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Corporate Nature Commitments: Evolution from 2022 and Beyond

2024-12-10

The world's largest enterprises are increasingly acknowledging the risks and opportunities presented by nature and natural capital. This awareness is prompting more businesses to set specific goals to address their influence on various aspects of nature, such as water, biodiversity, forests, and more. The unprecedented decline of nature and biodiversity emphasizes the urgency of these commitments. As of 2023, six out of the nine planetary boundaries proposed by scientists in 2009 have been exceeded, indicating significant risks for both people and the planet.

Unlock the Potential of Nature for Business Success

Nature and Natural Capital: A Crucial Consideration for Companies

The world's largest companies are now realizing the significance of nature and natural capital. This awareness is driving them to take proactive measures to address their impact on the environment. By setting specific targets, companies are aiming to protect and restore nature, which is essential for the sustainable development of the planet.For example, Starbucks and Mitsubishi have recognized the importance of biodiversity and have adopted GBF targets in their commitments. This shows that companies across different sectors are starting to prioritize nature and are taking steps to address the issues at hand.

Expanding Nature-Related Commitments Beyond Carbon

Compared to 2023, the number of Fortune Global 500 companies setting firm targets for preserving or restoring nature or acknowledging nature's importance has increased across all dimensions except carbon. The share of companies with targets in chemicals and plastics, biodiversity, and forests has gone up, while those with targets in carbon, water, and nutrients or NOx has slightly decreased.This indicates that companies are expanding their focus beyond carbon and are recognizing the importance of other dimensions of nature. For instance, the increase in commitments related to chemicals and plastics may be due to policies such as Extended Producer Responsibility (EPR) legislation for packaging.

Specificity and Scope of Nature Targets Vary Significantly

The specificity and scope of nature targets set by companies vary greatly from one to another. In biodiversity, for example, targets range from protecting a certain amount of land and ocean to halting and reversing biodiversity loss. This variability presents both an opportunity and a challenge for companies.On one hand, it provides an opportunity for companies to adopt existing standards and set more specific, quantifiable targets. On the other hand, it also highlights the need to develop new approaches to measure progress against these targets.

Sectors Show Differences in Target Setting

The manufacturing sector continues to have the highest share of companies with three or more nature-related targets. However, other sectors such as construction and buildings and retail sales and services have also shown significant growth in this category.For example, the share of construction and buildings companies with no targets remains high at 52%, but among those with targets, there has been a significant increase. This indicates that progress within these sectors is concentrated among companies with existing nature-related targets.

Regional Differences in Nature Target Setting

All regions except Asia have seen a significant increase in the share of companies making three or more nature-related commitments. Latin America has experienced the largest rise, with the number of companies increasing from four out of 14 studied companies last year to eight this year.This trend is in line with Latin American countries' recent commitments to protecting nature. For instance, 22 countries in the region have joined the High Ambition Coalition for Nature and People's 30×30 initiative.In Europe, companies are also taking significant steps, driven by recent nature-focused policies such as the EU Regulation on Deforestation-free Products (EUDR) and the EU Nature Restoration Law.

The Need for Collective Action and Innovation

Corporate nature action is gaining momentum, but there is still a long way to go. Our 2022 Nature in the Balance report outlines sector-level actions that companies can take to restore natural capital.Increasing collective actions by companies highlight the private sector's deepening commitment to nature. As the momentum builds around nature and natural capital, corporate leaders have the opportunity to play a central role in bringing businesses back within the safe operating space for humanity.To further these efforts, we are collaborating with the World Economic Forum to convene global CEOs to lead business initiatives for a nature-positive future.

Philadelphia's real estate landscape is witnessing significant developments, especially in the life science sector. The $3.5 billion Schuylkill Yards project is a major player, with Brandywine Realty Trust and Drexel University topping out 3151 Market St. last year. This 435,000-square-foot building is part of an ambitious master plan. Meanwhile, other projects like Parkway Corp.'s 2000 Arch St. and Spark Therapeutics' center for gene therapy manufacturing at 3001 Chestnut St. are also making waves. The city's office space market shows both challenges and opportunities, with vacancy rates on the rise but still below the national average.

Unveiling Philadelphia's Dynamic Real Estate Scene

Philadelphia's Life Science Hub: Schuylkill Yards

3151 Market St. is a crucial part of the $3.5 billion Schuylkill Yards project in University City. Rendering courtesy of Brandywine Realty Trust showcases the grandeur of this upcoming life science tower. The market's fundamentals have been a topic of concern, with vacancy ballooning 510 basis points over the past 12-month period. However, the supply pipeline remains relatively muted, with only 1.9 million square feet under construction. Four out of the five projects underway in October were life science assets, indicating the city's growing importance in this sector.

