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Net Zero; changing promises into pathways

Podcast 29 04 20
In the second episode of Series Three, Sophie Carruth, Head of European Sustainability at LaSalle Investment Management, discusses the change in sentiment across the real estate industry towards ESG and how it is being driven from the bottom up.

Sophie outlines LaSalle’s commitment to Net Zero Carbon with the Better Building Partnership, as well as the actual implementation and practical application of how they are intending to achieve it.

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Podcast Transcript

Holly: Hello, and welcome back to the Take 10 with Colliers podcast. I'm your host Holly Bryan, Head of Client Strategy here at Colliers. On series three, we're talking Net Zero Carbon and all things ESG. On today's episode, we welcome a woman who has been pioneering sustainability in real estate long before it became a household term we all use today.

Today's guest is Sophie Carruth, Head of Sustainability at LaSalle Investment Management. Sophie started her career at JLL before moving on to the LaSalle where she's been for 15 years. After spending seven years as an Asset Manager, she transitioned into a role of sustainability and is now Head of Sustainability for Europe. Sophie is also on the board of the Better Buildings Partnership, and is on a mission to reduce real estate’s impact on the climate crisis. Sophie, welcome to the podcast.

Sophie: Hi, Holly. Thanks for having me.

Holly: So as I mentioned in the introduction, you've been in your sustainability role for some time now. What do you think has changed or what have you seen in change of your investors and your occupier sentiment towards ESG over that period of time?

Sophie: Yeah, there's been a really massive shift over the last 10 years. And I mean, I always think it'd be quite interesting to almost chart the change, because we started getting questions from investors in sort of 2008 asking us if we had an ESG policy in place. And then a few years later, they were asking what our ESG policy covered. And now it's completely standard to be asked how quickly we're going to be delivering that zero carbon on a portfolio.

So the shift has been really phenomenal. And particularly in the last kind of two years, that acceleration has been quite impressive. And then, as you said that occupiers in parallel are starting to make their own commitments, or at least they have been making their commitments, but again, there's been a real acceleration. So more and more of our occupiers are making bold and ambitious commitments and pledges to achieving carbon neutrality or other kinds of sustainability targets, which is really helping us out, because I guess it means we now have kind of joint ambitions, that means that we can kind of collaborate with our tenants to hopefully deliver.

Holly: Definitely. And I think it's quite an interesting shift in how the workforce now has such a considerably louder voice and influence over the decisions that their companies and organisations are making, particularly when it comes to the accommodation within their work. And I think so that upward pressure, I think, from the workforce is going to really start to drive some change. And we're seeing it already.

Sophie: Yeah, absolutely. And I think, that even goes through to things like where your pension fund is invested. And suddenly every day, regular people are suddenly questioning where their pension fund money is going, what it's invested in. And as an individual, you might not feel like that's powerful. But actually, if suddenly large swathes of people are asking these questions, then things have to change. We've got to respond to that. So I think it's coming through from a lot of different angles, but it's really kind of snowballing. To me, there's quite a lot of momentum for change at the moment.

Holly: Yeah, I imagine. So and I think it's such an exciting period of time for us all. And I think the last 12 months have really pushed us in the right direction. I think people really are starting to understand what they actually want out of their workplace. And so tell us a little bit more about LaSalle’s net zero carbon goals, and what's the strategy for you getting there?

Sophie: Yeah, so we published our Pathway to Net Zero Carbon in December last year. And that was off the back of having signed up to the Better Buildings Partnership climate change commitments. And there are plenty of commitments out there in the industry at the moment. And the reason we went with the BBP one is, first of all, we're very active members of the BBP and we were involved in the development of it.

But what is particularly, I guess different about this commitment is it's quite ambitious. It covers a whole building operational carbon emissions, so the tenant consumption that is not within our direct control, as well as the landlord areas, and also embodied carbon: so the carbon emissions associated with the construction materials and processes that go into new developments, refurbishment and fit outs.

And so we published our pathway, part of the commitment is to kind of bring transparency to this space: not just to make a commitment, but also to set out okay, how are we going to get from where we are today to what we've said we're going to do, which is Net Zero Carbon buildings by 2050?

And the way we've chosen to set out our pathways is to look at the asset lifecycle. So if we want to have any chance of succeeding and delivering net zero carbon, this needs to be part of everybody's job. It really needs to be integrated into every investment decision making process that we make. So whether that's setting our strategy at the fund level, whether it's all of the parts of the acquisition process: stock selection, investment committee approval, due diligence, all of those pieces. Through to everything that we do during the whole period, whether that's development, refurbishment, leasing up vacant space, just your regular day to day property management and operations, and then through to disposal.

So we've kind of broken our net zero carbon commitment down into what does it mean each of those stages of the asset lifecycle. And what we're now working on, publishing the pathway was the easy part, now it’s the implementation piece. So we're now working with all of the different functions across our business to ensure that our processes are adapting to reflect all of this new thinking to make sure we're taking into account, well, I guess all of the implications of net zero carbon into all of the things that we already do, and making that part of day to day business.

