JLL CSO, Erin Meezan: Current retrofitting rates must triple to keep pace with decarbonization targets

By Climate Champions | April 30, 2024

Erin Meezan, Chief Sustainability Officer for real estate giant JLL delves into the core of the company’s sustainability strategy, emphasizing three pivotal areas: the transformative power of leadership in setting and pursuing net zero goals, the strategic impact of collaborations with SBTi and the Race to Zero campaign in accelerating JSS’s sustainability journey, and the role of innovative technologies and practices, such as green leasing and AI optimization, in advancing sustainable real estate.

Leadership’s role in realizing net zero

Leadership is a foundational component for achieving net zero and broader ESG goals, and it brings needed support throughout different phases of an organization’s net zero journey. At the outset, when net zero commitments are being considered and set, leadership is essential to embrace ambitious goals when there are not clear roadmaps to achieving net zero goals. I’m very proud that JLL was one of a handful of organizations to set the first SBTi-approved net zero goals, our CEO and leadership team saw the direction JLL needed to go and made an ambitious commitment. As we move into the implementation stages of net zero, it’s still important to have senior leadership supporting, communicating and giving the organization permission to change our ways of working, and to bring new ideas to the table on how we can meet our goals. Lastly, it’s ultimately senior leaders in the organization who must hold the business accountable for meeting critical emission reduction to ensure we’re on track to meet our interim 2030 and 2040 net zero goals.

Shaping strategy with the Race to Zero

Erin Meezan

The SBTi was a key enabler for JLL to set its net zero commitment in 2021 when JLL joined SBTI’s net zero expert advisory group to develop and apply its Net-Zero Standard. Their technical support helped us rapidly assess the implications of setting a net zero commitment, and SBTI’s guidance and technical review gave our commitment legitimacy and gave our organization confidence in the commitment.  Through this collaborative initiative, JLL became the first real estate company to set a 2040 net zero goal and SBTi’s subsequent recognition and promotion of JLL’s net zero commitment had a catalytic impact on the industry, with many other industry players following JLL’s lead to set their own commitments. That is the best impact, to not only enable an industry leader, but to set the stage for wider adoption in the industry.

These memberships offer the opportunity to accelerate our net zero journey in other important ways including: providing the network and relationships which form the bedrock for potential collaborative efforts across industry or with other organizations that can accelerate action and collaborative efforts to develop guidance that will speed how we measure.  We continue to engage with SBTi to provide feedback as they develop real estate-specific guidance.

Net-Zero Case Study – JLL – illustrates how JLL is reducing absolute emissions across all scopes by 2040.

Protecting and enhancing biodiversity 

Protecting and enhancing biodiversity is an important issue, but how material it is to organizations differs greatly based on their value chain. Understanding and mapping your value chain, and maintaining updated materiality assessments, helps us focus on our most important sustainability opportunities and impacts. And the fact is that for JLL, biodiversity is less material than you might imagine. JLL occupies a variety of leased spaces, often in multitenant urban office buildings. Our direct impact on nature and biodiversity is limited, so we’re focused on better understanding our indirect impacts. We started with an exercise to map our office portfolio against the World Database on Protected Areas, which showed that less than 0.3% of our offices are situated within protected areas, so we’re working to understand our opportunities to impact biodiversity in this context.

But while we have limited direct impacts on nature as a company, we know there’s a huge opportunity for us to leverage our scale to promote practices that preserve and protect nature through our supply chain and client services. Nature-based solutions can help cities mitigate urban heat islands and the effects of climate change, and these solutions can help attract tenants and enhance an asset’s overall value.

Balancing climate action with operational demands

Firstly, by making climate action a key part of our sustainability program which we have done at JLL (please see JLL’s ESG Performance Report). Secondly, we’ve set bold climate action commitments and stepped out as the first in the industry to set a net zero target. Thirdly, we’re experimenting across our own global office portfolio, learning what works to reduce climate emissions and using these lessons learned to influence the services we bring to clients to help them with their climate action goals. We’re showing what’s possible through our decarbonization progress on our own real estate portfolio. In our most recent progress report on our Scope 1 and 2 office emissions reductions, we’re proud of the fact that we’ve achieved a 34% reduction from our 2018 base year, exceeding our planned emission reduction pathway, and keeping us on track to deliver on our 2030 World GBC commitment to have all operational carbon emissions net zero by 2030, with our progress owing to more use of renewable energy across our global offices. As of 2022, nearly a third of all our global electricity was supplied by renewable sources. All companies need to take action to decarbonize their real estate as soon as possible, the solutions are available, but it is a longer term process which requires a comprehensive strategy.

Innovating for sustainable spaces

Bringing services and expertise normally reserved for clients to support our sustainability goals – we created a full-service Work Dynamics team to help us achieve our net zero and sustainability commitments covering the approximately 4.7 million sq. Ft. that we occupy ourselves. This team has created an innovative approach for our JLL spaces that integrates sustainability into all major decision points including site-selection, leasing, design and construction, fit-out and operations. This approach has created meaningful reductions in energy consumption (12% reduction in electricity intensity), increased our use of renewable electricity (29% is from renewables in 2022) and increased our percentage of offices over 10,000 sq. ft. with a sustainability certification, reaching over 54% in 2022.

