What Sustainability Looks Like in the Industrial Sector Right Now
Many companies are setting 20 to 30 sustainability goals at a time.
Occupiers and landlords alike are pushing for sustainability in the industrial space, with the issue “climbing the corporate agenda” for many companies, according to Mehtab Randhawa, director of Industrial Research at JLL.
In a recent JLL podcast episode Randhawa noted that the push for sustainability in the sector has grown exponentially as of late, with many companies setting in the neighborhood of 20 to 30 sustainability goals at a time. And with that, he said, “there will be a heavier conversation on this in the coming next five years.”
Sustainability is a far-reaching issue for industrial and includes factors like net zero overall carbon emissions and green and energy-efficient buildings to things like paper and packaging, customer delivery mechanisms, and renewable sources recycling. All of these factors, Randhawa says, are “agenda topics” on the occupier side. Employers are also increasingly prioritizing employee health with an emphasis on improved air quality, air conditioning and ventilation systems in warehouses—all areas of focus that help companies take a more “human-centric approach” than in years past.
The industrial sector is expected to grow to 1 billion square feet by 2025, according to JLL research, with e-commerce sales positioned to climb to $1.5 trillion by that time. And with that, warehouses and logistics facilities are scrambling to meet increased demand—which means the focus on sustainability will likely only continue over the next few years.
The ESG space is also an area of focus for private equity firms as well, with Blackrock CEO Larry Fink pledging last year that 100% of its portfolios will integrate ESG metrics. A 2020 report from The Counselors of Real Estate also supports the idea that sustainability has taken on an increased significance in CRE.
“COVID-19 has underscored the importance of ESG issues,” said Michel Couillard, 2020 chair of the organization, in the report. “ESG has been established as a prudent risk mitigation strategy that will contribute to long-term value creation that real estate has historically enjoyed.”