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stainability Perspective October 2011

Global Su

Global Sustainability Perspective, October 2011

Trends in Sustainability Communications and Reporting Throughout 2011, Jones Lang LaSalle sustainability professionals have been reflecting on global suand communication trends, a

stainability reporting s well as the latest developments of specific interest to the real estate sector. A summary

ho

t the posholdh the

mral chaeature

bout ects of Timberland’s Responsibility strategy and Sustainability

ose more ‘consumer-ut the concept of

ng to reach all of he real estate sector,

we are already seeing a split between:

Environmental and social accountability to investors, major tenants and employees through corporate-level

r stakeholders at an

expansion of digital media brings new opportunities, it also poses challenges. Brand value is becoming at concerns about a s of trust in ange.

l information or e public. However,

level of transparency about impacts on society and the environment can help to reduce these risks significantly.

Inviting stakeholders to post direct feedback on a company’s website (such as in the Timberland example mentioned above) is one way in which companies are increasing openness and transparency. Another way is to use stakeholder panels composed of external experts, inviting members of the panel to provide critical feedback in a Sustainability Report. Examples here include Lafarge and Balfour Beatty. And when it comes to reporting, readers do not expect perfect performance but they are impressed when companies tackle sensitive issues ‘head on’ rather than avoiding them. A leading example here is Marshalls, a British landscaping company, who have taken a very honest and upfront approach to child labour.

of these trends is provided below.

Trend 1: Use of Web 2.0 applications to engage with stake

Companies are, in an innovative way, beginning to exploi

lders

sibilities er groups m.

panies to nge. For called

different

Web 2.0 refers to wethat facilitate informatiuser-centred desion the World Wideapplications allow and collaborate wsoc

b applications on sharing,

gn and collaboration Web. Web 2.0 users to interact

ith each other in a ial media dialogue, in contrast to

static web content created for passive viewing only. Examples of Web 2.0

ing, blogs and .

offered by Web 2.0 applications to reach out to different stake– in particular their customers - and to engage in dialogue wit

Encouraging dialogue can attract attention. It can also allow cogain useful feedback and, potentially, to promote behaviouexample, Timberland’s Responsibility Website includes a f‘Voices of Challenge’ where stakeholders can add comments aaspperformance. In the property sector, use of Web 2.0 applications has focused on videos and blogs. Examples include Jones Lang LaSalle’s global Green Blog and European property company SEGRO’s Sustainability live.

include social networkvideo sharing sites

Of course, we may find that Web 2.0 applications are not as useful for real estate players as for thfacing’ sectors. In real estate, ‘customers’ are of course tenants rather than individual consumers. Bdeveloping different sustainability communications for different stakeholder groups – rather than tryithem in one Sustainability Report – is definitely as relevant for this industry as any other. And in t

1communications

2 Sustainability engagement with tenants, local communities, local authorities and otheindividual property or development level.

We expect this trend to accelerate throughout the remainder of 2011 and beyond.

Trend 2: Transparency and trust are critical

While theincreasingly difficult for companies to control as the fast-growing use of social networks means thcompany can quickly be publicised to a large audience. Coupled with this, there is a pervading losgovernments and business in the wake of the global economic crisis and concerns over climate ch

There is no trust without transparency, and if companies are perceived to be withholding materiareporting only selectively on their performance, then their trustworthiness will suffer in the eyes of thdemonstrating a high

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Global Sustainability Perspective, October 2011

For the real estate sector, we consider that transparency is already important in developed maincrease rapidly in the developing markets of the Middle East and Asia. At the moment, the lens of focuses on environmental impacts during the development, operation and occupation of real estate. We the recent release of the

rkets and is likely to transparency

can see this in er part of the score is

er, is that the urope, where the

before austerity ision that, globally, local communities and local governments are going to be far more

io-economic benefits of new deve pments, and the real estate sector will need to be ready to provide robust and honest answers.

s and is reflected in at demonstrate the interconnections

operates in - is steadily as South Africa

ese property ut within the same have focused more

strongly on communicating the value they derive from their sustainability strategy by applying Accounting for in the future with the

f an integrated reporting framework, led by the International Integrated Reporting Committee (IIRC). This in the evolution of integrated reporting and the IIRC recently released a discussion paper which

oposal for the framework.

hich should underpin the preparation of an Integrated Report:

• Strategic focus • Connectivity of information • Future orientation • Responsiveness and stakeholder inclusiveness • Conciseness, reliability and materiality

Global Real Estate Sustainability Benchmark (GRESB), where the largbased on environmental performance. Jones Lang LaSalle’s forward-looking perspective, howevrequirement for transparency is likely to spill over increasingly into social impacts, especially in Eprivate sector may be expected to fulfill some of the social obligations formerly provided by the statemeasures took hold. We envquestioning about the soc lo

Trend 3: Integrated reporting

Investors are increasingly demanding that sustainability is truly integrated into corporate strategiecompanies’ reporting. Consequently, the number of integrated reports – reports thbetween an organisation’s strategy and financial performance and the sustainability context itgrowing at a global level. In particular, it is gaining significantly more traction in some markets, such(where integrated reports are required by the Johannesburg Stock Exchange) and Brazil1.

Currently, companies take different approaches to integrated reporting. Some (such as the Portugucompany ) report on their financial, environmental and social performance separately, breport to demonstrate the importance of all three aspects. Others (including Hammerson of the UK)

Sonae Sierra

Sustainability’s Connected Reporting framework. We expect to see greater consistencydevelopment ois an important landmarksets out an initial pr

The IIRC proposes five guiding principles w

1 CorporateRegister.com; ‘CR Reporting Awards 2011 – Global Winners & Reporting Trends’ (March 2011) COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved 3

Global Sustainability Perspective, October 2011

Trend 4: Real estate sector specific reporting standards - EPRA and GRI guidance

In the March 2011 edition of Jones Lang LaSalle’s Global Sustainability Perspective we reviewed key developments in

h important implications for the property sector: the launch of EPRA’s Best Practices Recommendations on Sustainability Reporting and the launch of the Global Reporting Initiative’s Construction and Real Estate Sector Supplement (GRI CRESS).

corporate ESG reporting requirements at a global level and in different regions worldwide.

Since then, two key developments have taken place wit

EPRA Best Practices Recommendations (BPR) on Sustainability Reporting was launched during theConference in London in September 2011. EPRA’s aspiration is for its sustainability BPR to provide

EPRA Annual a consistent way of

ke the financial ility BPR are based

• The EPRA Sustainability Performance Measures (the current version of the BPR covers environmental indicators but

• Core recommendations for sustainability reporting which should be adhered to by all EPRA members, alongside e observations cover

ion (e.g. kWh/m2);

ed real estate sector BPR from 2012 onwards.

ers the world’s most widely used sustainability reporting framework. In plement (CRESS), a version of the

d real estate sector. The CRESS includes neral guidance on the Guidelines’ content, so as to ensure that sustainability reports by

ively cover the sector’s key issues. It also introduces eight new sector-

In particular, the CRESS covers the following key issues for the sector, expanded from the G3.1 Guidelines:

• Design, operation and retrofitting of buildings • Building energy intensity, water intensity, and GHG emissions relating to buildings in use • Green building certifications • Management and remediation of contaminated land • Economic legacy impacts from activities and provision of facilities for local communities • Policies and practices regarding resettlement and displacement

measuring sustainability performance in the same way that EPRA BPR on financial reporting mastatements of listed real estate companies in Europe clearer and more comparable. The sustainabon GRI CRESS guidelines, and comprise two key components:

the scope of the BPR is likely to broaden in years to come)

additional recommendations which are based on EPRA’s observations of good practice. Thesissues such as: reporting by meaningful segmentation (e.g. by country or asset type); normalisatlike-for-like analysis; and landlord and tenant consumption arrangements

EPRA also introduced the EPRA Sustainability Awards to annually assess compliance by the listagainst the Sustainability

The Global Reporting Initiative (GRI) offSeptember 2011, the GRI launched its Construction and Real Estate Sector Sup

eporting Guidelines tailored for the construction anGRI’s G3.1 Sustainability Rnew requirements and geconstruction and real estate companies effectspecific performance indicators.

