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John: Welcome to another edition of the Impact podcast. I’m John Shegerian. I’m so excited to have with us today Sean Drygas. He’s a global lead of ESG and impact at Colliers. Welcome Sean.

Sean Drygas: Thanks John. How are you?

John: I’m great, and I know we’re having a conversation like we’re together, but I’m in Fresno, California today and you’re in Toronto, so thanks for making the time to have this conversation with us and share everything you’re doing in ESG and impact at Colliers.

Sean: My pleasure., thanks for having me on.

John: Hey, so before we get talking about all the great work that you and your colleagues are doing at Colliers, can we share a little bit about your story, where did you grow up and who inspired you and how did you get on this really interesting and important journey that you’re on at Colliers?

Sean: Sure. Thanks John. Yeah. I grew up mostly in and around Toronto. We moved around a lot when I was a kid. Not sort of an army brat story, but more just because my parents had sort of wanderlust and around the area a fair bit. We actually ended up living in the countryside for a while and then lost our house. We were actually evicted from our house in 7th grade and I don’t mention that because I think it’ll maybe play into some of the motivation for getting [inaudible] later on, and then went to school in a city called London, Ontario, Canada, so a couple of hours southwest of Toronto, school called Western University studied business. At that point, money was a bit tight, as you might pick up from my comment a moment ago, I’d never really traveled, never been on an airplane before. Graduated with a finance degree into a recession and decided I was going to try to kill two birds with one stone, see the world a bit and get a job, and so went overseas. Taught English in Japan, actually, so a bit of a left turn from…

John: How was that? How was that experience coming from Toronto and not having traveled that much and all of a sudden finding yourself sort of a stranger in that very exciting land that Japan is?

Sean: It was tremendous. I’ll tell you how good it was, I went with the intention of staying a year or two and stayed for almost five, so it was terrific.

John: Which part of Japan?

Sean: In Tokyo. I wanted to be as close to the center of Tokyo as I could, and so I was in sort of the west end for a couple of years, then I got a promotion and ended up working at the head office right downtown, which was great, loved it. In fact, ended up about three and a half years into that meeting my wife, so we’ve been back a number of times since then.

John: Perfect. Wonderful. So you were in Tokyo, let’s talk a little bit about geography, and I shared this with you a little bit off air, a little bit too.

Sean: Yeah.

John: Toronto, every time I’ve been to Canada, no matter what part of Canada, eastern part, western part, Canada is first of all, a beautiful country, but it seems as though you guys are a step or two ahead of us here in the United states in terms of your cultural care and your DNA care of the environment up there, it’s a beautiful but very clean country, is that sort of your memory growing up as well?

Sean: It’s an interesting question, John, in that I’m not sure that we were conscious of it growing up, to be honest, I think you almost take things for granted when you [inaudible]. I think people are more aware of it now, especially as you look at what happened last year with the wildfires that really affected a lot of cities in the US [inaudible], and I think it’s really raised people’s consciousness that we’ve got this incredible gift of this boreal forest and all this land, but if we don’t take care of it and we don’t take care of the environment, then it’s at risk as well. I think the alignment, I would say, now around keeping this naturalized in terms of reducing emissions is pretty high, I think it’s not quite as bifurcated as it is in the US politically, but there’s still debate as to how fast we should go and what sort of measures we should be taking specifically to address it.

John: How about Japan? I just came back from Japan on a business trip. I’ve been going the last 17 or 18 years on business in Japan, at least two or three times a year. I find it to be incredibly leaning into circular economy, recycling, sustainability, that country has done it right and it just seems really on the right track, is that your impression as well?

Sean: Yeah. I think that’s changed a lot, actually, even in the sort of 30 years that have passed since I first arrived there, because one of the things we really noticed when we got there was everything was overpackaged because cleanliness is highly valued in the Japanese culture, and sterility. Everything was in a bag, which was in another bag, which is in another bag [inaudible] what’s going on here, but at the same time the average Japanese person’s carbon footprint is half of what it is for the US or Canada, because they don’t drive as much, they take trains, the trains are electrified, which helps a lot, but they also live in much smaller homes, and I think at this point they’re much more conscious about energy, too.

On the flip side that I did notice when I was first there, and this is continued, is if you take a shower in Japan, well, people, everybody takes a shower, when you take a shower, you turn the water on, you wet your body, you turn the water off, you scrub yourself, you’re in your [inaudible], so the water is on for 30 seconds of your shower, basically, and then the bathtub is sort of kept full all the time, and so once you clean, the whole family shares the same bath water because everybody’s clean by the time they get in there, one by one, that they go in, so there’s definitely, because it’s not a country rich in natural resources like the US or Canada are, they’ve always been much more cognizant about not wasting anything. That is one of the key aspects of Japanese culture.

