Webinar on Demand: How Corporate Real Estate Can Meet ESG Demands

As a corporate real estate leader, how prepared are you to lead your team through the increased pressure of Environmental Social Governance (ESG) initiatives at your company?

Join us for an informative session where Verdantix, an independent global consulting and advisory firm with a leading ESG and sustainability practice, will provide helpful and actionable information on the state of sustainability in the corporate real estate space followed by a panel discussion from corporate real estate experts from Mastercard, Verum Consulting, RefineRE, and more.

Fill out the form below to watch the webinar on-demand!

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Transcription

Vik Bangia: Thank you everyone and welcome to today’s webinar titled “Making an Impact: How Corporate Real Estate Can Meet Environmental, Social, and Governance Demands.” My name is Vik Bangia, and I’m the CEO of Verum Consulting and the Outsource USA Network. My company delivers expertise in corporate real estate outsourcing and strategy and operations consulting. And the Outsource USA Network is a group of independent companies all focused on employee-centric future work.

Now a growing aspect of corporate real estate and facilities management strategy is ESG or environmental, social governance. But what exactly is ESG? And why does it matter? Well, today we’ll be talking to experts in ESG, as well as leaders in corporate real estate and facilities management that are implementing ESG initiatives. On this webinar, you’ll hear great foundational advice for the uninitiated, lessons learned from those who are already on the journey, and advantages of ESG so you can begin your own journey.

So first, I want to thank Michelle Cobb and Mallory Pitts from RefineRE for organizing and hosting this webinar, and for our great panelists that have offered their time and expertise to discuss this topic. If you have questions, use the chat function and we’ll have some Q & A at the end of our session. Now we have with us today Wendi Lester, who’s a corporate real estate sustainability champion and the former director of global real estate and workplace operations at Zscaler. Wendi also has a background that includes roles with Cisco and IBM. And next, we have Dave Bertorelli who is the head of environmental sustainability at MasterCard and brings with him a varied facilities management background from both the end-user and service provider side of the business with Cushman & Wakefield, Cassidy Turley, and Enterprise Rent-A-Car. Susan Clarke is research director of smart buildings at Verdantix, an award-winning independent research firm based in London that provides research and advice on digital strategies, EHS, smart buildings, operational excellence, and ESG. And finally, Ryan Turner, who’s the CEO of RefineRE our host firm for this webinar. RefineRe is the leading digital transformation platform for corporate real estate, whose technology allows corporate real estate executives to work smarter, not harder to real-time reporting and dashboard visualization, actionable analytics, and a true cloud platform for their client’s CRE data. So before I ask Susan from Verdantix, to provide the true and academic definition of ESG, let me start by explaining it the way I explained it to myself. First, the E stands for environmental sustainability and involves making decisions and taking actions that are in the interests of protecting the natural world, with particular emphasis on preserving the capability of the environment to support human life. But beyond simply reducing the amount of waste produced or using less energy, it’s concerned with developing processes that will lead to businesses becoming completely sustainable in the future. S is for social responsibility. It’s a combination of your company’s reputation as a responsible entity and a good corporate citizen. And its ability to mirror society in your approach to diversity, equity, inclusion, belonging, and community. And finally, G stands for governance. It’s your company’s internal business controls, policies and procedures, and the steps that you’ve taken to govern yourself and make effective decisions within the context of environmental and social responsibility. But it’s much more than that. It’s actually governance, which extends to how you manage your company’s relationships with vendors, partners, and create a broader network that brings everyone up to a higher standard. So let me ask Susan, Did I get that right? Did I come up with the right definition? Why don’t you run us through a quick presentation that puts us all on the same level?

Susan Clarke: Yeah, that’s pretty good Vik, I think, very comprehensive definition. Potentially one part missing, though, and something that’s hugely topical today. And that is the concept of healthy buildings, which fits nicely into that S category that you spoke about. And clearly, today, with all the thoughts about COVID, and occupant health, people are really thinking quite hard about how to design and manage buildings in a way to really support the health of occupants. And with that, I’m now going to share a short presentation and really get stuck into the details around what is the state of ESG today.

