Responsible Property Investment Comes Of Age Globally
Portfolio Owners Embrace Emerging Green Lease and Wellness Trends
UK Ranks Top Performer in Europe
Building owners globally are increasingly implementing comprehensive Environmental, Social, and Governance (ESG) programs, according to global real estate advisor CBRE.
The results of the 2015 GRESB Global Survey - spanning over 700 participants reporting on the sustainability performance of real estate portfolios - show there is a significant shift towards enhanced responsible property investment (RPI) performance with the majority of responding portfolios achieving GRESB Green Star status for the first time. Two key themes emerging are the widespread adoption of green leases, and increased attention being placed on the health and wellbeing of building occupants.
Green Leases - The New Norm
According to GRESB, 60% of portfolios report some form of green lease clause in their standard contract. Given tenants are responsible for up to half of a building’s total energy use and associated greenhouse gas emissions, effective green lease clauses can have a profound effect on a building’s overall performance.
In addition, there is a growing trend among large multinational occupiers to seek the inclusion of green clauses in leased portfolios to facilitate the achievement of corporate sustainability goals. It therefore makes sound business sense for building owners to pursue the early adoption of green leases, as explained by
Justin Halewood, Head, Energy & Environment, Group CRES at Standard Chartered Bank:
"Green leases are one of the foundation stones for an ongoing programme to reduce energy and water consumption across the Bank’s footprint. With an ever larger proportion of our portfolio being leased, collaboration with our landlords has become critical to success - green leases provide a platform for those joint efforts. In addition to driving greater uptake of green leases by helping us identify and acquire the most sustainable assets, CBRE are transforming our footprint from grey to green."
Waking Up to Wellness
Rising up the corporate agenda is the increased attention being paid to the health and wellbeing of occupiers. According to GRESB, many health and safety plans, and actions, are in place within the commercial real estate sector, with employee health and safety checks in the last three years up by 11% year-on-year. Nearly all participants (95%) in the GRESB report have specific employee policies related to health and safety.
Furthermore, 88% actively monitor specific aspects of employee health, safety and wellbeing revealing that companies are increasingly prioritising employee needs when making business and real estate decisions.
Europe’s GRESB Highlights
Across Europe, participation in GRESB increased by 16% year-on-year with 380 companies and funds reporting, worth a combined total value of $750 billion which marks a 9% rise on 2014. The top three reporting countries comprised UK, Netherlands and France with the Nordics and Germany significantly increasing participation in the last year. In addition:
- UK ranked first place in Europe, and only second in the world to Australia, in terms of sustainability performance
- The GRESB response rate is up by 40% in the UK
- Across the region, 18% more green stars issued this year compared to 2014, which reflects increasing adoption of sustainability policies.
It is evident that portfolio owners who understand how to address the social aspects of sustainability, and in particular how to effectively engage with occupiers, are adding significant value to their assets, making them more attractive to institutional capital.
"The facts are clear - the overall value of institutional capital backing GRESB this year rose by more than 10% to $6.1 trillion. This significant upswing shows the property industry is waking up to the fact sustainable investment strategies are here to stay. It’s a win-win for all stakeholders. Occupiers wish to look after employee wellbeing, attract and retain talent; investors don’t wish to run the risk of financial penalties for not meeting legislation, and owners are keen to protect capital and grow asset value which is aided by holding efficient building stock."