Companies Walking the Talk on Corporate ESG

Pursuing sustainability via environmental, social, and governance goals is on the rise during the pandemic. A global technology company has made substantial progress in going carbon neutral.

Buildings and construction are responsible for nearly 40 percent of carbon emissions globally, with emission levels reaching a record high in 2019.

Global carbon emissions dropped by nearly 7 percent in 2020, largely as a result of the COVID-19 pandemic. But that means the real estate industry has a timely opportunity to commit to sustainability by setting environmental, social, and governance (ESG) goals. The worldwide disruption of the status quo could lead to long-range strategies that will result in greener portfolios and economies.

In an industry survey, consultancy KPMG found that while 31 percent of respondents said they were already strongly focused on pursuing ESG goals, 54 percent said they were refocusing their investments toward sustainability.

KPMG also found that 83 percent of industry leaders believe there will be a significant increase in pressure from tenants for sustainable and environmentally friendly buildings after the pandemic. The Paris Agreement was a big inspiration for many organizations to focus on sustainability—the international treaty that went into effect in 2016 aims to limit the global temperature increase to less than 1.5 degrees Celsius more than the pre-industrial baseline and get to net-zero carbon emissions by 2050.

To that end, members of ULI’s Greenprint Center for Building Performance are collectively working to reduce their portfolios’ greenhouse gas emissions by 50 percent by 2030 and to achieve net-zero carbon operations by 2050. That pledge will have an impact: Greenprint members—including Allianz, Nuveen, and LaSalle Investment Management—cumulatively manage over $1.2 trillion in assets in 32 countries.

Some organizations have set specific science-based targets (SBTs) to commit to companywide ESG goals—Amazon, Walmart, and Procter & Gamble among them. P&G set a goal of reducing its overall carbon footprint by 50 percent by 2030 and reports that the energy efficiency actions it has taken over the past four years have already saved the company $500 million. Many companies have turned to SBTs and other goal-setting standards to help keep their emissions reductions in line with levels set in the Paris Agreement. Real estate companies including Lendlease, Boston Properties, and City Developments Limited (CDL) also have committed to SBTs.

“Industry leaders are turning to international frameworks such as the Science Based Targets Initiative, RE100, and the United Nations Sustainable Development Goals for a holistic sustainability approach. Others are taking it a step further by setting carbon neutrality goals to fully address their impact on the environment,” says Marta Schantz, senior vice president for ULI’s Greenprint Center for Building Performance.

While the number of net-zero-energy commercial projects in the United States has increased by 40 percent over the past two years, many other companies still lack a strategy for how to achieve carbon neutrality.

Reaching Carbon Neutrality

Siemens, a leader in the technology industry, is applying its expertise to its own corporate portfolio. Siemens “walks the talk” on sustainability with a global energy master plan, setting an example for other firms to join in reducing carbon emissions.

With its global headquarters in Munich, Siemens is a Fortune 100 company with more than 293,000 employees and 2,400 locations worldwide totaling 86 million square feet (8 million sq m). In the United States alone, Siemens has 260 buildings totaling 9 million square feet (1.2 million sq m), with both office and industrial space.

The company has reduced the carbon footprint of its own value chain by more than half (54 percent) since 2014. Siemens has thus exceeded—by 4 percentage points—its goal of halving its global carbon dioxide (CO₂) emissions by 2020. Including Siemens Energy, the company has reduced its carbon emissions by around 1.2 million tons of CO₂ compared with its 2014 levels.

Siemens’ Corporate Strategy

Siemens’ ongoing program to green its real estate assets includes setting measurable goals for reducing the carbon footprint across the company. The decarbonization push has four pillars in line with its sustainability goals:

• Drive energy efficiency: In its ongoing efforts, Siemens is increasing energy efficiency in factories and embedding sustainable technologies in new buildings. Where the company leases space, or for technical reasons it can’t put a distributed solar solution in place, Siemens minimizes energy use at those sites and connects them to a data platform that can learn how to optimize building performance. This is done across the building stock.

• Use renewable energy: Siemens’ strategy for using green energy is a mix of on-site renewables and entering into virtual power purchase agreements to ensure that more windfarms and solar arrays are built to meet the demand. The company aims for all of its power to be 100 percent renewable by 2030; currently it is about 70 percent globally.

• Reduce fleet emissions: Siemens has over 50,000 vehicles worldwide and is accelerating uptake of electric vehicles in its fleets. In the United States, more than 20 percent of the 10,000 vehicles Siemens operates currently have hybrid engines. The goal is a zero-emission electric fleet by 2030, with electric vehicle (EV) charging stations being installed at Siemens facilities.

• Use carbon offsets: Siemens is developing and using innovative solutions such as hydrogen technologies and energy storage technologies to reduce carbon emissions rather than purchasing nature-based carbon credits. The company aims to achieve an emission-free supply chain by the year 2050.

Siemens’ office in Princeton, New Jersey, is not just another corporate campus: The Princeton microgrid is a living lab that integrates technologies from the company’s Smart Infrastructure portfolio to generate, store, and share energy. The technology headquarters runs on green energy and can operate as an island.

The Princeton campus features photovoltaic solar panels, a microgrid, an EV charging station, battery storage, a building management system, power monitoring, data analytics, and a digital twin. To engage coworkers and visitors in the zero-carbon mission, the company displays actual building and microgrid data in the lobby using Siemens’ cloud-based MindSphere platform. The lessons it learns from this living lab can then be shared with customers, demystifying the decarbonization process.

And Siemens is pushing for carbon neutrality on an even tighter time horizon in Zug, Switzerland, where its Siemens Smart Infrastructure headquarters will be net zero by 2023. An existing building is being renovated to house the headquarters, at a cost of €63 million (US$74 million). The main office and factory in Zug, which opened in 2019, saved 600 tons of CO₂ in the first operating year, a 60 percent decrease from recent years’ heat use.

In January, Siemens was among the first companies joining the World Economic Forum’s commitment to Stakeholder Capitalism Metrics, a set of global ESG benchmarks and disclosures considered most critical for business, society, and the planet.

Martin Powell, head of sustainability for Siemens Financial Services, explains how the company views ESG goals on an industrywide scale to help move the market toward carbon emissions reductions. “With increasing urbanization, global inequality, aging populations, and a climate in crisis, we know the only responsible way to create value is by building a more sustainable future—balancing the interests of people, planet, and profit. If we combine technology and data analytics, we can plot the journey to zero carbon emissions with robust business cases that deliver the outcomes we need.”

For buildings already in use, looking at energy efficiency and prioritizing renewable energy sources is of the utmost importance. Collecting accurate and comprehensive data on energy, emissions, water, and waste for each asset is essential for a sustainable portfolio. Only when a firm has baseline performance data can it track the progress the organization is making.

Reaching carbon neutrality within the next decade is not going to be easy. But it is achievable and necessary for ensuring long-term sustainability of real estate portfolios and the planet. Building a resilient, sustainable portfolio is both fiscally and environmentally sound, and the time to start walking the talk is now. As shown by Siemens’ example, organizations embarking on an ESG transformation, or looking to advance their current strategy, have a variety of options and technologies from which to choose.

Siemens is one of ULI’s Greenprint Center for Building Performance 2021 Innovation Partners. The Innovation Partner program is a collection of noteworthy technology companies and service/product providers moving the needle on energy and sustainability innovations.