Top US CRE Companies with Strong ESG Programs

The commercial real estate industry has a significant impact on environmental sustainability, social responsibility, and corporate governance (ESG). Buildings are major consumers of energy and resources, making it crucial for real estate companies to minimize their environmental footprint and promote social equity. This report examines the top commercial real estate companies in the United States with strong ESG programs, highlighting their policies, initiatives, performance metrics, and leadership in the industry.

To identify these companies, we first researched the top commercial real estate companies in the United States based on transaction volume. According to the Los Angeles Times, the top 5 commercial real estate brokerage firms in the US in 2023, based on transaction volume, are: ¹

Based on this information, we selected CBRE Group, JLL, and Cushman & Wakefield for further analysis. We also included Colliers International and Newmark, two other major players in the US commercial real estate market with notable ESG programs. For each company, we examined their ESG programs, including their policies, initiatives, and performance metrics. We also researched their voice and leadership in ESG, such as their public statements, participation in industry initiatives, and recognition or awards for their ESG efforts. Finally, we analyzed any controversies or criticisms related to the companies' ESG programs and gathered information on the impact of their ESG programs on their financial performance and market valuation.

CBRE Group

CBRE Group, Inc. is the world's largest commercial real estate services and investment firm, headquartered in Dallas, Texas². The company has a comprehensive ESG program that covers all three pillars of sustainability.

Environmental Performance: CBRE has set ambitious sustainability targets, including reducing its absolute scope 1 and 2 greenhouse gas emissions by 68% by 2035³. The company has already achieved a 25% reduction in scope 1 and 2 emissions since 2015³. CBRE is also committed to improving energy efficiency in its buildings and reducing waste³.

In addition to its internal efforts, CBRE helps clients reduce their environmental impact by providing a wide range of technical services in-house that increase real estate operational efficiency and reliability while reducing carbon emissions and lowering costs⁴.

CBRE Group, Inc. has an ESG Risk Rating of 6.3 (Negligible) and is ranked 12th out of 1009 companies in its industry⁵. This rating places CBRE among the top performers in the industry in terms of managing ESG risks.

Social Performance: CBRE has a strong community engagement program, with initiatives focused on education, health, and affordable housing³. The company also prioritizes diversity, equity, and inclusion (DE&I) in its workforce and supply chain².

CBRE is committed to supporting and adding value to the communities where its employees live and work. In 2021, the CBRE Foundation launched fundraising programs to assist the victims of the earthquake in Haiti and the tornadoes in the U.S. Midwest⁶. In December 2021, CBRE and the CBRE Foundation announced a community impact initiative, creating collaborations with and...source opportunities for underserved populations, and supporting humanitarian relief⁶.

CBRE also conducts a worldwide employee engagement survey to gather feedback on employee experiences and identify areas for improvement⁶. The company's 2021 survey showed an increase in overall employee engagement, particularly in employee wellbeing⁶.

Governance Performance: CBRE has a strong commitment to ethical business practices and has been recognized as one of the World's Most Ethical Companies for 11 consecutive years². The company also has a robust corporate governance structure that ensures accountability and transparency.

CBRE's commitment to ethical business practices is further demonstrated by its inclusion in the Dow Jones Sustainability World Index, which assesses an organization's climate commitments⁷. Notably, CBRE integrates ESG performance into executive compensation, with incentives tied to progress towards climate-related targets, increased use of renewable energy, and increased revenue from low-carbon products or services⁷.

Voice and Leadership: CBRE is a vocal advocate for ESG in the commercial real estate industry. The company participates in industry initiatives, such as the Better Buildings Challenge and the Global Real Estate Sustainability Benchmark (GRESB)⁸. CBRE has also received numerous awards and recognitions for its ESG efforts, including being named a "World's Most Ethical Company" by Ethisphere for 11 consecutive years and being listed on Forbes' 2023 Net Zero Leaders list². CBRE was also named a 'World's Most Ethical Company' by Ethisphere in 2023 for the 10th year in a row⁹.

Controversies: While CBRE has a strong ESG program, there have been some controversies and criticisms. Some critics contend that listed infrastructure is neglected in ESG and sustainable strategies¹⁰. For example, a report published by CBRE in conjunction with New York Life Investments states that "infrastructure may drive 50 percent of all decarbonization investment." ¹⁰ This suggests that more attention and investment should be directed towards sustainable infrastructure to achieve decarbonization goals.

Financial Performance: CBRE has a market cap of $41.30 billion and an enterprise value of $47.26 billion¹¹. The company's EV/EBITDA ratio is 21.35, and its EV/FCF ratio is 51.77¹¹. CBRE's financial performance has been strong in recent years, with revenue up 9% and net revenue up 11% in the third quarter of 2024¹². The company's strong financial performance may be attributed, in part, to its focus on ESG, which can enhance brand value, reduce costs, and identify market opportunities¹³.

JLL

JLL is a global commercial real estate services company with a strong focus on sustainability. The company's sustainability program is focused on delivering impact on three key areas: Climate action, Healthy spaces, and Inclusive places¹⁴. This framework guides JLL's ESG initiatives and targets.

