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2018

Debt

Scoring Document

Contents

Document preface

This document aims to outline the scoring methodology of the 2018 Debt Assessment. It is shared for information purposes in an effort to increase transparency around the Assessment, Methodology and Scoring processes.

How to read this document?

The GRESB Debt Scoring Document provides a visual breakdown of each indicator score included in the 2018 GRESB Debt Assessment. Since it does not include the reporting requirements of indicators, we recommend to read this document in conjunction with the 2018 GRESB Debt Reference Guide, available on our website at www.gresb.com/resources.

Each indicator included in the GRESB Debt Scoring Document is presented in a consistent manner to reflect the 2018 GRESB Debt Reference Guide. In addition to this, numbers documented in red on the left side of each scored indicator have been added to provide the scoring breakdown of that indicator, as well as explanation underneath. Where there is a blue bracket on the left side of each scored indicator, it reflects a diminishing increase in scoring approach being applied, which is described further in the below sccoring section.

Numbers provided on the most left represent the fraction of the total number of points for that indicator that contributing to the overall indicator score, and apply to all options contained within their respective bracket (when applicable).

In addition, numbers provided within brackets represent the fraction of the total number of points for that indicator contributing to the overall indicator score.

Finally, symbols "x" outside (or inside) brackets acts as a multiplier depending on the value associated to it. "x" can either refer to a validation decision (ex: based on a supporting evidence uploaded by the participant), a percentage number entered by the participant, or a quartile. What this multiplier applies to is documented in the narrative underneath each indicator in the Reference Guide.

Example Indicator

Total score of indicator MA1.1 amounts to 2.5 points (p). These 2.5 points are split between:

If you have any questions on how to interpet the information included in this document, please contact us via info@gresb.com.

Scoring Methodology and Peer Grouping

Scoring Model

The scoring model is based on an automated system, deployed via a technology platform designed for GRESB by a third party that specializes in data analysis software development. Following data validation, scoring is completed without manual intervention.

The GRESB Debt Assessment is structured into 6 sustainability Aspects. The weighted combination of points achieved in first five aspects generates the overall GRESB Score. The sixth, Sector-specific Aspect, is not used for the GRESB Score but will be reported separately as a Sector score. This Reference Guide provides detailed insight into the points available for each indicator, and the weighting of Assessment Aspects.

The sum of the scores for each indicator adds up to a maximum of 70 points; the overall GRESB Score is expressed as a percentage – from 0 to 100. To provide additional understanding of performance, the score is divided into two dimensions: Management & Policy (MP) and Implementation & Lender Practices (IL). These scores are visualized using the GRESB Model.

Management & Policy is defined as 'internal processes evidenced by sustainability policies and management procedures adopted by the company, fund or lending unit and connected to one or more actions.' The maximum score for Management & Policy is 32 points – this is 46 percent of the overall GRESB Debt Score, and expressed as a percentage.

Implementation & Lender Practices is defined as 'one or more actions taken to implement specific lending activities and/or the ongoing monitoring of loan portfolio performance indicators.' The maximum score for Implementation & Measurement is 38 points – this is 54 percent of the overall GRESB Score, and expressed as a percentage.

Indicator Points

For indicators where you can select one or more sub-options, GRESB awards points cumulatively for each individual sub-option and then aggregates to calculate a final score for the indicator. For many indicators, this final score is capped at a maximum, which means that it is not necessary to select all answer sub-options in order to receive full points. Open text boxes (where participants answer through a descriptive text) may receive full, partial or no points. Points are awarded for valid responses, based on the quality of the responses.

Aspect Points

Marker Aspect name Maximum points Aspect weight
MA Management 12 17.1%
PD Policy & Disclosure 13 18.6%
DD Due Diligence 13.5 19.3%
ME Monitoring 16 22.9%
RO Risks & Opportunities 15.5 22.1%
FUND Fund Indicators 11 Not part of the GRESB Score
BANK Bank Indicators 11 Not part of the GRESB Score

Each of the six Aspects have specific weights and number of points associated. Maximum number of points per Aspect that participants can achieve is equal to the sum of points for underlying indicators. Number of maximum points and Aspect weights are available in this table:

GRESB Model

The scores for Management & Policy (MP) and Implementation & Lender Practices (IL) are visualized using the GRESB Model. Depending on the points achieved along each MP and IL axis, each participant falls within one of the four quadrants.

