The SolHighlights team recently had the opportunity to speak with Susan Uthayakumar. We discussed her experience implementing green practices at Prologis, the world’s largest industrial real estate company.
Uthayakumar has been involved with energy management and sustainability for over 18 years, and has recently begun her role as Chief Sustainability Officer at Prologis.
At Prologis, Uthayakumar and her team evaluate and scale energy solutions. Prior to joining Prologis, Uthayakumar was President of Schneider Electric's Sustainability Business Division. She was also named a 2021 Environment+Energy Leader 100 Honoree for her efforts to provide enterprise customers with actions to mitigate their environmental impacts.
We conducted a Q&A with Susan to discuss her experience as Chief Sustainability Officer at Prologis.
Can you tell me about yourself and what you do in regards to Prologis?
"Prologis is the world’s largest industrial real estate company. We have over 1 billion square feet in 19 countries and the primary business that we do, we’re a logistics company and we work with all of your large customers and many small and medium customers. So the likes of Coke, Pepsi, Amazon, they are all in our facilities.
Here, I have two responsibilities. One is as the Chief Sustainability Officer to ensure that we are driving sustainability forwards in all of what we do and specifically decarbonize the built and the to-be-built environment.
The second accountability that I have is that I run the Global Energy Business, a renewable energy business. We today are the third largest U.S. on-site solar energy producer, and we couple that with other energy solutions like storage, microgrids, sustainability advisory and things like that."
Is solar something you are using to help meet your sustainability goals?
"Absolutely. The intention with what we are doing with our energy business is to really help our customers in their sustainability requirements and also, at the same time, decarbonize our value chain because 99.9% of our emissions come from our value chain. So unless we address that it would be impossible for us to hit our net-zero by 2040 goals."
To meet that net-zero by 2040 goal, you said you are largely focusing on decarbonization. Could you explain that process?
"When you set a net-zero goal, number one, it is based on a science-based target. So, what do you have to do to remove the emissions based on a data-centric approach? There is Scope 1, Scope 2, and Scope 3. Scope 1 is the emissions from the asset that you own directly. Scope 2 is the emissions from how you power those assets. Scope 3 is the emissions that come from the materials that you purchase, the emissions that come from the consumption of resources from the customers that you have on your facilities, and the emissions that come from the buildings that you have built, like the embodied carbon.
So for us, Scope 3 represents 99.9% of our emissions and our goal is to be net-zero operations by 2030 and net-zero in our operations and value chain by 2040. So, to be net-zero in our value chain, we have two primary drivers. One is to green the energy consumption of our customers, so 60% of our Scope 3 comes from the energy consumption of our customers. We then need to think about how we want to remove the embodied carbon that is in the buildings that we built."
Do you see a future where we will get all of our energy from renewable sources?
"People talk about the energy transition, which is where it is no longer possible for the energy needs of the global population to be met by producing it in one place and then transmitting it. Instead we will move towards this other energy model, where you will produce it in different places. You may produce it on rooftops, you may produce it from wind. I think that the stance that I saw is that 80% of the emissions come from usage production of some sort of energy. Whether it is combustion, building operations or whatever it may be.
"As we look into the future, that energy demand is going to exponentially increase. Therefore, you have to factor in all sources of energy, especially lower emission energy. It could be hydrogen, it could be electric, it could be nuclear. So you really have to think about the energy mix as you think about the future consumption.
Do you have one project that stands out to you that you have been most passionate about?
"Yeah. So I was really proud when we declared our net-zero by 2040 goals for Prologis. And I was proud of that because the size of Prologis is tremendous. So 2.2 trillion goods flow through our warehouses, which represents 2.5% of the world’s GDP. So when you decarbonize on that scale, you really make an impact locally and globally. So I was really proud of that moment, and now we are going to be super focused on how we can do that, how can we drive measurable actions and how can we bring along the industry? So today, there is no scalable zero-carbon concrete or zero-carbon steel, but through innovation and with our scale, we hope to bring those types of technologies and materials to be standard materials."
How are you working towards looking into these zero-carbon concrete and steel technologies?
"We do it in two ways. Definitely through our venture, when we come across new technology start-ups that are in the space we spend time to understand them, invest in them, collaborate with them and to co-develop things together. The other way we do it is by collaborating with suppliers and industry leaders, cement companies for example, on discovering what would be a lower-carbon cement. We collaborate with a number of critical suppliers to see if we can both work towards a more sustainable solution."