John: That’s so interesting. They do things with such intention, but I also think about geography, and when I think about Japan, South Korea, and then also jumping over to our European counterparts, UK, Germany, Spain, France, Italy, they’re small compared to Canada, compared to the US, so they couldn’t have really a linear economy ever, they could never be part of the go and throw, they were always had to be circular, at least the last two generations or three generations, had to be more circular in their behavior, so they got used to it and sort of embedded it in their behavioral lifestyle compared to, like you said, Canada and the US.

Sean: Yeah. We are spoiled for every [inaudible] including space here.

John: So talk about, so now you’re done with Japan, you come back, how did your career go from there?

Sean: Yeah. Maybe I’ll divide it up into sort of like pre and post 2007, September, that’s sort of the of the inflection point.

John: Perfect.

Sean: Around the time you’re starting out this podcast, I had a bit of a, epiphany is probably too strong a word, but a realization that I wanted to do something [inaudible] in the ability field. Before that time, I was really focused on getting into strategy work. I was really interested in economics, so something in that sort of sphere, and so came back, joined a tech startup, took an MBA part time, did some forecasting work with FedEx, got a strategy job at a large food company. It was really all about how can I make a living, raise my family, do some interesting work that’s sort of intellectually challenging, that was really what my world was about. Growing up, I’d had a strong desire to do something that was socially impactful, I was really interested in the US civil rights movement, for example, growing up, but a clear path for a Canadian kid to get involved or make a contribution in that area, I didn’t see a path, so I sort of followed the pragmatic way and followed sort of where my curiosity led me, I guess.

Fast forward, I’m working for the food company. I’ve actually been offered a job. We had a business, one of the businesses we’re in was bakery. We were exporting a lot of baked goods frozen to Japan, and our COO came to me and he said, he didn’t even know I spoke Japanese, actually, he didn’t even know that, he was just going on sort of like the work I was doing at the company. He said, “hey, we need somebody to go like open up a bakery business for us in Japan”, like get a bakery constructed or acquired, stop exporting all this stuff and start producing locally if you’re interested. I took it home to my wife, my Japanese wife, thinking she was going to go, “woohoo, let’s go, this is great”, and her reaction was, I’ve just invested 10 years getting educated here, getting a job here, we’ve got two kids now, one of them is a year old, where would they go to school, I don’t want to give all this up, so I was like, okay, yeah, that makes sense.

I was kind of 51, 49 anyway, and she was 99 to one, and so [inaudible]. At the same time, while we were debating this or discussing it, we went out for our 10th wedding anniversary. We went to dinner and a movie, and in between there was some time and we went to this beautiful old bookstore in our old neighborhood. It was one of those classic with the hardwood floors and the ladder you have to go up [inaudible] kind of play, it was beautiful, it doesn’t exist anymore, unfortunately, because industry is gone, but we were in there and I was just flipping through books and there’s a book that caught my attention just because of the COVID photo. It was a book called heat by a writer for the Guardian in the UK named George Monbiot, and it was about climate change. The photo was actually tailings ponds coming out of the oil sands in Canada by a Canadian photographer, Edward Britinsky.

I started reading the book, and I get through half the first chapter while we’re standing there. I’m kind of taken aback by what I’m reading because I was ignorant, blissfully ignorant, really, about climate change at that point in time. You were saying off camera that in 2007, nobody was doing this and nobody was talking about it, and that was exactly right. I was as ignorant as anybody else was, but I bought the book on the spot and devoured it within a couple of days, and right around that same time, Al Gore’s inconvenient truth had come out, and so I ordered the DVD. We didn’t even own a DVD player, but I had a CD rom at my work laptop and I managed to macgyver it up to my [inaudible] and watched it with my wife, and at the end of it said, we got to do something about this. I went into the COO’s office who’d offered me the job in Japan, I said, can’t do it, family’s not aligned, but we need a sustainability person in this company because food’s one of the biggest impacts industries for climate, and I’m your guy, because I was working in corporate strategy, I was like, we need a sustainability strategy, I’ll do it. Basically he agreed to let me do it on the weekend.

John: Part time.

Sean: [inaudible] on the side of my desk, and there were just a couple of other really passionate senior people in the organization. We sort of formed this little skunk works and over the course of time managed to get a sustainability strategy off the ground, we got our first sustainability report out. I’m sure if you look back at it now, you’d look at it and go like, yeah, it’s that…

John: It is a start.

Sean: It was a start, and so I went through a couple of years of health issues while I was there unfortunately, those, thankfully, are long behind me, but after that, I decided, you know what, if I’m going to continue working this hard, I want to do this full time, I don’t want to do this off the side of my desk. I had the opportunity to stay there and have a joint strategy sustainability job, but it was going to be 80 20 strategy. When I got a call from renewable energy company, who I’d interviewed when I was doing the strategy work at the food company, saying they needed somebody to come do business development and strategy for them, I thought my calling has arrived. I took a 50% pay cut and I went to the renewable energy company just to get into it full time. I’d been doing volunteer work in the space as well, but it just felt like if you’re going to make an impact in this space, you’ve got to put [inaudible], you can’t do it as a partner.

John: 100%. You’re 100% right.

Sean: Yeah. I spent eight and a half years at a company called Bullfrog Power here in Canada, who basically invented, in this market anyway, the retailing of green electricity to companies and individuals. They had pretty good impact, I say they, I was part of it, but it started seven or eight years before I joined.

John: What was your role there, Chief Sustainability Officer?

Sean: At the beginning, because the whole thing was sustainability, I was the corporate development guy. We were doing renewable electricity, I got us into biofuels, I got us into different ways of procuring renewables, got some new solar farms, wind farms built, that sort of thing, and then the company was acquired. The previous CEO exited, and I ended up running that renewal energy business, became the president of that division of the larger parent company, did that for about three years, and that was great. It’s incredible, John, to work in an organization where everybody is focused on sustainability.

That is the array is onto etrade, and it’s not a job for people, it’s a mission, and the culture is impossible to replicate, really. I’d still be there, but my current boss here at Colliers, who’s the global head of people and brand, was my co-worker back at the food company. She sent me the job description saying, “hey, we got this new role for global head for ESG, I don’t know as much about this stuff you do, would you mind just proof reading this for me and making sure it’s good and if you know anybody who you think would be good, let me know”. I gave her a couple of pointers on the qualifications and I said, well, there’s this guy and there’s this woman and maybe me. It was kind of like I was kind of hoping you’d say that, and so it went through the process.

John: She was fishing for sure. She…

Sean: A little bit maybe, I don’t know. I don’t want to put words in her mouth. Anyway, here I am. When I looked at it, as much as I was having an amazing time at Bullfrog and trying to get more renewables into the system, I look at Colliers and went operating in 60 countries around the world. We managed two billion properties.

John: Unbelievable.

Sean: $100 billion of assets under management. The management division has thought the scale and potential impact here is tremendous, and so that led to the change, but a bit of a stretch too, maybe we’ll talk in a minute about a lot of what we need to do is on the renewable energy side, that piece, I’m bringing some background to, but ESG is broader than that. You’re talking about all kinds of different aspects of ESG on your program, and so start talking about diversity, equity, inclusion, for example, straight cis gender, white mail, not exactly the picture of the DEI lead in most organizations. That’s been a learning journey for sure for me. Health and well being, how do you make buildings healthier for people, especially post COVID people are much more cognizant of the fact we spend 90% of our time indoors and that has profound impacts on our health, so a lot of learning there. It’s been a great [inaudible].

John: How many years ago did you join again?

Sean: It’s been two and a half years or so now, John.

John: Two and a half years. That’s fascinating, and Collier is headquartered out of where?

Sean: We’re headquartered here in Toronto, so I’m in our headquarters office. Yeah.

John: Approximately, how many employees, Sean?

Sean: We got about 19,000, roughly.

John: 19,000. Okay, for our listeners and viewers who just joined us, we’ve got Sean Drygas with us today. He’s the globally lead of ESG and impacted Colliers. To find Sean and his 19,000 or so colleagues, please go to www.colliers.com. Two and a half years ago, wow, it was just the pandemic was sort of winding up or sort of maybe towards the end part of it?

Sean: Yes.

John: That’s an interesting time to make a move and like you said, go into an area of impact that had never been really thought about consciously before by all the people that resided in these buildings, but now went to a big front and center of a big issue.

Sean: Very much so. In fact, when I joined the organization, we had just finished a materiality study to try to determine what are your three big or four big issues that you’re going to focus on. So it became first day, like, here’s the results of the study, let’s form a strategy based on that. It was pretty clear that the three areas were; number one, I don’t want to rank them, but anyway, first, in terms of like on the left, on the page is environment, specifically climate, because so many emissions coming from these two billion [inaudible] buildings that we’re managing, diversity, equity, inclusion, because all we are is people. We’re a professional services organization.

If you’re a big four accounting firm, your management consulting firm, your product is your people, and that’s definitely us, so we need to make sure we’ve got the best people in the best roles working here, and then third, as you say, September 2001, people are just starting to return to the office. There’s a lot of talk about how do we do this safely, how do we make sure we’re ready if there’s another wave, if we’ve got to go back, how do we make sure people are mingling in the right way in the office, how do we make them feel comfortable coming back, so that health and well being was sort of the third pillar of the strategy that was identified.

John: Now, so many great people that I get to interview on this show over the years step into these roles and they have that proverbial blank page. It sounds like you had a hybrid, you’re the first to do this on a codified basis, but you were being happily influenced by materiality study that had just been completed.

Sean: Yeah, that’s one element. You’re right in terms of the hybrid from another perspective, John, which is that we already have head offices for Europe, Middle East, Africa, in London, England, we’ve got one for AIPAC in Sydney, Australia, for the US and in LA, and then there’s a separate Canadian head office actually in Toronto for the Canadian business only. So if you see our global headquarters where I am, it’s a very small group of people, but 35 people working here out of a 19,000 person organization, so it’s very decentralized.

Decision making is really pushed out into our regions where they’re close to the customer and they can be, we call it enterprising, you can call it entrepreneurial, whatever you want, so we already had ESG focused people in some of our countries not talking to each other in many cases, didn’t even know each other existed in many cases, so that’s part of the job, too. In fact, that’s actually been one of my biggest focal points in joining Colliers is how do we leverage the scale that we’ve got, we’ve got these 19,000 people in so many countries, how do we now get them all working together and so we can go to a client and say, yes, we can do all this for you because we’ve got all these capabilities.

John: Well, as it is, you and I well know ESG, impact and sustainability could be read narrowly, could be read very broadly. Where did you choose to begin the journey in terms of start getting some momentum by getting some wins and building a consensus so you can go take on bigger challenges within the organization?

Sean: Yeah. The very first thing we did was we formed an ESG steering committee in each of our regions, and then we pulled those people together. We had an environment group, we had inclusiveness group, we had a health and well being group, and we got those groups together and said, okay, we’ve got an environment goal, what’s the goal going to be, what’s the goal for us, what’s the goal we’re going to do for our clients, which is actually much more impactful, and then how are we going to contribute to our communities in this way as well? That sort of got the ball rolling in that now people are talking to each other, we have consensus about what we’re trying to do, and we landed pretty quickly on pretty good alignment between what we should be doing and what we should be helping our clients do.

In the health and well being space, really what you’re going to do for a large office building, especially, and which is a large part of what we deal in, you’re going to look at what’s the air circulation, indoor air quality, that sort of thing. There are ratings out there for those where you can get certifications for it, the well certification, the fit well certification, so let’s make sure we’re ready to do that work for our clients and help them through that journey. So we should be doing that ourselves, too, we should have all our offices worldwide on that standard. Similarly, if we’re going to help decarbonize buildings, then for our clients, then we should make a commitment ourselves, and so we went out, we made a science based targets commitment.

We put the letter in in the first few months, I was here. It’s a bit of a journey to get actually approved, but we got approved last year for our targets, so now we’ve got to go out by 2030, and reduce our footprint by 68% versus 2021. So those, to me, those are the two big external facing ones. Diversity, equity, inclusion, hard to influence what your clients do, that’s really [inaudible]. We do, though, have some clients who, they’re looking to drive inclusiveness or diversity through their supply chains, the way that they procure, and the nature of our business, John, is that especially when we’re managing a property for somebody, we actually procure a lot on their behalf.

So if we’re managing a building, you’ve got to have electricians come in to do work, you’ve got landscapers in all the time, you’ve got janitorial, sometimes you’ve got construction work when a new tenant moves in, we actually write the checks on the client’s behalf for all that, so we’re controlling billions of dollars of spend overall, and so our commitment on the diversity side for clients is we’ll help you with your supplier diversity program essentially.

John: Understood, but on a broad base, though, there is an argument to be made that the better you’re managing those buildings and the healthier those buildings are, there’s that’s a huge way to recruit great people and also paying great people.

Sean: Yes, absolutely.

John: On a broad basis, talk a little bit about, it’s fun to understand process, what I’ve learned over the years, Sean, is that you belong now to really one of the coolest, nicest fraternities on the planet of impact sustainability ESG officers, so let’s talk about the smallest ring and then the two rings post it. You have the smallest ring is your counterparts at Colliers that are already doing ESG and impacted on other regions, then you take a bigger ring, you look at the benchmarking and getting inspired and also getting aspired by your other real estate counterparts that are doing ESG impact at the other big firms, then on the biggest ring, looking outside of your industry and getting inspired by others who are doing things at all, a whole broad base of networks. Talk a little bit about how you Sean, continue to get up every day and stay inspired and get inspired yourself in terms of those three different rings of fraternities that exist for you to lean into and to have a fraternity and be part of that fraternity.

Sean: Sure. Maybe I’ll go in the same order you went, John, from [inaudible] the little bit. Not hard to get inspired from our own folks. We are constantly recruiting in really great people. Sometimes we poach them from our peers in fact, if we say, oh, that person’s really good, let’s go and bring them over. Really what inspires me is the opportunity to get us all again pulling in the same direction, because we’ve got great people, but like any sports team and sports analogies get overused in business a little bit, but if you’ve got five people playing at individuals on the basketball court or on the hockey rank versus they’re playing like a team, it’s total different…

John: Like game changer.

Sean: Yeah, that’s the big focus, I would say internally, and it’s great because we have really great people.

