FP24 Climate-related Disclosures
NZX and media
announcement
—
12 September 2024
Page 1
FP24 CLIMATE-RELATED DISCLOSURES
Property for Industry Limited (PFI) today releases its Climate-related Disclosures for the six months
ended 30 June 2024 (referred to as Financial Period 24, or FP24).
Due to the change in PFI and its subsidiaries’ balance date from 31 December to 30 June, these Climate-
related Disclosures cover the 6-month period from 1 January 2024 to 30 June 2024, unless otherwise
noted. To the extent that this report reflects a shorter 6-month period, Greenhouse Gas emissions and
other metrics in the FP24 Climate-Related Disclosures are not entirely comparable to PFI’s disclosures
for the year ended 31 December 2023 (FY23) which are across a 12-month period.
PFI’s FP24 Climate-related Disclosures are available on PFI’s website at:
https://www.propertyforindustry.co.nz/sustainability/
ENDS
ABOUT PFI & CONTACT
PFI is an NZX listed property vehicle specialising in industrial property. PFI’s nationwide portfolio of 91 properties is leased to
around 126 tenants.
For further information please contact:
SIMON WOODHAMS
Chief Executive Officer
----
Phone: +64 21 749 770
Email: woodhams@pfi.co.nz
CRAIG PEIRCE
Chief Finance and Operating Officer
----
Phone: +64 21 248 6301
Email: peirce@pfi.co.nz
----
Property for Industry Limited
Level 4, Hayman Kronfeld Building, 15 Galway Street,
Auckland 1010
PO Box 1147, Shortland Street, Auckland 1140
www.propertyforindustry.co.nz
---
FP24
Sustainability
Update and
Climate-Related
Disclosures
YOUR
INDUSTRIAL
PROPERTY
EXPERTS
PROPERTY FOR INDUSTRY LIMITED
20
24
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE
SUSTAINABILITY
INTRODUCTION
APPENDICES
SECTION
SECTION
SECTION
SECTION
1
2
3
4
Introduction page 03
FP24 Sustainability Update page 05
Climate-Related Disclosures
Statement of Compliance page 12
Governance page 13
Strategy page 16
Risk Management page 30
Metrics and Targets page 32
Appendices page 39
2
APPENDICESFP24 SUSTAINABILITY
UPDATE
CLIMATE-RELATED
DISCLOSURES
INTRODUCTIONCONTENTS
CURRENT PORTFOLIO
VALUATION
2,050
.5
$
M
.7
CONTRACT
RENT
$
99
M
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
Property for Industry Limited
(PFI) is an NZX listed property
vehicle focused on the industrial
sector. We first listed in 1994 and
now thirty years on, we have a
portfolio of 91 properties valued
at over $2.0 billion as at 30 June
2024. PFI’s properties are located
throughout New Zealand, but
primarily in Auckland.
This report contains PFI’s FP24 Sustainability
Update and our second mandatory Climate-
Related Disclosures. PFI is pleased to share
the progress we continue to make in improving
our understanding of, and response to,
our climate-related risks and opportunities.
All financial information in this report is presented
in New Zealand Dollars and excludes GST.
INTRODUCTION
5
WEIGHTED
AVERAGE
LEASE TERM
(WALT)
YEARS
.07
SECTION
1
PROPERTIES
91
TENANTS
126
Figures on this page
are as at 30/06/24.
AUCKLAND
75 - 85%
OUT OF
AUCKLAND
15 - 25%
86%14%
CURRENT:CURRENT:
3
APPENDICESFP24 SUSTAINABILITY
UPDATE
CLIMATE-RELATED
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CONTENTS
INTRODUCTION
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
INTRODUCTION CONTINUED
PFI was created on the belief that investing in quality
industrial property in prime locations has the potential
to deliver attractive shareholder returns. In terms of our
impact on people and the planet, we understand that
meeting our ambitions requires long-term commitment,
long-term thinking, and no shortage of hard work.
We believe PFI’s approach to sustainability should
enable us to mitigate some risks and capitalise on some
opportunities for long term value creation.
PFI recognises that we need to manage the risks and
opportunities that arise from climate change, just as we
manage other risks and opportunities facing our business.
Since 2020, PFI has prepared voluntary climate-related
disclosures aligning with the recommendations of the
Task Force on Climate-related Financial Disclosures
(TCFD). In April 2024, PFI published its first mandatory
climate-related disclosures in accordance with the
Aotearoa New Zealand Climate Standards for the reporting
period ended 31 December 2023. Over the last four years
we have enhanced our understanding of the climate-
related risks and opportunities faced by the business
and applied this understanding to PFI’s strategy. Further
details on our current business model can be found in the
Strategy section.
REPORTING PERIOD
In 2024, PFI changed the balance date for the Group from
31 December to 30 June. Therefore, this report covers
the 6-month period from 1 January 2024 to 30 June 2024
(Financial Period 2024, or FP24), unless otherwise stated.
_ Optimised
industrial
racking system
installation.
4
APPENDICESFP24 SUSTAINABILITY
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INTRODUCTION
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
The purpose of PFI’s FP24 Sustainability Update is
to transparently communicate the impacts we have
on people and the planet, to explain our strategy to
address such impacts, and to provide insight into our
sustainability-related risks and opportunities.
Due to the shorter 6-month reporting period to 30 June 2024, a GRI index
has not been provided for FP24. More fulsome disclosures against the GRI
Standards can be found in the FY23 Annual Report.
FP24 SUSTAINABILITY
UPDATE
SECTION
2
5
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INTRODUCTIONFP24 SUSTAINABILITY
UPDATE
PFI
FP24 SUSTAINABILITY
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FP24 SUSTAINABILITY UPDATE CONTINUED
Significant new buildings to target minimum
5 Green Star certification.
PFI also aims to minimise and offset residual Scope 1 + 2 greenhouse gas emissions.
Install solar systems
at five buildings by the end of 2025.
Implement power metering and monitoring
for 50% of properties by the end of 2025.
SOLAR SYSTEMSMETERINGGREEN STAR
GREENHOUSE GAS
EMISSIONS
RESOURCES
AND WASTE
DISASTER AND
CLIMATE RESILIENCE
PEOPLE AND
WELLBEING
ECONOMIC
VALUE
IMMEDIATE TARGETS
MATERIAL FOCUS
AREAS TO 2030
CORE
PRINCIPLES
Create a future-proofed and resilient portfolio through sustainable refurbishments, developments, acquisitions and divestments.
Maximise the useful lifespan of buildings to minimise waste by transforming our core portfolio.
Become a trusted partner for tenants when it comes to sustainability and reducing greenhouse gas emissions.
Collaborate with supply chain partners to minimise waste, use lower-impact materials and promote positive social impacts.
Maintain strong employee engagement and health and safety performance.
Maintain high standards of financial and governance performance.
Our Sustainability Strategy: 2030
In 2022 we committed to a range of projects and targets through to 2025 to operationalise this strategy. Key targets include:
DYNAMIC
IMPLEMENTATION
Our implementation of the strategy will be dynamic.
We will review and adapt our response as we learn and as our external environment changes.
Aspiration
The embodied and
operational greenhouse gas
emissions associated with
PFI’s buildings
are minimised.
Aspiration
The impacts from the
materials that PFI uses and
the waste PFI produces
during developments
and refurbishments
are minimised.
Aspiration
PFI’s buildings are resilient
and we are well placed to
respond to disasters.
Aspiration
Our people are safe
and engaged, and we
promote positive social
impacts through
our operations.
Aspiration
The value of PFI
grows to create economic
value for investors,
tenants, our people and
others that we work with.
OUR SUSTAINABILITY STRATEGY
PFI plays an important role in the hard-working
industrial sector by providing workplaces for industrial
tenants. PFI owns long-term assets, so making
sustainable, enduring decisions is critical for delivering
positive outcomes for our tenants and investors. PFI is
focused on embedding sustainability in our core business
activities, to position PFI for the future.
PFI has continued to make progress in delivering toward
the first stage of its Sustainability Strategy to 2030, and
we are excited to share that progress in this report.
Of particular significance, PFI:
§
was awarded a 5 Star Green Star Design & As
Built NZv1.0 Design rating
1
for our first building
at Stage 1 at Bowden Road, leased to Tokyo Food.
§
progressed construction on two further buildings at
Stage 2 at Bowden Road and Stage 1 at Springs Road.
When combined with Stage 1 at Bowden Road, this
will result in 10.3% of our portfolio by market value
achieving Green Star ratings on completion.
2
§
achieved our target of installing solar panels at five
buildings by the end of 2025 ahead of time, helping
our tenants to move to renewable energy.
§
achieved our target of installing power metering and
monitoring at 50% of our properties by the end of
2025, with 63% of properties in our portfolio now with
metering installed. This will help us and our tenants
to better understand and manage the energy use of
the buildings at those sites.
1. A design rating was granted on 1 July 2024. An ‘As Built’ certification for Stage 1 at Bowden Road has not yet been issued. Green Star ratings are administered by the New Zealand Green Building Council (NZGBC), a network
of property and building businesses aiming to normalise market-based green practices. PFI is a member of the NZGBC.
2. Based on 30 June 2024 ‘as if complete’ valuations. The ‘as-if-complete’ market value of these properties (and the current market value of PFI’s portfolio of properties) are based on current predictions as at 30 June 2024
and could change at the time these developments are completed. Therefore, this figure is subject to change.
6
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CONTENTS
INTRODUCTIONFP24 SUSTAINABILITY
UPDATE
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
FP24 SUSTAINABILITY UPDATE CONTINUED
GREENHOUSE GAS EMISSIONS
PFI’s measured greenhouse gas emissions are set out
in the Metrics and Targets Section.
Scope 3 emissions comprise 99.3% of PFI’s FP24 measured
greenhouse gas emissions footprint. PFI considers its most
material emissions impacts to be:
§
emissions relating to our development and
refurbishment activities, known as embodied carbon
emissions. These are our Scope 3, Category 2 emissions
from capital goods.
§
emissions relating to the electricity use in our tenanted
buildings, known as operational emissions. These are
our Scope 3, Category 13 emissions from downstream
leased assets (partially measured for FP24 due to
data limitations).
PFI’s strategy and transition plan (see pages 6 and 17)
primarily focus on minimising both the embodied and
operational carbon emissions of our buildings. We have
therefore committed to:
§
building and refurbishing in a way that reduces both
embodied and operational greenhouse gas emissions
where practicable; and
§
measuring and over time improving the operational
performance of our buildings.
Embodied carbon is likely to be a particular challenge
for PFI in the coming decades. These emissions largely
arise from the use of materials such as concrete and steel
when constructing our buildings. There are lower-carbon
products becoming available, which PFI is utilising where
practicable and given cost considerations. However, zero
or near zero carbon concrete and steel are not available,
and it is unknown if or when these will become available
in the future. PFI is continuing to monitor progress in this
space and highlights the re-use of existing buildings as
an opportunity to reduce these impacts.
Emissions associated with property maintenance are also
significant (falling under Scope 3, Category 1). Bringing
PFI’s facilities management in-house during 2023 was an
important step in positioning the business to address these
emissions in future. However, our primary focus remains
on developments, refurbishments and energy use of
our buildings.
New Buildings and Brownfields Developments
When developing significant new buildings, our target of
a minimum 5 Green Star certification aims to ensure the
building performs to a range of sustainability standards
including materials, water, energy, and indoor environment
quality. In particular, the Green Star tool seeks to:
§
minimise the impact of building materials and practices
on the environment, including greenhouse gas
emissions; and
§
ensure the building is designed efficiently to minimise
greenhouse gas emissions arising from the operation
of the building (for example, electricity usage).
In July 2024, PFI was awarded its first 5 Star Green Star
Design & As Built NZv1.0 Design rating for the new building
at Stage 1 at Bowden Road. PFI is also targeting 5 Green
Star certification for the ongoing developments at Stage 2
at Bowden Road and Stage 1 at Springs Road.
Sustainable Refurbishments
In some cases, we are able to extend the useful life of an
aged building by undertaking a refurbishment. This avoids
the generation of embodied carbon and waste by reusing
materials (such as walls and foundations) that were
already in place in an original building, while presenting
an opportunity to upgrade or add sustainable features
(such as LED lighting). PFI has created an internal
Sustainable Refurbishment Framework, providing a way
for us to minimise our environmental impacts when we
undertake refurbishment projects through a preference
for lower-carbon materials and resource efficient design
features.
As each refurbishment is unique, this framework ensures
we have a range of sustainable design options to consider
for each refurbishment. A sustainable refurbishment
might include improving energy efficiency and water
consumption, reducing waste, using lower impact building
materials, and moving to renewable energy sources.
7
APPENDICESCLIMATE-RELATED
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INTRODUCTIONFP24 SUSTAINABILITY
UPDATE
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
FP24 SUSTAINABILITY UPDATE CONTINUED
Measuring and Improving
Operational Performance
Greenhouse gas emissions arise from the operations
of a building, for example through electricity use.
In 2022 we commenced a project to implement power
metering and monitoring for 50% of properties by the end of
2025, and as at 30 June 2024 we have successfully achieved
this target with power metering installed at around 63% of
properties in the portfolio. PFI is continuing to implement
power metering at properties to measure electricity use in our
buildings.
3
We have revised our metering target to: implement
power metering and monitoring for 90% of properties by the
end of FY25.
With the data collected so far, we have been able to disclose
the greenhouse gas emissions associated with the use of
electricity in 48% of our tenanted buildings for the first time
in FP24 (see pages 32-34). Based on the limited information
collected to date, we expect that this will be a material part of
our Scope 3 greenhouse gas emissions.
In time, as we build up data, we expect that we may be able
to identify opportunities to improve the efficiency of lower
performing buildings. We anticipate this should create value
for our tenants and help to retain the value of our buildings
in the long term. The power use of buildings forms part of
a tenant’s Scope 2 emissions, so we are in a position to help
them with their own emissions reduction plans. Buildings with
better operational performance also typically consume less
and cost the tenant less in power and water.
Finally, the collection of data is the first step toward being able
to explore options for operational performance certification
for our existing properties. This represents an opportunity for
some buildings in PFI’s core portfolio. Due to the wide range
of occupancies of industrial buildings, this will be a complex
journey. We will share progress in this area as it develops.
_ Measuring and improving the efficiency of
our buildings, Bowden Road.
