The real estate firm engaging with thousands of suppliers to tackle Scope 3 emissions
We Mean Business Coalition
CBRE is a commercial real estate firm headquartered in Dallas, Texas. The company employs more than 130,000 staff in over 100 countries around the world, and based on 2023 revenue is the world’s largest commercial real estate services and investment firm. CBRE provides numerous real estate services such as facilities management, property management, leasing, sales, mortgage services and development services.
The company has a headline goal, announced in 2021, to achieve net zero emissions by 2040. In support of this goal, CBRE has two near-term targets for 2030: reduce absolute Scope 1 and 2 emissions by 50% and reduce emissions per square foot for properties managed for clients by 55% (both compared to a 2019 base year).
A complex supply chain
Supply chains operate outside of a company’s direct control, making emissions occurring there harder to manage than those occurring in a company’s direct operations. Yet tackling Scope 3 is essential for any company serious about reducing its carbon emissions, and CBRE is no exception. With over 130,000 suppliers for both CBRE and its clients, the company’s supply chain is vast in size, and generates emissions over 50 times greater than CBRE’s direct operational emissions.
CBRE’s supply chain presents some additional challenges when it comes to tackling emissions. A large proportion of its suppliers are small- and medium-sized enterprises (SMEs), many of which are early on in their climate action journey. They are highly dispersed geographically, often operating locally to support individual buildings in CBRE’s global portfolio. This has created a ‘long tail’ of suppliers globally that are contributing to CBRE’s scope 3 emissions.
As Robin Burton, Director of Global Sustainable Procurement, said when he spoke to We Mean Business: “The business is very decentralized: wherever there’s a commercial real estate property, we have to have staff and suppliers, and a whole network that sits beneath that ready to make that building operate.”
The first priority for CBRE was therefore understanding where the emissions hotspots were in its large and long-tailed supply chain. The company conducted a spend-based analysis of the entire supply chain, looking at which suppliers were contributing the majority of emissions. As a result it was able to identify a group of 7,500 suppliers who were responsible for 90% of the company’s emissions from purchased goods and services. While this group represents fewer than 6% of its total number of suppliers, it is far higher than what other organizations of a similar size are dealing with due to the fact that CBRE conducts procurement on behalf of its clients.
These 7,500 suppliers became CBRE’s target group for engagement.
The supplier engagement journey
In 2023, CBRE began a series of supplier engagement campaigns targeting several hundred companies at a time. To date CBRE has engaged over 3,000 of that group, asking suppliers to provide data on their emissions and decarbonization actions.
They include businesses at varying stages in their decarbonization journey; for example, multinationals mature in their carbon accounting and management practices, and small, locally-based suppliers just getting started on their decarbonization journey. This requires, in Robin Burton’s words, “having a supplier engagement program that meets the supplier where they are today.”
CBRE has developed a five-step process which enables them to offer each supplier a tailored level of support. For smaller companies starting out on their journey, supplier forums and Q&A sessions have been a valuable way to build capability and understanding of what the data request means. With many suppliers completing an emissions inventory for the first time, CBRE has invested in a platform – provided free of charge to participating suppliers – to enable them to calculate their emissions and submit data in a standardized way. The platform, provided through a partnership with Emitwise, has helped CBRE to manage large volumes of outreach and technical questions from suppliers, and to verify data at speed and scale.
CBRE has found variability in how suppliers prefer to engage, with some happy to communicate via email, and others preferring to “touch and feel” the company via live forums and Q&A sessions. Having a number of different avenues for suppliers to build capabilities for reliable, accurate emissions data has therefore been an important part of the program.
One limitation has been the lack of non-English language communications and resources – something CBRE is working to address by translating materials into the biggest non-English language groups in its supply chain, starting with Spanish, French, German, Japanese, Chinese and Thai. In addition, an internal network of local champions is helping with face-to-face engagement with suppliers to support the central team.
Gathering the data, addressing the gaps
The engagement campaigns are yielding results. Almost 40% of suppliers engaged so far have provided emissions and climate data as requested, with over 100 suppliers having calculated their carbon emissions for the first time.
With this data CBRE uses supplier-specific emissions intensity factors to enable a comparative view of how suppliers are performing from a carbon perspective – more accurate than relying on industry averages or amount spent in the absence of primary emissions data. The information can then be used in procurement decision-making and supplier relationship management by both CBRE and its clients.
However, just 16% of suppliers have been able to provide all of the information requested. According to CBRE, many of its suppliers have not had this kind of request before. As a result, they may not have the correct data on hand, know how to respond, or even understand why they are being asked for the data.
In the company’s eyes, having these conversations with suppliers and allowing them to bring those concerns to the table are positive first steps. According to Robin Burton, “Our ability to hold suppliers’ hands, take them through the request and get them comfortable with it, is part of the value we drive.” CBRE is running a supporting campaign to re-engage the suppliers who did not provide the data the first time – and so far the company has seen a doubling in the response rate and significant improvements in the quality of data reported.
Until recently, responding to CBRE’s data request has been voluntary. However, as the program matures, it is becoming embedded as an expectation in the company’s Partner Excellence Program, which provides benefits such as improved payment terms, chances to meet with senior leaders in the business, and panel buying opportunities. As it embarks on additional rounds of supplier engagement, the company is placing more emphasis on these kinds of benefits in an effort to improve response rates.
The company is balancing its consideration of sustainable purchasing decisions, conscious of not making its climate requirements too stringent and thereby excluding suppliers doing good work in other important areas – for example, employing people from traditionally disadvantaged backgrounds. As Robin Burton says, “There is a broader societal impact you can make in procurement and we need to make sure we don’t close ourselves off to that.”
Beyond reporting
As CBRE continues working towards its target of engaging 7,500 suppliers, it is turning its attention towards bringing them on the decarbonization journey required to achieve its net zero goal.
While the company does not currently have a goal for the number of its suppliers that must have an emissions reduction target, it tracks which suppliers have set science-based targets and strongly encourages all suppliers to do so.
In addition CBRE positions itself as a net zero partner to its own clients looking to meet their climate targets. The company considers itself a “connector” in the supply chain – with its supply chain program supporting both its own Scope 3 targets and its clients’. And combining efforts with companies higher in the value chain is helping to bring additional leverage to its asks to suppliers, leading to overall improvements to supplier engagement rates.
Taking on the challenge
CBRE is deep in the work of its supplier engagement program and emphasizes the many different components of success – all the way from making the initial request to a supplier, to following up with them, collecting their responses, gaining insights from the response and building a relationship towards a shared goal of decarbonization. This takes significant time, effort and resources – and CBRE is learning and refining its approach as it progresses.
Doing supplier engagement at such a large scale has the potential to drive systemic change and embed climate action across global value chains. While CBRE still has much work to do, and the challenges for a company with such a large and diverse supply chain are many, as Robin Burton says: “it’s not impossible – and we see that it’s working.”