Good morning, ladies and gentlemen, and welcome to the ESG Discussion with Jones Lang LaSalle. At this time, all participants have been placed on a listen only mode and we will open up the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Derek Bingham. Sir, the floor is yours.
Hi, everybody. Thanks for joining us. Sorry for a bit of a delay there on the kickoff. So I'm Derek Bingham, my co lead the GS Sustain Research team. We're very fortunate to have with us today the team from JLL.
They're a world leader in real estate services and to give us insights on what we're calling the next wave of ESG reporting, this whole spate of acronyms we're hearing a lot about, but may not know why they're relevant for investors. For 1, the IEA estimates that buildings account for nearly 40% of total direct and indirect CO2 emissions. So the team has a lot of relevant experiences in tackling some of the biggest ESG challenges there are and have been gracious enough to share some of their learnings with us today. So I really appreciate them joining us. Before we get underway, I'm going to pass to Senior VP of Investor Relations at JLL, Karen Samhath, for a quick word on forward looking statements.
Karen?
Thank you, Derek. Before we dive into content, on our cautionary note, you will find forward looking statements made on this webcast, including predictions, projections or other statements about future events are based on current expectations and assumptions that are subject to risks and uncertainties. We do not undertake any duty to publicly update any forward looking statements discussed in today's call. And with that, I will turn it back over to Derek for an overview of today's exciting agenda.
Thanks for that, Karen. Thanks for being with us today. Just one note, you may have a little bit of delay as we control the slides on our end. It's looking pretty good on my end so far in terms of it flicking through, but if you're not seeing it immediately, just stay tuned, but it looks like it's working well. So our star guests for this conversation are Richard Batten, who is Chief Corporate Responsibility Officer and Cynthia Curtis, who is Senior Vice President of Sustainability at JLL.
Keep in mind, we're going to aim to leave some time after our discussion for questions. There's our ability to submit questions through the webcast. You have ability if you're dialed in to submit by the operator, you can also email me at any time during the call and we'll try to work those in. So let's get to it. First thing, I'm going to pass it to the team for a quick overview of their latest sustainability highlights, and then we're going to follow-up and dig in on a few of those new favorite acronyms.
So Richard and Sensia, over to you.
Thank you very much, Derek, and good morning, good afternoon to all. The sustainability report that we issued back in June is a standalone document. It's comprehensive. I encourage you to have a look at it. It is long, but that is by design.
Our sustainability credentials are often assessed based solely upon information that is freely and publicly available. And that is why everything we're doing on the subject should be included there. We set out on this slide some of the key highlights in our report, but the detail, if you look at the report in more detail, you see that there are many more highlights, both of what we've already achieved and what we're intending to do. I should comment on one of the highlights included in the report where we are reducing energy consumption by corporate office employee and also our building related greenhouse gas emissions for corporate office employee. For 2018, we had a target of reducing by minus 2% for each of them, and we've actually come up with figures of minus 15% and minus 16% respectively.
So a fantastic performance on the surface of things, but we think a lot of that could be down to the fact that our data gathering is becoming a lot more efficient as we get more and more into this process, more of which later. We base our sustainability agenda on our Building a Better Tomorrow program. Of the 4 pillars of clients, people, workplace and community, The slide here highlights the areas of focus for us in our first target setting exercise, taking us up to 2020. That is all the targets set 2020 with, you'll notice, the exception of the one improving gender balance in our leadership teams, which is a 2021 target because that particular target also is part of our Global Executive Board rolling long term incentive plan, and that one is being reassessed in 2021. But it's all very well setting the targets that we did, how have we done against them.
And here you can see that we are on track for most of the targets taking us to 2020 and some we've actually already achieved. 1 of the biggest issues for the likes of JLL, a company of 92,000 people working in 60 countries, is accuracy and consistency of data. But the improvements we were talking about earlier can be put down to a large part down to the governance structure that we put in place to support the program, and it's definitely contributing positively here. So that is being put down at regional and country level through the operating areas of the business. But we know we still got a lot more to do.
And at the end, very happy to take any questions on any of the targets we set. We spend a lot of time trying to get feedback from our stakeholders as to what is important to them, be it our shareholders, our clients or our own people. And in respect of the investor community, apart from occasions like this webinar today, we also engage with the likes of Seres who give us very useful feedback on targets and strategy, and that is taken into our strategy for our strategic forming exercise. The leverage with our clients is always a topic of discussion. We manage either directly or indirectly something like 1500 times the amount of space we ourselves occupy.
