting [everyone] on the same phone call is a challenge, so just trying to think about what we're all approaching is, of course, difficult. The ambition is to recognize that GRESB is the global standard, and, fortunately, we have members who are very skilled in explaining why and how GRESB is addressing the important work of standard setting across different regions,” explained Sarah Welton. “Taking into account a variety of [considerations] like the geography and the maturity of the market, [these members] are very thoughtful in the points that they raise…It's not a theoretical discussion; they're bringing practical challenges to committee discussions and [exploring] the impacts to real people on the ground.”

“The purpose of engagement between [building] investors and managers is evolving. For some investors… they are seeking to understand [portfolio] strengths and weaknesses and improve over time. That's the GRESB classic, that's what we were designed to do,” said Chris Pyke. “You also have some who set very high standards for their investments and want to use GRESB as a screen … and you have others who want to use it as a source of information… And they span the gamut from France to the UK, Canada, the U.S., Mexico, Australia, Singapore, Tokyo – all around the world. They are all in different stages of market development with different opinions about what they are pursuing.”  

2. GRESB’s consultation on green building certification was launched to help the industry deliver stronger tools for investors – and the foundation of an impactful certification is process and transparency.   

“I would say, at the most basic level, a certification is founded on trust,” noted Welton. “There's an expectation that when you're going into the assessment, you can trust what's going on. If you don't have clarity around your governance, your process, and transparency, why go any further? That's the basics of it, because investors want to be able to turn to these metrics, to these certifications, and make investment decisions based on what [they trust them to] represent.”  

“Our motivation [behind the consultation] was to look at how dynamic the different aspects of certification are,” shared Pyke. “[For example], BRE as an institution is [built on] a solid foundation — it’s rooted in science, and it has a set of attributes that go into anything it produces… these are brand characteristics… We understand that under [different standards] like BREEAM In-Use, there will be an evolution going from Version 5 to 6 to 7, but that doesn't change the characteristics of the brand. We must have a balance between [holding] onto the durable brand attributes that don't change every year while also being able to differentiate the evolving standards.”   

3. The industry needs to address the improvement of ‘brown assets’ to avoid further withdrawal from assets and communities that have historically been marginalized and underinvested in.   

“The reason you go to brown assets is [because] that's where the carbon is,” explained Pyke. “We need as many green assets as we can [get], and the greener, the better… But on the other end, we need to do real estate, buy low and sell high, and make that the proposition.   

One of the ways we [got this wrong] was by the quiet divesting of pensions. [Investors] put themselves on the hook for net-zero commitments, and they realized [a way] to do net-zero was to take the carbon-intensive real estate off their books… I would be more impressed if they owned these assets and reduced 100,000 tons of carbon over the course of [their] ownership… Our challenge over the next couple of years is to make investing in brown as integral as investing in green, and they'll coexist. It's not an either-or, it's a both-and.”  

Added Welton, “We've got some really capable managers who want to be asked, ‘What is the plan, what changed year on year, and why did this happen?’ There are people out there; it's not as if the pensions are divesting because there's no one to take this on — [that’s] absolutely not the case. And it's a business opportunity; this is a business strategy… getting back to the financial driver of this, it's a [chance] to make money, quite frankly. We're trying to reduce carbon, but also, these are value-add opportunities.”  

If you missed the webinar, you can view the full recording here.    

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