The European Central Bank (ECB) requires companies to report sustainability-related risk factors relating to their operations and real estate portfolios over a three-year cycle. For global companies with extensive real estate holdings, satisfying this requirement is expensive and time consuming.

An international bank with a multi- billion portfolio, soaught a way to streamline, simplify and reduce costs associated with its portfolio valuation and risk assessment process. JLL was the only service providerable to provide a solution for assets located in multiple geographies. JLL’s Risk Analytics technology applications use artificial intelligence and machine learning to provide real-time perspective into a property portfolio’s performance. The international bank was able to leverage data to simplify its portfolio risk assessment, while also helping to guide its future investment strategy.

The ECB leads the world in climate and sustainability requirements. As part of its goal to reach net-zero carbon emissions, the ECB requires companies to report on performance and risk exposure of asset holdings globally. While official on-site assessments are conducted every three years, companies with extensive real estate holdings typically conduct rolling valuations in manageable segments.

The bank wanted to take a tactical approach to climate risk reporting, and strategically monitor risk and asset value.

This was an ideal opportunity for the bank to derive a single source of truth for transaction, bid and property information across an entire global portfolio.

The bank was able to leverage the JLL’s applications to meet environmental reporting requirements and fill in gaps between valuations, but it gained even more than simply satisfying regulations. By using real-time analytics and automation, the bank was able to understand the portfolio better and make data-backed investment decisions.

The assessment identified 10% to 15% of the portfolio that required a further review, and as a result, the bank decided not to continue with 2% to 5% of loan refinances within the portfolio. Further, the bank also chose to reduce its exposure in two different commercial real estate sectors. Aa significant win for the bank with reduced risk exposure and improved portfolio performance delivered by the analytic insights provided. In addition, the bank will be able to leverage these updated insights when it conducts a full onsite assessment, providing more predictable investment outcomes for the bank.

By reducing risk exposure, the bank also achieved immediate operational and administrative savings. By using technology, the company saved approximately $100,000 in annual operational costs, the equivalent of a full-time employee. Of course, the assessment also ensured that the bank met climate risk and reporting standards. Overall, the bank pursued a forward-thinking and progressive solution, and it reaped the benefits.