On Thursday, listed HVAC and building technology firm Johnson Controls announced a strategic partnership with private equity investor Apollo Global Management, the alternative assets giant with $472 billion in managed client assets, to provide energy efficiency and other “smart building” services for clients looking to meet real estate decarbonization goals.
The new venture will provide customers in the U.S. and Canada with performance-based energy efficiency and smart buildings services at zero upfront cost and predictable monthly fees.
These services will build upon Johnson Controls’ decades of experience in energy efficiency performance contracting, along with its OpenBlue smart buildings technology and services, including its recently launched OpenBlue Net Zero Buildings as a Service initiative. Apollo will bring to the partnership its infrastructure expertise and fund capital.
“Johnson Controls is a trusted global leader in sustainable buildings, and we’re thrilled to combine their expertise and scaled suite of services with our fund capital and experience to bring customers fully financed, turnkey solutions to lower energy costs, improve energy reliability and reduce their carbon footprint,” said Geoffrey Strong, Senior Partner and Co-Head of Infrastructure and Natural Resources at Apollo. “We see strong and enduring demand for greater energy efficiency and sustainability. This new venture will help companies find innovative, more affordable means to take on these critical infrastructure projects and aligns with Apollo’s longstanding commitment to ESG.”
The venture targets a range of efficiency offerings tailored to schools, campuses, data centers, healthcare facilities as well as commercial and industry facilities, as more customers look to meet environmental standards to combat climate change and reach their carbon neutrality goals. The partnership provides a new strategic option for addressing the North American segment of the estimated $240 billion global market for decarbonization retrofit and services over the next decade.
“Meeting decarbonization, energy efficiency and sustainability goals while managing risk and reducing cost is a clear priority for our customers,” said Johnson Controls Executive Vice President and CFO Olivier Leonetti. “This new venture with Apollo combines strategic capital with our cutting edge OpenBlue services to provide customers with guaranteed outcomes and risk management models to achieve emission reductions and sustainability commitments and contribute to healthier buildings, people, places and planet.”
Earlier this year, Johnson Controls surveyed more than 1,000 North American firms on their efforts to reduce carbon emissions and energy consumption, and found that 90 percent of companies have “significant 2030 onward goals” to curtail building carbon emissions and energy usage. At the sector level, their research found that data centers have the most ambitious decarbonization goals, followed by lodging and education. Johnson Controls found that investors are leading the charge for more aggressive sustainability targets, with some $12 trillion in global assets now managed by dedicated ESG investors.
