By analysing our greenhouse gas (GHG) emissions inventory - incorporating Scope 1, Scope 2, and Scope 3 emissions - we can better understand our own emissions as well as those of our entire value chain. Scope 3 emissions, predominately generated by our tenants and their activities, represent over 99% of our total emissions and will be a key focus in our decarbonisation efforts. More detail on our GHG emissions reporting and data can be found here.

 

We have pledged to reduce greenhouse gas emissions to net zero across the Group in line with national targets. We plan to be Net Zero for Scope 1, 2 and 3 across our German portfolio by 2045 and UK by 2050. 

However, our immediate focus is on our short- to medium-term decarbonisation pathway to 2030, as we believe this is most relevant and in the interest of our business and stakeholders. We have set out an overview of our intended pathway on page 8 of our 2024 ESG Report. Our plan takes into account the EU-supported Carbon Risk Real Estate Monitor (CRREM) tools and the UN-supported Science-Based Targets initiative (SBTI)
framework, considered the gold standard for real estate net zero target setting.

Our ambition is to reduce our carbon emissions intensity per square meter for Scope 3 emissions by 45% by 2030 using 2021/22 as our base year.

We will review our ambition each year, taking into account the unique dynamics of our portfolio where the age, scale, and multiple uses of our assets add complexity to creating a decarbonisation pathway. As part of this, we will also work to enhance our data and assessments to ensure our net zero pathway is realistic and achievable.

Our pathway assumptions

Our decarbonisation ambition is based on a number of assumptions, which we will review over time. It is based on CRREM version 2.0 with a location-based approach for carbon emissions factors. Currently, the CRREM methodology does not have a target pathway for industrial sites, which means that the energy consumption of our tenant industrial processes is not reflected in our reduction ambition. Our current ambition also excludes the Titanium venture with AXA IM Alts, of which we hold 35%.

At the same time, we recognise that our ambition relies on the predicted decarbonisation of the national grids. Should the German or UK national grid decarbonise faster or slower than anticipated, we will need to review the implications for our decarbonisation plans. Additionally, the ambition is based on our current portfolio, which, due to strategic acquisitions and sales of assets, will change over time. Moreover, the reduction ambition does not include embodied carbon. These will be addressed through a separate programme of engagement with our suppliers.

Equally, with our large industrial assets, decarbonisation can only be achieved through partnership with our tenants, and this will take time as we coordinate with their plans. It is something we will be working towards over the coming years.

Our understanding and assessment of our Scope 3 emissions will continuously evolve due to these assumptions and as we gain further insight into our tenant's energy use and requirements. We must also account for changes to Government policy and science-based frameworks.

As our pathway develops, our assessment of required investment may change. Still, we expect the required investment to ensure we remain aligned with our ambition to be absorbed within the normal course of our planning and budgets.

Our carbon reduction initiatives

We have already achieved our net zero emissions target in Germany for Scopes 1 and 2 with minimal use of validated carbon offsets. This was accomplished by ensuring that our asset management offices across the portfolio were powered by almost 100% renewable energy and by continuing to improve on our energy efficiency.

Across our portfolio in Germany, the proportion of renewable electricity against total electricity provision is forecasted to be 99.7%. In the UK, we continue to provide a high proportion of low-carbon energy to our properties, with the proportion of renewable electricity against total electricity provision of 73%.

We have also achieved carbon neutrality in the UK for Scopes 1 and 2 for the first time, again through renewable energy and energy efficiency initiatives and the purchase of a small number of validated carbon offsets. Enhancing our portfolio remains essential to advancing our broader goals of carbon reduction and energy efficiency.

Throughout the year, we:

• Continued replacing conventional lighting with LEDs
• Reviewed our waste and water processes
• Improved measurement through smart metering
• Continued to assess our heating systems.

We remain on track to complete our rollout of smart energy meters by 2027 in Germany. In the UK, almost 90% of sites are equipped with smart meters, with work ongoing to equip the final sites and assess new acquisitions.

We are also examining sites which may require heating system replacements or upgrades across both our German and UK portfolios and are putting plans in place to make applicable enhancements. In Germany, this includes a pilot project on one site to increase the proportion of renewable energy to run the heating system, which will allow us to assess the feasibility of further rollout.

Inefficient lighting across our properties has been reviewed and replaced with LEDs as part of our building maintenance programmes. We completed 34 lighting optimisation projects in Germany in the year, with a further 30 projects identified across 24 properties. In the UK, our LED replacement programme is aligned with our ongoing EPC improvement programme. We completed 19 projects in the year, with additional projects to be aligned with our EPC ambitions.

We have conducted an in-depth portfolio analysis and plan to meet the UK Government's requirement that our UK assets have an EPC rating of C by 2027 and B by 2030. We have already made good progress in this regard. This year, we achieved our internal target to ensure that at least 55% of our EPCs had a rating of C or above by March 2024.

As part of our work to develop a Group decarbonisation pathway to 2030, we have worked to align our EPC programme in the UK to the German short- to medium-term targets based on CRREM and SBTi. We continuously review our programmes and monitor for updates to relevant policies and frameworks which may impact our plans.

Enhanced data collection

We will continue to work to improve data collection and integration with our GHG measurement system and through the work of our dedicated ESG Department which is tasked with driving our decarbonisation efforts in Germany. For the second year, all our emissions have been independently verified by Achilles, a global data validation company. Achilles is the UK's only accredited greenhouse gas certification scheme and the only accredited Carbon reduction programme in Europe to independently measure and reduce carbon emissions..

Our GHG Emissions Report can be found on pages 43 to 45 of our Annual Report 2024.

CDP disclosure

Last year, we also completed our first CDP disclosure to provide a snapshot of our environmental disclosure to provide a snapshot of our environmental disclosure and performance. The CDP supports thousands of companies with a global environmental disclosure system that measures and manages progress.

We achieved a score of C in our first year and aim to improve on this as we continue to develop our decarbonisation and biodiversity plans. Our TCFD Report can be found on page 46 to 59 of our Annual Report 2024.