Office portfolios: GRESB and indoor environment

Sydney city views

Start to measure something and improvement becomes inevitable. The metrics become a basis for engagement with stakeholders and the wider community.  

How important is indoor environmental quality or IEQ  to a Global Real Estate Sustainability Benchmark score? And how many GRESB points might be available for best practice performance in IEQ?

It makes sense to wholeheartedly embrace the GRESB philosophy that measuring environmental, social and governance or ESG performance is just the start of a conversation between asset managers and investors.

Like many things in life, if you start to measure it then improvement becomes inevitable, and the metrics become a basis for engagement with stakeholders and the wider community.

This also happens at the asset level. By measuring parameters associated with IEQ for the purpose of a rating, facility managers become interested in the process of improving the rating score and engaging positively in management techniques and capital investment required to improve the relevant parameters.

Before jumping into the analysis, it is important to note that it is possible to address these questions from an office perspective, ignoring other property types for the moment.

How IEQ can influence your GRESB score

IEQ on its own is but one small part of a portfolio’s potential GRESB score – touching seven of the 50 or so indicators across four of GRESB’s seven aspects (ignoring the optional health and well-being supplement and new construction module, for the time being).

What we found most interesting, and of particular importance to improving your overall GRESB score, is that gaining some additional points doesn’t really require top IEQ performance, only demonstration that you’re measuring it and working to improve it.

Overall IEQ could be worth a whopping 10 per cent of a GRESB score. Here’s how that works:

  • There are 136 GRESB points available in total
  • 13.5 points (10 per cent) are available through taking measures related to IEQ
  • In the building certification aspect, indicators BC1.1 and BC1.2 are worth a combined 12 points
  • For example, in Australia, you’re already doing NABERS Energy ratings so adding NABERS IE and one other NABERS rating (either waste or water) upgrades to a NABERS multi-rating certificate, where you can pick up those 12 points
  • In other countries, you might undertake a WELL rating or Fitwel rating, both heavily influenced by IEQ parameters, and find 12 points that way
  • There are 1.5 points pertaining to IEQ measures spread over five other Indicators (see the below table) – examples include conducting technical assessments for health and wellbeing including IEQ (R04) or including IEQ in standard lease contracts (SE10.1)

It does seem like a no brainer in Australia to go for the NABERS multi rating certificate, though we note that only a few leading asset managers are presently pursuing multiple NABERS ratings on a portfolio wide basis.

No doubt your present GRESB score might already include points in the indicators highlighted, however, it’s strongly recommended you review the table below to understand the impact of IEQ in the context of your portfolio.

All of the indicators touching on IEQ are important and there are good arguments to support that  GRESB is correct that the strong weighting for building certifications is justified.

And while this article has focused very much on scoring points, here is a final thought: ratings and scores are a means to an end – to improving outcomes, they are not, and should not be viewed as, the end itself.

Aspect Indicator points Description 
Risks & Opportunities R03.1: Environmental and/or social risk assessments as a standard part of due diligence for new acquisitions 0.25 IEQ is one of 18 areas of due diligence check boxes, each worth an eight of a point, multiplied by up to two times if sufficient evidence is provided. We recommend that standard due diligence process includes a review of the target’s existing IEQ documentation, and if none exists, commissioning a limited scope IEQ risk assessment. possible quarter point for IEQ. Without IEQ it’s certainly possible to attain the full two points available for R03.1 but the cost involved should be lower than ticking some of the other boxes with full evidence. 
 R03.2: Environmental and/or social risk assessments of standing investments in the last three years 0.125 IEQ is one of 19 check boxes worth an eighth of a point multiplied by the percentage of portfolio covered by IEQ risk assessments. To attain the full two points available for R03.2 requires 16 boxes ticked at 100 per cent portfolio coverage.  
Technical building assessments during the last four years 
0.5 IEQ forms part of the requirements for Health and Wellbeing which itself accounts for half a point (i.e. one ninth available for Health & Wellbeing multiplied by four and a half points in total available). 
Monitoring and Environmental Management Systems ME2: Data management system 0.167 This indicator measures the application of information technology to collect and analyze performance. IEQ is one of eight components, some of which are weighted more highly for example energy consumption. IEQ alone accounts for one sixth of a point for 100 per cent of the portfolio covered and refers to monitoring conditions inside the building and occupant control over lighting and thermal comfort. 
Building Certifications BC1.1: Buildings that obtained a green building certification at the time of design, construction or renovation See BC1.2 The certifications that are in use in Australia include GBCA Design and As Built, WELL Buildings, and WELL Core and Shell. Depending on the certifications used and percentage of portfolio certified, the combined BC1.1 and BC1.2 Indicators can be worth up to 12 points. Most of the certification schemes incorporate IEQ in the rating methodology and weight it highly. 
 BC1.2: Buildings that hold an operational green building certificate 12 Certifications that are in use in Australia are Fitwel, Greenstar Performance – Building Operations, NABERS Multi-Rating Certificate, and WELL Buildings. We wrestled with allocating 12 points in this table – is that a true reflection of IEQ’s contribution? We decided that in the Australian context the 12 points are available to any portfolio that adds NABERS IE and say NABERS Water to the compulsory NABERS Energy rating already undertaken. 
Stakeholder Engagement SE10.1 Sustainability-specific requirements in its standard lease contracts 0.5 This indicator contains a long list of 23 check boxes including indoor environmental quality management, each worth half a point. 

Michael Taranto has been director of QED Environmental Services since 2015. 

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