As sustainability and environmental impact measures play an increasingly important role in investment and corporate strategies, sustainability metrics have been integrated into the Transparency Index model for the first time this year.
Having been extended to all 100 markets and included in the main index for the first time, sustainability transparency has become a central part of the thinking around real estate transparency. Issues range from voluntary measures around energy benchmarking and green building certification (e.g. LEED) to mandatory policies concerning energy efficiency. Voluntary measures appear to be showing the strongest uptake.
France is leading the way when it comes to environmental sustainability transparency, with Australia, Canada, Japan and the United Kingdom forming the rest of the ‘Highly Transparent’ group in this sub-index. Canada has edged into this tier thanks to significant improvements over the past two years, while South Korea has also advanced up a tier. At the same time, the inclusion of dozens of relatively opaque markets shows that there is still a long way to go across much of the globe.
Even among the leading countries, financial performance indicators around green buildings are rare – despite their utility to real estate investors. These indicators, provided by MSCI, are limited to just four countries – France, Australia, Canada and South Africa.
Source: JLL, LaSalle Investment Management
While the Index tracks transparency at a national and metropolitan scale, there is a growing recognition that sustainability issues in the real estate industry are focused on portfolios of individual listed companies or investment vehicles. Global environment frameworks, which assess international portfolios, are increasingly being utilised by real estate investors. The most widely-used reporting system is the GRESB assessment, which now covers 850 reporting entities across the globe. It is clear that we are seeing the real estate industry truly take the initiative around sustainability itself, rather than relying on new policies and government frameworks.
To find out more about Global Real Estate Market Transparency, the latest market trends and challenges the industry is facing in pursuit of higher standards, please download the full report Transparency: Data, Disclosure & Disruption.