The impact of green building certifications on GRESB Ratings for in-use buildings

Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.

Green building certifications such as LEED (Leadership in Energy and Environmental Design) and BREEAM (Building Research Establishment Environmental Assessment Method) have become instrumental in driving sustainability initiatives within the built environment. These certifications are not just plaques on a wall, but a reflection of a building’s commitment to reducing its carbon footprint, enhancing energy efficiency, and promoting a sustainable future. GRESB has emerged as a leading benchmark for assessing the ESG performance of real estate portfolios worldwide in recent years. This article explores the symbiotic relationship between green building certifications and GRESB Ratings, focusing on their impact on in-use buildings.

Green building certifications serve as catalysts for sustainable performance improvement in buildings. By adhering to rigorous standards and best practices, buildings certified under LEED or BREEAM demonstrate a commitment to resource efficiency, occupant well-being, and environmental stewardship. These certifications incentivize building owners and managers to implement energy-efficient technologies, adopt sustainable operational practices, and enhance indoor environmental quality, ultimately reducing operational costs and improving tenant satisfaction. A compelling narrative emerges when we connect this to GRESB Ratings, which assess the sustainability performance of real estate assets worldwide.

GRESB evaluates the sustainability performance of real estate portfolios based on various criteria, including energy consumption, greenhouse gas emissions, water usage, waste management, and occupant health and well-being. Buildings with recognized green certifications invariably score higher on GRESB Assessments. Why? Because these certifications provide a structured, objective benchmark that aligns closely with GRESB’s evaluation criteria. Imagine, for example, a commercial office building in a bustling city center that underwent a transformation to achieve LEED Gold certification. Before its certification, the building’s GRESB Rating was mediocre, reflecting its average energy efficiency and environmental stewardship performance. However, the journey to LEED Gold certification involved retrofitting energy systems, enhancing water conservation measures, and implementing a comprehensive waste management program. As a result, the building saw a dramatic improvement in its GRESB Rating, not just because of the upgrades themselves but because these actions demonstrated a tangible commitment to sustainability.

Green building certifications directly address sustainability performance criteria by promoting sustainable building design, construction, and operation practices. Buildings certified under LEED or BREEAM typically exhibit lower energy consumption, reduced carbon emissions, efficient water management systems, and healthier indoor environments, all of which positively impact GRESB Ratings.

Green building certifications enhance the marketability of properties by signaling superior environmental performance and responsible stewardship. Investors are more inclined to allocate capital to assets with higher GRESB Ratings, as they are perceived to be less vulnerable to regulatory risks, market fluctuations, and environmental liabilities. GRESB Ratings have become increasingly influential in shaping investor perceptions and investment decisions within the real estate sector. Furthermore, certified green buildings often command higher rental premiums, occupancy rates, and property valuations, thus attracting investors seeking sustainable and financially resilient assets. The intersection of green building certifications and GRESB Ratings represents a symbiotic relationship wherein sustainable practices drive financial performance and stakeholder satisfaction.

GRESB provides a platform for real estate companies and fund managers to benchmark their sustainability performance against industry peers and global standards. Green building certifications contribute to this benchmarking process by providing standardized metrics and performance indicators that facilitate data transparency and comparability. By leveraging the data collected through the LEED or BREEAM certification processes, stakeholders can accurately assess the environmental impact of their buildings, identify areas for improvement, and track progress over time, ultimately driving continuous performance optimization and innovation. Green building certifications serve as a reliable indicator of a property’s long-term viability and resilience in the face of climate change and regulatory shifts. As such, buildings with certifications tend to attract greater interest from socially responsible investors seeking to align their portfolios with ESG principles.

The integration of green building certifications such as LEED and BREEAM with GRESB Ratings for in-use buildings underscores the synergistic relationship between sustainable building practices and financial performance within the real estate sector. By leveraging the data collected through the LEED or BREEAM certification processes, stakeholders can accurately assess their buildings’ environmental impact, identify improvement areas, and track progress over time, ultimately driving continuous performance optimization and innovation.

As the demand for sustainable real estate continues to grow, green building certifications will remain integral to driving positive ESG outcomes and shaping the future of the built environment. Given their importance, GRESB recently launched a public consultation on building certifications to develop new building certification evaluation criteria that will elevate best-in-class schemes, refine the list of accepted schemes, and enhance transparency on key evaluation metrics.

The relationship between green building certifications and GRESB Ratings is a narrative of progress, innovation, and a collective stride towards sustainability. It is a testament to how structured assessments and recognitions can drive the real estate industry toward a greener future.

This article was written by Tatiana Medaru, Green Building Certification Analyst at EVORA Global.

References

“BREEAM certification from BRE.” BRE Group. Accessed April 15, 2024.

“LEED rating system.” U.S. Green Building Council. Accessed April 15, 2024.