All industries typically include ESG statements in their annual reports, and it's only a matter of time before these statements become compulsory. The EU has already introduced SFDR – Sustainable Finance Disclosure Regulation. ESG is moving ever higher on corporate agendas, with obvious implications for data measurement, accuracy, and transparency.
Alan Colquhoun, our Management Board Advisor, spoke with Anna Olink, EMEA Business Development Director at GRESB and ESG Real Estate Tech Consultant Peter Thirlby about ESG reporting using software and technology. The following are some highlights from their discussion.
Due to the lack of internationally agreed definitions, multiple reporting frameworks, and the fact that many companies "do their own thing",
Do you agree that clarity and consistency are needed, in terms of ESG reporting?
Yes, there is a lack of definition, a lot of companies report in different ways according to different standards. GRESB collects, validates, scores, and benchmarks ESG data to provide consistency to investors, asset managers, and others with business intelligence, engagement tools, and regulatory reporting solutions.
How many data points are there in a typical annual GRESB submission?
Are they only related to sustainability, or do they cover wider ESG topics?
GRESB has 6,386 data points in a full survey, available to members and partners. Almost half the benchmarking comes from the environmental aspect of ESG, so there are two benchmarks, one for standing investments and one for developments. The other 50% is distributed equally between "S" and "G". In terms of the environment, there are questions about the utility data for every asset in a portfolio. Aside from policies and procedures, GRESB items related to employees and tenants are recorded on the "S" part of the submission.
What are the opportunities for software to make a positive difference – apart from well-known arguments around efficiencies, time, and cost savings, are there other sustainability and ESG-related benefits?
Technology can help by going deeper into the data. The main challenge for many landlords is to start engaging with tenants, that’s where technology can also help. Essentially, it allows landlords and tenants in the building to collaborate and become kind of a unit and understand how consumption in that building is going.
How can we ensure the accuracy of data collected for ESG reporting?
Tenants most often own their data, but landlords are ultimately responsible for decarbonizing a building, so we just need to connect those two. You could share your KPIs as a landlord because you might have tenants who have their own KPIs related to decarbonization. You could begin cooperating that way. As far as the accuracy of the data goes, that's part of GRESB's responsibility as well, just to verify what has been reported. Their manual validation of some questions is done by asking participants to provide proof. They read this proof, and it pertains more to qualitative questions about policies and procedures. To avoid greenwashing, if a company claims to have an ESG strategy, but there isn't much in it, they can reject the proof, the evidence. GRESB asks for more quantitative data when participants fill in the first fields, such as asset type, location, and size. Due to the amount of data reported, they already know what data it should follow.
Standards and frameworks for reporting environmental, social, and governance (ESG) information are crucial to providing consistent and comparable reporting. If you want to find out more click here to get access to the exclusive panel discussion on-demand and learn from our experts about the importance of ESG reporting empowered by technology and software solutions.