3. Measuring operational performance will remain challenging as it is often difficult to differentiate between emissions from the operation of an
industrial building and emissions associated with tenant operations within that building.
8
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CONTENTS
INTRODUCTIONFP24 SUSTAINABILITY
UPDATE
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
FP24 SUSTAINABILITY UPDATE CONTINUED
Solar
New Zealand has a higher supply of renewable electricity
than many other countries. However, electrification of
activities that we currently rely on fossil fuels for (such
as driving) is key for decarbonising many aspects of our
economy, meaning increased demand for electricity
is anticipated in the near future. Installing solar panel
arrays at our properties makes renewable electricity
available for our tenants to use, reducing their demands
on New Zealand’s electricity grid, and their energy bills.
Tenants may also be able to feed any electricity they
don’t use from the solar panels back to the national grid,
increasing the supply of renewable electricity for others
to use. Solar installations can help PFI to strengthen our
relationships with our tenants, and in some cases, presents
an opportunity to extend lease terms though lease
negotiations with tenants interested in solar.
We have now met our target to install solar systems at
five buildings by the end of 2025. PFI will revisit its solar
strategy and targets during FY25.
Scope 1 and 2 emissions
PFI’s Scope 1 and 2 emissions
4
are very small when
compared to the scale of Scope 3 emissions from
developments and tenanted building electricity use.
While our Sustainability Strategy focuses on managing
these more material impacts, we acknowledge that we
need to be mindful of our direct footprint, and we have
taken steps to reduce it.
In recent years, PFI has upgraded a significant number of
HVAC systems across our portfolio within PFI’s operational
control that contained R22 refrigerant gas, and either
replaced or re-gassed these systems with a non-ozone
depleting refrigerant gas.
We intend to continue to work on initiatives to further
reduce our gross Scope 1 and 2 emissions going forward,
particularly as new technologies become available that
enable us to make further advances.
_ Solar installation,
314 Neilson Street.
4. PFI’s measured Scope 1 emissions include fugitive emissions from
refrigerant gas and diesel consumed at PFI’s properties. PFI’s
measured Scope 2 emissions include purchased electricity consumed
at PFI’s head office, vacant spaces and common areas in PFI’s
portfolio of properties.
9
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INTRODUCTIONFP24 SUSTAINABILITY
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PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
FP24 SUSTAINABILITY UPDATE CONTINUED
RESOURCES AND WASTE
When PFI undertakes property developments and
refurbishments, building materials such as steel and
concrete are procured by PFI’s contractors. Extracting,
producing, and shipping these materials have upstream
impacts such as greenhouse gas emissions and potential
impacts on local communities or biodiversity if not
produced responsibly.
Waste is also generated by PFI’s contractors, for example
from demolition and packaging of materials that are
delivered to the site. We aspire to minimise the impacts
from the materials that PFI uses and the waste that PFI
produces during developments and refurbishments.
We are also collaborating with suppliers to improve
waste measurement and reduction, and use of lower-
impact materials. Our commitment to 5 Green Star
encourages us to use lower impact materials and reduce
the waste impacts from our developments. PFI is also
working with suppliers to move toward more consistent
waste measurement and reduction when undertaking
refurbishments. When PFI refurbishes buildings instead
of building new ones, we can reduce the impacts caused
by building materials by reusing what is already in place
(where possible) and aim to use lower impact materials.
Our transition to an in-house facilities management model
during 2023 positions us to make smarter decisions about
capital expenditure on our buildings, and reduce the
unnecessary use of materials.
DISASTER AND CLIMATE RESILIENCE
PFI aims to ensure its buildings are resilient and we are
well placed to respond to disasters, including climate-
related events.
PFI faces a range of risks arising from climate change
including regulatory change, increasing demand for
sustainable and climate-resilient buildings, changing
investor and funder preferences, and the effects of extreme
weather (including on insurance availability and pricing).
Preparing the business and portfolio for the physical and
transition impacts of climate change has been an ongoing
focus for PFI, and PFI’s Sustainability Strategy is designed
with this in mind. PFI’s approach to improving the climate
resilience of PFI’s assets is set out in PFI’s transition plan
on page 17.
ECONOMIC VALUE
PFI is proud to help our tenants to generate economic value
through the provision of fit-for-purpose properties from
which they can operate their businesses, while generating
direct economic value for our investors and other capital
providers. We see our Sustainability Strategy (along with
our proven business model, prudent capital management,
strategy, and team) as critical to continuing to deliver
strong economic performance as the context in which
we operate continues to evolve with regulatory change,
changing market demands and increasing expectations
from our business partners and investors.
PEOPLE AND WELLBEING
PFI strives to ensure our people are safe and engaged, and we aim to promote positive social impacts through our
operations. PFI also interacts with a wide range of stakeholders, for whom we want to contribute to a safe and positive
working environment.
The health and safety incidents in the following table reflect incidents that were reported to us across our operations.
The decrease in incidents and near misses in FP24 is in part attributable to the shorter reporting period.
HEALTH AND SAFETY INCIDENTS AND NEAR MISSES
*
12-MONTHS ENDED
31 DECEMBER 2023
6-MONTHS ENDED
30 JUNE 2024
Injuries136
Incidents that did not result in injury / near misses2016
Total recorded incidents and near misses3322
*
This table covers all health and safety incidents and near misses that have been reported to PFI by our contractors, tenants and PFI's staff.
10
APPENDICESCLIMATE-RELATED
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CONTENTS
INTRODUCTIONFP24 SUSTAINABILITY
UPDATE
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
This section contains PFI’s Climate-Related Disclosures
for the six-month period to 30 June 2024 (FP24).
To the extent that this report reflects a shorter 6-month period, Greenhouse
Gas emissions and other metrics in these Climate-Related Disclosures are
not entirely comparable to PFI’s disclosures for FY23 which are across a
12-month period.
PFI’s Climate-Related Disclosures are for Property for Industry Limited (the
Company) and its subsidiaries P.F.I. Property No. 1 Limited (PFI No. 1) and P.F.I.
Cover Limited (PFI Cover) (collectively, the Group, PFI or we).
CLIMATE-RELATED
DISCLOSURES
SECTION
3
11
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PFI
FP24 SUSTAINABILITY
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CLIMATE-RELATED DISCLOSURES CONTINUED
Climate change is an evolving
challenge, with high levels of
uncertainty. This report sets out
PFI’s approach to scenario analysis,
our understanding of, and response
to, PFI’s climate-related risks and
opportunities, PFI’s transition plan,
and our current and anticipated
impacts of climate change, including
financial impacts. This reflects our
current understanding as at 12
September 2024. We acknowledge
that this will evolve over time, and
this report contains estimates and
assumptions about future external
physical and transitional changes
driven by climate change and
their anticipated impacts on our
business. These representations
are subject to significant
uncertainties and assumptions.
This report contains forward
looking statements, including
climate-related scenarios, targets,
assumptions, climate projections,
forecasts, statements of PFI’s future
intentions, transition planning,
estimates and judgements. These
statements involve assumptions,
forecasts and projections about
PFI’s present and future strategies
and the environment in which PFI
will operate in the future, which are
inherently uncertain and subject to
limitations, particularly as to inputs,
available data and information which
is likely to change. The risks and
opportunities described here, and
our strategies to achieve our targets,
may not eventuate or may be more
or less significant than anticipated.
There are many factors that could
cause PFI’s actual results, impacts,
performance or achievement of
climate-related metrics (including
targets) to differ materially from
that described, including economic
and technological viability, as well
as climatic, government, consumer,
and market factors outside of PFI’s
control. For the first time, PFI has
reported its climate-related current
and anticipated financial impacts.
The disclosed qualitative financial
impacts and quantitative data are
inherently subject to limitations
and uncertainties. These have been
described at pages 26-29. PFI
has sought to use its best efforts
to provide a reasonable basis for
forward-looking statements and
is committed to progressing our
response to climate-related risks
and opportunities over time but
is constrained by the novel and
developing nature of this subject
matter. We remain committed to
progressing our response to climate-
related risks and opportunities over
time, and to report our progress
each year, but we caution reliance
on aspects of this report that are
necessarily less reliable than other
aspects of our annual reporting.
The disclosures and metrics in this
report have not been assured. PFI’s
greenhouse gas emissions will be
subject to assurance from FY25.
Nothing in this report should be
interpreted as capital growth,
earnings or any other legal, financial,
tax or other advice or guidance.
To the fullest extent possible, PFI
disclaims liability for any loss
suffered as a result of reliance on
this report.
STATEMENT OF COMPLIANCE
PFI is a climate-reporting entity under the Financial
Markets Conduct Act 2013. These Climate-Related
Disclosures comply with the Aotearoa New Zealand
Climate Standards (NZ CS 1, 2 and 3) issued by the
External Reporting Board (XRB).
In preparing this report, PFI has elected to use the following
adoption provisions in NZ CS 2:
§
Adoption provision 5, which exempts PFI from disclosing
comparative information for scope 3 greenhouse
gas (GHG) emissions. PFI has disclosed comparative
information for all relevant Scope 3 GHG emissions
sources except Category 13 which was not reported
in FY23.
§
Adoption provision 6, which exempts PFI from
disclosing two years of comparative information for
metrics. PFI has disclosed comparative information
for all disclosed metrics in the immediately preceding
reporting period, noting that the metrics for FP24 cover
a 6-month rather than the prior 12-month period due to
PFI’s change in balance date.
§
Adoption provision 7, which exempts PFI from disclosing
an analysis of trends evident from this comparison.
The Climate-Related Disclosures contained in this report
are signed on behalf of Property for Industry Limited and
were authorised for issue on 12 September 2024.
CAROLYN STEELE
Audit and Risk Committee Chair
DEAN BRACEWELL
Board Chair
DISCLAIMER
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INTRODUCTIONCLIMATE-RELATED
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PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
This section describes
the role of PFI’s Board
in overseeing climate-
related risks and
opportunities and the
role of management
in assessing and
managing climate-
related risks and
opportunities.
Board of Directors
Oversees PFI’s strategy and performance, including PFI’s Sustainability Strategy.
Establishes a framework for recognising and managing all business risks, including climate-related risks.
Oversees, reviews and approves PFI’s Climate-Related Disclosures.
Board Audit & Risk Committee
Assists the Board with risk management, including climate-related risks.
Annually reviews PFI’s company-wide risk register and climate-related risks and opportunities.
Reviews and provides recommendations to the Board on PFI’s Climate-Related Disclosures.
Senior Leadership Team
Comprising of PFI’s Chief Executive Officer, Chief Finance and Operating Officer,
Head of Sustainability and Operations, and Portfolio Manager
Leads PFI’s Sustainability Strategy and the day-to-day management of PFI’s climate-related risks and opportunities.
Meets frequently and monitors progress against PFI’s strategy and targets.
Reports PFI’s progress and response to climate-related risks and opportunities to the Board quarterly.
Head of Sustainability and Operations
Leads the assessment of PFI’s climate-related risks and opportunities.
Aims to ensure PFI’s strategy is designed to respond to climate-related risks and opportunities.
Reports progress on climate-related matters to the Senior Leadership Team.
Leads the preparation of PFI’s Climate-Related Disclosures.
Management Sustainability Meetings
Attended by members of the Property and Facilities Management Teams, who manage the day-to-day operations
and play a critical role in implementing PFI’s Sustainability Strategy and targets.
Attendees meet regularly to discuss property and facilities management matters, including sustainability-related topics
such as execution of PFI’s Sustainability Strategy and performance against targets.
Reports progress to the Senior Leadership Team (via the Head of Sustainability and Operations).
Governance
13
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INTRODUCTIONCLIMATE-RELATED
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PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
ANTHONY BEVERLEY
Independent Director
JEREMY SIMPSON
Independent Director
Governance Body Oversight
PFI’s Board of Directors is responsible for oversight of
climate-related risks and opportunities affecting PFI. The
Board oversees PFI’s overall performance, as well as its
Sustainability Strategy and management of climate-related
matters. The Board is also responsible for recognising and
managing all business risks and ensuring effective risk
management systems are in place to protect PFI’s assets,
including for climate-related risks, supported by the Audit
and Risk Committee.
PFI’s identified climate-related risks and opportunities are
reviewed and presented to PFI’s Directors annually. The
Audit and Risk Committee and the Board review PFI’s Risk
Register annually, which provides a view of the Company’s
overall business risks and climate-related risks. Risk is
also a standing agenda item at quarterly Board and Audit
and Risk Committee meetings. Climate-related risks are
embedded in several of PFI’s risks, including our strategic,
financial, operational, ESG, property and reputational risks.
PFI’s Audit and Risk Committee is responsible for ensuring
appropriate metrics and targets for managing PFI’s climate-
related risks and opportunities are set and monitored in
consultation with the Board and management. In 2022,
the Senior Leadership Team refreshed PFI’s Sustainability
Strategy, which included PFI’s key targets and initiatives
for managing climate-related risks and opportunities.
These key targets were endorsed by the Board in 2022,
and the Board monitored progress against the agreed
targets at quarterly Board meetings during FP24.
As PFI makes progress against these targets, PFI’s Board
also oversees the refresh of PFI’s sustainability targets
as appropriate.
The Board also oversees the achievement of sustainability-
related targets incorporated in the Senior Leadership
Team’s short-term incentives, including progress
towards the delivery of 5 Green Star certification for new
developments, solar installations, and power metering
installations. Management also developed metrics
to measure and manage climate-related risks and
opportunities, which were then endorsed by the Board at
the December 2023 Board meeting. It is intended that from
2024 the Board will monitor progress against these metrics
and targets at least annually at Board meetings. Further
details are set out in the Metrics and Targets section.
PFI’s Board considers climate-related risks and
opportunities when reviewing and overseeing
implementation of PFI’s overall strategy, plans and
budgets. Management of climate-related risks and
opportunities associated with our existing portfolio is a key
strategic consideration for PFI. Key strategic initiatives for
PFI include targeting a minimum 5 Green Star certification
for all significant new buildings, and aiming to improve
energy efficiency, sustainability and climate resilience of
PFI’s existing buildings via sustainable refurbishments and
property upgrades. Climate-related risks and sustainability
matters are one of a number of factors the Board considers
as part of PFI’s due diligence for new acquisitions and in
decisions to divest properties. In July 2024, the Board
reviewed and endorsed PFI’s transition plan, which sets
out PFI’s plans to embed emissions reduction and climate
resilience in capital deployment and funding decision
making. Further information on PFI’s transition plan can
be found on pages 16-17.