Susan Clarke: Alright, just to get us started and really to kind of give a bit of a context for the kind of insights and data that I will be sharing. I just wanted to briefly introduce Verdantix. As Vik has set out, we’re an independent research and consulting firm. But we’re very focused on the role of technology in enhancing the business outcomes across the EHS. Real Estate and sustainability functions. An interesting fact about Verdantix is that we were founded in 2008, to actually cover sustainability and climate change issues for businesses. And that was a time during which we saw the emergence of a first generation of carbon management policies. So with that, we’ve actually been tracking the topic of ESG and sustainability for the past 12 years. And today, we’re seeing the emergence of a new generation of active ESG strategies amongst corporates and investors. And as I’ll come on to shortly, this is really being triggered by the financial sectors embrace of ESG and the emergence of new regulations. And what is different today? Well, rather than sustainability simply being a window dressing for firms or part of corporate communications, we really believe today that firms are launching more active strategies. And these strategies which have a much more executive, and very frequently CEO sponsor. And in my short session today, I’m really going to provide you not only a review of the state of ESG today, but also explain why we are really anticipating the rise of active ESG strategy. For those of us that have been tracking ESG for the past decade will know that corporates sustainability strategies have already been simmering away for many years. And we kind of looked at kind of old sustainability and what we call new sustainability. What we see during the 2010s was sustainability was often quite tactical. Often the accountability for ESG performance sat with a VP of sustainability. And there was little investment in operations. And outside a few well-known market leaders, and a few exceptions, very often CEOs were mainly involved in conference speeches on sustainability or providing an introductory letter to a sustainability report. And today we really believe that the pressure is ramping up so much that the 2020s will see the emergence of what we’re calling active sustainability. And this is ultimately a program that is coordinated by the CEO. And whereby we see sustainability thinking being integrated into strategic decisions. And with this big shift, one important part is actually, there’s been a change in mindset around sustainability reporting and ESG disclosures. Rather than simply focus on annual reports with partial information, we are seeing new interest amongst firms in optimizing disclosures and transparency with the aim of boosting ESG ratings. So, what are the factors behind all of these changes? It comes to top-level we see six major factors really pushing ESG up the corporate agenda. And given the time today, I’m going to kind of dig into kind of the two most important factors. Firstly, the last two years has seen quite a considerable drive by financial institutions to incorporate ESG into investment strategies. We’re seeing investors start to realign capital allocation decisions with performance on sustainability metrics. And that means we’re moving into this world whereby a firm’s ESG performance is starting to factor in their valuation, that access to capital, and also their cost of capital. And in very simple terms, we’re seeing sustainability moving from being about doing good to rethinking how firms make money.

Susan Clarke: One big, important driver, I’ve mentioned CEOs a few times now, but we are seeing multiple pledges from CEOs to go net zero. And often these targets are expiring in 2030 or 2050. One example being Unilever. They’re targeting net-zero across their entire supply chain by 2039. Well, clearly there are questions around the extent to which such targets will really drive action the big point I’m making here is that sustainability programs today have a much more executive sponsor. And all this is happening against a backdrop of strengthening regulation. And the regulation today is setting out a long-term pathway to net zero. Following the Paris Agreement, we’ve seen multiple countries, write net-zero targets into law, such as Denmark, France, New Zealand, Sweden, and also here in the UK. And we’ve also seen the Biden administration looked to rejoin the Paris Agreement too. The regulatory environment has somewhat been a bumpy space for those of you kind of involved in the market. And what we’re seeing today is this kind of second generation of carbon policies, which are much better thought out than the first generation policies that we saw fall away in the early 2010s. So that is a bit of a kind of recap around what’s really happening at the macro level. The next question really is how does this all look in the real estate and facilities management function. One interesting trend today is we’re seeing firms look to sustainable real estate, to help them drive much broader business benefits. During the 2010s, we saw real estate executives launch sustainability programs targeting energy savings, and brand benefits. And those are clearly all great things to be working towards. What is different today? Well, we’re seeing investors, landlords and occupiers expand these programs seeking a broader set of financial benefits, such as reduced financial risk, employee wellbeing, and future-proofing their portfolio. And actually, one very clear example of this comes from Nuveen. They’re a real estate investor, and they’re aiming to be net carbon. Neutral, ahead of the market ahead of 2050. And the reason for that is they actually see significant risks with buildings with poor ESG performance, they really worry that carbon-intensive buildings across their portfolio will quickly lose value. And so for them. Sustainability is not just about brand, and short-term savings is actually very key for their business strategy around reducing risk. And actually, if you are an owner, occupier, you also need to be thinking about this as well. We have already seen that firms with lots of carbon-intensive assets in their portfolio, such as lots of gas boilers can already risk, kind of small discounts at the point of resale. And that’s because you buyers are starting to worry about the impact on their own carbon intensity. Given all of this kind of what whose strategies look like today, and where our facility executives are spending their money.

