Front of mind in our design approach is optimising energy and water consumption, integrating onsite renewable electricity, resilience and incorporating health and wellbeing features where practical. We focus on supporting our customers’ sustainability ambitions and consider flexibility within the building design to meet changing customer needs over time.

We consider how we can minimise our vulnerability to major weather events and transition risks within our global property portfolio. We also focus on addressing other sustainability risks and opportunities that can support our business and the communities we operate in.

To mitigate risks, our designs prioritise efficiency, renewable electricity and piloting lower carbon materials to reduce emissions. We also aim to manage and retrofit our properties to enhance asset resilience, repurpose brownfield sites and improve biodiversity while strengthening collaboration with our customers.

Sustainable and resilient design approach

Our approach is influenced by years of experience developing industrial and data centre properties and places, and our drive to innovate with smarter materials and designs. Some of the innovations we implemented in FY23 included specifying lower global warming potential concrete in New Zealand and piloting: battery storage in Australia and Japan, energy, water, and waste smart metering in Hong Kong SAR, and carpark solar PV structures in Australia.

The continued growth of cloud computing, data storage and artificial intelligence is fuelling the digital economy and the demand for data centres, which now account for approximately 30 percent of Goodman’s global development workbook¹. We incorporate sustainable design features in the design of our data centres and specify higher-performance thermal building envelopes in some regions to optimise energy performance. As data centres are major consumers of energy, this approach is one way we can support our data centre customers reduce their energy demand. Ideally, our customers use renewable energy to minimise carbon emissions, sourced partially from solar PV we provide where possible.

1. As at 30 June 2023.

Engaging our customers is key to our success

Among our top 20 global customers (by rent), 85 percent have public operational emissions reduction and net zero targets, and 70 percent have renewable electricity commitments. We have pragmatic discussions with our customers on design to help them achieve their sustainability targets. We typically focus on energy efficiency, renewable energy and reducing embodied carbon in areas we can control and where we can have influence across our value chain.

This approach, combined with our strategic and accessible locations, are reflected in our consistently high occupancy rates.

Goodman is committed to taking action to identify, evaluate, mitigate, and monitor physical and transition risks across our global portfolio.

This year we completed physical climate risk assessments in four regions – New Zealand, Hong Kong SAR, Mainland China and Continental Europe. Our Australian business is leveraging its previous climate risk assessments and has begun progressing an asset level assessment.

As Goodman operates in 14 countries, portfolio-based climate risk assessments enable a more granular consideration of local impacts. For example, local risks of wildfires in Continental Europe, and the potential of landslides in Hong Kong SAR and New Zealand were included.

These physical risks build on the following five key risks identified as material in our first detailed scenario-based climate-risk assessment in 2020:

• Increasing temperatures and heatwaves
• Extreme precipitation events
• Windstorms (tropical and extra tropical)
• Severity of hailstorms
• Sea level rise.

To help manage our climate risks, we are continuously improving our risk management assessment and adaptation approach for our new developments and stabilised portfolios. In Continental Europe, the UK, and Australia, a physical climate risk assessment is completed at the early stage of a development to identify risks and mitigation strategies early in the design process.

Goodman’s Board and Sustainability and Innovation Committee oversee our climate risk management as part of Goodman’s Sustainability Strategy. Our approach is captured under our Global Risk Management Framework, including the Group Investment Committee process which provides a structured operational decision-making and investment approval process.

Through material selection and optimising our use of materials during the design and construction process, we can reduce our upfront embodied emissions and enhance the energy efficiency of our buildings. We anticipate opportunities to use lower carbon materials will increase in coming years. While onsite solar PV opportunities will help reduce our whole-building emissions.

Science-based approach

Our commitments include:

• A 42% reduction in absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 2030 from a 2021 baseline. These include our direct emissions, primarily resulting from the use of fossil-fuels and electricity across our operations
• A 50% reduction in square-metre intensity of Scope 3 GHG emissions by 2030 from a 2021 baseline covering the use of our buildings by our customers and the use of our buildings which we have sold.

Our customers’ GHG emissions at our properties are a large part of our SBTi Scope 3 emissions reduction commitment. While our control over these emissions is limited and challenging, we recognise that sustainable design, retrofitting our existing assets, and installing solar PV systems are where we can increase collaboration with our customers to reduce carbon emissions.

Carbon neutral operations

Our carbon neutral certification boundary is based on operational emissions and does not include embodied emissions from our developments, customer emissions, or emissions from buildings we have sold. We still track these emission sources as required under our science-based targets commitment.

Achieving and maintaining our carbon neutral status relies on ongoing efforts to reduce our operational emissions, increase the use of renewable electricity, and invest in 100 percent Australian carbon credit units (ACCUs).

To date, the ACCUs we have purchased and retired to achieve our Carbon Neutral Organisation certification under the Climate Active program were sourced from Arnhem Land Fire Abatement (ALFA). ALFA is an organisation created by First Nations landowners to support their engagement in the carbon industry. The offsets purchased are of vintages no older than 2020 and have been retired on the Australian National Registry of Emissions Units (ANREU).

Investing in carbon offsetting

We continue to refine our procurement process and monitor the carbon markets to mitigate risks and procure high-quality offsets. We invest in nature-based projects preferably located in regions where Goodman operates. We partner with leading carbon offset suppliers who conduct additional due diligence on carbon offset projects, considering the social and biodiversity benefits associated with each project.

As part of our efforts to procure quality carbon offsets, Goodman has made a strategic investment alongside Australia’s Clean Energy Finance Corporation in Wyuna Regenerative Agriculture. This Australian carbon credit project uses the Clean Energy Regulator’s ‘Human Induced Regeneration’ methodology to generate credits. Activities centre around land regeneration, sustainable low-intensive livestock grazing and land management practices that promote vegetation growth and sequester carbon.