Green Leasing – JLL has been working to integrate green leasing clauses across our own portfolio, while simultaneously working with our clients on a new generation of green leases. As building owners and tenants need to meet growing sustainability expectations from customers and employees, there’s a greater focus on delivering carbon reduction. To achieve this, we’re advising that green leases address criteria such as carbon taxes and credit allocations. Identifying opportunities to get tenants and landlords to work together continues to be priority, particularly in areas such as data sharing.

Technology deployment offers significant carbon reduction and cost saving opportunities. JLL Technologies (JLLT) is a business line within JLL that has a suite of software platforms and technology solutions including recently acquired Hank, an AI platform for commercial building systems. Hank applies machine learning and AI to solve operational issues like HVAC equipment performance inefficiencies to optimize energy efficiency, air quality, maintenance costs and tenant comfort. Building technologies like Hank represent an exciting opportunity to autonomously solve real estate challenges.

Sustainable buildings achieve a financial ROI

There are a lot of interesting dynamics going on in the market that are impacting the value of sustainable assets. First, we know sustainable buildings achieve a financial ROI. For example, green certifications can provide a sales premium of more than 7%. However, these buildings don’t guarantee or necessarily correlate to lower emissions. As companies work to comply with increased regulation and stakeholder pressure to deliver on their climate commitments, they’ll pursue new space that aligns with these requirements.

As tenant interest in low-carbon buildings accelerates, we’re likely to see that demand will outpace supply. As about 80% of office buildings that exist today will still be in-use in 2050—there’s an urgent need to rethink the buildings we already have. Recent JLL research found that current retrofitting rates must triple to keep pace with decarbonization targets. We’re already starting to see this issue emerge in certain markets such as London where we’ve estimated there will be a significant shortage of spaces with low-carbon footprints by 2025.

There’s also a risk that a building’s value will fall if the owner can’t meet tenant demand for low-carbon space, which in turn can affect the number of potential future buyers—resulting in a ‘brown discount’. In fact, there was a survey that found about two-thirds of investors said they would turn down investment opportunities based on concerns over ESG standards.

JLL’s Green Leasing 2.0 report looks at how green leases can help owners and occupiers meet their sustainability targets while reducing costs.

Overcoming challenges

JLL’s size, broad geographic presence, and complex organizational structure poses an ongoing challenge to achieving our sustainability commitments. With operations in over 80 countries and a workforce of more than 106,000 across our five global business segments, making sure that our commitments are embedded into all business lines, and that all employees are accountable for results are ongoing challenges. To address the challenge of embedding our commitments business-wide, we’ve created a Net Zero Council that’s made up of executives at the highest levels of our key business lines and corporate functions responsible for JLL’s carbon emissions. This internal decision-making body is a critical step to build our net zero commitment into business decisions and operations globally.

Future trends in sustainable real estate

Embodied Carbon: There’s growing attention, and a raft of tools and standards now available to identify and address embodied carbon in buildings, and all of this has happened in the last 5 years. In fit outs and retrofits, embodied carbon emissions are higher than when procuring new products and sending existing items to the landfill rather than recycling or reusing them. Strong sustainable building standards that encourage reuse and procuring low-carbon products can significantly reduce the impact of retrofits and fit outs. Collaboration between tenants, landlords and developers via green leasing can help all parties adopt a more circular economy approach when approaching fit outs. Tools like EC3.

AI and Automated Technologies: Expanding digitization and smart technologies within commercial real estate are emerging tools to drive both sustainable outcomes and financial value. AI and smart building platforms can monitor building systems, analyze the data, and generate insights that can make real-time adjustments to reduce resource consumption and respond to occupant needs and preferences. JLL also uses AI and machine learning to analyze internal and external data points to help advise our clients on capital investments, risk management, and other portfolio strategies. These tools provide an exciting opportunity to transform and accelerate the solutions we deliver to clients.

Putting people first 

Focusing primarily on the building and built environment, we spend a lot of time talking about technology and building operations, and we can easily forget that people are at the heart of what we’re trying to do, and the audience for our work. Creating healthy, innovative, comfortable, nourishing, performance-enhancing and low carbon spaces are for the benefit of the people who work in them.  And we need to spend as much time interacting with, communicating, listening to the people as we do discussing systems, operations and technologies. I’m excited to see much more recognition and focus on making sure employees are educated and engaged on climate issues, and gratifyingly, that they are increasingly seeing the link between more sustainable buildings and climate action. It’s now a frequently cited figure that almost 40% of global carbon emissions come from building construction and operation, and I’ve been really energized to see how the whole ecosystem of architects, construction professionals, real estate and others working to design, manage, optimize and operate buildings recognize the important role buildings can play in addressing climate.

Join the race to zero

Race to Zero

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