Disclaimer: 2020 GRESB Resilience Module Reference Guide
The 2020 GRESB Real Estate and Infrastructure Resilience Module Reference Guide (“Reference Guide”) accompanies the 2020 GRESB Real Estate Resilience Module and is published both as a standalone document and in the GRESB Portal alongside each Module indicator. The Reference Guide reflects the opinions of GRESB and not of our members. The information in the Reference Guide has been provided in good faith and is provided on an “as is” basis. We take reasonable care to check the accuracy and completeness of the Reference Guide prior to its publication. While we do not anticipate major changes, we reserve the right to make modifications to the Reference Guide. We will publicly announce any such modifications. The Reference Guide is not provided as the basis for any professional advice or for transactional use. GRESB and its advisors, consultants and sub-contractors shall not be responsible or liable for any advice given to third parties, any investment decisions or trading or any other actions taken by you or by third parties based on information contained in the Reference Guide. Except where stated otherwise, GRESB is the exclusive owner of all intellectual property rights in all the information contained in the Reference Guide.
Introduction
Worldwide, the frequency, size and cost of disasters is increasing, driven by climate change, population growth, rapid urbanization, and other factors. Sustainability efforts are critical in helping mitigate these factors, including action to reduce greenhouse gas emissions; increase the use of clean, renewable energy sources; conserve water resources; and plan safe, equitable communities. Such efforts are essential and must be continued and expanded. At the same time, businesses or communities must prepare for the changes that lie ahead. Organizations need to identify hazards, assess risks, and systematically adapt to a changing climate and changing world.
Long-term, global trends including population growth, urbanization, and climate change necessitate that efforts to manage property and infrastructure in the future cannot entirely rely on past experience. Scientific evidence points to significant change, along with great uncertainty about local and regional impacts. The challenges of this dynamic future are daunting, but they also provide significant business opportunities. Scientists can already make reliable predictions about many types of impacts, along with information needed to identify the most vulnerable places and people. In parallel, new technologies and strategies are emerging that can mitigate local hazards, reduce risks, and protect life and property. The availability of this understanding and opportunities for positive action create the need to understand how property and infrastructure companies are acting to use these tools to manage risk and, in some cases, seize business opportunities.
These circumstances have motivated the development of the GRESB Resilience Module (the Module). The Module has two primary goals:
- Meet investor demand for information about the resilience of property and infrastructure companies and funds; and
- Provide more information about the processes that property and infrastructure companies use to identify, assess, and manage climate-related risks.
Definitions
For the Module, resilience is defined as the ability of an entity (i.e., organization or fund) to plan for, respond to, and rebound from short-term shocks and long-term stressors. This encompasses the Module’s original working definition, “The ability to survive and thrive when subjected to shocks and stressors…”.
The Resilience Module addresses two fundamental categories of climate-related risk identified by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD): transition risk and physical risk.
Transition risks refer to those posed by market, policy, legal, reputational, technological, and other risk factors that arise from the ongoing shift to a low-carbon economy necessary to achieve the goals of the United Nations Paris Agreement. This transition may create new liabilities for companies, particularly those reliant on inefficient or carbon-intensive technologies. Such companies may not only be at risk from the increased cost of complying with current and future regulation (e.g., U.K. Minimum Energy Efficiency Standards for leased property), but may also exhibit competitive disadvantages. However, the transition will also create new opportunities for companies capable of providing low-carbon solutions such as energy efficiency programs or buildings powered by renewable energy.
Physical risks are those associated with a myriad of acute shocks (e.g., wildfires, flood events, tropical and extratropical storms) and chronic stresses (e.g., changing heating and cooling degree days, precipitation levels) caused or exacerbated by climate change.