PFI's Board of Directors
CAROLYN STEELE
Independent Director
DAVID THOMSON
Independent Director
DEAN BRACEWELL
Independent Director,
Board Chair
ANGELA BULL
Independent Director
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PFI’s Board aims to ensure that the Board maintains the
right mix of skills and competencies to effectively deal with
current and emerging issues of the business, including
climate-related risks and opportunities as appropriate.
PFI’s Directors review the Board’s skills and competencies
annually, which includes a self-assessment of their skills
and experience across a range of topics, including climate-
related skills (comprising of sustainability, ESG and climate
change). Four Directors have assessed themselves as
having either ‘strong’ or ‘some’ climate-related skills and
experience, with two Directors assessing themselves as
having ‘limited’ climate-related skills or experience. In
December 2023, all current Directors on the PFI Board
attended training on climate-related disclosures to develop
and maintain their skills and knowledge in this area.
A summary of recent key Board engagements relating
to climate-related risks and opportunities can be found
in Appendix 1.
Management’s Role
PFI’s Chief Executive Officer and Chief Finance and
Operating Officer are responsible for managing risks and
executing PFI’s overall strategy, including climate-related
risks and opportunities. With contribution from the Senior
Leadership Team (including the Chief Executive Officer
and Chief Finance and Operating Officer), PFI’s Head of
Sustainability and Operations leads the identification,
assessment, and management of PFI’s climate-related
risks and opportunities and aims to ensure that the
Company’s strategy is designed to respond to these
risks and opportunities. Under PFI’s Risk Management
Framework, which is approved by the Board, the Senior
Leadership Team are responsible for promoting good
risk practices by their teams. Further details of how PFI
identifies, assesses, and manages climate-related risks
are set out in the Risk Management Section.
During FP24, PFI held regular management sustainability
meetings. The agenda of these meetings covers a broad
range of topics, including PFI’s sustainability targets and
initiatives. Attendees monitor and track progress on key
targets and management of climate-related risks and
opportunities through this forum.
Sustainability and climate risk is also a frequent topic
at fortnightly Senior Leadership Team meetings, where
management discuss emerging climate-related market
trends, progress against PFI’s key targets, strategy, climate
risk and transition planning. Management decisions on PFI’s
responses to climate-related risks and opportunities can
be made through this forum. The Senior Leadership Team
engage with PFI’s Board and Audit and Risk Committee on
climate-related risks and opportunities, progress against
targets, and risk responses via reporting at quarterly Board
and Audit and Risk Committee meetings. Frequency of
Management’s engagement with the Board and Audit and
Risk Committee during FP24 is described in Appendix 1.
Further information on PFI’s responses to climate-related
risks and opportunities can be found in the Strategy section.
_ Focusing on
projects with
value creating
opportunities.
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This section describes the scenario
analysis PFI has undertaken, the
climate-related risks and
opportunities we have identified
in our work to date, our current
and anticipated impacts of climate
change, and how we plan to position
our business towards a low-
emissions, climate-resilient future.
opportunities arising as the global and domestic economy
transitions towards a low-emissions, climate resilient
future state. Building from the core principles in our
Sustainability Strategy (see page 6), we have developed
a transition plan focused on improving the sustainability,
energy efficiency and climate resilience of our buildings.
PFI’s transition plan outlines initiatives that are critical
to our overall strategy and to help position PFI in the
transition to a lower carbon, more climate resilient future.
These initiatives (described on page 17) require PFI to make
strategic decisions regarding its existing portfolio and new
acquisitions, including whether to:
§
retain and upgrade buildings (via sustainable
refurbishment);
§
demolish and re-develop existing buildings (seeking
Green Star certification); or
§
divest properties and recycle capital.
PFI’s climate-related risks and actions being taken to
respond to those risks are described further on pages 22-24.
Alignment with capital deployment and
funding processes
Understanding and regularly reviewing the long-term
strategy for each property is critical to enabling PFI to
understand whether and when to deploy capital to upgrade
existing buildings to be more sustainable and climate
resilient or achieve a green building certification (e.g. Green
Star Design & As Built rating or operational performance
rating). Property strategies will adapt over time based on
market conditions, changes in tenant , owner and funder
preferences, and tenant demand.
PFI’s transition plan provides a high-level overview of how we
incorporate emissions reductions and climate resilience into
decision-making (including capital-deployment and funding
decisions), noting that climate change is one of a number of
factors in strategic decision-making for the portfolio.
PFI’S STRATEGY
PFI’s strategy is to invest in well-diversified, strategically
located, quality industrial properties across New Zealand. As
a professional landlord, our business model broadly covers
leasing existing properties to industrial tenants, portfolio
management through acquisitions and divestments, and
refurbishment and development activities. Following the
insourcing of facilities management in mid-2023, we now
coordinate repairs, maintenance and capital projects for our
buildings through our internal facilities management team.
In recent years, PFI has focused on prioritising value creating
opportunities through projects and bolt-on acquisitions that
have the potential to increase shareholder returns beyond
current levels. As part of PFI’s portfolio management, we
also divest properties to recycle capital and fund our ongoing
brownfield opportunities or new developments.
PFI’s Sustainability Strategy is described in the FP24
Sustainability Update on page 6. PFI has been assessing
its climate-related risks and opportunities since 2020,
and the current Sustainability Strategy was developed
with consideration to the outcomes of these previous
assessments. PFI’s transition plan aligns with our overall
business strategy and Sustainability Strategy. Further
information on PFI’s transition plan can be found below.
TRANSITION PLAN
PFI recognises that the impacts of climate change require
us to be responsive and make strategic decisions to
address climate-related risks and realise opportunities.
PFI’s scenario analysis, and identification of climate-
related risks and opportunities (as set out in this section)
demonstrate that there is scope for PFI to evolve its
activities to effectively manage the risks and realise the
Strategy
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HIGH LEVEL TRANSITION PLAN
The transition planning aspects of our strategy aim to embed emissions reduction initiatives and climate
resilience in key strategic decisions to retain and upgrade, demolish and redevelop, and acquire or divest properties.
FOCUS AREA
EXISTING PORTFOLIO:
Upgrade PFI’s existing
buildings, including new
acquisitions, to incorporate
sustainability, climate
resilience and energy
efficiency.
DEVELOPMENTS:
Incorporate sustainability
and climate resilience into
significant new
developments and
brownfield redevelopments,
which are targeting a green
building certification.
OUR INITIATIVES
1. Sustainable Refurbishments
Aim to address climate-related transition risk and reduce our embodied and operational
carbon emissions (Scope 3) by applying PFI’s Sustainable Refurbishment Framework to
applicable refurbishment projects. When upgrading existing buildings, we can incorporate
lower carbon materials, reduce waste, improve energy efficiency and lower operational
costs for our tenants.
2. Embed Climate Resilience
Implement PFI’s Climate Resilience Framework to improve the resilience of PFI’s buildings
and portfolio to climate-related physical risks (such as severe storms, wind, flooding, and
heat). The Climate Resilience Framework identifies resilience measures that
can be incorporated as part of upgrading existing properties during refurbishments (such
as improving weathertightness), or as part of day-to-day building maintenance and
management (for example, via increasing frequency of gutter cleans and roof maintenance).
3. Operational Performance Ratings
Measure emissions from electricity consumed at tenanted buildings and work
toward obtaining operational performance ratings for some properties in PFI’s
portfolio. This may help us to improve energy efficiency of the existing properties via
sustainable refurbishments.
SHORT-TERM ACTIONS
(PRESENT TO 2030)
§
Apply Sustainable Refurbishment
Framework to applicable projects.
§
Improve energy efficiency,
for example by installing solar
and LED lighting.
§
Implement Climate Resilience
Framework.
§
Install power metering at
PFI’s properties.
§
Trial selected properties for Green
Star Performance certification.
4. Green Star Certification
Significant new developments and redevelopments to target 5 Green Star
certification. This aims to reduce embodied carbon emissions from development
activities and address climate-related risks by improving climate resilience and energy
efficiency of our buildings and reducing operational costs for our tenants.
§
Commitment to 5 Green Star
certification for all significant
new buildings. Work through
opportunities to redevelop
existing properties to target
Green Star certification.
CAPITAL MANAGEMENT
DECISIONS
Funding to include sustainable or
climate resilience features into our
existing buildings can be incorporated
into our:
§
Annual maintenance capex
planning (for example, LED lighting
upgrades to improve energy
efficiency or HVAC replacements
when equipment reaches end of
useful life).
§
Approval processes for lease-related
capex (for example, to incorporate
tenant specific sustainability /
resilience features as part of
securing new or renewing leases).
We also consider exposure to physical
climate risks as part of acquisition and
divestment decisions.
Opportunities for Green Star
certification are considered as part
of development and acquisition
funding applications.
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SCENARIO ANALYSIS
In FP24, PFI undertook a scenario analysis assessment
to review PFI’s previously identified climate-related risks
and opportunities and assess our strategic resilience
across three climate scenarios. Climate-related scenarios
represent a plausible and challenging description of how
the future may develop based on assumptions about
potential climate-related impacts. Climate-related
scenarios are not intended to be probabilistic or predictive,
or to identify the ‘most likely’ outcomes of climate change.
Climate scenarios are intended to help entities develop
their internal capacity to better understand and prepare
for the uncertain future impacts of climate change.
PFI’s scenario analysis process involved using the climate
scenarios constructed by the New Zealand Green Building
Council (NZGBC) and Beca Limited (Beca) for the property
and construction sector in 2023.
5
Along with other key
stakeholders within the industry, we are pleased to have
been involved in overseeing the development of these
sector scenarios as part of the Technical Working Group
created by NZGBC in 2022. The scope of operations
covered in the scenario analysis process included the full
supply chain, including tenants, suppliers and funders. Our
scenario analysis considered a 1.5°C ‘Orderly’ scenario, a
less than 2°C ‘Disorderly’ scenario, and a greater than 3°C
‘Hot House World’ scenario.
6
A description of each scenario
is outlined on pages 19-21, with a detailed description,
methods, assumptions, and sources of data used to
construct each scenario available on NZGBC’s website:
www.nzgbc.org.nz/research-and-reports.
We consider the sector scenarios to be relevant to PFI, as
many entities within the property and construction industry
will face the same challenges resulting from climate
change. These scenarios have helped us to consider the
resilience of our business and strategy to climate-related
risks and opportunities faced by PFI and our sector
generally. PFI’s climate-related risks and opportunities
were assessed against these scenarios with oversight from
the Senior Leadership Team and reviewed by the Board.
PFI’s scenario analysis forms part of PFI’s climate risk and
opportunity assessment, which in turn is used to inform
PFI’s company strategy.
TIME HORIZONS
Climate change is a fundamental shift in our external environment that requires decisions to be made now with the implications spanning multiple years. PFI’s scenario analysis, climate-
related risks and opportunities, and targets consider short-term, medium-term and long-term time horizons that align with PFI’s strategic planning. These time horizons are set out below:
HORIZONPERIODDESCRIPTION
Short termPresent – 2030Within PFI’s weighted average lease term (WALT) (1-6 years)
Medium term2031 – 2050The period in which PFI anticipates spending major CAPEX at most properties (6-25 years)
Long term2051 – 2100The anticipated life of a building (25+ years)
TIME HORIZONS
Climate change is a fundamental shift in our external environment that requires decisions to be made now with the implications spanning multiple years. PFI’s scenario analysis, climate-
related risks and opportunities, and targets consider short-term, medium-term and long-term time horizons that align with PFI’s strategic planning. These time horizons are set out below:
HORIZONPERIODDESCRIPTION
Short termPresent – 2030Within PFI’s weighted average lease term (WALT) (1-6 years)
Medium term2031 – 2050The period in which PFI anticipates spending major CAPEX at most properties (6-25 years)
Long term2051 – 2100The anticipated life of a building (25+ years)
5. Beca Limited, Climate Scenarios for the Construction and Property
Sector, Ngā Horopaki Āhuarangi mō te Rāngai Hanganga me ngā
Whare, New Zealand Green Building Council (2023).
6. When reviewing the sector scenarios, PFI has assessed transition
risk in a Hot House World scenario to be higher than anticipated by
NZGBC and Beca. PFI has particularly focused on the impacts of
extreme physical climate risks (extreme weather events, rainfall
and flooding) driving increased demand for climate-resilient
buildings among tenants, investors, funders and insurers.
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SECTOR SCENARIOS
Decarbonisation policies
are enacted immediately
and smoothly (globally,
in New Zealand, and
within the sector). The
world successfully limits
global warming to 1.5°C
above pre-industrial
temperatures. This
scenario presents medium
to high transition risk for
PFI due to a greater focus
on decarbonisation.
Global emissions decline steadily to achieve
net zero CO
2
emissions globally by 2050.
New Zealand climate policies are ambitious
and in line with the rest of the world’s,
with the building and construction sector
adopting and prioritising decarbonisation
policies. The energy grid shifts rapidly away
from fossil fuel use, with the New Zealand
grid reaching 100% renewable by 2050.
Alternative fuels are used as a backup, and
renewables are utilised onsite instead of
fossil fuels.
Direct carbon capture technology matures
to a point where the world is on track to
achieve net zero CO
2
emissions globally
by 2050.
New Zealand’s Emissions Trading Scheme
(ETS) is amended to make carbon
capture and storage (CCS) a recognised
removal activity. Carbon capture and
storage systems are implemented in the
medium term to accelerate the rate of
decarbonisation and mitigate hard-to-
abate fossil fuel use. The implementation
of this technology increases pressure on
technical and skilled labour supply. As this
technology matures there is a reduction
in focus on hard-to-abate emissions
associated with some construction
materials (e.g. concrete, steel, aluminium).
This unlocks capital for more cost-effective
decarbonisation strategies.
The shadow price of carbon increases
dramatically to align with a 1.5°C trajectory,
steadily rising up to $250/tCO
2
e by 2050
(an increase of ~614% from a 2023
baseline of $35/tCO
2
e). As a result, the cost
and lead-times for low carbon materials
and products increase through the
2020s and 2030s, but they become more
cost and time effective than traditional
materials by 2040. The construction sector
grows significantly as carbon-supporting
infrastructure is replaced with greener,
low carbon infrastructure.