Climate Action: JLL has committed to achieving net-zero emissions across its operations by 2040¹⁵. The company is also working to reduce energy consumption and water use in its buildings¹⁶. JLL aims to evaluate ESG considerations during the investment process to highlight significant ESG risks and value creation opportunities¹⁷. Focus areas may include:

• Management of Waste & Hazardous Materials ¹⁷

JLL's Environmental Policy describes its policy and practices to deliver a positive impact on the environment¹⁴.

Healthy Spaces: JLL is committed to creating healthy and sustainable workplaces for its employees and clients. The company has achieved WELL Building Standard certifications for many of its offices¹⁸.

Inclusive Places: JLL promotes diversity, equity, and inclusion in its workforce and in the communities where it operates. The company has set targets for increasing female representation in leadership positions and spending with diverse suppliers¹⁹.

Voice and Leadership: JLL is a leader in the ESG movement in the commercial real estate industry. The company has been recognized for its sustainability efforts by numerous organizations, including Barron's, USA Today, and the International WELL Building Institute¹⁸. JLL also actively participates in industry initiatives and publishes reports on sustainability trends.

JLL's 2023 ESG Performance Report highlights its progress and achievements against the three priorities of its sustainability strategy¹⁵. Some key performance highlights include:

• 85% of JLL offices over 10,000 square feet have a green building certification, on track to achieve 100% by 2030¹⁵.
• 75% of electricity across JLL's global portfolio is supplied by, or sourced from, renewable sources¹⁵.
• $2.24 billion global spend with diverse and small businesses across JLL's supply chain¹⁵.

Controversies: JLL has faced criticism for its role in a legal dispute over a commercial lease in Washington, D.C²¹. The landlord alleged that JLL did not properly disclose its dual representation of both the tenant and the landlord in the lease negotiations. A U.S. District Court judge ruled in March 2023 that JLL was not entitled to its commission because it failed to comply with the D.C. Brokerage Act's requirements for disclosing dual agency²¹. This case highlights the importance of transparency and ethical conduct in commercial real estate transactions.

Financial Performance: JLL has a market cap of $12.79 billion and an enterprise value of $17.37 billion²². The company's EV/EBITDA ratio is 14.81, and its EV/FCF ratio is 42.16²². JLL's financial performance has been mixed in recent years, with revenue down 7% in 2023 but up 15% in the third quarter of 2024²³.

Cushman & Wakefield

Cushman & Wakefield (C&W) is a global real estate services firm that has made significant strides in its ESG program. In 2021, C&W renamed its Corporate Social Responsibility Report to the Environmental, Social and Governance (ESG) Report to reflect an increased emphasis on measurable actions and strategies²⁵. The company's sustainability strategy focuses on three key areas: driving net zero, accelerating progress, and creating positive places²⁶.

Driving Net Zero: Cushman & Wakefield has committed to achieving net-zero emissions across its value chain by 2050²⁷. The company has set science-based targets for reducing emissions and is working to improve energy efficiency in its buildings²⁸. C&W was among the first group of companies to have its net-zero emissions target approved by the Science Based Targets initiative (SBTi)²⁷. This demonstrates the company's commitment to aligning its sustainability goals with the latest climate science.

To enhance how it tracks and reports ESG progress, C&W implemented Salesforce Net Zero Cloud²⁹. This platform uses AI to deliver actionable insights, identify areas of inefficiencies and high emissions, and create tangible plans to become more sustainable²⁹.

Accelerating Progress: Cushman & Wakefield is actively engaged in promoting sustainability in the commercial real estate industry. The company has partnered with Measurabl, a leading provider of ESG data solutions, to help clients track and improve their environmental performance³⁰.

Creating Positive Places: Cushman & Wakefield is committed to creating inclusive and sustainable communities. The company focuses on diversity, equity, and inclusion in its workforce and supports initiatives that promote social equity²⁶.

Voice and Leadership: Cushman & Wakefield has been recognized for its sustainability leadership by several organizations, including TIME magazine and Forbes³¹. The company has also been named a top commercial real estate brand by The Lipsey Company³¹.

Controversies: Cushman & Wakefield has faced criticism for its ESG rating from Sustainalytics, which ranks the company lower than its peers³². However, the company has defended its ESG program and highlighted its commitment to continuous improvement in its 2023 Sustainability Report³³.

Financial Performance: Cushman & Wakefield's financial performance has been mixed in recent years. The company reported revenue of $9.5 billion in 2023, but revenue for the nine months ended September 30, 2024, decreased 2% from the same period in 2023³⁴.

Colliers International

Colliers International is a global commercial real estate services company with a growing ESG program. With operations in 66 countries, Colliers has 18,000 professionals and generates $4.5 billion in annual revenue³⁶. The company manages 2 billion square feet of property and has $98 billion of assets under management³⁶. Colliers' sustainability strategy, Elevate the Built Environment, focuses on three pillars: elevating the environment, elevating inclusiveness, and elevating health and wellbeing³⁷. This approach reflects Colliers' understanding that sustainability encompasses environmental, social, and human factors.

