Podcast transcript: How carbon offsetting could be part of a net zero ambition

Bruno Sarda

Hello and welcome to the EY Sustainability Matters podcast. In this series, we respond to the growing need for organizations to get a clear perspective on current sustainability and ESG issues. We explore the risks, the challenges and the opportunities, and we often come up with some helpful advice along the way. I'm Bruno Sarda. I'm a partner in EY's (Ernst & Young LLP) Climate Change and Sustainability Services (CCaSS) and your host for this series.

In each episode, we'll look at different aspects of what's topical on the sustainability agenda, whether it's megatrends, such as urbanization, digital transformation, climate change, and issues of governance and reporting, or changing legislation. And to talk about these issues, I'll be joined by some of the most interesting and passionate people in the sustainable universe — colleagues, clients, business thinkers and thought leaders. I hope you find it helpful, informative and hopefully entertaining. So, Earth Day 2022 is upon us. This year's theme is “Invest In Our Planet” and it's a direct call to corporates and investors to take action, and unless businesses act now, climate change may negatively impact business performance, damage economies, increase resource scarcity, depress profits, and impact jobs and livelihoods, not to mention the environmental stress in human toll that it is expected to cause. So, organizations across sectors are being asked to aim to achieve net zero emissions faster. And to achieve this, requires a comprehensive review and overhaul of all areas of an enterprise, its business practices and purposes, including things like the use of carbon offsets as a means to achieve net zero, which is expected to come under increasing scrutiny with questions about their credibility, durability but also the standards they use to calculate them. So, in today's episode, I am thrilled to welcome our guest, Cynthia Curtis, Senior Vice President of Sustainability for JLL – Jones Lang LaSalle – and my colleague, Jennifer Leitsch, Managing Director in our Climate Change and Sustainability Services practice here at EY (Ernst & Young LLP), to discuss these topics. So before we get started, can you share with our listeners a little information about your background and how it has influenced your journey to net zero? Cynthia, maybe let's start with you.

Cynthia Curtis

Great, thanks, Bruno, and thanks so much to you and EY   for inviting me to participate in today's important podcast. I am Senior Vice President for Sustainability at JLL.

Curtis

So I've been with JLL for about seven years now and have been in a sustainability space for around 16 years or thereabouts. But I really consider myself a marketer by training and by you know, my prior roles, which I bring into this job every single day. But my kinda seminal moment was seeing an inconvenient truth, and I thought, you know, if business doesn't get on board and see a way to make this profitable and core to business strategy, we collectively are never going to make the changes necessary. And so, I made a conscious shift in my career to focus on sustainability and driving that forward.

Curtis

So, JLL's purpose is to shape the future of real estate for a better world. So, our new framework, our new strategy of our issue areas of climate action, healthy spaces and inclusive places is born out of that purpose. And we really strive to put that, our purpose at the core of everything we do and live that out in our interactions with our employees, with our stakeholders, and with the solutions that we develop with and for our clients.

Jennifer Leitsch

Cynthia, it's so interesting that you say that an inconvenient truth is a seminal moment in your history, because I feel like it was for me as well. I saw an inconvenient truth in the theaters and, you know, really it was quite shocking for me. It was something that I hadn't really thought much about — climate change. And I was actually in graduate school at the time, and I ended up taking a class called “Managing for Sustainability” while I was completing my MBA program and that's what pivoted my career into sustainability about 15 years ago. And, I've been working in the ESG and sustainability space ever since and most of that time in the real estate industry, so I'm so excited to be speaking with you today, Cynthia. And maybe to get started, I'd love to hear more about JLL's sustainability program. Can you give us kind of a snapshot of JLL's sustainability evolution to date?

Curtis

Sure. As you know, Jennifer, the real estate industry can be fairly conservative. And I would say that JLL's trajectory would be similar to others in that we started out reporting, setting goals, but they weren't broadly known. They weren't core to the business. And so, over time, you know, we were kind of chipping away at the edges, I would say. Up until maybe four years ago or so, where we've moved sustainability and ESG issues more to the core of our strategy and where we are today, which is committed to leading in this space and leading by example. And one example of that is our commitment to net zero by 2040 with no more than 5% offsets. And I know we're gonna talk about offsets a little bit later, but that was something we felt was an important marker for us and a sign to the industry that we are all in, on sustainability, not only for ourselves in the spaces that we occupy, but also to help our clients and to help develop collectively with them and collaboratively with them, solutions that we all can benefit from.

