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Passing leadership batons on Reporting and Accounting and Sustainability Committees

Two European listed real estate veterans are stepping down as Chairs of the key EPRA Reporting and Accounting (R&A) and Sustainability Committees, so we asked them what the highlights of their times in these leadership positions had been.

Jean-Michel Gault
Olivier Elamine

Jean-Michel Gault Klépierre, Deputy CEO and Chair of the R&A Committee for three years.


Jean-Michel Gault said his priority when taking on the position of Chair was to make the R&A Committee’s work as relevant and useful for the CFOs of member companies as possible, because that is the best way to establish a consensus view across many different markets and business cultures and persuade busy executives to give up their time to engage with EPRA. So, a major part of the committee’s work is monitoring developments within the International Financial Reporting Standards (IFRS), consulting with members and the EPRA Board on what the association’s position should be on issues and then establishing a common lobbying position.


The other primary area for membership engagement is providing information on the EPRA Best Practices Recommendations in financial reporting (BPR) and encouraging their adoption across the industry. During Gault’s tenure on the R&A Committee, the three-year programme to lift compliance with the BPR has been extremely successful, hitting a record level this year and exceeding its targets. This is a positive outcome that resulted from the intensive engagement of the EPRA financial team with many association members across Europe. 


But Gault cautioned that as companies increasingly achieve ‘Gold Award’ levels for compliance with the BPR, the more the system risks becoming redundant and a victim of its own success.


“How do we further improve the BPR when almost everyone gets a Gold Award? The devil is in the detail, and the main issue is that, at present, there are only limited quality check options beyond what’s published in annual reports on the extent to which companies are actually complying with the recommendations,” he said. While the situation is not ideal, we have started to take steps to address this issue.  


The R&A Committee considered engaging with companies’ own audit firms to check internal compliance, but that option was rejected because not all EPRA metrics relate to accounting and members were generally reluctant to hand over more power to in-house auditors. An alternative idea, gaining traction, is for EPRA to employ a pool of ‘shadow auditors’ to delve deeper in corporate compliance. Gault said, however, the direction of travel on the BPR would now lie with his successor as Chair of the R&A Committee.


He added that there are three other main areas where the R&A Committee has focused its efforts:



  • Treatment of goodwill reporting: The committee decided not to be too prescriptive on the issue and has not created a BPR, leaving it largely to member companies to decide how they account for goodwill on their related EPRA metrics, while encouraging them to improve disclosure.

  • Improving capex reporting: The treatment of ‘like-for-like’ capex reporting in areas such as leasing, maintenance and refurbishments, has been a key preoccupation of the committee to the extent that a sub-committee was established to address this question. A dedicated table has been approved now by the committee members, and this is expected to be presented to the Board for approval in the near future.

  • EPRA NAV: Gault said the treatment of EPRA net asset value (NAV) was probably the toughest issue for the committee to deal with as it lies at the heart of the industry’s reporting of its financial performance. Three EPRA metrics instead of the two initial standards (EPRA NAV and triple net NAV) have been reviewed or defined: EPRA NAV, triple-net NAV and ‘going concern’ NAV. The committee voted favourably on these changes, and now the final word will be for the EPRA Board once the application of each NAV term is specified, which is expected by year-end.


Olivier Elamine, alstria CEO and Chair of the Sustainability Committee for four years.


During Olivier Elamine’s four-year tenure as Chair of the EPRA Sustainability Committee, there has been a steady and continuous improvement in the environmental core of the sBPR and the number of listed real estate companies achieving awards at the annual conference for reaching these industry standards. But the CEO of Germany’s alstria office REIT said this is only part of the story. The European listed sector still has a long way to go as EPRA adds social and governance elements to the sBPR from 2019 to bring the industry to a world-class level of (ESG) compliance.


“The initial idea of the sBPR was to start with a relatively low number of indicators to encourage companies to start reporting and then slowly increase the pace to improve transparency. We have not  finished because we now extensively cover the environmental area. EPRA is just at the start of the journey. The social and governance part of the sBPR needs to be completed, not only in real estate but across all industries,” Elamine said.


A critical component of the future benchmarking of the success of the sBPR in raising the bar for listed companies in ESG compliance will be EPRA’s establishment of a database covering the main corporate indicators in this area, as is already in place for the financial BPR, he added.


“There is a demand from most companies for the sBPR data to be held in one place and be publicly available to a wide audience of rating agencies, academics and researchers who are interested in the ESG performance of real estate. I think this information will eventually become embedded in corporate valuation models and firms will not want to fill-in private multiple questionnaires for different organisations, not least because it could become very sensitive information with all the possible governance and regulatory implications,” he said. 


Other areas that changed during Elamine’s period as Chair include the substantially greater resources that EPRA has allocated to the sustainability issue, including the appointment of a dedicated internal manager, and the representation of investors on the committee.


“Over the last four years, we started to have investor representatives on the committee, alongside the companies, to improve awareness of the work EPRA is doing and to get feedback on what they need and do not need from the industry. It has proved to be very valuable, particularly when we have engaged with rating agencies such as GRESB and MSCI to improve the alignment between their and EPRA’s ESG standards,” Elamine concluded.