PODCAST — How
will companies
meet net-zero
energy goals?

James Cook: [00:00:00] The number of companies that committed to net zero carbon emissions, more than doubled in 2020, but after you make an ambitious goal like that, how do you make sure to meet it today? We're going to find out how.

This is building places where we look at the world of commercial real estate through the eyes of the experts that study it every day. My name is James Cook. I research real estate for JLL.

Today, I'm making a call around the world to Australia to catch up with Matthew Clifford.

Matt Clifford: [00:00:33] My name's Matt Clifford, I'm the global energy and sustainability product owner at JLL

James Cook: [00:00:38] I wanted to catch up with you about sustainability goals I think it's nice to say that you care about something, right. But really you can't manage what you don't measure. So that's really where the rubber hits the road,

Do most companies even have sustainability goals?

Matt Clifford: [00:00:55] Most organizations do have sustainability goals. What I'll say is that those goals are in a constant state of flux. So if we, if you asked me that question 10 years ago, the kinds of goals that organizations may have had probably sounded a bit like, Hey, we're trying, and to reduce our energy by 10%, or we're trying to reduce our water consumption, we're trying to track our waste or recycling and get a bit better.

So it was all about improving, you know, doing less damage, doing less less bad fast-forward to where we are today and looking into the future a little bit. I think what we've seen is more organizations get much more ambitious around those goals. So it's still over the same topics. So we're still talking about energy.

We're still talking about carbon, but we're seeing organizations now set goals. Like we want to be net zero carbon by 2030, even 20, 25. Even this year, or some organizations that say, Hey, net zero carbon is not enough. How can we go beyond. Just reducing our impact or negating our impact and how can we actually be a cause for good in the world.

We're also seeing organizations set broader goals around things like health and wellness. You know, that's a very topical, issue, you know, given what we've been going through around a pandemic in the last 12 months or so, but I'd have to say that the main focus around organizational goals these days is carbon and that drive towards lower zero, zero emissions.

James Cook: [00:02:19] Yeah, it seems like in the news that more and more companies are making these ambitious calls, you know, net zero goals from your perspective, are they on track to actually meet those goals?

Matt Clifford: [00:02:32] We, did a review , not that long ago of a group of our top clients around the world. So this is not unique to any particular country., it was , 96% of those clients had ambitious sustainability goals in one shape or another.

Not all of them were net zero carbon. Roughly 88% of those had time bound goals that were expiring by 20, 25 or sooner, not that far over the horizon, but there was only about 20%. In fact, I think it was 19% had publicly stated their action plan. So there was this huge gap between their ambition.

And their action at least publicly. So if somebody, if I was an investor in one of those companies and I'm looking at their public information, I'm saying, well, it's fantastic. You've set this goal, but what are you going to do? What's the action. You know, how are you investing it? What's it going to cost you?

What's the level of resourcing I can see here. You've set a goal of 20, 25. That's not that long away. You know, aren't you going to need to get moving on some of that. So I think it's incumbent for those organizations to do the work on coming up with those action plans. Maybe some of them are doing that work in the background.

They're just not ready to share it yet, but I think sharing it is a critical part of the story because it tell it helps the industry understand what works and what doesn't work. It tells those investors that might be looking at the company. We've come up with a clear plan and it's costed and there's resources associated with it.

We're moving, you know, we don't, we're not going to be mad. Can you excuse us in 20, 25 about why did we miss that target? Or what did we quietly just kind of. Stop talking about it. You know, ideally what we should be hearing from companies is, well, we set ourselves a goal of 20, 25 and we put all of these resources behind it and, and, and got going.

And actually we realized we could achieve it by 2023, you know, and, and, you know, accelerate ourselves even further. So, you know, holding ourselves to account with a clear action plan, that's transparent. That's shareable with others, I think is an important part of the journey and it, and it's, it's really missing.

With a lot of organizations

James Cook: [00:04:35] Can you tell me a little bit about how you would advise a company to kind of practically make sure that they're on track to meet, meet the goals.

Matt Clifford: [00:04:44] The obvious part is. Understanding what's the baseline, you know, what is it that we're trying to measure? What is it we're trying to manage? So it sounds kind of crazy in this day and age where there's so much fantastic technology out there to help us understand our performance and understand energy costs, consumptions, you know, environmental impacts carbon.

Some organizations are still doing that in spreadsheets. Some organizations are still, you know, not doing that at all. So really understanding your baseline, knowing where your impacts are coming from, and more importantly, knowing what drives those impacts, you know, why is it that certain buildings within a real estate portfolio perform so much better or so much worse than the norm?

You know, that's, that's pretty common to see a big difference between high-performance buildings and maybe run of the mill or even low performance buildings. So getting clear on what are those drivers and then. You know, the next part around that is, and this is, this is where energy efficiency and carbon starts to make fantastic financial sense.

