Real estate companies and funds are showing improvement across all aspects of environmental, social and governance (ESG) performance, according to the 2016 Global Real Estate Sustainability Benchmark (GRESB) Real Estate, Developer and Debt assessments.
“The global real estate sector is working to manage its carbon footprint, build resilience in the face of climate change and respond to more stringent environmental regulations,” said Nils Kok, CEO of GRESB.
According to 2016 GRESB data, 90 percent of property companies and funds reporting to GRESB are integrating carbon management strategies into their investments. These actions have contributed to a 2 percent annual decrease in carbon emissions, according to GRESB, which noted that is the equivalent of taking 704,464 passenger cars off the road.
The data also showed a 1.2 percent reduction in energy consumption and close to a 1 percent reduction in water use. The overall GRESB score, which is a measure of how well ESG issues are integrated into the management and holdings of real estate companies and funds, rose to a level of 60 in 2016 from 54 in 2015.
The findings were based on responses from 759 real estate companies and investment funds, representing more than 66,000 assets across 63 countries with a combined value of $2.8 trillion. In 2016, 18 debt funds participated in the GRESB assessment.
On a regional basis, the average GRESB score of North American companies and funds rose to 59 in 2016 from 54 in 2015.
GRESB named several REITs as sector leaders in their respective industries:
- Kilroy Realty Corp. (NYSE: KRC) was recognized for office listed real estate;
- Macerich (NYSE: MAC) for retail listed real estate;
- Prologis Inc. (NYSE: PLD) for industrial real estate; and
- Equity Residential (NYSE: EQR) for residential listed real estate.
The Australia/New Zealand region had the strongest performance, with an average GRESB score of 74 in 2016, compared with 70 the year before. In Europe, the average GRESB score rose to 60 in 2016 from 56 in 2015.