Energy Emissions Reduction
Increase operational efficiency and lower energy costs
70% energy and cost savings from LED lighting benefit package2
45% average energy savings in Prologis LEED buildings2
Carbon Offsets and Renewable Energy Credits (RECs)
Neutralize remaining emissions after reduction efforts
90% of our top 25 customers have carbon emissions reduction goals
We seek to create and invest in REC/offset opportunities to advance joint efforts with our customers to meet mutual carbon reduction goals.
Further reduction of carbon impacts positioning us as the partner of choice
Carbon mitigation partnerships, including our Cool Earth partnership, have proven useful in meeting regulatory requirements for carbon reductions, such as the 10% reduction that was required for our DIRFT park.
Prologis is the first real estate company on the S&P 100 to achieve operational carbon neutrality.1
2. Average over the five-year period (2015-2019) for developed buildings certified through our LEED volume program compared to a market base case per LEED certification methodology.
Customer-Focused Building Design
Our modern, efficient and resilient building design saves money for our customers and minimizes impacts on our communities. Our customer-centric location strategy is focused on more infill locations closer to consumers. This allows our customers to meet consumer expectations around expedited delivery, while also reducing overall transportation emissions with shortened delivery distances. In addition to building location, we continue to explore innovative design features to improve our customers’ experience and minimize our impact on the environment.
We integrate energy and water reduction technologies into our buildings, redevelop brownfield and infill sites, and pursue sustainable building certifications for our development projects where appropriate. High-quality insulation, ventilation and lighting minimize operating costs and promote occupant comfort and productivity. As our customers continue to automate their warehouse operations, energy efficiency technologies become more valuable. Designed for resilience, our buildings have demonstrated their ability to withstand natural disasters, enabling operational continuity for our customers and their employees. These strategies ensure the resilience and enduring value of our buildings, benefiting our customers and our company.
In line with our commitment to environmental stewardship, Prologis has gained ISO 14001 certification for our development management activities. We have been certified under ISO 14001 in the European Union and UK since 2008, North America since 2016 and Japan since 2018. This series of international standards on environmental management provide a framework for the development of our global Environmental Management System (EMS) and supporting audit program.
Sustainable Building Certifications
We provide our customers with modern, efficient facilities to help them meet their business needs. Our progress in expanding sustainable design features—such as efficient lighting, solar installations and cool roofing material, as well as increasing our number of sustainable building certifications—underscores this commitment. In 2014, Prologis became the first warehouse developer to participate in the LEED Volume Program, which streamlines certification, creating a competitive advantage for Prologis because we can secure certifications quickly and efficiently. Certifying under Prologis’ LEED Volume Program has saved Prologis approximately $20 million since 2014 (compared to non-Volume certification). Our standard specification, strategic business partnerships, and scale contributed to this savings. Prologis' standard specification is designed to local sustainable certification standards, which embeds sustainability in all buildings we develop. Prologis’ specification allows us to participate in the LEED Volume Program without incurring exorbitant additional incremental development costs while maintaining our high standards throughout our global portfolio. Our scale and development allows us to utilize the Volume Program, which provides benefit when certifying many properties. As of year-end 2019, we had accumulated 169 million square feet of sustainably certified spaces across 456 projects in 18 countries since 2006.
Lighting is a primary source of electricity consumption in distribution centers. In recent years, lighting technology has evolved rapidly with light-emitting diodes (LEDs) surpassing other lighting types in efficiency. Installing LEDs can reduce electricity consumption and associated costs by as much as 70% compared to traditional warehouse lighting, yielding a rapid investment payback. In addition, the long lifespan of LED fixtures reduces lighting-related maintenance needs, thereby simplifying operations and producing savings we can pass on to our customers.
Because of the technological and energy efficiencies of LED fixtures, this is the last year Prologis will report on efficient lighting versus LEDs specifically. By the end of 2019, 88%1 of our global operating portfolio had efficient lighting. Further, 33%1 of our portfolio had LED lighting, a greater than double increase in coverage over the last three years (14% LED coverage in 2017).
