Introduction from the Chair

A strong governance framework with robust supporting processes across the Group, and with high standards set from the top, is a key factor in our delivering sustainable business performance, generating value for shareholders and contributing to wider society.”

Richard Mully Chair

Dear fellow shareholder

I am delighted to introduce this year’s Corporate Governance report for the financial year ended 31 March 2022.

The Board recognises that how the Group does business is as important as what it does. A strong governance framework with robust supporting processes across the Group, and with high standards set from the top, is a key factor in our delivering sustainable business performance, generating value for shareholders and contributing to wider society.

A key part of the Board’s role is to provide entrepreneurial leadership, with appropriate oversight, challenge and support to management. At GPE, the Board’s support, advice and interaction extends beyond the boardroom, supporting our efforts to promote and monitor culture and ensure its alignment with our purpose, values and strategy.

Board focus and oversight

Key areas of the Board’s focus during the year included the evolution of our strategy and operations, stakeholder engagement, supplementing our experienced team with new skills and diverse talent, advancing our Roadmap to Net Zero Carbon and our Social Impact Strategy, and enhancing our culture through our ‘Customer first’ approach and our diversity and inclusion agenda. Further details can be found in ‘What we did in 2021/22’ on pages 96 and 97.

2018 UK Corporate Governance Code and s.172 reporting

This report demonstrates how we have applied the principles and complied with the provisions of the UK Corporate Governance Code 2018 (the Code) during the year and our approach to governance in practice. Our Code compliance statement can be found on page 80. Details of how the Board has discharged its duty under section 172 of the Companies Act 2006 can be found on pages 62, 94, 96 and 97.

Board composition

Succession planning is an important part of our governance processes. Furthermore, as our strategy evolves, so too do the skills and expertise required for our Board. Having identified a need to strengthen the Board’s operational, customer service and digital expertise, we were pleased to welcome Mark Anderson and Emma Woods to the Board from 1 September 2021 and 1 February 2022 respectively. Search processes are ongoing for at least one additional Non-Executive Director to bring additional technology and data experience and with the aspiration of further strengthening the Board’s diversity. Wendy Becker will be stepping down from the Board, and as Chair of the Remuneration Committee, from the conclusion of the 2022 AGM to focus on her other commitments. On behalf of the Board, I would like to thank Wendy for her significant contributions to the Board and its Committees over the past five years.

From the conclusion of the 2022 AGM, Wendy will be succeeded as Chair of the Remuneration Committee by Emma Woods and, as we announced in August 2021, Vicky Jarman will succeed Nick Hampton as Chair of the Audit Committee. Emma and Vicky will each bring valuable experience to their new respective roles.

I would also like to thank Nick for his excellent leadership of the Audit Committee since 2016. Nick will remain a member of the Audit Committee, the Remuneration Committee (to which he was appointed from 1 September 2021) and the Nomination Committee.

We were also delighted to welcome Dan Nicholson to the Board from 6 September 2021 as an additional Executive Director with responsibility for Portfolio Management and Development Management. Dan has extensive real estate experience and brings further operational firepower and strategic support to the executive team as we grow both our development and flexible office activities.

Further details regarding these changes, and our Board appointment processes, can be found in the Nomination Committee report on page 102.

Diversity and inclusion

The Board continues to focus on strengthening diversity and inclusion at GPE, both in relation to the Board and more broadly throughout the organisation. A diverse Board and workforce, which is representative of our customers, is a strategic imperative as we enhance our customer approach and develop our operations to meet the evolving needs of a diverse customer base. We believe that strengthening our diversity and inclusion will lead to a more profitable, successful and innovative organisation.

We have made good progress in a number of areas, however there is much still to do. The Board therefore approved a new People Plan in early January 2022 which centres on our diversity and inclusion ambitions and which supersedes our previous Inclusion & Diversity Strategy. To further drive momentum, we have also incorporated specific diversity and inclusion metrics within the 2022/23 annual bonus objectives of our Executive Committee members. Diversity is also a key consideration in ongoing Board recruitment.

See our Nomination and Remuneration Committee reports on pages 103 and 114 for further details.

Board effectiveness review

This year we conducted an internal evaluation which was led by Charles Philipps, our Senior Independent Director. Details of this process, the findings of the review and our progress against the actions arising from the 2020/21 Board evaluation can be found on pages 104 and 105. We are planning for next year’s review to be an externally facilitated evaluation in accordance with Code recommendations.

Purpose, strategy and consideration of the likely consequences of decisions for the long-term

In the context of changing markets and evolving customer needs, the Board has spent significant time this year considering the development of our strategy to ensure we are well positioned to maximise the opportunity we have to generate long-term value across our business in line with our purpose – to unlock potential, creating sustainable space for London to thrive. As part of these discussions, we challenge our purpose and strategic ‘givens’ and reflect on customers’ changing needs, the optimum size for our business, whether our risk profile is appropriate and on our investment and disposal strategies. The Group’s business model and strategy are outlined on pages 12, 13, 16 and 17.

We remain confident that London’s commercial property market has enduring appeal for customers and investors and we expect customers to be increasingly drawn to best-in-class assets that offer flexible, tech-enabled, amenity-rich office space with the highest sustainability and wellbeing credentials.

Listening to what customers and the market are telling us, we are pivoting our strategy to centre on two complementary, overlapping activities, providing quality, choice and flexibility. We continue to focus on the delivery of our prime HQ office space and the Board has progressed our £1.1 billion development programme this year, including with the commencement of enabling works at 2 Aldermanbury Square. At the same time, we are seeking to grow organically our Flex business to more than 600,000 sq ft by 2027, and to supplement this growth through acquisitions. To this end, the Board was pleased to approve the acquisition of 7/15 Gresse Street, W1 in March 2022 and, more recently, the acquisition of 6/10 St Andrew Street, EC4 in May 2022.

While the retail market has improved, we continue to monitor individual asset plans and GPE’s exposure to any underperforming retail assets. Our customers are at the heart of what we do, and we believe that better customer outcomes will lead to better shareholder returns for the long-term. The Board has therefore been overseeing the development of our ‘Customer first’ approach to respond to developing themes and to shape the spaces and services we provide. This is underpinned by our refreshed corporate brand, and brand pillars, which were launched in November 2021. We have also overseen the restructuring of senior management roles and team structures, including the appointment of Steven Mew as Customer Experience and Flex Director, to further develop our customer service culture. Embedding our Customer first culture and ensuring GPE has the necessary skills, diversity and operational capabilities to execute its Customer first approach will remain important areas of focus for the coming year.

Sustainability is integral to our offer. Driven by our purpose, the Board sees sustainability as a differentiator and an opportunity area for GPE, including the acquisition of perceived stranded assets where GPE’s skills and credentials could potentially allow us to address sustainability demands and requirements that existing owners cannot.

The Board recognises the importance of innovation and technology in enhancing our operations and our customer offer, and in future-proofing for tomorrow’s working patterns. The Board was pleased to approve a new one-year Innovation Strategy for the coming year, which will focus on: our Customer first approach and providing a seamless digital experience; smart building technology to optimise occupation by reducing energy consumption; improving productivity through healthy workplaces; and exploring new technology to understand its risks and opportunities.

Stakeholder engagement and support

Building and nurturing strong working relationships with our stakeholders is critical to our success and the development of our strategy and is intrinsic in our day-to-day activities. As well as direct engagement, a key part of the Board’s role is, therefore, the oversight of work undertaken by the GPE team to maintain and enhance these relationships.

Much of the year was again impacted by the COVID-19 pandemic, and we continued to engage extensively with stakeholders to offer support, where appropriate, to those that needed it. The wellbeing of our customers and people has remained a priority, and our progressive culture and clear values has once again helped to deliver strong employee engagement and customer satisfaction levels, as set out on pages 53 and 56. These outcomes are a great credit to the continual hard work and dedication of the entire GPE team.

We continue to focus on customer and supplier engagement as we look to strengthen our Customer first approach and progress our sustainability ambitions, as further described below.

Further details of how we engage with our stakeholders are set out on pages 52 to 62 and 89 to 94.

Sustainability and the impact of the Company’s operations on the community and the environment

Sustainability is a key priority for GPE and a part of our purpose. As well as being a moral obligation, the Board sees sustainability as an economic and strategic imperative. Sustainability touches everything we do and we continue to integrate ESG considerations into all of our activities.

