WEBVTT - Smart Buildings Lead a Path to Sustainability

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Tim Stenebek on Bloomberg Radio.

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<v Speaker 2>Envoys representing more than one hundred and ninety nations they're

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<v Speaker 2>going to be gathering for COP twenty eight, the UN's

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<v Speaker 2>annual Climate change Conference Bailly. It's held in Dubai later

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<v Speaker 2>this week. You know, with everything going on, we can't

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<v Speaker 2>forget that world leaders have made commitments when it comes

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<v Speaker 2>to climate change.

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<v Speaker 3>Yeah, no, it's definitely interesting. And I don't know if

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<v Speaker 3>you saw the big take about China's remote deserts hiding

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<v Speaker 3>an energy revolution see that head of COP twenty eight.

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<v Speaker 3>So definitely top of mind as always, but even more

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<v Speaker 3>so given the week ahead.

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<v Speaker 2>Yeah, and think about the year that we've had right

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<v Speaker 2>in terms of the hottest on record in terms of

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<v Speaker 2>the climate. So let's get to it because someone who

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<v Speaker 2>will be there. We know that the world's two largest polluters,

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<v Speaker 2>the heads of those nations we're talking about, President Biden

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<v Speaker 2>and Chinese President Xijimping, they will not be there, but

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<v Speaker 2>our next guest will be there. Katie mcguindy is VP

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<v Speaker 2>and Chief Sustainability Officer at Johnson Controls. They make building

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<v Speaker 2>HVAC systems, building management and fire detection systems, security solutions,

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<v Speaker 2>and a lot more. She joins us on zoom from Milwaukee. Katie,

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<v Speaker 2>how are you doing terrific?

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<v Speaker 1>How are you today?

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<v Speaker 2>Doing well? Doing well? It's kind of a quiet day

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<v Speaker 2>after what's been a chaotic year to say at least.

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<v Speaker 2>First of all, I know you're head to Dubai, But

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<v Speaker 2>tell us what do you think the significance is of

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<v Speaker 2>presents Biden ag not being there. We know the two

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<v Speaker 2>have held some talks recently to step up action joint

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<v Speaker 2>action when it comes to climate change, So that's the

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<v Speaker 2>good news, But their physical presence not being there, what's

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<v Speaker 2>your view on that?

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<v Speaker 1>Well, Look, ideally they would all be there because this

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<v Speaker 1>is a critically important issue at a very sensitive and

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<v Speaker 1>important time. However, I know they will be well represented

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<v Speaker 1>and there is I think significant momentum in the direction

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<v Speaker 1>of progress on important dimensions of the climate issue that

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<v Speaker 1>both can tackle the problem as well as open up

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<v Speaker 1>new opportunities.

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<v Speaker 3>Well, Katie, decisions right, correct me if I'm wrong. They

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<v Speaker 3>have to be unanimous. So how does that play into

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<v Speaker 3>what we're going to hear and see from COP twenty eight?

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<v Speaker 1>Yeah, it was an excellent point. And when you think

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<v Speaker 1>of one hundred and ninety countries coming together and reaching

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<v Speaker 1>agreement on issues that go to the heart of their economies,

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<v Speaker 1>it is remarkable how much progress has been made. And

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<v Speaker 1>I think as we look at the issues that are

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<v Speaker 1>top of the agenda, tripling renewable energy, doubling energy efficiency,

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<v Speaker 1>those are policy priorities that can drive common ground because

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<v Speaker 1>they hit a trifecta. They help the environment, but they

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<v Speaker 1>also grow economies and provide good, home grown new jobs.

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<v Speaker 1>So I think that's a recipe to enable progress to

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<v Speaker 1>accelerate at this conference of the parties.

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<v Speaker 2>Well, we've definitely seen here in the United States the commitment,

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<v Speaker 2>the investment and you know, through legislation to help when

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<v Speaker 2>it comes to renewable energies, and that's certainly a significant way.

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<v Speaker 2>What I do wonder about is that governments are increasingly

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<v Speaker 2>around the world, the US included, Katie, you know that

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<v Speaker 2>their budget deficits are growing, and I do wonder what's

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<v Speaker 2>going to be cut going forward. So how are you

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<v Speaker 2>thinking about that and the impact it could have on

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<v Speaker 2>progress when it comes to climate moves.

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<v Speaker 1>Well, I do think that those policies that send a

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<v Speaker 1>market signal that the investment direction is in a climate

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<v Speaker 1>friendly way or incredibly important. They're coupled though, by a

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<v Speaker 1>business imperative that in buildings, for example, as you note

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<v Speaker 1>that Johnson Controls is a one hundred and forty year

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<v Speaker 1>young sustainable building technology company, and you know, we are

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<v Speaker 1>all about both cutting carbon in buildings as well as

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<v Speaker 1>giving a favor to the bottom line. So you know,

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<v Speaker 1>buildings are forty percent almost of global greenhouse gas emissions,

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<v Speaker 1>and that's just a lot of waste. When we get

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<v Speaker 1>in there and electrify those operations and put a digital

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<v Speaker 1>platform so you can have data, put data to work.

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<v Speaker 1>We're seeing buildings where we're cutting their carbon by seventy

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<v Speaker 1>plus percent while saving them more than sixty percent in

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<v Speaker 1>their electric bills. So that is a recipe to enable

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<v Speaker 1>us to both get on and accelerate action as we

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<v Speaker 1>have to do on climate while lifting economies and accelerating growth.