Leitsch

Cynthia, that's really exciting to hear. Like you said, collaborating with your clients and other organizations will obviously be a key part of advancing all of us toward net zero. Can you talk more about the role that third-party organizations have played in JLL's journey?

Curtis

Oh, absolutely. It is such an important role. Actually roles, plural. You know, you look at third-party providers, organizations, as they are partners. They are auditors in some cases, conveners, certainly cajolers and encouragers. And so, we work with the World Green Building Council. We work with WEF [World Economic Forum]. We work with Ceres, and a number of other organizations and SBTi, the Science Based Target initiative. And they all have a slightly different role to play and have played in our evolution. I would say, they can provide breakthrough moments, which we experienced and which, when I said, you know, roughly four, five years ago, there was a shift in our approach.

One of the reasons behind that was our work with Ceres and we were looking at goals and setting new targets and essentially, through a stakeholder engagement process that we work with them on, the response was, you know, this is not ambitious enough and you need to do more and you can do more. And that was a real important point in our whole journey of getting us more on track with ambitious and aggressive targets. The World Green Building Council, great example of an organization that brought forward the criticality of the built sector [buildings and construction sector]. Historically, the built sector hasn't really been, you know, considered, at the core of this, even though it's responsible for roughly 40% of the world's greenhouse gas emissions.  But as a result of the work that the World Green Building Council and associated parties have done, the built sector had a day at COP [United Nations Climate Change Conference COP26] this past year. First time that had happened. So, I think, you know, there's so many important roles that third-party organizations can play and it's important, I think, for organizations to determine which ones can play different roles with them.

Leitsch

Cynthia, one of the statistics you just mentioned is one that I also use a lot because I think it's so unbelievable, maybe to folks who aren't in the built environment space, that nearly 40% of global greenhouse gas emissions can be attributed to the built environment, and that includes both operations of buildings as well as construction and development. But it's something that I think as we continue to move toward net zero that the built environment will clearly have to play a key role in getting us there.

Leitsch

So, Cynthia, I wanted to talk a little bit about Earth Day 2022. The theme this year is “Invest In Our Planet.” And it really seems like the focus this year has shifted to become less about consumer activism and more about corporate action. So, I'd love to hear your thoughts on how organizations can align their own ESG initiatives to this year's Earth Day goals?

Curtis

You know, it's really interesting to see Earth Day, which historically has been very much about citizen activism and broad-based engagement kind of at the individual level. It's been really interesting to see that shift, and I think it is in line with a broader trend or a theme around collaboration. You know, again, if you look to COP[26] in the work there and the engagement there, there were more businesses at last year's meeting in Glasgow than ever before. If you look at reporting organizations, there's consolidation that's happening within that sector. NGOs [non-governmental organizations] are coming together in a number of different ways. So, I think, what we see with the Earth Day shift is more of that. It's more of that recognition. We've known all along that no one can do this solo. No industry, organization, no individual company can do this by itself. And so there is that growing recognition that we need to act on that understanding and bring together the different parties. I think that, you know, the topic is so broad, “Invest in our Planet,” which means that under it you can really develop and construct the type of activity that you want your organization to participate in that would support that. But true to Earth Day form, they offer specific initiatives on their website. There's a tremendous amount of materials and content to draw from and you can register a project that you're working on. You can get engaged with an existing project that you're working on. We're all in on that at JLL, so we're pretty excited about the various opportunities that we're going to engage in this Earth month really. But yeah, I think it is “find what works for your organization, within that construct, and then pull that thread, and does that thread mean that you're engaging collaboratively or collectively with members of your community?” That would be awesome. Are there other organizations that you can jointly come together with? So it's that spirit of collaboration, I think, that's going to make this year's Earth Day even more impactful.

Leitsch

Absolutely, and very exciting indeed that organizations are really, more than ever before, recognizing and realizing their obligations and opportunities to move toward net zero. So, I'd love to hear a little bit more about some of the measures that organizations can take to achieve net zero carbon. What kinds of tools are available to help organizations change and help them measure their progress?

