Dream Industrial REIT (TSX: DIR.UN)
View 2022 DIR.UN Sustainability ReportDream Industrial’s goal is to deliver strong total returns to its unitholders through secure cash flows underpinned by its high-quality portfolio and an investment grade balance sheet as well as driving growth in its net asset value and cash flow per unit.
2021/2022 Highlights
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2.4 million sfof green building certifications
underway for 12 properties (including properties under development) -
1.6 million sf
of completed green building certifications
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52 buildings
with energy ratings of EPC B or higher, totalling 7.7 million sf
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1.3 million+ sfin LED upgrades were completed
across the portfolio -
Added 10 MW of renewable energy capacity
by completing 14 solar projects in the Netherlands and Alberta
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$200 million
issued in a third green bond offering
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Gold level awardthrough the Green Lease
Leader Program by the Institute for Market Transformation and the US Department of Energy Better Buildings Alliance -
Over 1.3 million sf
of green leases have been executed
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52%
of managers are women(1)
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Completed inaugural GRESB(2)submission and achieved full marks in areas of Leadership, Policies, Reporting, Targets and Data Monitoring and Review Categories
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Implemented internal controls framework
to standardize collection, measurement and review of ESG and impact data across the portfolio
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Increased alignment to the TCFD recommendations
by integrating responsibility of ESG and impact matters into corporate governance
(1) Includes managers and above.
(2) All intellectual property rights to this data belong exclusively to GRESB B.V. All rights reserved. GRESB B.V. has no liability to any person (including a natural person, corporate or unincorporated body) for any losses, damages, costs, expenses, or other liabilities suffered as a result of any use of or reliance on any of the information which may be attributed to it.
(3) Based on 1,063 real estate companies rated by Sustainalytics globally. As at March 2023. Copyright ©2023 Sustainalytics. All rights reserved. This report contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third-party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers.
ESG Scorecard
| Indicator | 2019 Baseline | 2021 | 2022 | YoY% Change | % Change from Baseline |
| Energy | |||||
| Energy Consumption (ekWh)(2) | 39,877,385 | 16,691,442 | 38,945,824 | see note(4) | -2% |
| Annual MWh of Renewable Energy Produced(5) | 2,507 | 6,119 | 12,077 | 97% | 382% |
| Cumulative On-site Solar PV System Capacity (kW)(5) | 2,433 | 5,795 | 19,489 | 236% | 701% |
| Cumulative Percentage of Total Floor Area with On-site Renewable Energy Generation(5) | 3.7% | 5.8% | 11.5% | 98% | 211% |
| GHG Emissions(2)(6) | |||||
| Scope 1 Emissions (tCO2e) | 4,435 | 852 | 3,544 | see note(4) | -20% |
| Scope 2 Emissions (tCO2e) | 5,020 | 2,461 | 3,386 | see note(4) | -33% |
| Total GHG Emissions (Scope 1 and Scope 2 tCO2e) | 9,455 | 3,313 | 6,930 | see note(4) | -27% |
| Water | |||||
| Water Consumption (m³)(2) | 284,744 | see note(3) | 218,444 | – | -23% |
| Annual Water Savings from Climate-controlled Irrigation (litres)(7) | 15,667,000 | 10,712,000 | 10,467,000 | -2% | -33% |
| Building Lighting Upgrades | |||||
| Cumulative Total Floor Area with LED Lighting Upgrades (sf)(8) | – | 9,173,345 | 11,320,546 | 23% | – |
| Green Buildings | |||||
| Cumulative GLA of Portfolio with Green Building Certifications (sf) | 472,123 | 1,601,587 | 1,601,582 | 0% | 239% |
| Percentage of Eligible Portfolio with an Energy Rating(9) | see note(3) | 49% | 46% | -6% | – |
| Percentage of Portfolio with Sustainable Roofs(10) | see note(3) | 20% | 23% | 13% | – |
| Number of EV Charging Stations(11) | see note(3) | 93 | 136 | 46% | – |
| Indicator | 2020 | 2021 | 2022 |
| Employees(12)(13) | 78 | 90 | 103 |
| Voluntary Turnover Rate(14) | 15% | 16% | 14% |
| Women Employees(15)(16) | 62% | 52% | 50% |
| Women Managers(15)(17) | 53% | 53% | 52% |
| Women Executives(15)(17)(18) | 34% | 34% | 34% |
| Indicator | 2020(19) | 2021(20) | 2022(21) |
| Women Trustees | 25% | 25% | 25% |
| Independent Trustees | 75% | 75% | 75% |
(1) Excludes US Portfolio. Please refer to Supplemental Disclosures for more detail including data coverage and sources of emission factors.
