Leveraging data to fuel net-zero value for planet and profit alike

One of the largest investment managers in the world and a leader in responsible investment sought to assess the potential stakeholder impacts of embarking on a bold brown-to-green fund.

Having a strong pre-existing relationship with JLL's Value and Risk Advisory team, leadership with the asset management firm turned to JLL’s ESG specialists for advice on how investing in sustainability could help improve returns, minimise risk and meet net-zero carbon objectives for a trio of select properties in Europe.

The assets spanned vastly different sectors and markets; featuring offices and hotels across Germany and Poland. JLL analysts would need to consider how transition risk would influence the value of each asset based on unique market and sector nuances, requiring a unique approach for each of the three assessments.

Not only would the JLL team have to provide innovative analysis and highly tailored reporting the firm’s leaders could trust; the necessity was to deliver those results within an intense two-week timeline.

JLL’s dedicated experts set to immediate work with a thorough review of the energy audits for each of the assets. These detailed specific decarbonisation measures that could be undertaken in each location, together with the cost of implementing the works and their prospective impacts on energy performance.

Integrating these inputs, the project team performed sophisticated value scenario analysis for each asset; illustrating the potential brown discount associated with inaction, versus the potential for additional value where works were implemented. This process detailed how a suite of decarbonisation measures stood to directly affect each asset’s long-term cash flow, risk profile and value.

Overall, a decarbonisation strategy was found to have the potential to unlock additional value in excess of a 2.5% increase on the existing fund's valuation, representing several million euros. Given the variety of markets covered within the fund, the nuance at asset level was significant, with one asset showing more than a 5% increase in capital value under the decarbonisation scenario.

Two short weeks after the project kickoff, leaders with the firm walked away with the business case of asset-level decarbonisation plans in their management strategy.

Harnessing JLL analysis, our client elected to proceed on the decarbonisation plans—and went on to use these assets to seed their new brown-to-green fund, called the Net Zero Ambition Real Estate (NZARE) fund.

Today, this global powerhouse is raising equity to expand the fund even further, helping further its global reputation for delivering long-term value as well as a positive impact on society and the environment.