Case research: How Prologis is popping the sustainability regulatory squeeze into alternative

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Suzanne Fallender, vp of World ESG at Prologis, the world’s largest logistics actual property firm, is an optimist who views the advanced, quickly altering regulatory panorama as an opportunity to drive good decision-making throughout the corporate — not a reporting nightmare.

With $209 billion of property underneath administration, Prologis is topic to not solely the upcoming U.S. Securities and Change Fee’s local weather disclosure necessities and the European Union (EU)’s Company Sustainability Reporting Directive, but additionally the EU’s Sustainable Finance Disclosure Laws.  

Fallender joined Prologis from the tech sector, the place she labored as international director of company sustainability at Intel Corp. Her strategy to the brand new rules is to speed up what Prologis was already doing — integrating ESG into its enterprise technique and decision-making whereas partnering with totally different groups internally to put money into and enhance knowledge methods. 

“The significance of setting objectives and integrating sustainability capabilities throughout the corporate, so that you just’re tying these two to your core enterprise technique, is basically necessary to us,” she stated. 

Right here’s Fallender’s recommendation for getting ready for the brand new rules that may function a case research for different corporations:

Determine which groups must internally align

To get forward of the curve earlier than the foundations take impact, the ESG, vitality, accounting, operations, IT and danger administration groups at Prologis received collectively to overview their knowledge and administration methods, determine gaps and plan for the way they’ll meet the brand new necessities.  

The ESG workforce’s collaboration with accounting has been particularly vital for standardizing and prioritizing the metrics the corporate will report throughout the assorted disclosure frameworks. Past aligning on core metrics, bringing the workforce leads collectively “has been actually good [for] the inner relationship piece and ‘mutual studying,'” stated Fallender. “Our ESG workforce is aware of extra [about] the metrics and the necessity for assist, whereas our operations groups introduced knowledge course of experience, and the accounting workforce [brought important] perspective about inside audits.”

The groups had collaborated earlier than, however getting ready for the rules and responding to rising investor and buyer knowledge wants has taken collaboration to a better stage.

Put money into knowledge administration and IT methods

Prologis spends a number of time on knowledge, transparency and knowledge administration methods as a result of it drives a lot of what the corporate does, stated Fallender. The corporate created a “knowledge lake,” or central knowledge repository that may “pull or push knowledge” from numerous inside and exterior sources, making certain that they’re interoperable.

Involving the IT workforce in decision-making has been necessary, Fallender stated, as a result of it may be tough to kind by the numerous software program choices for managing ESG knowledge. Fallender additionally discovered it useful to debate potential future wants for knowledge administration as a result of she’s discovered that investing in a device to fulfill your speedy wants might depart you quickly looking for a brand new device when your objectives change.

Get artistic when addressing Scope 3 knowledge gaps 

Prologis is eager to automate knowledge assortment, particularly for Scope 3 emissions, that are its largest knowledge hole. The corporate set a net-zero purpose for operations by 2030 and its worth chain by 2040, and with Scope 3 emissions accounting for 99 % of the corporate’s greenhouse gasoline footprint, Prologis has a number of work to do.

Buyer vitality use within the 1.2 billion sq. ft of warehouses, distribution facilities and different logistics services that Prologis owns, operates and develops includes 75 % of its Scope 3 emissions. The rest is embodied carbon in development constructing supplies. Accessing buyer vitality knowledge is hard, particularly as a result of Prologis, headquartered in San Francisco, operates in 19 international locations with totally different administration and lease buildings.

To extra simply entry that knowledge, and shut its Scope 3 hole, Prologis is working towards “inexperienced lease” language and altering utility metering practices. Inexperienced leases comprise language about sharing knowledge and different provisions designed to align tenant and landlord pursuits round vitality effectivity and water conservation. “It is a multiyear course of to proceed to automate that knowledge to get away from a few of the guide knowledge assortment duties, similar to asking prospects to share it,” stated Fallender. 

Use your core enterprise objectives to drive your strategy 

With out sturdy objectives to information knowledge assortment and administration, the duty can appear overwhelming. At Prologis, “we’ve come at this from [the perspective of], how does all of this work assist us create worth for the shoppers?” Fallender stated. “We don’t make these choices in a bubble.” Prologis depends on buyer advisory boards to make sure it will get their suggestions.

For instance, when Prologis set its net-zero purpose, Fallender and others helped folks throughout the group perceive the dual objectives of the dedication — each lowering Prologis’ carbon footprint and serving to prospects on their decarbonization journey. Prologis prospects have been asking for photo voltaic panels and EV charging stations, and it wasn’t at all times potential to put in these, Fallender stated. To assist implement the corporate’s net-zero purpose, Prologis modified its development pointers to incorporate photo voltaic vitality and charging station set up capabilities in all new tasks.

As Prologis builds its knowledge administration methods, its net-zero purpose and customer-centered strategy are driving its strategy. That’s why Fallender doesn’t thoughts the brand new rules’ “messiness,” or the “hockey stick price of change in elevated consideration and criticism,” as she places it. “I believe all of that signifies that we’re altering the dialog in a significant approach.”

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