Logistics & Industrial Asset Optimisation

Addressing ESG Risk & Opportunity

While there is no “one-size-fits-all” solution, the following areas could provide opportunities for industrial and logistics asset managers and owners when seeking improvement in ESG credentials for operational assets:

Environmental, Social, and Governance (ESG) considerations have rapidly risen to prominence within the Logistics & Industrial sector over the past few years. This has not only been driven by legislative changes but also firm commitments by companies to improve ESG performance at every stage of the product manufacturing and transportation cycle, especially their supply chain. For occupiers, real estate may only constitute a small proportion of their carbon emissions given wider supply chain considerations such as transport of raw and finished products. However, the location of manufacturing and warehousing sites is an important consideration. Optimum site selection can not only reduce transport costs, but also transport emissions and so can make a meaningful contribution to sustainability initiatives1. From an asset manager’s viewpoint, addressing ESG risk means taking a more holistic view of tenants’ targets and identifying where they can play a facilitatory role. At the more complex end of the spectrum this could be by enabling relocation to optimise supply chain efficiency. For tenants not wishing to relocate, or at least not yet, other opportunities exist. For example, many industrial leases are “triple net”, whereby the tenant is responsible

for paying the operating expenses associated with the property. Not only does this mean that the asset manager has little oversight of the buildings ESG performance, such as power utilisation, it can also limit a tenant’s ability to adopt more sustainable operating practices as the financial commitment might not match the risk exposure. social value. Arguably this is more difficult in the logistics and industrial sector given the location of assets and the nature of operations they undertake, though at the fundamental level they provide significant employment opportunities across a range of occupation types. Notwithstanding this, forward-thinking landlords have these opportunities firmly in their sights and have introduced more options for active, collaborative and public transport, greater adoption of green space, the introduction of wellbeing initiatives and organising community engagement events. Beyond environmental considerations, there is an increasing need to generate

LOGISTICS & INDUSTRIAL ASSET OPTIMISATION FOR TOMORROW

Supply chain optimisation

Achieve sustainability accreditation

Explore different lease structures

Understand tenant ESG targets and their key pain points

CUSHMAN & WAKEFIELD

Install smart building (monitoring) technology

Focus on the requirements of tenants’ employees

Identify opportunities for community engagement

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