CoreNet Global

Another way to view his stirring cost-benefit comparison: Countries, societies and companies can opt for actual carbon reductions now, "not just postponement of risk" which remains more politically feasible. But once elected leaders see how practices such as low-cost technology transfer, governments will likely buy into adoption of integrated sets of strategies, not just a single solution. The exploration of outer space yielded similar benefits, he observed. He added that other large-scale social interventions prove that there is strong ROI on the public money invested in such approaches.

"Let each country focus on its own future," he recommended. In doing so, a number of alternatives can and will be used. They include renewable energy, fission, fusion, conservation and carbon storage.

He advised governments to invest a mere .05% of their GDP's in research and development of non-carbon emitting technologies in order to attain the cost efficiency and payback on alternative solutions.

His advice to business and industry revealed another lynchpin of sustainability. Lomborg clearly implied companies taking a community reinvestment view will recognize that there's a range of issues to be addressed. For real impact, he urged corporate enterprises to "fund projects dealing with other social issues" instead of treating it as a "feel-good" public relation opportunity or viewing it as a single issue.

Dr. Lomborg also outlined cost-effective ways to reduce warming in several key areas:

- Hurricanes: better building code enforcement and wetland development will do more to help stem their impact. "Kyoto is over-rated," he said
- Heat deaths: help cities like Paris and London do what Philadelphia has done, as one example by enabling more residential air conditioning, painting rooftops white and adding more green spaces and water to urban hot zones
- Rising sea levels: spend a small proportion of the GDP to carry out many of the same solutions seen in responding to hurricanes. Since shorelines in developed markets attract wealth, those in emerging markets are more at risk unless reasonably scaled investment is made to offset the effects
- Malaria: Again it's more about eradication through economics, not by reducing warming.

Speaking about the polar cap melt-down issue, Lomborg quipped, "Kyoto would save one polar bear a year but we shoot 1,000 (of the 22,000 bears alive) instead. Shouldn't we stop shooting them first?"

DAILY REPORT • TUESDAY, 18 SEPTEMBER 2007

The considerable buzz generated from the morning's Opening General Session with Dr. Bjorn Lomborg carried over into the luncheon panel discussion facilitated by CoreNet Global CEO Dr. Prentice Knight.

Dr. Knight called for a straw poll of the more than 450 industry executives in the luncheon room, asking how of them agree or disagree with Dr. Lomborg's assertion that carbon emission reductions as prescribed by the Kyoto Protocol are "hardly worth" the costs, and that companies can do far more to address sustainability issues by taking what he described essentially as a community reinvestment approach.

The vote was strongly in favor of Lomborg's conscience-raising primer by a margin of approximately 5 - 1. Only 20% of those who voted by show of hands do not see sustainability in the broader supply-chain sense, or what is also described as the "adaptive" approach. The view of concentrating on carbon reduction from a long-term perspective is known as "mitigation."

Here's what the three industry panel members said about Lomborg's hypothesis and related points after Dr. Knight asked them to share their reactions live before the audience:

"We must massively reduce carbon emissions in society," according to Geoff Lye of U.K.-based SustainAbility. "Adaptive is managing the unavoidable impacts. Mitigation is avoidance." Nevertheless, Geoff disagreed with Lomborg's prediction that climate change and warming trends are problematic and not catastrophic. "If we follow his prediction, we'll see global warming out of control," Geoff cautioned, advising there could be an accompanying and devastating drop in GDP of 4% - 5%.

"Is it about public relations or economics?" asked Ron Blanken of Philips. Blanken, who heads the electronic giant's Competence Center as VP of Corporate Real Estate, went on to explain that opinions like Lomborg's don't count as much inside multinational enterprises so much as what senior management and the employees are saying and doing. "It's more about what people think" inside a given company than it may be about outside influences. That thought pattern is frequently associated with the economics of introducing or expanding sustainable practices, implying there has to be a clear business case and value proposition along with enhancements for social and environmental gains.

James Charnaud of Cushman & Wakefield called it "the number one hot topic, and we can't avoid it." Corporations - some of his clients included - should take some measure of satisfaction in knowing that the private sector is be more proactive in taking some of the steps that Lomborg prescribed earlier in the day. Take the attraction and retention of talent as an example, he offered. "Talent won't go to companies they don't like to work for" based on a lack of socially responsible practices. He cited Nike's reputation problems with working conditions in emerging market settings largely in Asia, saying the company improved its track record largely in response to shareholder, employee, public, media and other "stakeholder" pressures. "They lost business, showing that CSR (corporate social responsibility) will have a lot of impact on shareholders."

