Understanding the corporate climate migration By Michael Beckerman, CEO, CREtech & CREtech Climate
Two years ago, the Covid-19 pandemic forced the world to take a step back and reevaluate the ways in which we live our everyday lives. Gone were the days of letting out the occasional cough without feeling the need to reassure bystanders or considering hand sanitizer an essential item. In place of working in enclosed offices and dedicating little thought to the air we breathed, many individuals – myself included – found themselves spending more time in their backyards and parks, enjoying nature and generally rediscovering the majesty of the Great Outdoors. The price to pay for this rekindling of interest was undoubtedly far too high, but this only emphasizes that we cannot allow these experiences and lessons learned to fall by the wayside once the pandemic is behind us.
This notion is particularly true for the commercial real estate (CRE) industry, which for too long has reflected a disconnect between the passions of its leaders and the output of its built environment. My own personal circumstances are no different; though I have long considered myself a “tree hugger,” capable of spending hours staring at the night sky and listening to the unfiltered sounds of nocturnal life, it has become clear to me that the young Michael Beckerman who would spend afternoons hiking with his dad would not be proud of the environmental efforts I have made in my professional life today. This lack of connection between my personal and professional life could be attributed to many things, but the fact of the matter is that the time to rectify this is long overdue.
We need to act now.
The consequences of this inaction are reflected all around us in today’s CRE industry. It is responsible for 40 percent of the world’s energy consumption and one-third of all carbon emissions. Worse yet is that factors such as water abstraction, greenhouse gases and air pollutants – which can be mitigated far more effectively than they currently are – still represent nearly 90 percent of our industry’s environmental impact. The current pace of retrofitting of roughly 2 percent is far too slow and decarbonizing the built environment carries with it a price tag of $5.2 trillion over the next decade, per Vivid Economics. Additionally, in order to adhere to the Paris Agreement, the built environment as a whole must aim to reduce emissions by 50 percent by 2030, a benchmark that itself exceeds New York’s ambitious goal of 40 percent by 2030 and 85 percent by 2050. While much discourse has been had surrounding how best to return to our offices or identifying ways to work remotely, we have all allowed this to take priority over embracing sustainable initiatives. It is no longer enough to ensure that our buildings and offices are safe for human beings; we absolutely must lend equal focus to creating buildings that are safe for the environment as well.
This is not to say that nothing has been done. Immediately prior to the pandemic, the U.S. Green Building Council celebrated that it had surpassed 100,000 registered and certified LEED commercial projects. Moreover, at that time, over 2.6 million square feet were being certified every day. These green buildings release almost 40 percent less carbon dioxide and use 40 percent less water as well. Combined with our admittedly forced exodus from these buildings in 2020, the United States led the world with a 13 percent decrease in emissions that year, which was also a result of significantly less motor vehicle and airplane travel. However, as encouraging as this appears at face value, we cannot delude ourselves into thinking that these 2020 figures were achieved entirely by choice.
Our industry can, should and will lead the way.
In order to maintain and improve the trajectory we now find ourselves on, the CRE industry is today at the critical juncture at which we must make conscious decisions. Despite the presence of the omicron variant, it cannot be denied that the outlook is brighter than it was even one year ago. Today, over 63 percent of Americans are fully vaccinated, with 36 percent of them having received the booster. Offices have reopened – if only in a hybrid sense, with roughly 74 percent of the workforce planning to permanently continue working remotely – and traffic jams have returned to being a daily occurrence in major metropolitan areas. Air travel is once again becoming routine, and it will not be long until we run the risk of forgetting the dire straits we found ourselves in as recently as 2021. In other words, the pieces are in play for the population to either slow down or progress, or worse, reverse it.
The good news is that this is not inevitable. In fact, I would go so far as to say that the desire to improve the CRE landscape is there. Buildings across the country are continuing to incorporate newer technologies – with 80 percent of real estate owners and operators citing them as having greatly benefited their operations – and 72 percent of companies are anticipating reducing the size of their office spaces to better fit hybrid models and reduce emissions. LEED certified buildings have become a badge of honor, with leaders of companies speaking up in greater numbers on the importance of addressing these challenges. The multifamily sector is pitching in in this regard as well, with LEED-certified homes having recently reached an all-time high of over 500,000 – over 80 percent of which are in the U.S. Laurence Fink, Founder and CEO of BlackRock, has stated that future investment decisions will prioritize sustainability. Microsoft has not only pledged to eliminate its carbon emissions, but to effectively eliminate all emissions it has ever produced by 2050. Stephen Ross, founder of Related Companies, stated in 2020 that he considers his effect on the environment to be his “biggest issue in life” right now, emphasizing the importance of achieving a carbonless world. While encouraging, the fact remains that CRE leaders must follow their examples en masse if they are not to ultimately be in vain.
Real change. Real progress. A real impact.
I am proud to add my name to that list of leaders. I intend to continue to reinvigorate CREtech’s continued focus on sustainability and ESG in a way that persists long after our emissions have diminished. This means assisting and mentoring any professional or company who has expressed an interest in building a cleaner and more sustainable environment. Through working with our CREtech Advisors to develop new ways of encouraging investment and adoption of sustainability startups and related tech companies, our organization will incentivize our team members and the world at large in speaking up and participating in both public and private forums dedicated to promoting these themes. Finally, nonprofits and other associations will also receive CREtech’s support whenever possible.
Over the past two years, the world has experienced what my wife refers to as “The Great Reset.” The global population was spending more time outside of vehicles and offices and more time in parks or enjoying nature. However, there is arguably no point in taking a step back if not to reevaluate the path forward. The Great Reset should not cease to be of importance once Covid-19 and its impact have faded into memory. We members of the CRE industry have all proven to ourselves–and each other–during this time that we are quite capable of making ESG and environmentally-conscious changes when we are required to do so. Join me in this pledge to apply these lessons to our professional lives as well as we embrace the beginnings of 2022 and gradually return to building a better world.
Understanding the corporate climate migration By Michael Beckerman, CEO, CREtech & CREtech Climate
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