Sustainability benchmarks are assessment tools used to evaluate the environmental, social, and governance (ESG) performance of companies, assets, and portfolios, particularly in sectors like real estate and infrastructure. These benchmarks […]

Sustainability benchmarks are assessment tools used to evaluate the environmental, social, and governance (ESG) performance of companies, assets, and portfolios, particularly in sectors like real estate and infrastructure. These benchmarks offer structured methodologies for measuring sustainability practices, enabling businesses to meet growing regulatory and investor demands for transparency. For example, GRESB (Global Real Estate Sustainability Benchmark) assesses the ESG performance of real estate and infrastructure portfolios, with over 2,000 companies and funds participating globally in 2023, representing assets worth over $6.9 trillion. [1] 

Other benchmarks include LEED (Leadership in Energy and Environmental Design), which certifies green buildings, and the CDP (Carbon Disclosure Project), which focuses on carbon emission disclosures. According to CDP’s 2023 report, over 18,700 companies disclosed environmental data through its platform. [2] 

The purpose of comparing GRESB with other benchmarks is to help stakeholders choose the most appropriate assessment tool based on their objectives. GRESB offers a comprehensive view of ESG in real estate, while other benchmarks may specialize in narrower aspects like energy efficiency (LEED) or industry-specific standards (SASB). Understanding the strengths and limitations of each benchmark ensures companies align their sustainability strategies effectively with global trends and investor expectations. 

What is GRESB? 

GRESB (Global Real Estate Sustainability Benchmark) is a globally recognized ESG (Environmental, Social, Governance) benchmarking system that assesses the sustainability performance of real estate and infrastructure portfolios. Established in 2009, GRESB provides a standardized framework for measuring ESG practices across these sectors, offering detailed insights into the sustainability efforts of companies and funds. [3] 

GRESB operates through two key assessments: the Real Estate Assessment and the Infrastructure Assessment. The Real Estate Assessment evaluates property companies, real estate investment trusts (REITs), and funds on their environmental, social, and governance performance. Meanwhile, the Infrastructure Assessment focuses on infrastructure funds and assets, assessing their ESG management and impact. 

For investors, these scores offer a clear and objective measure of how well an asset or portfolio aligns with sustainability goals, helping to guide investment decisions. For companies, participating in GRESB enhances transparency, improves ESG performance, and boosts reputation. In 2023, more than $8 trillion in assets were reported through GRESB, reflecting its importance as a critical tool for sustainability benchmarking in global real estate and infrastructure markets. 

Popular Sustainability Benchmarks: An Overview 

LEED (Leadership in Energy and Environmental Design) 

LEED (Leadership in Energy and Environmental Design) is one of the most widely used green building certification systems globally. Developed by the U.S. Green Building Council (USGBC), LEED focuses on promoting sustainable building design, construction, and operations. Its key criteria for assessment include energy efficiency, water conservation, sustainable site development, materials selection, and indoor environmental quality. 

LEED certification is sought after by developers, architects, and building operators who aim to reduce the environmental impact of their projects. LEED-certified buildings are known to save energy, reduce carbon emissions, and create healthier environments. As of 2023, over 110,000 projects across 180 countries and territories have achieved LEED certification, making it a popular choice for both commercial and residential buildings. The certification is highly valued by investors and tenants alike, as it often leads to reduced operational costs and improved marketability. 

CDP (Carbon Disclosure Project) 

CDP (Carbon Disclosure Project) is a global platform for environmental disclosure, particularly focusing on carbon emissions, water security, and deforestation. Companies, cities, and governments report their environmental data through CDP, which ranks them based on their transparency and actions toward climate change mitigation. CDP’s climate reporting system provides insights into how organizations are managing their carbon footprint and aligning with global climate goals. 

In 2023, more than 18,700 companies, representing over 60% of global market capitalization, disclosed environmental data through CDP. CDP’s scoring system focuses on factors like emissions reduction initiatives, risk management, and governance. CDP’s reports are critical for investors and financial institutions aiming to understand climate-related risks and opportunities. The platform’s widespread adoption makes it one of the most trusted sources for assessing carbon and climate-related disclosures. 

SASB (Sustainability Accounting Standards Board) 

SASB (Sustainability Accounting Standards Board) is an ESG reporting framework that provides industry-specific standards for 77 sectors, covering a wide range of financial and sustainability metrics. Its focus is on identifying financially material ESG issues that could impact the performance of companies within each industry. SASB standards are designed to be decision-useful for investors by highlighting relevant ESG risks and opportunities. 

SASB is particularly popular in the financial industry, where investors seek detailed ESG data to inform their strategies. Since SASB standards are tailored to different industries, they provide a nuanced view of sustainability challenges that vary across sectors such as energy, healthcare, and real estate. As of 2023, thousands of companies worldwide, including over 50% of the S&P Global 1200, reported using SASB standards, further solidifying its role as a critical tool for ESG integration in the financial markets. 

Key Differences Between GRESB and Other Benchmarks 

GRESB vs. LEED 

Focus: GRESB and LEED serve different but complementary purposes in the sustainability landscape. GRESB focuses on ESG (Environmental, Social, Governance) assessments across real estate portfolios and infrastructure assets, evaluating overall sustainability performance from an investment perspective. In contrast, LEED (Leadership in Energy and Environmental Design) is a certification system for individual buildings, emphasizing green building design, construction, and operations with a primary focus on energy efficiency and environmental performance. 

