Future-Proofing Real Estate Assets for a Net Zero Future

Over the past five years, more than 300 cities in the United States have committed to meet the targets of the Paris Climate Accords. However, only a handful have made meaningful progress in developing climate action plans, said Alaina Ladner ,energy and sustainability practice lead for JLL. “Cities, companies, investors, and tenants are looking to the building sector to meet greenhouse gas reduction goals,” she added, speaking at the “Future-Proofing Asset Value: The Pathway to Net Zero” panel as part of the 2022 ULI Spring Meeting in San Diego.

“In April 2021, one thousand executive leaders, investors, and corporate occupiers were surveyed by JLL,” Ladner said. “And that study showed that nearly 80 percent of corporate occupiers are incorporating carbon reduction targets. About 80 percent of them believe that climate risk is investment risk, and 42 percent of them believe that there’s going to be a rise in demand for healthy spaces.”

Blackstone has 54 portfolio companies within the company real estate globally, said Eric Duchon, global head of real estate ESG for the company. “Each of those companies is on a different stage of their ESG journey,” he added. “We have asked them to develop three-year strategic ESG roadmaps and identify those areas that they’re going to implement, with key metrics and KPIs in the first 12 to 18 months, and then more strategic visionary opportunities going forward.”

In September 2020, Blackstone announced that, starting in 2021, the company would target 15 percent carbon emissions reduction within the first three years of ownership for all new acquisitions where the firm controlled energy usage. “If we think about getting to 50 percent carbon emissions reduction by 2030, reducing by 15 percent in the first three years is setting our assets and investments on that journey in that pathway. And the way that we do that is through our due diligence and through underwriting.”

Susan Uthayakumar, chief sustainability and energy officer for Prologis, noted that her company has 1 billion square feet of real estate, typically in densely populated areas. “Our plan is to put it to good use in terms of generation of renewable energy for our employees and customers, who are demanding that we play a leading role in the industry to get this done.”

Prologis is working with customers to provide on-site solar power and developing solutions for storing the energy produced from renewable sources. “We also provide support and education on what decarbonization looks like,” Uthayakumar said. “We know, being a logistics company, that transportation is a big contributor to greenhouse gas emissions. So we’re working with [our customers] on electrifying the fleet and providing the infrastructure that they need to have charging available.”

Myrrh Caplan, national sustainability director for Skanska USA Commercial Development, also spoke about helping the company’s clients reduce their carbon footprints. Skanska has implemented a number of buildings that meet the Living Building Challenge’s stringent requirements, which go beyond carbon neutral to produce more electricity and water than they consume. “We’ve got clients asking how they can get to a net positive building. And that includes entertainment, as in theme parks, massive global manufacturing organizations.”

Skanska’s own decarbonization goal was to get to a 50 percent reduction of carbon emissions by 2030, with 2015 as the baseline year. “We’re already there,” Caplan said. “So we decided a few months ago to bump up our game a bit. We now have a 70 percent goal of reducing our own carbon by 2030. And by 2045, we will have gotten to neutral for our carbon as well as our clients’.”

RON NYREN is a freelance architecture, urban planning, and real estate writer based in the San Francisco Bay area.