Each panelist alluded to workplace practices as another form of viable sustainability, starting with the acknowledgements that it makes good business sense. (See related special Web-only series, Workplace Flows to the Mainstream.)

"In the mid-1990's," recalled Blanken, "it was a struggle to keep it (workplace strategies) on the (corporate) agenda." But with technology's continued progression to more advanced mobility, combined with the better definition of remote and distributed work, Blanken reported, "It's an easier sell the last two years."

Another reason for the widening embrace of flexible workplace practices by companies as a form of sustainability in itself is the "sea change" in attitudes and awareness of management, according to Charnaud. Dr. Knight characterized the recent rapid adoption to mainstream status as "an enormous change in the level of interest among corporations" in sustainability. (See the following London Daily Report on CoreNet Global - Jones Lang LaSalle survey results.)

The big change means sustainability has gone from early adoption to embedded business practice at what appears to be record speed for the corporate real estate industry. "It's moving up the ladder" of the corporate management hierarchy, added Lye. So much so, that more companies are either reporting the so-called Triple Bottom Line in their annual and quarterly reports by measuring not only financial results but also social and environmental impacts - for better or worse. At Philips, the 3BL style of accountability is reflected in the company's semi-annual report, advised Blanken.

"The focus is now on work, not so much on buildings," Dr. Knight observed. "It's a huge opportunity for corporate real estate to step forward and lead. It's a big opportunity for companies to use the real estate and workplace team as examples for the public to see."

Stakeholders actually look to corporations to set higher standards, commented Lye. "There's no single answer for companies (but) accountability is higher and different today." Indeed, mounting case evidence shows, companies that recognize how to do business within this new reputation-driven landscape will reduce risk and increase profitability. (See related Industry Tracker on "The New Uber-Sustainability," Leader Magazine, March 2007, and CoreNet Global Lisbon Summit Daily Reports, September 2006.)

DAILY REPORT • TUESDAY, 18 SEPTEMBER 2007

The early adoption of sustainable practices by multinational corporations has gone from early adoption to mainstream.

That's what the latest round of preliminary results on the CoreNet Global - Jones Lang LaSalle survey Sustainability Perceptions and Trends in Corporate Real Estate shows, according to a presentation made at today following a luncheon panel with three of the industry's leading executives from Europe and the United Kingdom.

The results, which center on the European sampling captured in the days leading to the London Global Summit, mirror and support the findings of the same survey conducted at Global Summits in Asia, Australia and North America.

"It's a critical issue now to an overwhelming number of the respondents," noted CoreNet Global VP of Knowledge Management Linda DeMars. Well over half (61%) of the more than 1,000 executives surveyed on site at the summits regard sustainability as an issue that must be addressed now and into the long term.

The survey shows the top three areas of focus are energy management, sustainability and corporate social responsibility.

The European results bolster the case that these and other initiatives are now embedded business practices in many of the world's largest enterprises.

"It's top down and bottom up," said JLL International Director Chris Hiatt in describing both the high-level and grass-roots demand for companies to go green. Major drivers are for rising energy costs, carbon and energy taxes, and employee interest along with C-Suite expectations. "The bar is being raised," Hiatt added.

Nearly two-thirds (65%) of respondents are willing to pay a premium ranging between 3% - 10% for instilling environmental solutions into their operations and supply chains. "All global regions agree on demand and the willingness to pay," stated DeMars, who reported that willingness reached a high point of 74% in Asia.

Still, there are gaps in perception to be closed. One is the cost of sustainability, because four-fifths of the respondents think there is a cost premium compared to the 20% that believe it costs the same or even less than conventional construction.

Another gap is in the perception of a "patchy" supply chain. Less than half (49%) perceive the availability of goods and services to support sustainable development is "good in some but not other markets," according to the study.

"It's an immediate opportunity for the supply chain," DeMars advised.

There are important undertones or subtexts, as will be reported in Leader Magazine's Industry Tracker this November, preceding the official release of the full results in January 2008:

- One is that we now have a formal, objective validation that a critical piece of the triple bottom line - the profit component - is indeed attainable. The survey is about the built environment, but it supports the case for sustainability in the broader sense, too. We've reached the trigger point where sustainability surpasses early adoption. It's going mainstream, like our workplace practices which in themselves are sustainable.

- The survey results add another page to CRE's growing leadership lexicon. The direct feedback of members and other industry professionals from a comprehensive geographic and industry-sector viewpoint is tied to the views and attitudes of the business units and C-Suites that our network supports.

- By gaining a clearer understanding of the business case for sustainability - which is what the survey results will ultimately provide - CoreNet Global members have again positioned themselves to play a leadership role inside the global enterprise, as we're doing with M&A's, decision support, location strategies, and more. (See May 2007 Leader Magazine Industry Tracker on industry leadership roles.)

