In an ever-growing field, sustainability has been marked by a multitude of frameworks, standards, labels, certifications, initiatives, programs, newsletters, articles and columns (present company included), and most importantly, acronyms.
While TripAdvisor has effectively streamlined much of the conversation on green hotels this past year from the consumer standpoint, on the investor side a relatively new initiative has emerged that quickly is catching on among entities that invest in real estate.
The emerging Global Real Estate Sustainability Benchmark, armed with the palatable acronym GRESB (pronounced “gresbuh” by its Dutch founders but pronounced “gresbee” on this side of the world aligning with accounting acronyms), has undertaken a concerted effort to attract a much wider audience. It recently launched, simultaneously in three continents, the results of its 2014 survey.
In 2014, 637 property companies worldwide, covering 56,000 buildings, responded to the survey for its 130 members. A handful of hotel companies participated, in addition to the several property companies that have hotels within their portfolios. Though arising in Europe, GRESB gained traction in the United States, especially last year when the National Association of Real Estate Investment Trusts decided to align GRESB’s survey and use it as the principal instrument for awarding its “Leader in the Light Award” for environmental sustainability. Already seeing a handful of hotel REITs responding to this survey, it is an initiative particularly for hotel owners to keep an eye on regarding future disclosure needs.
GRESB and responsible investing in real estate
GRESB joins a number of initiatives targeting responsible investment in commercial buildings. Some others, such as the UNEP Finance Initiative and Responsible Property Investing, are more focused on evaluating owners and property managers on a range of approaches and risks on environmental, social, and governance issues. Others, such as the Greenprint Performance Index and the Cornell Hotel Sustainability Benchmark, focus more on amassing global data sets for comparable benchmarking of utility performance. GRESB in theory addresses both of these.
GRESB’s approach
GRESB’s approach is to attract signatory members who invest in real estate portfolios to support its annual survey, more akin to a supplier evaluation model than a reporting framework. By becoming GRESB members, these managers of funds and holdings then request (soft pressure) their investments to fill out the survey, which asks respondents to cover a range of policies, practices and performance across ESG issues, including building operations and new construction or renovations.
GRESB uses the results and scores each respondent based on the relative pool and sector. The methodology is transparent, albeit subjective and in flux. Respondents receive in return their benchmark report and score. The responses and results are then kept private, while the signatories can see the responses submitted by entities in which they invest. Therefore, the results aren’t necessarily transparent but at the same time more enticing to respondents who don’t have to worry about being publicly shamed for poor performance or lackluster ESG programs. GRESB then produces a summary results report each year, where the best performers are named as “Green Stars.”
Why GRESB is gaining traction
- Unlike more general reporting frameworks, GRESB is specifically tailored toward real estate. Though it does not necessarily address the nuances of each type of real estate well, it nonetheless speaks the language of real estate.
- The naming of “Green Star” respondents rewards good performers and incentivizes improvement, while the confidential nature of the responses encourages participation without risk of low scores being made public.
- The prescriptive nature of the survey is straightforward to answer and less open-ended. Likewise as it is tailored to real estate companies, it does not ask extraneous questions or those that were intended for large consumer product companies (which is the case of many other frameworks).
- GRESB has managed to gather support from large investors and real estate companies who can piggyback the initiative as part of their own claims of commitment to corporate responsibility and sustainability.
How this affects hoteliers
- As GRESB increases its prevalence and member base, hotel owners, particularly those publicly traded, might receive more requests to respond to the survey next year.
- Responding to GRESB is free; however, the data collection and response preparation can be cumbersome if systems or programs aren’t in place and is a task requiring upward of 100 hours to complete.
- Like other ESG analysis initiatives, hotel ownership structures and operating nuances are poorly understood by audiences, and the onus is on hotel real estate owners to educate the GRESB audience about how proper hotel disclosure should be structured.
- GRESB has a strong focus on renovations and retrofits for efficiency and is less focused on the operational practices that, while not as relevant for other commercial buildings, drive hotel sustainability performance in large part.
- Hotel managers and management companies will be affected because they will be requested for yet another series of data points and program information, which is related to but not an exact match for information that corporate customers, meeting planners, brand companies, other certifications such as LEED or TripAdvisor GreenLeaders are asking for.
For sustainability advocates, GRESB is interesting because it widens the reach of audiences to build awareness of sustainability. For hotel industry practitioners, it might add a little more survey fatigue to the growing list of responses and surveys requested by investors and major customers. In a larger trend, it is one more example of shifting from the business case of sustainability to sustainability being seen as just another cost of doing business.
Eric Ricaurte works with the hotel industry and its leading companies to advance sustainability through reporting and measurement. His current activities include consulting, industry engagement, academic fellowship, column writing and publication authoring.
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