Businesses who have set a 2030 net zero carbon target may struggle to achieve their objectives without a major shift towards more sustainable real estate, according to the latest research from Knight Frank.
Knight Frank’s second edition of its (Y)OUR SPACE report draws on responses from almost 400 international businesses with a combined headcount in excess of 10 million, providing unique insight into the workplace strategies and real estate needs of global companies.
The report shows a growing desire for global firms to be sustainable, with 40% of firms having set a net zero carbon target and, of those, 77% are aiming to achieve this by 2030. Yet despite real estate accounting for as much as 40% of global carbon emissions, and with growing pressure from the increasingly robust ESG agendas of investors, over 87% of firms said that less than half of their current global real estate portfolios are either ‘green’ or ‘sustainable’.
Buildings that perform well on sustainability can be recognised through an official sustainability accreditation system such as BREAM, LEED, DGNB, CASBEE or Green Star.
Despite their net zero ambitions, over a quarter of businesses believe that their company’s commitment to a net zero carbon future will have little impact on their future real estate choices, with a further 15% believing that it will have no impact at all on those choices.
Only 19% said that sustainability considerations would be the key influence in determining their real estate strategy and portfolio over the next three years. While this may reflect the dominance of COVID-19 on current thinking, it also suggests a disconnect between real estate and wider corporate thinking on sustainability. Almost 60% of respondents said that there is only a partial recognition from their wider business that occupying and utilising real estate differently will impact their ability to achieve net zero carbon and wider sustainability targets, with a further 15% arguing that there is no recognition at all.
Dr Lee Elliott, Global Head of Occupier Research at Knight Frank, said: “A lack of awareness and action on sustainability is one of the most significant findings from our global survey. Occupiers may need to completely change how they use real estate to meet their net zero objectives without having to rely on carbon offsetting, particularly if they are aiming to be net zero by 2030, which is a huge challenge both for them and office landlords. As the pandemic gradually subsides, the carbon footprint of office buildings will come under increased scrutiny, which means that the clock is quickly ticking on the opportunity to bridge the gap between ambition and results. It is questionable whether such ambitions can be met prior to the 2030 net zero carbon target date that the bulk of our respondents have set, which presents a significant reputational risk for firms who cannot adjust their real estate quickly enough.”
William Beardmore-Gray, Global Head of Occupier Services and Commercial Agency at Knight Frank, commented: “Tackling the climate crisis will increasingly depend on more businesses occupying sustainable real estate. It will also be critical for international businesses looking to meet their ESG objectives. With more than three-quarters of occupiers with a net zero target in place having set a date before 2030, the pace of change must increase, and that means businesses cannot continue to separate sustainability considerations from their real estate decisions.”