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Discover five key outcomes that real estate can drive as part of your sustainability strategy
It’s no secret that sustainability is at the top of the corporate agenda – especially when 99% of CEOs of companies with more than $1 billion in annual revenues agree that sustainability will be important to the future of their business. And remarkably, the COVID-19 pandemic only seems to have amplified and accelerated this trend – in fact, the number of organizations making net zero carbon commitments has doubled in 2020 compared to 2019 pledges.
As C-level leaders work to set sustainability strategy, they need to consider every facet of their organization’s value chain – from raw materials to manufacturing processes and logistics to procurement (and beyond). Real estate leaders can and should play a crucial role in this strategy-setting process, as they are uniquely positioned to translate their organizations’ sustainability ambitions into concrete actions and ultimately improve performance.
Here are five key outcomes that real estate can drive as part of your sustainability strategy:
Improve your financial performance. By embedding sustainability into every real estate decision that you make, you have the opportunity to reduce operating expenses, prioritize capital expenditures to maximize ROI and improve asset value, and even explore creative opportunities to generate revenue. Take the Washington Metropolitan Area Transit Authority’s $50 million solar revenue stream as just one example of how applying a sustainability mindset to real estate decisions can pay off in spades.
Reduce your environmental impact. Real estate is a major source of greenhouse gas emissions – representing more than 40% of total carbon emissions worldwide. This should not come as a surprise to most building owners or tenants, who know that energy accounts for anywhere from 20 to 40% of a building’s annual operating costs (and upwards of 70% for energy-intensive property types, like data centers, manufacturing plants, and trading floors). For many organizations, reducing the environmental impact of their buildings is a needle-moving opportunity to act on sustainability.
Amplify your social impact. Your buildings aren’t empty shells – they’re spaces where your employees, customers and partners come together to do their best work. By strategically considering your workspaces as a channel for social impact, real estate leaders can drive positive social outcomes that cascade across the organization. For employees, a sustainable workplace that optimizes indoor conditions translates to a 26% improvement in cognitive function and 30% reduction in “sick building” symptoms. For executive teams or boards, it translates to an improved ability to attract and retain top talent and positions you as a premium brand.
Step up your governance practices. Aligning to mandatory and/or voluntary sustainability reporting frameworks is no small task – and once you’ve chosen which frameworks you’d like to participate in, the real work of sustainability data management and reporting begins. Whether you’re aligning to broad industry frameworks like CDP or the UN Sustainable Development Goals or real estate-specific frameworks like GRESB, you’ll need to submit data that shows how your real estate portfolio is performing on sustainability (and which is increasingly subjected to internal and/or external audit). Gathering this granular level of data can very quickly become a tedious and heavy lift – but there’s good news for real estate leaders: strategic, thoughtful planning and a clear data governance strategy can go a long way towards making sustainability data management and reporting less cumbersome and time intensive.
Improve your resiliency. Extreme weather events continue to become more frequent, more severe, and more costly – creating nearly $1 trillion in damage in the US alone in the last decade. As real estate assets and portfolios are increasingly on the front lines of these extreme weather events, it becomes more important than ever to be prepared for the unthinkable and to have solid business continuity plans in place.
The bottom line: Real estate should play a critical role in any organization’s ability to translate their sustainability ambitions into action. The key to success is to involve real estate leaders in sustainability strategy discussions early-on, rather than after-the-fact. This ensures alignment across those teams that are setting the strategy (including the C-Suite) and those that will be translating that strategy into action (including the real estate team).
To learn more about how JLL can support you on your sustainability journey, click here.