Land use change due to increased forestry
sequestration continues through to
2050 but the extent is limited and has
marginal impacts on food production
and biodiversity.
Regulatory changes for the property and
construction sector include government
procurement policies targeting recycled
materials and circular economy principles.
Stringent energy and carbon caps for new
buildings are phased in rapidly. Existing
buildings must disclose energy and carbon
performance, take steps to remove all
reliance on fossil fuels for operation, and
scale up energy efficiency.
Pressures on centralised infrastructure
increase with the demand for
electrification, closing of fossil fuel power
stations and direct climate impacts on
storm and wastewater networks. Modular,
circular designs will take precedence,
with existing building re-use and adaptive
re-use being in demand rather than new
builds. Rapid densification puts pressure
on horizontal infrastructure, necessitating
significant upgrades.
Significant behavioural change results in
an increased demand for energy efficient
buildings, increased pressures on public
transport, the rise of circular business
models and a higher consumer awareness
regarding low carbon buildings.
In response to continued high intensity
rainfall events, properties in floodplains,
or subject to unstable ground conditions,
experience increasing insurance premiums
above inflation and experience insurance
retreat by 2050. The threat of late century
sea level rise is being priced into property
valuations in the short term and premiums
on some coastal properties increase to the
point of permanent unprofitability, leading
to them being stranded.
1.5°C
Orderly
scenario:
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SECTOR SCENARIOS
Significant decarbonisation
is delayed until 2030
(globally, in New Zealand,
and within the sector).
Global warming is limited
to <2°C by 2100. The
sector faces high transition
risk after 2030 as entities
rush to decarbonise.
As global emissions continue to rise
during the 2020s, concerns about meeting
Paris Agreement goals drive a sudden
shift in global policy around 2030. Abrupt
and stringent decarbonisation policies
are enacted in the 2030s, succeeding in
limiting global warming to below 2°C above
pre-industrial levels by 2100.
New Zealand follows suit with the rest
of the world, leading to abrupt policy and
market changes for the property and
construction sector post-2030. There is no
initial increase in carbon price up to 2030,
at which point price rapidly increases to
reach $250/tCO
2
e by 2050.
Whilst rapid policy, technology, and
behaviour change does occur, it is
disordered and inconsistent across sectors
and sub-sectors.
Land use change due to increased forestry
sequestration takes place out to 2050
and there are moderate impacts on food
production and biodiversity as rapid
decarbonisation efforts significantly expand
the extent of managed forests.
During the 2020s there is a slow increase in
demand for electricity, followed by a surge
in demand in the 2030s as New Zealand
rushes to electrify our transport networks.
The electricity sector is unprepared for
the sudden shift in demand at 2030, which
causes a delay in adequate expansion of the
grid during the 2030s and leads to supply
constraints. These constraints result in
more frequent blackouts and fluctuations
in electricity prices.
During the 2020s, increased regulation
within the sector attempts to address
the need to decarbonise, but regulation is
uneven across local entities and conflicting
regulations lead to uncertainty.
At 2030 more stringent regulatory changes
are introduced. During the 2020s there is
less investment signalling for both new and
retrofit low carbon buildings, which causes
further uncertainty and lack of momentum
until 2030. At 2030, significant regulatory
changes demand an immediate step change
in building energy and carbon requirements.
Limited investment during the 2020s
means the spike in demand for low carbon
materials, low energy technology and
onsite generation in 2030 causes significant
disruption for the sector. Competition
for availability of products, materials,
professional advice and competent
installers impacts significantly on both new
building and retrofit projects resulting in
escalation in development costs.
Pressures on centralised infrastructure are
compounded after 2030 due to increasing
densification and the increasing impacts of
physical climate risks. Spatial planning to
prioritise decarbonisation and densification
versus climate resilience and managed
retreat is inconsistent across the country.
This inconsistency leads to increasing
uncertainty for the construction and
property sector regarding which assets
are most likely to become stranded.
Initially the construction and property
sector is slow to decarbonise, but ‘fast
movers’ get the opportunity to utilise
materials, capital, and knowledge while
late movers are disadvantaged when
demand peaks post-2030.
A lack of action in addressing medium
term physical risks in the 2020s results
in a greater extent of vulnerable assets
in the medium term (2030-2050). The
pace of insurance retreat is accelerating.
Properties in floodplains experience
increasing insurance premiums above
inflation and experience insurance retreat
by 2040. Premiums on some coastal
commercial properties increase to the point
of permanent unprofitability, leading to
them being stranded by 2030.
<2°C
Disorderly
scenario:
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No further decarbonisation
policies are enacted
(globally, in New Zealand,
and within the sector), and
emissions continue to rise.
Global warming reaches
>3°C above pre-industrial
levels by 2100. The sector
faces extreme physical
climate risks, particularly
towards the end of
the century.
In a Hot House World scenario PFI
expects transition risks will continue as
a consequence of the extreme physical
impacts of climate change, particularly
as adaptation and climate resilience
are prioritised.
New Zealand’s climate change policy
remains in keeping with the rest of the
world. No further policies are introduced
to curb emissions, with the building
and construction sector following suit.
Regulatory changes are slow and focus
on adaptation and managing climate
driven immigration / refugees. The price
of carbon remains at $35/ tCO
2
e to 2050.
Mandates are introduced to conserve
energy for critical functions, as asset and
infrastructure damages due to climate
change are realised.
New Zealand follows global trends in not
introducing additional policies and both
technology and behaviour change remain
slow across all sectors.
Increasing frequency and severity of acute
weather events, as well as longer term
increases in baseline shifts (increasing
temperatures and sea level rise), drive an
increasing need for climate adaptation.
For example, the need to retrofit buildings
and infrastructure to be more heat and
flood resilient. There is little investment in
technology and innovation that does not
serve these pressing adaptation needs.
This increases our reliance on current
extractive technologies, which become
more expensive as material resources
become scarcer (e.g. rare earth minerals
for EVs and mobile phones).
Use of carbon capture and storage is
minimal. Current policies are entrenched
seeing New Zealand’s reliance on carbon
sequestration through forestry increase
significantly out to 2050 in an attempt to
offset continued increases in emissions.
New Zealand’s electricity grid is gradually
decarbonised further in line with current
policies. Emission grid factors remain at
0.06 kgCO
2
/kWh by 2050 which means
businesses wishing to achieve net zero
carbon emissions must invest in their own
zero carbon generation.
Existing low carbon materials are readily
available due to low demand but there is
little innovation beyond technologies and
materials currently available. Investment
is prioritised towards adaptation and
climate resilience. Some assets become
stranded as building codes increasingly
become more stringent regarding the need
for buildings to withstand climate impacts
(such as storm events, extreme rainfall,
heatwaves, and floods).
Centralised infrastructure will show
failures and stresses, with some assets
becoming stranded due to the physical
impacts of climate change. Consequently,
local councils increase rates to invest in
protection and restoration of certain assets.
There are no incentives for meaningful
behavioural change. A significant
breakdown of social cohesion occurs, with
heat stress and mental health impacts
from climate change at record levels.
Food insecurity and growing populations
drive retreat from cities. Spikes in
demand for housing occur due to climate-
driven immigration from other parts of
the world and increasing numbers of
climate refugees.
The pace of insurance retreat accelerates.
Properties in floodplains experience
increasing insurance premiums and likely
experience insurance retreat by 2040.
Properties lose value and become stranded
assets. Premiums on coastal commercial
properties may increase to the point of
permanent unprofitability, leading to them
being stranded by 2030.
>3°C
Hot House
World
scenario:
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CLIMATE-RELATED RISKS
In FP24, we reviewed PFI’s climate-related risks across the above three climate-related scenarios. Further information on PFI’s approach
and processes to identifying and assessing climate-related risks can be found in the Risk Management Section.
This process has assisted us to identify what we consider to be PFI’s material climate-related risks. A summary of these risks is illustrated below:
RISK DESCRIPTIONTIME HORIZON
RELEVANT CLIMATE
SCENARIOSRISK RESPONSE
Climate-related Regulatory Change
Transition Risk – Policy
The introduction of climate-related policies, for example on low-carbon
building materials and design, land use, mandatory energy performance
ratings, and restrictions on water and energy use could lead to
increased capital expenditure on upgrading properties to a lower
carbon, climate-resilient standard. Flow on impacts could potentially
include a reduction in feasibility of developments and projects.
Short
Medium
Long
Orderly
Disorderly
Hot House
World
§
We closely monitor and work with industry bodies to respond to regulatory
changes and comply with new regulations.
§
We are working to prepare for potential regulatory change, such as mandatory
energy performance ratings by installing power metering and monitoring to
build data on building performance.
Tenant and Purchaser Demand for Sustainable Buildings
Transition Risk – Market
Increased tenant and purchaser demand for sustainable buildings could
result in increased retrofit activities and high demand for low-carbon
building materials across the industry. This could lead to increased
costs to upgrade properties to a sustainable standard. In the long term,
failure to upgrade properties could result in difficulty re-letting
buildings or devaluation of properties.
Short
Medium
Long
Orderly
Disorderly
§
We have a target of 5 Green Star certification for all significant new buildings.
§
We apply an internal Sustainable Refurbishment Framework
for eligible projects.
§
We are working to drive stronger operational sustainability performance
of existing buildings through inhouse facilities management.
Tenant and Purchaser Demand for Resilient Buildings
Transition Risk – Market
Severe weather events (for example, storms and floods) could result
in increased demand for buildings that are resilient to the physical
impacts of climate change. This could result in increased costs to
upgrade properties to be climate resilient or negative financial impacts
for buildings in high-risk locations.
Medium
Long
Disorderly
Hot House
World
§
We have created an internal Climate Resilience Framework which, when
implemented, will provide us a way to incorporate climate resilience into our
existing buildings through wider sustainable refurbishments, and facilities
management activities. We plan to embed climate-resilience measures into our
annual maintenance capex plans and projects. See further detail on page 17.
§
Climate adaptation plans are completed for major developments which assist
with designing new buildings to be more resilient to the expected physical
impacts of climate change.
22
APPENDICESFP24 SUSTAINABILITY
UPDATE
CONTENTS
INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
RISK DESCRIPTIONTIME HORIZON
RELEVANT CLIMATE
SCENARIOSRISK RESPONSE
Changing Investor and Funder Preferences
and Funding Requirements
Transition Risk – Market
Increased vulnerability to climate-related risks could result in declining
market attractiveness. There is also an increased risk of inability to
meet investor and funder expectations for decarbonisation, particularly
where emissions reduction targets are not met or seen as insufficiently
ambitious. Severe weather events could result in greater expectations
among investors and funders for PFI to own buildings that are resilient
to physical impacts.
Short
Medium
Long
Orderly
Disorderly
Hot House
World
§
Execute PFI’s Sustainability Strategy to manage this risk, including PFI’s
aspiration to minimise embodied and operational greenhouse gas emissions.
§
We disclose progress against climate-related targets and initiatives annually.
§
We regularly engage with our investors and funders to understand expectations.
§
We are installing power metering and monitoring at PFI’s buildings to build data
on building performance.
§
We have a target of 5 Green Star certification for all significant new buildings.
§
We apply an internal Sustainable Refurbishment Framework for eligible projects.
§
In 2023, PFI launched its Green Finance Framework and established its inaugural
$150 million Green Loan Tranches to support progressive action towards Green
Star targets.
Extreme Weather Events
Physical Risk – Acute
Increased severity and frequency of weather events (for example,
flooding, storms and cyclones) could result in damage or accelerated
deterioration of assets, potential loss of access to PFI’s properties,
and impact the availability of insurance coverage for specific perils.
This could lead to increased capital expenditure to upgrade properties
to a climate-resilient standard, increased insurance costs, and increased
costs to repair damage not covered by insurance.
Short
Medium
Long
Orderly
Disorderly
Hot House
World
§
We review portfolio physical climate risks periodically and complete climate risk
assessments as part of due diligence for new acquisitions.
§
We plan to implement a Climate Resilience Framework to incorporate climate
resilience into our existing buildings through wider sustainable refurbishments,
and facilities management activities (see above).
§
We have a target of 5 Green Star certification for all significant new buildings,
which incorporates climate resilience measures.
§
In FP24, P.F.I. Cover Limited was incorporated for the purpose of establishing
a captive insurance programme for the Group. This forms part of a long-term
insurance strategy to position PFI to obtain prudent levels of insurance.
§
We aim to reduce physical impacts through proactive maintenance via inhouse
facilities management.
§
We aim to manage our borrowings in a manner that provides headroom to
potentially cope with extreme weather events and the associated destruction in
value and increase in capital expenditure.
23
APPENDICESFP24 SUSTAINABILITY
UPDATE
CONTENTS
INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
RISK DESCRIPTIONTIME HORIZON
RELEVANT CLIMATE
SCENARIOSRISK RESPONSE
Rising Temperature
Physical Risk – Chronic
Temperature extremes could result in increased cooling demand and
electricity consumption during hot, dry summers. This could also result
in increased demand on HVAC equipment, leading to degradation, and
demand from tenants to improve air conditioning and temperature
control within PFI’s buildings.
Medium
Long
Disorderly
Hot House
World
§
We plan to implement a Climate Resilience Framework to incorporate climate
resilience into our existing buildings through wider sustainable refurbishments,
and facilities management activities (see above).
§
We aim to reduce physical impacts through proactive maintenance via inhouse
facilities management.
Sea Level Rise Risk
Physical Risk – Chronic
Sea level rise could lead to insurance retreat from coastal locations and
at-risk properties may become permanently unprofitable or stranded.
Long
Hot House
World
§
Sea level rise risk is a consideration in PFI’s acquisition and divestment decisions.
§
We have assessed PFI’s current portfolio for risk of coastal flooding due to sea
level rise.
24
APPENDICESFP24 SUSTAINABILITY
UPDATE
CONTENTS
INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
OPPORTUNITY
OPPORTUNITY
TYPE
TIME
HORIZON
RELEVANT CLIMATE
SCENARIOS
Sustainable refurbishments
With increased demand for lower carbon, energy efficient buildings and a focus on decarbonisation among some investors, funders, tenants, and policy
makers, we have a potential opportunity to reduce emissions, improve the operational performance of some buildings in our existing portfolio and improve
building value and desirability through sustainable refurbishments. This may include:
§
Reducing embodied carbon emissions via use of lower carbon materials and reuse of existing materials or structures.
