2018 ESG Impact Report - Home

Long-standing Commitment

A message from our CEO

Dear Stakeholders,

Since the company’s inception, our forward-looking vision has pushed us to seek ways that keep us ahead of the evolving supply chain. Taking the long view, we have built a portfolio of strategically located assets that meet our customers’ needs and help to solve their pain points around location, energy and labor. The rise of e-commerce and demand for shorter delivery times have led customers to seek locations closer to end consumers. With increased customer interest in automation, we continue to identify and implement solutions to maximize energy efficiency. As these influences continue to shape our business strategy, they also continue to demonstrate the importance of environmental, social and governance (ESG) within that strategy.

Our future-focused approach to ESG not only enables us to be resilient in a dynamic world, but also demonstrates leadership across the global business community. This year, we were the top-ranked U.S. company and sixth overall on the 2019 Global 100 Most Sustainable Corporations in the World list published by Corporate Knights, announced at the World Economic Forum in Davos.

Hamid R. Moghadam, chairman and CEO

We are committed to demonstrating alignment on matters such as climate change, which are important to our customers, employees, investors and communities. In 2018, we became the first logistics real estate company with an approved Science Based Target (SBT) to reduce greenhouse gas (GHG) emissions. In our innovation center, Prologis Labs, we partner with our customers to test cutting-edge technologies. These new technologies, such as motion sensors and smart meters, improve the operating efficiency of our buildings while advancing our progress toward meeting our SBTs.

In 2018, we became the first logistics real estate company in the world to have a logistics building receive WELL Certification, which uses building design to further promote customer health and well-being. We also launched the Community Workforce Initiative (CWI) in three major markets (Los Angeles, Miami, Chicago). We are partnering with local workforce development organizations to provide training and job placement to underserved communities, while helping our customers build a talent pipeline in logistics. By bridging our customer needs with community needs through CWI, we generate value, growth and goodwill in communities strategic to our business.

At Prologis, ESG is good business—a part of our strategy since our beginning. A fundamental starting block is strong governance that provides oversight at all levels. As a testament to this, our governance program has been recognized by Green Street as the best in the REIT industry for 16 years in a row.

We are uniquely positioned. No other real estate company has the portfolio, scale or infrastructure to serve customers the way we can. Taking this vision forward, building on all that we have built, is what energizes me and our team around the world every day. I am excited for our future. As I look ahead, I know our long-standing commitment to ESG is a competitive differentiator that helps us better serve our customers, deliver value to our business and stay ahead of what’s next.

Sincerely,

Hamid R. Moghadam
Chairman and CEO, Prologis, Inc.

I know our long-standing commitment to ESG is a competitive differentiator that helps us better serve our customers, deliver value to our business and stay ahead of what’s next.

Hamid R. Moghadam, Chairman and Chief Executive Officer

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Our Customer-Focused Business Model is Working

Real estate operations

leases prime logistics facilities in global infill markets where our customers want to be

Development

builds the modern assets in centers of global trade—assets that are scarce and in demand by our customers.

Strategic capital

enables responsible growth in global markets, while earning asset management and incentive fees

Our Global Leadership

Scale augments efficiency.

$87B
in assets under management (AUM)
768 MSF
owned, managed or under development
19
countries
3,690
buildings

Partnership ensures enduring value.

5,100
customers
800
multisite customers
97.2%
global occupancy rate

Business model delivers results.

87.4%
five-year TSR¹
558 bps
outperformance over MSCI US REIT Index over past five years
57%
greater dividend CAGR than REIT average²
131%
increase in net earnings per share over the last five years
61%
increase in Core FFO per share over the last five years³

1. Total stockholder return (“TSR”) is calculated based on the stock price appreciation and dividends paid to show the total return to a stockholder over a period of time. TSR assumes dividends are reinvested in common stock on the day the dividend is paid.

2. Includes REITs in the RMZ as of 12/31/2018 with data for every year in each respective period. Compound Annual Growth Rate (CAGR) weighed on market cap as of December 31, 2018, and measured over the past five years.

3. Core FFO per share is a non-GAAP measure. Please see our annual report filed on Form 10-K with the Securities and Exchange Commission for a discussion and reconciliation to the most directly comparable GAAP-measure.

Sustainability at a Glance

Our forward-looking approach to sustainable design, development, operations and culture delivers long-term value for our stakeholders.

Employees

98%
of employees completed engagement survey versus external benchmark of 70-80%¹
100%
of employees have access to career training and education
4
business days per employee per year to volunteer with charitable organizations

Customers

88%
of our top 25 customers rent our sustainably certified space, and 76% of our top 25 customers align with us in supporting the UN Sustainable Development Goals
8.4%
higher retention rates with our top customers (covering 30% of our total square footage) that engage with us through our outreach programs

Environment²

186 MW
of total solar energy generating capacity
374
sustainable building certifications in 18 countries
42%
of total operating portfolio has cool or reflective roofing
88%
of total operating portfolio has efficient lighting

Communities³

50,000+
volunteer hours
$13M
charitable contributions from the Prologis Foundation
$5M
of in-kind rent donated to local non-profit organizations through the Space for Good Program

1. Survey completed in 2017, administered every two years.
2. Environmental totals across the portfolio as of December 31, 2018.
3. Figures calculated under the Communities section are aggregated from five years of data (2014-2018).

