Several companies prioritize sustainability technology but face challenges in its implementation, according to a JLL study.

Fast-Evolving Technologies

With carbon emission reduction deadlines and stricter regulations, more companies are adopting fast-evolving technologies to measure, monitor, and manage emissions, guiding future sustainability decisions.

Sustainability technologies are expected to represent the largest part of increased technology budgets for both occupiers and investors in the next three years, according to a survey of 1,000 companies by JLL. Over two-thirds of occupiers state that technology helping manage and report their sustainability progress is a budgetary priority.

Globally, 45% of occupiers and 62% of surveyed investors plan to adopt energy or emissions management technology next year. Another 62% of investors are interested in technology supporting sustainability monitoring and reporting, while assessing climate risk in portfolio planning is an evolving area.

"Technology is essential for companies to better understand how they are progressing with their net-zero goals, from reporting risks in their portfolio to monitoring day-to-day operations," says Ramya Ravichandar, Vice President, Technology Platforms - Smart and Sustainable Buildings at JLL.

Successful Technology Implementation

As more companies invest in sustainability technologies in their real estate portfolios, they face practical integration challenges. One obstacle to implementing these technologies is that many companies lack a concrete roadmap.

"The successful integration of these technologies in real estate is a challenge facing companies in every industry," says Yuehan Wang, Global Research Associate, Real Estate Technology at JLL. "Even large companies may not have a feasible technology strategy to address how to make acquisition decisions, ensure technology is used correctly by employees, and expand it across a portfolio."

The number of companies adopting data science and modeling tools, used to analyze occupancy, energy use, and financial costs in buildings and locations, has increased from 14% to 40% between 2020 and 2023, according to the JLL survey.

However, the lack of standardized data in smart building systems remains a stumbling block for many companies. To accurately extract information about the carbon footprint of real estate, companies must order information from various systems, from HVAC (heating, ventilation, and air conditioning) to waste management.

However, systems are often isolated, making data integration difficult, and companies may not have the tools or expertise to efficiently collect and analyze building data.

"The most challenging issue for real estate is the numerous data silos that need to be integrated for buildings to operate efficiently, especially when some buildings may be 50 or 60 years old with outdated systems," says Ravichandar.

Generating Value from Technology Investments

Companies could address skills gaps by increasing collaborations with external partners to achieve their technological vision, a strategy adopted by over 60% of JLL survey respondents.

However, to generate value from sustainability technology investments, companies need to clarify their goals and how they will achieve them, says Wang. "Businesses should define what they need to achieve with sustainability technology, set benchmarks for success, and understand which products on the market are best suited for their operations and objectives," she adds.

Training is also essential to ensure different teams use sustainable technology correctly and benefit from it. "Sustainability technology needs to reach everyone, from the boiler room to the boardroom," says Ravichandar. For example, CEOs will focus on net-zero progress, while owners may focus on tenant satisfaction, and facility teams want more efficient day-to-day operations.

For companies that understand it correctly, there are substantial benefits for operating costs and environmental impact. Using JLL's AI-based Hank platform, which dynamically optimizes HVAC systems based on user requirements in real-time, a leading UK investment management firm achieved a 708% ROI and reduced energy consumption by 59% in its 11,600-square-meter office building. This reduced carbon emissions by up to 500 metric tons per year.

Another financial services company conducted data analysis to identify energy-saving initiatives, using data visualizations to support clearer reporting and better decision-making. These measures contributed to savings of $664,158 in a single building reported as having high energy consumption.

Such measures can also bring additional benefits through areas such as tenant satisfaction.

"Sustainability is not standalone. Optimizing a building also has a positive impact on the tenant experience and workforce health and well-being, creating opportunities for companies to align multiple corporate goals when investing in sustainability," says Wang.

The Role of AI

At this point, AI is in its infancy in real estate, but as it continues to evolve, it will play an increasingly essential role in addressing the considerable carbon footprint of real estate. Generative AI could catalyze the integration of sustainability technologies both in buildings and operational workflows, making these technologies more accessible through user-friendly interfaces that help people understand and engage with data information.

This could accelerate the critical transformation of smart buildings that underpins more sustainable real estate. "In recent years, building owners have experimented with sensors, digital infrastructure, and other smart technologies. The capabilities of artificial intelligence could bring a tipping point, making it easier and more efficient to exploit the benefits of these technologies," says Wang. This, in turn, would have significant implications for the speed and scale of real estate decarbonization.