As Season 10 of the Propcast comes to a close, it is a great time to reflect on what we have learned about ESG within the Built Environment from some of the leading players in the industry.
Season 10 featured:
- Vincent Bryant, Co-Founder and CEO at Deepki & Grigor Hadjiev, Head of Product and Development for West Europe at Allianz | Can Technology Help The Real Estate World Reach Net-Zero?
- Taylor Wescoatt, General Partner at Concrete VC & Guy Grainger, Global Head of Sustainability Services and ESG at JLL | Why Are Global Real Estate Leaders Turning To Sustainable Investments To Reach Net-Zero?
- Aleksandra Njagulj, Managing Director and Global Head of Real Estate ESG & Simon Wallace, Global Head of Research and Strategy at DWS Group | What Are The Key Data Points in ESG in Real Estate & How Are They Measured?
- Sally Jones, Head of Strategy, Digital and Technology & Matt Webster, Head of Environmental Sustainability at British Land | Are Net Zero Developments the Future of Real Estate?
- Jonathan Flaherty, Global Head of Sustainability and Building Technology Innovation at Tishman Speyer & Philippe Le Fort, Leader of Ambio, a Smart Buildings SaaS platform by PATRIZIA | What Are The Costs and Benefits of Innovation Within ESG?
- Zachary Denning & Jerremy Spillman, Co-Founders of Hank | Is There Really an Appetite For Energy Efficiency Within Commercial Real Estate?
- Peter Epping, Global Head of ESG & Kathryn Scheckel, Global Head of Innovation at Hines | An Investment Managers Plan For Our Planet
- Sonu Panda, CEO of Prescriptive Data & Rebecca Timms, Director of ESG at Jamestown | What Makes a Smart Sustainable Technology?
- Eric Duchon, Global Head of ESG for Blackstone Real Estate & John Fitzpatrick, Chief Technology Officer of Alternative Asset Management Technology at Blackstone | How to Integrate ESG into your Portfolio Effectively
- Daniel Stephens, Senior Partner & Farzana Huysman, Junior Engagement Manager at McKinsey & Company | Strategy & Consulting Around Sustainability in ESG
Listen to previous seasons here: The Propcast
Now more than ever is the time to initiate conversations that centre around how the Real Estate industry, which currently consumes 40% of global energy and has a projected increase of over 50% in building CO2 emissions by 2030, can do its bit in tackling the climate crisis.
Here are the 5 key takeaways from the 10th season that provide some insight into how we as an industry can reduce carbon emissions, increase investment in green and sustainable buildings and implement ESG strategies into businesses.
Takeaway #1: Technology and Smart Sustainability
Whilst technology alone will not provide a feasible solution to tackling the climate crisis, new technological advancements that we are seeing emerge within the Real Estate industry can play an undeniable role in helping us reach net-zero targets.
- Prescriptive Data’s Nantum OS platform uses artificial intelligence to automate building systems with real-time occupancy data, utilizing the least amount of energy to provide the maximum amount of indoor comfort. Integrating meter data allows Nantum to calculate energy, cost, and carbon emissions reduction. On top of energy reduction, Nantum analyzes every data set within your data, predicting and detecting BMS anomalies, potential leaks, power quality issues, and unhealthy indoor air quality.
- Deepki utilizes its SaaS platform to leverage the data from its ESG performance against its goals into the broader business environmental strategy. The platform collects existing data, so they can provide a comprehensive overview of the performance of their customer’s portfolios, and therefore provide insights on their investment decisions, in order to reduce their impact on the environment and benefit from their energy savings.
Takeaway #2: Investment
In recent months, we have seen a considerable shift in focus to reach net zero targets, with investors targeting green buildings for funding now more than ever. Companies with an ESG focus closed 33% of the financing rounds in Q2 this year.
Following COP27 this year, Fifth Wall’s Co-Founder and Managing Partner Brendan Wallace discusses what he took away from the conference, including what his team at Fifth Wall is seeing in investment opportunities; ‘We’re also excited about voluntary carbon markets and the tech that can help these markets mature, in turn driving additional capital into the projects and technologies.’ (Brendan Wallace, Fifth Wall)
- Concrete VC, an early-stage PropTech fund, is helping founders with solid technology and Real Estate credentials to change the world of the built environment. They’ve created an investment platform that helps large real estate organisations see more deeply and clearly into the early-stage tech space that will be creating and driving change in the industry.
