New Report Highlights Global Growth of Real Estate ESG Commitment

In a recent report, global ESG (Environmental, Social, and Governance) benchmarking organization GRESB highlighted some positive sustainability trends in real estate investing and management, stating they saw: “The largest ever growth in total [participant] numbers.”

The report, which is based on data provided by 1,820 investment groups and portfolio managers worldwide, also showed a global jump in ESG scores across diverse property types including office, industrial, retail, residential, healthcare, tech, hospitality, and education.

ESG performance by region

Overall, GRESB says their average global ESG score rose one point to 74 (out of 100), indicating increased engagement with ESG issues among their participants.

Specific highlights across the globe include:

  • A score of 81 put Oceania (led by Australia) ahead of other global regions
  • Asia’s score improved to 78 from last year’s score of 75
  • Europe came in slightly below the average at 73 (a two-point improvement)
  • The Americas dropped to 72 (a single-point decline)

Rising Participation

GRESB attributes the slight drop in score for the Americas to growth in regional participation, with a 30% increase year-on-year (+111 participant organizations), stating: “The steep increase in participation in the Americas region has impacted the average GRESB Score.”

Given that most were first-time participants, it’s also likely that many of these companies will be aiming to up their scores in the coming years.

Worth noting is that the US “registered the highest progress in terms of number of new participants (78 new participants reaching 380 total in 2022).”

Overall, global participation in the benchmark rose by 20%, covering 150,000 real estate assets with an estimated value of USD 7 trillion.

ESG focus

The drive to promote ESG and sustainability imperatives in commercial real estate (CRE) is a growing trend for the sector. Over the past year alone, we’ve seen a surge of interest in ESG reporting from investors and lenders.

Given this growing interest, and the associated opportunities for investors, we’re likely to see a lot more movement in this area in years to come.

For CRE professionals, these factors, along with the underlying sustainability imperative, make ESG an area we can’t afford to ignore as we head into 2023.