Risk assessments
Assessments can be performed on standing investments to in order to identify physical and transition risks that could adversely impact their value or longevity. A good rule of thumb is to perform risk assessments every three years (which is the cycle credited in the global real estate benchmark GRESB).
ESG risk assessments of standing investments demonstrate an ongoing commitment to ESG management, a focus on mitigating risks that may negatively impact returns and a forward-looking approach to the development of the portfolio.
A risk assessment can be performed according to ISO 31000 or other third-party standards for internal or external audit programs.
GRESB
RA1 in reporting cycle 2025, 2024, 2023, 2022
GRESB allots a total of 3 points to this indicator for assessments performed in the last 3 years, based on the percentage of the portfolio covered by each assessment that is performed.
You achieve full points by performing risk assessments on 600% of your GFA. Otherwise, the coverage percentage is a multiplier over the full points. For example:
- 6 different assessments, each across 100% of your GFA = 3 points
- 12 different assessments, each across 50% of your GFA = 3 points
- 15 different assessments, each across 40% of your GFA = 3 points
- 6 different assessments, each across 50% of your GFA = 1.5 points
Risk Assessment | Definitions courtesy of the 2023 GRESB Real Estate Reference Guide |
Biodiversity and habitat | Issues related to wildlife, endangered species, ecosystem services, habitat management, and relevant topics. Biodiversity refers to the variety of all plant and animal species. Habitat refers to the natural environment in which these plant and animal species live and function. |
Building safety and materials | Environmental issues with the potential to create or exacerbate risks to human safety. Examples of building safety topics include fire safety, structural safety, and electrical and gas safety during development. Building safety strategies can include, but are not limited to, having site inspections at key construction milestones, having a reporting system in place for recording building safety observations, and having designated personnel to oversee building safety compliance during development. |
Climate change adaptation | Preparation for long-term change in climatic conditions or climate related events. Examples of climate change adaptation measures can include, but are not limited to: building flood defenses, xeriscaping and using tree species resistant to storms and fires, adapting building codes to extreme weather events. |
Contaminated land | Land pollution which may require action to reduce risk to people or the environment. As an example, contamination can be assessed through a Phase I or II Environmental Site Assessment. |
Energy efficiency | Refers to products or systems using less energy to provide the same consumer benefit. |
Energy supply | Availability of conventional power (generated by the combustion of fuels: coal, natural gas, oil) or renewable energy (e.g. sun, wind, water, organic plant and waste material). |
Flooding | Refers to a rising and overflowing of a body of water especially onto normally dry land often caused by heavy rain, flash flooding, or sea level rise. |
GHG emissions | GHGs refers to the seven gases listed in the GHG Protocol Corporate Standard: carbon dioxide (CO2); methane (CH4); nitrous oxide (N2O); hydrofluorocarbons (HFCs); perfluorocarbons (PFCs); nitrogen trifluoride (NF3) and sulfur hexafluoride (SF6). They are expressed in CO2 equivalents (CO2e). |
Health & well-being | “Health is a complete state of physical, mental and social well-being, not merely the absence of disease or infirmity” (WHO). Health & well-being is impacted by genetics and individual behavior as well as environmental conditions. Particularly relevant to GRESB stakeholders are the social determinants of health, which are the “conditions in which people are born, grow, work, live and age, and the wider set of forces and systems shaping the conditions of daily life.” These are the conditions that enable or discourage healthy living. This could include issues such as physical activity, healthy eating, equitable workplaces, maternity and paternity leave, access to healthcare, reduction in toxic exposures, etc. |
Indoor environmental quality | Refers to the conditions inside the building. It includes air quality, access to daylight and views, pleasant acoustic conditions and occupant control over lighting and thermal comfort. |
Natural hazards | Naturally occuring physical phenomena that have the potential to cause serious disruptions to the functioning of a community. Natural hazards can be geophysical, hydrological, climatological, meteorological, or biological. Examples include but are not limited to earthquakes, wildfires, hurricanes, and droughts. |
Regulatory risks | Examples include, but are not limited to: mandatory energy/carbon disclosure schemes, changes in taxes e.g. carbon tax, extreme volatility in energy prices due to regulation, zoning. |
Resilience to catastrophe/ disaster | Preparedness of the built environment towards existing and future threats of natural disaster (e.g., the ability to absorb disturbances such as increased precipitation or flooding while maintaining its structure). This can be achieved by management policies, informational technologies, educating tenants, communities, suppliers and physical measures at the asset level. |
Socio-economic risks | Impact on social well-being, livelihoods and prosperity of local communities and individuals. Examples include: economic/political instability, social housing, vulnerability to pandemics and epidemics, crime and vandalism, and the displacement of people. |
Transportation risks | Risks associated with transportation around the location of a building in relation to pedestrian, bicycle and mass-transit networks, in context of the existing infrastructure and amenities in the surrounding area. |
Waste management | Issues associated with hazardous and non-hazardous waste generation, reuse, recycling, composting, recovery, incineration, landfill and on-site storage. |
Water efficiency | Refers to the conservative use of water resources through water-saving technologies to reduce consumption. |
Water supply | Provision of surface water, groundwater, rainwater collected directly or stored by the entity, waste water from another organization, municipal water supplies or other water utilities, usually via a system of pumps and pipes. |
Technical building assessments
A technical building assessment is a formal documented assessment undertaken to understand the energy, water and waste improvement opportunities available to an asset by a person with technical expertise. Examples of persons with technical expertise can include building engineers and building surveyors.
Examples of types of assessment can include assessments of the structure of the building and materials used, how the building is operated, and how the building is used by its occupants.
GRESB
RA2 in reporting cycle 2025, 2024, 2023, 2022
GRESB allots a total of 3 points to this indicator for assessments performed in the last 3 years. Each type of assessment is assigned a maximum number of points, multiplied by the percentage of the GFA covered.
To achieve full points, you must have performed each of the 3 assessments on your entire portfolio.
Assessment | Total possible points |
Energy | 1.5 |
Water | 1 |
Waste | 0.5 |