- For JLL, they aim to get an end-to-end solution, from setting the strategy to the execution and implementation of the pathway to zero carbon in buildings. JLL wants to work with clients that are willing to go beyond the reporting and disclosure phase and into the execution phase. In short, their aim is to link having the consultants set the strategies to then having the engineers and project managers transition these assets and link them to the operations of the building.
Takeaway #3: Green Buildings
Commercial buildings that stick to net-zero targets show an increase of 5-12% in value, compared to a 30% drop for non-sustainable buildings. Fortunately, there is a wide range of existing companies and technologies that put in place strategies and develop sustainability products to help these buildings become greener.
- Hank, a virtual engineering platform recently acquired by JLL, is a Software-as-a-Service, so there is no replacing of controllers. Instead, they drive what is already in place to its highest efficiency and that allows them to build their sustainability plan for the future. Hank has utilised the data and found that they can fix comfort without sacrificing energy and save energy without sacrificing comfort.
- PATRIZIA, the leading partner for global real estate assets, recently launched their new product Ambio, a SaaS solution that involves doing health checks of buildings, identifying opportunities to add value by using technology to smarten things up and working with suppliers in the market to connect them to PATRIZIA’s investment managers so that they cover the entire spectrum of digital transformation and decarbonisation. Ambio was launched as a response to the company’s need to understand their buildings better, understand how good the tech infrastructure was and how good it needed to be.
Takeaway #4: Strategy
Michael Doust, Director, Urban Efficiency and Climate at the WRI Ross Center for Sustainable Cities, attended the COP27 conference and said that the pace of clean energy retrofits for buildings is just one-sixth of where it needs to be to hit 2030 decarbonization goals (Patrick Sisson, Bloomberg UK). With such a huge problem to tackle, having a clear strategy that provides a road map of how to reach the desired outcome is crucial, whether that be for reaching net-zero targets, becoming carbon neutral or implementing sustainability and ESG initiatives into a business’ core values.
- For British Land, they have augmented clear sustainability and digital strategies to reach net zero carbon by 2030. Their latest strategy runs from 2019 to 2030 and is balanced between environmental and social issues. As both an operator and developer of space, their two big sources of carbon are embodied from the development of their assets and operations which is related to the energy from running these assets. They are aiming for a 50% reduction in their embodied carbon and a 75% reduction in their operational carbon. The digital plan will help them deliver these ambitious targets.
- For Blackstone, they believe that having a clear strategy is the starting place to achieving ESG targets. They have worked to develop a framework that sets out Blackstone Real Estates ESG priorities across 6 pillars, setting the tone for how they engage with the portfolio companies for them to develop their 3-year strategic ESG roadmaps. They use their data initiatives to help them implore technology and try to make the transition as seamless as possible, meaning they can then analyse and track the portfolio companies’ data and help them achieve their targets.
Takeaway #5: Challenges
It is no secret that the path towards reducing the vast amount of carbon emissions produced by the real estate industry and tackling the climate crisis on a global scale presents huge challenges. Fortunately, there are companies in the space that have identified specific challenges, as well as provided solutions to combat them.
- The post-COVID world has seen a permanent shift towards hybrid working, and we as an industry need to be making the relevant changes in line with this shift. For Tishman Speyer, one of their key focuses is on getting brick-and-mortar businesses on board with technology adoption and ESG. They have identified the need to transform the office product into something that is much more focused on digital, hospitality and low carbon. Tishman Speyer believes that buildings that do not adjust to such changes will inevitably become obsolete.
- McKinsey & Company work with big real estate investors, insurance firms and asset managers helping them answer how sustainability is going to impact their financing business and what they can do about it. They can do this by either divesting any high-emitting assets or lending that they’re doing, or McKinsey & Company can support them in investing in technologies that help to reduce the emissions of their existing assets.
So where can we go from here? Sustainability and ESG need to be integrated into all aspects of business, from implementing strategies tailored to reaching ESG targets, to adopting new technologies to assist in transitioning to net zero. The tenth season of the Propcast has given us invaluable insight into what some of the leading players in the industry are doing to tackle the climate crisis, as well as how we as an industry can help minimize CO2 emissions and meet our net zero targets.
Brendan Wallace, Fifth Wall; ‘4 Key Takeaways for the Real Estate Industry from COP27’, published on November 18th. Accessible at: https://medium.com/fifth-wall-insights/4-key-takeaways-for-the-real-estate-industry-from-cop27-1683744abda6
Patrick Sisson, Bloomberg UK; ‘At COP27, Building Emissions Loom Larger’, published on November 9th. Accessible at: https://www.bloomberg.com/news/articles/2022-11-09/cop27-can-the-building-sector-clean-up-its-act