The Evolution of Real Asset Resilience

Resilience Insights Series: Part 1


The GRESB Resilience Module was launched in 2018 in an effort to evaluate the data that would provide investors and fund managers alike with an understanding of how resilience is considered within real asset investment processes. Over the 3-year lifecycle of the Module — from designing the indicators, engaging with stakeholders, discussing with our governance groups, and analyzing and contextualizing Module results — GRESB has learned a lot about resilience in general. Furthermore, we’ve developed an understanding of how our Participants think about resilience and how to collect the most relevant data in a way that can be expressed clearly to our Members.

In its inaugural year, the Resilience Module was completed by 121 Real Estate entities and 37 Infrastructure Asset entities. In its final year of 2020, participation in the Module had grown to 412 Real Estate entities, 98 Infrastructure Asset entities, and 28 Infrastructure Fund entities, representing roughly 34%, 23%, and 24% of total GRESB participation for the GRESB Assessments, respectively. This rapid uptake mirrors the growth in investor awareness and interest in real asset resilience and climate-related issues. It also suggests that much of the market is still in the early stages of its collective approach to these, perhaps daunting, issues.

The Resilience Module has been discontinued in 2021, as its most useful and insightful elements have been incorporated into the GRESB Real Estate and Infrastructure Assessments. We are excited to integrate the most evolved resilience indicators into our Assessments in pursuit of our mission to provide standardized, validated, and benchmarked data to the capital markets, and contributing to our collective progress toward a more sustainable real asset sector and, by extension, a more sustainable world.

Introduction to the Resilience Insights Series

This Resilience Insights series is meant to serve three main purposes. Firstly, to put our learnings over the past three years into context and provide an orientation of how they guided the integration of climate-related resilience into the main Assessments. Secondly, to provide expert commentary on subjects core to the understanding of resilience, particularly as it relates to real assets. And thirdly, to disseminate high-level output/insights from the final iteration of the Resilience Module.

The Resilience Insights series will unfold as follows:

  • Article 1 provides a brief background on the GRESB Resilience Module, an introduction to the series, and three high-level lessons learned from the Resilience Module lifecycle
  • Article 2 will explore the concept of climate risk and how it relates to climate resilience 
  • Article 3 will explore best practices and what effective organizational leadership looks like in terms of resilience
  • Article 4 will explore the concept of resilient business strategy and its operationalization into effective risk management
  • Article 5 will explore the concept of social risk, its nascent status within institutional understanding, and provide context to users who may have struggled with the category in hopes of advancing the ESG conversation

Three high-level lessons from the lifecycle of the GRESB Resilience Module

1: The concept of resilience in the financial industry is still in its infancy

Resilience as a general concept has been around for quite some time. However, the financial industry’s interest in resilience, and how it might be used as an indicator of market outperformance, is more recent. And with its entrance into this new “market,” the term resilience is still going through the growing pains experienced by any new buzzword:  overuse, mis-use, oversimplification, over-correction, etc. Transparency is key in sorting through market confusion.

In an effort to promote critical dialogue, we propose to explore a central dichotomy: resilience as a state or resilience as a process.

In an effort to promote critical dialogue, we propose to explore a central dichotomy: resilience as a state or resilience as a process. Resilience as a state — as understood in the question “is your asset/portfolio resilient?” — raises the question: resilient to what? Resilient to climate change? Resilient to hurricanes? Wildfires? Pandemics? Cyber-attacks? This is quickly followed by the question: resilient to what degree? Resilience to storm surges of 1 meter? What about 2 meters? How about tsunamis? We see that resilience as a state is not an easy claim to make without a significant amount of scoping.

Resilience as a process is no less of a challenge to wrangle. While it might evade the absolutism of resilience as a state by only dealing with its more relative nature, it nevertheless comes with its own set of perhaps even more difficult questions. Does a process promote or degrade the qualities generally associated with resilience? How quickly does an organization respond to change? How quickly and completely might it recover when it experiences a situation in which it takes damage or loses value, as it almost inevitably will? And critically, how can indicators of process be designed in ways that strongly correlate with an organization’s ability to be resilient to the wide range of potential climate impacts and opportunities as they actually occur?