Clearly, multinational companies are buying into the idea of socially responsible globalization on a wide scale.

DAILY REPORT • TUESDAY, 18 SEPTEMBER 2007

Moderator:
Juliet N Filose, Global Real Estate General Manager, BP International Ltd

Speakers:
Stephen Smith, Global Head of Facilities Management & Sustainability, ABN, AMRO
Robert Seatter, Strategic Communications & Partnership Manager, BBC Workplace
Tina Perfrement, Director Business Sustainability, Corporate Property Advisers

As evidenced by standing room only presence, and supported with statistics indicating 95 - 98% of corporate real estate facility initiatives deal with existing buildings as opposed to new construction, this session was a must-attend for Summit participants.

With fact-filled and successful case studies presented by ABN-AMRO and BBC, attendees walked away with practical applications, a sustainability roadmap, and a hint of the pitfalls to avoid along the way in their own efforts to improve corporate sustainability.

As opened by Moderator Juliet Filose, Global Real Estate Manager of BP International, "We are not here to debate climate change; but to look at what organisations are doing to address sustainability and to focus on real steps." This session helped map a course on the journey to implementing and achieving successful sustainability strategies.

The first case study presented by Stephen Smith, Global Head of Facilities Management & Sustainability, ABN-AMRO - the 8th largest international bank in Europe and 13th largest in the world serving consumer and commercial clients - reviewed the challenging yet rewarding and successful undertaking of bringing sustainability strategies to 5 regions, 50 countries and 4,700 buildings worldwide.

With a corporate goal of carbon neutrality by 2008, ABN-AMRO needed to focus on meaningful initiatives to meet this challenge - initially addressing primary concerns of energy and CO2 emission reductions. Even with 10% reduction in energy, increased transparency of energy supplies and usage, increased transition to green energy suppliers and offsetting remaining carbon emissions, Mr. Smith noted this is not the final solution. It is a process to continually find and make improvements over time.

Key to success is building a team of stakeholders across all operational and strategic functions, and knowing the point from which you are starting. Noting critical importance of benchmarking performance of existing buildings both highlights areas for improvement and maximum impact as well as identifying areas for integration of new technology to optimise performance. He discussed detailed monitoring of key systems - HVAC, IT processing and networking, lighting and general power - with critical focus on transparency.

Through remote monitoring of energy consumption, ABN-AMRO has created numerous dashboard examples and best practices of energy usage. Applying this learning helps to ensure they are continually use less energy, never more. Even in buildings with strong sustainability elements already in place, there is always room for improvement. Citing the retrofit of their Amsterdam Headquarters, a highly innovative process of integrating a natural lake water cooling system to reduce energy consumption, with zero environmental impact, has resulted in 65% reduction in emissions versus other commercial cooling systems. As a $1 billion contributor to the Clinton Foundation Climate Initiative, ABN-AMRO is demonstrating its dedicated to supporting sustainability on a global scale well beyond its own corporate footprint.

This session's second case study - BBC Workplace - gave us a fascinating glimpse behind the cameras to show that this organisation's dedication to enriching lives with programming that informs, educates and entertains is much more than simply independent of political and commercial interest - it is dedicated to improving sustainability both internally and externally.

Introducing us to the BBC's journey toward sustainability, Robert Seatter, Strategic Communications & Partnership Manager discussed the importance breaking down silos, building consensus and rallying a disparate workforce around change. Three components to achieving their consensus building approach included:
- Motivators: what are the triggers for change?
- Barriers: what are the stumbling points?
- Business Case: how would the bottom line benefit?

Looking first at motivators, what better place to start that ensuring the corporation is practicing what it preaches? With a major on-air awareness campaign on sustainability, increasing competitive pressure and FoIA requests, BBC seized the opportunity to take the high ground.

Breaking down barriers to ensure that every employee can participate in some way, the internal "death to the poly cup" campaign began and the initiative officially moved from one of compliance to one with an internal groundswell of support. Integrating strategies to reduce energy, emissions, waste, and address supply chain issues is now more than ever becoming part of the corporate culture at BBC.

As the last component Mr. Seatter discussed, building the financial case for implementation was supported with statistics in support of sustainability workplace strategies from the USGBC including:
- Increased occupant productivity & wellbeing (1-25%)
- Lower staff churn
- ROI 14%
- Higher rents 5-10%
- Higher market value for asset 10%

In support and further elaboration, Tina Perfrement, Director Business Sustainability, Corporate Property Advisers and partner to BBC Workplace in their sustainability activities, discussed the three priority strategies behind how the BBC and others achieve success in sustainability. Best practice approaches follow three key themes: they are Integrated, Empowering and Meaningful.