Susan Clarke: Actually, Verdantix currently has a survey live in the field. And we’re currently asking a panel of global corporate real estate and facility executives, where they are spending money given all the new interest in ESG and sustainability. And you can see from this chart that I’m showing here that one focal point is data collection and data reporting. Some of it is about energy data. So we’re seeing firms look to get a better view into their portfolio-wide energy consumption, aggregating data from buildings, feats production processes. And there’s also a big focus on reporting. And you can see that tops the chart here, firms are generating reports for sustainability disclosures, whether that’s CDP, GRI, or SASB. And they’re actually fairly interesting. This data is at least showing that there’s a big appetite right now for renewable energy and storage. Additionaly not necessarily the case, but the changing economics are certainly driving up that business case. So clearly, this data does show lots of positive momentum. And while this is great data, actually it does not capture the full story on the ground. And that is For many facility leaders, implementing sustainability projects can sometimes be a bit of an uphill struggle, and actually can be a world of pain, depending on your specific situation. So I’d like to kind of dig into two of these factors in a little bit more detail. And one of the major reasons that sustainability isn’t easy in practice is that real estate leaders need to really balance sustainability and decarbonization programs with many competing business priorities. When we asked our global panel, how important decarbonization is, generally, we’ve heard from our respondents that it is important, but actually, it’s often a second priority factor, coming below cost reduction, or improving occupant health. And clearly, the pandemic is playing a bit of a role here, forcing lots of near-term focus on initiatives that support business recovery, or return to the office. So in a world where sustainability is clearly important, that this data here is showing it’s often not a top priority. And there is clearly a risk that investments do get sidelined. And I would just like to make one further point about some of these challenges. We asked another panel of 250 facility and energy management executives, specifically, what is holding back your firm in investing in energy management. And you can see that the data here but kind of topping the chart is projects are often below the required financial return from the CFO. And actually, many firms are still really struggling to present a number-based business case. So clearly, lots of challenges to work through. So I guess, to wrap up my section, and end on a more positive note, what are the strategies and solutions that firms should be considering to drive sustainable real estate at scale. And the first point I’d like to make is that we believe that building occupiers should really be looking at any opportunities they can to take advantage of lease renewals to drive efficiency in these buildings. And there’s a few good case studies available that really kind of highlight that actually can be a very powerful strategy. And the next kind of big action we would put forward is really spending time enhancing information management strategies related to your ESG data. For many firms, it is an urgent item on the corporate ESG agenda. Particularly because there are ballooning requirements from financial markets for investment-grade data. And we believe that firms need to kind of take action now to really craft out their own ESG information management strategy. And then my final tip, just to round out, we do believe there’s an opportunity for firms as they look at a portfolio of potential sustainability investments to actually run a blended program of quick payback and transformational projects. And simply put the idea here is that you’re using the savings from low-hanging fruit to open up funding for much longer return projects. But in practice, that could mean upgrading or lighting an HVAC which delivers really fast returns. And then using that to fund something that is more transformational, such as on-site generation, where paybacks may be greater than five years. So that wraps up my session. Back to you, Vik.

Vik Bangia: Great, Susan, Thank you. And I hope this presentation can be made available to everybody that’s on the call. I think it’s got some fantastic information in it. And I do appreciate you sort of summarizing what’s in there, but it is a fairly robust discussion that could probably take the entire time if we needed to but thank you for that. I’d like to turn this over to the panelists for some vibrant discussion on the topic of ESG and maybe start by saying welcome, Dave. Earlier I introduced you at a high level but could you give us a brief background on you and then tell us what was the advantage of adopting ESG practices at MasterCard?