Curtis

It's such a nascent space, in many ways. One of the things I mentioned that of our third parties that we work with is the Science Based Targets initiative [SBTi]. And one of the reasons why we feel strongly about that is to help do whatever we can do, to help drive standards and standardization in this space; to help coalesce around a singular definition of net zero as an example, because it can mean so many different things and it has so many different permutations to it today. So, that's one thing, is that we are all about whatever we can do to help drive consistency and standardization throughout the industry. But in terms of tools, there's a lot out there. The World Green Building Council, as I've mentioned, they've had their “Advancing Net Zero initiative.” They've put out a health and well-being framework, where, as we know, in the last couple of years with Covid [COVID-19] in particular, has really driven home the importance and the relationship of health and well-being to climate. And so, putting some tools together specifically to look at that, there's obviously also all of the various rating, and certifications of lead certifications, or Well [WELL Building Standard], BREEAM [Building Research Establishment (BRE) Environmental Assessment Method], etc. But more specifically, Ceres has a road map that they've published which has, again, some very specific steps to take. WEF, the World Economic Forum, in collaboration with us, or perhaps we in collaboration with them, have developed the Green Building Principles. We released those last November [2021], just ahead of COP[26]. I was just made aware this morning of a Circular Buildings Toolkit that Arup  has recently published. So, there's a growing number of tools that are available. And again, I think, you're looking at some of the credible organizations that are developing and putting those forward, and making them available for further enhancement you know, and not making them proprietary is really important as we, you know, take these next steps and try to get more consistency in our approach.

Leitsch

Thank you, Cynthia. That is a huge array of tools and resources available that you've just mentioned and I think our audience will really find many of those valuable. So, thank you for sharing all of those with us. When organizations are thinking about making the move toward net zero, one of the questions that they might get externally or internally is, well, how are carbon offsets going to play a piece of that? So, what is the role of carbon offsetting and achieving net zero? You know, we've heard a lot on the news lately about carbon offsets. How are they calculated? Are they fit for purpose? I would love to hear what JLL's thinking in terms of carbon offsets.

Curtis

Well, as I mentioned, we have taken the position with our net zero goal of no more than 5% offsets. And I will tell you, that's frightening. It's exciting but it's hard. But you know, one of the reasons that we feel strongly about it is we want to be able to prove that we can negate, abate, cut emissions and really do that focus much more on that efficiency aspect. But, having said that, that's our decision. There is a role, I think, for offsets because there are things that just never will, you can't get to zero. And so, what do you do about that? And I think offsets offer that alternative. The challenge is just, as you mentioned, the credibility of the offset market. And so, while it is really important, I think we all need to tread carefully. You know, the lack of standards coupled with the heightened demand, because more and more organizations are putting forward goals for carbon neutrality or net zero, and so the demand for offsets is spiking. But you put those together with no standards and heightened demand and that could lead to a rapid scaling of non-credible offsets. And that benefits no one. Well, benefits someone but it doesn't benefit our collective goal. And so, I think, for example, linking back to your question on the role of third parties, WWF, World Wildlife Fund, and EDF, Environmental Defence Fund, are spearheading an initiative, called the “Carbon Credit Quality Initiative.” And that is an example of really taking some heavyweights in this space to try to address the credibility and verification capability around offsets. So, I think, you know, not all offsets are created equal and there are projects, just, you think of carbon sequestration, for example or certain types of technologies that need investment and that investment can come from the offset credits that they're selling which can help further accelerate the innovation and scale of those highly credible, verifiable offsets. If you're using offsets, [you need] to be very thoughtful about what that audit trail is.

Leitsch

Absolutely, I definitely agree with you, Cynthia, that making sure that if offsets are a part of your program, that you're being very thoughtful about where those offsets are coming from and all of the attributes associated with them. So, getting back to third parties, I wanted to shift and maybe talk a little bit about governments and would love to hear your thoughts on the role of governments and long-term policy changes and what are the role of those things incentivizing change? How do you think that public-private sector partnerships will help us build a low-carbon economy?

