net zero carbon?
Here are 5 things you can learn from net zero’s early adopters
While sustainability has been a major concern for several decades, the concept of “net zero carbon” is a hot topic. In 2012, John Elkington – a long-time sustainability thought leader and net zero pioneer - published The Zeronauts, which was the debut of the idea of living and working with net zero environmental impact.
The trend towards net zero carbon continues to accelerate at a rapid pace. The race to net-zero is on with one in three companies committed to meeting their net-zero carbon commitment by 2030. Since 2019, we’ve seen twice as many organizations make net zero carbon commitments driven by the economic and public health challenges brought on by COVID-19 and its variants.
Net-zero ambitions are mainstream, for two key reasons. Firstly, government commitment to net zero mandates is growing globally. In 2019, the UK became the first major economy to enact a net zero mandate, followed that same year by France, Denmark and New Zealand. Then in 2020, China, Japan, South Korea and Hungary committed to net zero carbon. At the end of 2021, over 80 countries — representing almost 75% of global emissions — announced commitments to achieve net-zero emissions. In the United States, the bipartisan passage of the 2021 Infrastructure Investment and Jobs Act (IIJA) focuses action at the federal, state and local level to address the climate crisis. And secondly, in the private sector, competitive pressures will drive more and more organizations to commit to achieving net zero, even in the absence of government intervention. We’ve already started to see this in the tech sector, where industry giants have publicly doubled down on their pledges to fight climate change – and it’s only a matter of time before we start to see the same competitive pressures play out in other industries.
For those of us in the real estate and infrastructure sectors, which collectively account for 40% of global carbon emissions, it’s clear that the journey to net zero is only just beginning. Luckily, there are several key lessons that we can learn and apply from net zero’s early adopters.
Lesson 1: Know thy carbon footprint
Not surprisingly, knowing your carbon footprint is essential in getting to net zero – and how thoroughly and accurately you monitor and measure is critical. That means being rigorous in planning your measurement regimen. There are three basic parameters or “scopes” defining how narrowly or widely you measure and disclose your carbon emissions:
Scope 1 – Emissions that come directly from a given company’s operations. For example, emissions from the gas used in your offices and from your vehicle fleet.
Scope 2 – Indirect emissions that come from the process to generate power that an organizations buys. Moving to renewable electricity is one critical way to cut down on Scope 2 emissions.
Scope 3 – Emissions generated by your value chain overall – including things like business travel, employee commuting, and purchased goods and services.
To truly know your carbon footprint – and therefore truly reduce your emissions – you can’t just look at scopes 1 and 2. You have to set your sights on measuring and reducing all three.
We measured JLL’s own carbon footprint, as part of setting our Science Based Targets and signing on to the World GBC’s net zero carbon buildings commitment – and the results were instructive. The process helped us verify that 95% of our carbon footprint is derived from scope 3 emissions coming from the 5 billion square feet of client space that we manage globally – something that we knew intuitively, but we now have the facts to prove. This knowledge of what drives our carbon footprint is a critical input to our own net zero action plan.
Lesson 2: Don’t scrimp on strategic planning
One of the biggest challenges in committing to net zero carbon is setting a clear path all the way from pledge to success. That starts with the work of building a thorough and robust action plan, which clearly defines your optimal pathway to net zero in terms of the tactical, concrete actions you need to take to get there.
Within your action plan, establishing ambitious-but-realistic timeframes is critical. For example, many businesses in the UK have set 2030 net zero goals. For other organizations, 2030 targets may not be achievable. An effective action plan can help you validate whether it’s feasible to meet your goals against a proposed timeline – and helps you to identify where you need to seek additional investment or make strategic tradeoffs.
An effective action plan also takes full account of your business model – in the case of our net zero carbon strategic advice to UK REIT, Great Portland Estates, their strategic planning involved adapting their net zero roadmap to their investment and development pipeline activity, covering major refurbishments, acquisitions and disposals. Fundamentally, adjusting target dates and actions to their business strategy yielded a bespoke pathway to suit and support their existing progress.
Lesson 3: Build your business case
Building the business case for net zero is an exercise in balance. To get to net zero requires a mix of low-hanging fruit initiatives – which can deliver immediate cost savings – and needle-moving investments. The best net zero strategies consider both easy, quick wins (like LED lighting upgrades and other no/low cost initiatives) and long-term investments (like installing onsite renewable energy technologies, as just one example) within the same action plan and timeline. Savvy organizations reinvest the cost savings achieved in early phases of the net zero journey to mitigate the cost of larger, more ambitious investments down the line. Balancing short- and long-term views is crucial.
We saw this first-hand at JLL as we made the business case for our science based target to our executive leadership. Our analysis revealed that for every $1 spent, we would make $1.50 – with an IRR of 16% and positive returns within five years.
And don’t be afraid to look for creative and innovative ways to fund your sustainability investments. For example, when our clients at British Land committed to achieve net zero by 2030, they knew that a status quo approach to financing their net zero efforts wasn’t going to suffice. That’s why they launched a bespoke Transition Fund – the first of its kind – resourced by a £60 per tonne of carbon internal fee, levied on new developments. This fund will support British Land’s efforts to retrofit its existing portfolio and accelerate its progress towards net zero.
Lesson 4: Bring everyone along
It’s clear that the success of any major corporate net zero commitment relies on inclusion, buy-in and participation: from the top down, and with all stakeholders inside and out. That means educating stakeholders about the high-level challenges and opportunities, offering hands-on training for those that will play a role in implementation, and celebrating key milestones and successes along the way. The more everyone at every level across the organization understands and takes personal ownership of their part in the pursuit of net zero, the greater the success and the faster it comes.
Outside of your organization, it’s critical to engage both your supply chain and broader value chain, which play a key role in reducing your scope 3 emissions. Sharing information and ideas can help you on your journey and help them on theirs. Equally important, you want to continually communicate with your investors about your net zero efforts – as more and more investors use environmental, social and governance (ESG) factors to inform their investment decisions, you want to make sure they’re apprised of both your goals and ongoing efforts to achieve them.
Lesson 5: Be brave about your commitment. Half measures won’t cut it
The last, and perhaps most important lesson learned is to be bold. For most organizations, committing to net zero carbon can mean a serious change in mindset, and re-examination of value and values. Yes, committing to net zero carbon is a big, ambitious goal. But that commitment is far less daunting than the reality your organization – and society at large – will face in the absence of these commitments. There is no putting the genie back in the bottle.
Ultimately, ask yourself the question, “what would it take for my company to be net zero carbon by 2030” rather than, “what would it take for my company to be net zero carbon by 2050?” The net zero carbon market transformation is well and truly underway, and the adoption curve will be exponential throughout the 2020s.
Acting sooner and being bolder – whilst following the detail of lessons one through four—will pay long-term dividends for your business and ensure your company and your brand is on the right side of the problem/solution equation.
Learn the role your real estate portfolio plays in meeting your organization’s net zero commitment download our latest eBook: The real estate leaders guide to decarbonizing your portfolio.