John: Getting alignment is really part of really where you’re at, that’s one of your main focuses.

Sean: It is, because I’m not the person typically in front of the client. If we have a global client who wants to see the global head of ESG and talk to them, I’m there, but generally speaking, on a day to day basis, it’s our folks in the Netherlands who are talking to the Dutch customers, in Australia, the Aussie customers. Not so that’s [inaudible]. That’s really, to me, it’s like actually I learn a ton on the technical basis because I come from the renewable energy side learning curve on. I spent 17 years decarbonizing my house. I kind of understand [inaudible] 1000 square foot level. Now I got to learn at the billion square foot level, and some of it carries over, some of it doesn’t.

When we get to our peers, it’s actually really interesting because I think you were talking to one of our peers recently and there’s some really good stuff happening out there. We were not the first to make the science based target commitment, so that actually made it an easier sell. In fact, as I go and I talk to our CFO, our CEO, the heads, the CEO’s of each of our regions, a lot of times they want to know what are the two or three big peers doing, because we don’t want to be left behind on that. The question now is how do we have our own way where we’re a little bit ahead of them? I can’t share too much on that because [inaudible] [crosstalk].

John: That’s right. I don’t want to give up any competitive advantages because there’s sort of a frenemy situation.

Sean: A little bit. That’s right. At the same time, at the end of the day, nobody’s going to manage every building in the world and we need to decarbonize every building in the world over the next couple of decades.

John: That’s right.

Sean: It’s imminently doable, but only if we’re all putting our best foot forward on it. I’m glad to see our peers taking aggressive action in this space, making aggressive commitments, especially when it comes to doing it for the clients, because part of the science based target is you got to have a scope three target. When we did our scope three measurement, 96% of our scope three is those buildings that we manage for the clients, our business travel and our employee commuting and all that stuff, it matters, it matters culturally, for sure, but when you add up the numbers, it’s 96% in those buildings that we manage, so that’s where we’ve got a commitment to take our clients emissions down. How do you do that?

That’s where people had a little bit of anxiety around here because we don’t make these investment decisions, they’ve got to decide, are they going to put in a new software system to control H VAC, are they going to swap out the boiler for a heat pump at some point, not our call. Really, our peers, having taken that step, helped us get across the line too, and now I do feel that the whole industry is really pulling in that direction. The owners of the buildings that were managing, they’ve got their own pressures coming from other sides, they’ve got their investors regulatory pressure, especially in Europe, pulling them. They need somebody like us to come up and say, we got you, heres the path to do this.

John: A playbook. You give them a playbook that youve developed and you make it happen.

Sean: And then we make it happen. Exactly. Execute for them.

John: Then outside, who inspires you outside of your industry? It’s the other bookend of 2007 or so with your wife in that beautiful bookstore that unfortunately those don’t exist that much anymore. Finding the book, now who are your big thinkers that you love to watch and follow and continually make you inspired, but also give you some aspirational ideas to go chase down a Collier’s as well?

Sean: Sure. A lot of what inspires me, actually, is people have the courage in the political field to stand up on this, because especially in the US, you’re seeing it’s a bit of a minefield, right? And you’re sticking your neck out to do anything in this space, but ultimately, we look at how we’re going to reach our goals, whether it’s in real estate or any other part of the economy, it’s a combination. Ultimately, people are not going to change their lifestyles, people are going to want to keep living the energy-dependent way that we live, and so technology has to be there to allow us to continue to live our lives in the way we want to, without the emissions that have historically gone along with that.

The technology needs to get up the learning curve, down the cost curve that happens by scale and by experience, and you can accelerate that if you’ve got the right regulatory framework in place. Look at the Inflation Reduction Act, for example, in the US, and look at how that is accelerating all kinds of fields, from the relatively well-established electric cars, solar, wind, to the stuff that probably we’re going to need to get the last 20 or 30% of this journey. Hydrogen, battery, stationary storage, things like that, they’re all taking off. To me, there’s a lot of courage that happens in making that happen.

When I think about it, I’m thinking they’re doing their job, what’s our role in this, and how do we make sure that we’re keeping up with everything that’s going on in the regulatory space and that we are right on top of, how do we bring that to our clients, and so they know, okay, here’s the things that now work economically and environmentally and for our tenants, let’s go after it.

John: Understood. As speaking to both building owners, but also to tenants, what should tenants expect nowadays out of a from a good building owner for them to make a healthier but decarbonized building so we can all feel like we’re supporting and doing our best, both as a tenant and also as a landlord. Where should we be going now, because comparatively speaking to when you started on this journey in 07, the beauty of Moore’s Law has gone on steroids and the advent and the explosion of AI and other great technologies that now can help us manage our buildings air quality, heat and air conditioning, water, and so many other important items, what is reasonable to expect in 2024?