You know, the, the low hanging fruit, the quick wins around getting going on that plan tend to have really good financial return. You know, we, we talk in terms of payback in real estate, and you might often hear the term two year payback three-year payback, something like that, you know, to put that into more financial terms.

Two year payback means 50% return on investment. Now I don't get 50% return on any of my other investments, but you can get it on energy efficiency. So that is a fantastic place to start. And it's going to pay for itself in a very short period of time.

James Cook: [00:06:18] Let's say we have this goal net zero carbon emissions by 2030, which is, you know, nine to 10 years away.

How do we. Track it, is there a, a software that you use? Or is it spreadsheets? I'm just curious how this all works.

Matt Clifford: [00:06:34] We've got software that we've developed in-house around this for the real estate industry. So, that's something that JLLs is incredibly proud of to have built something that has energy, carbon sustainability and real estate. In mind, there's a lot of technology out there, but it doesn't necessarily get tailored in on the real estate industry.

So we're gathering up all of that information on a day to day or sometimes monthly basis to feed into that system, to track how. How things are going now, when I say day to day or monthly, one thing it's probably going through some people's mind is, well, I might be a tenant in a building.

JLL is mostly a tenant. We don't, we don't own a lot of real estate. You know, we advise on real estate, but we're, we're pretty much tenants, across our 300, 400 offices around the world. So we're getting electricity bills, gas bills, water bills, like you, and I probably do at home. You know, sometimes we get them in the post.

Sometimes it's a paper copy invoice. You know, if we're lucky, it might be a more sophisticated, utility provider that provides digital files or a portal or something like that. So access it. But you know, often that data capture it's a little clunky. You know, we're still dealing with kind of legacy, businesses like the utility market, where quite frankly, they've got a bit of a captive audience.

They haven't had quite the same incentive to, you know, to improve it and to modernize. So the assumption going in is for us to gather that data. We're going to need to be able to capture everything from digital files in a digital portal that can come in automatically. Maybe it's connected up to a building automation system or smart metering or something like that.

Cutting edge kind of way of capturing data. And we're also going to need to be able to deal with, you know, less, less mature, a little bit more clunky., a little bit more manual could be Literally a paper invoice that's come in from a landlord to, to track how things are going. All of that tells the story of our footprint.

So, so tracking that information and getting it into a format that we can analyze it action and do something about it is a huge task. And for clients of ours that are operating, say outside of the mature markets, you know, I'm based in Australia. I know you're, you're based in the us, but if we're talking to clients that might be in less mature markets, what I just described is probably pretty common.

One thing we're learning is the industry moves pretty rapidly so that there is a ton of great , partners out there that we work with , every day on, on interesting technology, interesting equipment that are going into buildings.

But another piece, which just kind of a little bit of a tangent is just how important it is to celebrate the wins. You know, I'll tell you a quick story about our office in Shanghai. So , a couple of years ago, our , managing director of the Shanghai office, he said, look, it's time for us to relocate offices.

We're going to fit out a new space, you know, and this is something JLL has done a ton of times, right? We've got a lot of experience. This is, this is bread and butter for us, but he said something interesting. He said, I want to make this the best office in Asia. And by best, he meant I want it to be the most sustainable.

I want health and wellness to be an absolutely critical element. This is, this is pre COVID. This is just, you know, him looking over the horizon about where things were heading. So that's what we set ourselves. The task of doing is going down that pathway of delivering this outstanding office. And I, I won't get into too many of the details here.

There's case studies online, people can Google. JLL Shanghai office and check that out. But we achieved some fantastic results across both the sustainability and the wellness , criteria, real world leadership stuff. And just the amount of support that drove from other parts of the organization and our clients that were saying, Hey, tell me what you did.

Tell me more about this project. Can we come and take a look at it? How would we do some of those ideas in our project? And how quickly can we adopt that? So we set ourselves this goal of building the, you know, the light on the Hill, the shining light of what the best office in Asia should look like. And very, very quickly we found that that really galvanized a lot of support from.

Internal Jaylon stakeholders, clients, stakeholders, and whatnot, to want to do their version of what we've been doing to beat us. So what we'd be doing and Hey, good luck to them. You know, go, go, go your hardest build, build an even better office. But that notion of celebrating the wins, you know, sharing those success stories, using it to motivate others.

That was really positive.

James Cook: [00:10:58] Perfect. A perfect message to end our conversation on, I think,

Thanks for, joining me.

Matt Clifford: [00:11:04] It's been a pleasure. Thank you.

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And for the latest research about commercial real estate, visit our website JLL.com

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production help. On this episode of building places came from Stephanie Kilgore,