Metrics: identifying eligible green projects and reporting

GRESB Green Bond Working GroupSecond meeting

© 2015 GRESB B.V.

Defining scope of researchTypes of green bonds

1

Green PropertyBonds

CRE Universe

Use of Proceeds Bonds

Greater Green Building (GGB)

Universe

Use of Proceeds Bonds

Use of Proceeds Revenue Bonds

Securitized Bonds Project Bonds

Greater Green Buildings

(GGB)CREGBWG

Defining scope of researchIssuers

2

Scop

e

Universe CRE

(7 issuers)Real Estate Corporates

Digital Realty TrustUnibail-Rodamco

Vornado

Universe GGB

(28 issuers)

MunicipalsIlle de France

University of Virginia Mass. Dev. Authority

Non-RE Corp. SkanskaTelus

BanksABN AMRO

Dev. Bank of Japan TD Bank

GSEs Berlin HypFannie Mae

Application: metrics for green bondsTying use of proceeds to positive environmental outcomes

3

Metrics

Prospectus (pre-issuance)

Process for eligible green project

evaluation and selection

Reporting (post-issuance)

Actual use of proceeds

FrameworkIdentifying Eligible Green Project criteria (pre-issuance)

• Should provide clear environmentally sustainable benefits, which, where feasible, will be quantified or assessed by the issuer.

Green Bond

Principles

• Assets certifying to a rigorous green building rating systems, such as LEED, Green Star, BREEAM, CASBEE, DGNB, EDGE (or similar) may serve as the basis for Eligible Green Projects.

• Energy rating programs can describe energy efficiency investmentobjectives and may be used to qualify Eligible Green Projects.

GRESB GB Guidelines

for RE

4

Observations: metrics in useIdentifying eligible green projects in prospectus (pre-issuance)

5

CRE Universe Mostly global building certification schemes;More likely to specify a range of certification

levels;None specify CO2

emissions reduction; When referenced, ESG

factors are broad-based

In Common Most reference building certification scheme and

levels (86% CRE/79% GGB);

Appx. 25% specify level of energy reduction/

improvement; Only 1 issuer specifies

water efficiency improvement

GGB Universe Many local building

certification schemes; Energy ratings tied to

particular benchmarks more prominent than %;

Only 1 specifies CO2 emissions reduction;

Many reference local/state energy and

waste regulation;

Building certification granularityLEED is the most commonly leveraged building certification system

CRE Universe4 issuers (US focused)2013-2015 Wider range of certification levels

GGB Universe19 issuers (global)2014-2015Tighter range, increasing at high end

6

0

4

8

12

16

20

Certified Silver Gold Platinum0

1

2

3

4

5

Certified Silver Gold Platinum

Building certification granularityBREEAM is the second most commonly leveraged building certification system

CRE Universe3 issuers (EU focused)2013-2015Similar range

GGB Universe6 issuers (EU focused)2014-2015Slightly wider range, still increasing at high end

7

0

1

2

3

4

5

6

0

1

2

3

4

5

Application: metrics for green bondsTying use of proceeds to positive environmental outcomes

8

Metrics

Prospectus(pre-issuance)

Process for project evaluation

and selection

Reporting (post-issuance)

Actual use of proceeds

FrameworkReporting (post-issuance)

9

Green Bond Principles

• In addition to reporting on the use of proceeds […], issuers should provide […] a list of projects to which Green Bond proceeds have been allocated including - when possible […] - a brief description of the projects and the amounts disbursed, as well as the expected environmentally sustainable impact.

GRESB RE Guidelines

• Investor disclosures regarding Green Bond investments and impacts should include the following elements:• Asset level information confirming

full allocation to Eligible Green Projects by the amount of proceeds invested per project.

• One or more GBP 2015 categories associated with each project.

• Asset level green building certification and energy rating data.

Observations: metrics in useFound both is CRE and GGB universes

Current use of proceeds

List of projects

Few impact reports

Few ESG factors

Certification level

Few change in energy use

10

Upfront Identification

in Prospectus

Post-issuanceReporting

Questions & Comments

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