How Foreign Regulation Finds Its Way Across Borders

Have you heard of GRESB?  It’s a big thing.  Investors from the EU are asking for greater transparency about the environmental, social and governance (ESG) performance of real asset portfolios. Regulators are mandating ever more ESG disclosures and improvements. And tenants, owners and other stakeholders are demanding more sustainable, greener and healthier buildings.

I lifted this from their website:

GRESB assesses the sustainability performance of real asset sector portfolios and assets in public, private and direct sectors worldwide. It offers ESG data, Scorecards, Benchmark Reports and portfolio analysis tools.

The Assessments collect information regarding the sustainability performance of companies, funds and assets, including information on performance indicators, such as energy, GHG emissions, water and waste. The Assessments are guided by what investors and the industry consider to be material issues in the sustainability performance of real asset investments and are aligned with international reporting frameworks such as GRI and PRI.

Assessment participants receive comparative business intelligence on where they stand against their peers, a roadmap with the actions they can take to improve their ESG performance and a communication platform to engage with investors.

Investors use the ESG data and GRESB’s analytical tools to improve the sustainability performance of their investment portfolio, engage with investment managers and prepare for increasingly rigorous ESG obligations.

If you are a life insurance company in the US and you raise money from a pension fund based in Europe the odds are very good that you will have to comply with GRESB reporting for all of your investments. It doesn’t matter if you are US based, you cannot get out from under the regulation.  Even if you don’t like it or think it’s meaningful.

One of our portfolio companies Megalytics is GRESB compliant.  They integrate GRESB analysis into their product so their customers know they are getting GRESB compliant data.  That means if you are a real estate investor in the US that raised money from somewhere outside the US that forces you to adhere to the GRESB standard, you are if you use Megalytics.