TCFD
Disclosure
Climate governance
(2-12, 2-13, 2-17, IF-RE-450a.2)
Battling climate change and incorporating sustainability into our business strategy has become a priority for Fibra Danhos. The technical committee, our highest governance body, considers sustainability and the battle against climate change to be essential to our activities, requiring us to manage the associated risks while considering them a significant business opportunity that can support our growth strategy.
With this in mind, we need to set goals so that we can supervise and track our progress. This in turn will result in action lines for managing climate-related opportunities and risks and ensuring oversight by the related business areas.
The duties of tracking and supervision were entrusted to the ESG Committee, which is charged with prompt institutional management of climate-related risks and opportunities, and notifying the technical committee of them. The ESG area is responsible for defining sustainability standards and ascertaining application of the ESG strategy. It is also responsible for communicating our public commitment to sustainability, our investment in the community and our impact management.
We are aware that sustainability requires the involvement of many areas and activities, so each area of our business is responsible for gradually incorporating it into its strategic agenda and workflow.
In 2021, Fibra Danhos supported this strategy by raising sustainability to the highest executive level of the organization, creating an ESG Committee and business area, with the aim of becoming a benchmark in sustainability topics in Mexico.
For the same reason, the ESG area works closely with the investor relations, operations and maintenance, human capital and process areas, to ensure that the ESG strategy is reflected in all of our activities, operations, policies and decisions.
Cross-disciplinary integration of sustainability is the guiding axis of our business strategy.
Technical Committee
As the highest governance body, the technical committee is responsible for authorizing and monitoring ESG strategy, climate-related risks and opportunities, and the well-being of all our stakeholders.
ESG committee
Responsible for promptly and institutionally managing climate-related risks and opportunities and notifying the Technical Committee of its actions.
ESG area
Responsible for defining sustainability standards and ensuring the ESG strategy is applied. Also responsible for communicating our public commitment to sustainability, our investment in the community and our impact management.
Related business areas
Responsible for promoting transformation of the business and guaranteeing execution of the ESG strategy in their respective areas and activities.
Strategy and risk management
201-2
Transition risks
| Classification | |||||
| Classification | Climate-related risks | Possible financial impacts | ST Short term next 5 years |
MT Medium term between 5 and 10 years |
LT Long term between 10 and 15 years |
|---|---|---|---|---|---|
 Legal and regulatory |
Increase in the price of CO2 emissions | Increase in operating and regulatory compliance costs. | |||
| Further requirements for correct reporting of emissions. | Increase in operating costs and work hours. | ||||
| Changes in regulation for sustainable urban planning in Mexico | Increase in operating and maintenance costs. Need to invest in new technologies and sustainable building certifications. | ||||
| Risk of lawsuits over environmental issues. | Increase in operating costs and regulatory compliance costs. | ||||
 Technological |
Replacement of some products and services with lower-emission equivalents. | Early retirement of existing assets and reduced demand for our leasing services. | |||
| Failed investment in new technologies. | Expenses involved in research and development of alternative technologies. Opportunity cost of a failed investment. | ||||
| Costs of transitioning to clean energy. | Investment in new technologies, including their adoption and implementation. | ||||
 Markets |
Change in market trends. | Reduced demand for our services due to a change in consumer trends. | |||
| Uncertain market signals. | Change in the combination and sources of revenues resulting from a reduction in revenues. | ||||
| Rise in the cost of raw materials. | Sudden and unexpected changes in the cost of energy, water and raw materials. | ||||
 Reputation |
Changes in the preferences of customers and visitors. | Reduction in revenues due to lower demand for our services. | |||
| Stigmatization of the industry. | Reduction in revenues from an abrupt change in perceptions of the industry, with a significant loss of clients. | ||||
| Rising concerns or negative feedback among stakeholders. | Risk of poor implementation of defined policies and strategies, which could result in greenwashing or an erosion of stakeholder trust. | ||||
Physical risks
Because we are a real-estate investment trust, it is highly important that we analyze the vulnerability of our portfolio to the physical risks of climate change, in order to ensure the well-being of our stakeholders by preventing and mitigating any possible economic or operational impact.