Prologis Essentials LED
Prologis led the charge to establish LED lighting as a standard in logistics real estate. In 2019 alone, an additional 50 million square feet (MSF) of our portfolio realized the productivity benefits of LEDs. Through Prologis’ procurement and dedicated manufacturing of LED lighting fixtures, the additional 50 MSF of LED lighting coverage came at a $15 million savings compared to what the fixtures would have cost without our scale-enabled procurement.
Since 2017, we have more than doubled our LED coverage. We expect to accelerate our transition to 100 percent LED lighting across our global portfolio through our Prologis Essentials LED program. This program offers customers the opportunity to upgrade their lighting without upfront capital costs, but with reimbursement throughout the duration of their lease. Prologis Essentials LED allows all customers, of all sizes and in all markets, to enjoy the benefits of LED lighting. LEDs foster a better work environment by enhancing safety and boosting employee productivity. Another upside is that well-lit and appealing workspaces promote greater employee satisfaction and decrease turnover—a definite plus for our customers.
additional square feet illuminated with LED lighting in 2019.
Energy Use Reduction and Monitoring
In Japan, our team partnered with an LED manufacturer to develop a motion-sensing LED light fixture that reduces customer energy use by 82% when compared to fluorescent lighting. In recognition of this innovation, our team received the 2018 Good Design Award from the Japan Institute of Design Promotion and the 2019 Energy Conservation Award from the Energy Conservation Center, Japan.
Installing white or reflective roofing materials, known as cool roofs, is a proven way to reduce customer energy consumption inside buildings in certain climates. The white surface of a cool roof reflects more sunlight and absorbs less heat than a standard roof. Cool roofs produce a range of benefits: energy savings for customers, lower temperatures and greater comfort in the building for customer employees, reduced cost of roof maintenance and replacement for building owners, and a reduction in the urban heat island effect—the warming of the air that occurs as the sun’s heat is absorbed by roads, buildings and rooftops.
At the end of 2019, 46% of our global portfolio had cool or reflective roofing, up from 42% in 20181.
Prologis has long been a leader in rooftop solar installations, often viewed as a brand differentiator by our stakeholders. Most recently, we were ranked third in the U.S. for corporate solar installed capacity by the Solar Energy Industries Association (SEIA). In 2019, Prologis added 26 megawatts (MW) of solar, surpassing our goal of 200 MW by 2020 and bringing our total to 212 MW of generating capacity in nine countries. Together these installations produce enough emissions-free energy to power approximately 32,770 average U.S. homes per year. Building on our strong momentum, we set a goal to double our generating capacity with a target of 400 MW by 2025.
As our customers pursue their own environmental goals and carbon-reduction targets, deploying Prologis-installed solar energy at our warehouses is an example of shared value creation made possible by our experience, scale and core business strength.
Responding to emerging customer interest in renewable energy solutions, our customer-focused solar program is being elevated by our Prologis SolarSmart program. The solar system installations are sized to meet the specific energy demands of customers, enabling them to power a significant portion of their operations from the clean energy generated by the Prologis solar system.
Integrated Energy Solutions
Our 116,000 square foot state-of-the-art, rail-accessed logistics building at DIRFT in the UK utilizes an integrated solution of a solar photovoltaic (PV) system and three 15 kilowatt hours (kWh) Tesla Powerwall battery storage units. This integrated system has helped our customer realize energy and cost savings by self-generating 43% of their electrical energy requirements.
Energy Consumption Monitoring and Electric Vehicles
Tools to monitor and manage energy consumption are essential for customers seeking to become more energy efficient. Given that the majority of our assets are triple-net leased and our customers have direct control of utility bills, we pursue numerous customer-engagement strategies to obtain whole-building energy data for benchmarking, building performance and ESG reporting. Our engagement strategy includes energy-sharing parameters in our lease agreements. This earned us Gold-level Green Lease Leader recognition in 2018, the first in the logistics real estate industry. Where we are able to obtain access to whole-building data, we enter and track energy, GHG emissions, and water and waste data through the Urban Land Institute’s Greenprint Center for Building Performance environmental management platform: Measurabl.
We also capture information on energy consumption in our corporate offices to better understand our own energy-related GHG emissions and work toward our goal of minimizing our impacts on climate change.
