Article

Real estate sustainability data reveals world’s top performers

GRESB results rank international markets amid record growth in real estate participation

décembre 05, 2022

As more real estate owners report sustainability performance, one region is outshining the rest of the world in terms of investor action on environmental, social and governance (ESG) issues.

Oceania, led by Australia in size and population, has achieved an average score across its real estate companies of 81 – compared to the global average of 74 – in the annual Global Real Estate Sustainability Benchmark results. Oceania has held the top position since the initiative started in 2009.

Asia follows closely with an average score of 78 – up three points from last year – while Europe is in third spot with an average score of 73 – up by two points from last year.

A key differentiator of Australia’s real estate landscape is its consolidated group of property investment groups, like Charter Hall, Dexus, GPT Group and Lendlease.

“These companies have large portfolios of office, retail and industrial assets within their funds under management and often have dedicated ESG teams that manage their reporting requirements,” says Connor McCauley, head of sustainability for JLL Australia and New Zealand. “When you have all of these companies reporting into GRESB, that increases Australia’s overall geographical competitiveness.”

However, Australia’s portfolio owners are facing increasing competition. This year, GRESB recorded its largest historical growth in participation globally – increasing 20%.

And the Americas recorded its largest leap in participation, with 30% year-on-year growth – a result put down to it being a larger market with inherently more growth opportunities. With 30% of the Americas benchmark consisting of first-year participants, its average GRESB score dropped by one point to 72. Europe recorded 16% growth.

“Increasing investor interest in ESG, along with emerging regulations and the unfolding climate crisis, is evidently driving sustainability’s rise up the priority list for real estate companies,” McCauley says. 

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The GRESB Benchmark

GRESB data is used by more than 170 institutional and financial investors to monitor investments across portfolios and understand the opportunities, risks and choices needed to transition to a more sustainable future.

This year’s result accounts for US$13.6 trillion in real estate and infrastructure value worldwide.

Scores and rankings are allocated to companies annually after asset (real estate and infrastructure) and company data aligning with GRESB’s reporting methodology is analysed and assessed against a range of indicators as well as sector, or region-specific, benchmarks.

Australia’s early adoption of GRESB and recognition of real estate’s environmental and social impact, is considered another driver of its world-leading position. Organisations like Better Buildings Partnership and the Green Building Council of Australia are driving change locally through sustainable leadership, education, and advocacy.

Add to that, regulations in the Oceania market.

“We’ve long been adhering to green building initiatives like NABERS and Green Star. These, combined with the real estate industry’s push towards net-zero emissions, have put sustainability at the forefront of investors’ priorities,” McCauley says.

Top performer

As in previous years, Australian property company Lendlease continues to set the bar. Its Australian funds ranked first, second, and fourth out of all office funds globally. One International Towers Sydney Trust was named World’s Most Sustainable Office Fund, followed by APPF Commercial. Lendlease’s Barangaroo office fund ranked fourth globally.

The company’s clear pathway to decarbonisation, which is one of the biggest hurdles for real estate companies at the moment, underpins its strong results, according to McCauley.

Transformational thinking, specifically the uptake of technology, is also a characteristic shared by the top-performing companies.

“The companies that will continue to come out on top are those investing now, not later. They’re utilising more technology, more data, and making more automated decisions to improve performance and drive sustainable outcomes now and into the future.”

Contact Connor McCauley

Head of sustainability, JLL Australia and New Zealand

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