CBRE CEO Bob Sulentic

CBRE ‘miscalculation’ reveals struggle to track emissions

A calculation error in CBRE’s environmental data led the firm to overstate supply chain emissions by a factor of six, PlaceTech has learned.

The mistake shows that, two years into publicly tracking its clients’ emissions, CBRE – the world’s biggest real estate adviser – is still grappling with the logistics of monitoring indirect emissions.

CBRE stated in its latest corporate responsibility report that Scope 3 (clients and supply chain) emissions totalled 54.7m metric tonnes CO2e in 2020, revising a previous estimate of 361m MTCO2e for the year down by 85%.

Scope 3, which largely consists of clients’ fuel and heating, accounts for the vast majority (99.9%) of CBRE’s emissions due to the company’s global reach.

The corporate responsibility report only briefly mentioned the revision in a footnote, offering no explanation for what caused the overstatement in the previous report.

However, a spokesperson told PlaceTech: “Scope 3 emissions included a calculation error when converting natural gas use to CO2e emissions for 2020. Natural gas is a significant portion of our CO2e emissions.

“It is important to know that the miscalculation was detected through our internal controls process. We have improved our internal controls so that an error like this does not recur.”

2020 was the first year CBRE included its clients’ emissions data in Scope 3, and it did not have a previous baseline for comparison, the spokesperson said.

CBRE’s headache throws a light on the struggle for the industry more broadly to track – much less act on – significant indirect emissions.

‘Evolving and complex’

Calculating and cutting Scope 3 emissions is more difficult than dealing with direct carbon emissions, because it relies on proactive clients and suppliers.

CBRE’s spokesperson said: “Scope 3 emissions reporting is evolving and complex. Very few companies are able to report on their full value chain. We are providing the best information we have annually and are committed to transparency as we continue to get more data.”

The company has had to rely partly on estimates for its Scope 3 calculations, but it said it will “forego extrapolations when we have sufficient actual data”.

The spokesperson added: “There are not a lot of precedents for calculations that capture the full value chain of a company. We are confident in the processes and strategy we have in place so that we can continue to improve our reporting transparency and accuracy.”

CBRE grapples with the unknown

CBRE has undoubtedly made progress in its net zero targets. According to the latest report, Scope 1 and Scope 2 (more controllable emissions such as fuel and heating) were down 24% on its 2019 baseline and well on their way to the 68% reduction target it intends to hit by 2035.

But Scope 3 emissions rose 63%, year-on-year, in 2021, totalling 89m MTCO2e – and CBRE is still exploring why.

CBRE’s Scope 3 targets include reducing emissions per sq ft in space managed for both occupiers (-79% by 2035) and investors (-67% by 2035).

While the firm is making progress on the former, hitting a reduction of 11% in 2021, the latter has gone in the opposite direction, up 84% on the baseline.

Asked why investor emissions have risen, CBRE pointed to an increase in natural gas use. However, the spokesperson also said: “We’re looking to better understand on a property by property basis if any factors besides natural gas contributes to this rise.

“This will help us make necessary adjustments to move the numbers towards our SBT [science-based target] goals.”

Working with clients

CBRE said that tackling Scope 3 emissions will depend on working with clients: “This is an iterative process and each of our clients is in a different phase of understanding and reducing their emissions.

“As we work more closely with them and develop and implement strategic sustainability plans that consider all the interconnected elements, we will see bigger impact and emissions reductions.”

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