Dave Bertorelli: Great. Thanks, Vic. And just in starting, I just wanted to thank the panel for inviting MasterCard to participate in this conversation. It’s an important one. And also I thank everyone that’s attending because we all have busy schedules and just appreciate the participation. And please challenge us with questions. That’s what this is about. So no one has all the answers for sure. My background, I’ll try to keep it brief. Although brevity has never been a strong point for me, as many of my colleagues know. But I’ve been working in real estate in some capacity for 30 years, in sustainability for just over 20 now, I started, you know, I had my aha moment, early on after LEED came out, a certification program, I guess it was back in 1999. So I’ve been working in some capacity, with various companies trying to move sustainability forward is important, and certainly a topic and critical to our future. So right now, I’ve been with MasterCard, I’ve been working with them or for them, for the past 10 years in the past four and a half years, specifically, handling environmental sustainability, building that program, and setting up a fantastic team of people that I’m very fortunate to be working with. I also that first year picked up workplace safety, some of the as you might see, you’ve heard environmental, health and safety. I think, Susan, you pointed that out with the pandemic, especially that it’s not just about the health of the buildings and the health of the environment, but the health of the people in the buildings, obviously. And so some of the fit well, and well, programs are coming out of something that we’re pivoting and looking at. Also in terms of certification. So something that’s gaining more importance and visibility. As for MasterCard, specifically, for those of you familiar with MasterCard, big focus, or charter, if you will, doing well, by doing good, and taking care of the planet, and the people on that planet obviously falls into that. And I’d be disingenuous to say that, obviously investors have played a role in that asking us what we’re doing, where we’re reporting, what reports we’re participating in, looking closely at our CDP scores, that’s quite honestly how my role got started was wanting to put a laser-like focus on improving some of that reporting information. And then also just employees, I think it’s important to focus on the fact that, especially at least for MasterCard, younger, average age of employees globally served well, but compared to me, certainly younger, but they, you know, they’ve come up in a different environment, they’ve seen some of the challenges we’ve had with weather-related change, and, obviously, the pandemic and other things that have happened over the course of the past decade or so. So there’s a lot of interest and pressure there just internally. We’re structured a little bit, well, I guess it’s differently, the E, in the ESG, which is my, under my purview, falls under Real Estate Services. And I think that’s happened for a couple of reasons. One was that I think everybody, and probably a lot of people on this call, I would imagine, think that it’s the built environment. It’s all these buildings that are, you know, causing all this climate change and carbon emissions. And though that’s true, when you get into it, it tells a little bit of a different story. And then the S and G rolls up, actually, to a team out of New York, corporate sustainability. So we work collaboratively, but the E falls under sustainability or under real estate rather. And my second point to that is we’ve got a fantastic real estate team, I’ve just got to give a shout-out to all my colleagues because we couldn’t have gotten this far without them. And without their ideas and without their support and without quite honestly putting up with me and the rest of the team pushing this forward. So I think those are really the advantages we’ve seen was one, it’s part of our charter to its investors asking us and pushing it. A lot of companies are seeing this. And as evidenced by our CDP focused on the CPU score, and then now, employee retention and attracting new talent. So those are all important things.

Vik Bangia: Great. Thanks, Dave. That’s a fantastic answer. So, Wendi, similarly, tell us a little bit about yourself if I left anything out of your bio, and from your perspective, what opportunities and challenges do you believe sustainability poses for people in corporate real estate? I know Susan mentioned a few of the challenges but from your perspective, what do you see?

Wendi Lester: Sure, thanks, Vik. My name is Wendi Lester and I’ve been in corporate real estate for over 25 years, with responsibilities for leasing, designing construction space management facilities management, and security for Duke Energy, IBM, Cisco, and most recently Zscaler. While sustainability was a consideration in all my CRE roles, I truly learned the challenges of operating a sustainable business when I opened and operated an organic bakery in 2008. Some of the challenges I faced were challenges every business that wants to operate sustainably faces, like finding reliable and ethical suppliers, securing resources that have a circular as opposed to linear lifecycle, and creating detailed trackable documentation. But running your own small business is different than being part of a larger organization because you must have buy-in from leadership. This is the biggest challenge that I faced with moving sustainability initiatives forward, leadership commitment. Are the company sustainability goals aligned with the company’s business goals? Are they intertwined? Or are they just added on? Since different leaders have different opinions and approaches, each CRE organization must understand what motivates their particular leader. Some are compelled by doing what’s right for the environment. Others are only motivated by money. So data is invaluable to convey what CRE and sustainable practices can bring to the table. But the tools to collect the data may not always be in place. So one way to address this is by engaging with trade organizations like IFMA or CoreNet who can provide industry data, support your presentation to leadership, or finding a consulting partner who can help you gather data for your company will certainly provide you the most relevant information to make decisions. The third challenge is the variety of disclosure frameworks. You’ve heard a couple of them already today. They are inconsistent across industries and countries. So having one framework would allow real estate organizations to provide the same information, regardless of country, and make apples-to-apples comparisons. So that said, we look at opportunities. So in CRE, we are in a unique position to have impact on the E, the S, and the G of sustainability. For an environment, we were able to monitor and make changes to building systems to operate more efficiently saving energy, we can save water by using creative landscaping solutions and specifying water-saving fixtures. And we directly impact air quality with the equipment we purchase and install to support critical systems. For social, we want to have the best talent on our teams. And that means actively seeking out new employees who might not look like the people who are historically in those roles, we will get better solutions if we have different perspectives and ideas being considered. We also have an opportunity to use diverse suppliers, which, like our department hires can bring new ideas and innovation. And for governance, we have strong controls posture. So, it’s really required in order to ensure fiscal responsibility and data-driven decision-making. We are eager to track energy and water use because it helps us make smart decisions that save the company money, we validate invoices because it prevents us from overpaying for services and wasting money. So, by being good stewards of our company’s resources and keeping detailed records of transactions, we improve the company’s bottom line.