Sean: I think the sort of basis or the bedrock for that, John, is there should be what you call a green lease in our space. Now. I think the word green is going to go out of fashion soon enough because it gets used in ways maybe it shouldn’t, but the idea of a green lease sometimes is very specific on we will have this energy usage per square foot, or this much water uses per square foot, etcetera, but really, the foundation of it is there should be a mechanism for the tenant and the landlord to sit down on a regular basis and discuss how do we get over the sometimes misalignment of interests that keeps buildings from becoming healthier and greener.

If there’s an example of that, for example, think about an industrial building, a logistics building, we manage a lot of logistics buildings. Typically only one tenant in that building, so you’ve got an Amazon in that building. They may not own the building, though, it might be a pension fund or somebody who owns that. So that building, you don’t have to have a lot of chillers and gas lines on the roof, it’s basically a wide open space that’s completely flat. You don’t use a ton of energy in the building, you can put solar on almost any industrial building in North America or the world, frankly, and power that building easily several times over, sometimes with solar, and the economics makes sense.

It’s cheaper than buying electricity from the grid in almost every location, but if you fly into a city from the airport, it’s surrounded by warehouses, and they’re 1% of those buildings have solar on them. Why is that? The reason is because the landlord, they’re the ones responsible for the condition of the roof, so they’re worried about, I don’t want to put a hole in the roof and there’s a leak and the tenant’s going to…

John: My buddy who owns a warehouse down the street, put solar on and the guys who put it on opened up roof, then when it rains, it leaks, and I’m not doing that.

Sean: Right. Exactly. At the same time, theyre going to take this risk. They’re not sure they’re going to get their money. If they decide to offload this building in three, four, five years, they’re not sure theyre going to get the money back for it, and they dont pay the electricity bill because theres only one tenant, so the tenant pays the electricity bill.

John: Great point.

Sean: Theres this misalignment of, well, one person puts up the capital, the other person gets the benefit. Thats one maybe extreme example, but that dynamic plays out all over the place. If you want to put LEDs in an office, you’ve got to have some sort of capital charge that gets spread amongst the tenants, and one tenant says no, and it doesn’t work. So we don’t have the speed we should in doing things that actually make tons of sense, again, financially, environmentally, human health every way, and so what we’ve got, I think the real sort of sea change that’s got to happen is tenants and landlords need to be actually sitting down and going, okay, how do we share the costs and the benefits in this stuff, because the benefits are there for all of us, and the mechanism for making that happen is the green lease. You put that because as a property manager, that’s our marching orders, we’re the representative of the owner of the building. If it’s in the lease, we do it, if it’s not in the lease, we don’t do it because we’re going to get in trouble for doing… [crosstalk].

John: Something governed by that lease, that lease is your governing body.

Sean: We got to get that stuff in the lease, so there’s a mechanism to get going. Once we’ve got that, I think what are the big hitters? Number one is, how do we balance having enough fresh air into the building or treated air that’s going through the proper sort of merv 15 filtration, protecting people’s health, while at the same time not spending twice as much energy to cool or heat that air to keep tenants at a level of comfort as well. That’s the trade off that we’re always playing with.

John: Talk a little bit about new versus old. What’s the demand now from your investors, landlords to build new leed Platinum certified buildings, and how hard is it for you when you’re going in with your teams to convince your legacy landlords and partners and to retrofit buildings to bring them up to the right standards so everyone can be proud of the real estate that’s in your portfolios?

Sean: Yeah. It’s a great question, especially today, especially in North America, where the return to office has not been as strong as it’s been in Asia or Europe. So you’ve got a lot of agencies and those class of B and C buildings are half empty in a lot of cases. That’s a big even being cited as a risk to the financial sector, maybe not on the scale of subprime loans and that sort of thing, but still a risk. We’ve seen a couple of smaller regional banks actually go under in the US in the last few months with loans in their space. So there is definitely a move towards the newer buildings on the tenants behalf and therefore the owner is looking for that, but that actually leads to a conversation of, okay, how do we make the older building attractive for those tenants?

You could tear it down and build a brand new building, but when we think about the emissions from buildings, we often think about what we call the operational emissions. It’s the stuff that’s going on every day, gas that’s being burned in the boiler to heat the water in the winter, heat the air, it’s the electricity that’s going into the H VAC system and the elevators, et cetera, but something like a quarter in some cases, it’s more than that. Of all the carbon that will ever be emitted by that building in its 50, 60, 70 years of life happens when it’s being built, it’s the concrete and manufacturing that concrete that goes into it, it’s the steel that goes into it, it’s the glass that goes into it, it’s the carpeting, it’s the drywall, it’s all the fixtures that go into the inside of that building.

This is people trying to call it a carbon bank, like you’ve banked this carbon in this building. If we’re going to reach net zero by 2050 or anywhere close to it, we cannot be tearing down every old building and building new ones, even if the new ones are complete net zero buildings, because you’re never going to get… Until we’ve got concrete that captures CO2, which people are working on and been doing at small scale now, until you’ve got steel that’s made with renewable electricity in an electric arc furnace, which again, happens a little bit, but it’s a small part of the market.

