Global CRE Companies & ESG in the US

The commercial real estate (CRE) industry has a significant impact on the global economy and environment. Buildings consume a substantial amount of energy and generate a significant portion of greenhouse gas emissions. As awareness of environmental, social, and governance (ESG) issues grows, the industry faces increasing pressure to adopt sustainable practices. This report examines the ESG practices of top global commercial real estate companies based outside of the United States with a significant presence in the U.S. market. It analyzes their ESG initiatives, impact, and challenges, providing insights into the future of ESG in global commercial real estate.

Many companies are committing to net-zero carbon emissions in their operations and are working with clients to achieve similar goals. These commitments often involve setting science-based targets to reduce greenhouse gas emissions significantly by 2030 and achieve net-zero value chain emissions by 2050. In addition to environmental sustainability, these companies are also prioritizing social responsibility through initiatives such as promoting diversity, equity, and inclusion (DEI) within their workforce and supporting community engagement programs.

Cushman & Wakefield

Cushman & Wakefield, a global commercial real estate services firm headquartered in Chicago, Illinois, has a strong presence in the United States and a significant commitment to ESG.

ESG Practices and Initiatives

Cushman & Wakefield has implemented various ESG practices and initiatives across its business operations.

• Net Zero Carbon Buildings Commitment: Cushman & Wakefield has committed to achieving net-zero carbon emissions in its U.K.-occupied buildings by 2030¹. They are actively working towards similar goals in the U.S. by setting science-based targets to reduce greenhouse gas emissions by 50% by 2030 and achieve net-zero value chain emissions by 2050².
• ESG Integration in Project Lifecycle: Cushman & Wakefield integrates ESG considerations throughout the project lifecycle. This includes embedding sustainability into initial portfolio planning discussions with clients, encouraging sustainable investments, highlighting location-specific factors such as social impact and climate transition, creating state-of-the-art structures with net-zero technology, sustainable workplace design, and retrofitting fixtures for material, cost, and heat efficiency¹.
• ESG Assessment Services: Cushman & Wakefield provides ESG assessment services to provide insights into the main ESG drivers to generate, protect, and grow the value of an asset and/or portfolio. These assessments demonstrate how to capitalize on ESG value drivers, provide details on how each ESG measure impacts the asset value, and provide a practical route map for the application of the proposed measures⁴.
• Diversity, Equity, and Inclusion (DEI): Cushman & Wakefield is dedicated to ensuring an inclusive, safe, and rewarding environment that enables employees to do their best work and give back to their communities. They are focused on advancing diversity, equity, and inclusion (DEI) across the organization and within the industry⁵.

ESG Impact in the United States

Cushman & Wakefield's ESG initiatives have made a notable impact in the United States.

• Energy Efficiency: Cushman & Wakefield has been named an Energy Star Partner of the Year by the Environmental Protection Agency (EPA) for 11 consecutive years³. Their Energy & Sustainability Services (ESS) team completed more than 200 Energy Star certifications across 25 million square feet of real estate in 2022 alone. Since 1999, their teams have helped certify more than 40,000 buildings with the Energy Star distinction⁶.
• Green Leasing: Cushman & Wakefield promotes green leasing practices that align the interests of commercial landlords and tenants with sustainability initiatives⁷.
• Sustainable Building Certifications: The company assists clients in obtaining LEED, BREEAM, WELL, and Fitwel certifications for their buildings, promoting healthier and more sustainable built environments⁸.

ESG-Centric Clients

Cushman & Wakefield actively seeks to work with ESG-centric clients⁹. Some of their clients include:

• Citibank
• Ocean Network Express (ONE)

ESG Certifications and Awards

Cushman & Wakefield has received numerous ESG certifications and awards for its sustainability efforts.

ESG-Related Challenges

While Cushman & Wakefield has made significant strides in its ESG journey, the company faces various challenges in implementing and advancing its ESG practices in the United States.

