Sustainability Policy
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Contents 1. Introduction 2. Investments, acquisitions and disposals 3. Property and facility management 4. Developments and refurbishments 5. Operations and working practices 6. Customer engagement
Sustainability Policy
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1. Introduction In 2021, the leadership of the company identified five principal objectives that would underpin the continued success of the business. These can be referred to as the five pillars of the emerging Strategic Plan.
Strategic Aim To be the preferred property partner in central London
Strategic Objectives 1.
2.
Increase income, manage costs, and improve quality
Remain relevant in a competitive real estate market by delivering property and services that customers demand
3. Avoid property obsolescence and plan for a net zero carbon future.
4. Maintain a balanced portfolio and reduce tenant concentration risk where necessary.
5. Make organisational and operational improvements including cultural and behavioural changes to drive a higher level of performance
The overriding strategic objective of our sustainability iprogram reflects the implementation of the third pillar of Company’s Strategic Plan and is to invest in measures and features that safeguard our buildings from obsolescence, and to make sure they continue to appeal in an increasingly carbon conscious world. The decarbonisation ii of our property portfolio is a commercial necessity, required to avoid stranded assets iii. It is essential for mitigating physical iv and transitional risks v that arise from a changing climate and the movement towards a low carbon economy vi. Whilst these risks have the potential to adversely impact the value of our properties and our rental income, it is also recognised there may be opportunities to enhance asset values, increase income and lower costs. Retrofitting and redeveloping our buildings to be highly sustainable in both design and operation may strengthen our financial performance. Undertaking sustainability enhancements will develop skills and knowledge as we upgrade our heritage building stock, which is required to meet the UK’s legally binding carbon reduction commitments. Being at the forefront of retrofit investment on period buildings may advance our skills so that we are able to identify under-priced assets, owned by others, but with fewer resources or skills to invest. We have signed up to the Science-Based Target Initiative vii (SBTi) that requires us to halve our carbon (Scope 1 viii and Scope 2 ix emission) by 2030; we are also endeavouring to achieve net zero xacross all Scopes by 2040. The following policy commitments will set us on the path to achieving these specific carbon related requirements and improve broader environmental performance. As an organization, we are committed to upholding all relevant legal requirements and sustainability obligations to which we subscribe. This includes complying with applicable laws, regulations, and other requirements related to sustainability in our operations and investment activities Page 1
Sustainability Policy
2. Investments, acquisitions and disposals 2.1
We evaluate the existing energy performance of properties as part of our pre-acquisition due diligence, identifying risks to future financial performance and exploring opportunities to create additional value or to improve environmental performance.
2.2
We will not ordinarily acquire buildings that fall short of our minimum standards unless we are able to demonstrate that affordable improvements can be made, or value can be added.
2.3
We may dispose of assets where it is unfeasible or cost-prohibitive to implement building improvement works. Furthermore, we may divest assets that pose a significant risk of becoming stranded due to non-compliance with existing or forthcoming energy-efficient and net-zero requirements, and market expectations.
3. Property and facility management 3.1
We will actively monitor energy performance and seek to monitor the waste and water efficiency of all the buildings we manage, working with occupiers and service providers to reduce resource use and to roll out smart meters and other controls.
3.2
We expect all our service providers and maintenance contractors to share our values and support us to ensure our buildings are managed and maintained in an environmentally responsible manner. This includes commitments on recycling, energy management, water efficiency and carbon reduction.
3.3
We will procure 100% renewable energy in buildings / spaces we manage and will assess the opportunity and viability for onsite renewables.
4. Developments and refurbishments 4.1
We expect the environmental performance of new developments and refurbishments to exceed the minimum standards laid down by building regulations and planning policy.
4.2
Where refurbishing or redeveloping buildings, we require contractors to consider and track sustainability-related issues in the design and construction and to follow our minimum standards.
4.3
We expect all commercial developments and major refurbishments to have Energy Performance Certificates rated at B or higher (C for residential) and that wherever possible the design will incorporate low carbon heating, low embodied carbon, enhanced insulation, advanced energy efficiency and suitable water-saving features.
4.4
We will seek to retain existing structures and facades wherever feasible thereby reducing material use. We will commission whole life carbon assessments and aim to reduce embodied carbon on all redevelopment projects and major refurbishments involving structural changes.
4.5
We will specify the use of recycled and/or recyclable construction materials, products and finishes and will seek to avoid sending waste to landfill.
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Sustainability Policy
5. Operations and working practices 5.1
We will continue to monitor the environmental impacts of our business activities and work towards becoming net zero carbon by 2040 and to halve scope 1 and 2 emissions by 2030.
5.2
We will instruct our employees to incorporate sustainability into their work practices.
5.3
We will use our Head Office as an exemplar for sustainable building design and operation, exploring and trialling new ideas and solutions.
6. Customer engagement 6.1
We will encourage our customers to reduce the carbon footprint of assets under their control, including through the adoption of green leases, and will explore ways in which we can support them in meeting this objective.
6.2
We will use our influence to encourage our customers to consider sustainability-related issues in the fit-out and operation of buildings.
6.3
We will use our events and marketing activity to promote and encourage sustainable practices and solutions among customers, residents and the community.
Implementation of this policy is the responsibility of all the Group’s employees and directors with performance reviewed by the Sustainability Committee of the Board. This policy is reviewed on an annual basis.
Signed: Mark Kildea, Chief Executive Date: 5th June 2023
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Sustainability - Meeting the needs of the present without compromising the ability of future generations to meet their own needs.
i
Decarbonisation -Reduction or elimination of carbon dioxide (CO2) emissions and equivalent greenhouse gas emissions (CO2e) resulting from human activity.
ii
Stranded assets - Properties that will not meet future energy efficiency standards and market expectations and might be increasingly exposed to the risk of early economic obsolescence.
iii
Physical risks - Economic costs and financial losses resulting from the increasing severity and frequency of extreme climate change-related weather events, longer-term gradual shifts of the climate such as changes in precipitation and indirect effects of climate change such as loss of ecosystem services. iv
Transition risks - The risks related to the process of adjustment towards a low-carbon economy, such as rising costs due to the pricing-in of carbon emissions, market effects, regulations, and reputational risks.
v
Low carbon economy - Decarbonized economy is based on low-carbon power sources with minimal greenhouse gas (GHG) emissions into the atmosphere.
vi
Science Based Target Initiative – Carbon reduction target aligned with the latest climate science deemed necessary to meet the goals of the Paris Agreement — limiting global warming to well-below 2°C above preindustrial levels and pursuing efforts to limit warming to 1.5°C. vii
Scope 1 emissions - The direct greenhouse gases emitted from owned or controlled sources, for example running the company’s boilers and vehicles.
viii
Scope 2 emissions - The indirect emissions generated from the purchase of electricity or energy used for example to cool and heat buildings.
ix
Net Zero- All carbon emissions are reduced in line with the Paris Agreement 1.5° C trajectory, with residual emissions offset through carbon removals or avoided emissions.
x
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23 Queen Anne Street London W1G 9DL T +44 (0)20 7580 3163 enquiries@hdwe.co.uk hdwe.co.uk
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Sustainability Policy