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<v Speaker 3>Well, Katie, how easy is it to deploy those technologies

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<v Speaker 3>and kind of what regions of the world are actually

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<v Speaker 3>set up to have things like that deployed and utilized

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<v Speaker 3>in their buildings.

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<v Speaker 1>Yeah, you know, it's a great question because people think, well,

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<v Speaker 1>maybe it's just for brand new and state of the

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<v Speaker 1>art buildings, but it's not that is the case, or

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<v Speaker 1>maybe it's just for buildings that are in the sunniest

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<v Speaker 1>parts of the planet where you can use solar energy.

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<v Speaker 1>We have worked both on the one end of the

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<v Speaker 1>spectrum with public housing authorities, community colleges where every dollar

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<v Speaker 1>is precious and we can knock twenty thirty forty percent

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<v Speaker 1>off the energy bills there and an equal amount of

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<v Speaker 1>carbon so that the carbon footprint, you're doing right by

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<v Speaker 1>the planet while you're doing right by your pocketbook. We

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<v Speaker 1>have buildings that are way north of the Arctic Circle

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<v Speaker 1>that not only are net zero buildings, they actually generate

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<v Speaker 1>more electricity than they consume and they give the rest

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<v Speaker 1>of it back to the surrounding communities through what's called

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<v Speaker 1>district energy loops. So these technologies work in every building,

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<v Speaker 1>and for every building, there is the opportunity to make

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<v Speaker 1>the people who live, work and play in those buildings healthier,

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<v Speaker 1>more productive, more engaged, while you are also dialing down

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<v Speaker 1>that energy bill and dialing up doing your part for

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<v Speaker 1>the planet. And I think what we have found is,

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<v Speaker 1>you know, sometimes I think of ESG is becoming JGB

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<v Speaker 1>just good business. Shareholders expect it, they see the weather

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<v Speaker 1>events that have been happening. They want to know their

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<v Speaker 1>investments or future proof attracting the best and brightest talent.

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<v Speaker 1>Young people are being cleared. They want to work with

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<v Speaker 1>purpose driven companies. And it is true that customers are

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<v Speaker 1>voting with their dollars as well to say give me

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<v Speaker 1>a sustainable option. So I think it comes together for progress.

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<v Speaker 2>Katie, no argument there, and again I feel like these

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<v Speaker 2>are the arguments that have been around for a couple

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<v Speaker 2>of years. Understanding that people want it. It makes good sense,

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<v Speaker 2>it's good for the environment. Having said that, if you're

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<v Speaker 2>a publicly held company, yeah, you get also make sure

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<v Speaker 2>that your shareholders are happy a old timely otherwise it's

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<v Speaker 2>going to be tricky. And I understand this idea of

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<v Speaker 2>it's good business, but you know, sometimes you've got to

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<v Speaker 2>make a decision between a CAPEX spend that's going to

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<v Speaker 2>move the needle more when it comes to earnings versus

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<v Speaker 2>doing the right thing. So how do we get around that.

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<v Speaker 1>It's a great point, and we actually have new research

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<v Speaker 1>that we'll be releasing very soon. Here a poll of

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<v Speaker 1>three thousand and five hundred senior executives, and they are

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<v Speaker 1>pointing exactly to a couple things. First of all, that

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<v Speaker 1>sustainability is a top business priority. A third of them

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<v Speaker 1>have made great progress against their commitments to reduce climate change,

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<v Speaker 1>but they all are saying, look, we don't necessarily have

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<v Speaker 1>the upfront capital, and we need partners to help us

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<v Speaker 1>accelerate our progress. I guess the bright side of the

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<v Speaker 1>downside that buildings are forty percent of global greenhouse gas

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<v Speaker 1>emissions is that when we make those buildings more efficient,

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<v Speaker 1>those interventions cash flow to the extent that companies like

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<v Speaker 1>Johnson Controls now offer net zero as a service. We'll

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<v Speaker 1>pay all that upfront capital because we know we'll see

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<v Speaker 1>a return and the incredible savings on the back end.

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<v Speaker 1>So that is something that is very important. It's a

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<v Speaker 1>solution that people need because in these days where you're

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<v Speaker 1>worried about are we going to have a recession or not,

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<v Speaker 1>every dollar needs to go to the purpose of that

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<v Speaker 1>business and this can help when you embrace decarbonization in

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<v Speaker 1>a smart way.

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<v Speaker 3>And Katie, we only have about twenty five seconds here,

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<v Speaker 3>but as Carol mentioned, a lot of companies and a

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<v Speaker 3>lot of leaders will talk, but will they actually make

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<v Speaker 3>action happen. What is going to happen this week, and

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<v Speaker 3>what actually can we take away from a meeting of

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<v Speaker 3>leaders again really quickly.

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<v Speaker 1>Yeah, there'll be some tough things like writing the check

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<v Speaker 1>to enable developing countries to grow in a more sustainable way,

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<v Speaker 1>and that'll be tough to reach agreement. But I think

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<v Speaker 1>we're going to see great progress on energy efficiency or

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<v Speaker 1>renewable energy and in understanding that we can grow the

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<v Speaker 1>world's economy even as we cut global greenhouse gas emissions.

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<v Speaker 1>And that's the imperative for us to do right now.

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<v Speaker 2>And gotta ask, all right, we'll certainly be looking for

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<v Speaker 2>some headlines out of a Cup twenty eight later on

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<v Speaker 2>this week. Katie mcguinny, VP and Chief Sustainability Officer at

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<v Speaker 2>Johnson Controls on Zoom from Milwaukee