Is the pandemic just a dress rehearsal for the climate change crisis?
JLL's Global Chief Sustainability Officer says we need to make environmental resilience core for our post-COVID-19 recovery. We can't afford to go back to a quick fix--that's only going to take us back to where we were... which wasn't working. As we rebuild, we need to reimagine. We need to reshape the future. The steps we take today are laying the foundation for our future.
[00:00:00.06] [James Cook] For decades, we've heard about the importance of being environmentally sustainable. But now we're all just grappling with COVID-19. So is sustainability still important? Let's find out. 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 calling Richard Batton. He's the [00:00:30.0] global chief sustainability officer at JLL. Hello, Richard. This is James Cook.
[00:00:39.99] [Richard Batten] Hi, James. My name is Richard Batten and I am the global chief sustainability officer for JLL.
[00:00:47.64] [James Cook]
Right now you and I are both speaking together from our home offices because we are in the midst of a Global COVID-19 crisis. I think some people would say now is not [00:01:00.0] the time to focus on sustainability. We've got other more important things to worry about.
[00:01:04.23] [Richard Batten] I almost fear that what we're dealing with now is a dress rehearsal for some far bigger issues that are coming down the line as us through climate change. What the COVID-19 crisis is teaching us at the moment is that we need to make environmental resilience a core to our planning for the recovery ahead. We can't afford to go back for people who want [00:01:30.0] a quick fix. That's only going to take us back to where we were when that doesn't work. So as we rebuild, we need to reimagine. We need to reshape the future that's in front of us. However, we rebuild now will help us prepare for even greater issues from climate change that will be coming from the line as us over the next 10, 15, 20 years.
[00:01:53.65] [James Cook] Few weeks ago, I saw an announcement that JLL is going to cut carbon emissions by two thirds. [00:02:00.0] Walk me through that. How does how does that work? What's the timing? What's that look like?
[00:02:05.94] [Richard Batten] You hear about a lot of people going to net zero in the workplace, but the most ambitious targets you can set yourselves in respective carbon emission reduction is a science based target, one that is aligned to the Paris agreement, where they were expecting companies and countries to ensure that they did not increase to world's temperature by more [00:02:30.0] than one and a half degrees since these industrial times. There is an independent body out there who assesses strategies for reduction. We have to calculate what our carbon footprint was, not just our buildings off fleet, also our air travel, commuting times, and also on impact with our clients. And they came back with an answer that we needed to reduce by 70 percent.
[00:02:59.61] [James Cook] What is [00:03:00.0] the strategy? What are you going to have to change in order to meet that goal?
[00:03:04.17] [Richard Batten] The two biggest areas that we have to impact is. Our vehicle fleet, which is very big in the US, big in the UK and Germany as well. We have to move off fleet to electric vehicles and we have a plan to do that by 2034. And that will be the whole of the European fleet and [00:03:30.0] about two thirds of the U.S. fleet. We also need to put in place operational efficiencies in all of our buildings. So one of our targets is to increase the certification levels of our buildings so that they are more environmentally friendly anyway. But on top of that, we will be needing to retrofit sensors, which could be lighting. We will be needing more efficient motors in to our air conditioning and more sensitive switching [00:04:00.0] as well into into our plant rooms. So there's lots of efficiencies we can do with our existing building stock as well. Our intention is to move globally by 2034 to 100 percent renewable energy. Now, there are some countries in the world where we might not be able to achieve that by 2034. In those cases, we go down the route of purchasing renewable energy certificates. And it's a combination [00:04:30.0] of those four areas of operational efficiencies, electric vehicles, renewable energy and renewable energy certificates, whereby we'll be able to get to a 70 percent reduction in vehicles and our buildings themselves.
[00:04:45.7] [James Cook] Not only is it ambitious, it sounds like it could be expensive. Is there a calculation there that in the long run there's there's an upside to that or does JLL do this out of the goodness of its heart.
[00:04:58.55] [Richard Batten] Are global executive board [00:05:00.0] doesn't work quite like that. The first of all is ambitious.