While the Resilience Module aligns with the TCFD in addressing both transition and physical risks, it takes a broader perspective than the TCFD by evaluating and scoring other resilience-related measures beyond these two major categories. Notably, the Module provides indicators related to social risks. Social risks in the 2020 Module are constrained to those caused or exacerbated by transition or physical climate-related risk factors -- i.e., those that are climate-related. Social risk factors include social shocks and stressors such as labor market disruption, building inaccessibility, inequity, loss of life during catastrophic events, and others, many of which are described by the global 100 Resilient Cities program. Other social risks unrelated to climate change are addressed in the core assessment.
| For the purpose of 2020 reporting, the Resilience Module provides relevant, actionable information related to transition, physical, and social risks and opportunities facing real estate and infrastructure companies around the world. |
Scope and Purpose
The Resilience Module provides investors with information needed to understand how real estate and infrastructure companies and funds are identifying and assessing long-term trends, preparing for potentially disruptive events and changing conditions, and ultimately becoming more resilient over time. The Module provides companies and funds with the opportunity to communicate their governance, risk assessment, business strategy, and performance measurement for climate-related risks and opportunities.
The Resilience Module was designed to align with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). While it is not meant to, by itself, constitute a complete climate-related risk disclosure in accordance with the TCFD, it nonetheless provides a strong basis for one in the context of real estate and infrastructure fund management.
The Resilience Module does not attempt to assess or communicate specific risks to individual assets, such as homes or buildings. Rather, the Resilience Module provides an entity-level framework to report on the processes used to conduct such risk assessments and use those results to manage risk and create value. Stakeholders interested in asset-level risk assessment and management are referred to a growing number of tools such as those identified in the GRESB (2018) Special Report on Real Assets and Resilience.
Timeline
The GRESB Resilience Module is a three-year effort to improve reporting and benchmarking of climate risk and resilience management by property and infrastructure companies. The stages of development of the Module are as follows:
- 2018: The 2018 Resilience Module was an initial high-level screen intended to raise awareness, motivate internal discussion, and provide a basic level of transparency for investors. Results from 2018 Real Estate and Infrastructure Assessments are available in the GRESB (2018) Special Report: Real Assets & Resilience.
- 2019: The 2019 Resilience Module built upon the high-level criteria, with more rigour with respect to the contents and quality of evidence. It also sought to increase the Module’s alignment with the recommendations of the TCFD. The 2019 Resilience Module was opened to participation by Infrastructure Funds.
- 2020: The 2020 Resilience Module makes improvements in reporting indicators based on two-years of experience, with continued emphasis on increasing alignment with the recommendations of the TCFD. The 2020 Resilience Module also attempts to provide more practical and nuanced answer choices related to scenario analysis, as well as the identification, assessment, and management of specific risks. This is the last year that a distinct Resilience Module is planned to be offered.
In 2021, select climate risk and resilience indicators are expected to be incorporated, scored, and reported as part of the core Real Estate and Infrastructure Assessments.
Structure
The 2020 Resilience Module has four sections:
- Leadership & Governance
- Risk Assessment
- Business Strategy & Financial Planning
- Performance Metrics & Targets
The Resilience Module is available for the Real Estate, Developer, Infrastructure Asset and Infrastructure Fund Assessment.
The Resilience Module contains indicator structures familiar to users of the GRESB Real Estate or Infrastructure Assessments. Each item consists of a “Yes or No” question. Either choice provides the option of providing additional text comments. Selecting "Yes" provides a set of sub-options to refine the response and the option to provide supporting evidence in the form of an uploaded document or hyperlink.
Data Access
Participants in the Resilience Module can control access to Module results via the GRESB Portal by checking a box to confirm whether they wish to share their Module results with their investors. If a participant elects to share its Module results, the results will appear as a separate section in the participant’s GRESB Benchmark Report. If a participant chooses not to share its results, Resilience Module results will not appear in the Benchmark Report. This selection can be changed upon request here. Aggregated information from all Resilience Module participants will be used as the basis for a market report and related research.
Supporting Indicators
The following indicators from the core assessments also provide valuable information about resilience. Responses to these indicators complement information provided for the Resilience Module indicators.