GRESB Rating

The GRESB Rating is an overall measure of how well ESG issues are integrated into the lending practices of institutional lenders and real estate debt funds.

The rating is based on the GRESB Score and its quintile position relative to the GRESB universe. It is calculated relative to the global performance of all reporting entities - lender type and geography are not taken into account.

The calculation of the GRESB Rating is based on the GRESB Score and its quintile position relative to the GRESB universe, with annual calibration of the model. If the participant is placed in the top quintile, it will have a GRESB 5-star rating; if it ranks in the bottom quintile, it will have a GRESB 1-star rating, etc.

Allocation to E, S, G

GRESB allocates each indicator to one of the three sustainability dimensions – Environmental, Social or Governance

Peer group allocation

Each participant is assigned to a peer group, based on the participants’ lending actions and geographical location, as reported in EC3. To ensure participant anonymity, GRESB will only create a peer group if there is a minimum of five peers in the group.

Peer group assignments do not affect an entity's score, but determine how GRESB puts participant’s results into context. The peer group composition is determined by a simple set of quantitative rules and provides consistent treatment for all participants. Peer group participants will see only Fund Manager / Organisation name in the list of peer group constituents.

GRESB requests details on Entity Characteristics [EC] and Reporting Characteristics [RC] to construct these groups for proper benchmarking and comparison opportunities.

Management

This Aspect focuses on how the organization addresses sustainability and its implementation in the context of its real estate lending approach.

There are 6 indicators in this Aspect and all are scored. The maximum number of points is 12 and this corresponds to 17.1% of the GRESB Score.

Sustainability Objectives

2017 Indicator

2.5 points , MP, G

Indicator: This indicator is for describing objectives focused on real estate lending activities and reporting clearly defined sustainability objectives and/or targets.

Participants are required to report sustainability objectives and/or targets in text boxes.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

Evidence: The evidence is validated and assigned a score which is used as a multiplying factor, according to the table below:

Validation status Score
Accepted 2/2
Partially accepted 1/2
Not accepted/not provided 0

2.5 points , IL, G

Indicator: This indicator is for communicating steps that lender takes to achieve sustainability objectives and explaining how selected actions are related to sustainability objectives.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

1.5 points , MP, G

Indicator: This indicator is for identifying internal resources dedicated to implementing overall sustainability objectives and actions in lending.

In this section, the respondent is required to report the name, title and e-mail of the employee, but this information is not used for scoring.

Other: 'Other' answer must be accepted during validation to achieve a score.

Sustainability Decision Making

2017 Indicator

1.5 points , MP, G

Indicator: This indicator is for providing details of the most senior decision maker accountable for ESG issues and clarifying the department or governance group of which senior decision maker is part of.

In this section, the respondent is required to report the name, title and e-mail of the employee, but this information is not used for scoring.

Other: 'Other' answer must be accepted during validation to achieve a score.

2.5 points , IL, G

Indicator: This indicator is for sustainability-related elements that are reviewed by the investment committee during loan approval process and explaining the review of sustainability-related content by the committee.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

1.5 points , MP, G

Indicator: This indicator is for elaborating to what extent ESG performance indicators are addressed in employee performance targets and identifying if ESG performance has positive and/or negative consequences.

Other: 'Other' answer must be accepted during validation to achieve a score.

Policy & Disclosure

This Aspect focuses on established internal guidance that defines and communicates sustainability-related factors.

There are 6 indicators in this Aspect and all are scored. The maximum number of points is 13 and this corresponds to 18.6% of the GRESB Score.

Sustainability Policies

2017 Indicator

2.5 points , MP, G

Indicator: This indicator is for reporting the guidance document used for commercial real estate lending that includes sustainability aspects and practical cases when this guidance document is used/applied.

Other: 'Other' answer must be accepted during validation to achieve a score.

Evidence: The evidence is validated and assigned a score which is used as a multiplying factor, according to the table below:

Validation status Score
Accepted 2/2
Partially accepted 1/2
Not accepted/not provided 0

3 points , MP, G

Indicator: This indicator is for identifying aspects and metrics included in the document(s) referenced in PD1.1 and practical use of this guidance.

Note: In order to achieve points for this indicator the participant must also have received more than 0 points for the corresponding section in PD1.1

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

1.5 points , IL, G

Indicator: This indicator is for explaining the guidance document used for sustainability-related data collection process for post-close loan monitoring and communicating items that borrowers are required to report according to the guidance document.