§
Reducing operational carbon emissions, helping our tenants meet their climate commitments and potentially reducing costs via implementation
of energy and water initiatives (for example, LED lighting, metering, water capture and fittings).
§
Helping our tenants move to renewable energy (via solar installations) or implementing sustainable initiatives as part of their lease negotiations.
Transition
Short
Medium
Long
Orderly
Disorderly
Green Star Certification
We have identified an opportunity to use Green Star certification as a differentiator for our new buildings, which may improve building value and
desirability. Through Green Star certification, PFI has the opportunity to reduce embodied and operational emissions and address market and regulatory
risks, which may drive demand for low carbon, energy efficient and climate resilient buildings.
Transition
Physical
Short
Medium
Long
Orderly
Disorderly
Hot House
World
Energy performance ratings
We have identified a potential opportunity to gain accreditation for some buildings in PFI’s existing portfolio via energy performance ratings.
Power metering and monitoring is a first step that will allow us to measure operational carbon emissions from energy use in our buildings with an
ambition to eventually reduce these emissions where practicable. PFI views this as a potential way to further improve building value and desirability.
Transition
Short
Medium
Orderly
Disorderly
Building climate resilience
With increased severity and frequency of extreme weather events and temperature rise driving demand for resilient buildings, we have an opportunity
to embed climate resilience into PFI’s portfolio. Through the implementation of PFI’s Climate Resilience Framework, PFI may be able to:
§
Improve resilience of existing assets against the physical impacts of climate change by incorporating climate resilience features during sustainable
refurbishments and developments (for example, improving weather-tightness), and as part of day-to-day building management (for example, through
increasing frequency of gutter cleans).
§
Improve PFI’s due diligence and management of properties with heightened climate risk to create a more resilient portfolio.
§
Reduce reactive capital expenditure on responding to climate-related weather events.
§
Reduce the number of insurance claims and improve insurer appetite.
§
Improve the safety of tenants and occupants.
Physical
Short
Medium
Long
Orderly
Disorderly
Hot House
World
Green Finance
PFI has identified an opportunity to secure green finance under PFI’s Green Finance Framework to support progressive action towards our strategic
objectives and Green Star targets.
Transition
Short
Medium
Orderly
Disorderly
CLIMATE-RELATED OPPORTUNITIES
We have also identified climate-related opportunities, which may be used to manage PFI’s climate-related risks.
The following climate-related opportunities have been identified and are being progressed by PFI.
25
APPENDICESFP24 SUSTAINABILITY
UPDATE
CONTENTS
INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
CURRENT CLIMATE-RELATED IMPACTS
AND FINANCIAL IMPACTS
PFI has begun to experience physical and transition impacts
of climate change. A current climate-related impact is
defined as having occurred during the FP24 reporting
period. PFI has experienced the following current climate-
related impacts and financial impacts during FP24.
Current Physical Impacts
We continued to experience the impact of extreme
weather events during FP24. In May 2024, a local storm
event impacted a number of PFI-owned properties across
Auckland, which experienced some flood-related damage
due to intense rainfall and subsequent leaks. The financial
impact to PFI from this event was negligible as the claim
for damage to these properties due to this event was
accepted by insurers.
Current Transition Impacts
Following widespread damage and destruction due to the
Auckland Floods and Cyclone Gabrielle in early 2023, PFI
experienced restrictive flood terms imposed during the
2023/24 insurance programme renewal. The impact of
climate-related weather events on insurer appetite has
influenced a strategic decision to move to a more advanced
insurance structure. During 2024, P.F.I. Cover Limited
was incorporated in the Cook Islands for the purpose of
establishing a captive insurance programme for the Group
(an insurance captive). Establishing an insurance captive
helped to improve access to overseas insurance markets,
reduce insurance risk and assist PFI with obtaining prudent
levels of insurance cover. The financial impact to PFI due to
establishing an insurance captive was immaterial. Further
information on insurance premium increases during the
2024 insurance renewal can be found in the Metrics and
Targets section.
During FP24, PFI created an internal Climate Resilience
Framework which, when implemented, will identify
opportunities to improve climate resilience of buildings
within the portfolio. PFI intends to implement this
framework as part of wider sustainable refurbishments,
projects, and facilities management activities over time.
Resilience to physical impacts of climate change is also
considered in the design stage of new developments
targeting 5 Green Star certification. The financial
impacts of the resilience aspects of targeting Green Star
certification are included in the capital expenditure towards
our three new buildings provided in the Metrics and
Ta rgets section.
PFI did not measure financial impacts associated with
resilience-related upgrades during FP24 as the Climate
Resilience Framework is yet to be implemented. In future,
financial impacts for resilience-related property upgrades
are likely to be captured in PFI’s capital expenditure or in
planned proactive maintenance costs.
Climate-related transition risks and opportunities, including
increased demand for sustainable and climate-resilient
buildings among tenants, purchasers, investors, and
funders, has directly influenced the implementation of
sustainability initiatives for our buildings. For example,
PFI has:
§
Progressed major developments at Stages 1 and 2 at
Bowden Road and Stage 1 at Springs Road.
7
Targeting
5 Green Star certification for these three new
buildings has enabled us to incorporate energy and
water efficiency initiatives, embed climate resilience,
and lower embodied carbon emissions of the new
buildings. PFI deployed approximately $43.6M in capital
expenditure towards the delivery of these Green Star
developments during the financial period.
8
Although
we are unable to reliably estimate the incremental
costs incurred for developing these buildings to a Green
Star standard, additional costs associated with seeking
5 Green Star certification include costs to implement
energy and water efficiency measures, use of low-
impact building materials and products, and additional
consultant fees to support the certification process.
7. In July 2024, Stage 1 at Bowden Road (leased to Tokyo Food) was awarded a 5 Green Star – Design & As Built NZV1.0 Design rating.
8. This figure does not separate the incremental spend that is ‘climate-related’ from general Green Star development costs, nor does it provide an estimate of additional costs incurred for undertaking Green Star
developments, (therefore the gross spend also encompasses costs that are not climate-related).
26
APPENDICESFP24 SUSTAINABILITY
UPDATE
CONTENTS
INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
§
Continued to apply an internal Sustainable
Refurbishment Framework to incorporate energy
and water efficiency measures and use lower impact
building materials at applicable refurbishment projects.
In FP24, sustainable features incorporated into PFI’s
buildings include solar installations, LED lighting and
metering installations. Capital expenditure deployed
towards LED lighting upgrades during FP24 was around
$275k. The financial impact of installing solar and
metering is described below.
§
Completed solar installations at four buildings during
FP24, resulting in a total of five buildings in PFI’s
portfolio with solar panels installed. This presents an
opportunity to obtain a return on cost via additional
capital works rent for solar installations. During FP24,
PFI spent around $414k in capital expenditure on solar
installations at 314 Neilson Street and 12 Zelanian
Drive on a return on cost basis.
§
Continued to install utility metering and monitoring
at PFI’s properties to obtain data to measure the
operational performance of our buildings. PFI considers
that measuring the energy and water use in our
buildings presents a potential market opportunity
to obtain operational performance ratings in future.
Although no legislation mandating energy performance
ratings for commercial buildings has been formally
introduced, measuring operational performance also
prepares PFI for potential regulatory change in this
space. During FP24, the financial impact to PFI was
approximately $217k in capital expenditure deployed
towards metering installations.
ANTICIPATED CLIMATE-RELATED IMPACTS
AND FINANCIAL IMPACTS
Based on our current understanding of PFI’s climate-
related risks and opportunities and scenario analysis,
PFI anticipates the following physical and transitional
impacts of climate change may materialise in future.
Anticipated Physical Impacts
PFI recognises the need to consider and prepare for the
impacts of climate-related physical risks, acknowledging
that some physical impacts of climate change are
already being experienced. PFI considers physical
climate-related risks as part of asset management and
portfolio management decisions such as future capital
expenditure and / or divestment decisions. Physical risk
assessments also inform our due diligence processes for
new acquisitions.
PFI has assessed the anticipated financial impact of
various physical hazards to our properties via S&P Global
Climanomics.
9
Financial impacts are calculated using the
sum of climate-related expenses, decreased revenue and/
or business interruption, and are reflected on an annualised
basis as a percentage of loss relative to total asset value
(Modelled Average Annual Loss, or MAAL)
10
. The S&P
Global Climanomics platform is limited in its ability to
predict the anticipated financial impact of climate change
on our assets, however the platform does provide a useful
understanding of the potential financial impacts of physical
hazards on our properties. Based on the climate data
available in the modelling, S&P Global’s experience in real
estate, and the ability of the platform to model anticipated
financial impacts of physical climate risks for PFI’s
properties, PFI considers this platform to be an appropriate
model to estimate the financial impact of physical risks
to PFI’s portfolio across a range of climate scenarios and
time horizons.
The Climanomics platform considers four Shared
Socioeconomic Pathways (SSPs) that broadly align
with the ‘Disorderly’ and ‘Hot House World’ scenarios,
including SSP1-2.6, SSP2-4.5, SSP3-7.0 and SSP5-
8.5.
11
PFI’s anticipated financial impacts of the physical
hazards described below are modelled over a short-,
medium- and long-term time horizon (i.e., present through
to 2090s). This assessment indicates that the most
significant potential risks to PFI’s portfolio are flooding and
extreme temperatures.
Severe weather events
PFI has identified a risk that increased severity and
frequency of weather events (for example, flooding, storms
and cyclones), could result in damage or accelerated
deterioration of our assets, and exposure to increased
reactive repairs and maintenance costs and business
interruption for our tenants.
According to the Climanomics platform, the MAAL due
to pluvial and fluvial flooding is anticipated to range
between 0.16-0.86% in a ‘Disorderly’ and ‘Hot House
World’ scenario. Further information can be found in the
Metrics and Targets section. This modelling captures costs
associated with fixing damaged or deteriorated assets and
business interruption costs. These are typically covered
by insurance, however, following PFI’s scenario analysis
9. Climate hazards assessed using the S&P Global Climanomics platform include flooding (pluvial and fluvial), extreme temperatures, tropical cyclones, wildfire, water stress and drought.
10. Relative to PFI’s current insurance value of nearly $2B.
11. S&P Global’s Climanomics platform does not estimate risks under an ‘Orderly’ scenario.
27
APPENDICESFP24 SUSTAINABILITY
UPDATE
CONTENTS
INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
and climate risk assessment, PFI anticipates that over a
short to medium term time horizon, insurance will become
increasingly difficult and expensive to obtain, particularly
for certain perils. Further details on the anticipated impact
of climate change on insurance premiums can be found on
page 29.
Other financial impacts of severe weather could include
damage from severe storms, weather-related delays
to projects and developments and increased planned
proactive maintenance costs. These anticipated financial
impacts cannot be reliably quantified as PFI does not have
access to climatic data at a sufficient scale to estimate
these impacts.
Rising temperatures
PFI has identified a risk that rising temperatures could
result in increased demand on, or for, air conditioning
systems and electricity use, particularly in a ‘Hot House
World Scenario’.
According to the Climanomics platform, the MAAL due to
temperature extremes is anticipated to range between 0.38
– 1.57% in a ‘Disorderly’ and ‘Hot House World’ scenario.
Further information can be found in the Metrics and
Targets section. This modelling primarily considers costs
associated with HVAC degradation due to temperature rise
over time. PFI considers that this financial impact may be
overstated, as the warehouse component of PFI’s buildings
do not typically have cooling (as opposed to HVAC systems
cooling the office portion of the building). However, as we
expect temperatures to rise over time, we anticipate we will
need to upgrade HVAC systems as they reach the end of
their useful life and incorporate temperature control within
some PFI warehouses over a long-term time horizon.
Sea Level Rise
Although sea level rise is considered a lower risk for
PFI because of the physical location of our assets, we
anticipate that sea level rise could result in insurance
retreat from coastal locations and at-risk properties may
become stranded over a long-term time horizon.
The impact of coastal flooding in the S&P Climanomics
platform is recorded as having no financial impact for PFI.
However, to ensure that sea level rise risk is appropriately
assessed, PFI has also assessed the risk of sea level rise
to PFI’s properties using NIWA’s extreme sea level flood
maps (1%AEP and up to 2m sea-level rise) for Aotearoa.
12
NIWA’s extreme sea level flood map identifies national
and regional level flood hazard and exposure trends
with rising sea levels (across various climate scenarios).
NIWA is a nationally recognised Crown Research Institute
that provides climate expertise specific to New Zealand.
PFI considers this dataset to be an appropriate model
to understand which of PFI’s properties are located in
regions that are at risk of sea level rise inundation. Through
this modelling, PFI has identified that two properties
representing a value of $37.05M (or 1.8% of PFI’s portfolio
by value), are potentially at risk of coastal flooding due to
sea level rise, albeit over a long term time horizon.
13
Further
information can be found in the Metrics and Targets section.
Anticipated Transition Impacts
14
PFI anticipates that, due to market and regulatory drivers,
there will be a divergence over a short and medium-
term time horizon between industrial properties that
are considered to be sustainable, and those that are not.
PFI anticipates that the financial impact of this is likely
to be reflected through a potential increase or reduction
in a range of factors such as rents, vacancy rates and
valuations, depending on whether a building has green
certification or not. However, at this point in time, we are
unable to quantify the anticipated financial impact as it
is not clear what the level of premium might be for more
sustainable properties, or the discount for less sustainable
properties. Similarly, PFI anticipates that climate resilience
of PFI’s properties could also have an impact on the value
of PFI’s assets over a medium and long-term time horizon.
This impact cannot currently be reliably estimated due to
the uncertainty surrounding the extent of climate change
and the value of the climate resilience of individual assets.
In addition, climate change will only be one of a range of
economic factors that determine future rents, vacancy
rates and valuations, with these continuing to be influenced
by factors such as location and tenant demand. PFI may be
able to quantify this impact in future if market information
becomes available.
For the reasons stated above, PFI is unable to quantify the
anticipated financial impacts of these market changes.
However, given the risks and potential opportunities, PFI
considers that it is in the interests of long-term shareholder
value to prudently invest capital expenditure to upgrade our
assets to be more sustainable, energy efficient and climate
resilient over a short and medium-term time horizon. PFI
is also investing in the development of new buildings that
are designed and built with a view to addressing climate-
related risks.