Our current portfolio consists of 15 properties, fourteen of which are located in the Mexico City metropolitan area and one in the city of Puebla.
To identify our portfolio’s exposure to physical risks, we used the climate change projections from the Vulnerability Atlas published by the National Institute for Ecology and Climate Change (INECC) to estimate the change in precipitation and average temperature for each part of the city. These projections are estimated based on information from the interactive Atlas of Working Group I of the Intergovernmental Panel on Climate Change (IPCC) from 1981 to 2010.
We used the data from the SSP2-4.5 and SSP5-8.5 scenarios, which are part of the five shared socioeconomic pathways (SSP) proposed by the IPCC.
Scenario SSP2-4.5 has a medium probability of occurrence and assumes that a significant effort is made in the future to achieve sustainability. Scenario SSP5-8.5 is more likely and more pessimistic, and assumes a future characterized by the intensive use of fossil fuels.
The strategic location of our properties means they are less exposed to many of the climate disasters seen in the rest of this country, particularly tropical storms like cyclones and tornadoes. However, there are physical risks, both acute and chronic, which should be considered and are analyzed below.
To determine the current vulnerability of our portfolio to various physical risks of climate change, we used the national risk Atlas of the national disaster prevention center, and the Water Risk Atlas developed by the World Resources Institute (WRI) to identify water-stressed regions.
Finally, based on the projections of these various scenarios and considering our portfolio ‘s current vulnerability, we establish the possible operational and financial impacts and their possible mitigation strategies.
IF-RE-140a.1, IF-RE-450a.1
Changes in precipitation
| Vulnerability to drought | ||
|---|---|---|
| Current degree of drought risk | Number of properties | |
| Very low | 0 | |
| Low | 13 | |
| Medium | 2 | |
| High | 0 | |
| Very high | 0 | |
| Vulnerability to flooding | ||
|---|---|---|
| Current degree of flood risk | Number of properties | |
| Very low | 0 | |
| Very low | 0 | |
| Medium | 0 | |
| High | 3 | |
| Very high | 12 | |
| Location | SSP2-4.5 | SSP5-8.5 | ||||||
|---|---|---|---|---|---|---|---|---|
| Short term (2021- 2040) | Medium term (2041-2060) | Short term (2021- 2040) | Medium term (2041-2060) | |||||
| Percentage change in precipitation (1981-2010) |
Expected increase in annual operating cost | Percentage change in precipitation (1981-2010) |
Expected increase in annual operating cost | Percentage change in precipitation (1981-2010) |
Expected increase in annual operating cost | Percentage change in precipitation (1981-2010) |
Expected increase in annual operating cost | |
| Mexico City (14 properties) | 1.50% | $106,822.40 | 0.10% | $71,214.93 | 0.10% | $71,214.93 | -1.90% | NA |
| Puebla (1 property) | 0.80% | $585.22 | -0.20% | NA | -0.30% | NA | -2.20% | NA |
Possible operational and financial impacts
- Reduced flow of visitors due to complications in transport.
- Damages to infrastructure.
- Investment in mitigation measures to protect infrastructure.
Mitigation and resilience strategy
- Increased budget for waterproofing and coatings.
- Develop a flooding contingency plan.
- Monitor avenue regulation infrastructure.
Water stress
| Vulnerability to water stress | ||
|---|---|---|
| Current degree of water stress | Number of properties | |
| Very low | 0 | |
| Low | 0 | |
| Medium | 0 | |
| High | 0 | |
| Very high | 15 | |
Fibra Danhos properties
Possible operational and financial impacts
- Increased cost of water supply.
- Reduction in occupancy rates due to higher operational costs for tenants.
- Interruption of operations due to a lack of availability of water.
Mitigation and resilience strategy
- Increase in percentage of wastewater treated and reused in our operations.
- Ambitious targets and goals to reduce and optimize our water consumption.
- Increased investment in wastewater treatment plants.