(2) Excludes data from assets in the European portfolio.
(3) Indicators were not tracked for the noted time period. (4) Data coverage increased significantly, hence, the YoY % change is not comparable.
(5) Includes estimations and third-party and tenant-owned systems on Dream Industrial’s properties.
(6) GHG emissions are calculated in accordance with the World Resource Institute Greenhouse Gas Protocol. Calculations in this t able capture activities DIR.UN has direct and indirect operational control over: Scope 1 emissions gener ated directly from its operations, including heating properties; Scope 2 emissions indir ectly associated with generation of purchased electricity.
(7) Data is collected from 46 buildings in Calgary.
(8) Historic numbers have been updated to exclude T5 lighting and US Portfolio GLA to stay consistent with future reporting.
(9) Represents 100% of GLA of floor area of properties in ENERGY STAR Portfolio Manager or has Energy Performance Certificates (EPC) ratings. Changes in years are due to acquisitions and dispositions of assets.
(10) Sustainable roofs include cool roofs and green roofs with vegetation.
(11) Includes EV chargers owned or installed by tenants.
(12) Includes only employees 100% dedicated to DIR.UN and excludes employees on unpaid leaves of absence (e.g., permanent disability, long-term disability, parental leave) and interns.
(13) Numbers represented as total headcount; not full time equivalent.
(14) Turnover is calculated as a percentage of employee headcount within the noted category.
(15) Percentages are based on total headcount.
(16) Includes employees at all levels.
(17) Includes managers and above.
(18) The Chief Executive Officer, Chief Financial Officer and Chief Operating Officer of Dream Industrial REIT are employees of Dream Asset Management Corporation. For the purposes of this Report, they are included under DIR.UN.
(19) Board composition as at December 31, 2020.
(20) Board composition as at December 31, 2021.
(21) Board composition as at December 31, 2022.
Environmental
Dream Industrial has a responsibility to manage and mitigate its overall impact on the environment. It recognizes that sustainability and impact investing are fundamental to doing business and a key driver of creating long-term value for its stakeholders. Dream Industrial’s approach to sustainability includes increasing energy efficiency throughout its portfolio, engaging tenants, lowering operational costs, incorporating energy management initiatives into its capital expenditures, and future-proofing assets against the impacts of climate change.
Building Certifications
Green building certifications help Dream Industrial incorporate a range of sustainable features into its global portfolio of properties and provide tenants and investors with credible proof points of the value of ESG features in buildings.
In 2022, Dream Industrial continued to make progress on its commitment to increase the number of green building certifications in the portfolio.
- 1.6 million sf of completed green building certifications in the portfolio
- 2.4 million sf of green building certifications underway (for 12 properties)
In 2022, Dream Industrial incorporated green certification criteria into its development strategy and made the commitment to obtain LEED, BOMA or DGNB certification for all new developments.
LED Lighting
Lighting is one of the most significant and consistent sources of energy consumption and utility costs in the portfolio. LED (light emitting diodes) lights require substantially less energy, have a longer lifespan, produce less heat, and provide more illumination than conventional lighting such as incandescent bulbs. Dream Industrial is focused on transitioning interior and exterior lighting to LEDs, and in 2022 developed an in-house software application to track LED upgrades completed in the portfolio. Dream Industrial continues to optimize opportunities to upgrade lighting when tenants renew or when space is returned. In 2022, Dream Industrial upgraded over 1.3 million square feet to LED.