So there is potential to create a huge impact. Our difficulty is actually measuring it. You can see on this slide the specific areas where we are actively engaging our clients. Our clients are all at different stages in their own sustainability journey. So our impact is very different in each case.
But we get good feedback via our client surveys as well as informal responses, so we are well aware of their expectations. In respect of our people, we have a global sustainability network of over 2,000 people representing all of our offices around the world, and they certainly let us know what their expectations are as well. Now we've reported to you previously that we've been rolling out new finance and HR systems on a global basis as part of our AIM 2020 data initiative. This is not a key just a key part of running the business, but it's absolutely essential for our sustainability data as well. Now these are in place.
We've now reintroduced our Global People survey. This time, it's operating a little differently. Rather than a one off survey annual capturing a moment in time, we're now using a survey whereby we survey a proportion of the company at more regular intervals. The intention really being getting 25% of our staff every quarter so that we get everybody during the course of the year, but then that allows us to assess trend more effectively. You'll see from the slide that we've introduced for the first time questions on sustainability and ethics, and the results are here.
Again, very happy to take questions, but generally, we're happy with the first responses we've had, but again, also know that there's still work to be done. Well, that's a general introduction. I would urge you to have a look at the report if you haven't done so. That's what we've been up to. And I'm going to hand it back to Derek now, who I think got some questions for us to ask us more importantly about what we're doing next.
So back to you, Derek.
Yes. Thank you for that. When we reengaged with you early this year, we heard about some of your vocal initiatives and virtually all of them were these acronyms, I would say, that are relatively new and where I think there's a real need for some education. So that's where I really wanted to spend most of our time in this conversation for our listeners. And so maybe we start with reporting constructs.
And starting with SaaS B, maybe one that most on the call know best, since it's been around a long time, but relatively recently, standards actually kind of finalized and codified. I know a lot of companies are kind of working through their first swings at reporting on SaaS B this year. So could you tell us a bit about your SaaS B process? Why has it been something that you want to focus on and what does it entails for you?
Well, why don't I I'll take that one. Well, and as you can see here and as Richard just mentioned, we've really stepped up the ways and the frequency with which we engage our stakeholders and the SaaS B, TCS, Epti, our webinar here, etcetera. These are just some of the examples of how we're being more proactive with, our one of our key stakeholders, which are our shareholder investors as well as the investor community writ large. But to drill down on SaaS rate, the Sustainability Accounting Standard Board, It was established, just as you say, I think most folks are familiar with it, to provide investors with industry specific data that's comparable, consistent and financially material. And that's really the SaaS B difference where it's focused on financially material information and works within the established financial regulatory system, the construct that exists today.
And while we heard from our investors that they give us high marks for our disclosure, they also said that TASB would be helpful for them, again, having that comparable data. And so that kind of prompted us to say, yes, we're ready to move forward with it. We've identified as part of the real estate services SaaS standard. That's applicable. We have not yet published.
We anticipate publishing, this fall our first report, and it will be based on our 20 18 metrics. I thought what would be helpful perhaps is to show folks what is included in the topics and metrics for the real estate services disclosure. So these are the things that we will be reporting again.
Perfect.
So why don't we stay on the reporting topic. And again, we can come back if people want to dive in on any of these a little more deeper because I want to leave time time for questions. TCFD is something that's coming up a lot in discussion and I think that's one that is a lot less known about. Could you give us a quick primer maybe on TCFD and kind of what is it asking companies to do that that goes beyond maybe what they were already doing?
Sure. Yes, TCFD, the task force on climate related financial disclosures, as you can see, it's really a set of recommendations for consistent disclosure, voluntary, of course, but it's for consistent disclosures for use by companies in providing information to investors, lenders, insurance underwriters about what their climate related financial risks are. The task force was chaired by Michael Bloomberg, was established by the FSB, the Financial Stability Board, who at that time was chaired by Mark Carney. And it was established at the request of the B-twenty Finance Minister. So they released the recommendations in 2017.
There was a period of comment. They've run pilots. And as you can see here, it's separated into there are 4, as it says, thematic areas. And disclosures are there are recommended disclosures for each of the categories of governance, strategy, risk management and metrics and targets. So, KCFD is unique in a couple of ways.
1 is that it was private sector led. So there was a keen eye on balancing the objective with the level of effort required. So a real attempt to not have it be onerous, but have it fit more seamlessly within the construct of an enterprise risk management approach, for example, or strategy development. The other unique aspect of TCFD is that it's designed to reflect the impact that climate change will have on a business rather than the other way around, rather than what the business is doing to reduce its impact. And that is a that's a real difference between a PCFD versus other reporting frameworks, like CDP or BRI, which focus much more about what is the business doing, what is the company doing.
