CHICAGO, Jan. 11, 2022 /PRNewswire/ -- Expectations
for new buildings – from amenities to environmental footprint –
have increased significantly in recent years. Sustainability
continues to move up the corporate priority list and investors are
rethinking value, making the threat of a "brown discount" more real
than ever.
A new report by JLL (NYSE: JLL), "Return on Sustainability: How
the 'value of green' conversation is growing up," highlights the
urgency for investors to move beyond the conversation around the
"value of green" to instead focus on the long-term return on
sustainability. The paper explores a step-change at play around
what qualifies a best-in-class building.
"The bar is being raised on what it means to be green,"
explained JLL's Global Head of Sustainability Services and ESG,
Guy Grainger. "Now that the business
case for sustainability is undeniable, the time has come to evolve
the valuation conversation."
There is a strong financial incentive to go
green
While investors initially doubted the value of
certifications like LEED and BREEAM, evidence now shows that green
certifications result in a rent premium of 6% and a sales premium
of 7.6%. These so-called "green premiums" are proving materially
significant, however, there is another facet to consider. JLL's
research shows that buildings that don't evolve to meet
sustainability standards will suffer financially – resulting in a
"brown discount."
The definition of green is evolving
New dimensions
are quickly emerging to influence the value conversation. Climate
risk and resilience, carbon emissions and occupant health are
increasingly contributing to conversations around what it means to
be "best-in-class" in the built environment.
JLL's April 2021 survey of nearly
1,000 executives, investors and corporate occupiers found that:
- 83% of occupiers and 78% of investors believe climate risk is
financial risk.
- 79% of occupiers anticipate that carbon emissions reduction
will be part of their corporate sustainability strategy by
2025.
- 42% of occupiers believe that their employees will increasingly
demand green and healthy spaces.
Sustainability and wellness-focused certification systems will
need to adapt to meet this new moment. Up until now, a highly
rated, green-certified building hasn't necessarily been a building
with the lowest carbon footprint. Certification standards will soon
change as LEED, BREEAM and others launch new carbon-centric
benchmarks, defining carbon footprint and incorporating additional
elements in the calculation. As investors and companies make
environmental and social commitments, they will increasingly need
to consider their real estate portfolio to meet climate
goals.
Time is of the essence. According to the Paris Agreement, to
avoid the worst impacts from climate change on the global economy,
emissions must be reduced 50% by 2030, and the world must reach net
zero carbon by 2050. JLL's paper urges those who shape the built
environment to take action to avoid asset stranding and to push for
sustainable, resilient and healthy places, even in the absence of
the perfect case study or data.
Find out more by downloading the JLL report "Return on
Sustainability: How the 'value of green' conversation is growing
up"
at https://www.us.jll.com/en/trends-and-insights/research/return-on-sustainability.
About JLL
JLL (NYSE: JLL) is a leading professional
services firm that specializes in real estate and investment
management. JLL shapes the future of real estate for a better world
by using the most advanced technology to create rewarding
opportunities, amazing spaces and sustainable real estate solutions
for our clients, our people and our communities. JLL is a Fortune
500 company with annual revenue of $16.6
billion in 2020, operations in over 80 countries and a
global workforce of more than 95,000 as of September 30, 2021. JLL is the brand name, and a
registered trademark, of Jones Lang LaSalle Incorporated. For
further information, visit jll.com.
Connect with us
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Contact: Gayle Kantro
Phone: +1 312 228 2795
Email: Gayle.Kantro@am.jll.com
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SOURCE JLL