GRESB traditionally hints at processes rather than end states. We provide a standardized benchmark for ESG considerations to the extent the information is captured about the existence of an ESG policy or the scope of a process. As such, we take a similar approach with regard to resilience. While we have taken pains to scope the relevant issues as much as possible, we have tried to capture a portrait of resilience with the paints of a process’ existence, scope, quality, and decision-making strength.

2: Climate resilience provides a useful first step for the financial industry in understanding general resilience

The Task Force on Climate-related Financial Disclosures (TCFD) has provided financial markets with a framework for the clear, comparable, and relevant communication of climate-related issues to financial actors. It’s use of the term ‘resilience’ in the context of climate change has given the term a more defined and approachable scope.

Firstly, the TCFD’s acknowledgment of resilience as an opportunity in the face of climate-related risks positions resilience as more of a dynamic process of developing rather than a static threshold of post-development.

“The concept of climate resilience involves organizations developing adaptive capacity to respond to climate change to better manage the associated risks and seize opportunities, including the ability to respond to transition risks and physical risks. Opportunities include improving efficiency, designing new production processes, and developing new products. Opportunities related to resilience may be especially relevant for organizations with long-lived fixed assets or extensive supply or distribution networks; those that depend critically on utility and infrastructure networks or natural resources in their value chain; and those that may require longer-term financing and investment.”

Secondly, the TCFD’s use of resilience in its recommended disclosure Strategy (c) infers that same action-oriented understanding of resilience.

“Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.”

You’ll notice that the recommended disclosure does not read “Describe whether or not the organization’s strategy is resilient…”

Finally, the way resilience is used throughout the TCFD report allows us to use the TCFD structure itself as a useful framework for thinking about climate resilience. In the same way that climate-related issues should be disclosed in a way that it addresses elements of governance, strategy, risk management, and metrics and targets, reporting on climate resilience can leverage a similar structure.  Thus, the four pillars of the TCFD provide a comprehensive lens to view climate-related resilience.

3: The concept of social risk is not yet formulated in a way that is useful to investors

This does not mean that risks associated with social elements are not real or not important. On the contrary, vast evidence demonstrates that low-income communities, communities of color, low-wage workers, isolated populations and many others are at greater risk because they already lack the resources to respond to climate impacts or to recover from disasters. It is essential for capital to flow in ways that support local communities. However, this requirement is generally seen as a priority for public policy instead of capital. Financial interests alone are unlikely to direct sufficient resources into underserved communities, as returns are often perceived to be more limited. Few mechanisms exist to allow investors to directly capitalize on social co-benefits, although programs and funds are emerging to help investors do just that. Our experience with the concept of social risk within the Resilience Module helped us understand its challenges and shaped our decisions for the future.

Social risk, as it evolved throughout the course of the Resilience Module, tended to be a catch-all of everything that did not fall into the well-defined categories of transition risk and physical risk. The initial version of the Resilience Module (2018) looked at a broad range of disruptions and asked companies to consider risk from what, and to whom? The alignment with TCFD meant that the “to whom” question no longer fit and was therefore placed into a separate section. This created confusion, as social dimensions of risk cannot be separated cleanly from physical or transition risks. Various transition risks and physical risks were even at times portrayed as social risks in an effort to address all three categories. Without a clearer understanding of what social risk entails, the category lost its utility in its primary purpose of informing the identification, assessment, and management of those risks.

Furthermore, while the TCFD provided a framework for translating transition and physical risks into impacts, no such widely understood and accepted framework is yet available for the translation of social risks. Without such a framework, the identification, assessment, and management of social risks, while no less important, are not as easily communicated to, or accessible by, investors attempting to build resilience into their decision-making processes and overall strategies.

Finally, GRESB already captures a strong foundation of data on various aspects relating to social capability, performance, objectives, and management within its core Assessments. The building of such capabilities may indeed lead to more resilient entities. The “S” in ESG continues to be a core element on which GRESB seeks to provide actionable insights.

Looking Ahead 

The articles in this series on lessons learned from the Resilience Module will provide insights on what was revealed from results over the last three years. Notably, it will illustrate key concepts and what best practice looks like. The goal is to keep advancing the state of practice by helping investors to ask better questions and demonstrating what good answers look like. 


TCFD (2017) Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures.