This audio was created using Microsoft Azure Speech Services
I recently talked to two women involved with decarbonizing 4.4 billion square feet of commercial buildings.
For reference, that’s about 4% of the U.S.’s total commercial building stock.[1] To achieve net-zero across this footprint is truly decarbonization at scale — and it’s happening.
What insights have they gained on the way to net-zero? What advice do they have for leaders? I want to share three takeaways from our conversation at Innovation Summit North America that should help any organization navigate the path to sustainability.
Two sustainability leaders, one net-zero mission
First, I’d like to introduce these two remarkable women. Melanie Nakagawa is the Former Special Assistant to the President and National Security Council Senior Director for Climate and Energy, The White House. That’s a mouthful, but the bottom line is that she’s had her fingerprints on a lot of the federal government’s net-zero planning across its 3.3 billion-square-foot footprint.
Susan Uthayakumar, a Schneider Electric™ alum, is now the Chief Energy and Sustainability Officer of Prologis. Prologis is one of the world’s largest commercial real estate companies, leasing 1.1 billion square feet of logistics and warehousing facilities. And thanks in part to Susan’s work, it’s also the third-largest on-site producer of renewable energy in the U.S.
Together, Melanie and Susan possess rich and varied experiences in advising large organizations on net-zero journeys. Here are three of the most important insights they shared with me.
1. Data drives decarbonization.
One common theme across the stories from Susan and Melanie is how central data is to decarbonization — on many levels.
The first level is simply knowing how much you’re emitting at any given time. That means tracking energy sourcing and emissions data. It also means modeling that data to make sure your organization can actually achieve the targets it sets — something we helped Prologis to do.
But savvy organizations like Prologis don’t stop there. They’re now turning that data into differentiators that deliver customer value. Prologis uses the data its customers generate to advise them on sustainability, energy sourcing, and operational efficiencies.
“By looking at the energy consumption of our customers, we can actually provide them services that are hard to get,” Susan said.
It’s not just Prologis that’s looking to strengthen relationships. It’s also the company’s customers.
“What our customers have said to us — these are customers like DHL, FedEx, Amazon — what they have said is, ‘We’re not just looking for a real estate partner — we’re looking for a partner that can provide us the real estate, as well as be our sustainability partner.’”
That connection between data and partnership is a perfect segue to the next big insight they shared.
2. It’s time to partner up.
No one decarbonizes alone. Tackling your organization’s Scope 3 emissions — those of your suppliers and customers — requires you to engage your entire value chain.
Partnerships are thus at the heart of any net-zero strategy. And that’s why the largest legislation ever passed on climate, the Inflation Reduction Act (IRA), emphasizes public-private partnerships.
This is something we’re pursuing at Schneider, including projects with the Department of Defense to upgrade infrastructure at MCAS Miramar and with Montgomery County, Maryland, to deploy a new e-bus charging depot powered by microgrids.
According to Melanie, these types of public-private projects are about to kick into high gear. The federal government is embarking on what she described as a “really aggressive” plan to reach 100% carbon-free energy by 2030 and 50% emissions reductions from the building portfolio by 2032.
“The government is actively figuring out who are our partners to help us achieve these goals,” Melanie said. “The government has done the modeling, they’ve looked at what’s achievable, but now it’s about procuring the partners to reach these goals.”
That final point should be on the minds of every business leader reading this. An organization with over 300,000 buildings and $650 billion in procurement power is asking the private sector a big question: Who’s ready to work with us on decarbonization?
That’s an enormous tailwind for the energy transition, which takes me to the third insight.
3. The market signal for decarbonization is stronger than ever.
As I write this, economic uncertainty is high. Will the global economy enter a recession? How will energy markets cope with supply disruptions?
And yet, there’s never been a more certain market signal for decarbonization. The International Energy Agency’s World Energy Outlook 2022 shows, for the first time ever, that in every scenario it models, fossil fuels are plateauing or on the decline.
When you look at that finding alongside the IRA, which will steadily deploy funding for the next decade, it’s now clear to everyone that the market is moving toward decarbonization.
“The IRA has supercharged some decisions in the company because we know the passing of the climate bill is a clear signal of where things are going,” Susan said. “And when you couple that with the laws that we’re seeing state by state, we know the pathway of what we have to solve for.”
The moment is now.
I didn’t just talk to Melanie and Susan at Innovation Summit North America. I had a chance to take the pulse of 78 Fortune 500s in attendance, plus Schneider Electric’s ecosystem of partners and distributors.
My biggest takeaway? I can’t emphasize enough how different the conversation was around sustainability between now and just three years ago, when we held the last in-person Innovation Summit North America. Today, people get it. They’re on board. And conversations like the one I had with Susan and Melanie are building even more momentum toward decarbonization.
The federal government and one of the largest commercial real estate companies in the world are now going “nothing but net-zero.” They’re not doing that just because of the climate necessity — they’re making that commitment to sustainability because it’s the key to building resilience and protecting the long-term health of their organizations.
What about your organization? Want to start or accelerate your own journey? We have the technology and the expertise to help you take that next step.
[1] Estimate derived from a U.S. Energy Information Administration 2018 report, which put the total U.S. square footage at 97 billion.
