Listed real estate companies ahead of the curve on ESG reporting for sBPR

European listed real estate companies are already anticipating next year’s incorporation of broader social and governance factors into the EPRA sustainability Best Practice Recommendations (sBPR). This year’s JLL survey shows many have started disclosing on metrics such as gender diversity and employee development, as these will form part of the assessment for the sBPR Awards from 2019.

A comprehensive review

For the assessment for the 2018 sBPR Awards, consultants JLL reviewed the public reporting of 125 EPRA members and 14 non-members to gauge sBPR adoption. To place the companies in one of the three award categories reflecting their level of compliance, JLL assessed 16 performance measures: energy (fuels, electricity, district heating and cooling); direct and indirect greenhouse gas emissions; water; waste and certified buildings.
This year’s survey showed 81% of EPRA members reported at least one sustainability performance measure, compared with 68% last year.
This year’s review also includes a dozen measures relating to social and governance performance, including gender diversity; employee development; health and safety; community engagement and Board composition; as well as selection and conflicts of interest. While JLL did not score these metrics this year, they will contribute to the companies’ overall score from 2019 onwards.

Award numbers rising

A total of 65 companies won awards this year, compared with 55 in 2017, corresponding to 73% of the total market value of all companies included in this year’s assessment. Among the EPRA members, 52% received an award, meaning they disclosed at least a dozen sustainability metrics. Companies that did not report according to the sBPR guidelines declined to 17% of the survey sample from 32% in 2017.
“The number of award winners has doubled since we first started monitoring compliance with the sBPR in 2012. This year’s outstanding results highlight how the listed property sector is raising transparency standards on the vital question of sustainability and proactively, demonstrating its commitments in this field,” EPRA CEO, Dominique Moerenhout said.
“We can see further evidence of this in the promising take-up in broader ESG reporting to meet the guidelines that will be the basis for assessing awards from next year. Huge credit must go to the work of the Sustainability Committee and EPRA’s team on this year’s impressive results,” he added.
A total of 50 companies won the highest Gold Award in 2018, a 35% increase rise from 2017. Of these, seven made significant improvements in their sustainability reporting after achieving no award last year: Aroundtown, Entra, Hispania, Merlin Properties, Mobimo, Standard Life Investments, Property Income Trust and UK Commercial Property REIT. Forty-six Gold Award winners reported on all 16 sBPR measures, while four companies – British Land, Citycon, Klépierre and Unibail-Rodamco-Westfield – won Gold Awards for the seventh consecutive year in 2018.

Looking ahead to 2019

EPRA’s 2019 awards will be judged according to compliance with all 28 ESG reporting metrics. The 2018 results showed companies have already started reporting using the new set of guidelines on the broader ESG disclosure: 86% of companies reported at least one social performance measure, commonly on gender diversity, while 74% reported all performance measures on governance.
“Leading listed property companies are already exploring how best to gauge their impact and contribution to society, not just at a corporate level but at an asset level. EPRA has provided them with the tools to do so while continuing its work through feedback reports, engagement with companies and education initiatives such as seminars and workshops,” Olivier Elamine, Chair of the EPRA Sustainability Committee and CEO of alstria office REIT, said.
“Our task for the coming year will be first to double our efforts to encourage compliance with the ESG metrics and second, and more importantly, to deliver the tools that will allow stakeholders to access the data generated by companies in an unbiased way. Together this will enable the industry’s disclosure to reach the next level,” he added.
Matthew Tippett, National Director at JLL, concluded: “Legal disclosure requirements in each national jurisdiction are becoming less of a factor in determining if companies win awards. This shows that the listed real estate sector is getting ahead of the curve in its ESG responsibilities without the need of regulators and laws to oblige companies to measure their impact on society and the environment. Our work in supporting EPRA’s Sustainability Awards dates back to 2012, during which time the improvements have been impressive. This year is no exception.”
Matthew Tippett, Director Upstream Sustainability Services at JLL, presenting the 2018 sBPR Awards report at EPRA Conference.