Vik Bangia: Fantastic. Thank you, Wendi, I want to know more about that organic bakery. So we’ll have to take that conversation offline because that’s really, I’m kind of hungry now. Well, you know, you mentioned buy-in from leadership. So, Susan, I was gonna ask you, for an ESG initiative to be successful. What’s an absolutely critical buy-in level within the organization? I think you mentioned a little bit of this in your presentation, that it is, you know, has to be on the radar of certain people, but not just the CEO. Where does the responsibility for successful implementation lie?

Susan Clarke: Absolutely. So yeah, I guess, making the point, again, we do firmly believe for sustainability programs to be successful within organizations. It really does need the CEO to be a key sponsor and the champion of that program. And actually, I was talking to a head of sustainability at kind of billion-dollar, IT services firm just the other day, and they were saying what enabled their sustainability program to switch gears was actually the kind of day that the CEO came in, and really kind of put themselves behind the sustainability program. And but that in itself, we don’t think will be enough. And you need to look at different mechanisms and levers, that you can actually push sustainability right through the organization. To drive success, we believe firms should be looking at levers such as putting in place an internal carbon price. If you remember back to some of the slides that I presented earlier. One of the key barriers today for energy efficiency projects is the fact that on paper, they have quite a short payback period. But if we can start factoring in an internal carbon price that’s going to push firms towards projects that support sustainability and decarbonization, and then the second lever that we think firms should be considering, again, the idea is trying to push sustainability, right through the organization is linking executive pay towards sustainability performance. And there’s already been a few announcements in the news around this. But we think that’s another potentially successful strategy for really pushing sustainability through all levels.

Vik Bangia: Yeah, that makes perfect sense. While I have you on this topic, I wanted to bring in a question from the chat from Mike Hammerslag who asked a question about ESG related KPIs because there is a need to measure this. So what are some of the KPIs that could be used in a lease evaluation, in particular, that would be germane to an ESG score?

Susan Clarke: Yeah, absolutely. So, for us, a big focus would really be around the carbon and energy intensity of a building per square foot. In the UK, if you have an all-electric building, that is actually great news for your overall carbon intensity, because in the UK, year by year, the grid electricity is getting increasingly greener. But if you have gas in your portfolio, gas boilers, that’s much more carbon-intensive, and will have a negative impact there. So I think you’d be wanting to understand that those different factors, thinking of that, if you are renewing, or agreeing a new lease, you may want to have a clear discussion with the landlord around who is responsible for energy spent, and actually moving to a model whereby the tenant is responsible for energy costs over long term lease could actually make it much clearer, where responsibility lies and could actually enable a tenant to be more open to funding energy efficiency projects. So I would certainly be looking at those two factors.

Vik Bangia: Great. Thank you. And thanks, Mike, for that question. And I’m going to mix this up a little bit because a lot of KPIs are dependent on data gathering and data collection. So I want to ask Ryan, this question. What should leaders in sustainability, real estate workplace or facilities, any of those organizations be doing now to navigate this impending ESG requirement from a data standpoint? Because that’s I know where you live?

Ryan Turner: Yeah. Well, I think that is a great question. And it’s one we hear the most, I think, when we went out to our customer advisory board, you know, some of the largest occupiers around the globe, that we’re lucky enough to call customers ESG was a number one initiative that they were all focused on. And that started with the data component of that. I think what makes ESG such a difficult thing for us is that it’s a big lift that we haven’t done before. And we’ve had to rely on outside consultancies or other resources to gather the information. That’s step one is that that big, heavy lift. And then how do we standardize it? There is no standard across different organizations to bring this information to bear so that we could actually wield it. So I think those are the two key pieces that we’re focused on is how do we gather and standardize information relative to, you know, energy, and water and sewer utilization, the things that are affecting the environment the most? There are some KPIs to your question, Mike, that we’ve had come up, it’s basically renewable energy versus non-renewable energy. And what’s our percentage? And which grids are we on and the ways that we can affect that the most is today, primarily around where we’re located. And where we’re focusing the density of our workforce or the density of our workforces in New York City versus Jacksonville, Florida, we’re spending or we’re using a lot more non-renewable energy. And we want to know that so that we can adjust going forward. So that’s something that we’ve helped our customers do is aggregate that information and standardize it. So that we can at least build that baseline. And I think that that is a key piece. And that’s really where we are in the corporate real estate ESG evolution is we got to get to baseline, and we got to get to something that we can all agree on and say, here’s where we are today. Now, you know, the old Peter Drucker, if you measure it, you’ll improve it. That’s where we got to start and so that’s been a big emphasis for us is helping our customers get to, I would say, lower lift or less labor-intensive ways of gathering information, aggregating it, cleaning it, standardizing it, validating it, etc, so that we can help build that baseline.

Vik Bangia: Yeah, excellent response. So, Wendi when you’re thinking about companies in the industry that are either your peers or companies that you’ve worked for, who do you think’s doing ESG right?

