The State of Sustainability in CRE

The State of Sustainability in CRE 2021

March 2021

What happens when a legal counsel, a facility manager, a sustainability manager, and a consultant gather to discuss sustainability priorities in 2021? We found out when Thomas Baade-Mathiesen, a leading sustainability advisor and chair of CoreNet’s Sustainability Committee, moderated a panel consisting of Laurie Rothenberg, Assistant General Counsel at Pfizer, Pratik Raval, Global Manager of Sustainability at American Express, and Michael Gualano, Facility Operations Manager at Facebook. Although the panelists came to the sustainability challenge from different roles, many commonalities became apparent as the discussion unfolded.

Each panelist is responsible for not only presenting the vision but also removing the roadblocks that can arise in the execution of a sustainability strategy. Rothenberg noted that these roadblocks can be contractual or operational. As she and her team “provide a place where all of our colleagues can develop, manufacture, and bring the breakthrough therapies to patients,” it is critical that all of the internal functions are on the same page and aligned to implement the sustainability agenda - the brokers/leasing team, design team, operations, procurement, and many others. From a leasing perspective, this means “making sure they actually have the rights and abilities to do what they need to do to get the sustainability agenda enacted”. At American Express, Raval underscores the importance of how the sustainability strategy is viewed and experienced by his colleagues and communicated to their external stakeholders. Gualano mentioned that one of the keys to staying on track at Facebook is thinking of sustainability in “everything we do - all of the time.” Baade-Mathiesen added that initiatives are “more likely to fail when there is no clarity around the goal”.

Drivers and goals for sustainability vary by company. Beyond the practical, sustainability is also embracing the human and personal. “Sustainability used to be about corporate stewardship and doing things good for the environment, and largely through good green buildings. Perhaps triggered by COVID, it’s now shifting to the human experience, to risk mitigation, and to resiliency,” says Rothenberg. She maintains that sustainability also becomes a “way to show the world, your employees, your customers and everyone who comes through your doors who you are as a company.” Facebook is looking not only at internal impacts but also the external upstream and downstream impacts, which can be much larger. Gualano says they are setting targets for vendor partners with the goal of “transforming the market.” American Express completed a comprehensive Environmental Social Governance (ESG) materiality analysis to prioritize across the spectrum of key environmental, social, and governance issues. Raval says
“one of the three major buckets coming from the exercise is advancing climate solutions.”

When it comes to getting things done, Gualano stresses that clearly defining the approach and scope and establishing a baseline is where you have to start. With Facebook’s size, pilot programs are important to verify initiatives before rolling out on a large scale. “With pilots, you can afford for it not to go well,” says Gualano. It is key to approach the pilot postmortems with a clear perspective. He also explains that many times the best approach is optimizing what already exists instead of starting from scratch. His team is asking questions about the organization’s practices across the board including plug load management, waste, water,
submetering, and janitorial supplies.

Rothenberg asserts that it is important to align the sustainability measures you decide to take with those drivers identified at the beginning. The big picture includes looking across the entire lifecycle of the property, keeping not only the site selection, lease, and design in mind but also the exit and “whether you are selling to a buyer who is going to honor the environmental integrity of the property”. For American Express, although sustainability goals are company-wide, Raval remarks that real estate is the key stakeholder in successfully delivering most of the climate-impact related goals.

The enterprise-wide implementation has to be executed on a site-by-site basis, and each site contributes in its own way to the corporate goals. Another key to success for Raval and American Express is taking a simultaneous top-down and bottom-up approach. “This alignment from key stakeholders,” Raval says, “significantly reduces the chance of failure.” When Baade-Mathiesen asked about ideas for those who don’t have the word “sustainability” in their title, Rothenberg asks the audience to think about where in their roles they touch an aspect of the building and how can that become sustainable. “It doesn’t have to be a grand gesture - it could be something small.” Even small office-based activities like printing double-sided can make a difference. Raval agrees and Gualano adds, “We need to engage the employees. If each of them makes a really small change, it’s a significant change at the end of the day. Small, meaningful gestures really go a long way.”

Facebook has three sites under construction in NYC pursuing LEED Gold and is launching a closed-loop wallboard pilot program with the goal of driving market change for overall material resources in new projects. The new Pfizer NYC headquarters is pursuing both WELL Gold and LEED Gold. For American Express, Raval says, “the company’s NYC headquarters is one of the key sites because of its size and visibility across our portfolio. It has already achieved LEED certification and is pursuing TRUE Zero Waste Certification.”

The first audience question commented on how bad the internet, specifically data centers, can be for the environment and asked how the panelists were addressing this issue. Baade-Mathiesen commented that data centers are being built in colder climates so they don't need as much cooling. Facebook's electricity use will be net-zero in 2020, which includes data centers and offices.

Last, but not least, a question was raised about how important indoor air quality is, especially in the wake of COVID. Rothenberg recognized that ventilation is top of mind in WELL certification efforts. Raval concurred that we need to be prepared because there is no going back. Gualano offered that indoor air quality is part of making employees feel as comfortable as possible.