And this is about taking that reverse look. And I think Mark Carney sums it up beautifully when he said, the more we invest with foresight, the less we will regret with hindsight. And that's really what CCFD is intended to do, provide that additional lens. Let me move to the next slide here. This will give you a little like everything in the sustainability space, it's always we always talk about it as a journey.
And TCFD is called most definitely into that category. So to date, we have, as I mentioned, we've agreed to, adopt the framework, this past June. And actually, when they issued their latest status report, which was distributed in June, there were 785 supporters listed on that. So I know it is still kind of new ish, Derek, as you mentioned, but there is growing uptake, which doesn't mean that, oh, by the way, all 785 have issued reports, they haven't. But and you don't have to report externally if you don't want to.
You could do the work and retain that information internally. But our thinking is, again, with our commitment to transparency, we would be looking to publish something.
And so the mechanics of that in terms of disclosing that information, are you saying that, that is a it's kind of a standalone document or does it is it become part of somewhere else, some other reporting?
We've seen it both ways. For those who have reported, they've had standalone documents. City is 1, for example. And but others have incorporated it in. And the things too about ECFT, which is what we're in the midst of doing right now is, chunking it out, taking it in logical steps because it can be a little daunting.
And so looking at determining what our reporting options are, are we going to focus kind of have our first initial scope be geographic based, the line of business based, to be limited to the finance the physical risks and opportunities versus the transitional risks, secondly. So there's a number of different considerations, and we're working through that right now. But if you I
think it'd be fair to say yes, Cynthia, we're looking to create a standalone document in due course, but it may well be part of our sustainability report initially, I think is one of the initial plans, I think, isn't it?
Yes.
And then when you're facing this, I wonder if you have thoughts on how this compares in terms of challenge requirement of resources, just the kind of the scope of the lift versus some of the other things you've done before, say, versus, say, reporting on SaaSV? Is it significantly different in terms of its challenge? And maybe related to that, if you're an investor looking for signaling, is a company that reports on TCFD signaling something unique that investors ought to be taking into account?
Yes. Good question. I think, well, 1st and foremost, the challenge is data and determining potential impact 10, 20, 30 years out, we know is a challenge. Doing that modeling is a challenge. But I think what it signals to investors is that, again, we are fully supportive of and committed to transparency, but also that we take this seriously.
We recognize there is inherent risk associated with climate change and we want to be smart about our approach of how we respond. And that requires actionable information. I think TCFD, we've kind of concluded that the work that will go into this will help to do some of that more actionable information.
Yes. Okay. Well, I feel like the way we structured this is kind of, we keep kind of moving up the path in terms of kind of graduate level coursework, so to speak, in terms of sustainability reporting. I want to move to maybe arguably the next level. And that science based targets and Rich, I know that's something that you have a lot to share with us on that.
Maybe you can educate us a bit similarly in terms of what is a science based target and what has it entailed and require for your team to address that?
Okay. So first of all, what is a science based target? Simplistically, it's a target that is set, which is going to focus JLL as a company to not contribute any more than 1.5 degrees centigrade to global warming by 2,050 in accordance with the 2015 Paris Agreement. So that's simplistically what it is. So that to ensure that JLL peaks within the 1.5 degree limit.
What it means is that we have to track emissions under what are known as Scope 1, 2 and 3 emissions. Scope 1 is essentially our work fleet. We have a lot of engineers driving about in white vans. So we've got to track the emissions coming from those. Scope 2 is our workplace emissions and Scope 3 are sort of 3rd party emissions that include where we're not totally in control, which will include air travel in our case and it will also include the emissions generated by our clients where we're managing their buildings.
And to answer the second part of your question, what does it entail? Well, we have agreed to commit to science based targets. We did that to set a target. We did that at the end of 2018. And during the course of this year, we've been we've created our own data management plan.
That's the first piece. We have agreed our data software that we will be using on a global basis. And we've now assessed the 2018 data returns, and we've set our baselines for 2018. There's a detailed breakdown in the report that you can see of our mission, but in simplistic terms as from where I was before, if our workplace create X amount of emissions, our fleet of white vans that we have create 1.5x the amount of our workplace and our air travel creates twice as much as our workplace, but we've assessed initially that our clients emit something like 96x the amount of our own emissions. So you can see the biggest issue is in capturing accurate client data and we'll come on for some of the issues arising out of that.