Wendi Lester: So, the companies that I think are doing ESG, right, they’re linking measurable, transparent, and significant ESG targets, to executive pay, like Susan mentioned, and then they do the hard work to execute the initiative. So these are the same companies that recognize they don’t have all the answers and go to companies like RefineRE to engage experts to help them. So Chipotle ties 10% of its annual executive bonuses to sustainability goals. So this sort of personal financial commitment really demonstrates the company is putting its money where its mouth is which is appropriate for Chipotle so then also to tie back to how impactful corporate real estate can be. We’re empowered to source from sustainable companies. So Train is another company that is focused on sustainability, and they have their executive pay tied to achievement of their goals. So they have ESG goals that are trickled down through the ranks so that every employee is contributing to sustainability targets. And they feel engaged and responsible for helping their company succeed. Salesforce is another one, they actually stopped purchasing unbundled renewable energy certificates, called RECs, because they weren’t necessarily contributing to additionality. And additionality is when you are increasing the supply of renewable energy available. And so instead, they use direct power purchase agreements. So they know that they are actually contributing to additionality and increasing the availability of new renewable energy sources. And last one I’ll mention is Cisco, which is one of my old companies. And it has zero waste goals and attainable energy reduction targets to achieve carbon neutrality. And they have the vocal and financial supportive executive leadership. And I experienced that firsthand. So for environmental sustainability, they use durable dishes in the break rooms and have a robust composting program. They have centralized trash, they use reclaimed water for irrigation and low flow fixtures and restrooms. They have solar panel arrays and power purchase agreements. And all these initiatives do help reduce greenhouse gas emissions and minimize landfill waste.

Vik Bangia: That’s great. And I would encourage any of the participants on the call today to research some of these firms to see who’s doing it right. I might be biased a little bit, but I think MasterCard is doing it right. Dave? I think you can talk a little bit about what MasterCard is doing. That’s, that’s similar to some of the things that Wendi laid out from some of these other companies, what are some of the attributes of your ESG program that fit that list?

Dave Bertorelli: Yeah, and I think it’s good to look at companies and those that are doing the right things and I’ve long said that sustainability is a path, it’s a journey. No two companies get on it in exactly the same way and progress in the same way and end up at the same time. So what we look for is, are they looking for the right data? Are they driving the right initiatives? And is their approach to sustainability targeted to their industry sector, right. So, I guess for us, and I alluded to this earlier, but if they’ve done a good analysis of where, and this is step one, right, where their carbon emissions are coming from. When we got into this, as I said, it’s, it’s got to be real estate, right, we’ve got 170 plus offices, using energy all over the globe. And it actually turned out because we’re a technology company, we’re not manufacturing widgets, the lion’s share of our emissions are in scope free, and specifically, the supply chain over 70%, on average. So when I get back to that, you know, we had a pivot on our path a little bit, because we’ve done a lot of good things with real estate, I touched on that, making sure you’re building in a good green lease language because you only have one shot at selecting the right facility. And then through project management, ensuring that we’re certifying all of our projects that are eligible to be certified. And then through our facility management team who subsequently takes over, making sure they’re operating it the way it was intended, and then recertifying the facilities. So I guess what I would just for those people on the call if you haven’t determined where your carbon is coming from you might be surprised, and I think having a good third-party, independent consultant out there that can walk you through scope one, scope two, scope three, because without that information, you can’t you know, it’s great that you may be recycling or looking at renewable energy, those are all important and worthy things to do. But you really need to know where the problem is in your specific business sector, your specific company to put a laser-like focus on resolving these issues, and looking towards ultimately, hopefully, everyone’s looking toward a net-zero goal.

Vik Bangia: Great, thanks, Dave. And Susan, you have more of a global view from your vantage point at Verdantix. Can you name a few clients that you think are doing this really well?

Susan Clarke: Um, yeah, absolutely. I mean, for me, one factor that distinguishes a sustainability leader versus a sustainability laggard is whether they are taking action today, or essentially kicking the problem down the road. If we look at what regulation requires, that is firms and operations become net zero by 2050. So there is the opportunity for firms, it may be a somewhat risky strategy to really wait and see for the next decade with very limited action, and then plan to buy carbon offsets, although we know those are likely to go up in price significantly. So that is my starting point for your question. Vik, I think it’s quite interesting to see that there are some firms really pushing ahead with much more aggressive carbon targets. One example that does come to mind here in the UK is a facility services firm, Mighty, they’ve got a couple of billion pounds of revenue each year, they’re actually working towards a net-zero carbon target expiring in 2025, which is essentially 25 years ahead of where they kind of need to be based on regulation. Lots of investment is happening straight away. So they’re electrifying their fleet. They’re decarbonizing their buildings, and really going quite big from today. And I think that really marks them out from a lot of other firms in the market.