Methodology and Scoring Differences: GRESB scores are based on a comprehensive evaluation of ESG factors, including governance, stakeholder engagement, resource efficiency, and environmental impact across entire portfolios. LEED uses a point-based system that awards credits for sustainable design choices, such as water conservation, energy usage, and indoor air quality, with certification levels ranging from Certified to Platinum. 

Areas of Overlap and Divergence: Both GRESB and LEED focus on environmental sustainability, but GRESB covers broader ESG issues beyond building-level certifications, assessing entire portfolios. LEED, on the other hand, focuses specifically on the environmental performance of individual buildings. While GRESB includes ESG governance and social aspects, LEED is more technical, concentrating on construction materials, energy use, and environmental impacts. 

GRESB vs. CDP 

Focus: GRESB provides a holistic view of ESG performance across real estate and infrastructure portfolios, while CDP (Carbon Disclosure Project) is primarily focused on environmental data reporting, particularly in areas of carbon emissions, water use, and deforestation. CDP’s emphasis is on climate-related disclosures, aligning companies with global climate action goals. 

ESG Depth vs. Carbon and Climate Reporting: GRESB assesses a broader range of ESG factors, including governance and social issues, in addition to environmental concerns, making it a comprehensive tool for investors in real assets. CDP, on the other hand, specializes in the transparency of environmental impacts, with a specific focus on carbon footprint and climate change mitigation efforts. CDP provides in-depth analysis and scoring on how companies manage environmental risks and opportunities. 

Differences in Reporting and Transparency: GRESB requires companies to submit detailed reports covering ESG performance at the portfolio level, with a focus on investor-useful data. CDP relies on voluntary disclosures from companies and governments on their environmental data, which are then made public for stakeholders, allowing for greater transparency in environmental risk management. GRESB reports focus on performance benchmarking, while CDP emphasizes the disclosure of emissions data and climate actions. 

GRESB vs. SASB 

Focus: GRESB is tailored to the real estate and infrastructure sectors, focusing on asset and portfolio-level ESG performance in those areas. SASB (Sustainability Accounting Standards Board), on the other hand, provides industry-specific ESG standards for 77 sectors, offering a broader approach across industries like healthcare, energy, and manufacturing. 

Industry-Specific ESG Metrics vs. Real Estate Focus: While GRESB focuses on ESG metrics relevant to real estate and infrastructure, including resource management, environmental impact, and stakeholder engagement, SASB’s standards are designed to capture material ESG factors specific to each industry. SASB’s framework is used across multiple sectors, addressing ESG risks and opportunities that could financially impact companies in different industries. 

Broader Sector-Based Approach vs. Asset-Level Focus: GRESB is concerned with the ESG performance of specific real estate and infrastructure assets, providing benchmarking at the asset and portfolio level for investors. SASB, by contrast, applies a broader approach, focusing on ESG factors that are most financially material to each industry. GRESB’s detailed asset-level insights help investors in the real estate sector, whereas SASB provides sector-specific data that is useful across multiple industries for investor decision-making. 

When to Choose GRESB Over Other Benchmarks 

GRESB is ideal for real estate and infrastructure portfolios that need a comprehensive, investor-focused ESG evaluation. It provides detailed assessments of environmental, social, and governance performance at the asset and portfolio levels, making it a valuable tool for companies aiming to benchmark their sustainability efforts in these sectors. Investors often rely on GRESB scores to evaluate ESG performance across real estate portfolios, helping them identify assets that align with their sustainability goals. Additionally, companies looking to stay competitive by aligning with global sustainability trends—such as decarbonization and social responsibility—will benefit from GRESB’s standardized framework and benchmarking process. 

However, other benchmarks might be preferable depending on the project’s focus. For instance, if a building project prioritizes energy efficiency or green building design, certifications like LEED or BREEAM would be more appropriate. Similarly, companies that want to concentrate on carbon emission reporting and climate impact mitigation should look to CDP for detailed environmental disclosures. For those requiring industry-specific ESG reporting, especially outside of real estate, SASB provides a more tailored approach, focusing on the material ESG risks and opportunities relevant to each sector. Choosing the right benchmark depends on the specific ESG goals and the sector in which the company operates. 

Conclusion: Making an Informed Choice 

When navigating the complex landscape of sustainability benchmarks, it’s essential to choose the one that aligns with your specific goals and industry needs. GRESB stands out as a comprehensive ESG evaluation tool for real estate and infrastructure portfolios, offering deep insights into environmental, social, and governance performance. For investors, GRESB provides robust data to assess the sustainability of assets, making it invaluable for those focused on ESG-driven decision-making. However, other benchmarks like LEED or BREEAM might be more suitable for projects centered on energy efficiency or green building design, while CDP is ideal for companies emphasizing carbon emissions and climate action. SASB, with its industry-specific ESG standards, is better suited for businesses needing a sector-based approach to sustainability. 

Ultimately, understanding the strengths and limitations of each benchmark will help businesses and investors make informed choices. By selecting the right framework, organizations can effectively demonstrate their sustainability efforts, align with global trends, and attract ESG-conscious stakeholders. The decision boils down to the specific focus of the project or portfolio—whether it’s broader ESG performance or targeted environmental impacts like carbon reduction or energy efficiency. 

Sources: 

[1] https://unctad.org/system/files/official-document/wir2023_en.pdf 

[2] https://www.cdp.net/en/companies/cdp-2023-disclosure-data-factsheet 

[3] https://wp.senecaesg.com/insights/gresb-the-global-standard-for-real-estate-sustainability/