Cities must do more to support the environmental and social revolution

Qu0026amp;A with Stephanie Hyde, chief executive, JLL UK; and Jeremy Kelly, research director, at real estate services provider JLL
JLL’s Manchester office (pictured) was the first UK Platinum WELL Building certified office outside London

Why is decarbonising buildings so important to the climate change agenda?

JK: 40% of carbon emissions come from buildings; in cities, it’s typically 60% to 70%. That means the world will not achieve its ambitious net-zero carbon targets without addressing emissions from buildings, in operation and construction. As these ambitions get bolder, the pressure to address building decarbonisation intensifies.

SH: During the pandemic, people realised what can be achieved with increased attention on the environmental agenda. Our clients and colleagues across the real estate industry have shifted focus over the last year from what we should make happen, to how it should happen.

Are cities doing enough to decarbonise buildings?

JK: No. Their focus has been on sustainable transport and providing clean energy, which are very important. But buildings must also move up the agenda. City governments have only realised that recently, but the tide will turn rapidly as they start calculating emissions from buildings.

New York, Melbourne, and Copenhagen are at the forefront of building decarbonisation initiatives. New York aims for all new buildings to be carbon zero by 2030, and recognises the need to retrofit existing buildings, which is the bigger issue. They are incentivising owners to deep energy retrofit (DER), which takes a whole building approach.

New York also educates developers and construction companies about how to retrofit for net-zero carbon. Combining regulation and education brings workers and companies with them.

SH: Some things investors and occupiers can’t do alone or have little control over - such as greening energy grids - so they want bolder decarbonisation actions from city governments.

In this decade, one where we need to move beyond words to delivery, each city needs to develop a comprehensive plan where everyone comes together to realise net zero. The social impact is also essential to consider how we improve lives by addressing social inequality, particularly since that has widened during the pandemic.

In this decade, one where we need to move beyond words to delivery, each city needs to develop a comprehensive plan where everyone comes together to realise net zero

What targets should cities prioritise?

SH: Action, not commitments. Without a clear, iterative roadmap to a net-zero built environment, initiatives won’t take off. Tangible milestones and deliverables are needed. Businesses and investors will worry about starting without understanding the overall plan. They also need to be incentivised.

New York is a good example of incentivisation, with its finance programme offering long-term low interest rates to fund energy and water efficiency improvements.

Cities also need to target use of onsite renewables, solar energy, and biophilia; and adopt circular practices around water and waste.

There will be a sweet spot when we get the right regulation, incentives and support; with investors, developers, occupiers and city governments all working together.

JK: Targets for new buildings are the lower hanging fruit, but cities need rapid, ambitious retrofitting targets to decarbonise. Across mature cities, the refurbishment rate is 1% or 2% a year. They need to ratchet that up. Only a few cities in the UK have taken the lead on retrofitting.

Cities also need to lead by example by setting targets around decarbonising their building stock, and upskilling workers on decarbonisation.

Retrofitting homes is also an opportunity to upgrade inadequate housing stock.

JLL’s report “Decarbonising cities and real estate” emphasises the importance of partnerships. How can cities, investors, developers and occupiers partner to decarbonise?

SH: Collaborations are developing because no single group can achieve decarbonisation alone. We’ve seen examples of where investors have made leasing terms dependent on whether occupiers meet their green goals. But we need more partnerships and JLL is prioritising this too.

We’re collaborating with British Land to deliver our flagship office at Broadgate in London, by 2026. We are both committing publicly to net-zero targets and the highest environmental assessments such as BREEAM and WELL Building certification levels.

Technology and innovation will be pivotal to these sustainability partnerships, and that’s happening increasingly through our JLL Spark venture capital investments in property technology. Transparency, data and metrics are also important, so collaborations can measure progress and improve. Ultimately this is about shared values, commitments and prioritisation – finding like-minded partners who realise this goes beyond economic outcomes.

Without a clear, iterative roadmap to a net-zero built environment, initiatives won’t take off

What should be the role of regulation?

JK: Regulations and penalties will ensure companies are accountable for decarbonisation. However, the real estate industry should help bring together public and private sector stakeholders and communities to define ambitious but achievable regulatory frameworks.

Copenhagen is a good example of a collegiate approach, in which the city government works with investors and occupiers to decarbonise and reduce energy use in buildings.

SH: The Better Buildings Partnership climate commitment is also a good example of collaboration. Cities should see owners, developers, investors, and occupiers as long-time partners working together on environmental goals. I see a genuine willingness to do this.

How is JLL promoting ESG principles in the built environment?

SH: We are leading the charge across the sector, and challenging and supporting clients in meeting ambitious targets.

We also want to focus more on social returns in cities and neighbourhoods, and work with community organisations to drive a sense of place. King’s Cross in London has been a great recent example, and there are many more.

Our refurbished Manchester office became the first UK Platinum WELL Building certified office outside London. It featured a circular design, with recycled materials; and a focus on air quality, and environment quality.

We have received amazing feedback from our colleagues about how it feels to work there.

We will upgrade all our UK estate using these principles by 2030. It’s inspiring to see how excited people get when you show them around. We’re sharing what we’ve learnt and are working closely with clients on the same journey.

Building-specific initiatives will accelerate in the coming months. Many people appreciate getting back together, but they need to do that in positive environments.

We don’t have all the answers yet. But we’ve set ourselves challenging social and environmental targets, with detailed plans. We will hold ourselves accountable and deliver them.

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