Vik Bangia: Okay, fantastic. Well, I appreciate all that feedback. And I want to leave a little time at the end of our discussion for q&a from the audience, as well as time to wrap up for everybody and then for Mallory to let people know, some next steps. But my question is for all of the panelists here, and we’ll go around the room. If you were to give advice to any of the participants on this call, how to implement ESG initiatives that make a difference, and how to measure success, what would you what would be the nugget, the kernel, the one piece of wisdom that you would impart to, to everybody on this call? So we’ll start with Wendi. And then we’ll go to Dave, Susan, and then we’ll close that question with Ryan.

Wendi Lester: Okay, I think it’s so important to engage stakeholders, all stakeholders, business unit leaders, investor relations, legal, HR, finance, IT, security, everyone has to be involved because everyone has a vested interest in the success of a strong ESG program. And so I would make sure that the participants are diverse, and not completely U.S based, I’ve seen that to be a problem, especially if your company is global, that would be very useful to get that diversity of thought. And I think everyone should have a mission and expected outcomes. Because you have to set the baseline for your team’s goals so that you can get that approval from leadership, and then make the goals and targets relevant to your industry and to your company. Because every company will have initiatives that will vary and how easy they are to execute. So you want to make them really personal to your company’s mission.

Vik Bangia: Great, Dave?

Dave Bertorelli: Oh, well I agree with what Wendi said. I think that, in terms of what’s come up before, I think Susan was mentioning tying it to executive compensation is a big win, because that’s a way to quickly get everybody across the company, engaged and interested. And you know, MasterCard has recently announced that and it’s the right thing to do. And I think that it gives us an opportunity then, to reach out across the board and across service lines, people that we wouldn’t normally in a large company like this globally, have access to. To talk about what net-zero really is, what carbon neutrality is, what are science-based targets, those sorts of things. And I think most people are pleasantly surprised that once you can get there, get an audience in front of them to explain this and then actually go through the science behind it, and why it’s important to MasterCard, or your prospective company because sometimes I think a lot of companies do this is “well we don’t produce anything so, that’s other companies problem, we’re not we’re not a coal mine or something like that.” So getting the ability to have that visibility and the audience to present that has been very, very helpful.

Vik Bangia: Great. Thanks, David. And, Susan, what’s one piece of advice you’d give anybody embarking on this as Dave used the word journey?

Susan Clarke: Great. So, I think all the good points have already been made. But I guess one new idea could be trying to actually link your internal sustainability program to revenue generation opportunities. So it’s something we’ve seen some of the big, IT firms do quite well, they don’t just kind of run internal programs, but they think kind of what sustainability services can be offered to the market. And I think that’s quite powerful. And it’s pretty interesting in the UK. Now, if you’re looking to bid for large UK government contract worth over 5 million pounds annually, you actually need to have a clear net zero program for 2050. So when you start joining the dots like that, I think it can really give you some ammunition for your sustainability program.

Vik Bangia: Absolutely. And I know investors are making investment decisions for companies based on the ESG scores, as well as the potential for future revenue based on that company’s transparency around ESG. So I think that is vitally important. And Ryan, I would like to hear your feedback on what you would say to companies embarking on this journey as well.

Ryan Turner: Sure. I’m going to get a little closer to the ground and think about it from a practical standpoint, for the corporate real estate executive, because I don’t think, you know, I agree with all the points made, but we’re awfully far away from being able to change executive pay, in some of those broader initiatives. So, from a corporate real estate executive standpoint, corporate real estate leaders standpoint, some of the things that we’re seeing, you know, having an impact and making those leaders successful in these initiatives, is getting your data house in order. That’s step one, and like we talked about is understanding to today’s point, where is our carbon coming from? And we can certainly, you know, think about supply chain and other things. But from a corporate real estate standpoint, where is it coming from within our occupied portfolio? I think then the next most important thing is context. So we’ve got information, we know where we stand. Now, we need context for that information to understand? Where could we be doing better? So we know where our carbon is coming from. So what? How do we get to a “So what?” that helps drive broader goals and initiatives that are going to move the needle going forward, so we can demonstrate and measure, you know, show success with these initiatives we’re putting in place. To me, that is the most important way to have a corporate real estate executive be able to build a business case, and tie it back to some of those other things, revenue generation, ROI, things that matter to your leadership and elevate the corporate real estate role within this important initiative or across the whole organization.

Vik Bangia: Yeah, I agree. fragmented data is a big issue. I want to bring up forward a couple questions that were in the chat one was directed towards you, Dave, from MasterCard, if you could talk about your current goals and targets if you can disclose any of those.