What made Prologis want to invest in sustainability?
"I think, because real-estate and energy go hand-in-hand, and it’s to serve the needs of customers. As you know, many customers and countries have declared their net-zero emission goals. In order for our customers to reach their sustainability goals, we have to be a part of that. Number one, it’s the opportunity of marrying real-estate with energy production. Number two, it’s to service the needs of the customers. And number three, with our scale we have a responsibility to drive innovation and drive towards climate change mitigation."
Do you think that’s helped differentiate Prologis from other real-estate firms and investment companies?
"Absolutely. There is no other real-estate company that has done this. We are the number three on-site renewable energy generator in the US, no other real estate company is up there. I think it’s also a differentiator on the customer side. We provide quality real-estate spaces for our customers but then, through what we call the essential arm of Prologis, we provide value out of services, one of which is the energy and sustainability business. This differentiates us in the market. I think when we came out with our net-zero emissions by 2040 Morgan-Stanley said that, of all the plans that are out there, this is by far the most ambitious and that definitely differentiates us."
What concrete actions are you looking towards to meet these goals? Can you give me a couple examples?
"So to get to Scope 1, 2, and 3 by 2040, we’ve got to get to 1 GW of solar production supported by storage by 2025. All out construction has to be carbon-neutral by 2025. Then by 2030, our own operations, Scope 1 and 2, have to be net-zero. With the focus on addressing embodied carbon, we will get to our value chain being net-zero by 2040. So we are measuring against these interim goals. Not only that, but we are actually changing the way we do things.
After our net-zero emissions declaration, we are making sure that any of the new buildings that we build are to our new net-zero standard. They will be, for example, energy and mobility ready. They will incorporate greater energy efficiency, and will also incorporate material and the way we handle waste. We are thinking through: how do we build and operate with sustainability in mind?"
Within the commercial real estate sector, what do you think are some of the biggest hurdles regarding sustainability?
"I think in any real-estate, it is the embodied carbon that is hard to solve because there just isn’t a cost-effective, scalable way to produce lower-emission cement or steel, which you would have to have. The steel and concrete are challenges to solve for."
I know solar is definitely playing a big role in reaching your sustainability goals. Have you experienced any issues regarding the solar process so far?
"No. We are very specific about using qualified electricians to do our installations. We are very specific about the quality of materials and the panels that we use. We also have a very experienced team that is embedded within Prologis in order to install the system, operate the system and maintain the system. We do the investment ourselves. The customers don’t have to put a penny into the solutions, they just have to say, “Look, I would like clean energy, or renewable energy.” We will build the system, we will maintain it, and we will charge them a price that is equal to the grid or slightly better."
Climate change can be a controversial subject. Have you experienced any issues with customer relations when you are talking about climate change and reaching these net-zero goals?
"I expect customers to welcome them, because what it does is provide them: one, with a facility that is sustainable, which is important to their stakeholders. Whether it be to their employees, their board, their investors, their management, or their customers, it’s favorable. Two, we are doing it in such a way that we are bearing the cost of that service to them. We are providing value-added services to our customers. Three, I would say that we are very specific about having measurable actions. We don’t say something and then there are no actions or output regarding the goals we are aspiring to achieve. Therefore, our customers and stakeholders can count on concrete actions to get to where we need to get to. I actually see this as a very positive trend and a value added trend. I see this as good for business for Prologis and our customers and stakeholders."
Do you see solar becoming a leader in the sustainability landscape within the real estate industry?
"I see that solar, from an energy standpoint, has already become a leader in the new energy mix that gets added, everybody adds greater capacity every year. Solar is where most of the new capacity comes from. People are not building new power plants for the most part. Something is getting added and that is solar. Do I see solar as being in synergy with real estate? Yes I do, because you’ve got the availability of roofs and the energy needs of that building can be supplied. The shorter the distance that energy has to travel the better because you have less leakage. I actually see solar as a beautiful solution."
What is your favorite Dinosaur and why?
I think they are like gentle giants. Wouldn’t it be nice if today we could see one and touch one and experience one. And I think that’s a good reminder that there’s always a reaction when something is out of balance, like species becoming extinct. They did that because the environment changed and to lose something forever is quite a shame.