The sustainability reporting requirements for businesses are subject to fundamental changes. The latest EU directive governing corporate sustainability reporting (the Corporate Sustainability Reporting Directive or CSRD) will obligate companies to publish details on their greenhouse gas emissions in their management reports. The relevant data are measured in the form of a so-called corporate carbon footprint (CCF).
For the year 2023, Trei Real Estate (“Trei”) compiled its first report on the company’s carbon footprint in Germany, Poland and the United States. Ivonne Mundil, Head of Sustainability & ESG at Trei, about the ways in which the company prepares for the new reporting requirements.
What makes the corporate carbon footprint so important for Trei?
The corporate carbon footprint is a decisive instrument for us as it helps us to understand our greenhouse gas emissions, to measure them and ultimately to manage them, too. It represents an important part of our sustainability strategy and helps us develop pinpoint measures to cut our emissions. In addition, we thereby prepare for the imminent EU reporting requirements which we will have to meet as of the 2025 financial year.
How do you measure the corporate carbon footprint of a given company?
To measure the CCF, the carbon emission sources are broken down into so-called scopes: Scope 1 defines all direct emissions, e.g. those caused by our car fleet or by the electricity consumed at our branch offices. Scope 2 covers indirect emissions, e.g. those caused by the purchased energy that is consumed at our tenant-occupied properties. Scope 3 emissions are generated indirectly through the company’s activities along the value chain, which in our case would include construction activities, lettings or investments. In addition, the sources are subject to a distinction between upstream and downstream emissions: Upstream emissions are caused during the production of goods – in our case meaning the emissions generated in connection with property developments or asset management services. Downstream emissions are attributable to the occupancy of our properties by our tenants, for instance.
What sort of challenges did Trei face when compiling its CCF report?
The biggest challenge was definitely the data sourcing part. We needed to ensure that we obtain high-quality and comparable data from all three of the countries – meaning Germany, Poland and the United States. Especially for the indirect emissions, such as the consumption data of our tenants, we depended on the cooperation of our business partners. A high proportion of our data is extrapolated. For instance, all data from the United States are based on forward projections. In Germany, available data amounted to about 25 percent of the total. In Poland, it was actually 40 percent.
What do the findings say? What is the biggest carbon source for Trei?
Scope 3, which covers all emissions that are generated by our construction activities, lettings and investments, accounts for about 98 percent of all emissions. In 2023, our property developments in the United States were responsible for about 41 percent thereof, and the energy consumption of our tenants in Poland and Germany for roughly another 35 percent.
What are the next steps you intend to take to reduce your carbon footprint?
Based on the insights gained from the 2023 CCF Report, we are currently drafting a decarbonisation roadmap that specifies concrete measure to cut emissions. In the case of existing properties, we pursue a manage-to-green approach in order to steadily lower their operational emissions. In the case of our new-build structures, we seek their certification by recognised rating systems like DGNB, BREEAM or NGBS. On top of that, we deploy state-of-the-art heating and cooling technologies as well as a dedicated solar energy strategy to ensure a sustainable reduction of our carbon emissions.