The logistics sector faces pressure to adopt more sustainable practices to comply with the objectives and regulations set by Europe. Furthermore, with the need to calculate emissions, the entire chain needs to improve its performance in this regard. “Today, the calculation of emissions for our clients is something that is increasingly in demand, and not only by large companies obliged to measure their greenhouse gas emissions, but also by firms with a greater commitment. social and environmental”, stressed Ontime’s Director of Operations, Antonio Zafra. For this reason, the real estate logistics company is betting on integrating ESG criteria into its assets. However, actors in the sector admit that by using more expensive raw materials the income is higher, so the challenge is how to find the balance between sustainability and market price.
“Sustainable materials often have a higher initial price”
David Martinez CEO of Proequity
“Sustainable materials often have a higher starting price compared to conventional materials. This is due to several factors, including limited production, more complex manufacturing processes and still relatively low demand compared to conventional materials,” highlighted Proequity CEO David Martínez. In this regard, he added that finding sustainable materials can be a challenge. “Although the supply of sustainable materials is gradually growing, there are still limitations in terms of variety and availability, especially in some regions or for specific applications,” he acknowledged.
Sustainable materials also require specific certifications and standards, which can increase production costs. For her part, Valfondo’s ESG Manager, Marta Esquivias, adds that, “although these materials may have a higher initial cost, their durability and long-term efficiency make them a very good investment and this is also increasingly valued. the clients”. Furthermore, there are times when ensuring the security of the implementation that will make the asset more sustainable is what increases the cost, such as water filtration systems or solar panels. “The solar panels on the roof can be flammable, therefore, rock wool is used, which is non-combustible, but involves a high cost,” stated the technical director of Scannell Properties, José Ortega.
Jose Ortega Scannell Properties Technical Director
Along these lines, José Ortega has assured that, as they are more expensive assets, “the challenge is to balance sustainability at a market price.” In this regard, Antonio Zafra (Ontime) has pointed out that “sustainability is generically associated with higher costs, but it is also necessary to highlight that not everyone would be pushing for it, if there were no real profitability behind it.” In fact, José Ortega (Scannell Properties) has stated that at Scanell Properties “we do not make some implementations if this implies that the rent is going to increase in such a way that the tenant cannot assume it.” For its part, Proequity has indicated that this extra cost, although it is usually transferred to the rent, in some cases, is assumed by the company “in part or in its entirety as part of its commitment to sustainability and its long-term strategy.”
In any case, “it is currently practically unthinkable to develop new logistics centers without considering ESG criteria from practically the conception of any project,” clarified Valfondo’s ESG manager, Marta Esquivias. Promoters and users of the assets agree that sustainability is no longer an option. Furthermore, they have agreed that regulations are increasingly stricter, and “investors and clients seek to develop assets that meet the highest environmental and social standards to carry out their activity.” In this regard, José Ortega (Scannell Properties) has pointed out that, “although seals like Breeam are not legally required, investors do force you to have them.”
TECHNOLOGY AND INNOVATION TO MAKE SUSTAINABILITY CHEAPER
Therefore, to try to achieve that balance between sustainability and an affordable price, logistics real estate promoters rely on innovation and technology. “Technology and innovation help find sustainable materials that are economically viable,” said José Ortega. Regarding the main trends, they include the integration of intelligent and automation technologies to optimize the use of energy and resources. In fact, innovations are being implemented in the construction of the asset itself to reduce costs and recycle. “Demolition can be recycled within the work by crushing the concrete to reuse it in the new platforms. In fact, it is cheaper to do so than to bring in new material, so we make the project cheaper and we are more sustainable,” exemplified the technical director of Scannell Properties. For his part, the CEO of Proequity, David Martínez, has indicated that the circular economy is another trend that is being supported, since it allows costs to be reduced. “Maximizing the use of resources and minimizing waste through recycling and reuse makes it cheaper,” he stressed.
Demolition can be recycled on site by crushing the concrete to reuse it
In any case, the need for supply chain neutrality pushes landlords and developers to opt for centers with ESG criteria, which are increasingly in demand. “ESG criteria have acquired great relevance in all areas, including the real estate logistics sector, and this trend has given rise to the figure of the ‘socially responsible investor’, which has made us take measures to align ourselves with the expectations of the society”, they have highlighted from UPS. For its part, DHL has also assured that it is “a priority” for them. “All our logistics centers They already have high sustainability criteria and certifications, although it is true that having a supply chain with net zero emissions increases prices, on average, by 4%, we know from surveys we have carried out that, in Spain, 50 % of consumers would pay more for green logistics,” explained the real estate manager of DHL Supply Chain Iberia, Luis Domínguez.
Luis Dominguez Real estate manager of DHL Supply Chain Iberia
On the other hand, betting on ESG criteria also entails a series of advantages, beyond being able to certify the neutrality of the chain or demonstrate that you are that “socially responsible investor.” “Carrying out responsible practices within ESG terms, in addition to being an obligation, also represents an opportunity to generate added value that can attract clients, investors and be able to access better financing conditions, but it also helps retain talent” , said the Director of Portfolio Operations in Southern Europe at Prologis, Cristian Oller. From Ontime, Antonio Zafra also emphasizes that integrating sustainable practices and technologies allows reducing risks and operational costs by improving supply chain management. For his part, the technical director of Scannell Properties, José Ortega, has summarized that the advantages of adopting ESG criteria are a benefit for both parties. “Clients get lower energy costs and better design and comfort for workers, and developers make it more easily rentable.”
WHAT ARE ESG CRITERIA IN INMOLOGISTICS?
ESG criteria consist of the application of specific environmental, social and governance aspects so that the impacts that logistics processes have on the real estate sector are improved. “This leads us directly to aspects such as optimizing the supply chain, minimizing waste generated and improving its management, or maximizing efficient inventory management, among others,” stated the Director of Operations at Ontime. , Antonio Zafra. From Prologis, Cristian Oller has corroborated that, in addition, these criteria contribute, first, to the reduction of greenhouse gases, second, to the generation of social value and, third, to ensuring compliance with the applicable legislation. However, in practice, the application of ESG criteria in logistics involves obtaining environmental certifications for logistics buildings, optimizing transport routes to reduce fuel consumption and emissions, and investing in sustainable infrastructure with green technologies. “These criteria have become increasingly important in the real estate logistics field, with effects above all on the quality of the platforms and also on costs,” concluded the CEO of Proequity, David Martínez.