But you'll also see at the back end, we've thrown in a couple of good examples of where we are able to work with our clients. There are a couple of case studies there, Majel Coutain, who are based in Dubai, their holdings are all throughout the Middle East. And you can also see a case study on what we've done down in Brisbane, which is a fantastic case of reducing emissions from one of our own buildings. So where we get involved and getting engaged, it can work. Our issue is trying to get the information off our clients.
Yes.
So I mean, would it be, do you think, appropriate or accurate to think of these signals in terms of maybe graduated level of strength? I mean, Cynthia mentioned TCFD, for example, as a signal of commitment to transparency and the level of seriousness that you're taking the climate issue, SBT seems to me to be yet another level, which is then, okay, this is a commitment to a certain level of performance and with accountability because there's an external monitoring component to it. Is that fair characterization?
No, it's a very good characterization. It might sort of come back to the fact that the issue of climate and are we talking about just are we talking on an impact view about climate change or you'll hear a lot more about the fact that it's not climate change, we're actually in a climate crisis. And I think the urgency and everything that you hear from the IPCC reports is talking about the urgency to act now. We're talking on the reporting side about transparency and risk. Here on science based targets, we're actually talking about the need to reduce emissions to avert what a lot of people believe is an actual climate crisis that we're in.
And in our case, those sort of net debts are creating those country plans. And for us as a business and we're bringing our targets into 20.40, for us as a business, it will mean from the scope 1 and scope 2, we'll move 100 percent to renewable energy globally. We'll move 100 percent to electric vehicles globally. We'll also be making operational improvements to our building. The challenge though as I was saying before is actually engaging with our clients so that we do get engaged with the clients to help them reduce their emissions, which some of them are asking us to do, but not all of them.
And obviously, there are costs involved in doing all of it and that must be taken into account as well. But I think the whole issue with finance, to answer your question specifically, is the whole thing is being ramped up to another level by government, by our people, by school kids around the world as well.
Yes, yes. That's very helpful. So I want to get to questions from the listeners. Again, you have the ability to submit those via the webcast. We'll give you the opportunity to dial in if you're on the phone.
You can send e mails to me and we'll get through as much as we can. And if we can't, we certainly invite everybody to follow-up with the JLL team through Investor Relations or through myself, and we'll try to get you answers to your question. So while you're thinking about your question and just before we poll, I have one question just kind of following up on that. I mean, we've talked a lot about these initiatives and they all involve an enormous amount of data capture. And so that brings to mind the need for capturing mechanisms and technology to be able to do all of this to measure and assess and report.
So I wonder, Richard, if you could maybe touch a little bit on that point in terms of the incorporation of technology and all of this.
Yes, of course. The biggest issue is data collection. And what I was talking about our AIM 2020, that is a massive investment, but it's creating massive improvements for us around all of our business, pulling all of the information into a central piece. Specifically around the Science Based Target initiative, we have created global data software to capture the emission in a format that we can actually use in our dealings with SVTI. But I think there's a lot of technology is what is going to drive our business, not just sustainability, but the whole real estate business going forward.
But it is we're not just engaged in making our new systems internally, but we have got a top deck investment arm start in Silicon Valley and they are now looking for to invest in top deck digital startups. And one of the investments we've made recently is in SMC, which is a software motor company, which is these are this is software that drives motors, that drives the air conditioning units. And we've just invested there quite heavily. And that is a business that when we child it on 2 of our buildings reduced emission reduced energy requirement and therefore emissions by 50% overnight with just the introduction of this new software. Those are the sorts of issues that we're also looking to get involved in from, if you don't want to call it, green PropTech, and that's a very good example of it.
So we'll be looking for more of those going forward.
Perfect. So Holly, I wonder if you could poll for questions. In the meanwhile, we'll be taking a look at what's come in through the webcast.
Thank you. There are no questions
in queue at this time.
Assuming we've got a lot more people on the webcast. Yes.
Actually, and Derek, I have a question here that's come in with regard to SaaS and asking whether or not there were topics that we thought were more material to real estate services, perhaps more down stream in our business model that weren't captured in the 2 topics covered by SaaS and were the SAPI metrics aligned with our existing reporting goals and strategy. And I would say, and Richard certainly jump in here, is that I think actually what Richard was just speaking to, which is the as part of our science based target and what it means for our clients and for ourselves. That's not it's part broader than SaaS B. So I think that, yes, I mean, there's each one of these has their own objective. And but there definitely are considerations that are material to our business that are not included in SaaSV and they really as I mentioned, some of the things, some of the questions that are asked, the metrics are not ones that we have previously reported.
