How CBRE harnesses efficiency, brand and risk management to create value through sustainability

How CBRE harnesses efficiency, brand and risk management to create value through sustainability

Over 40% of the world’s energy is consumed by commercial and industrial buildings. At a time when the need for climate action and sustainability reform is greater than ever before, global real estate services and investment firm CBRE’s Global Workplace Solutions (GWS) division is working to leverage new technology, alongside the combined experience of over 80,000 employees, to ensure the world’s leading companies are also sustainability leaders in the private sector. “We work across a broad, diverse background of clients with different needs and specialisations around their energy and sustainability appetites. Our goal is to create value for them in that space,” says Joe Gomez, Head of Energy & Sustainability, EMEA. We sat down with Gomez to find out how CBRE is delivering sustainability at a profit to its impressive roster of tier one clients.

Gomez and the GWS division work across four different major verticals. “We have industrial oil and gas businesses like Shell, BP, and Honeywell; then we have banking and insurance like Deutsche Bank, Bank of America or BBVA in Spain; the third vertical consists of technology companies like Facebook, Google and Cisco; and then the fourth is life sciences and pharmaceuticals – GlaxoSmithKline, Pfizer, Syngenta, Movato, those sorts of customers,” explains Gomez. When taking on a new client, CBRE prides itself on being a full spectrum provider of a complete range of solutions. The company calls its three major offerings “Buy Smart, Use Smart and Be Responsible”. Gomez explains: “The supply side energy management is ‘Buy Smart’; demand side energy management is ‘Use Smart’; and ‘Be Responsible’ is about sustainability. That's the wheel of services that we offer. We bring them in at whatever level our client is currently at and plug all the gaps to make them a fully comprehensive energy and sustainability business that is creating value and mitigating risk all the time. Once you're on this wheel, the idea is that you keep it going and the process will become self funding, because of the amount of value that you're creating and releasing. CBRE is in the business of being a full provider of all of these services.”

There are three principal areas in which CBRE creates value for its customers through sustainability: Profitability, Brand and Risk Management. “Our goal is to help a company generate its output in the most energy efficient way,” explains Gomez. “There needs to be a business case to make sustainability attractive.” The first value opportunity that CBRE provides revolves around a “reduction in spend and therefore an increase in profitability. They reduce what they spend on their energy, they get any revenue back if they've overpaid on their energy bills, and they actually can drive revenue into their coffers if the National Grid has schemes known as demand side response schemes, that will pay clients to turn load off,” says Gomez. Demand side response schemes involve financially incentivising grid users to reduce or shift energy consumption away from peak hours. “They can then bank that obligation as a virtual power station and do that multiple times around the country,” explains Gomez. “Then they could have 20 megawatts of energy that can be used to shave peak demand. When the whole country puts the kettle on during Bake Off adverts, they don't have to turn another gas turbine on; we can use this virtual power plant." CBRE has a full library of over 150 initiatives that can be used to make savings on clients’ energy. “The goal is to turn every building green over a course of time. That will then give that business the best carbon credentials they could have,” Gomez explains. “We're the trusted advisor and partner for clients, and we're there to run and manage their property. We don't make anything or sell any products, but we sell expertise and human horsepower.”

Over the years, CBRE has built up its relationship with a trusted network of third party suppliers and contractors. One such company is VES. Founded in 1968, VES provides energy efficient ventilation and air handling solutions across multiple verticals in the industrial and commercial real estate space. “We believe VES is one of the best air handling units and air flow management businesses in the country,” says Gomez. “What you get is a bespoke solution that fits your needs at a high quality standard. We believe that their attention to detail and their thoroughness is something we would stand behind.”

Secondly, CBRE manages its clients’ sustainability branding, helping clients to position themselves on indexes like the Dow Jones Sustainability index, the FTSE for Good, the Carbon Disclosure Project, and the Global Real Estate Sustainability Benchmark,” says Gomez. “These rankings show the world our customers’ green credentials. If they occupy the top spots on those indexes, not only is it good for their brand and good for how attractive they are to their market, but it also drives greater transparency between the company and its customers.”

Thirdly, CBRE offers risk management through its sustainability expertise. “The energy and sustainability landscape has experienced a proliferation of financial and legislative requirements, driven by the United Nations Climate Change Program to deliver a world to our grandchildren that's two degrees cooler than if we don’t act,” notes Gomez. CBRE manages the risks of compliance for its customers so that “whether they’re lending money or making Neurofen, we take away their compliance headaches and minimise the financial impact of those regulations and penalties”.

The sustainability service CBRE provides is linked to three major trends in the industry, which Gomez calls “the three Ds: de-carbonisation, decentralisation, and digitisation”. De-carbonisation reflects the global movement away from fossil fuels in favour of renewables like wind, solar and geothermal energy. In addition to the moral imperative, CBRE uses the rapid advance of green technologies like battery storage and photovoltaics to “make sure people will do something because it makes financial sense as well”. In January, Business Green reported: “As early as 2020, renewables are on course to overtake fossil fuels for the first time as the UK's primary electricity source.” Over the summer of 2018, renewable energy already exceeded other sources during periods of intense sunshine, and in 2018 UK energy production from coal fell by 25%. “That's a consequence of that agenda being driven and price points beginning to compete with and become better than traditional methods,” says Gomez.

The second trend, decentralisation, involves the restructuring of energy distribution infrastructure on a global scale. “We as a nation and as a planet cannot continue to feed our need for energy by building more power stations ad infinitum, and by digging up the roads and laying more and more copper wire to bring us more and more energy. That's just patently unsustainable,” Gomez explains. “We should be looking to generate energy in a decentralised way, which reduces reliance on the grid and creates more resilient local operations.” CBRE maintains strong ties with energy companies that emphasise sustainability in their offerings and are making strides towards a decentralised energy future. Centrica is a multinational energy and services company with its headquarters in Windsor, Berkshire, that is moving into decentralised power generation options. “What they're doing is moving into distributed energy solutions, which take the energy they are providing to their clients, but design those solutions to be so efficient that the customer uses less energy,” Gomez says. “Centrica have their own Small Hydropower (SHP) business in Manchester. They’re the only SHP manufacturer in the UK. They have their own metering business, their own battery storage business, and their own solar business. They provide the full technical, project management and funding and purpose agreement solutions we believe a customer could utilise. So, we have a preferred arrangement with them,” he explains.

Digitalisation, Gomez believes, will allow CBRE to increase both efficiency and sustainability for its clients. “If you put a sensor on every moving part of everything, you'd have ultimate and infinite knowledge of the machinations of our needs in life, right?” Gomez asks. “Now, if you put a sensor on every part of a building – its windows, boilers, chillers, air handlers, low voltage power points and its computers – you could identify a problem and fix it before the building’s occupants were even aware something was wrong. Not just if something was broken, but if it was about to break.” Gomez believes that the power of predictive analytics and automation have the power to dramatically change the real estate management industry. “That continual progression towards complete data transparency on everything that moves is the goal,” he says.

Looking to the future, Gomez believes that digitalisation will continue to have an exponentially magnified effect upon the sustainability space. “Digitalisation is the way forward, not only with respect to facilities management, but in respect to the ability for facilities management to be driven by smart decisions around energy,” Gomez emphasises. “Because if you drive something more efficiently you drive it more reliably. And if you drive it more reliably, you’re driving better facilities management.”

Joe Gomez