Sustainable Roofing
Sustainable roofs can achieve energy savings through using properly insulated roofing systems, while white roofs save energy during the air-conditioning season by reflecting sunlight and reducing heat absorption. Green roofs also reduce urban heat island effect, control water runoff and provide habitat for local species.
In 2022, Dream Industrial finalized its Sustainable Roofing Policy for Canadian assets, which formalizes the integration of sustainable attributes into standard specifications for roof repairs and replacements. Prior to commencing any major roof work, the team evaluates if a building is a potential candidate for rooftop renewable energy and considers adapting the roof specification to ensure the roof is solar ready.
Social
Dream Industrial has committed to promoting the highest standards of social responsibility throughout the organization and aims to improve the lives of everyone who works there. Employees come from a wide range of backgrounds and experiences, bringing many valuable skills and perspectives to the team. The people Dream Industrial hires all have one thing in common: they hold shared values and contribute to company culture.
Green Lease
Dream Industrial has adopted a green lease as its standard lease across Canada. The green lease program includes tenant commitments to energy disclosures, low carbon construction practices, the purchase of on-site renewable energy (if available), energy efficiency engagement and training, and cost recovery clauses for energy efficiency upgrades. In 2022, Dream Industrial executed over 1.3 million sf of green leases in Canada and Europe.
Green Lease Leader Gold Award
Dream Industrial received Gold Level recognition from the Green Lease Leaders program during the Better Buildings, Better Plants Summit, held by the Institute for Market Transformation and the U.S. Department of Energy’s Better Buildings Alliance. Dream Industrial will be targeting Platinum Level recognition in 2023 and plans to continue integrating its sustainability initiatives with its high-performance leasing program.
Dream Industrial Gender Breakdown(1)
(1) Includes only employees 100% dedicated to Dream Industrial REIT and excludes employees on unp aid leaves of absence (e.g., permanent disability, long-term disability, parental leave) and interns. Percentages are based on total headcount.
(2) Includes employees at all levels.
(3) Includes Managers and above.
(4) Executives of Dream Industrial REIT are employees of Dream Asset Management Corporation however the CFO of DIR.UN is a woman, while the CEO and COO are men.
Governance
As part of the ESG Framework, Dream Industrial links ESG considerations to executive goals and compensation.
Sustainability at DIR.UN is managed by the following:(1)
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Board of Trustees
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The DIR.UN board has delegated such oversight to the Governance, Compensation and Environmental Committee
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Governance, Compensation and Environmental Committee
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Oversee approach to environmental, social and governance matters
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Chief Executive Officer
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Provide oversight of sustainability and ESG
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ESG Executive Committee
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(Members of the Executive Leadership team from each Dream entity)
Adopt ESG Framework for DIR.UN
Communicate sustainability strategy and commitment across company and key external stakeholders
Delegate implementation to DIR.UN’s Sustainability and ESG team
Reports to the Governance, Compensation and Environmental Committee
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Green Finance Committee
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A cross-departmental committee co-chaired by the COO and CFO and made up of senior executives representing the following departments at DIR.UN: Finance, Sustainability and Portfolio Management
Established to provide oversight of DIR.UN’s Green Bond Framework and to identify sustainable financing options
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Sustainability and ESG Team
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Embed sustainability strategy and commitment across company and key external stakeholders
Oversee the implementation of the ESG Framework for each Dream entity
Manage portfolio sustainability initiatives including building certifications, energy, water and waste management and monitoring, as well as strategic initiatives
Meet quarterly with the ESG Executive Committee
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Sustainability Working Groups
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Responsible for advancing sustainability initiatives and activities at company and property level
Includes three working groups covering the following focus areas: Green Property Operations, Employee Engagement and Tenant Engagement
Includes representatives from central functions, regions, and properties
Report regularly to the Sustainability and ESG team
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Investment Committee
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Review the investment’s Acquisition Checklist and approve investments that meet both financial and impact goals
Hold the project team accountable to achieve goals and create impact
(1) The responsibilities set out in this section are for illustrative purposes only, reflect certain relevant ESG matters, and do not purport to reflect the full extent of responsibilities or the full mandate of any of the board, committees or teams referred to in this section.