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Global Sustainability Perspective, October 2011

• Assessment of negative and positive impacts on local communities and community engagement at each stage of the

f labour and ‘health and safety’ impacts in relation to the total workforce, including contractors and

process which was ed included

con, the United our Organization (ILO).

two guidance documents, we hope to see greater consistency and transparency in the reporting of sustainability impacts in the real estate sector.

ty Legislation for the Real Estate Sector

keep you up to date on major energy, carbon and related sustainability legislation in the major markets, below are the lates al estate investments you are holding.

Global / United Nations

eetings held since on of the Durban

ntended to help e Durban meeting at

onvention on Climate Panama meeting that

Governments “have recognized very clearly that the current level of effort is not ission controls on to climate change”.

ar Green Climate hanisms between

ialised and emerging economies.

2012. Opinions on eting and some countries propose to delay

any decision until 2015. Currently, only the European Union stands firmly behind the Kyoto Protocol prolongation beyond 2012. The U.S. government continues its refusal to commit to any binding carbon reduction targets, as long as major emitters - such as China, India or Brazil - are not joining the collective global effort in combating climate change. Canada, Russia and Japan have announced they are not in favour of prolonging the Kyoto Protocol at the meeting in Durban.

In our next edition of the Global Sustainability Perspective we will provide you with feedback from the Durban Climate Change Conference (COP17) being held in South Africa from 28 November to 9 December.

property lifecycle • Reporting o

subcontractors

The content of the CRESS was developed over a two-year period through a multi-stakeholder supported by Jones Lang LaSalle’s in-house experts on sustainability reporting. Organisations involvProLogis, Lend Lease, Oxford Properties, Hermes, Hindustan Construction Company (HCC), CityNations Environment Programme (UNEP) and the UN’s specialised agency, the International Lab

With the introduction of these measurement, monitoring and

Legislative Update Sustainabili

Making sure that wet changes that may impact the office space you are managing or the re

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved 5

At the beginning of October, Panama hosted the last of three mthe Cancun Climate Change Conference last year in preparatiConference starting at the end of November. The meetings are igovernments prepare their negotiation positions going into ththe end of November.

The Executive Secretary of the United Nations Framework CChange (UNFCCC), Christiana Figueres, stated during the

enough and that it is important to increase both the level of emgreenhouse gases as well as the capacity of countries to adapt

However, there were some positive outcomes in Cancun, notably the creation of a $100 billion a yeFund to help developing nations adapt to climate change and to facilitate technology transfer mecindustr

But the key issue remains prolonging the Kyoto Protocol for a second commitment period beyond how this goal may be achieved diverge in the preparation for the Durban me

Global Sustainability Perspective, October 2011

UK

Introduced in March 2011, the UK Energy Bill aims to encourage investment in energy efficiency meand commercial real estate. This September, the Bill went through the Report stage and Third ReadCommons, and in October it will go through the Consideration of Amendments in the House of LordRoyal Assent. The June amendment - supported by

asures for homes ing in the House of s prior to receiving

a number of organisations such as the UK Green Building Council uildings was not

K government-wide plan on climate change that sets out initiatives and deadlines for the next five years, its commitment to extend DECs

ercial green

K government also intends to launch a number of consultations this autumn on energy performance certificates as

. Here are the main

ployees to report law also applies to public

sidents and to central government. The report

terials and products in onstruction. The new decree will no longer allow urban planning laws to prohibit the use of eco-friendly

construction materials or installations, such as photovoltaic installations on building roofs.

rging stations in new and ing's car parking capacity, cycle storage

ernments, a rowth and fuel

losed by the d an energy saving

26% increase in total energy consumption by 2015.

As an advisor to developers of large construction projects, we expect the central government to ramp up efforts to control energy intensity. Though new construction has slowed somewhat in the more developed Eastern regions of the country, the volume of new projects in these areas is still extremely high by any Western country’s measure. In the less developed Western cities and central tier 2 cities, new construction growth is accelerating, following the path of leading cities like Shanghai and Beijing. With so much new property and the consequential energy demands pulling from an already pressured electricity grid, energy efficiency has become the urgent need of a nation which requires fast growth (8% to match population growth) with strained domestic energy supplies.

and the British Property Federation - to require Display Energy Certificates (DECs) for commercial bretained by the UK government during the September session.