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ESG Creates Value

As an industry leader, we show that not only does ESG benefit our communities and the environment, but it creates value for our customers, investors and other stakeholders and, in turn, grows our business.

Growth

Growth in brand value, customer loyalty and satisfaction, investor confidence, and employee and community relationships

CASBEE “A”-rated Prologis Osaka 5, Osaka, Japan

OUR MODERN, SUSTAINABLE BUILDING DESIGN AS A BRAND DIFFERENTIATOR

Sustainable Building Certifications

162% growth
53 MSF in 2014 to 139 MSF in 2018

13x greater
than S&P 500 REIT industry average^1,2

Solar

65% growth
113 MW in 2014 to 186 MW in 2018

26x greater
than S&P 500 REIT industry average^1,2

Productivity

Cost savings and value preservation through modern, efficient building design—staying ahead of our customers’ needs

LEED-certified Prologis Park Bonneuil, Bonneuil-sur-marne, France

ENERGY, WASTE AND WATER SAVINGS BENEFITING OUR CUSTOMERS

Up to 42%
estimated energy cost savings on average to customers^3,4,5

79%
of construction waste (6,880 tons) recycled and diverted from landfills^4,6

30-60%
average operational water savings^4,5,6,7

Resilience

Smart governance of financial, operational and reputational risk, building trust among stakeholders

OSHA safety procedures at Prologis I-17 Logistics Center, Phoenix, Arizona

FINANCIAL RESILIENCE
Top REIT balance sheet (A3/A- credit rating)⁸

OPERATIONAL RESILIENCE
Leveraging scale and innovation to develop proprietary data modeling and tools, assessing risk, natural catastrophe factors and future disrupters impacting our industry

REPUTATIONAL RESILIENCE
Creating a culture where ESG is owned by everyone and all are empowered to do the right thing through company-wide communications and training on strategy, risk management and ethics

1. Solar average and average square footage for sustainable building certifications based on available information in latest sustainability reports of REITs within the S&P 500

2. Source: https://www.reit.com/data-research/reit-indexes/reits-sp-indexes

3. Average over the five-year period 2014-2018

4. For developed buildings certified through our LEED Volume Program

5. Compared to a market base case per LEED certification methodology

6. Based on data for the calendar year 2018

7. Based on research from BranchPattern, our third-party LEED Volume program consultant—estimate indoor operational water savings: 30 percent; estimated outdoor operational water savings: 60 percent

8. Ratings by Moody’s and S&P, respectively. A securities rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal at any time by the rating organization.

It was important to prove our commitment to sustainability through actions, rather than words—that’s why we chose to locate our main distribution center in a Prologis building.

Adam Hall, Head of Sustainability, Internet Fusion

About This Report

Prologis' 2018 ESG Impact Report, and this newly developed ESG report microsite, describe the significant achievements and relevant initiatives that have furthered our progress toward our ESG goals and targets. This report covers our efforts across our global portfolio of $87 billion in assets under management in 19 countries serving more than 5,100 customers.

Prologis conducts its global business on four continents—the Americas, Europe and Asia—through one common operating platform that governs all entities in the Prologis group. This includes our six private funds: Prologis Targeted U.S. Logistics Fund (USLF), Prologis U.S. Logistics Venture (USLV), Prologis European Logistics Fund (PELF), Prologis European Logistics Partners (PELP), Prologis UK Logistics Venture (UKLV), and Prologis China Logistics Venture (PCLV). It also includes our two public co-investment vehicles—FIBRA Prologis (FIBRA) and Nippon Prologis REIT (NPR)—through which we conduct our operations in Mexico and Japan, respectively. For ESG initiatives, Prologis uses its scale to provide one common ESG platform that covers its private funds, FIBRA and NPR, and includes ESG principles, policies, goals and monitoring systems.¹

This report marks our 13th consecutive year of ESG reporting. We report to the Global Reporting Initiative (GRI) Standards. You can find more information about GRI, including the GRI content index on the GRI Materials page.

We also report progress on our ESG initiatives, annual GHG emissions and Task Force on Climate-related Financial Disclosures climate risk management through CDP, DJSI and GRESB. In addition, we discuss aspects of our ESG program in our 2019 Proxy Statement and 2018 Annual Report and Form 10-K, which are available in the Annual Reports section of Prologis’ IR website.

This report has been externally assured by Lloyd’s Register Quality Assurance (LRQA) using the AA1000 Assurance Standard (2008). Please see our complete External Assurance Statement and Verification Statement.

1. We do not report on the business activities of entities over which we do not exercise direct operational control—including service providers, customers, contractors, suppliers and vendors. We do include aggregated and anonymous customer energy data in our Scope 3 carbon emissions calculations that are part of our Science Based Target (SBT) for reducing greenhouse gas (GHG) emissions, and which also inform our sustainable supply chain initiatives.

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