How GRESB’s New Initiative Benefits Lenders
Dan Winters is Senior Director – Market Development & Strategic Initiatives for GRESB, the global ESG benchmark for private equity real estate and infrastructure portfolios.
Dan, can you please describe the GRESB Real Estate Lender Initiative? What is it, who is involved, and how does it work?
Dan: The GRESB Real Estate Lender Initiative brings together industry experts from the GRESB member base seeking to elevate global best business practice by integrating ESG-oriented risk factors into borrower underwriting, asset due diligence, loan origination, and loan portfolio monitoring processes.
The objectives of this initiative are to advance borrower due diligence criteria and “Know Your Customer (KYC)” best practices, identify ESG KPIs and develop data capture systems, enhance portfolio monitoring capabilities for ESG KPIs, refine decision responsibility and accountability, further operational integration and governance structures, and pursue financial product innovations.
All current and invited Lender Roundtable members may complete the GRESB Lender Assessment by August 1, 2025 using the GRESB online portal. Members will become part of the GRESB Lender Benchmark, then receive a 2025 GRESB Lender Benchmark Report plus 1:1 consultation.
Who will benefit from this GRESB lender initiative, and how?
Dan: Real estate lenders benefit by integrating global ESG best practices into the full range of lending activities—these include investment management firms with real estate private credit funds, insurance companies, banks, mortgage REITs, PACE lenders, and other real estate lending platforms.
Peer benchmarking drives industry awareness into best business practices, providing context into leading and lagging aspects advancing industry practice. Lenders often have little borrower consumption data (i.e., energy, water, waste, GHG) which GRESB can help either acquire or estimate for the full loan book.
How is GRESB endeavoring to streamline processes for acquiring and structuring non-financial data?
Dan: The GRESB Innovation team works directly with Lender Roundtable Members to help identify assets from amongst the 210,000+ buildings in the GRESB ecosystem with previously submitted consumption data, helping match borrower data with the specific lender.
For any missing consumption data, lenders can work with GRESB to run their existing loan portfolio through GRESB Real Statistics estimations to determine a baseline carbon footprint for the loan portfolio.
How do you see the MIC Framework as being an important tool/leverage point?
Dan: The Multifamily Impact Council Framework offers important metrics and measures that define global best practices for multifamily investors.
Lenders who track MIC metrics can confidently articulate impacts and outcomes of their loan book to a range of internal and external stakeholders, advance borrower due diligence efforts, and better underwrite collateral prior to investment committee consideration.
Megan Saunders is Senior Managing Director of Sustainability for Kayne Anderson’s real estate group.
Megan, what is Kayne Anderson’s philosophy on GRESB’s lender tool? Why did you decide to participate in using the tool this year?
Megan: Kayne Anderson Real Estate is participating in the GRESB Lender Roundtable, which is an update to the 2019 convening of the group. The Lender assessment is establishing a benchmark for debt investors to enhance sustainability integration in the real estate debt industry. Additionally, the results of these assessments provide quality-assured, validated data that lenders can use to identify risks, such as physical and transitional climate risk, and allow us to work with borrowers to make data-driven investment decisions.
How will this tool help your firm in terms of sustainability?
Megan: Our philosophy on sustainability revolves around prudent risk management and finding opportunities to create value. We’ve done this for years on the equity side of our business and are now taking the best practices we’ve learned and rounding out our program by applying these concepts into real estate debt.
Kayne Anderson Real Estate plans to submit to the GRESB Lender Assessment in 2025 to improve transparency and accountability in the debt platform, while measuring our progress against peers and incorporating best practices from the industry.
What other recent programs or developments to process have you instituted as part of your sustainability strategy?
Megan: We see the value in having tools that appropriately measure impact for real estate while providing transparency for the industry. As such, we’re excited to be part of the Multifamily Impact Council and help create a framework for measuring the impact we’re making for the residents and communities in which we operate. We’re tracking key metrics from the framework against our attainable housing strategy and will be including a snapshot of our alignment in our annual report to demonstrate our progress in areas such as affordability, resident engagement, health and wellness, and climate resilience.
Enhancing the resiliency of the assets, as well as the residents that live in the communities has resulted in higher retention, lower turnover costs, and ultimately higher property-level NOI. These categories are reflective of the key pillars of our attainable housing strategy.
Anything else to add?
Megan: As part of our ongoing commitment to transparency, the Kayne Anderson Attainable Housing Strategy will be participating in the new, optional GRESB Residential Assessment. This assessment serves to differentiate key factors for residential real estate and commercial real estate. This supplemental assessment will include new indicators that address fair attribution and affordability, community safety measures, and access to infrastructure/amenities that improve quality of life.
These new indicators align with the goals of our Attainable Housing Strategy, as well as those outlined by the MIC. The opportunity to participate in this optional assessment offered by GRESB will allow for further standardization across the industry of the key social metrics that our strategy our Attainable Housing strategy already incorporates.