Responsible Business Sustainability Performance 2017 Contents
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Responsible Business Sustainability performance 2017 Contents Key achievements in the year 01 Our approach to Responsible Business 02 Responsible Investment 05 Responsible Development 06 Asset Management 08 Our communities and charitable commitments 10 Our people, human rights, governance and Health & Safety 12 Detailed environmental performance 14 Performance against 2016-18 targets 15 EPRA sBPR performance measurement 17 Advisor’s statement 23 LondonMetric Property Plc Sustainability performance 2017 01 Key achievements in the year Our Responsible Business activities are enabling us to build on our significant achievements from previous years. The successful rolling out of our Responsible Business Strategy has resulted in the achievement of a GRESB Green Star award and we maintained our EPRA sustainability BPR Gold award. Last year, we set 33 new two year targets and have made good progress towards achieving these. Awarded GRESB Green Star and Targets 2016-18 Assets rated ‘E’ or above maintained EPRA sBPR Gold award 82% for MEES purposes1 targets achieved, ongoing 100% or in progress at year end See page 04 See page 15 See page 05 BREEAM Very Good certification Solar PVs installed Monitoring Responsible on completed developments Procurement and development 1.1 Mw 1.0m sq ft 1 2 3 4 See page 06-07 See page 09 See page 06 Car park lighting LED replacement Collection of tenant energy usage Carbon footprint reduced by 18% programme completed and monitoring performance on developments -18% on a like-for-like basis See page 08 See page 09 See page 14 1 Excludes a recently refurbished convenience asset where a rating is expected shortly LondonMetric Property Plc 02 Sustainability performance 2017 Our approach to Responsible Business Responsible Business is an important priority for LondonMetric and we continue to work hard to fully integrate Responsible Business policies and procedures across our core business activities. Our approach Importance of to Responsible Business Responsible Business Our Responsible Business Policy was first • Critical to managing sustainability risks We have made good published in 2014 following a detailed progress towards • Important in generating sustainable review of the sustainability risks and achieving our 2016-18 value from our portfolio and opportunities which are most material targets. This is allowing enhancing profitability to our business. us to build further on our sustainability • Helps us to mitigate any potential Our Responsible Business Strategy sets out achievements. long term risks posed by less resource our sustainability priorities across four core efficient assets Martin McGann business activities: Finance Director and • Enables us to successfully and Responsible Business Board (i) our business operations sponsor sustainably deliver on our developments (ii) our property investments • Promotes excellent stakeholder (iii) property development relationships and assists them in delivering on their own responsible (iv) asset management business objectives It is supported by the foundations of good risk management. Key targets are set for each of our sustainability priority areas on an annual basis. The delivery of these Responsible Investment, targets is overseen by our Working Asset Management and Development Group and progress is monitored on a quarterly basis through our Responsible Business meetings, attended by key representatives from across the business. Responsible We also receive support from our external Investment real estate sustainability advisor. In 2017, Generating sustainable value we approved our Working Group terms of reference. Responsible Business training is carried out across relevant employees annually to make sure we effectively deliver on our targets and continue to optimise our Responsible Business approach. Responsible Business Managing stakeholder We actively engage with stakeholders relationships and risk well (investors, JV partners, occupiers, communities and local authorities) Responsible Responsible on Responsible Business themes Development Asset Management Future-proofing Responding to and relevant materials are included our pipeline occupier needs in investor roadshows. LondonMetric Property Plc Sustainability performance 2017 03 Responsible Business in action Tonbridge Retail Re-development Transformational Pre redevelopment development • 60,000 sq ft retail park redevelopment • Retail offering and configuration significantly improved • Once complete, will comprise seven retailers in M&S, Halfords, Home Bargains, Carpetright, Go Outdoors, Jollyes and Costa • Cost of £9 million • c. 70 full time jobs anticipated CGI post redevelopment Responsible Asset Responsible Management Development • Assisted