Holly: That's really interesting. And from what you've just said, there's so much reliance as a landlord on your real estate advisors. What advice would you give to those groups to help you and not only you, but all landlords who have such ambitious strategies to actually be able to achieve them?

Sophie: Yeah. I mean, I mentioned collaboration with occupiers earlier, but actually, I think a collaborative approach is going to be needed kind of across the board, we're all going to need to pull together to make this happen. And, I mean, I mentioned all of those different stages of the asset lifecycle. We obviously work with a whole bunch of different advisors as we're going through that process, whether it's leasing agents, or investment agents, or property managers or rent review surveyors.

There are so many different real estate professionals that contribute to the running of a real estate portfolio. And I cannot think of a single one whose role is not going to be affected by this. So I think, the wider industry has got a huge challenge in upskilling across the board for I guess there's two parts of it. One is just general knowledge and understanding of what net zero carbon means for real estate, what the built environment industry needs to do. And then secondly, there's kind of drilling down to make that a bit more specific to each role, you know, what do leasing agents need to understand and how can they start today to make that just a standard part of what they do.

Holly: Yeah, no, I completely agree. And I saw that the BBP released some a ESG training course recently, which looks like it's had really good traction. Can you tell us a little bit more about what that involves? And I'm assuming you were involved in that process?

Sophie: Yeah. No, it's, actually, a piece of work I'm really proud of, because a couple of years ago we kind of identified there was a bit of a gap in the market for sustainability training really properly targeted at real estate professionals. So a bunch of us came together created a consortium and we've really developed a training programme that we think is going to be hugely informative, but with really practical outcomes. And that was quite important.

So it is specifically aimed at asset managers and fund managers with very practical outcomes in mind. So you would leave this training, knowing that you can go and apply all of this learning immediately in what you're doing in your day to day operations. Just in terms of the take up, as you said, Holly, it's been hugely successful. We weren't sure how much demand there was going to be. And we're now discussing how many more courses can be run between now and the end of this year.

And so that's been a very positive reaction, I guess, to the launch of this training. And it's so critical, isn't it? We've all suddenly got to, and we're not all going to be experts, but we've all got to get up to a basic level of understanding of what net zero carbon means for real estate in order for us to be able to start moving towards those ambitious targets that everybody's setting.

Holly: Completely agree, and congratulations as you said the take up has been really impressive. So hopefully that continues, and I'm sure it will. And you're right, it's that practical application that people are craving. I think there is a lot of theory available, but it's how do I do this in my day job, which I think is going to really make the impact.

So we're running close to the end of time. So we're on to our quick fire question round. I hope you're ready? So just answers top of your head as soon as you can. So would you rather plant a forest or regrow a coral reef?

Sophie: Plant a forest

Holly: Good one. Build a wind farm or solar farm in your back garden?

Sophie: Oh, I think a wind farm actually.

Holly: Why is that?

Sophie: It was a bit more space to play around. I've got young kids, I think they'd been bit bothered by solar panels in my back garden. I’ve got them on the roof though, so I think we’re okay.

Holly: Who would you rather meet David Attenborough or Greta Thunberg?

Sophie: Oh, you can't ask that question. Okay. David, for many reasons. I love Greta, but hopefully, I'll have more chance of meeting her in the future. David, it feels like that time is precious with him.

Holly: Everyone loves David. Everyone loves him. And finally, if you could choose to save one part of the world from global warming, where would you save?

Sophie: Okay. It's not very exotic or tropical, but I think it's got to be home. I'm really into local travel and enjoying the place that I live, so it would be the UK.

Holly: Brilliant. Sophie, thank you so much for your time today. It's been such a pleasure to speak to you. And to all of you listening, there are more episodes of Take 10 with Colliers, you can find in all the usual places: Apple podcasts, Google podcasts, Spotify, and YouTube. To find who we’re speaking to on the next episode, please follow us on all of our usual social media channels, LinkedIn, Twitter and Instagram. Thanks very much for listening.


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Holly Brown

Head of Client Strategy

London - West End

Holly is Head of Client Services EMEA, leading Colliers' Key Client Programme. This programme ensures Colliers deliver a seamless, cohesive service to our key pan-European clients and aims to strengthen relationships and engagement  with  prevalent investor clients.

Holly graduated from the University of Reading with First Class Honours in 2011 and qualified as a chartered surveyor in 2013 at niche hotel investment firm, Gerard Nolan and Partners. 

Holly joined CBRE's High Street Retail Investment team in 2014, and transitioned into their Client Care team in 2016 to develop the Retail & Institutional Investors Client Care programmes. 

Having joined Colliers in December 2017, Holly is now leading the EMEA cross border Key Client programme and working across Capital Markets, Property Management and Valuation  to deliver services directly aligned to clients' real estate strategies. 

 

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