Other: 'Other' answer must be accepted during validation to achieve a score.

Evidence: The evidence is validated and assigned a score which is used as a multiplying factor, according to the table below:

Validation status Score
Accepted 2/2
Partially accepted 1/2
Not accepted/not provided 0

1.5 points , MP, S

Indicator: This indicator is for reporting stakeholder engagement and/or collaboration process along with a list of stakeholders involved in this program.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

Other: 'Other' answer must be accepted during validation to achieve a score.

Evidence: The evidence is validated and assigned a score which is used as a multiplying factor, according to the table below:

Validation status Score
Accepted 2/2
Partially accepted 1/2
Not accepted/not provided 0

Sustainability Disclosure

2017 Indicator

3 points , MP, G

Indicator: This indicator is for identifying one or more disclosure methods used to report sustainability-related actions and/or performance.

Each form of ESG disclosure method is assigned a specific score that is multiplied by reporting level and evidence multiplier. The two reporting levels are mutually exclusive.

Evidence: The evidence is validated and assigned a score which is used as a multiplying factor, according to the table below:

Validation status Score
Accepted 2/2
Partially accepted 1/2
Not accepted/not provided 0

Other: 'Other' answer must be accepted during validation to achieve a score.

Alignment is for reporting purposes only and is not used in scoring.

1.5 points , MP, G

Indicator: This indicator is for identifying disclosure methods used by the participant and the review level.

Note: In order to achieve points for this indicator the participant must also have received more than 0 points for the corresponding section in PD4.2

Scheme name is for reporting purposes only and is not used in scoring.

Other: 'Other' answer must be accepted during validation to achieve a score.

Service Provider: A service provider has to be picked to achieve a score.

Due Diligence

This Aspect focuses on actions taken during the loan due diligence process to assess the sustainability performance of the collateral, and the borrower.

There are 4 indicators in this Aspect and all are scored. The maximum number of points is 13.5 and this corresponds to 19.3% of the GRESB Score.

Property & Borrower Review

2017 Indicator

3 points , MP, G

Indicator: This indicator is for communicating third-party reports included in standard due diligence.

Evidence: In this section the respondent may provide evidence through a hyperlink and/or file upload, but this information is not used for scoring.

Other: 'Other' answer must be accepted during validation to achieve a score.

3.5 points , MP, E

Indicator: This indicator is for communicating asset-specific sustainability risks and opportunities incorporated during due diligence and sources used in the review process.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

3 points , MP, S

Indicator: This indicator is for identifying lender process to better understand borrower risk profile by using sustainability attributes, actions and performance and identifying ESG metrics that are reviewed during the underwriting process.

Other: 'Other' answer must be accepted during validation to achieve a score.

4 points , IL, S

Indicator: This indicator is for identifying actions to systematically integrate sustainability-related attributes into the due diligence process .

Threshold: The reported text must be accepted during validation to achieve a score.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

Monitoring

This Aspect focuses on presence of a sustainability-based KPI tracking system and the overall portfolio monitoring process.

There are 5 indicators in this Aspect and all are scored. The maximum number of points is 16 and this corresponds to 22.9% of the GRESB Score.

Portfolio Monitoring

2017 Indicator

2.5 points , IL, G

Indicator: This indicator is for identifying actions to systematically monitor sustainability KPIs related to the borrower/sponsor .

Other: 'Other' answer must be accepted during validation to achieve a score.

Service Provider: A service provider has to be picked to achieve a score.

3 points , IL, E

Indicator: This indicator is for dentifying KPIs / metrics used to monitor asset-specific sustainability attributes.

Other: 'Other' answer must be accepted during validation to achieve a score.

2.5 points , IL, E

Indicator: This indicator is for identifying sources and process(es) used to assess natural disaster risks.

Mandatory for is for reporting purposes only and is not used in scoring.

Percentage of the loan portfolio is for reporting purposes only and is not used in scoring.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

4 points , IL, E

Portfolio coverage: The score is based on the data coverage reported by the respondent.

The overall portfolio coverage of energy certification of this indicator is the sum of weighted coverage percentages of each reported certification scheme. The overall portfolio coverage number is scored.

Percentage number: The coverage percentage number reported is used as a multiplier to determine the score assigned.

Text Box: The text box response is validated, and its score is determined by the validation status according to the table below:

Validation status Score
Accepted 1
Not accepted/not provided 0

Other: 'Other' answer must be accepted during validation to achieve a score.