Reducing our upfront embodied carbon

We’ve been calculating the upfront embodied carbon of our developments globally since 2021 using Life Cycle Assessments (LCAs). This process establishes carbon baselines for our developments which we use to monitor embodied emissions and identify the key material sources between varying building types and regions, and importantly, the ability to forecast and explore opportunities to reduce carbon.

Building on our work to date, our regional teams are evaluating ways to reduce our upfront emissions. We’re engaging with our suppliers, architects, builders, consultants, and industry groups, such as Circular Australia and the Materials and Embodied Carbon Leaders Alliance (MECLA), on low embodied carbon solutions and materials. Our development teams in some regions are also using their regional carbon baselines and green building rating tools to meet embodied carbon reduction targets over the next few years.

Currently, the availability of low-carbon solutions and materials, like low-carbon concrete, is a challenge that will impact our rate of decarbonisation and varies greatly across our regions. Over time, we expect the availability of cost-effective low-carbon materials and solutions will increase, helping to reduce our embodied emissions.

1. Source: 2022 Global Status Report for Buildings and Construction | UNEP – UN Environment Programme

During the last year we have installed or committed to an additional 103MW of new solar capacity taking us approximately 75 percent of the way to our target with a total of 306MW installed or committed to. Solar PV is a practical way we can encourage the take-up of renewable electricity, particularly with our new developments. It’s one reason why we have added to our existing target, with an additional 100MW of solar PV commitments out to 2030.

In properties with less opportunity for rooftop solar, we are seeking renewable electricity from accredited suppliers or using international renewable energy certificates (I-RECs), including those produced from our large-scale solar PV installations. For example, Goodman in Mainland China has commenced generating I-RECs from its solar PV installations, which once issued and retired under the I-REC standard, can be used to offset Goodman’s electricity consumption across Mainland China and Hong Kong SAR and reduce their respective Scope 2 emissions. And our Australian business is also planning to generate Large-scale Generation Certificates (LGCs) from its large-scale solar installations which will be used to offset future electricity consumption.

Our teams in Europe and New Zealand have been capitalising on the circularity benefits of reusing and recycling for a few years now, with around 90-95 percent of the existing site materials reused and recycled onsite or locally on some developments. The US has also been employing circular techniques including crushing and reusing concrete on site. Our other regions also started to design for circularity on their brownfield sites in FY23 with Southend Lane in Australia and Taicang New-tech Park in Mainland China being two examples.

Our brownfield sites offer multiple benefits beyond circularity. Brownfield developments offer Goodman opportunities to use our expertise to regenerate existing sites, build new healthy habitats to improve biodiversity, and contribute to a more vibrant urban landscape. Brownfield sites are often close to existing transport infrastructure and large populations providing our customers with opportunities to find efficiencies within their logistics operations, and to reduce transportation-related emissions and costs. These regenerated properties and places often include cafes, restaurants and health and wellbeing facilities, helping our customers attract and retain employees – and in some cases also serving the local community.

We have commenced planning and defining our approach for TNFD, considering practical biodiversity baselines, commonality among our global development teams, and flora and fauna assessments required for developments. We’re also assessing how the green building certification tools, such as LEED, Green Star and BREEAM, address biodiversity. Lastly, we’re considering tools that could help us measure our biodiversity baselines and make improvements over time.

In addition to TNFD, we continue to progress biodiversity projects and explore biodiversity opportunities. Our preference for re-developing brownfield sites gives us the opportunity to build a new healthy habitat, promote and improve biodiversity and create biodiversity corridors.

More than half of our development workbook is on brownfield sites. Where we develop, we strive to balance the priorities of our customers and planning authorities with preserving the natural environment. Removing vegetation is sometimes necessary, but where we can, we replace trees and restore vegetation elsewhere on the property, or nearby, to mitigate the impact.

Certifying our sustainable property credentials

Our customers are at the core of our developments. Efficient energy and water usage lead to operational savings, and our workplaces can be designed to provide health, wellbeing, and social benefits with a range of amenities. To steer our advancements in improving our buildings’ operational performance, and verify our sustainability credentials, we often use certification schemes.

In FY23, nearly 50 percent of our total portfolio was covered by a green building certification. This includes both developments and existing assets.

Our achievements this year include:

• Two 6 Green Star Design ratings achieved in New Zealand – the first industrial developments to achieve a 6 Star rating in the country
• 99.5% of the Goodman Japan Core Partnership portfolio has a green certification
• The development of a Volume tool for LEED certification by our Mainland China team, with the US Green Building Council
• Goodman Huiyang Industrial Park P3 and Beijing Southgate Industrial Park P2 developments awarded LEED Gold certification, in Mainland China
• LEED Gold certification achieved for Goodman Tsuen Wan West Building 3, and LEED Gold pre-certifications achieved for the remaining buildings at Tsuen Wan West and Westlink in Hong Kong SAR. We also received an ‘Excellent’ rating under BEAM Plus for seven existing buildings and ‘Platinum’ for Goodman Interlink, demonstrating outstanding performance in building energy usage for older stabilised assets
• About 50 development projects in Australia have been registered for Green Star Buildings, as well as the former rating, Green Star Design & As Built v1.3
• Our UK developments at Brentwood, Dartford and Purfleet achieved the BREEAM Excellent certification
• In Continental Europe all new developments must meet the minimum BREEAM Excellent certification target. In addition, 29% of the stabilised portfolio is certified under the BREEAM In-Use performance standard
• Two logistics developments in Itaquera, São Paulo, Brazil achieved LEED Gold
• Four industrial developments in the US are set to achieve LEED silver. Six Energy Star certifications on stabilised assets with three buildings scoring above 95 and the rest above 80.