Disclosure Frameworks
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United Nations Principles for Responsible Investment ↗The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by all United Nations Member States in 2015 as a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030. There are 17 goals in total which provide a shared blueprint to achieve the 2030 goals. The Dream group of companies has identified relevant SDGs throughout its investment strategy and considers how projects may contribute to the achievement of these goals. In particular, the Dream entities are dedicated to building safe, resilient, inclusive, and sustainable cities – expressed by Goal 11. -
Taskforce on Climate-related Financial Disclosures ↗In 2021, Dream Industrial became an official supporter of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. To align with TCFD recommendations and enable appropriate oversight, Dream Industrial hosted board education sessions to increase understanding of ESG and climate-related risks and opportunities. To strengthen oversight, responsibility for ESG and impact matters was formally integrated into corporate board governance. Scenario analysis was also completed, which is a corporate strategy and risk/opportunity identification exercise to evaluate how Dream Industrial prepares for the implications of climate change and climate-related financial disclosures.
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Net Zero Asset Managers ↗The Net Zero Asset Managers (NZAM) initiative is an alliance of global asset managers committing to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with the global efforts to limit warming to 1.5 degrees Celsius. As one of the first Canadian companies to join the NZAM initiative, Dream Unlimited, on behalf of the Dream group of companies, made its initial target disclosure in 2022. At the time of submission, across the Dream group of companies, 61% of total assets under management were committed to be managed in line with net zero for Scope 1 and Scope 2 emissions by 2035. -
Operating Principles for Impact Management ↗The United Nations Principles for Responsible Investment (PRI) is the world’s leading responsible investor collaboration. It supports its signatories to incorporate environmental, social and governance (ESG) factors into their investment and ownership decisions. Signatories commit to follow PRI’s six principles and report annually on their progress through the PRI Reporting Framework. Dream Unlimited, with support from Dream Industrial, became a signatory to the PRI in 2021 and will report on its responsible investment activities starting in 2023.
Environmental
Courtney Park Net Zero-Ready Development
Tenants are setting ambitious net zero commitments and seeking spaces that enable them to align with corporate goals, deliver operational cost savings and achieve net-zero operations. To meet its tenant’s shared net zero goals, Dream Industrial is constructing a net zero-ready industrial warehouse redevelopment at Courtney Park.
Courtney Park is an industrial warehouse redevelopment project that is currently under construction and scheduled to be completed in 2024. Dream Industrial engaged an independent consultant to develop a net zero roadmap by conducting an in-depth GHG audit, creating a calibrated energy model, and completing a life cycle assessment.
Additional features to support reaching net zero include:
- Designing 70% of all building systems to be electric
- Implementing high efficiency upgrades including HVAC systems and roof insulation
- Installing a reinforced roof to support the addition of solar panels
To reduce embodied carbon at Courtney Park, Dream Industrial has actively sought opportunities to recycle and re-use equipment. Throughout the construction and development process, the project management teams identified items to be repurposed for the new development such as steel, doors, concrete slabs, and mechanical systems. In addition to reducing embodied carbon, re-using materials can also result in cost savings. Coordinating the re-use of materials to realize these dual benefits is enabled through the synergy and cooperation of Dream Industrial’s development and property management teams.
This pilot project provides Dream Industrial with an industrial warehouse net zero-ready roadmap for future new industrial warehouse developments. In addition, Dream Industrial is undertaking an architectural design review to assess how low carbon materials, such as mass timber and low carbon concrete, can reduce the embodied carbon of an industrial warehouse development.
Once completed, the Courtney Park project is expected to receive Canada Green Building Council’s (CaGBC) Zero Carbon Building Standard certification, which certifies the building is net zero design ready.