Dave Bertorelli:  Sure, and I just want to pause here for a second because I do agree with Ryan, I mean, in our case, at MasterCard, we’re a little bit further ahead in the journey, because we had to do all those things that he’s talking about at the beginning to get this sort of buy-in. So I think having that ground-level approach is very critical. So just want to support his commentary there. Well, you have an established science-based target for 2025. So it’s a 20% reduction in our scope three, and a 38% reduction in scope one and two, we realigned those, when they changed the target from 2% to one and a half percent in terms of the alignment with the Paris Accord in terms of what we’re trying to achieve before 2050. So we also recently announced a net-zero target, which is to Susan’s point, 2025 is fantastic, you know, ours at this point is 2050. And we looked at that in a couple of different ways, right? Because one, all emitters are important, but in the scale of things we’re not manufacturing, so we’re not a huge emitter, but it’s still important that we’re focused on it obviously and also that you since so much of it is a supply chain, that isn’t going to change overnight. And you know, we’ve got right now two people dedicated toward collaboration and integration and reporting, just to identify our key suppliers and work with them to get them to report to the CDP and all those other things and that you’re not going to do that overnight. So I think the engagement and the collaboration piece with your supply chain is something that you need to build. And to Ryan’s point, you need data for that. So who are the key offenders because it might not be who you think because depending on how it’s categorized if it’s based on spend, that doesn’t necessarily do a whole lot of good, because that’s probably not the most accurate way to determine their carbon emissions, as it pertains to their contribution to your specific firm.

Vik Bangia: Great. Thanks, got a quick sort of recommendation comment from Sue on the q&a panel here saying “how about having ESG goals for each of the business units within an organization and its leader based on the nature of their business? And then link that as part of their performance measure?” What do you think of that approach? Anybody on the panel want to reply to that? We’re talking about linking ESG goals for each of the business units within an organization and specific to that leader, rather than kind of a global measure?

Susan Clarke: So, I’m happy to provide my thoughts, actually that could be a strong strategy, if your organization has quite diverse business units, maybe you have some manufacturing some retail sites, it will make sense to decentralize targets. At the same time, there could be a bit of confusion and conflict in the organization if someone’s working towards a more aggressive goal than their counterparts within a specific department. But yeah, it’s certainly an interesting idea that that’s worth exploring.

Wendi Lester: How would that impact reporting? I think that would be a big question, too. How do you report that with all the different inputs?

Vik Bangia: Okay. Great. All right. Well, you know, I’m a big fan of making sure that nobody has to go from webinar to webinar or from webinar to meeting without a little bit of a break. So we’re at five till the hour. What I’d like to do is sort of wind this down. First of all, thank all my panelists for being part of this webinar, thank RefineRE for hosting it, thank every one of our participants for being on the call. And just give everybody here on the panel a chance to say any closing comments, and then Mallory, if you want to take us home, let people know what’s happening as a follow-up or as next steps. But does anybody on the panel have any just final comments for everybody that’s been part of this webinar from a participant standpoint?

Ryan Turner: Overall, as our, you know, host, I’ll call us. Just want to say thank you for everybody and their expertise, and really, really valuable information for this particular audience. So thanks for your time and effort on this. We really do appreciate it.

Vik Bangia: Any final comments from anybody else?

Dave Bertorelli: No, I would agree with that. I would just say that we’re going to be publishing our corporate sustainability report soon. So, if you’re interested in learning more about how we’ve approached it, and some of the challenges we’re having feel free. Last year’s the one that’s upcoming, and you can certainly reach out to anybody on our team.

Vik Bangia: Yeah, absolutely. Well, I would just suggest that if you haven’t already LinkedIn with all of us on the panel here, you’d be wise to do so there’s a lot of content that all of us put out there on LinkedIn, and we’d love to stay in touch. Wendi, any final comments from you?

Wendi Lester: No, thank you so much. I’ve learned even in this discussion too. So thank you all. And thank you for participating.

Vik Bangia: Thank you, Susan

Susan Clarke: Yeah, just echoing Wendi, actually, I’m on a constant learning mission in life. So it’s been great to connect with all the fellow panelists on this topic.

Vik Bangia: Excellent. Thank you. Well, Mallory, why don’t you take us home and let people know what’s next. And again, let me say my Thank you before we adjourn. So Mallory.

Mallory Pitts: Thank you to all of our panelists and attendees for a really engaging conversation. And just be on the lookout in your inbox. We’ll be sending out a follow-up with a link to the recording so that you can watch it if you missed anything, but also forwarded along you know if you know anyone who might be interested, and we’ll include some information about how to connect with the panelists.

Vik Bangia: Terrific. All right. Well, thank you, everybody. Really appreciate this as a very important topic and enjoy the rest of your day.