The question therefore remains if the UK government will put into practice the Carbon Plan, a Uof action to commercial buildings by October 2012, and what the next step will be to boost the uptake of commbuildings.

The Uwell as building regulation changes.

France

A continuing stream of decrees is being published as part of the French ‘Grenelle’ Environment Lawsupdates since our last Global Sustainability Perspective edition.

A decree on what to report in greenhouse gas inventories requires companies with over 500 emgreenhouse gases from direct and indirect emissions (electricity and district heating etc.). Theinstitutions with headcounts over 250, to municipalities with over 50,000 reneeds to include reduction measures and goals for a three-year planning period.

The urban planning law will contain a new requirement to further the use of eco-friendly mabuilding c

The building code receives a new obligation for building owners to install electric vehicle chaexisting buildings. Electric charging stations must be installed and cover at least 10% of a buildfor new buildings from 2012 and existing buildings from 2015. A similar obligation applies for biinstallations.

China

China is studying how to enforce a total cap on energy consumption by setting targets for local govgovernment report stated in August. The proposed total energy gap is intended to slow emissions gconsumption by setting quotas, and some details of how China could enforce the cap have been discNational Development and Reform Commission (NDRC). Any proposed projects that have not passeassessment will not be approved for construction, it added. However, the cap would still allow for a

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Global Sustainability Perspective, October 2011

However, it is also important to bear in mind China’s typical process for introducing new regulationthe recent tax overhauls. Before introducing sweeping reforms which add cost to companies, govepilots a variety of different execution strategies in select cities such as Shenzhen, starting with ialign with existing best practice before tweaking the regulations and increasing the standards. Sforward with firm caps, it can be expected that imp

s as demonstrated by rnment traditionally

nitial standards which hould China move

lementation will be conveyed well in advance and the impact to

-in tariffs for solar ce of about $0.15 per

slightly higher.

mise to use non-fossil fuels amid nuclear development setbacks, and feeding its hungry solar manufacturers for whom overseas markets

onger sufficient. Up to now, China has lacked efficient financial incentives to nurture its own solar energy use. In decent investment return.

ements of the esigned to improve the l capacity from 1

From 1 November 2011 a full Building gible property transactions. The BEEC needs to be

provide e sale, lease comme ce greater than 2,000 sq m with only limited excep mple new cupan less than h BEEC will be a

ocument that can b ownloaded fr cbd.gov.au

ency Certif e (BEEC) comprise following:

developers of the highest quality properties will be marginal.

On the renewable energy front, there has been an important change with the introduction of feedpower. Since August, project developers can now sell solar-generated electricity to utilities at a prikilowatt hour. And in some cases, depending on the timing and location of solar projects, the price is

Analysts attribute the birth of this long-awaited scheme to two urgent needs: keeping the nation's pro

are no lmany cases, analysts say, project developers here could barely break even, let alone get a

Australia

On 1 November 2011 the Australian property industry will be subject to the full disclosure requirCommercial Building Disclosure (CBD) program that started in the summer of last year and is denergy efficiency of Australia’s large office buildings. The program was operating in a transitionaNovember 2010 with only a NABERS Energy rating required at transaction. Energy Efficiency Certificate (BEEC) will be required during eli

d during thtions (for exa

or sub-lease of buildings with an oc

rcial office spacy certificate two years old). Eac

publicly available d e d om http://www. .

The Building Energy Effici icat s the

Disclosur

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved 7

e Requirements

Transition Period 1 Nov 2010 – 1 Nov 2011

Full Disclosure Requirements Completed by Whom?

