CRE, Smart Tech & Sustainability: Q&A with JLL’s Richa Sahay

By applying smart technology, Richa Sahay is championing sustainability for the built world.

In past roles with the World Economic Forum and the UN Secretary General’s Office, she spearheaded a portfolio of sustainability initiatives to advance decarbonization technology. Today, as vice president, sustainability consulting, at JLL, she continues this work with a focus on advising commercial real estate clients.

Below she shared some thoughts about the risks of ignoring climate change, but also the great opportunities at the intersection of technology and sustainability.

“What if we flip the script and find the silver lining within this challenging scenario?” she said.

Answers edited for clarity and brevity.

What is a challenge that you feel is facing the built environment today?

Climate change is rapidly evolving into a pressing issue that’s affecting our cities and the resilience of our buildings. Shockingly, non-profit organization CDP found that around four out of five cities globally are now facing serious climate threats including heatwaves, floods, and droughts. In fact, for nearly a third of these cities, these climate change-related hazards pose a potential threat to over 70% of their population.

These climate risks will undeniably have significant impacts on both occupiers and owners in terms of their operations and their buildings. Disruptions to operations and property downtime could result in reduced revenues and increased supply chain costs, while damaged buildings and infrastructure could lead to escalated costs of maintenance, repair, restoration, and even insurance premiums.

The financial fallout from these climate risks is significant – we’re looking at heatwaves, flooding, storms, droughts, and more, that are affecting urban spaces and have far-reaching implications for building owners.

To put it in perspective, the last five years saw climate-fueled events costing the U.S. alone a staggering US$612 billion. Yet, while JLL’s research in 2022 pointed out that most occupiers (83%) and investors (78%) have identified climate risk as a significant financial risk, only 23% of executives have begun contingency planning for disruptions in the upcoming year to 18 months – a surprising revelation from a 2023 PwC Pulse Survey.

Finding workers in areas affected by physical risks could become more challenging and costlier. Lack of proper mitigation measures could lead to resources like energy and water becoming increasingly expensive for companies.

Moreover, increased capital costs would be needed to repair damages and integrate climate mitigation infrastructure. The upsurge in frequency and severity of physical risks could drive up maintenance costs. Failing to maintain buildings could even risk obsolescence and stranded assets.

Clearly, despite such dire consequences, for some companies, climate risk continues to remain a blind spot. It’s crucial for us to raise awareness and action in tackling this looming crisis head-on.

What regulation and/or incentive would you prioritize to accelerate our response?

In my experience, I’ve found that regulations haven’t quite kept pace with the rising climate risk and resilience challenge. As it stands, compelling incentives for long-term resiliency investments that seek sustainable solutions over quick-fix methods, are lacking.

Having said that, there are some good examples. Given that climate-related risks tend to be localized, local laws carry significant weight. Let’s consider New York Local Law 97 – it aims to reduce greenhouse gas emissions in sizeable buildings, designated as Class A building stock. Meanwhile, other cities assign high priority to energy use intensity, a measure of a building’s energy efficiency. This diversity in standards points to the need for a flexible approach that acknowledges and responds to the distinct challenges and goals individual jurisdictions face.

Yet, the patchwork nature of these regulations does pose its challenges. Particularly for building owners managing national portfolios, they find themselves navigating a sea of varied standards and compliance requirements from city to city. Managing these unique requirements can add another level of operational complexity, and this is a reality we need to confront and address promptly.

Some in the building industry remain unconvinced of the business case for sustainability – how do you articulate it to the holdouts?

Let’s confront the reality of our era – sustainability isn’t just a question of ethics anymore; it’s transforming into a pivotal business necessity. Every day, building owners are juggling the escalating costs induced by climate risk, along with an array of growing transition risks. Whether it’s stricter policies and regulations, the shifting expectations of the market, or intensifying societal pressure, the challenges are numerous and continually evolving.

With these forces at play, the financial implications cannot be ignored. They hold significant potential to influence the worth of their assets and the profits they generate. However, what if we flip the script and find the silver lining within this challenging scenario?

Take a look across all cities. You’ll notice an undersupply of low-carbon spaces. This scenario opens a world of opportunities for building owners willing to act now, not later.

From attracting high-value tenants, bolstering occupancy levels, and potential rental uplifts, to enjoying more significant rental yields – the incentives are profound. Add to that the reduced compliance costs and operational expenses, and the financial argument for sustainability becomes overwhelmingly convincing.

So, let’s not view sustainability as merely a chore on our to-do list. In this era of transformative change, sustainability is not just about safeguarding our future; it’s about making smart, strategic decisions today that propel us towards growth and success.

What kind of technology or innovative projects are you working on and how is this helping move the built industry forward?

JLL’s commitment to sustainability and smart technology is tightly interwoven. In August 2023, we launched a pioneering technology called JLL GPT, a large language model tailored for the commercial real estate (CRE) industry, which is being used by JLL’s global workforce of more than 100,000 professionals to deliver unique and valuable CRE insights to our clients.

Another example is JLL’s Canopy technology – it collects useful utility and environmental data to track performance. Companies can easily compare their progress against well-known frameworks, making it highly useful as more companies strive to meet sustainability targets.

As a sustainability solutions leader, I collaborate with facilities managers to amplify our retrofitting initiatives, boost energy efficiency, and enhance building performance, enabling our clients to reinforce their sustainability strategies and move closer to achieving net-zero carbon buildings.

We’re utilizing cutting-edge AI tools to sift through data like leasing information and asset emissions, which help us provide data-driven recommendations about which buildings to sell off and which ones to retrofit. This approach also helps us identify tailored decarbonization solutions based on the condition of buildings.

Is there a solution or innovation that you’re particularly excited about?

In my role, I am genuinely excited about the advancements we’re seeing with our AI-powered platform called JLL Hank. This incredible technology is designed to dynamically optimize heating, ventilation, and air conditioning (HVAC) systems, a critical aspect given that they’re one of the largest uses of energy in commercial buildings. What makes Hank unique is its ability to integrate with various data sources, such as occupancy sensors and building management systems. This integration allows Hank to automatically adjust HVAC settings based on real-time requirements, dramatically reducing energy waste.

Hank also optimizes efficiency, identifying problem areas, and even signaling predictive maintenance needs. A perfect example of this in action is how U.K. investment firm Royal London Asset Management put Hank to use in their 125,000-square-foot commercial office building. The AI-powered platform enhanced their HVAC operations and energy efficiency, delivering a return on investment of 708%. Moreover, they managed to reduce their carbon emissions by up to 500 metric tons per year, all while achieving energy savings of 59%. It’s developments and results like these that make me thrilled about the transformative potential of AI in our industry.

An earlier version of this article appeared on May 7, 2024.