by Brianna Crandall — February 13, 2017 — A recent report from global corporate real estate (CRE) association CoreNet Global, The Bigger Picture: The Future of Corporate Real Estate, highlights a growing corporate focus on energy efficiency and sustainability, as well as on corporate social responsibility (CSR).
Focus on efficiency, sustainability, pursuit of zero net energy
Even without soaring energy prices as a primary motivator, global corporations — and more specifically their real estate departments — are increasingly focused on efficiency, sustainability and achieving a state of zero net energy (ZNE), finds the report.
The strategies to achieve those reductions and move closer to ZNE often fall into three main buckets, according to Mike Bendewald, a manager at the Rocky Mountain Institute, a U.S.-based nonprofit sustainability research and consulting firm:
- Energy efficiency, including retrofitting buildings with LED lights, improved water filtration systems and heating/cooling; and, constructing buildings with more efficient systems in place;
- Adding renewable energy sources on site; and
- Off-site renewable energy purchasing, such as purchasing renewable energy credits (RECs) or power purchase agreements where firms contract to buy energy from a wind or solar farm.
Karen Ellzey, executive managing director of consulting for Global Workplace Solutions at CBRE, commented:
It is a very active topic, but it may not be driven as much by cost and cost savings as it has in the past. I think it is going to be driven more by regulatory issues and companies’ perspectives on how this is going to support their broader brand and social responsibility objectives.
While companies are approaching energy usage with varying levels of focus and reasons for doing so, innovation is clearly taking place, according to the report:
- Unilever CEO Paul Polmon announced in November 2015 that Unilever will work towards a goal of being carbon positive by 2030. Essentially, 100 percent of its energy across operations will come from renewable sources, and with the help of partners, the company will directly support the generation of more renewable energy than it needs for its operations, making the surplus available to the markets and communities in which it operates.
- Oracle has had success in introducing solar power at some locations. The company added a three-canopy photovoltaic (PV/solar) system to its new LEED Gold-certified building in Burlington, Massachusetts. The system sits atop a four-story parking deck and is expected to generate about 720,000 kilowatt-hours after its ﬁrst year of operation. That is enough energy to power approximately 80 average-size homes for one year.
As buildings are one of the biggest users of natural resources, and producers of greenhouse gases, corporate real estate executives will be on the front lines of developing and executing strategies to improve energy efficiency and sustainability. In addition to construction features, companies are taking a broader view by considering locating near public transportation, and policies that support employees who ride their bikes or buy hybrid vehicles.
The challenge for CRE leaders, according to the report, will be to present the value of capital expenditures that are necessary in terms of their return on investment.
CRE positioned to lead in corporate social responsibility effort
Corporate social responsibility (CSR) is increasingly being used as a tool for expressing the values of companies and their shareholders, a way of linking organizations to popular or important issues, and a point of pride for employees, according to the report.
Because the CRE function influences many factors related to corporate social responsibility, it is well positioned to be the change agent within the organization, as more companies heighten their CSR profile.
For example, according to Colleen Conklin, director of Research – Corporate Services with Sodexo North America:
Green buildings and operations unquestionably reflect a responsible company with a strong commitment to its sustainability objectives. CRE can also be a mechanism for corporations to foster improved employee health and well-being. CRE can help corporations take health and safety standards a step further through facility and space design, incorporating greater ease and efficiency of operational processes, giving occupants control over some aspects of their environment, and providing ergonomic elements.
In addition, Rajeev Thakur, a location strategy consultant with Newmark Grubb Knight Frank, sees companies using their choice of location as a projection of their values. Many international firms with whom he works have chosen one city over another based on its green policies, friendliness to bikes and pedestrians, and use of electricity.
CSR may also be used as a tool to attract and retain talent, as Millennials and other workers place increasing value on a company’s external profile. As such, company-led initiatives such as charity walks and fundraisers have been on the rise in recent years, and in many offices, photos from recent events are prominently displayed where clients and job prospects can see them.
We are seeing CRE groups taking on redevelopment of existing neighborhoods in cities and working hand-in-hand with organizations who wish to create a workplace that benefits both their employees and the larger community.
According to the report, this trend is growing: “In the next decade, corporate social responsibility may take new forms and pursue new initiatives in areas like fair labor practices, sustainable land use, air and water quality, the rights of indigenous people, and other areas perhaps not yet imagined. It is clear, however, that a corporate commitment to social responsibility is here to stay, and will likely only grow over time as today’s young professionals move into positions of leadership.”
The complete 45-page report, The Bigger Picture: The Future of Corporate Real Estate, is available for free download with registration on the CoreNet Global site.