During the year, the Board has received regular reports and updates from our Sustainability & Social Impact Director and has held detailed discussions regarding our sustainability objectives, strategy, risks and opportunities. The Board has continued to monitor the progress of our Roadmap to Net Zero and the deployment of monies from our Decarbonisation Fund to finance the reduction of emissions from our buildings and initiatives to drive meaningful behavioural change across the business. The Board continues to oversee the development of our Climate Resilience Strategy which we expect to adopt later this year.

Working collaboratively with our stakeholders will be key to achieving our sustainability ambitions. As a Board, we regularly discuss ongoing work to partner with our customers to reduce the carbon impacts from our buildings, along with work with our suppliers to reduce supply chain impacts and to innovate and drive improvements in the design and development of sustainable buildings.

Reflecting our sustainability aspirations and those of the investor community, the Board approved our new Sustainable Finance Framework in July 2022, providing the framework for potential future debt issuances to (re)finance projects that have a positive environmental and/or social impact. ESG metrics, including sustainability, also continue to feature as an important element of our Executive Committee’s annual bonus targets, as further explained in the Directors’ remuneration report on pages 115 and 118.

The Board adopted our new Social Impact Strategy in the year, which is designed to create a lasting positive social impact in our communities with a target of creating £10 million of social value by 2030. Our Community and Charity Committee has now been reconstituted as our Social Impact Committee, chaired by the Chief Financial & Operating Officer, to oversee the implementation of this important strategy. We are delighted that, for 2021/22, GPE generated £631,000 in social value through our community programmes and direct business activities. See page 43 for further details regarding the social value we created in the year.

We also commenced new three-year strategic partnerships with XLP, a charity focused on creating positive futures for young people growing up on inner city estates in London, and National Energy Action, a charity which focuses on alleviating fuel poverty.

Maintaining a reputation for high standards of business conduct

We aspire to the highest standards of conduct and, together with a culture of continuous improvement in standards and performance, this helps to ensure that good governance extends beyond the boardroom. Annually, the Board approves the Group’s Ethics and Whistleblowing Policies, both of which are also reviewed in advance by the Audit Committee. These policies are now supported by our new, over-arching Anti-Fraud, Bribery & Corruption Policy which was adopted in March 2022. Each of these policies is available on our website at www.gpe.co.uk/about-us/governance.

In September each year, the Board considers and approves our Modern Slavery Statement, which explains the activities we have undertaken during the year to demonstrate our commitment to seeking to ensure that there is no slavery, forced labour or human trafficking within any part of our business or in our supply chains. A copy of our Modern Slavery Statement is available at www.gpe.co.uk/ourmodern-slavery-statement. More on how we behave can be found on pages 44 and 95.

We seek sustainable long-term, two-way relationships with our supply chain, building mutual trust to deliver exceptional results in a responsible way. Our Supplier Code of Conduct, which is available on our website at www.gpe.co.uk/ our-relationships/our-suppliers, sets out the standards we require of our suppliers to help ensure they operate ethically and responsibly.

I am delighted that the efforts of our team have been rewarded with our winning a number of awards and recognitions, including Property Company of the Year and Commercial Property Developer of the Year at the Property Awards 2021 and IR Magazine’s 2021 award for ‘Best in Sector: Real Estate’. I am also very pleased to report on our achieving a gold award in relation to EPRA’s 2021 Best Practice Recommendations and Sustainability Best Practice Recommendations.

Engaging with our shareholders

We believe that communication with our shareholders is key. To this end, in addition to our comprehensive investor relations programme led by Toby Courtauld and Nick Sanderson as detailed on pages 90 and 91, as Chair of GPE, I proactively seek periodic engagement with many of our institutional shareholders. During the financial year, I was pleased to correspond and meet with a number of our largest shareholders to discuss and hear their views on GPE’s business and governance arrangements.

I, together with Charles Philipps as Senior Independent Director, am available to meet with shareholders as appropriate. Each of our Committee chairs is also available to engage with shareholders on significant matters related to their areas of responsibility.

The AGM provides the Board with an opportunity to engage with and answer questions from shareholders. We hope to see shareholders in person once again at our 2022 AGM. Arrangements for the 2022 AGM can be found in our 2022 AGM Notice.

On behalf of the Board, I would like to thank all our of shareholders and other stakeholders for their continued support as we work to evolve and execute GPE’s strategy to deliver long-term sustainable success.

Richard Mully

Chair 19 May 2022