GRESB Real Estate Assessment indicators including:
| LE4/5 |
Leadership and responsibility |
| PO1 |
ESG policy, including resilience |
| EN1 & GH1 |
Performance indicators for carbon, energy, renewables, etc. |
| RM4 |
Risk assessments for new acquisitions |
| RA1 |
Risk assessments for standing investments |
| BC1 |
Building certifications |
GRESB Infrastructure Fund Assessment indicators including:
| LE3/4 |
Leadership and responsibility |
| RM1.1 |
ESG due diligence for new acquisitions |
| RM1.2 |
ESG risks and opportunities in investment monitoring
processes/asset management |
GRESB Infrastructure Asset Assessment indicators including:
| LE4/5 |
Leadership and responsibility |
| PO1 |
Environmental policy |
| RM2.1 |
Environmental risk assessments |
| RM2.2 |
Social risk assessments |
| EN1 & GH1 |
Performance indicators for carbon, energy, renewables, etc. |
| CA1 |
Asset-level certification |
| CA2 |
Awards for ESG-related actions |
Alignment with TCFD
The Resilience Module is not designed to, by itself, constitute a complete climate-related risk disclosure in accordance with the TCFD. However, it provides a strong basis for one in the context of real estate and infrastructure fund management. As illustrated in the table below, there is significant overlap between the TCFD recommended disclosures and GRESB Resilience Module indicators. As described in the Supporting Indicators appendix above, there are a number of indicators within the core Real Estate and Infrastructure Assessments that already cover specific recommended disclosures from the TCFD. For instance, indicators EN1 & GH 1 from the Real Estate and Infrastructure Assessments align with the TCFD’s Metrics and Targets recommended disclosure (b): Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
| TCFD Recommendation | TCFD Recommended Disclosure | GRESB 2020 Resilience Module Indicator |
| Governance: Disclose the organization’s governance around climate-related risks and opportunities. |
(a) Describe the board’s oversight of climate-related risks and opportunities. |
RS2 |
| (b) Describe management’s role in assessing and managing climate-related risks and opportunities. |
RS1, RS2 |
| Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material. |
(a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. |
RS4, RS5, RS6 |
| (b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. |
RS7, RS8 |
| (c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. |
RS4, RS5, RS6, RS8 |
| Risk Management: Disclose how the organization identifies, assesses, and manages climate-related risks. |
(a) Describe the organization’s processes for identifying and assessing climate-related risks. |
RS4, RS5, RS6, RS7 |
| (b) Describe the organization’s processes for managing climate-related risks. |
RS8 |
| (c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management. |
RS3 |
| Metrics and Targets: Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. |
(a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. |
RS10 |
| (b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. |
|
| (c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. |
RS9 |
Definitions
Climate Change Adaptation: The process of changing business models and/or operations in order to prepare for and function within a different climatic environment, including different patterns of climate-related events. Examples of climate change adaptation measures may include, but are not limited to, building flood defenses, xeriscaping and using tree species resistant to storms and fires, and adapting building codes to extreme weather events.
Adaptive Capacity: The capability of an organization to proactively and positively manage change. In the context of resilience, adaptive capacity is a function of an organization’s leadership, its ability to assess and understand threats and opportunities, its ability to plan and implement adaptive measures, and its ability to continually improve. Adaptive capacity can be expanded in the context of an organization’s physical, social and economic systems.
Community: Community means persons or groups of people economically, socially or environmentally impacted (positively or negatively) by the organization’s operations. Communities are defined by association and connection, not geography. Resilience can be strengthened by supporting the bonds within and between communities.
Entity: The investable portfolio for which the Resilience Module is being completed.
Hazard: Potentially dangerous or harmful occurrence that may cause loss of life, injury, destruction of property, loss of livelihood, disruption of business, damage to the environment, etc.
Mitigation: Actions that can be taken to lessen the likelihood or harmfulness of a potential hazard. Note that the word is used differently in the fields of climate change and risk management. In the climate change arena, mitigation generally refers to the reduction of greenhouse gas emissions and similar actions to reduce the causes of climate change, while actions taken to address the impacts of climate change (such as sea level rise or storm surge) are called adaptation. In the fields of risk management, mitigation refers to actions to reduce the likelihood or severity of risks on the ground, including hazards that are driven by climate change as well as those resulting from other causes (e.g. earthquakes). In the GRESB Resilience Module, the word is used in the latter context, referring to actions to lessen hazards from an operational standpoint.
New Acquisition: As used in the GRESB Real Estate Assessment.
