Prologis · Physical Exposure and Transition

Embodied carbon in new build and major refurbishment. Concrete and steel decarbonisation pace caps how fast REITs can reduce dev-pipeline emissions.

Construction-related activities account for roughly 21% of Prologis' GHG footprint, making concrete and steel the largest controllable Scope 3 lever after tenant energy in its development pipeline [E1][E2]. As a global developer of logistics buildings and distribution centers, Prologis' exposure runs through cement- and steel-intensive shells, slabs, and structural frames built across its US and international pipeline, with life-cycle assessments completed on select buildings (six DCs in 2022, 57 UK buildings) to quantify this exposure [E1][E2].

Prologis has targeted 100% carbon-neutral construction globally by 2025, pursued via material substitution plus offsets for residual emissions [E3][E4]. Concrete measures include lower-carbon concrete (Nexiite, carbon-storing concrete) and circular/bio-based materials (e.g., Waalwijk DC3 at 30% circular content), while steel measures include substituting mass timber for steel framing (Portland OR, Ontario CA) and specifying 80%+ recycled-content steel in US procurement [E1]. Supporting levers include digital materials passports, local sourcing of 25-30% of materials, and life-cycle assessments to identify reduction opportunities, alongside a shift to sustainable certification (LEED or equivalent) for 100% of eligible new developments/redevelopments since June 2021 [E1][E5][E6][E8].

Direct heating and cooling — moving from gas boilers to heat pumps cuts both Scope 1 (landlord) and Scope 3 cat 13 (tenant). Equipment supply chain is the rate-limiter.

Prologis's landlord Scope 1+2 footprint is already small (6,703 tCO2e in 2024) since most warehouses rely on limited onsite gas heating, but tenant energy use inside leased buildings dominates the footprint at 3.2M tCO2e of Scope 3, representing 99.9% of total emissions [E7]. Replacing gas-based heating with electric heat pumps in new developments and retrofits directly cuts both the landlord's Scope 1 and the tenant-facing Scope 3 cat 13 exposure, and is already embedded in design standards for new logistics parks [E1]. Data center conversion of select sites adds a new, more power-intensive load profile that raises the stakes on electrified, low-carbon building systems [E4][E6].

Prologis's design standards mandate more-efficient lighting and electrification of onsite equipment, eliminating natural-gas heating where feasible, with heat pumps already deployed at Perris DC 6 & 8 in California, a no-gas-connection building at Prologis Park Moissy II in Paris (rooftop solar plus borehole geothermal), and a ZEB-certified facility in Inagawa, Japan [E1]. Sustainable building certification is now standard practice, with heat pumps, cool roofs, LED lighting and EV charging integrated into 100% of eligible new developments and redevelopments stabilized in 2025 [E3]. The company retired its standalone cool-roofs target in 2020 due to methodological issues but retains cool-roof installation where it delivers energy savings, alongside broader customer-facing energy solutions (onsite solar, storage, EV charging) via the Prologis Essentials platform to address the tenant energy Scope 3 lever [E2][E7].

Insulation, glazing, airtightness improvements cut heating load before electrification even starts. Without envelope retrofit, heat-pump conversions undersize or underperform. Retrofit-supply-chain depth (insulation, glazers, MEP installers) caps the achievable refurb rate.

As a global industrial/logistics landlord, Prologis' carbon footprint is dominated by tenant energy use in leased warehouses and embodied carbon in new construction, not by fabric retrofit of older stock — Scope 3 emissions of 3.21M tCO2e dwarf Scope 1+2 of 6,703 tCO2e in 2024. The evidence shows the company's building-performance strategy is built around third-party sustainable certification (LEED, BREEAM, CASBEE, DGNB, WELL) for new developments and redevelopments rather than disclosed envelope-specific measures like insulation, glazing or airtightness upgrades on existing assets [E2][E3][E4]. There is no disclosed operational detail on retrofitting the envelope of the existing 1.2 BSF portfolio's non-certified buildings (roughly 80% of the portfolio remains uncertified) [E4].

Since June 2021, Prologis requires 100% of Investment-Committee-approved new developments and redevelopments to achieve a sustainable building certification, reaching 19.41% (235 MSF) of the portfolio certified by 2022 and confirmed as achieved/in-process for 100% of eligible 2025 projects [E2][E4][E7]. Its main construction-phase lever is embodied carbon reduction via low-carbon and circular/bio-based materials (e.g., 30% circular/bio-based content in the Waalwijk DC3 and Netherlands data center) plus a LEED Volume Program, rather than a stated envelope-retrofit program for existing buildings [E1][E5]. Tenant-facing energy efficiency is addressed through Essentials/Energy Solutions offerings (LED lighting, on-site solar, battery storage) that target customer Scope 2 reduction inside leased space, but no envelope-specific retrofit initiative (insulation, glazing, airtightness) is disclosed in the extracted reports [E8].

Landlord can install the kit; tenant behaviour + monitoring determines whether it gets used as designed. Smart-meter, sub-metering and post-occupancy-evaluation deployment rates govern realised vs designed performance.

Downstream leased assets — tenant energy use in Prologis' logistics buildings — account for 99.9% of the company's total emissions footprint, with Scope 3 at 3.21 million tCO2e in 2024 versus just 6,703 tCO2e for Scope 1+2 combined [E2][E3]. Because Prologis owns the buildings but tenants control operational energy use (lighting, equipment, refrigeration), realised performance depends on lease terms enabling data access and on tenant uptake of installed kit like solar, LEDs and smart meters [E1][E2].

Prologis addresses this through its Clear Lease green-lease framework, which embeds utility-data-sharing rights and enables installation of sustainable features; ~31% of leased area globally was under Clear Lease by end-2022 [E1]. Smart metering and real-time consumption data are delivered via the Essentials platform, alongside LED rollout (42% of portfolio by end-2020, targeting 100% by 2025, cutting consumption 60-80%), cool roofs (44% of portfolio) and SolarSmart on-site solar [E2]. The Essentials/Energy Solutions business has expanded into turnkey warehouses, battery storage, heat pumps and EV charging, exceeding its 2025 stretch goal with $60.2M contribution, while rooftop solar and storage capacity across the owned-and-managed portfolio reached 1.1 GW at end-2025 [E4][E5][E8]. New developments are also required to achieve sustainable certification (LEED, BREEAM, etc.) since June 2021, with 19.41% of the portfolio certified by 2022 [E7].