And so it is requiring capturing some new data sets. But I don't know if I would say it's not aligned with our reporting strategy overall because it really is about ensuring that we're responding in the best and most transparent way that we can to those the inquiries. I
have one that through e mail team. The question is kind of on the lines of reporting initiative on the UN Global Compact, something that has been out there for a long time, any views on that initiative in terms of what you hear in the marketplace and corporate participation?
Well, I can start Richard and you can jump in. I think the UN Global Compact is, I would say, it's almost table stakes now. It's been out there for a long time. Most companies are signatories. We are, have been for many, many years.
I would say that the next evolution of where the UN is, is the Sustainable Development Goals, the SDGs, and which you can see up here on the screen. And the SDGs are what I would say is kind of a big game plan of targets and indicators. And those were also developed and introduced by the UN in 2015. And the intent there is to help facilitate and support the aspirations that are laid out frankly in the Global Compact that are laid out in Paris Climate Accord. And that game plan is split into 17 SDGs spanning everything from clean water to decent work to sustainable cities and communities.
And what we did at JLL is, we did our own evaluation process and determined that the 6 SDGs you see here are where we have the greatest opportunity for impact. And so and there are a number of organizations, many of our clients, most of our clients, frankly, are also adopting SDGs. So the benefit there is it provides that consistent vernacular, consistent terminology that helps promote partnership and collaboration. And the other piece of it is that it is now helping to guide our strategy and our initiatives. We initially like, again, most other organizations, we already had our goals set out when the SDGs were released.
And so we looked at what goals we had and how they supported certain of the SDGs. And now we're really shifting that focus to having them provide more of a framework for our initiatives and strategy going forward. And you can see examples if you look at our report, our sustainability report where we're showing the applicability and the relationship of certain STDs with our target and our areas of focus.
Yes. I'm really glad you Yes. Okay. I
understand, Derek. I think it is that is not to say that the UN Global Compact has been left behind. I mean, it is more focused on the ten principles of labor law, human rights, etcetera. So those are still absolutely crucial to a business and how it runs itself with yes, there are some environmental ones, but there's anti corruption included, all that sort of stuff. But it is that is absolutely crucial for governance.
I think where the SDGs are now taking us is actually helping a framework to move forward into the future rather than the U. N. Global Compact being more about government is how I would view it.
Yes. Really glad you brought that up. And another great example of an acronym with a lot of momentum. So, though different than the others, I think we discussed, just in terms of kind of it's not something where there's kind of big necessarily technical requirements. Is that would you say that's fair in terms of gathering the data, but more kind of a common parlance in terms of how you frame impact?
Yes.
I think that's fair to say.
All right.
Yes. I think impact is interesting you brought the word out. Impact going forward is going to become ever more important. We're not just doing and the STGs are not leading us down a route to create improvement for improvement sake. They are looking for us to be assessing what that impact is.
And you will hear words coming out as we go forward about social purpose. And if the company has social purpose, then what social impact is that company making? And so I think the impact is going to be important going forward. And for some, within connected within the purpose and impact is also you're hearing more about social value, what value do you create. From GL's perspective, we're far keener on assessing impact.
There is no consistency of valuing that impact yet in the market and we're far more concerned with actually assessing impact than spending a lot of time going down some dead ends trying to assess value. So just the comparative value of that impact. So we're not going down that yet, just for the listeners benefit.
Good, good. We're running up against the end of our time. Is there any last question or questions that we wanted to address before we wrap, Cynthia?
The only question is, let's see, how do ESP ratings firm methodologies impact our disclosure? And do you try to get a good rating and do they matter to your company? And Richard, do you want to take this or would you like to sneak this?
No, I will definitely I'd love to take that one. Yes, they do matter to us. As I say, we are assessed and compared with other people with other companies, whether they're competitors or not. So it's absolutely essential We would We would like to spend more time driving our progress going forward like the science based target routes. But we cannot leave aside some of these ratings.
And so yes, they are very important to us.
And then there's also been some questions about providing the slides. So Derek, I'll let you address how that works.
Yes, it's something that we can send across. Maybe the easiest thing to do just shoot me an email and we can get you a soft copy. That will do it. Anything else? All right.
All right. Well, I just really want to thank Richard and Cynthia and Karen for joining us, for taking the time to share us the insight on kind of I think these topics that are really warm in the marketplace I think everybody is kind of wrestling with. I think I learned a lot about how we should take these as signaling as investors. So Richard and Karen and Cynthia, thank you very much for taking the time with us.
Thank you and thank you all on the call.
All right, everybody. Thanks so much for joining. Okay. Take care.
Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.