Environmental
Tenant Collaboration on LED Retrofits
In 2022, Dream Industrial engaged directly with tenants to collaborate on LED retrofits. This involved an outreach program to increase tenant awareness of the environmental and financial benefits of LED technology and provide them with an opportunity to upgrade lighting during their lease term. Using this approach, Dream Industrial teams successfully collaborated with a major tenant to upgrade the lighting in their space, totalling over 220,000 sf.
Social
Tenant Engagement
In 2022, Dream Industrial improved building amenities, accessibility, and EV infrastructure at select properties, in response to its tenant outreach and engagement program, including:
- At 100 East Beaver Creek, in Richmond Hill installed a walkway to provide tenants and visitors with increased access to the building, on-site EV charging stations and transit routes.
- At Alberta Park in Edmonton installed an accessibility ramp and washrooms which services a 26,638 sf two-storey building currently occupied by an organization that supports the local community.
- At 45A and 45B West Wilmot Street, Richmond Hill and 55 Horner Avenue, Etobicoke in Ontario installed picnic tables in tree-covered areas to enhance tenant outdoor spaces at 2 buildings.
As the transition to net zero continues to support the need for EV charging infrastructure, Dream Industrial’s EV portfolio increased by 46%, to 136 EV chargers. Installing EV chargers futureproofs assets to future tenant needs, as Canada aims for 60 percent of passenger vehicle sales to be EVs by 2030, with all sales being electric by 2035.
Sustainability Reports
- Previous years +
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Policies
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Dream Industrial REIT’s Declaration of Trust governs our operations and includes such topics as investment guidelines and operating policies, financing restrictions, units and distributions, and the responsibilities and obligations of the Trustees.
Disclosure PolicyThe objective of our disclosure policy is to ensure that communications to the investing public about Dream Industrial REIT are timely, factual and accurate, and disseminated in accordance with all applicable legal and regulatory requirements. The policy covers topics including trading restrictions and blackout periods, confidentiality, and designated spokespersons. This policy applies to all trustees, officers and employees of Dream Industrial REIT and its subsidiaries.
Code of ConductOur Code of Conduct (the “Code) is our statement of the values and principles that guide us in our day-to-day business activities. The keystones are: integrity, respect, fairness, accountability and transparency. The Code supports our commitment to operate our business at the highest level of legal, moral and ethical standards. The Code applies to all trustees, officers and employees of Dream Industrial REIT and subsidiaries.
Whistleblower PolicyAt Dream Industrial REIT, we are steadfast in our commitment to maintaining the highest business and personal ethical standards by dealing openly and honestly with our investors, tenants, suppliers and employees. With our Whistleblower Policy we marry this commitment to that of securities laws and regulations with respect to accounting standards and internal control standards. We have contracted EthicsPoint Inc., an independent service provider, to manage any complaints or concerns on our behalf. This service reports directly to the Audit Committee of Dream Industrial REIT and is available seven (7) days a week, 365 days a year. Any concerns may be reported directly, confidentially, and, if preferred, anonymously, through www.ethicspoint.com
Majority Voting PolicyThe Trust has a majority voting policy, requiring that each Trustee nominee receive the support of a majority of the total number of votes cast by the unit holders entitled to elect such Trustee nominee, failing which such Trustee shall submit his or her resignation to the Board for consideration.
Diversity Inclusion & Advancement CommitmentAs one of Canada’s leading real estate companies, we always invest with purpose, embracing creativity and diversity, passion and innovation, while positively impacting our communities and the world around us.
Board Diversity PolicyDream seeks to maintain a Board comprised of talented and dedicated trustees whose skills and backgrounds reflect the diverse nature of the business environment in which Dream operates. Accordingly, the composition of the Board is intended to reflect a diverse mix of skills, experience, knowledge and backgrounds, including an appropriate number of women trustees.
*All intellectual property rights to this data belong exclusively to GRESB B.V. All rights reserved. GRESB B.V. has no liability to any person (including a natural person, corporate or unincorporated body) for any losses, damages, costs, expenses, or other liabilities suffered as a result of any use of or reliance on any of the information which may be attributed to it.