• Monitoring and Managing Scope 3 Emissions: Tracking and reducing emissions from sources outside of their direct control, such as tenant operations, remains a challenge⁷.
• Evolving Sustainability Landscape: Keeping up with the latest ESG trends and regulations requires continuous adaptation and innovation¹².
• ESG Risk Rating: Sustainalytics, a leading ESG research and ratings firm, has given Cushman & Wakefield a low ESG risk rating, indicating that the company faces a low risk of experiencing material financial impacts from ESG factors. However, they are ranked 586 out of 1009 companies in their industry, suggesting that there is room for improvement in their ESG performance compared to their peers¹³.

Key Insight: Cushman & Wakefield is a leader in Energy Star certifications, having helped certify over 40,000 buildings. Their focus on green leasing aligns with the growing trend of tenant demand for sustainable buildings⁶.

Colliers

Colliers, a global commercial real estate services firm headquartered in Toronto, Canada, has a significant presence in the United States and a strong commitment to ESG.

ESG Practices and Initiatives

Colliers has implemented various ESG practices and initiatives, including:

• Elevate the Built Environment: Colliers' ESG strategy, "Elevate the Built Environment," focuses on minimizing environmental impacts in their own operations and through client services to elevate the health of the planet. They also aim to increase diversity, equity, and inclusion within their firm and across its procurement practices to foster environments that are inclusive and engaged. Finally, they promote health and wellbeing in all their operations and through client services to help improve lives¹⁴.
• Net Zero Carbon Goal: Colliers aims to achieve net-zero carbon emissions in its operations and is working with clients to achieve similar goals¹⁵.
• Green Building Certifications: The company actively promotes and manages green building certifications for its properties, including LEED, BREEAM, and WELL¹⁶.
• Sustainability-Linked Loan: Colliers has incorporated a sustainability-linked loan feature into its revolving credit facility, demonstrating its commitment to achieving specific ESG targets¹⁵.
• ESG Data Collection and Management: Colliers provides services related to ESG data collection, carbon footprinting, and ESG reporting. They assist clients with identifying and quantifying emissions sources, conducting carbon footprinting, and complying with reporting frameworks such as the National Greenhouse and Energy Reporting (NGERs) and the Global Real Estate Sustainability Benchmark (GRESB) Survey¹⁷.

ESG Impact in the United States

Colliers' ESG initiatives have had a notable impact in the United States:

• Sustainable Construction Management: The company has managed over 100 million square feet of green-certified construction projects¹⁵.
• Green-Certified Property Management: Colliers manages over 215 million square feet of green-certified properties¹⁵.
• Community Engagement: Colliers engages with local communities to promote sustainability and social responsibility¹⁸. Some examples of their community engagement initiatives include:

• Edible and Pollinator Garden Program: This program has been launched at more than 40 managed properties to bring green space to urban environments across Canada.
• Support for Community Housing: Colliers supported the development of a new community housing project in Manila, Philippines, providing housing for 336 families.

ESG-Centric Clients

Colliers works with a variety of ESG-centric clients, including those focused on community development, sustainable architecture, and green building practices¹⁹.

ESG Certifications and Awards

Colliers has received numerous ESG certifications and awards, including:

ESG-Related Challenges

Colliers faces challenges in implementing ESG practices in the United States, including:

• Balancing Competing Interests: Balancing the ESG priorities of various stakeholders, such as lenders, investors, and tenants, can be complex²².
• Data Collection and Management: Gathering and managing ESG data across a large portfolio can be challenging²³.
• Material ESG Issues: According to Sustainalytics, Colliers' top material ESG issues include business ethics, data privacy and security, and human capital. These issues are considered to be financially material to the company and require effective management to mitigate potential risks and capitalize on opportunities²⁴.

Key Insight: Colliers takes a comprehensive approach to ESG, encompassing environmental, social, and governance factors. This aligns with the increasing demand for holistic sustainability strategies in the commercial real estate industry¹⁴.

