Discussions in Davos: The Role of Energy Efficiency Retrofits, Bonding with the BBC and More

Discussions in Davos: The Role of Energy Efficiency Retrofits, Bonding with the BBC and More

[Editor's Note: Jones Lang LaSalle CEO Colin Dyer writes from the World Economic Forum's annual meeting in Davos, where he chaired the Governors Meeting for Real Estate. His blog post originally appeared on the JLL website and is reprinted with permission.]

Today, the first full day of the Davos conference, started for me at 6:30 this morning, when I left the small family ski hotel where I’m staying. Walking through town for an early interview with the BBC, I was challenged twice by the Swiss riot police, who are amazingly friendly and cheerful at all times, even when it’s -14° C (7° F), as it was this morning.

Regulating financial institutions 

The BBC interview was a short, open-air affair held on a balcony. The questions focused on two issues of the moment: recovery in real estate markets internationally and how we feel about further regulation of financial institutions.   

{related_content}Clearly this is being debated quite a bit, with President Obama in the U.S. and European governments making moves towards tighter regulation. 

Our point of view is that we need stability in our financial systems. Our clients, and our own investment management business, both need to be able to finance investments in real estate without the constant threat of either a boom or a bust because the finance is over-liquid and under-regulated. So overall, careful regulation should be good for the real estate industry and our clients.   

A ‘social agenda’ for business 

What’s also clear is that the "social agenda" around business, and corporate social responsibility in particular, are on the minds of a lot of people. For real estate, this comes back heavily to the issue of carbon output, since we know that real estate produces nearly 40 percent of the world’s carbon, and to broader questions of sustainability. 

In that context, it was interesting to listen to Jack Ehnes, CEO of CalSTRS, the California State Teachers’ Retirement System, an important client of LaSalle Investment Management. He described the organization’s commitment to sustainability as it makes investment allocations and picks investment managers. CalSTRS seeks investments in mainstream countries, with good returns, and, if they’re technology-based, in mainstream technologies. Increasingly, however, CalSTRS is also looking for the clear integration of sustainable investment principles from their managers and in their allocations. 

Growing interest in social media 

There is also talk amongst business people here about the impact of social media on their operations. Much of the interest stems from the fact that current  business leaders are simply not of a generation that is familiar with Twitter, Facebook or Linkedin. 

People do seem to understand the potential for social media to make organizations much more open and transparent, and to make the connections between organizations, their employees and their customers much more interactive. This should work in the favor of our firm, with our collaborative and ethical culture, but it remains a work in progress, with no big conclusions so far. 

In the retail sector, BestBuy, the U.S. consumer electronics retailer, is using social media internally -- to have colleagues help each other solve technology problems -- and externally, to get instant feedback from customers on the quality of their products and services. But no one here seems to have worked out really effective uses of social media in professional services. 

Even if it’s not clear yet what the applications and implications could be for us, what I hear here reinforces the direction our marketers are taking to investigate and invest in social media this year. Perhaps these comments will provoke someone to offer some new ideas, which I’d be glad to hear back on. 


Conversations  

Throughout the day, I’ve met with clients for one-on-one conversations. I talked with S.D. Shibulal, COO of Infosys Technologies, the large Indian outsourcing firm, who is interested in providing their technology services to us, but, more importantly, is open to a discussion about our managing their real estate outside of India. I also had a general catch-up yesterday with Steve McCann, the CEO of Lend Lease, an important client in Australia, and today, with Frits van Paasschen,  Starwood Hotels CEO. 

Retrofitting energy efficiency 

Finally, this evening’s job has been to chair the Governors Meeting for Real Estate, a dinner with 50 senior people from the real estate, hotel and financial sectors. Dinner was followed by presentations and discussions about the role of retrofitting energy efficiency into existing real estate. The presenters included: 

  • Joachim Faber, CEO, Allianz Global Investors
  • Rick Fedrizzi, CEO, U.S. Green Building Council
  • Steve McCann, CEO, Lend Lease
  • Kevin Surace, CEO, Serious Materials 

The big problem about energy management and carbon emissions from real estate is not so much building new properties effectively. The issue is retrofitting energy efficiency into existing stock, the vast majority of all commercial property, which will still be with us in 2050. 

Principal points made by the speakers: 

  • There is quick financial payback from investing in classic technologies.
  • Building costs are 20 percent of the life-cycle energy costs of real estate, and therefore there are big benefits in lowering the cost of that 80 percent tail.
  • LEED has become a very effective international marketing tool for building efficiency.
  • There are big business opportunities in improving building efficiency.
  • The world has to develop and implement ‘green leases’ to allow the benefits and costs of retrofitting to be shared between owners and occupiers.  

The appetite for sustainability certainly hasn’t diminished during the past year. If  anything, it’s stronger, driven by the real cost savings potential. (And I hope that answers your question, Mike Mroz.) 

That’s all for tonight. I hope you’ll check back tomorrow.

Colin Dyer is the chief executive office of Jones Lang LaSalle.

Image © World Economic Forum/swiss-image.ch, courtesy of the World Economic Forum.

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