Curtis

Well, first of all, I think there is no option but to have public-private partnerships in the development and the acceleration of a low-carbon economy. It can't be left to one versus the other. It has to be an “and.” You know, policy is really important and it sets kind of the guard rails and the guidelines. What we would advocate for would be market-based guidelines such as a carbon tax. I think there isn't any single – in my opinion – any single aspect of policy that could be more meaningful than a carbon tax approach. But also, some of the work, if we look here at the US market, the SEC [U.S. Securities and Exchange Commission] coming out with their disclosure recommendations for climate risk, that lands this topic smack in the middle of finance departments all over the world. And that focuses attention, that accelerates change, that brings up the reporting and the disclosure and the accounting of emissions right up into the same organization department level as your financial accounting and financial reporting. That is critically important. And yet, we've already seen one of the reasons why, I think, Europe in many ways is ahead of the US in some of their actions, is because the governments have been more active and collaborating more with the business community, to put in place those guidelines. And we can learn from that here in the US.

Where are we seeing the benefits from that? Where is it perhaps a little bit of an overreach? Or you know, how do we tamp down certain aspects of it? But clearly, there has got to be those guidelines. You can look at a number of different examples over the course of history, but when you put policy guidelines in place, what it ends up doing is accelerating innovation, accelerating investments, help to inform investments that then create all new, you know, whole new markets and new areas of business. So, it’s such I think, both important from the standpoint of how we develop and grow a low-carbon economy, but for economic growth period,  it's those are the types of things that we absolutely need. And I think, my recommendation would be for businesses to engage with their policymakers and bring the voice of what makes sense for business to accelerate growth, to the lawmakers.

Leitsch

Cynthia, I know that you and JLL have been engaging directly with lawmakers for a number of years and would love to hear what's next for JLL on your sustainability journey?

Curtis

You know, one of the things, in addition to, I will continue to, to push as far as I can, in terms of engaging on the policy side, it can be dicey, as we all know, but it's critically important. Where we've recently released our new sustainability, approach strategy framework, call it what you will, which moves to an issues-based and impact-measured strategy. And our three issue areas are climate action, healthy spaces and inclusive places. And so, under those, what we're doing really for the first time is digging in on the “so what?” What have we, the goals that we take, the actions that we take, the initiatives under way, what is the actual impact of those initiatives, of those actions? How many lives have we impacted? What are we doing to help facilitate healthy spaces and improve the health of well-being of our own employees and the tenants in the spaces that we manage? And the role of D&I [Diversity and Inclusion], it has just exploded. And it's, you know, when we did our most recent materiality assessment, D&I was the off-the-charts number one issue, above everything else, and it's just vital that be core to, I think, any effective ESG strategy. So, we've brought that in as one of our three key focus areas. And then, you know, further from that, just like we were talking about throughout is really leaning on the collaboration space. How do we work more closely with our suppliers, with our clients, with our competitors? Right, really looking at areas where we can have meaningful coopetition and raise all the boats in the space of the real estate industry. And then lastly, I would say it's our investment in technologies, and how we can leverage and innovate in this area of technology to improve and accelerate the reduction in consumption, in emissions, etc., throughout the built sector.

Leitsch

Cynthia, it's been so much fun to chat with you today and so exciting to hear about all of the things that are on the horizon for JLL. Thank you again for taking the time to speak with us.

Curtis

Thank you, Jennifer. It's been great, and Bruno, thank you.

Sarda

Well, thank you both, it's been such an illuminating conversation, in highlighting both the, you know, the challenges but also very much so, the opportunities. You know, even as regulators and policymakers consider their role in facilitating the path to the net zero transition, I think it's clear business must lead from the front. In fact, almost all corporate action on climate to date has been voluntarily prompted by stakeholders, but also driven by a sense of purpose and opportunity and inspired by the possibilities. I think we've seen business as a force for change in society and not just in business, but as a force for change in society [that] has the ability to move at the speed and scale that the challenge requires. And frankly, I think, spurred on by a workforce that increasingly demands action from within in certainly helping organizations at all stages of ESG and sustainability maturity is where our work, at the EY Climate Change and Sustainability Services group, is very much focused these days. So, thank you again both, for joining us today.

Sarda

Well thank you for listening to Sustainability Matters. If you enjoyed this episode, please check out previous episodes on ey.com or wherever you get your podcasts. We’d love you to subscribe, and rating reviews and comments are also very welcome. Please also visit ey.com where you’ll also find a wide range of related and interesting articles that will help put these bigger topics in the context of your business priorities. I look forward to welcoming you on the next episode of Sustainability Matters. My name again is Bruno Sarda; you can find me on LinkedIn and feel free to connect with me there. Thanks so much for listening.