Elevating the Environment: Colliers is committed to minimizing its environmental impact and helping clients do the same. The company has set targets for reducing emissions and is working to improve energy efficiency in its buildings³⁷.

Colliers offers an intelligent ESG Focus™ powered by Allovance to help occupiers develop their ESG goals and initiatives, design and operationalize sustainability programs, identify risk and building performance, digitize workflows, and gain business intelligence for continuous improvement³⁶.

Elevating Inclusiveness: Colliers promotes diversity, equity, and inclusion in its workforce and in the communities where it operates. The company has programs aimed at increasing female representation in leadership positions and supporting diverse suppliers³⁸.

Elevating Health and Wellbeing: Colliers is committed to creating healthy and sustainable workplaces for its employees and clients. The company has achieved WELL Building Standard certifications for many of its offices and promotes health and wellbeing initiatives³⁷.

Voice and Leadership: Colliers is an active participant in industry initiatives and publishes an annual sustainability report³⁸. The company has also been recognized for its ESG efforts by GRESB³⁹. In 2021, Colliers appointed Sean Leighton as Global Head of Sustainability to accelerate the success of its ESG goals⁴⁰.

Controversies: There is limited information available on any controversies or criticisms related to Colliers International's ESG program.

Financial Performance: Colliers reported annual revenue of $4.5 billion in 2022³⁶. The company has a strong track record of delivering returns for shareholders, with compound annual investment returns of approximately 20% for over 28 years³⁶.

Newmark

Newmark is a global commercial real estate services firm with a commitment to ESG. The company's ESG program focuses on embedding social and human capital, employment, environmental, sustainability, charitable, and corporate governance policies and practices into its corporate strategy¹³.

Environmental Performance: Newmark is increasingly collecting and measuring environmental data to build client strategies around energy efficiency and renewable energy supply initiatives⁴¹. The company's Energy and Sustainability Services team has led energy management initiatives for Newmark clients since 2017⁴¹.

Newmark facilitates property due diligence, which includes an analysis of several climate risk factors, including Phase I environmental site assessments, property condition assessments, seismic analysis, and water risks⁴¹. This helps clients identify and manage potential environmental risks associated with their properties. Newmark also collaborates with clients to help them identify, develop, and manage green building investments⁴¹.

Social Performance: Newmark has partnered with the National Minority Supplier Diversity Council to incorporate their 15,000 certified minority suppliers into its supplier bid process¹³. The company also launched an ESG Champions Council to ensure input and incorporation of all its business lines¹³.

Governance Performance: Newmark established an ESG Executive Committee consisting of executive and senior leadership to provide direction for the company's ESG progress and initiatives¹³.

Voice and Leadership: Newmark published its inaugural Corporate Responsibility Report in 2022, demonstrating its commitment to ESG and disclosing relevant ESG metrics¹³.

Controversies: There is limited information available on any controversies or criticisms related to Newmark's ESG program.

Financial Performance: Information on Newmark's financial performance and market valuation was not available in the provided research material.

Industry Trends and Challenges

The commercial real estate industry is increasingly recognizing the importance of ESG. This trend is driven by several factors, including:

• Growing investor demand: Investors are increasingly incorporating ESG factors into their investment decisions, recognizing that sustainability can enhance long-term value and mitigate risks.
• Tenant preferences: Tenants are increasingly seeking sustainable buildings that promote health and wellbeing, reduce environmental impact, and contribute to social equity.
• Regulatory pressures: Governments are implementing policies and regulations to promote energy efficiency, reduce emissions, and encourage sustainable building practices.

However, the industry also faces several challenges in implementing ESG:

• Measuring and reporting ESG performance: There is a lack of standardized metrics and reporting frameworks for ESG in commercial real estate, making it difficult to compare performance across companies and portfolios.
• Data availability and quality: Accessing reliable and consistent ESG data can be challenging, particularly for older buildings or those with limited historical data.
• Cost of implementation: Implementing ESG initiatives can require significant upfront investments, which may be a barrier for some companies, particularly in a challenging economic environment.

Despite these challenges, the commercial real estate industry is making progress in integrating ESG. Leading companies are developing innovative solutions, collaborating with stakeholders, and demonstrating the business case for sustainability.

Conclusion

The commercial real estate industry is undergoing a significant transformation as ESG becomes increasingly important. The companies highlighted in this report – CBRE Group, JLL, Cushman & Wakefield, Colliers International, and Newmark – are leading the way in integrating sustainability into their operations and strategies. These companies have demonstrated a commitment to reducing their environmental impact, promoting social equity, and enhancing corporate governance.

While there are some controversies and challenges, these companies are demonstrating a commitment to creating a more sustainable and equitable future for the built environment. They are setting ambitious targets, implementing innovative solutions, and engaging with stakeholders to drive progress. Their efforts are not only contributing to a better world but also enhancing their brand value, reducing costs, and identifying market opportunities.

As the demand for sustainable buildings continues to grow, these companies are well-positioned to capitalize on the opportunities presented by the ESG movement. Their leadership in sustainability is not only good for the planet but also good for business.

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