12. NIWA’s extreme sea level flood map for New Zealand
can be found here: https://experience.arcgis.com/
experience/8e3d7262cc9846968f0bfb86da0806f8
13. There is no data for the Bay of Plenty region within the NIWA
extreme sea level flood maps, therefore PFI has not yet assessed
the risk of sea level rise for properties located in this region.
14. Anticipated transition financial impacts have been quantified over a
shorter time frame, where a reasonable forecast is able to be made.
28
APPENDICESFP24 SUSTAINABILITY
UPDATE
CONTENTS
INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
Around $7.1M of PFI’s budgeted capital expenditure for
FY25 incorporates sustainable features for PFI’s existing
buildings.
15
Sustainable features in the FY25 capex budget
include power metering installations, LED lighting, and
sustainable landscaping. Budgeted capital expenditure
from FY26 onward cannot be reliably estimated at this
stage due to insufficient data.
PFI also anticipates investing capital expenditure towards
significant sustainable refurbishments, and further
brownfield and greenfield developments targeting 5 Green
Star certification. For example, PFI has identified potential
opportunities to deploy ~$350M toward Green Star
developments in the short to medium term, including the
Bowden and Springs Road projects noted below.
16
PFI also anticipates investing capital expenditure to
upgrade our properties to be more climate-resilient over a
short and medium-term time horizon. Specific resilience-
related property upgrades have not been separately
identified in the FY25 budget as the Climate Resilience
Framework is yet to be implemented. As noted on page 26,
the financial impact of resilience-related property upgrades
are likely to be captured in PFI’s capital expenditure or in
planned proactive maintenance costs in future.
PFI has committed a total $33.5M in capital expenditure
towards the development of Stage 1 at Springs Road
(leased to Fisher & Paykel Appliances) and Stage 2 at
Bowden Road (leased to Daikin) during FY25. These
developments are aiming for practical completion
during FY25. These developments are targeting 5 Green
Star certification, and on completion (when combined with
the recently completed building at Stage 1 at Bowden
Road) will represent a value of $214M or 10.3% of our
total portfolio market value.
17
On completion, these three
buildings are expected to generate around $11.2M in
contract rental income.
We anticipate that over time as we increase the proportion
of our portfolio that has green certification, the percentage
of our funding that is green funding will adjust accordingly.
18
PFI considers that there is an opportunity over the short
and medium-term to increase access to capital via green
finance and potentially secure finance with cheaper rates.
However, there is insufficient market information at this
time to quantify the anticipated financial impact of this and
we note that finance market dynamics are likely to continue
to be the primary influencer of this financial impact. PFI
may be able to quantify this impact in future if more market
information becomes available.
15. Budgeted sustainable capital expenditure for FY25 is captured where projects have been identified as including a ‘sustainability feature’ and does not separate capex that is ‘climate-related’ from general project costs
(for example, wider refurbishment works). Therefore, budgeted sustainable capex also includes costs that are not climate-related. Budgeted sustainable capex does not include capex towards Green Star developments.
PFI notes that budgeted sustainable capital expenditure for FY25 may differ from actual spend during FY25. Other uncertainties include data entry limitations.
16. Based on early estimates of costs for identified projects. We note that, in some cases, these are not fully-committed projects.
17. Based on 30 June 2024 ‘as if complete’ valuations. The ‘as-if-complete’ market value of these properties (as well as the current market value of our portfolio of properties) are based on current predictions and could change
at the time these developments are completed. Therefore, these figures are subject to change.
18. Refer to PFI’s Green Finance Framework for further information on green funding.
Notwithstanding the changes that PFI has made to its
insurance programme to prepare for the impacts of
climate change, we anticipate that insurance premiums
may continue to increase over a short, medium and long-
term time horizon. PFI is unable to quantify the financial
impact of potential premium increases at this time due to
the uncertainty surrounding the extent of climate change
in future. PFI also views that claims history and financial
market dynamics are likely to continue to be key drivers
of insurance pricing, in addition to climate change-related
losses. PFI may be able to quantify this financial impact in
future if more market information becomes available.
_Increasing
5 Green Star
certification in
our portfolio,
including at
Bowden Road.
29
APPENDICESFP24 SUSTAINABILITY
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INTRODUCTIONCLIMATE-RELATED
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PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
This section describes PFI’s
processes for identifying, assessing
and managing climate-related
risks and how these processes are
integrated into PFI’s overall risk
management processes.
IDENTIFYING, ASSESSING AND MANAGING
CLIMATE-RELATED RISKS
As noted in the Governance section of this report,
identification, assessment, and management of PFI’s
climate-related risks and opportunities is led by PFI’s
Head of Sustainability and Operations, with contribution
from the Senior Leadership Team. PFI undertakes an
annual assessment of both PFI’s climate-related risks and
company-wide risks, which are reviewed by the Board at
least annually.
PFI’s Risk Management Framework governs our approach
to identifying and assessing risks, including climate-related
risks. In line with this framework, climate-related risks
are identified by reviewing previously identified climate-
related risks and considering any changes to the internal
and external environment. Risks are then assessed and
prioritised according to our Risk Management Framework
which assesses them against a risk matrix of likelihood
of the risk occurring and consequences to PFI, should it
occur. The Framework provides an ‘inherent risk rating’
and a ‘residual risk rating’, which can be assessed as low,
medium and high risk. The residual risks are determined
by assessing any changes to consequences and likelihood,
considering PFI’s current responses to mitigate this risk.
In addition to this typical risk assessment process, climate-
related risks have been assessed across each sector
scenario and adapted to reflect how they may evolve
in each plausible scenario. We have also determined
the potential impact to PFI over different time horizons.
The time horizons considered in this risk assessment are
described on page 18.
PFI’s climate-related risks are characterised as either
‘transition risks’ associated with transitioning to a lower-
carbon, climate-resilient economy (such as changes in
policy, regulation, technology, and market), or ‘physical
risks’ associated with the impacts of climate change (such
as extreme weather events, storms, flooding, temperature
change, and damage to property). This risk assessment
was also informed by an analysis of the potential impacts
of physical climate hazards across all PFI properties as
discussed on pages 27-28.
PFI’s climate-related risks and opportunities assessment
considers PFI’s direct operations, as well as upstream
and downstream impacts. No parts of the value chain
are excluded.
Managing and responding to climate-related risks forms
part of PFI’s Sustainability Strategy. Management oversees
PFI’s climate-related risk and opportunities assessment,
which also identifies any responses and opportunities PFI
may undertake to manage PFI’s climate-related risks.
Any decisions on PFI’s responses to climate-related risks,
including whether to mitigate, transfer, accept or control
these risks and opportunities are made by the management
team with oversight from the Board. PFI’s assessment of
climate-related risks and opportunities translates through
to PFI’s transition plan. Actions being taken to respond to
and manage PFI’s most material climate-related risks are
set out in the Strategy Section.
Risk Management
30
APPENDICESFP24 SUSTAINABILITY
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CONTENTS
INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
INTEGRATION INTO OVERALL RISK
MANAGEMENT PROCESS
Under PFI’s Risk Management Framework, every PFI staff
member is responsible for the identification, management
and escalation of risks as part of their role. Risks are
discussed at Senior Leadership Team meetings and reports
on risk management are provided to the Audit and Risk
Committee at least annually.
In 2023, PFI’s Audit and Risk Committee and Board
reviewed and approved PFI’s Risk Management Framework,
which was updated to integrate climate-related risks
into the risk management process. Assessment and
management of climate risk is managed in the same way
as our other risks, with oversight by the Senior Leadership
Team, including the Chief Executive Officer and Chief
Finance and Operating Officer, and the Board.
PFI’s climate-related risks are also incorporated into PFI’s
company-wide risk register to give a single view of PFI’s
risks. In most cases, climate risks are an extension of our
existing risks. Potential impacts of climate change are
considered to present strategic, financial, operational,
ESG, property and reputational risks for PFI. Our controls
for those risks have been improved to include consideration
of climate change impacts. For example, PFI added new
controls for PFI’s strategic and ESG risk, which now
includes an annual review of PFI’s climate-related risks
and opportunities.
_ 30-32 Bowden Road,
Mt Wellington, June 2024.
31
APPENDICESFP24 SUSTAINABILITY
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PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
Fugitive emissions from HVAC systems
Electricity consumption
Diesel emissions from sprinkler systems
Electricity from
tenanted buildings
Operational waste
Business travel
GREENHOUSE GAS EMISSIONS
PFI’s Scope 1, Scope 2 and Scope 3 greenhouse gas emissions for FP24 are set out below. These greenhouse gas emissions are not subject
to an external assurance engagement, however they have been externally peer reviewed by Ekos Kamahi Limited to check alignment with
the GHG Protocol. Further information on PFI’s calculation methodology, assumptions, limitations, uncertainties, consolidation approach,
emissions factors, and excluded emissions is detailed in Appendix 2.
upstream emissions
scope 3
corporate emissions
scope 1 and 2
downstream emissions
scope 3
Goods and services
Capital expenditure
Electricity transmission and
distribution losses
Employee commuting
% TOTAL FOOTPRINT
EMISSIONS SOURCE
Offset
Our carbon footprint
9,899.1
tonnes of C0
2
e
92.1%
9,112.8 TONNES
0.7%
73.3 TONNES
7.2%
713.0 TONNES
This section describes
the metrics and targets
set to measure and
manage PFI’s climate-
related risks and
opportunities.
The metrics disclosed in this report are
largely the same metrics disclosed in
our FY23 report. However because the
metrics in this report reflect a shorter
6-month reporting period rather than 12
months, these metrics are not entirely
comparable to prior reporting periods.
Metrics and Targets
32
APPENDICESFP24 SUSTAINABILITY
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INTRODUCTIONCLIMATE-RELATED
DISCLOSURES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
SCOPECATEGORY
FY19 (tCO
2
e)
12 MONTHS
FY20 (tCO
2
e)
12 MONTHS
FY21 (tCO
2
e)
12 MONTHS
FY22 (tCO
2
e)
12 MONTHS
FY23 (tCO
2
e)
12 MONTHS
FP24 (tCO
2
e)
6 MONTHS
19
SCOPE 1
Direct EmissionsFugitive emissions (refrigerants) 94.5116.876.861.341.2
68.7
Fuel Covered under
Category 6
Covered under
Category 6
0.24.55.6
2.4
SCOPE 2
Indirect EmissionsElectricity consumption (location based)
20
15.55.414.219.64.4
2.2
Total Scope 1 and Scope 2 Emissions110.0122.291.285.451.2
73.3
SCOPE 3
Other Indirect
Emissions
Category 1: Purchased goods and services
21
Not measured in FY19111.3117.4284.31,244.2
506.1
Category 2: Capital goods
22
Not measured in FY192,564.72,615.02,122.416,733.7
8,595.5
Category 3: Energy and fuelNot measured in FY190.51.21.80.5
0.2
Category 5: Waste generated in operations0.70.50.20.40.5
0.1
Category 6: Business travel 19.89.412.718.425.0
43.6
Category 7: Employee commutingNot measured in FY1915.113.612.617.711.0
Category 13: Downstream leased assets
23
Not measured in FY19Not measured in FY20Not measured in FY21Not measured in FY22Not measured in FY23
669.3
Total Scope 3 Emissions20.52,701.52,760.32,439.918,021.7
9,825.8
TOTAL Scope 1, 2 and 3 Emissions130.52,823.72,851.32,525.418,072.9
9,899.1
OUR GHG EMISSIONS
19. tCO
2
e figures for FP24 reflect the six-month period between 1 January 2024 and 30 June 2024 due to PFI’s balance date change to 30 June, and are not entirely comparable with prior year emissions.
20. PFI’s Scope 2 emissions are comprised of electricity consumption at PFI’s head office, vacant properties and common areas.
21. Scope 3 Category 1 emissions per $ spend was calculated using an input output (IO) consumption-based model. An IO model estimates emissions based on category spend using data from allocating national GHG emissions to final
products based on economic flows between sectors. The IO model is accepted by the GHG Protocol and is considered comprehensive but varies in its granularity. The increase in Scope 3 Category 1 emissions from FY23 onwards is
a reflection of a change in the IO consumption-based model used by PFI, rather than a material change in underlying activity.
22. Scope 3 Category 2 emissions were calculated using Whole-of-Life Carbon Assessment data for major developments, with consumption-based models (see footnote 21) used for the balance of emissions in this category.
The Whole-of-Life Carbon assessments used are an early estimate of the emissions associated with our major development projects. As these projects span multiple financial years, the emissions have been allocated to
financial years based on spend. There may be adjustments made to emissions allocated to future periods to account for any variances from these initial estimates. The increase in Scope 3 Category 2 emissions from FY23
onwards is attributable to both a change in the consumption-based model used and increased development activity.
23. Downstream leased assets include emissions relating to electricity use by PFI’s tenanted buildings. The tCO
2
e figure for FP24 only includes electricity usage at the 48% of properties for which PFI is able to access at least
one full month of consumption data through power metering, therefore it is not a complete reflection of electricity use across the portfolio for FP24. Extrapolating actual metered data during FP24, PFI estimates that the
overall emissions associated with building electricity use may be around 2,728 tCO
2
e in FP24. This estimate is highly uncertain as PFI has a limited dataset to extrapolate from. PFI will not gain greater visibility on the
electricity use of its tenanted buildings until more properties have metering installed.
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APPENDICESFP24 SUSTAINABILITY
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INTRODUCTIONCLIMATE-RELATED
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PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
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GHG EMISSIONS INTENSITY METRICS
GHG EMISSIONS
INTENSITY METRICFY23FP24
Scope 1 + 2 GHG
emissions (tCO
2
e) / sqm
lettable area
0.00006 tCO
2
e0.00008 tCO
2
e
Scope 1 + 2 GHG emissions intensity increased slightly
in FP24 due to an increase in Scope 1 emissions for the
reporting period.
PFI had three buildings under development during FP24.
Once completed, the Scope 3 Category 2 upfront embodied
carbon emissions associated with the properties that were
under development during the financial period is estimated
to have an intensity of 0.406tCO
2
e per sqm lettable area
being developed.
24
EMISSIONS PERFORMANCE
PFI does not have an absolute or intensity emissions target.
See page 6 of our FP24 Sustainability Update for more
information on PFI’s strategy to minimise our emissions,
along with PFI’s transition plan on page 17 setting out our
planned initiatives to reduce emissions associated with
our buildings.