From 1 Nov 2011 NABERS Energy rating Yes Yes Accredited Assessor Tenancy lighting energy efficiency assessment

No Yes Accredited Assessor

Department of Climate Change & Energy efficiency guidance No Yes

Energy Efficiency (DCCEE)

A limited number of exemptions apply for genuine cases wherein disclosure requirements cannot be satisfied:

Exceptions (granted automatically – no action required) New buildings (occupancy certificate < 2 years old)

Strata title properties

Sale through shares, units or partial interest

Short-term lease (< 12 months including options to extend)

Mixed-use buildings < 75% office (of the NLA)

Exemptions (Application required. Exemptions are granted at the discretion of DCCEE) Police or security operations

Where NABERS rules cannot be applied

Global Sustainability Perspective, October 2011

Holistic Evaluation of Sustainability Investments The environmental and social impacts of property are rapidly becoming central to its overall performance, as investors

ness.

d a consensus within the sector about the most le property stakeholders

e of open plan environments and a general move away from ‘private’ cellular space to more agile and flexible workplaces. The goal is

odate activity growth at minimal expenses and create a collaborative space that, at productivity.

uming practices, to Going beyond the low cost

to identifying those g techniques should

ly to currently impact on the commercial viability of sustainability s.

at certain investments e rental values or reduced vacancy rates, by virtue of better future-

he net present value (NPV) hen be grouped according to their value potential to

property stakeholders with differing investment horizons.

e known as the ‘split incentive’ (where the owner pays for the capital One example are the so-

nd benefits of

fundamentally termining its commercial viability. Planning for sustainability investments as an intrinsic part of

any property’s asset refurbishment cycle allows the sustainability measures to be integrated within existing capital budgets by aligning the planned preventive maintenance (PPM) schedules and Asset Replacement interventions.

Holistic property performance must include consideration of sustainability. It also emphasises the important role that changing property usage, including the move towards flexible working policies, can play in reducing property’s exposure to rising energy prices and carbon liabilities. There is a need for robust financial models to systematically factor in complex environmental and economic parameters in the appraisal of value that can be generated from investments in sustainability improvements.

and occupiers alike recognise the importance of sustainability to the long-term viability of their busi

Several efforts have been made during the past few years to help builappropriate sustainability metrics to use. A number of industry initiatives have emerged to enabto track this important aspect of environmental asset efficiency in meaningful ways.

One of the most significant emerging trends in property is the shift towards an increased acceptanc

to reduce occupancy costs, accommthe same time, increases staff

Sustainability investments and ROI

A well-managed property requires regular scrutiny of its plant and equipment, and of energy-considentify further savings that might be achieved through sensible and timely improvements.‘quick wins’ and behavioural changes, one should involve a robust investment appraisal with a viewsustainability improvement measures that offer the best value per invested dollar. Financial modellincertainly account for important variables that are likesolutions; for example, rising utility prices, carbon emission related taxes or rising insurance premium

More challenging criteria to be factored into the financial model are the upside value potential thmight secure for the property owner, such as attractivproofing the asset to changing investor/occupier requirements.

Whatever the financial modelling technique utilised, the aim should invariably be to evaluate tof sustainability improvement measures. Such measures can t

Innovative ways of overcoming what has becomimprovement and the tenant recuperates the associated operating cost saving) are emerging. called ‘green leases’ where both landlords and tenants agree on how to share some of the costs asustainability upgrades and ensure transparency around performance data.

Planning sustainable investments into asset lifecycles

The timing at which a particular sustainability initiative is considered within an asset’s lifecycle is a important criterion in de

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Global Sustainability Perspective, October 2011

Stop Press: Jones Lang LaSalle CSR Report 2010

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved 9

Our 2010 CSR Report is now published - learn how our sustainability performance can benefit you

l Responsibility (CSR) w Jones Lang

ignificant strides towards integrating CSR and sustainability into our business. It also profiles a

e as experts in real

nd tomorrow’ focuses ellence; green and diversity. It

ght into the success of Jones Lang LaSalle’s own CSR T: A Cleaner

ents related to work

ort tells the story of our ctivities will always can inspire efforts

ities where we do business.”

