Suzanne Fallender, vp of World ESG at Prologis, the world’s largest logistics actual property firm, is an optimist who views the complicated, quickly altering regulatory panorama as an opportunity to drive good decision-making throughout the corporate — not a reporting nightmare.
With $209 billion of belongings beneath administration, Prologis is topic to not solely the upcoming U.S. Securities and Trade Fee’s local weather disclosure necessities and the European Union (EU)’s Company Sustainability Reporting Directive, but additionally the EU’s Sustainable Finance Disclosure Rules.
Fallender joined Prologis from the tech sector, the place she labored as international director of company sustainability at Intel Corp. Her method 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 completely different groups internally to spend money on and enhance knowledge methods.
“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 necessary to us,” she mentioned.
Right here’s Fallender’s recommendation for making ready for the brand new laws that may function a case research for different corporations:
Determine which groups have to internally align
To get forward of the curve earlier than the foundations take impact, the ESG, vitality, accounting, operations, IT and threat administration groups at Prologis bought collectively to assessment their knowledge and administration methods, determine gaps and plan for a way they may 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 assorted disclosure frameworks. Past aligning on core metrics, bringing the crew leads collectively “has been actually good [for] the inner relationship piece and ‘mutual studying,'” mentioned Fallender. “Our ESG crew is aware of extra [about] the metrics and the necessity for assist, whereas our operations groups introduced knowledge course of experience, and the accounting crew [brought important] perspective about inner audits.”
The groups had collaborated earlier than, however making ready for the laws and responding to growing investor and buyer knowledge wants has taken collaboration to the next degree.
Put money into knowledge administration and IT methods
Prologis spends a whole lot of time on knowledge, transparency and knowledge administration methods as a result of it drives a lot of what the corporate does, mentioned Fallender. The corporate created a “knowledge lake,” or central knowledge repository that may “pull or push knowledge” from varied inner and exterior sources, guaranteeing that they’re interoperable.
Involving the IT crew in decision-making has been necessary, Fallender mentioned, as a result of it may be tough to type 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 realized that investing in a instrument to fulfill your fast wants could depart you quickly looking for a brand new instrument when your objectives change.
Get inventive when addressing Scope 3 knowledge gaps
Prologis is eager to automate knowledge assortment, particularly for Scope 3 emissions, that are its greatest knowledge 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 p.c of the corporate’s greenhouse fuel footprint, Prologis has a whole lot of work to do.
Buyer vitality use within the 1.2 billion sq. toes of warehouses, distribution facilities and different logistics amenities that Prologis owns, operates and develops includes 75 p.c 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 nations with completely 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 among the handbook knowledge assortment duties, comparable to asking clients to share it,” mentioned Fallender.
Use your core enterprise objectives to drive your method
With out robust 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 purchasers?” Fallender mentioned. “We don’t make these selections 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 lowering Prologis’ carbon footprint and serving to clients on their decarbonization journey. Prologis clients had been asking for photo voltaic panels and EV charging stations, and it wasn’t all the time attainable to put in these, Fallender mentioned. To assist implement the corporate’s net-zero aim, Prologis modified its development tips to incorporate photo voltaic vitality and charging station set up capabilities in all new initiatives.
As Prologis builds its knowledge administration methods, its net-zero aim and customer-centered method are driving its method. 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 approach.”