Due to the shorter 6-month reporting period during FP24,
PFI’s total emissions for FP24 are not entirely comparable
to the prior year’s 12-month reporting period (FY23).
PFI’s Scope 1 fugitive emissions increased by 67% or
27.5tCO
2
e in FP24 compared to FY23 figures, primarily due
to a large leak of refrigerant gas at one of our properties
during the reporting period.
PFI’s largest source of measured emissions is ‘embodied
emissions’ from development and refurbishment activity
(Scope 3, Category 2). These emissions account for over
86% of PFI’s FP24 measured GHG emissions.
We also note that emissions relating to the operational
performance of our buildings (for example, electricity
use) are expected to be a material source of emissions
(Scope 3, Category 13). In FP24, we have reported our
Scope 3, Category 13 emissions using actual measured
data for approximately 48% of properties in our portfolio.
As installing metering is an ongoing project for PFI, the
total measured emissions of 669.3 tCO
2
e reflects a limited
number of properties, and for some properties, a limited
number of months since metering has been installed.
This is not representative of the electricity consumed in
our portfolio of tenanted properties. Extrapolating actual
metered data during FP24, PFI estimates that the overall
emissions associated with building electricity use may
be around 2,728tCO
2
e in FP24. This estimate is highly
uncertain as PFI has a limited dataset to extrapolate from.
Electricity use in PFI’s tenanted buildings will also vary
depending on tenant operations. PFI will not gain greater
visibility on the electricity use of its tenanted buildings
until more properties have metering installed.
OFFSETS
We have offset our measured FP24 Scope 1, 2 and selected
categories of Scope 3 emissions
25
with certified carbon
credits. These certified carbon credits are sourced from a
project that protects forests in the Pacific Islands and helps
to deliver climate resilience, waterways protection and
biodiversity conservation.
26
INTERNAL EMISSIONS PRICE
PFI does not currently use an internal emissions price for
its business activities. PFI has a small team, and relevant
staff members have developed an understanding of PFI’s
material emissions impacts (in particular, the impacts of
developments, refurbishments and building operation)
through regular management meetings. At this stage, PFI
does not consider that setting an internal carbon price will
add material incremental value to the business’s decision-
making with regards to carbon impacts.
24. This intensity metric has been calculated using the upfront embodied carbon emissions from Life-Cycle Assessments prepared for Stages 1 and 2 at Bowden Road and Stage 1 at Springs Road. This data spans multiple
financial years and does not attribute emissions for the FP24 reporting period only. This data is subject to the uncertainties and limitations of LCA data set out on page 43. This intensity metric does not cover all Scope 3
emissions, however upfront embodied carbon emissions associated with properties under development is PFI’s largest emissions source (accounting for 71% of PFI’s Scope 3 emissions in FP24). Excluded Scope 3 emissions
include Purchased Goods and Services, other Capital Goods (not associated with developments), Energy and Fuel, Waste, Business Travel, Employee Commuting and Downstream Leased Assets.
25. Including waste, business travel, employee commuting, and energy and fuel; but excluding goods and services, capital goods, and downstream leased assets.
26. These carbon credits are certified under the Plan Vivo (UK) carbon credit standard and are retired on the Markit Environmental Registry, New York / London.
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APPENDICESFP24 SUSTAINABILITY
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FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
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OTHER METRICS AND TARGETS
The key metrics used to measure and manage our climate-related risks and opportunities are set out below.
We consider these metrics to be most relevant to PFI’s industry and business model. PFI uses these metrics to
understand and assess the extent to which our assets and business activities are vulnerable to climate-related
transition and physical risks and to track progress on climate-related initiatives.
The following metrics were set in 2023, with oversight from the Board. Metrics in line with industry-based metrics
are indicated below.
27
We are continuing to monitor metrics used by our peers in the property sector.
METRIC
FY23
12 MONTHS
FP24
6 MONTHSCOMMENTARY
Assets vulnerable to physical risks
Modelled Average Annual Loss %
due to pluvial and fluvial flooding
28
0.16%
– 0.85%
0.16%
– 0.86%
PFI undertook an assessment of the vulnerability of PFI’s properties to flood risk using S&P Global’s Climanomics platform, which
models the potential financial impact from climate-related expenses (e.g., clean up and repair costs) decreased revenue and / or
business interruption.
According to the Climanomics platform, the Modelled Average Annual Loss (MAAL)
29
over a short-, medium- and long-term time
horizon (2020s through to 2090s) due to pluvial and fluvial flooding is anticipated to range between 0.16 – 0.86% (relative to the
current insurance value of almost $2B), in a ‘Disorderly’ and ‘Hot House World’ scenario’.
The MAAL % has remained stable compared to the previous reporting period (primarily due to there being no material change to
PFI’s portfolio size and location in the reporting period).
Modelled Average Annual Loss %
due to temperature extremes
0.38%
– 1.57%
0.38%
– 1.57%
PFI has identified a risk that rising temperatures could result in increased demand on, or for, HVAC systems. PFI has assessed the
vulnerability of PFI’s portfolio to this risk using the S&P Global Climanomics Platform, which models the potential financial impact
from climate-related expenses (e.g. HVAC degradation).
According to the Climanomics platform, the MAAL over a short, medium and long-term time horizon (2020s through to 2090s)
due to temperature extremes is anticipated to range between 0.38 – 1.57% (relative to the current insurance value of almost $2B)
in a ‘Disorderly’ and ‘Hot House World’ scenario.
PFI notes that this metric is potentially overstated due to the limited use of HVACs within PFI’s buildings at present, albeit
refrigerated warehouses may become more common in a hotter climate. As above, the MAAL % has remained stable compared to
the previous reporting period (primarily due to there being no material change to PFI’s portfolio size and location in the
reporting period).
27. Industry-based metrics are broadly in line with the ISSB, Industry-based Guidance on implementing Climate-Related Disclosures (for IFRS S2 Sustainability Disclosure Standard) (June 2023).
28. ‘Pluvial flooding’ occurs when rainfall exceeds the capacity of storm water drainage systems or the ground to absorb it. ‘Fluvial flooding’ occurs when rainfall causes the water level in a river, lake or stream to rise and
overflow onto land.
29. Modelled Average Annual Loss (MAAL) % is derived from S&P Global’s Climanomics Platform, which models the potential financial impacts of climate hazards relative to asset value. For PFI, MAAL is calculated using the
current insurance value of PFI’s portfolio (as at 30 June 2024). This model has a number of limitations and assumptions, including that the modelling assumes PFI, or the tenant are responsible for certain costs, which does
not necessarily align with PFI’s lease agreements (negotiated separately). Using local Council flood maps, PFI has also identified that a significant portion of PFI owned properties are located near or on a flood plain or flood
prone area (in some capacity, whether fully or partially). However, this exposure does not necessarily mean the properties are vulnerable to physical climate risks. As such, PFI does not rely on Council data as an appropriate
measure of the ‘vulnerability’ of PFI’s assets to physical risks.
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APPENDICESFP24 SUSTAINABILITY
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INTRODUCTIONCLIMATE-RELATED
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FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
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METRIC
FY23
12 MONTHS
FP24
6 MONTHSCOMMENTARY
% of properties by market value that may be
at risk of coastal flooding due to sea level rise
This metric is in line with industry-based metrics.
2.2%1.8%PFI undertook an assessment of the vulnerability of PFI’s assets to risk of coastal flooding due to sea level rise using NIWA’s
extreme sea level flood maps (1%AEP and up to 2m sea-level rise) for Aotearoa.
30
After divesting one property during FP24, as at
30 June 2024, two properties are potentially at risk of coastal flooding due to sea level rise of a minimum 0.8m and 1.4m
respectively. These properties represent a combined value of $37.05M (based on 30 June 2024 valuations). The timeframes over
which these properties might be impacted by sea level rise is long (between 2080-2110 in a ‘Hot House World’ Scenario).
Average % increase in
insurance premium
31
33%13%An increase in insurance premiums is attributable to a range of factors such as increased sums insured, increased severity and
frequency of climate events locally and globally, and other market factors.
During FP24, PFI established an insurance captive to improve access to overseas markets, reduce insurance risk and assist PFI
with obtaining prudent levels of insurance cover. During PFI’s 2024 insurance renewal, we experienced a 13% increase in premiums
compared to 33% the prior year. The majority of insurance premiums are recovered from PFI’s tenants.
Assets vulnerable to transition risks / alignment with climate-related opportunities
% of portfolio by value that has
achieved a green building rating
This metric is in line with industry-based metrics.
0%0%We are currently targeting 5 Green Star certification for significant new buildings. In July 2024, PFI achieved a 5 Star Green Star
Design & As Built NZv1.0 Design rating for Stage 1 at Bowden Road (leased to Tokyo Food), however an ‘As Built’ certification for
this building has not yet been issued.
% of portfolio by value that is registered for a
green building rating
This metric is in line with industry-based metrics.
6.8%9.1%PFI has made significant process on the development of three buildings at Stage 1 and 2 at Bowden Road and Stage 1 at Springs
Road, which are currently registered for 5 Green Star certification. These properties represent 9.1% of PFI’s portfolio (based on ‘as-
is’ market valuations as at 30 June 2024). PFI is aiming to complete these developments by the end of FY25. On completion, these
developments will represent 10.3% of PFI’s total portfolio value from Green Star developments (based on ‘as-if-complete’ market
valuations as at 30 June 2024).
32
This metric includes the completed building at Bowden Road (leased to Tokyo Food), which achieved a 5 Star Green Star Design &
As Built NZv1.0 Design rating in July 2024. An ‘As-Built’ certification for this building has not yet been issued.
% of properties that have power
metering installed
This metric is in line with industry-based metrics.
21.7%62.6%PFI has a potential opportunity to obtain operational performance ratings for some properties in our portfolio in future, with a
need to collect electricity data in the interim to prepare for this. In 2023, PFI committed to installing power metering at 50% of
PFI’s properties by the end of 2025. We have now achieved our goal, with power metering installed at 63% of properties (or 57
properties) in PFI’s portfolio as at 30 June 2024.
% of total funding facilities that
is Green Debt
33
16.7%16.7%During 2023, PFI developed a Green Finance Framework to support progressive action towards our strategic objectives and target
to develop significant new buildings to a 5 Green Star certification. At the same time, PFI announced the establishment of
inaugural $150m Green Loan tranches, which are being used to fund the Company’s committed Green Star developments at
Bowden Road and Springs Road. There have been no changes to the total funding facilities that is green debt.
30. There is no data for the Bay of Plenty region within the NIWA extreme sea level flood maps, therefore PFI has not yet assessed the risk of sea level rise for properties located in this region.
31. The average increase in premium does not include five tenant-insured properties in PFI’s portfolio as PFI does not have oversight of these premium increases.
32. The ‘as-if-complete’ market value of these properties (and the current market value of PFI’s portfolio of properties) are based on current predictions as at 30 June 2024 and could change at the time these developments
are completed. Therefore, this figure is subject to change.
33. Green Debt is defined in PFI’s Green Finance Framework.
36
APPENDICESFP24 SUSTAINABILITY
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INTRODUCTIONCLIMATE-RELATED
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PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
CLIMATE-RELATED DISCLOSURES CONTINUED
METRIC
FY23
12 MONTHS
FP24
6 MONTHSCOMMENTARY
Capital deployment towards climate-related risks and opportunities
Gross capital investment deployed
toward Green Star buildings
$64.25M$43.6MAs part of executing PFI’s strategic goal for all new significant buildings to target a minimum 5 Green Star certification, PFI has
progressed construction on major developments targeting 5 Green Star certification for three new buildings, with one building
having achieved practical completion during FP24.
During FP24, PFI deployed a gross amount of around $43.6M in capital expenditure towards these developments. This metric does
not separate the incremental spend that is ‘climate-related’ from general Green Star development costs, nor does it provide an
estimate of additional costs incurred for undertaking Green Star developments, (therefore the gross spend also encompasses
costs that are not climate-related).
Gross capital investment deployed
toward solar installations
$193k$414kAs part of executing PFI’s target to install solar panels at five buildings by the end of 2025, PFI deployed $193k towards the
installation of solar panels at 3-5 Niall Burgess Road during FY23, and $414k to install solar panels at 314 Neilson Street
and 12 Zelanian Drive during FP24. Solar panels have also been installed at two buildings at Bowden Road as part of 5 Green
Star developments, the cost of which is encompassed in the metric above (gross capital investment deployed toward Green
Star buildings).
Gross capital investment deployed
toward metering and monitoring
$448k$217kDuring FP24, PFI spent $217K in capital expenditure to install power and water metering and monitoring at PFI’s properties.
REMUNERATION
During the six-months to 30 June 2024, the key performance indicators underpinning the
Short-term Incentives (STIs) of the Senior Leadership Team included sustainability-related
measures and objectives. Sustainability-related KPIs were weighted at 10% of the Senior
Leadership Team’s STIs for FP24. This included progressing 5 Green Star certification for
new developments, solar installations, and power metering installations.
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APPENDICESFP24 SUSTAINABILITY
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FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
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CLIMATE-RELATED DISCLOSURES CONTINUED
TARGETS
PFI has committed to key targets to operationalise its Sustainability Strategy. The time frames for these targets align
to the time horizons set out on page 18. Performance as at 30 June 2024 against these targets is also described below.
TARGETTIME FRAMEBASE YEARPROGRESSPERFORMANCE
GREEN STAR
Significant new buildings to target minimum 5 Green
Star certification
Short
Medium
Long
2023
Ongoing
target
As at 1 July 2024, PFI has been awarded a 5 Star Green Star Design & As Built NZv1.0 Design
rating for Stage 1 at Bowden Road (leased to Tokyo Food).
We are also progressing with our developments of a further two buildings at Stage 2 at Bowden
Road and Stage 1 at Springs Road, which are both targeting 5 Green Star certification.
METERING
Implement power metering and monitoring for 50%
of properties by the end of 2025
Short2023
Target
achieved
Power metering and monitoring have been implemented at 63% of properties in PFI’s portfolio.
PFI is continuing to install power metering at its buildings to build data to measure the energy
performance of our tenanted buildings.
SOLAR
Install solar systems at five buildings by the end of 2025
Short2023
Target
achieved
PFI has completed solar installations at five buildings in its portfolio.
