Schroder Real Estate Investment Trust Limited Annual Sustainability Report For the year ended 31 March 2019 For professional advisers and employee benefits consultants only. Sustainability Report Company summary Schroder Real Estate Investment Trust Limited (the ‘Company’ and together with its subsidiaries the ‘Group’) is a real estate investment company with a premium listing on the Official List of the UK Listing Authority and whose shares are traded on the Main Market of the London Stock Exchange (ticker: SREI). The Company is a real estate investment trust (‘REIT’) and benefits from the various tax advantages offered by the UK REIT regime. The Company continues to be declared as an authorised closed-ended investment scheme by the Guernsey Financial Services Commission under section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended and the Authorised Closed-ended Collective Investment Schemes Rules 2008. Contents 1 Our approach to Sustainable Investing Schroder Real Estate Investment Trust Limited 2 EPRA Sustainability Reporting Performance Measures (unaudited) 3 Key contacts Schroder Real Estate Investment Trust Limited 4 Annual Sustainability Report Schroder Real Estate Investment Trust Limited 5 Annual Sustainability Report SustainabilityStrategic Report Report SustainabilityOur approach Reportto sustainable investing Schroder Real Estate Investment Trust Limited The Board and the Investment Manager believe that corporate social responsibility is key to long term future business success and that a successful, sustainable investment programme should deliver enhanced returns to investors, improved business performance to tenants and tangible positive impacts to local communities, the environment and wider society. The importance of environmental and social The industry’s potential to cost-efficiently A good investment strategy must incorporate changes are investment factors that the Board reduce emissions and the consumption of environmental, social and governance factors and Investment Manager must understand to depleting resources, combined with the alongside traditional economic considerations. protect Company assets from depreciation political imperative to tackle issues such as The Board and the Investment Manager and optimise the portfolio’s value potential. climate change, means the property sector will believe a complete approach should be remain a prime target for policy action. This rewarded by improved investment decisions Offering occupiers resource-efficient and presents new challenges and opportunities and performance. flexible space is critical to ensure our for the real estate industry with profound investments are fit for purpose and sustain implications for both owners and occupiers. Further information on Schroder Real Estate’s their value over the long term. As a landlord, Sustainable Investment approach and its 2019 we have the opportunity to help reduce The Investment Manager is evolving its Sustainability Policy can be found at https:// running costs for our occupiers, increase investment philosophy to incorporate ‘positive www.schroders.com/en/uk/realestate/ employee productivity and wellbeing, and impact’ investing; this aims to proactively take products--services/sustainability/ contribute to the prosperity of a location action to improve social and environment through building design and public realm. outcomes. The Investment Manager has Environmental Management System Ignoring these issues when considering asset mapped key impacts to the UN Sustainable Schroder Real Estate, led by its Head of management and investments would risk the Development Goals and uses these to focus Sustainability and Impact Investment, and erosion of income and value as well as missing sustainability programmes for funds and supported by sustainability and energy opportunities to enhance investment returns. assets. The Investment Manager will report management consultancy Evora Global, on its progress with this impact programme in operates an Environmental Management Through its construction, use and demolition, next year’s Annual Report. System (‘EMS’). The EMS is aligned with the the built environment accounts for more than internationally recognised standard ISO one-third of global energy use and is the single 14001. The EMS provides the framework for largest source of greenhouse gas emissions in how sustainability principles (environmental many countries. and social) are managed throughout all stages of its investment process including acquisition due diligence, asset management, property management provided by third parties, refurbishments and developments. Schroder Real Estate reviews its Sustainability Policy Value protection annually which is approved by the Investment & performance Committee. Key aspects of the Policy, performance against 2018’s objectives and Pre-acquisition Operational targets, as well as objectives and targets for the year ahead, are set out below. Legal Risks Property Monitor compliance managed assessment Reporting Targets set Implement & disclosure & monitored Disposal Development/refurbishment SchroderSchroder Real Real Estate Estate Investment Investment Trust Trust Limited Limited 226 AnnualAnnual Sustainability Report and ConsolidatedReport Financial Statements for the year ended 31 March 2019 Strategic Report Overview Strategic Report Governance Financial Statements Other Information Sustainability Report The Board and the Investment Manager believe that corporate social responsibility is key to long term future business success and that a successful, sustainable investment programme should deliver enhanced returns to investors, improved business performance to tenants and tangible positive impacts to local communities, the environment and wider society. The importance of environmental and social The industry’s potential to cost-efficiently A good investment strategy must incorporate Schroder Real Estate continues to focus changes are investment factors that the Board reduce emissions and the consumption of environmental, social and governance factors on energy and greenhouse gas emissions and Investment Manager must understand to depleting resources, combined with the alongside traditional economic considerations. performance and the target has been protect Company assets from depreciation political imperative to tackle issues such as The Board and the Investment Manager extended to achieve a 18% reduction in and optimise the portfolio’s value potential. climate change, means the property sector will believe a complete approach should be landlord-controlled energy consumption remain a prime target for policy action. This rewarded by improved investment decisions by 2020/21 (2015/16 baseline). This is Offering occupiers resource-efficient and presents new challenges and opportunities and performance. accompanied by a target of 32% reduction in flexible space is critical to ensure our for the real estate industry with profound landlord-controlled greenhouse gas emissions investments are fit for purpose and sustain implications for both owners and occupiers. Further information on Schroder Real Estate’s by 2020/21 (2015/16 baseline); this target is their value over the long term. As a landlord, Sustainable Investment approach and its 2019 inclusive of decarbonisation of the UK we have the opportunity to help reduce The Investment Manager is evolving its Sustainability Policy can be found at https:// electricity grid over recent years. running costs for our occupiers, increase investment philosophy to incorporate ‘positive www.schroders.com/en/uk/realestate/ employee productivity and wellbeing, and impact’ investing; this aims to proactively take products--services/sustainability/ In support of achieving these targets and contribute to the prosperity of a location action to improve social and environment improving the efficiency of the portfolio, through building design and public realm. outcomes. The Investment Manager has Environmental Management System Schroder Real Estate has continued to work Ignoring these issues when considering asset mapped key impacts to the UN Sustainable Schroder Real Estate, led by its Head of with sustainability consultants Evora Global management and investments would risk the Development Goals and uses these to focus Sustainability and Impact Investment, and and property manager MJ Mapp to identify erosion of income and value as well as missing sustainability programmes for funds and supported by sustainability and energy and deliver energy and greenhouse gas opportunities to enhance investment returns. assets. The Investment Manager will report management consultancy Evora Global, emissions reductions on a cost-effective basis. on its progress with this impact programme in operates an Environmental Management The programme has involved reviewing all Through its construction, use and demolition, next year’s Annual Report. System (‘EMS’). The EMS is aligned with the managed assets within the Company and the built environment accounts for more than internationally recognised standard ISO identifying and implementing improvement one-third of global energy use and is the single 14001. The EMS provides the framework for initiatives, where viable. largest source of greenhouse gas emissions in how sustainability principles (environmental many countries. and social) are managed throughout all stages Property Manager Sustainability retains operational control responsibilities, Schroder Real Estate can report for the 2018 of its