John: It can be scaled.

Sean: Yeah. Then we can’t just go and build a new building that’s truly net zero, at least very easily, so we’ve got to be retrofitting those buildings. I think the architecture space, the architecture community is really catching on to that now, and so they’re looking for ways to how do we retain the core and shell of the building, whereas we can do a lot to the fit out of the building to make it more amenable and bring people back in.

The challenge we have, though, is there’s just too much office space for the number of people who need to use it right now, and it’s not easy to repurpose it for residential, for example, because office building typically more square in shape, all the mechanicals are in the center, it’s hard to give everybody a window if you’re trying to convert that to apartments or condos, it’s hard to have plumbing, rent, it ends up being cheaper to tear the building down in some cases, unfortunately. That’s a space where I don’t think the industry has solved that problem fully yet.

John: That’s so interesting. How much is AI really playing a role, especially in a post COVID world, to your point of so many office buildings now are only 50% occupied, does AI and other great technologies that have recently come out and got a scale help in the better, like Chris call smart building management now? So the buildings are going to sort of get realigned to support the 50% that’s there and sort of push off and forget the other 50% that’s no longer occupying the building at any given time.

Sean: Yeah. For sure. What we’re seeing in terms of AI that’s sort of ready for commercialization already and starting to get implemented is really how do you control the building systems that are there already without replacing any of the building systems? It’s just software that plugs into your building management system, and it knows, again, what’s occupied and what’s not. It’s looking at patterns of occupancy over the week and over the year, it’s actually making sure that you’re not overheating or overcooling spaces sometimes because actually, the number of people in the building, we generate heat [inaudible], and so you actually need to adapt the mechanical heating, cooling to take into account the humans that are in the space and what the thermal properties of the building are.

You have a very well-insulated building with a lot of people in it, you actually don’t need a lot of mechanical heating, and so you can end up overusing it. Sometimes we even heat and cool the same space at the same time, and so AI is very useful already, I would say, today, and getting better all the time at figuring out that optimization. You can start to save, like we’ve seen examples of saving 20 or 30% of the energy that goes into the heating ventilation, and air conditioning without any capital. It’s just a monthly software subscription, and you save from day one in terms of the energy savings versus the cost of that software.

John: Sean, excuse my ignorance on this topic, but in terms of Colliers being an advisory services for landlords and high net worth investors, as you pointed out earlier, pension funds and other large funds, how much is part of your business advisory services on where to invest money in real estate?

Sean: We have what we call capital markets as part of our one of our business lines, Colliers on the whole, outside of ESG, which we all know is the most important one, of course. So we have what we call brokerage, which is what some people might call leasing, so this is how you lease out the space. We have what we call capital markets, which advises people on either buying or selling on both sides of that equation, and so that comes into it on this.

John: On the capital market side, how much are you involved with the leveraging of technology? Again, going back to AI with regards to predictive analytics, with regards to climate change and population shifts, due to climate change and due to cultural shifts, some countries are going through immigration, some countries are going through emigration, and as we know, this is all going to get rebalanced in the years to come, and some regions are going to be, the property values are going to far hyper scale versus other regions. How much is that part of what you do or how much do you have a ringside seat watching that unfold?

Sean: I haven’t been brought in to talk about what is climate going to do in terms of migration patterns yet, so maybe that’s a next step for our [inaudible].

John: Okay.

Sean: I think where we are involved in that right now, and many of our people in country are, is you’ll do what they call it, ESG due diligence on a property. You want to know how is this building operating right now, is it an A or an F on the scale, and actually in Europe, they literally grade them on an A to an F in because of energy, what’s the physical risk to this building? So if we look at, okay, we know what the weather is like today, but let’s look out a few years, whether it’s extreme weather, flooding, drought, et cetera, like what’s the physical risk of this building as well, and there are tools now that we can deploy to help assess right down to the address level.

So that’s probably the biggest part. So, yeah, it’s interesting, again, it’s more, if I’m honest, it’s more in Europe, we’re seeing this today, but I think we’re going to see it in other places where the capital markets team, like if they go into a pitch or they go into a client meeting and the client asks them an ESG question and they look at them like they have a dough in the headlights, it’s a big problem now. I heard somebody say this earlier this week, it’s in every conversation that we have. We’re not quite there yet in North America, certain Asian markets, I think it’s getting there as well.

John: Sean, you’re a decarbonization rockstar, obviously. So to leave some actionable items for our listeners and viewers in their own homes, what are two or three things they could do? Easy wins they could get to help decarbonize their home and eventually help us all decarbonize the planet together.