The key to integration is bringing all decision makers - real estate, design, construction and facilities - together to ensure full awareness and understanding of their impact, influence and responsibility. Throughout the lifecycle of the building (i.e., acquire, design, construction, occupation, disposal and make-good), all choices have deep impact upon others. Bringing this awareness to the forefront helps to avoid pitfalls down the line.

In terms of empowerment, this strategy focuses on giving functions, teams, and/or employees the means with which to understand and implement larger corporate goals. For example, Ms. Perfrement discussed how an approach could be either issue-based or place-based (e.g., office, travel or with client). Both provide means to engage employees and to measure and report on successes.

With the aid of tools and roadmaps, organisations can begin to move from the "should we" discussion to the "how can we" discussion of integrating sustainability strategies. Tackling the compliance issues is the first step, and through increased dedication will achieve the economic payback and successes that contribute to bottom line. This is where making sure meaningful goals are employed. Ms. Perfrement encouraged attendees to "Avoid the seduction of head-line grabbing goals such as CO2 reduction. Start where you need to, go quietly, make great strides to go beyond neutrality and become a true contributor to making things better than they were before."

In addition, Ms. Perfrement encouraged organizations to consider seeking accreditation or following an accreditation process, such as ISO 14001 (for larger organizations) as this can provide a clear roadmap and substantiation to corporate stakeholders. Similarly, working with suppliers of products and services that are certified also provides objective third-party substantiation.

In closing the session, Ms. Filose summarized two important points. As experienced by ABN-AMRO, the process can be pain free and low cost, and in the experience of the BBC, mobilizing energy of employees can make a significant impact in overall corporate successes. Both important points to remember in pursuing sustainability strategies.

DAILY REPORT • TUESDAY, 18 SEPTEMBER 2007

Moderator:
Mark Tamburro, VP Workplace, Nokia

Speakers:
Mark S. Nicholls, Senior Vice President, Corporate Workplace Executive, Bank of America
W. Stuart Hicks, International Director, Jones Lang LaSalle

Building anything in New York City is a challenge - not to mention the difficulties of a new construction in one of the most congested parts of the city. But to also attempt to build green and build tall in a post-9/11 world is a challenge only few would tackle.

The Bank of America, Jones Lang LaSalle and The Durst Corporation are meeting these challenges head on.

Moderated by Mark Tamburro, VP Workplace, Nokia, this session demonstrated that building green makes great business sense. Currently under construction, 1 Bryant Park - on track for Platinum LEED(r) certification for external construction and Gold LEED® certification including interiors - Tamburro noted "will be the most environmentally friendly skyscraper in the world."

W. Stuart Hicks, International Director, Jones Lang LaSalle discussed some of the impressive numbers and challenges of this initiative. Moving employees from 13 current locations, Bank of America is poised to make significant impact on the New York community and their employees. Looking at the statistics alone, this project is massive:
- 2.1 million square feet
- 51 occupiable floors
- $2.2 billion building costs
- 5,000 Bank of America Employees
- Multi-use space development for office, retail, theatre, and fine dining
- 100% new interior furnishings
- 100% self-sufficient up to 72 hours

But it is the state-of-the-art technology being utilized in the building that will gain the most interest due to potential financial returns and in its impact on employees and community over time.

Discussing technology and employee impact, Mark S. Nicholls, Senior Vice President, Corporate Workplace Executive, Bank of America first began by acknowledging the significant contributions the European community has already made in reducing environmental impact. "It is with great respect that acknowledge your advanced efforts in sustainability and we're still playing catch up" Nicholls remarked.

Nicholls continued to provide a fascinating view of the strategies and technologies being employed at 1 Bryant Park that will impact so many both inside and outside the building including:
- Recycle 35% of construction material waste (e.g., shipping pallets)
- Use 30% less energy than buildings that simply 'comply' with code
- Estimate a 3 year break-even on new technologies
- Maximize diffusion of natural light and efficiently use artificial light to realize a +20% increase in productivity, reduce healthcare claims and prescription usage.
- Improve energy efficiency via improved insulation and self-generated power
- Realize significant utility credits for self-sufficiency and government credits to pilot projects/programs that have potential for vast impact.
- Introduce under floor air (vs. traditional HVAC systems) to provide cleaner air, healthier occupants and individual work-space control
- Reduce water usage via innovations (e.g., waterless urinals) and reduced stress on local systems (e.g., ability to retain waste water during peak city periods when public systems are strained to maximum capacity.)
- Utilize sustainable materials throughout construction process including some steel components, low-emitting VOC products including furnishings (Knoll) and flooring (Shaw)