For super funds and their advisers

… as Australia leads the world in ESG for property

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Australia and New Zealand have scored the highest in the latest annual ESG ratings by GRESB, the leading data collector and assessment organisation for property and infrastructure. ‘Oceania’ was first, followed by Asia, then Europe, then the ‘Americas’.

GRESB (Global Real Estate Sustainability Benchmark) says in its annual global real estate assessment, published in Amsterdam last week (November 25), the participation in its data collection process jumped 22 per cent in the past 12 months, despite the challenges of the COVID crisis, “showing an industry responding decisively to the accelerating investor demand for comparable ESG data”.

Private investors lead the publicly listed sector in the rankings overall, but only because of a big lead in the Americas. In the other regions, publicly listed investments were ranked slightly higher than real estate private equity and debt. The latest study covered 1,229 portfolios (1,005 in 2019) and a total of US$4.8 trillion (A$6.5 trillion) in assets under management. There were 96,000 assets across 64 countries represented in the portfolios.

For the purposes of aggregate investment data, Oceania is basically Australia and New Zealand, although its geography consists of 14 countries and thousands of islands spanning the Pacific. Australia has about A$3 trillion in superannuation assets, followed by New Zealand with about A$280 billion in super and other fiduciary funds, and Papua New Guinea with about A$4 billion in government funds.

Although a change in methodology means that the latest dataset is not strictly comparable with previous years, with a higher rating given to performance, GRESB says that there are several remaining trend lines:

  • Listed property companies still outperform the private sector, but with a smaller lead than previous years. The average GRESB Score for standing investments portfolios is 71 for listed companies and 70 for private entities. For development portfolios, the differences are slightly larger and favour the private sector – listed companies have an average score of 73, compared to 75 for private entities.
  • By sector, average GRESB scores for offices continue to outperform other property types, but the other sectors are closing in.
  • The regional breakdown shows Oceania still ahead, with an average GRESB score of 77. The Asian real estate sector comes in second, with 72, followed by Europe at 69.5, just slightly ahead of the Americas at 69.
  • Once again, Europe leads the world in transparency with the highest number of new entities participating in the benchmark, while the Americas cohort remains the largest in dollar terms globally. Americas is also the only region where the average score for the private sector (70) is higher than the listed sector (67).

– Greg Bright

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