RI) to an initial, closure level C. Additional information is available from Jones Lang LaSalle’s dedicated CSR website

and from a podcast where our Global Chief Operating and Financial Officer, Lauralee Martin, discusses our CSR commitment.

our overall sustainability and CSR strategy. To k forward to hearing from you as we aim to improve

tate sector over the last 10 years. The future is ’s Offices 2020

ffice market between urope on the key p issues facing

explores the shape of offices to come and covers issues and challenges including sustainability, location, asset management, technology, fit-out and finance. In this summary, we are providing you with the key findings that concern the sustainability issue in the offices context. Based on a preliminary survey by Jones Lang LaSalle, 83% of real estate professionals think sustainability is currently the most pressing issue facing office real estate and will be for the next 10 years. From almost nowhere a decade ago, this subject has raced to the top of our worry list. In seeking to understand sustainability and its impact on the offices sector, we have identified five significant drivers. For

Jones Lang LaSalle released its annual Corporate SociaReport at the beginning of September. The Report shows hoLaSalle and LaSalle Investment Management have taken s

range of industry-leading initiatives that add value to our rolestate. The new Report, entitled ‘Where we stand: Building beyoon five material areas: energy and climate; client service excbuildings; community commitment; and workplace, wellbeing provides a robust insicommitments through our internal sustainability program, ACTomorrow, as well as the numerous sustainability achievemwith our clients around the world. Colin Dyer states in his opening message: “Our CSR Repachievements and challenges throughout 2010. Our CSR abe ‘a work in progress’, but we believe reports such as this

toward being first for our people, first with our clients and shareholders, and first in the commun

Jones Lang LaSalle’s 2010 CSR Report is based on guidelines from the Global Reporting Initiative (Gself-evaluated dis

We welcome your feedback on this edition of our CSR Report and onretrieve your comments, we have created a five-minute survey. We looour approach to CSR.

Research - Sustainability and Offices in 2020 There has been considerable change in the office real esdifficult to predict but the worst position one can take is not to even try. Jones Lang LaSalleresearch aims to go beyond the existing forecasts and to establish new insights into the onow and 2020. As part of this endeavour, we have polled a selection of industry experts in Efuture issues perceived as most pertinent to them today. The programme will consider the tooffice real estate investors, developers and occupiers across Europe, the Middle East and Africa. Offices 2020

Global Sustainability Perspective, October 2011

the most part these are interconnected, self-reinforcing and require continual vigilance as they evolve and spearhead the developments in office real estate.

ese days. Acid rain, holes in the ozone layer, global d ground pollution,

ly at first, and subsequently with a torrent of environmental the issues have been discussed at the very highest political level

al and local levels. Two key obligations are:

they do it. Ethical ur, workers salaries in

ing world, and health and safety issues in the Middle East. In short, the business of business is no longer

another way to ess. Whether cynical or enlightened, the fact is that being ‘green’ is now business

on employees' comfort atisfied to work

sustainable buildings and, in an age where finding and keeping talent and commitment is a regular HR nightmare, offices have an increasing role to play.

that the ‘green agenda’ will continue to grow and grow over the decade. Many oses new

es. Here is just a selection of some of the trends we can

- every new piece of legislation at a European or national level will have the power to surprise on

t programmes will give uildings a boost towards eventual conformity with legislation

be more imposing • Occupiers will be likely to push the boundaries further with a demand for second-hand furniture and non-toxic

cleaning products

The list of trends is long and exhaustive. One of the things we can ascertain is that a ‘sustainable building’ will quite quickly come to mean a ‘quality building’. Given the forceful, accelerating drivers and the emerging trends, it is clear that organisations would be wise to keep up with the pace of change. On the other side, there are very few inhibitors to this dynamic, if any. Those who succeed will recognise sustainability as a force for rapid change that stirs up much in the industry and which offers opportunity rather than constraint. Click here for more Offices 2020 research.

The key drivers of sustainability

• Environmental Change - This needs little commentary th

warming, damage to ecosystem services, climate change, resource depletion, air water andeforestation, wasteful practices – the list is long and compelling.

• Legislation - Governments have responded, slowlegislation. From Kyoto, Copenhagen to Cancun, and policy decisions taken at supra-governmental, regional, nation– by 2020 all new buildings need to be ‘nearly zero energy’

– by 2050 emissions from all buildings need to be as ‘near to zero’ as possible

• Ethical Business - many corporations have radically revised their view of what they do and how

concerns have spread well beyond ecological issues, of course, to include things like child labothe developbusiness, but profits, social and environmental – the triple bottom line.

• Cost Control - Finance Directors have been quick to understand that the sustainability agenda is yet squeeze costs inside the busincommon sense.

