The GRESB Rating is an overall relative measure of ESG management and performance of the asset. The calculation of the GRESB Rating is based on the GRESB Score and its quintile position relative to the GRESB universe, with annual calibration of the model. If the participant is placed in the top quintile, it will have a GRESB 5‑star rating; if it ranks in the bottom quintile, it will have a GRESB 1‑star rating, etc.
The Management component is made up of 5 Aspects and 17 indicators with the exclusion of Entity & Reporting Characteristics. The below weights apply for 2020:
There are five models used within indicators for scoring:
- One Section indicator - consisting of only Section 1 (Elements)
- One Section indicator - consisting of only Section 2 (Evidence) where the evidence provided is not validated and is for reporting purposes only.
- Two Section indicator (Evidence validated) - consisting of both Section 1 (Elements) & 2 (Evidence).
- Two Section indicator (Evidence not validated) - consisting of both Section 1 (Elements) & 2 (Evidence) where the evidence provided is not validated and is for reporting purposes only.
- Not scored
Note that selection of the 'Yes/No' responses in relation to the indicator question, will no longer be scored in 2020
The overall outcome of these models is to generate a fractional score (i.e. between zero and one) which is then multiplied by the indicator weighting (maximum score) to generate the score for the indicator.
Section 1 (Elements)
Every scored indicator begins with this section which can receive a fractional score (i.e. between zero and one), determined by selections made in checkboxes and radio buttons, and answers provided in open text boxes. Based upon these inputs, fractional scores are calculated using either an aggregated points or a diminishing increase in scoring methodology.
Aggregated scoring: For indicators where one or more answers can be selected, fractional scores are awarded cumulatively for each individual selected answer and then aggregated to calculate a final fractional score for the section. In some cases, each checkbox answer may be equally weighted and in others, each checkbox answer may be assigned a higher or lower fractional score each, to reflect best practice responses. For many indicators, the final fractional score is capped at a maximum, which means that it is not necessary to select all checkbox answers in order to receive full points.
Diminishing increase in scoring: The idea behind this concept is that the fractional score achieved for each additional data point provided decreases as the number of provided data points increases. This means that the fractional score achieved for the first data point will be higher than the fractional score achieved for the second, which again will be higher than for the third, and so on.
If an indicator is a One Section indicator, the score calculated in this section will also be its final score.
Section 2 (Evidence)
Some indicators include an evidence section to verify information provided in section 1 (Elements). In these cases, the fractional score for the evidence section acts as a multiplier to the Section 1 score. As of 2020, evidence is always mandatory. Mandatory evidence receives a multiplier of 0 for no evidence or not-accepted evidence, 0.5 for providing partially accepted evidence and 1 for providing fully accepted evidence. To clarify, the indicator will receive zero score unless the hyperlink and/or uploaded document is considered valid (i.e. partially or fully accepted). The final indicator score is then calculated as:
The total indicator score is then calculated as:Indicator score = Indicator weighting X (Section 1 fractional score) X (Section 2 multiplier)
Peer group allocation and benchmarking
For benchmarking purposes, each participant is assigned to a peer group, based on the entity’s sector focus and geographic focus, as reported in RC3. To ensure participant anonymity, GRESB will only create a peer group if there is a minimum of six participants allocated to the peer group (the participant and five other peers).
Peer group assignments do not affect an entity's score, but determine how GRESB puts participant’s results into context.
The goal of the peer group creation process is to compare participants who share as many characteristics as possible, while:
- Maintaining a minimum threshold of 6 and
- Having less than 50% of the participants in the group from the same Fund Manager
Each participant can be part of multiple peer groups, but can only have one active peer group. The active peer group is the one which is used for benchmarking and is displayed in the participant’s Benchmark Report. This means that participant A can be in the active peer group of participant B, without participant B being in the active peer group of participant A.
The peer group composition is determined by a simple set of rules and provides consistent treatment for all participants. If the peer group is too small, we eliminate filters until we have a valid peer group. There are two ways in which the filter can be widened:
- Using a more general version of the characteristic (e.g. filtering on the fund’s region, not country)
- Dropping a characteristic entirely (e.g. ignoring a participant’s nature of business).
The system attempts to find the optimum peer group, based on the criteria presented above. This process repeats in a loop following the logic described in Appendix 7: Peer Group Allocation Logic.
Peer group disclosure
GRESB provides an opt‐in option to discloses the entity’s name in Benchmark Reports. However, this is only disclosed to participants who also opted to disclose their name and dimension scores.
Customized Benchmark Reports
Participants who would like to be compared against a different peer group than the one assigned by GRESB can request a Customized Benchmark Report (click here for details). The GRESB Customized Benchmark Report provides advanced analytics through alternative indicator‐level performance comparisons and rankings based on a self‐selected peer group. It builds on the detailed insights you can draw from the standard Benchmark Report and adds additional flexibility to understand your relative performance in the market.
The GRESB Sector Leader program recognizes the best performers annually from across the GRESB Assessments. Achieving sector leader status is clear recognition of best practice ESG performance by Infrastructure companies and funds. A minimum number of entities is necessary to award a Sector Leader. This minimum number is reviewed each year.
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