Financial Benefits of Participating in GRESB
After more than 15 years since the first green buildings, Vietnam now boasts a total of 559 green-certified projects (data as of 31/12/2024 according to IFC – World Bank Group). However, a key concern for real estate investors is how to demonstrate sustainability across an entire enterprise, rather than just individual projects. Therefore, a comprehensive and detailed internationally recognized assessment system is essential.
What is GRESB?
Organizational Perspective
From an organizational standpoint, GRESB is a global leader in assessing and standardizing ESG for the real estate sector. Established in 2010 by a group of European institutional investors seeking greater transparency on sustainability impacts in investment projects, GRESB has significantly evolved over the years to become a suitable tool for investors, managers, and real estate developers to build their ESG strategies. Currently, 2,084 real estate organizations from 77 countries participate in GRESB (as of 2023), alongside 175 leading global investors using the GRESB assessment tool for ESG evaluation and managerial selection.
Implementation Perspective
From an implementation perspective, GRESB is essentially an ESG report covering all aspects of Environment, Social, and Governance. To obtain this report, real estate organizations must first complete the GRESB assessment questionnaire. Upon submission, GRESB validates the responses, assigns scores, and compares the organization’s results with peers in the same industry and local market competitors. All types of real estate entities—companies, developers, real estate investment trusts (REITs), private funds, subsidiaries, special purpose vehicles (SPVs)—are eligible to participate in GRESB.
Benefits for Investors Participating in GRESB
1. Reducing Borrowing Costs Through Green Loans or Sustainability-Linked Loans
Participating in the GRESB assessment process, achieving a ranking among peer organizations, and earning a GRESB score can be leveraged to secure sustainability-linked loans (SLLs) and negotiate favorable terms. The goal of these loans is to integrate sustainability strategies into the core business operations of the enterprise. Companies meeting sustainability requirements (via GRESB participation) often enjoy lower borrowing costs and better loan incentives, improving net profits (after-tax profits) while continuing to pursue long-term sustainability goals.
2. Attracting Global Investors
Participating in GRESB demonstrates a commitment to sustainability, making it easier for companies to attract global investors interested in ESG topics. According to statistics, 75% of GRESB member investors have worked with their managers on GRESB participation requirements, with 44% of investors including this requirement in their partnership agreements.
3. Joining Top-Performing Funds to Boost Profits
Some funds that previously participated in GRESB reported an increase in after-tax profits. For instance, a study in The Journal of Real Estate Finance and Economics indicates an average increase of 1.94% in quarterly fund performance for those implementing ESG reports. Participation in GRESB and its outcomes are also key predictors of profitability and fund value growth.
4. Reducing Operating Costs and Increasing Asset Value
Engaging in GRESB provides a detailed roadmap for implementing environmental initiatives, such as energy efficiency, resource management, and sustainable building certifications, thereby reducing operational costs. These sustainable improvements not only cut expenses but also enhance asset values over time, leading to higher long-term financial returns.
5. Enhancing Customer Satisfaction and Retention
Adopting GRESB standards supports companies in implementing social initiatives, including tenant satisfaction and community engagement. These factors directly contribute to higher tenant retention rates and attract high-quality tenants, ensuring stable revenue streams and reducing property vacancy periods.
6. Improving Operational Efficiency & Mitigating Risks
Implementing GRESB’s governance practices boosts operational efficiency, attracts investors, and facilitates better financing terms. Addressing climate risks through stronger infrastructure and low-carbon strategies reduces legal and financial risks, while enhancing business resilience. These efforts improve market positioning and create growth opportunities in sustainability sectors, driving long-term profits.
7. Unlocking Competitive Advantage
By participating in GRESB and learning from industry leaders, companies can follow a proven path, outperforming those not engaged in GRESB. According to a study by INREV and GRESB, funds participating in GRESB outperform non-participants by 1.8% annually, even when adjusted for differences in scale and leverage (INREV & GRESB, 2023).
8. Ensuring Long-Term Financial Stability
The GRESB framework helps companies comply with ESG regulations, manage climate-related risks, and minimize penalties from legal violations. This not only stabilizes finances but also enhances market reputation, attracting long-term investments and delivering consistent financial performance.
