Prologis cites progress toward net-zero targets

Large publicly traded real estate companies in North America are making progress in the transition to net-zero and are leveraging their massive property footprints to help abate the approximately 40% of greenhouse gas emissions contributed by buildings worldwide.

Prologis Inc., which is the largest industrial real estate investment trust globally in terms of market capitalization, achieved its initial net-zero goals ahead of its 2025 target year, according to Prologis officials. The REIT said it surpassed its goal of 21% reduction in Scope 1 and 2 emissions by becoming carbon-neutral in 2019 and reduced its Scope 3 emissions by 37% instead of the original 15% target in 2021.

The biggest challenge faced by Prologis was its scale — a real estate footprint of about 1 billion square feet across 19 countries, Chief Sustainability and Energy Officer Susan Uthayakumar said in an interview with S&P Global Market Intelligence.

"Our plan is to use that one billion square feet and put it to good use in terms of generation of renewable energy," Uthayakumar said during a panel session at the recent 2022 Urban Land Institute Spring Meeting.

Prologis is seeking to become the decarbonization partner for its global network of about 5,800 customers, many of which have multinational operations and are dealing with the transition to clean energy. The REIT is providing its customers with LED, solar, storage and other energy efficiency solutions, while investing in transportation fleet electrification and vehicle charging infrastructure.

The company is also looking to partner with utilities to give communities access to clean energy. The company's facilities, which are predominantly in major metropolitan areas and close to end customers, allow for reduced transport emissions by shortening last-mile deliveries, Uthayakumar told Market Intelligence.

The net-zero strategy involves challenging work in multiple areas such as communicating the value of these initiatives to stakeholders, factoring sustainability into the company's investment budget and underwriting the transition costs, Uthayakumar said.

Prologis will now focus on reduction of its Scope 1 and 2 emissions by 56% and its Scope 3 emissions by 40% on or before 2040.

Other real estate companies that have stepped up their net-zero goals after achieving their initial targets include SL Green Realty Corp., Kimco Realty Corp. and Equity Residential. The general pace of progress toward goals, however, remains sporadic.

The transition to net-zero carbon emissions by 2050 or sooner aligns with the Paris Agreement's goal of limiting global warming to 1.5 degrees C in order to combat the threats of climate change.