Suzanne Fallender, vp of International 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 below administration, Prologis is topic to not solely the approaching U.S. Securities and Alternate Fee’s local weather disclosure necessities and the European Union (EU)’s Company Sustainability Reporting Directive, but in addition the EU’s Sustainable Finance Disclosure Rules.
Fallender joined Prologis from the tech sector, the place she labored as world director of company sustainability at Intel Corp. Her strategy to the brand new laws 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 spend money on and enhance information programs.
“The significance of setting objectives and integrating sustainability capabilities throughout the corporate, so that you simply’re tying these two to your core enterprise technique, is admittedly vital to us,” she mentioned.
Right here’s Fallender’s recommendation for getting ready for the brand new laws that may function a case research for different firms:
Determine which groups have to internally align
To get forward of the curve earlier than the principles take impact, the ESG, power, accounting, operations, IT and threat administration groups at Prologis obtained collectively to overview their information and administration programs, determine gaps and plan for a way they’ll meet the brand new necessities.
The ESG crew’s collaboration with accounting has been particularly essential for standardizing and prioritizing the metrics the corporate will report throughout the varied disclosure frameworks. Past aligning on core metrics, bringing the crew leads collectively “has been actually good [for] the interior relationship piece and ‘mutual studying,'” mentioned Fallender. “Our ESG crew is aware of extra [about] the metrics and the necessity for help, whereas our operations groups introduced information course of experience, and the accounting crew [brought important] perspective about inner audits.”
The groups had collaborated earlier than, however getting ready for the laws and responding to growing investor and buyer information wants has taken collaboration to a better degree.
Put money into information administration and IT programs
Prologis spends a whole lot of time on information, transparency and information administration programs as a result of it drives a lot of what the corporate does, mentioned Fallender. The corporate created a “information lake,” or central information repository that may “pull or push information” from varied inner and exterior sources, making certain that they’re interoperable.
Involving the IT crew in decision-making has been vital, Fallender mentioned, as a result of it may be troublesome to type via the various software program choices for managing ESG information. Fallender additionally discovered it useful to debate potential future wants for information administration as a result of she’s discovered that investing in a software to satisfy your rapid wants could go away you quickly trying to find a brand new software when your objectives change.
Get inventive when addressing Scope 3 information gaps
Prologis is eager to automate information assortment, particularly for Scope 3 emissions, that are its greatest information hole. The corporate set a net-zero aim 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 whole lot of work to do.
Buyer power use within the 1.2 billion sq. toes of warehouses, distribution facilities and different logistics services that Prologis owns, operates and develops contains 75 % of its Scope 3 emissions. The rest is embodied carbon in building constructing supplies. Accessing buyer power information is hard, particularly as a result of Prologis, headquartered in San Francisco, operates in 19 international locations with totally different administration and lease constructions.
To extra simply entry that information, and shut its Scope 3 hole, Prologis is working towards “inexperienced lease” language and altering utility metering practices. Inexperienced leases comprise language about sharing information and different provisions designed to align tenant and landlord pursuits round power effectivity and water conservation. “It is a multiyear course of to proceed to automate that information to get away from a few of the guide information assortment duties, comparable to asking prospects to share it,” mentioned Fallender.
Use your core enterprise objectives to drive your strategy
With out sturdy objectives to information information 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 mentioned. “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 aim, Fallender and others helped individuals throughout the group perceive the dual objectives of the dedication — each decreasing 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 all the time potential to put in these, Fallender mentioned. To assist implement the corporate’s net-zero aim, Prologis modified its building tips to incorporate photo voltaic power and charging station set up capabilities in all new initiatives.
As Prologis builds its information administration programs, its net-zero aim and customer-centered strategy are driving its strategy. That’s why Fallender doesn’t thoughts the brand new laws’ “messiness,” or the “hockey stick price of change in elevated consideration and criticism,” as she places it. “I feel all of that implies that we’re altering the dialog in a significant means.”
