Sustainability is rising to the forefront of U.S. corporate agendas, with building decarbonization emerging as a critical focus in the years ahead.
Eighty-three percent of executives responding to a Carrier survey in July said they plan to increase their sustainability spending over the next two years, with 57% naming sustainability as a top priority and 52% prioritizing decarbonization efforts, according to the company’s survey of over 200 CEOs, CFOs and chief sustainability officers in the U.S., conducted this July.
Despite this level of commitment, only 44% of executives surveyed expressed strong confidence in reaching the global net-zero emission goals outlined in the Paris Climate Accord by 2050, Carrier said in a Sept. 17 news release.
With just a little more than a month until the U.S. presidential election, uncertainty lingers around the future of the Inflation Reduction Act and the potential impact of former President Donald Trump’s critical stance on the IRA and other clean energy policies if he is elected for a second term.
Despite concerns over potential changes to legislative measures like the IRA, 81% of the executives Carrier surveyed said they would continue or increase their sustainability investments, even if IRA incentives are rolled back.
Challenges in meeting decarbonization targets do persist, however. Economic headwinds have heightened and building owners are contending with higher costs of money, falling property values and an increased demand for net-zero carbon buildings from occupiers, amid limited supply, Guy Grainger, global head of sustainability services and ESG at JLL, said during a Sept. 24 panel hosted by Financial Times Live in partnership with Carrier and JLL.
“There’s some real survival taking place out there at the moment. Corporate occupiers are looking over the horizon in 2030 — they’ve set some pretty steamy targets. We’ve also set those targets and it’s all getting a bit scary,” Grainger said at the panel, which focused on strategies for reaching net-zero emissions in the built environment. “We’re all signed to take a truth pill here. It’s one big therapy session.”
Organizations in the initial stages of their decarbonization journey particularly struggle with calculating energy use, identifying emission sources and navigating workforce limitations, according to Maria Vargas, senior program advisor at the U.S. Department of Energy and director of the agency’s Better Buildings Initiative. Securing the financial resources to deploy decarbonization projects remains a challenge for many organizations, while implementing new technologies, like heat pumps or refrigerants requires skilled workers, Vargas said in an interview.
Workforce shortages are exacerbated by early retirements that can leave gaps in institutional knowledge, Carey Sealy, global head of client operations at JLL Work Dynamics, said in an interview.
“Since 2021, we have [fewer] candidates to fill [facilities management] positions, and we expect yearly retirements to double over the next three years,” Sealy said. “When retirements are coming and a tremendous amount of institutional knowledge is leaving with them, it's difficult to get people in the door with the same skill level. I would underscore creativity in succession planning and cross-functional training in preserving institutional knowledge.”
Improving energy efficiency in HVAC systems ties into broader sustainability efforts, Hakan Yilmaz, senior vice president and chief technology and sustainability officer for Carrier, said during the FT Live panel. Yilmaz outlined a multi-step approach to energy efficiency, starting with shifting from traditional heating systems like furnaces and boilers to fully electric heat pumps.
“But even though we bring our products to perfection in those steps, it’s not enough,” Yilmaz said, pointing to the strain HVAC systems place on the grid. A shift toward a more energy-defined approach, where energy availability and optimization are central considerations to HVAC systems, will assist the built environment with their sustainability efforts, Yilmaz said.
Carrier’s survey also pointed to a divergence in how executives view a path forward, with CSOs focusing more on specific actions such as decarbonization and adapting to ESG regulations, while CEOs and CFOs emphasized broader business priorities. This gap accentuates a growing responsibility CSOs have to lead sustainability initiatives, Carrier said in its news release.
“There’s a shared belief that corporate America must lead the way in shaping the U.S. sustainability agenda,” Carrier chairman and CEO David Gitlin noted in a statement. Eighty-five percent of executives that participated in Carrier’s survey said they think “businesses have a responsibility to drive sustainability actions,” he said.
