How science-based targets are helping real estate shrink its carbon footprint
A clear framework for emissions reduction shapes business strategies and aligns companies with global climate goals
With deadlines for international sustainability commitments focusing attention on the need for action, more real estate companies are turning to science-based targets to help mitigate the worst impacts of climate change and future-proof businesses.
Over 150 real estate firms such as JLL, Landsec, Canary Wharf Group and New World Development (NWD) have now committed to emissions-reduction targets based on criteria set by the Science Based Targets Initiative (SBTi). These aim to limit global warming to 1.5°C (2.7 F°) above pre-industrial levels, in line with Paris Agreement goals to halve greenhouse gas emissions by 2030 and reach net zero by 2050.
Targets cover both direct and indirect emissions from a company’s operations, as well as those generated throughout its supply chain. Companies then plan the reductions they need to achieve over a particular timeframe.
“Science-based targets provide a robust framework and clear pathway to mitigating emissions so the fact they’re being embraced by real estate is a positive move,” says Richard Batten, Chief Sustainability Officer at JLL and member of the SBTi advisory board.
“By defining types of emissions and the reductions that the industry needs to make to meet the 1.5°C (2.7 °F) trajectory, the initiative pushes companies to set milestones and take a long-term approach to sustainability.”
An industry shift
Companies that have set science-based targets are starting to significantly reduce the direct and indirect emissions from their operations, known as a company’s Scope 1 and 2 emissions.
British Land, which reduced its Scope 1 and 2 emissions by 73 percent between 2009 and 2020, has announced science-based targets for a further 51 percent reduction by 2030, as part of a sustainability strategy that includes a net zero target for all its offices and real estate by 2030.
JLL is committed to reaching net-zero greenhouse gas (GHG) emissions across scopes 1, 2 and 3 by 2040. JLL has a near-term target to reduce emissions 51% by 2030, and a long term target to achieve 95% by 2040 from a 2018 base year. For JLL, scope 1 emissions arise mostly from the operation of our vehicle fleet; scope 2 emissions result mainly from the operation of our office portfolio; and the vast majority of our scope 3 emissions come from the operation of those buildings which we manage on behalf of our clients.
JLL’s target is certified to the Net-Zero Standard, which brings the latest climate science to net-zero target setting. It is the first global science-based standard to guide organizations setting net-zero targets and encourage them to follow the principles of the mitigation hierarchy. Effectively, this means that companies should prioritize implementing strategies to reduce their emissions before engaging in emissions abatement through carbon sequestration projects or purchasing carbon offsets.
“The environmental impact of the built environment means that changes in the real estate sector can have a significant influence on emissions reduction,” says Batten. “Using science-based targets has given a rigor to how firms report operations data and make assessments to understand how they can mitigate emissions.”
Where some net zero definitions permit offsetting emissions with carbon-reducing activities, science-based targets don’t. Instead they require businesses to mitigate emissions through measures such as improving the efficiency of their operations.
Hong Kong-based NWD, for example, is ramping up its sustainability efforts to further decarbonize its operations by 2030 by setting science-based targets in 2023.
“Science-based targets are the gold standard for emissions reductions, signposting the sustainability changes that a company needs to make and thus paving the way for a real net zero trajectory,” says Batten.
Let’s shape the future of work
Ideas, research and solutions to address the tough questions facing business leaders today.
Decarbonizing real estate supply chains
For real estate services firms, which typically advise on more space than they occupy themselves, one particular challenge is reducing the emissions in their value chain that are outside their direct control. Known as Scope 3 emissions, these include emissions produced by buildings managed on behalf of clients, as well as those generated by suppliers in the procurement of products and services.
“Many real estate firms have capitalized on implementing the most straightforward measures to improve efficiency in their own buildings and within their own operations. Further progress to reduce emissions across the value chain will require larger interventions, and that’s where science-based targets have a real impact,” says Batten.
By focusing on Scope 3 emissions, science-based targets push companies to consider emissions throughout their supply chain, from construction to procurement and beyond.
For JLL, with over 96% of its emissions arising from the consumption of natural gas and electricity in the real estate managed for clients, collaboration is fundamental. “Taking all clients on their own climate action journeys is critical,” adds Batten.
JLL has invested in the continued development of products to provide a broader complement of globally scalable, consistent services to meet a surging demand from investors, occupiers and city leaders. This more comprehensive suite of services is supported by a robust JLL technology platform, enabling greater automation, tracking and management.
Corporate action towards Race to Zero
It’s not just real estate taking action; the adoption of science-based targets doubled in 2020 compared with the period 2015-2019 and continues to gain momentum. To date, over 2800 companies across a range of industries are taking action in line with science-based targets as corporates increasingly prioritize sustainability. There is a recognized need for climate action and putting the onus on industry leaders to make their business practices and supply chains more sustainable.
“We’ve seen countries and governments come together to firm up plans for delivering net zero and resilient economies,” says Batten. “There is an increasing realization that the real hard work has to be done by the private sector.”
Greater transparency that requires firms to publicly disclose the action they’re taking will help progress, he adds, while activism among shareholders can drive change at a board level. Legislation that enshrines the SBTi – which is currently voluntary – will also be a vital next step for wider adoption.
While many companies are starting to make progress, others are lagging behind – with a knock-on effect on overall progress to meet 2050 net zero timeframes.
“The cost of inaction is so high,” says Batten. “This isn’t just about doing the right thing for the world we all live in; there’s a strong business case for companies to demonstrate their commitment to a net zero future – to their shareholders, customers and a modern workforce that increasingly demands sustainable practices.”