4 points , IL, E

Each certification is validated by GRESB according to a list of predifined criteria which results in a weight as shown in the table below:

Validation status Weight
Full points 1.0
Partial plus 0.6
Partial minus 0.3
No points 0.0

The overall portfolio coverage of building certification of this indicator is the sum of weighted coverage percentages of each reported certification scheme. The overall portfolio coverage number is scored.

Percentage number: The coverage percentage number reported is used as a multiplier to determine the score assigned.

Risks & Opportunities

This Aspect focuses on actions that entity takes to facilitate market transformation.

There are 5 indicators in this Aspect and all are scored. The maximum number of points is 15.5 and this corresponds to 22.1% of the GRESB Score.

Market Transformation

2017 Indicator

3 points , IL, G

Indicator: This indicator is for identifying framework(s) used for the valuation assignment and how the results are used in decision-making process.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

2 points , IL, G

Indicator: This indicator is for identifying if loan collateral is subject to periodic appraisals/valuations post-close of the loan.

Other: 'Other' answer must be accepted during validation to achieve a score.

3.5 points , IL, E

Indicator: This indicator is for communicating lender program(s) for funding property improvements that result in improved building efficiencies and/or positive environmental impacts.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

Evidence: In this section the respondent may provide evidence through a hyperlink and/or file upload, but this information is not used for scoring.

3 points , IL, G

Indicator: This indicator is for identifying mechanism(s) within loan agreements that are tied to enforcing borrower-controlled sustainability aspects/KPIs.

Specific cases: The reported text must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

Other: 'Other' answer must be accepted during validation to achieve a score.

4 points , MP, G

Indicator: This indicator is for identifying long-term sustainability risks and explaining actions to track impact.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

Fund Indicators

This Aspect focuses on actions that real estate debt funds take to improve ESG metric integration into the real estate lending process.

There are 5 indicators in this Aspect and all are scored. The maximum number of points is 11 and this corresponds to 0% of the GRESB Score.

2 points

Indicator: This indicator is for identifying the presence of any internal sustainability taskforce or committee and selecting the main issues assigned to this cross-functional group.

Other: 'Other' answer must be accepted during validation to achieve a score.

1.5 points

Indicator: This indicator is for identifying lender processes used to evaluate borrower actions during or after property improvements and describing any follow-up actions after completion.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

2.5 points

Indicator: This indicator is for identifying cases when the lender requests an asset improvement plan during due diligence and describing components that are reviewed during this process.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

2 points

Indicator: This indicator is for evaluating social impacts of real estate loan portfolio and identifying metrics that are used in this process.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

3 points

Indicator: This indicator is for identifying lending unit approach to mitigating long-term, sustainability-based portfolio risk factors.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

Bank Indicators

This Aspect focuses on actions that institutional lenders take to improve integration of ESG metrics into real estate lending processes.

There are 5 indicators in this Aspect and all are scored. The maximum number of points is 11 and this corresponds to 0% of the GRESB Score.

2.5 points

Indicator: This indicator is for communicating any positive impact financing programs and describing applicable thresholds/certifications/improvement minimum.

Criteria: The reported text must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

Other: 'Other' answer must be accepted during validation to achieve a score.

2 points

Indicator: This indicator is for communicating lender approach to provide loan incentives to deliver positive environmental impact(s).

Other: 'Other' answer must be accepted during validation to achieve a score.

Evidence: The evidence is validated and assigned a score which is used as a multiplying factor, according to the table below:

Validation status Score
Accepted 2/2
Partially accepted 1/2
Not accepted/not provided 0

1.5 points

Indicator: This indicator is for identifying the presence of any internal sustainability taskforce or committee.

Other: 'Other' answer must be accepted during validation to achieve a score.

2 points

Indicator: This indicator is for identifying targeted impacts and applicable property types/regions included in the long-term financing commitment.

Long term commitment is for reporting purposes only and is not used in scoring.

Total value of loans provided is for reporting purposes only and is not used in scoring.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0

3 points

Indicator: This indicator is for communicating internal process and systems used to identify and mitigate future sustainability-related risks.

Other: 'Other' answer must be accepted during validation to achieve a score.

Text Box: The text box is validated, and its validation status is determined based on the requirements of the indicators. Various validation status lead to different scores according to the table below:

Validation status Score
Full points 2/2
Partial points 1/2
No point 0