We completed our first solar panel installation in 2023 at 3-5 Niall Burgess Road. In 2024, we have
continued to work with tenants on solar opportunities and have completed solar installations
across a further four buildings at 314 Neilson Street, 12 Zelanian Drive and Stages 1 and 2 at
Bowden Road.
The targets in PFI’s strategy above were set in 2022, prior to the transition to an internal facilities management team
that is focused on embedding sustainability in our buildings. The shift to this internal model has greatly assisted in
meeting two of our key targets well in advance of our targeted completion dates. Therefore PFI:
§
Has revised its metering target to: Implement power metering and monitoring for 90% of properties by the end
of FY25.
§
Will complete a review of its solar strategy during FY25, with a view to setting a revised solar target.
We will also continue our focus on targeting a minimum 5 Green Star certification for significant new buildings.
38
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FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
APPENDICES
SECTION
4
39
FP24 SUSTAINABILITY
UPDATE
CLIMATE-RELATED
DISCLOSURES
CONTENTS
INTRODUCTIONAPPENDICES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
APPENDICES CONTINUED
Recent key Board engagements
relating to climate-related risks
and opportunities:
BOARDAUDIT & RISK COMMITTEE
August 2023Review of annual Climate-related Risk and Opportunity
Assessment, including discussion of PFI’s scenario analysis exercise.
Review of annual Climate-related Risk and Opportunity
Assessment, including discussion of PFI’s scenario analysis exercise.
December 2023Review and approval of the A&RC Charter to incorporate
climate-related responsibilities.
Review and confirmation of PFI’s metrics and targets.
Board training on Climate-Related Disclosure regime by
external provider.
Review of PFI’s risk register.
Review and endorsement of A&RC Charter to incorporate
climate-related responsibilities.
February 2024Update on progress against targets within PFI's
Sustainability Strategy.
April 2024Approval of FY23 Climate-Related Disclosures.Review and recommendation of FY23 Climate-Related Disclosures
for Board approval.
May 2024Review of annual Climate-related Risk and Opportunity
Assessment, including discussion of PFI’s scenario analysis exercise.
Climate-Related Disclosures update including progress against
targets within PFI’s Sustainability Strategy.
Review of Board skills matrix, including climate-related skills.
July 2024Review and endorsement of PFI's transition plan.
August 2024Climate-Related Disclosures update, including progress against
climate-related metrics and targets.
Climate-Related Disclosures update.
September 2024Approval of FP24 Climate-Related Disclosures.Review and recommendation of FP24 Climate-Related Disclosures
for Board approval.
APPENDIX 1:
40
FP24 SUSTAINABILITY
UPDATE
CLIMATE-RELATED
DISCLOSURES
CONTENTS
INTRODUCTIONAPPENDICES
PFI
FP24 SUSTAINABILITY
UPDATE AND CLIMATE-
RELATED DISCLOSURES
APPENDICES CONTINUED
APPENDIX 2: MEASURING OUR EMISSIONS
PFI’s greenhouse gas emissions for the six-month period
ended 30 June 2024 (FP24) have been measured and
prepared in accordance with the Greenhouse Gas Protocol:
A Corporate Accounting and Reporting Standard (revised
edition) and the Greenhouse Gas Protocol: Corporate
Value Chain (Scope 3) Accounting and Reporting Standard
(GHG Protocol).
PFI’s greenhouse gas emissions for this reporting period are
not subject to an external assurance engagement, however,
they have been externally peer reviewed by Ekos Kamahi
Limited to check alignment with the GHG Protocol.
Organisational Boundary
PFI is comprised of a single holding parent company,
Property for Industry Limited (the Company), and its
subsidiaries, P.F.I. Property No. 1 Limited (P.F.I. No.1), which
owns the full property portfolio, and P.F.I. Cover Limited
(PFI Cover) (collectively, the Group).
Consolidation Approach
PFI has applied an operational control approach to its GHG
inventory. All emissions that PFI has operational control
over in its own head office and within its property portfolio
are covered in this inventory. This approach allows us to
focus our initiatives on the emission sources which we have
operational control over and can make decisions on in line
with our Sustainability Strategy.
Baseline year
PFI’s baseline inventory is 2019. The 2019 base year was
selected to enable early performance comparison across
reporting years.
Reported Emissions
PFI is reporting on Scope 1, 2 and 3 emissions.
Methodologies, assumptions,
limitations and uncertainties
PFI’s GHG emissions have also been calculated with
guidance provided by Greenhouse Gas Protocol:
Technical Guidance for Scope 3 Emissions (version 1.0)
(Technical Guidance). Emissions factors and Global
Warming Potential (GWP) rates were sourced from the
Ministry for the Environment’s 2024 Detailed Guide for
Measuring Emissions for Organisations (MfE Guide)
34
.
Emissions factors have also been sourced from the
consumption-based emissions modelling report prepared
for the Auckland Council
35
for Scope 3, Category 1
and 2 emissions.
Data for Scope 1, 2 and 3 emissions are captured by PFI’s
team members.
For most emissions sources, supplied source data was
multiplied by the relevant emission factor or GWP rate.
Specific data uncertainties and limitations are set
out on the pages that follow.
34. MfE, Measuring emissions: A guide for organisations, 2024
detailed guide.
35. The Market Economics Limited, 2023, Consumption Emissions
Modelling report prepared for Auckland Council (Table 5
Consumption Emission Intensities for the Year Ending 2019) has
been used to calculate Scope 3 Category 1: purchased goods
and services and Scope 3 Category 2: Capital Goods (excluding
construction-related emissions for major developments at Bowden
Road and Springs Road).
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Emissions Source Inclusions
A summary of the emissions sources included in this inventory is provided below, along with a description
of the methods, assumptions, limitations, and uncertainties relevant to calculating or estimating emissions.
GHG EMISSIONS SOURCEFACILITIES MEASUREDDATA SOURCE AND COLLECTIONKEY UNCERTAINTIES, LIMITATIONS AND ASSUMPTIONS
SCOPE 1
Fugitive Emissions from
HVAC systems
All properties within the
portfolio where the
HVAC is owned and
maintained by PFI.
Records from HVAC suppliers (emails and
reports) detailing the quantity used (in kg) to top
up HVAC systems during the year.
Medium uncertainty – assumption that records provided by HVAC suppliers represent a
complete and accurate account of all fugitive emissions from HVAC systems. Assumption made
that the quantity of refrigerant gas topped up equals the quantity of the refrigerant gas lost
during the reporting year.
Diesel emissions from
sprinkler systems
All properties with
diesel-powered sprinkler
systems that are owned
and maintained by PFI.
Records from suppliers that maintain PFI’s
sprinkler systems (emails and reports) detailing
the quantity of diesel used (litres) to top up
sprinkler systems.
Medium uncertainty – assumption that records provided by contractors are a complete and
accurate account of diesel emissions from sprinkler systems.
SCOPE 2
Electricity consumption
(location based)
Vacant properties,
properties with common
area power and PFI’s
head office.
Records from electricity suppliers (invoices and
metering reports), which record kWh consumed.
Low uncertainty – assumption that the meter readings are correct and that the kWh provided
by electricity suppliers are an accurate record of the electricity consumed.
SCOPE 3
Category 1: Purchased
goods and services
Emissions related to
goods and services
purchased.
Expenses report for FP24 extracted from PFI’s
accounting software.
High uncertainty – data limitations meant that a spend-based method was employed.
This methodology involved multiplying spend against emissions factors derived from a
consumption-based model. Since FY23, PFI has selected a NZ consumption-based model.
36
The
NZ consumption-based model provides an estimate only, and this model relies on the quality of
the statistical data used to calculate emissions factors and the categories aligning with PFI’s
accounting codes.
36. Emissions factors for calculating Scope 3 Category 1 and 2 emissions in FY23 and FP24 were taken from the Market Economics Limited, 2023, Consumption Emissions Modelling, report prepared for Auckland Council.
Emissions factors for calculating Scope 3 Category 1 and 2 emissions prior to FY23 were derived from GZA’s US environmentally-extended input output (EEIO) model.
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GHG EMISSIONS SOURCEFACILITIES MEASUREDDATA SOURCE AND COLLECTIONKEY UNCERTAINTIES, LIMITATIONS AND ASSUMPTIONS
Category 2: Capital GoodsCapital expenditure at
PFI properties, including
refurbishments and
major developments.
Dollar spend from internal records and draft data
from Whole-of-Life Carbon Assessments.
High uncertainty – a combination of a spend-based method and estimations using draft
Life-Cycle Assessment (LCA) data was employed.
The spend-based methodology involved multiplying spend against emissions factors derived
from a consumption-based model (limitations are described above). This method was applied
to Category 2, Capital Goods emissions, where LCA data was not available.
Construction-related emissions for PFI’s major developments at Bowden Road and Springs Road
have been estimated using data from draft LCAs prepared by Beca Limited.
37
This methodology
intends to more accurately convey the construction-related emissions from PFI’s major
development activities using estimated emissions totals for the product and construction stage
of each development. The following uncertainties and limitations apply:
§
The LCA data used is for upfront carbon only (i.e., through to the end of construction).
§
The LCA data contains estimated emissions for PFI’s major developments, which will not be
finalised until practical completion and is subject to limitations, uncertainties and possible
change. For example, different types or quantities of materials may be used during the
project compared to what was anticipated when the draft figures were calculated.
38
§
The LCA data is calculated ‘as at practical completion’ and these developments will span
over more than one reporting period before receiving practical completion. Therefore,
a spend-based method has been employed to calculate the emissions for FP24 only. It is
assumed that there is a correlation between the project spend to date and the volume of
carbon emissions produced.
Category 3: Fuel and
Energy – Transmission and
distribution losses
Properties for which PFI
is responsible for paying
for the electricity.
Records from electricity suppliers – total
kWh from PFI’s Scope 2 emissions from
purchased electricity.
Low uncertainty – assumption that electricity invoices and meter readings accurately represent
the energy that PFI consumed across its offices, vacant properties, and common areas.
37. LCAs have been prepared by Beca Limited for the purpose of design review and certification under the Green Star framework.
38. Adjustments for these changes, should they arise, will be made in future accounting periods. We do not plan to restate the FY23 and FP24 footprint to account for these changes.
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GHG EMISSIONS SOURCEFACILITIES MEASUREDDATA SOURCE AND COLLECTIONKEY UNCERTAINTIES, LIMITATIONS AND ASSUMPTIONS
Category 5: Waste
generated in operations
Waste generated from
PFI’s head office.
Proxy measurement.Medium uncertainty – supplier data on office waste was unavailable. Instead, a proxy
measurement was used to calculate the emissions associated with waste generated from
PFI’s head office.
Category 6: Business
Travel – Air travel (domestic
and international flights)
Staff from PFI
head office.
Records include invoices and booking
confirmations containing destination travelled
and number of passengers.
Low uncertainty – assumption that all flights taken by PFI staff for business travel are captured
in the accounting data.
Category 6: Business
Travel – Taxi
Staff from PFI
head office.
International travel and domestic travel reports
from PFI’s accounting system.
Low uncertainty – assumption that that all taxis (including ride sharing modes) used for PFI
staff business travel are captured in the accounting data.
Category 6: Business
Travel – Rental cars
Staff from PFI
head office.
Invoices from rental car companies which record
the total km driven.
Medium uncertainty – assumption that all rental car invoices have been captured and that this
accurately reflects km travelled in rental cars. It is assumed that all rental cars were petrol.
Category 6: Business
Travel – Staff mileage
Staff from PFI
head office.
Mileage report is taken from PFI’s expense
management system, detailing kilometers (km)
travelled in private vehicles for business.
Low uncertainty – assumption that all business trips made in private staff vehicles are captured
in the accounting data. Assumptions made about the age and engine size of staff cars.
Category 6: Business
Travel – Hotel
accommodation
Staff from PFI
head office.
Hotel booking confirmations containing
information on number of people and number
of nights.
Low uncertainty – assumption that all accommodation associated with business travel
is captured.
Category 7: Employee
commuting
Staff from PFI
head office.
Employee Commuting Survey results. The data
collection unit is kilometers (km) travelled to
work via private vehicle, bus, train and ferry and
number of days worked from home.
Medium uncertainty – assumptions that the answers provided by PFI’s employees in the survey
are a complete and accurate representation of how employees commuted to work in a typical
week. Assumptions have been made around the number of days worked and distance travelled.
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GHG EMISSIONS SOURCEFACILITIES MEASUREDDATA SOURCE AND COLLECTIONKEY UNCERTAINTIES, LIMITATIONS AND ASSUMPTIONS
Category 13: Downstream
Leased Assets – Electricity
consumed at tenanted
buildings
All properties within the
portfolio that have at
least one full month of
electricity consumption
data available via
metering.
Records include metering reports.High uncertainty – PFI is currently undergoing a project to install electricity metering and
monitoring at PFI’s properties, and therefore PFI has limited visibility over electricity consumed
at tenanted properties.
The following limitations, uncertainties and assumptions apply:
§
Although 63% of PFI’s portfolio had metering installed as a 30 June 2024, the metering
report only captures data from the first full month of verified consumption data, meaning
properties with metering installed during June 2024 have been excluded. Therefore,
measured emissions include 48% of PFI’s portfolio, where at least one full month of
consumption data was available.
§
As metering installations are an ongoing project, actual metered consumption data covers
a limited timeframe. In many cases, metering has been installed partway through the
reporting period, and metered data reflects less than 6 months of electricity consumption
for those properties.
§
The metering report is manually compiled using data fed live from metering.
§
It is assumed that the metering reports are a complete and accurate representation
of electricity consumed at tenanted buildings with metering installed.
To the extent that metered data covers a limited number of properties and, in some cases,
a limited timeframe, the measured electricity consumption does not represent a full picture of
PFI’s Scope 3 Category 13 emissions associated with electricity consumption at
tenanted buildings.
Emissions Source Exclusions
We acknowledge that there are likely to be fugitive
emissions from building HVAC systems that tenants
manage (Scope 3, Category 13: Downstream Leased
Assets). These emissions are excluded from PFI’s inventory
due to an absence of data, and we note that it is unlikely
PFI will be able to gain visibility of these fugitive emissions.
However, the vast majority of HVAC systems in PFI
buildings are managed by PFI, and tenant-managed fugitive
emissions are not expected to be material when compared
to building electricity.
Scope 3, Categories 4 and 8 are calculated within Category
1 emissions. Categories 9, 10, 11, 12, 14 and 15 do not apply
to PFI’s operations.
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