The availability of quality data is essential for informed decision-making. And, as real estate investors increasingly incorporate responsible investment credentials into their manager selection processes, access to standardized and comparable quantitative information is key.
“Quality data is essential for making quality decisions, in real estate, as in all other areas,” says Helena Olin, head of real assets at Swedish pension scheme AP2. “One aspect of quality data is to be able to compare sustainability performance. This can be a challenge with real estate as different jurisdictions have different standards.”
Emma Storm, associate, data quality and validation, at GRESB, adds: “More and more, investors are using ESG metrics to drive their investment decisions, which means the underlying data needs to be accurate and complete, and reported in a consistent, comparable way. While real estate companies have made great strides to improve the quality of their ESG performance data, there are still limitations to overcome in bringing the quality of non-financial data on par with the quality of financial data.”
To determine the physical risk from climate change, for example, PGGM gathers exact longitude/latitude information for the almost 4,000 assets it has had exposure. “This was supplemented by exact climate risk metrics for those locations, providing us with full insight into the physical risk within our overall real estate portfolio,” says PGGM’s Mathieu Elshout.
Quality data is just as important for real estate managers as it is for their underlying investors, enabling them both to assess future opportunities and drive value within existing assets. “There is data around today to support our investment decision-making that we simply couldn’t have accessed a few years ago,” says Nuveen’s head of sustainability Abigail Dean.
Technological advances, in particular, are supporting the ability to monitor the digital profiles of buildings. It is now possible to use sensors, advanced metering and specialist software to monitor tens of thousands of data points on a real-time basis, ensuring buildings deliver the best environment for tenants, while not using more energy than necessary, says Dean.
But for this to work effectively, mere data retrieval is not enough. “The important step is taking that data, analyzing it and using the results to improve our properties,” adds Dean. “Organizations can sometimes get stuck at the data collection stage.”
Sarah Ratcliffe, chief executive at Better Buildings Partnership, agrees. “Good quality data is absolutely critical if we are to understand the scale of the sustainability challenges we face,” she says. “But the old adage of ‘rubbish in, rubbish out’ still holds true. This is being made easier by technology, but this needs to be matched with the skills to make data meaningful to everyone from the property manager to the investment manager. It is their decisions and actions that will drive change.”