Philadelphia had 1.9 million square feet of office space under construction as of October, representing 1.1 percent of the market's existing stock. This is 20 basis points above the national figure. When compared to peer markets, Philadelphia is ahead of Phoenix (0.4 percent of stock underway), Houston (0.7 percent), and Charlotte (0.9 percent), but lags behind San Diego (3.2 percent) and Nashville (3.5 percent). These figures highlight the city's position as an emerging hub in the life science space.

Parkway Corp.'s Chubb Headquarters: A Major Development

The Chubb headquarters will span 438,000 square feet, courtesy of JLL's rendering. The largest project underway is Parkway Corp.'s 2000 Arch St. in the Logan Square neighborhood, a 550,000-square-foot building that is a build-to-suit for Chubb. The developer obtained $409 million in credit tenant lease financing last year. This project showcases the significant investment and growth in Philadelphia's commercial real estate.

Other life science assets include Brandywine Realty Trust and Drexel University's 3151 Market St., Spark Therapeutics' center at 3001 Chestnut St., a 350,000-square-foot facility for Children's Hospital of Philadelphia set to open in 2025 with laboratory space, and 3201 Cuthbert St. by Gattuso Development Partners and Vigilant Holdings of New York, a 519,647-square-foot property with $290 million in construction financing in late 2022. These projects collectively contribute to the city's evolving real estate landscape.

Office-to-Residential Conversions: A Growing Trend

In response to rising interest in office-to-residential conversions, CommercialEdge created the Conversion Feasibility Index (CFI). Philadelphia had 43 assets, roughly 5.6 million square feet, in the Tier 1 range as of October. An additional 165 buildings were Tier 2, approximately 26.8 million square feet. For example, 1701 Market St., a 929,124-square-foot high-rise, will be converted into 299 rental apartments. Alterra Property Group secured a $70 million construction loan for this project slated for completion in Spring 2025. The property has a CFI score of 96, indicating its high potential for conversion.

Gazit Horizons is redeveloping the 76,500-square-foot Art Deco building at 1618-1622 Chestnut St. by bringing 67 units online from the currently occupied office space. This trend shows the adaptability of Philadelphia's real estate to changing market demands.

Average Price and Transactions in Philadelphia

Investors traded $316 million in assets across the metro year-to-date through October. Office space in Philadelphia continued to change hands at a below-average price per square foot, $83, compared to the U.S. figure of $177. Philadelphia also ranked last among its peer markets in terms of average price, below Houston ($104), Charlotte ($151), Phoenix ($164), Nashville ($193), and San Diego ($198).

The largest transaction was Incyte's $34.2 million purchase of the office asset at 1100 N. King St. from Capital Commercial Investments. The pharmaceutical company also bought the property at 1100 N. French St. for $13.3 million. KKR sold the 267,597-square-foot asset at 111 S. Independence Mall E for $31 million to Lubert-Adler, the second-largest transaction year-to-date through October. The Bourse building, constructed in 1895 and now housing 20,000 square feet of retail and nine floors of office space, underwent two rounds of complete renovations in 2012 and 2018.

Vacancy and Stabilization in Philadelphia

Philadelphia's overall vacancy stood at 18.9 percent as of October, below the 19.4 percent national figure. However, the metro's rate increased by 510 basis points year-over-year, while the U.S. average was up 160 basis points. Compared to peer markets, Philadelphia's vacancy is somewhere in the middle, higher than Charlotte (16.4 percent), Nashville (17.5 percent), and Phoenix (18.4 percent), but below San Diego (20.6 percent) and Houston (24.3 percent). This shows the city's unique position in the national real estate market.

Expanded Coworking Inventory in Philadelphia

In October, Philadelphia had around 2.8 million square feet of office space dedicated to coworking, which was 1.5 percent of the market's total inventory, 40 basis points below the national figure. Despite lagging peer markets, Philadelphia's amount of shared space locations grew by 9 percent from the second to the third quarter, according to CoworkingCafe. The metro now has 150 coworking locations, and the median price for monthly rates for open workspaces was $119 in September, below the average.

Not many significant deals took shape across the market in recent months. In September, Potter Anderson & Corroon LLP renewed its 82,757-square-foot lease at 1313 N. Market St. in Wilmington, Del. Earlier in November, Rubenstein Partners signed Arcfield at its Chesterbrook Corporate Center in Wayne, Pa., occupying 36,000 square feet. These transactions give an insight into the city's ongoing commercial activities.