In addition to improving building efficiency and energy monitoring, we also provide our customers with other means to reduce their own carbon footprints, such as charging stations for electric vehicles (EVs) and trucks. As more customers consider the integration of EVs in their fleets and for their employees, we are proactively ensuring our buildings are capable of supplying sufficient electricity. While we are still in the early stages of this program, we already have over 110 properties outfitted with EV and electric truck charging stations across our global operations.
Gradually across our global operations, existing gas, electric and water meters are being replaced with smart meters, which increase visibility into patterns of use and create opportunities to boost efficiencies for Prologis and our customers. Building on a successful pilot in Central and Eastern Europe, Prologis has begun to introduce smart meters in Prologis parks across the world while partnering with software developers to increase the relevance and viability of emerging technologies that provide greater access to transparent data for the customer. Beyond enhancing the ability to analyze energy consumption, smart meters improve customer service by simplifying year-end reconciliation payments.
Logistics facilities generally do not consume much water compared to other types of buildings. Even so, we recognize the environmental and business gains that can be realized for our customers by adopting an integrated approach for how we use and manage resources. Where possible, we design landscaping that captures and recycles runoff or doesn't require high volumes of water. Many of our buildings are equipped with water-saving features, such as low-flow toilets, motion-activated faucets and systems to capture rainwater for irrigation. We also continue to explore sustainable technologies, including a water-saving technology that improves the efficiency of water systems in the building, resulting in lower utility bills for our customers.
Waste Management and Recycling
Minimizing our use of materials and maximizing the quantity of materials we recycle is critical to the efficiency of our buildings and construction practices. During the construction phase of every development project, we set up dedicated areas for collection and storage of recyclable materials to divert waste from landfills. When possible, we use materials that are either recycled or contain a high level of recycled content. In addition, 25 to 30% of building material is locally sourced and manufactured for new development projects. This produces buildings with a minimal impact on the environment that are suited to meet our customers' needs.
Effectively identifying and managing risk is critical to maintaining continuity for our customers and our business. We recognize the potential impact of extreme weather events and natural disasters, including seismic activity, on our facilities. To protect our customers’ operations from natural disasters and adapt to climate change across the globe, we invest in the latest innovations designed to ensure the resilience of our buildings. Resilient buildings provide value for our stakeholders because they withstand extreme weather and natural disasters more effectively, and they reduce the cost and waste associated with damage and reconstruction. We maintain detailed emergency response and communications plans for each building in our global portfolio, and we have construction crews and supplies on standby in areas where natural disasters are more likely. In earthquake-prone areas, such as Japan, our buildings have seismic isolation systems that function as shock absorbers during earthquakes. In addition, many of our buildings in Japan include early warning systems and backup energy and water supplies. In potential flood-prone areas, Prologis buildings benefit from being located in higher-elevated areas, as well as flood mitigating designs, such as increased floor heights and water-diversions systems.
Mitigating Environmental Impact with Urban Core Development
The strategic location of our properties is essential to meeting our customers’ needs. As our customers look to reduce transit times and associated carbon emissions to meet their own customers' expectations for next-day and same-day delivery, we stay ahead of their needs by investing in the development of infill sites close to urban cores.
Today, more than half of our global portfolio are located in the urban core, many of which are positioned to enable Last Touch® delivery to consumers. These projects offer shorter delivery routes and spur local economic development. We target buildings and development opportunities in locations close to major transportation hubs—such as ports, airports, railways and highways—and seek sites in busy centers of commerce and consumption. From an ESG perspective, infill locations shorten the distance goods travel to reach consumers, thereby reducing supply chain-related carbon emissions.
As necessary, we remediate environmental contamination, put abandoned or brownfield land to higher and better use, and enhance or build new infrastructure. Globally, Prologis has enhanced communities with nearly 20 million square feet of brownfield industrial redevelopment to high-quality, Class-A real estate and infrastructure since 2007.
We strive to ensure that our building designs are sustainable and provide a healthy place for people to work. Similarly, promoting biodiversity and ensuring the health of plants and wildlife in and around the built environment is integral to sustainability. Acting as a good neighbor in the way we maintain our properties makes us welcome to do business in communities around the world. Furthermore, by focusing on infill redevelopment, often with legacy contamination issues, we promote biodiversity in two key ways: (1) we clean up potentially harmful ecosystem contaminants; and (2) we recycle land.