New Construction: Includes all activities to obtain or change building or land-use permissions and financing. Includes construction work for the project with the intention of enhancing the property or asset’s value. Development of new buildings and additions to existing buildings that affect usable space can be treated as new construction. New Construction projects refer to buildings or infrastructure assets that were under construction at any time during the reporting period.
Preparedness: The level of readiness of an organization or community to disruptions and disasters. Preparedness can be increased via strategic planning, emergency planning, training, drills, and communication protocols.
Prevention: The stopping or avoidance of hazards. For example preventing flood damage by not building in a floodplain or by locating critical system components above potential flood levels.
Recovery: Efforts to restore (and ideally improve) full functionality of a business or community following a disaster.
Response: The ability of an organization to react to a disruption or disaster and provide in emergency efforts. Response activities typically include accounting and ensuring the safety of people, supporting those in need of rescue or assistance, protecting property and processes, communicating with emergency responders, etc.
Resilience: The ability of a system (e.g., organization, entity, fund) to plan for, respond to, and rebound from short-term shocks and long-term stressors. This encompasses the Module’s original working definition, “The ability to survive and thrive when subjected to shocks and stressors…”.
Risk: The combination of the likelihood that a hazard will occur, the potential severity of its consequences, and the level of vulnerability of people, assets or systems that are exposed. For example, the frequency and severity of heat waves in many places is increasing, leading to increased risk. This risk is higher for the elderly because they are more vulnerable to the impacts of heat and more likely to be socially isolated.
Standing Investment: As used in the GRESB Real Estate Assessment.
Stressor: Underlying stress factors within communities, organizations, or places that reduce the capacity of the system to plan for, adapt to, cope with or recover from disasters. They can also be thought of as slow-moving disasters on their own. Examples include poverty, unemployment, racial inequality, public health concerns, environmental pollution, crumbling or poorly planned infrastructure, water stress, changing climate, etc. Addressing stressors is a fundamental component of resilience. See Shock.
Shock: Sudden, sharp, disruptive events that threaten a community, organization, or place. Examples include hurricanes, fires, floods, earthquakes, violence, terrorism, economic collapse (see Hazard). There is some fluidity between shocks and stresses. For example, rising temperatures associated with climate change can be seen as a stressor (the long term trend undermines the ability of communities to cope with a variety of challenges) and a shock (sudden heat waves can cause direct health problems and deaths).
Stakeholder: A person or group that can be directly or indirectly affected by the operations of the organization, and that may require or be able to provide assistance during disasters.
Strategy: A set of coordinated actions and planned courses of potential actions taken to achieve an objective.
Vulnerable population: Disadvantaged sub-sections of a community, such as the economically disadvantaged, racial and ethnic minorities, the uninsured, low-income children, the elderly, the homeless, people with disabilities or chronic illness, etc.
Resources
- 100 Resilient Cities
- B-Ready Building Resilience Assessment Tool
- Building Resilience-LA
- The Carbon Risk Real Estate Monitor
- City Resilience Index
- Global Adaptation & Resilience Investment Working Group
- Enterprise Green Communities Ready to Respond Toolkit
- Green Star, Asset Resilience Innovation Challenge innovation-challenges/
- Insurance Council of Australia Building Resilience Rating Tool
- International Energy Agency
- International Disaster Database
- LEED Pilot Credits
- National Institute of Building Sciences “Natural Hazard Mitigation Saves: 2017 Interim Report”
- PEER
- RAND CORPORATION
- Resilience Action List and Credit Catalogue (RELi)
- Resilient Design Institute
- Rockström, J., Gaffney, O., Rogelj, J., et al. (2017) A Roadmap for Rapid Decarbonization. Science.
- Task Force for Climate-Related Financial Disclosure
- US Chamber of Commerce, Building Resilience 101 Workbook
- U.S Federal Emergency Management Administration. Threat and Hazard Identification and Risk Assessment
- United Nations Office of Disaster Risk Reduction
- UN PRI Inevitable Policy Response
- van Vuuren, D.P., Edmonds, J., Kainuma, M. et al. The representative concentration pathways: an overview. Climatic Change 109, 5 (2011).