Avison Young

Avison Young, a global commercial real estate services firm headquartered in Toronto, Canada, has a growing presence in the United States and a strong commitment to ESG.

ESG Practices and Initiatives

Avison Young has implemented various ESG practices and initiatives, including:

• Net Zero Carbon Commitment: The company has committed to achieving net-zero carbon emissions in its global occupied office portfolio by 2040²⁵.
• ESG and Wellness Strategy: Avison Young integrates ESG and wellness considerations into its operations, client services, and philanthropy. ESG and Wellness at Avison Young is delivered through a combination of dedicated professionals,...source Certifications:** Avison Young actively promotes and manages green building certifications, including LEED and WELL, for its properties²⁸.
• Ecological and Urban Resilience: Avison Young is committed to ecological and urban resilience. They are concentrating their presence in energy-efficient buildings, including those that have been retrofitted or refurbished with a focus on sustainability. This is part of a broader decarbonization effort that extends across their operations, reshaping policies and practices in areas ranging from procurement to business travel²⁵.

ESG Impact in the United States

Avison Young's ESG initiatives have had a notable impact in the United States:

• Sustainable Workplace Design: The company has implemented sustainable design practices in its U.S. offices, prioritizing energy efficiency, health, and wellbeing²⁹.
• Tenant Representation: Avison Young has provided tenant representation services for LEED-certified projects, helping clients achieve high sustainability standards²⁸.
• Community Impact: The company engages in community initiatives to promote social value and urban regeneration³⁰.

ESG-Centric Clients

Avison Young works with clients who prioritize sustainability and wellness in their real estate decisions²⁶.

ESG Certifications and Awards

Avison Young has received numerous ESG certifications and awards, including:

ESG-Related Challenges

Avison Young faces challenges in implementing ESG practices in the United States, including:

• Financial Sustainability: The company has faced financial challenges that could impact its ability to invest in ESG initiatives. Avison Young's capital structure is considered unsustainable due to weak operating performance, negative cash flow, high leverage ratio, and considerable payment-in-kind (PIK) debt burden³³.
• Scaling ESG Initiatives: Expanding ESG programs across its growing U.S. portfolio requires significant resources and coordination²⁵.

Key Insight: Avison Young is committed to integrating ESG and wellness into their workplace culture. This approach can contribute to employee satisfaction and productivity, creating a more positive and engaging work environment²⁶.

The Future of ESG in Global Commercial Real Estate

The future of ESG in global commercial real estate is promising, with increasing demand from investors, tenants, and regulators for sustainable practices. Key trends include:

• Mandatory ESG Reporting: More jurisdictions are requiring ESG benchmarking and disclosure for commercial properties⁷.
• Focus on Climate Risk: Real estate companies are increasingly incorporating climate risk assessments into their investment decisions³⁴.
• Green Leasing: Green lease clauses are becoming more common, aligning landlord and tenant interests with sustainability goals³⁵.
• Technology Integration: Technology is playing a crucial role in monitoring and improving ESG performance³⁶.

Conclusion

Global commercial real estate companies with a significant presence in the United States are actively integrating ESG considerations into their operations and client services. They are driving positive change by reducing emissions, promoting sustainable building practices, and fostering diversity and inclusion. However, challenges remain in monitoring and managing scope 3 emissions, keeping up with evolving regulations, and balancing the interests of various stakeholders. As the demand for ESG performance continues to grow, these companies will play a crucial role in shaping a more sustainable future for the commercial real estate industry in the United States.

The increasing demand for ESG in commercial real estate highlights a shift in investor priorities and market expectations. Companies are recognizing the importance of incorporating ESG factors into their investment decisions, not only to mitigate risks but also to enhance long-term value and competitiveness. The trends identified in this report, such as mandatory ESG reporting, climate risk assessments, and green leasing, indicate a growing momentum towards a more sustainable and resilient real estate industry. The companies profiled in this report are well-positioned to navigate this evolving landscape and contribute to a more sustainable future for the built environment.

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