All of our new developments are subject to rigorous environmental permitting processes, including evaluation of sensitive habitats and protected species and implementation of projects to protect them. In our development processes, we adhere to local codes and guidelines, including those governing biodiversity. Where possible, we incorporate landscaping and bioswales to protect flora and fauna and decrease contaminants in stormwater runoff.
We continuously seek innovative ways to promote biodiversity globally. For example, Prologis mitigates 100% of the whole-life carbon emissions for our new properties in the United Kingdom through avoided deforestation by supporting Cool Earth’s community-led rainforest protection projects, saving over 3.2 million trees since 2008.
Furthermore, our long-standing Cool Earth partnership provides a Life Cycle Assessment of our efforts to reduce or mitigate the whole-life carbon emissions of our properties. The assessment measures embodied carbon in accordance with the BS EN ISO 14040 series of standards. Prologis reduces embodied emissions by efficient design, specifying low carbon materials and minimizing construction waste. The Cool Earth assessment has helped Prologis developments in the United Kingdom lock in over 3.5 million tonnes of carbon dioxide in forests in Peru and Papua New Guinea. This makes it one of the most successful and effective embodied carbon mitigation programs anywhere in the UK and has led to a lasting global impact.
There’s a clear business case for promoting biodiversity because it aligns with the interests of all of our stakeholders. Being a good and sensitive neighbor gives us the social license to develop and operate in communities around the world.
Customer-Centric Location Strategy
ESG is a key aspect of the value we deliver to our stakeholders. This is evidenced by the quality of our assets and our location strategy that are crucial components of how we build sustainable value for our customers. Our customers are increasingly focused on the consumption end of the supply chain. In response to this shift, our in-house research team developed a new language to classify our assets. Each classification type offers ESG benefits. For example, the ample roof space on our Gateway distribution facilities can support large solar installations. Closer to the end consumer, Last Touch® facilities offer shorter transportation distances, which in turn reduce emissions associated with distribution. Across the logistics supply chain, Prologis is bringing state-of-the-art ESG benefits to our customers and communities.
Estimated 15% lower end-to-end environmental impact for online e-commerce versus in-store shopping
BREEAM "Very Good" accreditation, solar panel installation, LED lighting
BELS 3-star accreditation, solar panel installation, multi-level
BREEAM Outstanding accreditation, electric vehicle charging
Infill location, LED lighting, community mural on exterior
In 2019, Prologis developed a carbon-neutral logistics facility for a customer in Muggensturm, Germany. Overall emissions had to first be reduced before applying offsets to achieve carbon neutrality. To reduce emissions, the building is equipped with reinforced insulation, LED lighting and low-emission building materials. It uses green energy from wind turbines and has a 2.0-megawatt photovoltaic system. The renewable electricity produced is fed back into the local utility grid. To achieve the operational carbon neutrality for the logistics facility, with the overall difference between emissions and the use of renewable energy plus carbon offsets equal zero.
120% of emissions neutralized through renewable energy procurement and solar installation to buffer against any future changes in energy use
A 30,000 square meter green roof
B LED Lighting and low-emission building materials
C 7,400 solar panels generating 2.0 MW
D Partially powered by wind turbines offsite
Green bonds are used to fund projects that increase sustainability and reduce environmental impacts. The strength of our sustainable building program allows us to tap into green financing and attract environmentally conscious investors. Prologs affiliates issued green bonds in Europe (in March 2018, November 2018, July 2019, and January 2020) and Japan (in August 2018). Use and management of the bond proceeds, the process for project evaluation and selection, and reporting are guided by the Prologis Green Bond Framework. Additionally, when Prologis recast its global line of credit, it included an ESG-related mechanism that reduces the borrowing spread if and when certain sustainability benchmarks are achieved.
Prologis continued to maintain its leadership as a 2019 Gold-level Green Lease Leader by the Institute for Market Transformation and the U.S. Department of Energy’s Better Buildings Alliance. Working across a range of real estate owners, tenants, brokers and other stakeholders, green leasing sets terms and provides a framework for landlords and tenants to ensure operating practices and capital investments are environmentally beneficial. These collaborative relationships, which also includes our engagement with customers through our Customer Sustainability Advisory Council, help to unlock value for both our customers and our business.