• Management Levers - Sustainability is such a powerful force in our society that its influence and motivations has not been lost on HR and business managers. Overall, employees seem more sin

These sustainability drivers will ensurenew trends linked to sustainability will emerge and continue to change the landscape. Each trend pmanagement challenges and new risks but also new opportunitiforesee: • Stricter legislation

the downside, leading to investor frustration • While the vast majority of buildings remain 'non-green', a trend towards 'light' refurbishmen

many more b• Green leases – or at a minimum Memorandums of Understanding • Continual technological innovation • Green city governance • Occupiers will become far more educated about their sustainability requirements and

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Global Sustainability Perspective, October 2011

Certification Updates: LEED 2012 (USA); HQE 2011 (France) LEED Certification Recast Ready for 2012

The U.S. Green Building Council (USGBC) periodically reorganizes its LEED rating system in respongreen building practitioners as more is learn

se to feedback from ed about best practices to reduce the impact of building design, construction

ization will introduce

aries of strategies e manner. As green building knowledge and practices improve and the cost of

o that LEED nment. The 2012

stem toward that goal.

USGBC has received

tegories to ensure n of location and

15, in rtification.

nstruction (NC) and Core & Shell include a range of lity and healthcare.

rty types except e Interior Design & Construction (ID+C) standard covers not only commercial interiors but also retail

ria.

systems. Whereas in h more uniformity in

the proposed 2012 system. Also, in some situations two or more existing credits have been combined into one more

rom other rating systems, during this first public comment period, no point values have been assigned yet. The main focus of the comment period is to

evise the credit requirements. This brings up the obvious question if the proposed rating system will raise achievable in LEED from 110 to higher total, or if credits will start being counted at ½ point values.

stem instead of equire more evaluation, calculation and

ce.

Our perspective

Although the comment periods were the most appropriate times to offer opinions on specific changes, our extensive work with building owners, investors and tenants worldwide - as well as the hundreds of LEED buildings we have helped certify, lease and/or manage - gives us a unique perspective on where the system is headed.

In general, the changes under discussion do an admirable job of addressing most of the concerns that we hear about LEED. In particular, the emphasis on measurement and verification and the introduction of credits for following an

and operations on the environment. The last major reorganization was in 2009. The 2012 reorganthe most sweeping changes since the system began.

The USGBC’s original goal was to minimize the environmental impact of buildings within the boundthat could be carried out in a cost-effectivLEED has become negligible compared to the benefits, the USGBC now seeks to evolve the system scertification eventually recognizes buildings that have a neutral or even positive impact on the enviroversion aims to move the sy

In addition, each successive reordering of the LEED system has addressed the feedback that thefrom green building practitioners.

One of the biggest proposed changes is the increase in credit categories from 7 to 10, with new capractitioners follow an integrative process to measure building performance, as well as the separatiotransportation credits into their own category. The number of prerequisites may also increase from 9 to recognition of the additional baseline criteria that every building should have to be worthy of ce

Another major change is the realignment of the types of LEED. The existing New Co(CS) certifications will be rolled up into a new Building Design & Construction (BD+C) system that willproperty types: commercial, schools, retail, data centers, warehouse and distribution centers, hospitaThe Existing Buildings: Operations and Maintenance (O+M) system also includes all those propehealthcare, and thand hospitality properties. Systems for homes and neighborhoods continue to have their own crite

A welcome change for many practitioners is a closer alignment of credits among the different rating the past versions similar credits had different names requirements in different systems, there is muc

comprehensive credit.