Heat waves
The following table shows the increase in Celsius degrees in the average temperature of Mexico City and Puebla, estimated under the SSP2-4.5 and SSP5-8.5 scenarios for the short and medium terms, using the years 1981 to 2010 as base levels.
| Average temperature ( 1981- 2010 ) | ||||||||
|---|---|---|---|---|---|---|---|---|
| SSP2-4.5 | SSP5-8.5 | |||||||
| Short term (2021- 2040) | Medium term (2041-2060) | Short term (2021- 2040) | Medium term (2041-2060) | |||||
| Location | Increase in average temperature (1981-2010) |
Expected increase in annual operating cost | Increase in average temperature (1981-2010) |
Expected increase in annual operating cost | Increase in average temperature (1981-2010) |
Expected increase in annual operating cost | Increase in average temperature (1981-2010) |
Expected increase in annual operating cost |
| Mexico City (14 properties) | 1.1 °C | $670,592 | 1.7 °C | $1,036,369 | 1.2 °C | $731,555 | 2.2 °C | $ 1,341,183 |
| Puebla (1 property) | ||||||||
The next table shows the current vulnerability of our portfolio to heat waves.
| Vulnerability to heat waves | ||
|---|---|---|
| Current degree of heat wave risk | Number of properties | |
| Very low | 0 | |
| Low | 5 | |
| Medium | 8 | |
| High | 2 | |
| Very high | 0 | |
Possible operational and financial impacts
- Increase in demand for air conditioning.
- Increase in cost per kWh of electricity consumed.
- Possible heat stroke to visitors and employees.
Mitigation and resilience strategy
- Invest in more efficient air conditioning systems.
- Invest in renewable energy.
- Set and monitor ambitious targets to reduce our energy consumption and our GHG emissions intensity.
- Ensure that our medical personnel is capable of treating heat stroke.
Opportunities
| Classification | |||||
| Classification | Climate-related opportunities | Possible financial impacts | ST Short term next 5 years |
MT Medium term between 5 and 10 years |
|
|---|---|---|---|---|---|
 Resource use efficiency |
Use of recycling. | Reduction in cost of materials. | |||
| Transition to more eco-efficient buildings. | Increase in value of fixed assets. | ||||
| Reduced consumption and use of water. | Reduced operating costs. | ||||
| Use of low-emission energy sources. | Lower exposure to future increases in the price of fossil fuels. | ||||
 Energy sources |
Use of tax breaks | Reduced transition costs. | |||
| Use of new technology. | Return on investment in low-emission technology. | ||||
| Transition toward decentralized energy consumption. | Reduced dependence on a single energy source. | ||||
 Products and services |
Investment in low-emission properties. | Increase in revenues due to demand for lower-emission products and services. | |||
| Change in consumer preferences. | Greater competitive advantage reflected in change in consumer preferences and higher revenues. | ||||
 Markets |
Access to new markets. | Increase in revenues due to access to new and emerging markets. | |||
| Public sector incentives. | Greater diversification of financial assets. | ||||
 Resilience |
Anticipate diversification of trends. | Increase in market valuation due to resilience planning. | |||
Climate risk management
The risks associated with climate change are considered an additional risk factor for our company, and therefore are managed in the same way.
For situations under our control, we have policies that extend to all our employees and stakeholders. For example, in our Environmental and Sustainability Policy, we assume environmental responsibility from the highest levels of governance, as reflected in our Statement on Prevention of Labor, Environmental and Quality Risks, which unites the priority goals of satisfying our clients, our human team and society, delivering results and creating value, among others.
To confront climate change, we take a preventive approach in building our properties in order to minimize any damage to water, soil, or air, by properly managing liquid and solid wastes, discharges and atmospheric emissions of particles and contaminating gases.
In our day-to-day operations, we scrupulously measure energy and water consumption and generation of emissions and waste in all our properties, to be sure they conform to the established targets and programs, or if not, to take the corresponding remediation measures and ensure compliance for every metric in every building. In biodiversity matters, all of our properties are located in previously impacted urban areas, so no native flora or fauna are affected. However, we voluntarily participate in the Mexico City Government’s Environmental Audit Program to mitigate our environmental impact. When construction is complete, we plant native vegetation to support biodiversity in each place.
ESG risk management process
Metrics and goals
Fibra Danhos monitors its environmental impact through KPIs aligned with industry standards and international methodologies.