Sean: Yeah. From a residential standpoint, ultimately, maybe keep the end in mind, which is the way we get to decarbonize buildings, it’s two ingredients. It’s electrify everything, and all the electricity is zero emissions. If you’ve got that, the building is zero, no matter how much energy you’re using. That said, you don’t want to have to overbuild your heat pump. You don’t put too many solar panels on it, etcetera, if you’re wasting energy. Number one is there are a lot of things that have a payback of a year or less you can do to save energy in your house.

A lot of it is just, do I have to turn the thermostat down at night, that would be the very first thing I say. It’s actually better for sleeping at the same time [inaudible] or when you’re not home, like put in a nest or ecobee or something like that, $100. It’ll save you $100 before you know it, and it looks cool and your house will feel better. So that’d be number one, I would say, but the other thing is, have a plan. Let’s not make it a rush panic decision when the furnace breaks down, and it only breaks down in winter because you’re only ever running it in the winter, so if you’re in Michigan, you’re in Toronto, you’re in New York, it’s cold, and you’re going to make a panic decision and put another gas furnace.

Now be ready, because the heat pump actually works in every climate now, and it’s an air conditioner at the same time. So it keeps you cool in the summer, keeps you warm in the winter. With the price of gas having gone way up, the operating cost now is actually cheaper in some places, depending the cost of electricity, than it is to run gas. So it’s have this plan of, okay, when the furnace dies, we’re getting this heat pump, when the water tank dies, we’re putting an electric in, when the stove conks out, we’re putting an induction cooktop in. Just how to have that…

John: Be intentional on your decision making to decarbonize your house.

Sean: That’s it. Have a plan. Often you can actually have somebody come in and for a pretty reasonable price, they’ll give you that plan.

John: Got it. That makes sense. That’s beautiful. You’ve been at Colliers for about two and a half years, name one or two projects that you’re most proud of, that you accomplished in the first two and a half years.

Sean: Oh, my. Wow, that’s putting me on the spot here, Josh.

John: Sorry. Or just one, pick one, pick your favorite.

Sean: Yeah, the thing is, like, I don’t do them right. This is all like, pick one, you know, one teammate.

John: Okay, I want to put you on the spot, but 2024 is here now, talk a little bit about what… Like if you have one, maybe I’m just using the wrong Canadian term, but if you have one muskie for this year, what’s your muskie this year, what’s your sense of purpose that you really want to accomplish this year at Colliers?

Sean: Yeah. Our number one thing is we want to make sure that all our clients know exactly what we have to offer them end to end on decarbonizing their building. I think you can look at, and I don’t think we’ve done a good job as an industry, us included, in sort of giving the big picture to people and helping them understand this is the path that you’ve got to take, and we can do all those steps for you. So we want to simplify the language, the client, and give them a very clear path to carbonization and build our business that way, because again, we can decarbonize our own operations. We have 24,000 tons a year of carbon, that’s great, we’ve got literally 1000 times that in our client buildings that we’re managing, and so it’s, how do we have a very clear offer to the market so our clients know exactly what their path to decarbonization is and they can get there by 20, 30, 40 or 50, whatever their goal.

John: Sean, do you guys put out an ESG impact report every year?

Sean: We do. We call it the Impact report. We’ve actually got a global one, and then some of our regions have started putting out their own because they want to tell those stories. I was reticent to tell you, we could talk about, five star, green star buildings in Australia, New Zealand, we could talk about heat pumps in Canada, there’s lots going on in Europe.

John: Lots of winds.

Sean: Yeah.

John: When does your impact reportivity come out?

Sean: This year will come out May 31st, and it has the last couple of years. The space is changing, California’s got new regulations, the SEC is coming out with them next month, Canadian regulator next month, Europe’s already got them. You’re going to see this reporting move up to inside the financial reports that are going to come out in February every year, actually, but right now it’s all in one. I think we’re going to end up bifurcating the hard data that investors want to see, the black rocks of the world, they want to see that it’s going to go into your financials and then when you put out your report maybe in the spring, it’s going to be more about, let’s tell the story about what we’re doing for employees, what we’re doing for our clients, what we’re doing for our communities, that sort of thing, and that may not even be a report, it may just sort of be ongoing live, you know, digital.

John: So May 31st it comes out, and then it lives right now in perpetuity up on Colliers.com?

Sean: That’s correct. Yeah, and scroll down to the ESG link about us, and that’s where it lives.

John: I love it. Sean, thank you for spending time with us today. Time is so precious for all of us. I really appreciate your history and the vision and what you’re working on with all your colleagues at Colliers. For everyone that wants to find Sean and his colleagues and learn about their great ESG and impact work they’re doing at Colliers, please go to www.colliers.com. Sean, thanks for not only the time today, but more importantly, thanks to you and all your colleagues at Collier, Colliers for making the world a better place.

Sean: Thank you for doing the same thing, John, by telling these stories. It’s amazing.

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