While there are a number of new credits being introduced and several being reused f

evaluate and rthe total points

The proposed draft also moves closer to USGBC’s goal of developing a performance-based rating syprescriptive requirements. While a performance-based system will obviously rdocumentation by the project team, it will also allow more opportunities for alternatives to complian

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved 11

Global Sustainability Perspective, October 2011

integrative process will help ensure that LEED certification signifies a high-performing building, which was not universally

etail and hotel owners or those property er property types,

ms for property types with very different issues and goals. Creating one system for y owners from

the ‘easy to get’ erequisites. Many owners already tell us that LEED is too difficult for them to get,

ildings. However, we g certification more

uildings greener. In the s - and even existing

conform to LEED standards. This has already created some confusion as some nger conforms

ringent. To put it consistent with the idea that every

building must achieve that benchmark.

standards should remain frozen in time. One of the best things about GBC’s process for

onnementale or epending on the building

lifecycle and the building type that was to be certified. As such, in France there exists a separate reference framework would certify

e time offices, retail ssment categories.

gement that included an g project stakeholders and the documentation

d effort, the French d developments it proposes to use a generic

assessment framework that applies to all different asset types that form part of the development programme. And for each different asset type, it uses a building specific analysis that comes in addition to the generic framework. In addition, if there are several separate activities in the same building, then a developer can choose to apply the assessment framework to the activity-specific portion of a building to which it corresponds most.

In contrast to the existing assessment methodology, where a building was only certifiable if a reference framework existed for that specific type, from now on a building with any kind of activity it houses can be assessed, using a system of equivalent points that Certivea may provide based on custom-made audits.

the case in the early days of the system.

We are pleased to see the inclusion of retail and hospitality properties in the new version. Many rwe work with have expressed an interest in certification, but the existing systems do not work well ftypes. It is an interesting decision for USGBC to develop one system for retail, hotel, office and othrather than creating individual systeall property types has clear advantages, but it may create challenges that prevent retail and hospitalitadopting LEED as quickly as we would like.

Another trade-off lies in USGBC’s decision to raise the bar on certification overall, by eliminating most of credits and increasing the number of prand these changes may prevent more owners from maximizing energy and sustainability in their burecognize that LEED is designed to be an elite standard indicating superior performance, and makindifficult to achieve serves that purpose well.

A question in our minds is how changing LEED standards will affect legislative efforts to make bU.S., many states and cities have passed laws that large commercial new-construction projectbuildings in some cases - must legislation contains language that conformed to the LEED standard at the time of passage, but no lotoday. These points of confusion will surely increase as certification requirements become more stanother way, the evolution of LEED as a benchmark for high performance is in

These points are not meant to suggest that LEED LEED is its evolution as an effective worldwide standard, and that it requires the will to change. USgetting feedback from the market and acting on that feedback, is vital to its continued success.

French Green Building Certification System HQE recast

Since its beginning in 2005, the French green building certifications system HQE (Haute Qualité EnvirHigh Environmental Quality) for commercial property has built separate reference frameworks d

for office and educational buildings for new construction or for their in-use phase. Another frameworkwarehouses or hotels etc. When there was a development programme that contained at the samand, for example, hotel buildings, each asset had to be certified independently across all the 14 asseOn top of building-specific criteria, there was a complementary assessment of the project manaanalysis of the project management quality, the communication amonprocess.

In order to streamline the certification system for new mixed-use developments and to reduce time ancertifying body, Certivea, is introducing an assessment recast. For mixe

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Global Sustainability Perspective, October 2011

This new method allows, for example, for only having to assess the construction method and the site oone and the

nce, if it concerns same mixed development programme. As a consequence, only the individual asset specific categories need

urrently being fine tuned, taking into account the comments and feedback from various working groups. It is expected to come into force some time in October 2011.

to be analysed.

After a public consultation period that lasted from May to June of this year, the new methodology is c

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Global Sustainability Perspective, October 2011

ergy and Sustainabil acts:

Global En

ity Services Cont

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Dan Probst Julie Hirigoyen Chairman, Energy & Sustainability Services +1 312 228 2859 dan.probst@am.jll.com

Sustainability Services +44 (0)20 7399 5330

EMEA Head of

julie.hirigoyen@eu.jll.com

& Sustainability Services +61 2 9220 8735

Peter Hilderson Asia Pacific Head of Energy

peter.hilderson@ap.jll.com

& Su+1 213 2

Peter Belisle Americas President of Energy

stainability Services 39 6033 lisle@am.jll.competer.be

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are forward-looking involve known and unknown risks and uncertainties that may cause future realities to be materially different from those implied by such forward-looking statements. Advice we give to clients in particular situations may differ from the views expressed in this report. No investment or other business decisions should be made based solely on the views expressed in this report.