Halfords and B&Q in • Two-year development in rightsizing their estates two phases • Divided two large stores into • M&S and Halfords stores six smaller units and added a completed in 2016 and Working in partnership with Costa pod remaining stores to be our local contractor completed in summer 2017 • Enabled ongoing trading • Established over 30 years ago, at Halfords throughout • Extensive local planning based locally in Tunbridge Wells the development consultation including comprehensive impact report • Family run business utilising • Brought local of the development local suppliers and contractors community recruitment as it establishes a low • Responsible development carbon footprint Energy/Environmental checklist fully implemented benefits • Worked closely with • Computers4Africa occupied LondonMetric for the last • Car park lighting upgrade as the former B&Q unit pre two years delivering high part of LED lighting programme construction commencing quality projects • Monitoring energy usage of • In house design and tenants post occupation management capability • Installed solar panels in conjunction with M&S • Planned installation of electric vehicle recharging point LondonMetric Property Plc 04 Sustainability performance 2017 Continued recognition of our focus on sustainability The significant improvement in our sustainability performance and practices made over recent years has been rewarded through our EPRA sBPR Gold award for environmental performance reporting as well as the achievement of a Green Star award from GRESB for the first time, proving that two leading industry bodies recognise the soundness of our Responsible Business approach. Global Real Estate Sustainability Global Real Estate Benchmark (GRESB) Sustainability Benchmark 2016 • Achieved 66% score in 2016 survey and achieved green star status • Up from 34% in 2014 and 50% in 2015 Performance in 2016 GRESB Survey % 100 • In 2016 we achieved improvements 66% in seven out of eight GRESB (2015: 50%) segments, with our biggest improvements in Risk & Opportunities (2014: 34%) and Building Certification, where our energy efficiency activities and better environmental ratings of our 50 assets helped in particular • Further actions undertaken to maintain status in the 2017 survey policy and Management for stakeholder engagement and new construction/major 0 renovations criteria 0 50 100 Implementation and measurement LondonMetric Property Peer group average GRESB average Sustainability Best Practice FTSE4Good Recommendations (sBPR) • Assessment for inclusion • Framework for reporting in the FTSE4Good Index standardised environmental data • In 2016, our most recent assessment, • For first time in 2015, we we scored 3.0 out of 5.0 reported in a format required • Significant improvement on the 2015 by the EPRA sBPR and received score of 1.4 special commendation for improvement made • Exceeded target score of greater than 2.0 • In 2016, we were one of only ten listed UK companies to • Narrowly missed inclusion in index receive a Gold award and working to make further improvements to achieve inclusion in index LondonMetric Property Plc Sustainability performance 2017 05 Responsible Investment We aim to invest in assets that have enduring occupier appeal and ensure that material sustainability risks and opportunities are integrated into the way we acquire and sell assets. • During 2015 we revised all Overview 100% of assets rated EPC ratings that had been E or above1 Material sustainability risks are issued pre-2010 and clarified addressed and considered ratings for all assets which were throughout the investment cycle. previously unknown 100% Pre-acquisition due diligence and • 100% of our applicable portfolio has decision making process includes risk an EPC rating of E or above assessment criteria for: • Energy efficiency and energy costs, Our activity impacted positively and CRC liabilities on overall EPC ratings % of developed assets • EPC risks, flooding and other We continue to sell our retail rated A-C extreme weather events and other warehouses and rotate into distribution environmental risks through our developments and urban logistics acquisitions. 85% Preparation for sale: This is having a positive impact on the • The complete portfolio review we EPC ratings of our portfolio: undertook in 2016 gave us certainty that all assets had an EPC ratings of • 11 out of 13 distribution warehouses E or above and retail stores developed in EPC ratings by ERV the year had an EPC ratings of (estimated rental value) • We include key sustainability between A-C information into our asset • 14 out of 16 urban logistics A 9% marketing materials. B 31% warehouses acquired in the year C 34% MEES risk mitigation had an EPC rating of between A-C D 20% E 6% • UK legislation on Minimum Energy As a result, we increased the Performance