[00:05:04.89] The one and a half degree target is the most ambitious you can do. There are only 100 companies worldwide who are who have managed to set this target and have it agreed. And of those 100. By my calculations. And there's only 10 who are truly global in respect of the finance. We calculated we went to the board and we [00:05:30.0] had a plan whereby the payback was going to come through after five years. So we were going net positive after five years. And throughout the period, up to 2035, we were working on a 16 percent IRR. Yes, it's a capital commitment. But more importantly, we get significant returns coming back.
[00:05:54.64] [James Cook] How do we influence our clients to take similar steps?
[00:05:59.56] [Richard Batten] We [00:06:00.0] have such an influence due to the amount of property that we manage on behalf of clients. We manage 1500 times the amount of space on behalf of our clients than we ourselves occupy. So that's massive leverage. We need to work with our top 50 clients, 34 of them Work Dynamics, and 16 of them are investor clients. We already are working with them in some areas [00:06:30.0] of sustainability. But our task now is to ensure that we are working with them on their own emission reductions. And that will be a big part of the way forward.
[00:06:40.99] [James Cook] What should owners of commercial real estate be thinking about? What are what are the challenges that are coming down the road in 20 years?
[00:06:48.97] [Richard Batten] We're just going through and we will be reporting in full is something new that big corporates are now taking on, which is [00:07:00.0] really reporting on climate related financial disclosure. So it's reporting on the risks, risks and opportunities of climate related risks that sit in front of us. And you'll see more and more companies reporting on that basis. And very shortly, I believe, having to report, because just the same as we have financial transparency, we will be needing that transparency and risk as a result of changes in climate.
[00:07:28.21] [James Cook] I know that JLL is coming [00:07:30.0] out with a new global sustainability report in a few months. Is that the mode of the transparency? Is that where you kind of keep yourself honest and reveal to the world peers how we are in meeting those targets?
[00:07:43.12] [Richard Batten] Yes, the Global Sustainability Report is the one time each year where we have to take everything into a single document. Anybody can find out where we're at by looking at that document to online that will encapsulate all of our targets. So just been speaking [00:08:00.0] about science based targets, other targets that we've got that in respect of our people, new gender balance targets. We did not have not previously had targets in respect of mental health? Mental awareness and I think what we're getting to at the moment is certainly brought that right up to the level of awareness. We're in the process of rolling out a strategy to eradicate single use plastics throughout all of the JLL buildings, quite demanding because [00:08:30.0] what we're seeing with the pandemic is actually a bit of a reversal with the need masks, rubber gloves, cetera,
[James Cook] for folks out there who would like to learn more [00:08:41.8] do they go to to JLL dot com.
[00:08:44.29] [Richard Batten] If they went to jll.com and look for global sustainability, they'll find us.
[00:08:49.96] [James Cook] It's such an uncertain time right now. What is your hope for the future? What's your vision?
[00:08:56.68] [Richard Batten] I think it is important that we're not intimidated by [00:09:00.0] what's going on. And then we will come through this and we must have the confidence that we will. So it is equally important to understand that we cannot go back. We cannot recreate the world and the conditions that we had previously. That didn't work. We have to imagine how we how we want to work in the future. We have to create resiliency. And in order to do all that, we [00:09:30.0] then need to reshape. We shaped the world that we wanted to be and that it would be a better world. Once we've done that.
[James Cook] I'm inspired. [00:09:40.37] Richard, here's how much you've achieved your goal. I'm I'm inspired to do more. And I like to consider myself relatively trying to do my best every day. But I want to do more now. So thank you so much for joining me today.
[00:09:54.03] [Richard Batten] Take care, bye
[00:09:55.95] [James Cook] If you've got a comment on today's episode or a question that you'd like for us to tackle, you [00:10:00.0] can leave a message on the podcast hotline and we may use your voice in an upcoming show. Give us a call at six zero two six three three four zero six one. Be sure to tell us your name and where you're calling from. Don't miss another episode of this show. You can subscribe to building places on the iPhone podcast app on Spotify or wherever it is you get your podcasts. And if you'd like to learn more about retail real estate, you [00:10:30.0] can listen to our sister show. It's called Where We Buy. It's a show where we talk with retail experts and visit the places where we buy. For the latest research about commercial real estate. Visit J. L. L. Dot com.