CHICAGO, June 21, 2021 /PRNewswire/ — With demand for greener, more sustainable places amplified by the current pandemic, occupiers, investors and city authorities are more willing than ever to commit to tackling climate change. According to JLL’s (NYSE: JLL) new research, Responsible Real Estate – Decarbonizing the Built Environment, this decade is a pivotal time to decarbonize the real estate industry and build back better for the future. However, translating good intentions into achievable targets will require partnership and transformative thinking.
“The real estate industry is in the spotlight. We cannot get to a zero-carbon planet without re-purposing our buildings. So, what is our response – can we build a better future for our communities and our world? The only way is to create a commercial investment model that incorporates the environmental and social impact,” said Guy Grainger, Global Head of Sustainability Services and ESG. “This requires a mindset shift and a much more collaborative approach between owners and occupiers of buildings.”
Heightened expectations and key drivers
The senior executives representing nearly 650 leading global occupiers and investors surveyed by JLL say that their top priorities are to create places that are human and green. Occupiers are taking a transformative approach to carbon reduction by embedding sustainability into their business models, with 89% stating that sustainability is increasingly important to their corporate strategy. Real estate investors believe focusing on decarbonization can deliver value and a competitive advantage. This is the case, in particular, for leading investors who are investing in a deep spectrum of sophisticated strategies and aligning decarbonization strategies with investment strategies.
Multiple factors drive the heightened focus on sustainability. For one, leading occupiers and investors are outpacing policymakers in their ambitions, because they believe decarbonizing is the right thing to do for their employees, customers, tenants, communities and the planet. Occupiers and investors want to see stronger partnerships and also to see national and city governments take a bolder stance.
Secondly, there is significant value in acting responsibly. JLL’s research found that 83% of real estate occupiers and 78% of investors think that climate risk poses a financial risk. For occupiers and investors alike, the myriad of no-cost and low-cost options have game-changing potential to generate increased operational efficiency and better financial performance. Conversely, the downside of inaction is now too strong, and few see inaction as viable.
Enablers and barriers toward achieving sustainability ambitions
JLL’s report revealed a few key enablers and barriers that must be considered on the journey to net zero carbon. One primary hurdle is that the demand for sustainable real estate options, such as net zero buildings, outstrips supply. The current supply may not be sufficient to meet the ambitious targets set by occupiers, and the imbalance may grow unless further buildings come to market. As supply outpaces demand, the opportunity to retrofit buildings is substantial. However, building age and obsolescence, as well as inadequate urban infrastructure, are major challenges.
A key enabler in driving the transition to net zero is technology. Data is the single biggest catalyst for green progress, as enhanced data capabilities provide opportunities for continuous improvement based on real-time analytics and automated decision-making. Yet, most investors (55%) and occupiers (50%) describe their current data and measurement capabilities as “developing.” There is a considerable opportunity to close the digital gap and to invest in technology, as dependency on data will continue to expand in the future, fueled by requirements for greater transparency and reporting.
Roadmap toward responsible real estate
Real estate can play a critical role in helping occupiers and investors to reduce their carbon footprint and make progress towards their carbon reduction targets. As investors and occupiers recognize the roles they must play in reducing carbon emissions, green intentions are being translated into ambitious sustainability targets. There is a wide spectrum of opportunities for real estate to flatten the climate curve. However, unlocking the value behind these goals requires a well-planned approach.
“This data shows that organizations have been proactive in setting climate targets, but the execution has not really started in earnest,” said Grainger.
A key component to accelerating the journey to decarbonization is an ecosystem of partnerships. JLL’s research reveals that 81% of occupiers and investors agree that a strong partnership between cities, occupiers and investors is instrumental to driving the net zero carbon agenda. By leaning into an ecosystem, governments, businesses, investors and communities can more easily adopt and scale innovations, bridging the gap between intention and action.
JLL’s sustainability journey
In 2020, JLL set a science-based target to reduce emissions by 2034 and also committed to net zero emissions from its own buildings by 2030. These commitments are milestones to enable the firm to achieve net zero by 2040 across all areas of its operations, including the client sites it manages.
About JLL
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 91,000 as of March 31, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.
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