Responsible
Business & ESG
Report 2022
Inside this report
Responsible business and ESG Report
Overview and | Our Responsible Business |
progress | activities are embedded into our |
1 | investment, asset management, |
development and corporate | |
activities and aim to deliver on | |
our ESG targets. We work with all | |
our stakeholders to bring benefits | |
to society more widely. | |
Martin McGann | |
Finance Director & Responsible | |
Business Board representative | |
Environmental | Our Net Zero Carbon ('NZC') ambitions |
3 |
#1 Our operations will | #2 We will continue | #3 We will work | |
be net zero by 2023. | to reduce emissions | with our occupiers to | |
from developments | ensure our buildings | ||
which will be fully | are net zero by 2035. | ||
net zero by 2030. | |||
Social | Our occupier relationships | ||
10 | Occupiers | are crucial to the success | |
of LondonMetric. We work | |||
closely with our occupiers to | |||
understand their requirements | |||
and our ambition is to be their | |||
real estate partner of choice. | |||
Mark Stirling | |||
Asset Director at LondonMetric |
Governance
18
Governance, compliance & TCFD
The Board is committed to upholding the high standards of corporate governance and Responsible Business is an important part
of ensuring that we deliver on those high standards.
Performance against 2021-22 targets
Our performance in the year against our Responsible Business Targets.
23
Adviser's statement
25
JLL's external evaluation of LondonMetric's performance.
EPRA sBRP performance and CDP Disclosure
26
LondonMetric Property Plc | Annual Report and Accounts 2022 |
1
Our sustainability performance
Responsible Business and ESG review
Our Responsible Business activities aim to address the material ESG risks and opportunities that impact our business.
The Company recognises the need to consider and address all environmental, social and governance matters relevant to its business.
As well as meeting legislation, environmental improvements are starting to translate into real asset value enhancement as occupiers value these improvements more highly than before and valuers begin to differentiate assets based on environmental attributes.
Our Responsible Business framework guides us in mitigating climate change risks, identifying and progressing environmental and stakeholder related opportunities
as well as ensuring a high standard of corporate governance.
Responsible Business is embedded across all of corporate, investment, asset management and development activities with a policy in place and ESG targets set every year.
Progress against targets is monitored at Working Group meetings held several times a year and attended by key business representatives, a Board member and our external sustainability advisor.
ESG performance is reported to the Board at regular intervals with the Audit Committee responsible for overseeing ESG progress. Executive Directors and relevant employees are set individual ESG targets and remuneration is linked to achieving those targets.
Environmental
Through our activities we look to minimise the environmental impact of our business, maximise opportunities to improve the efficiency of our assets and improve the resilience of our assets to climate change and the impact of transitioning to a low carbon economy.
Key progress in 2022
- Material improvement in portfolio's EPC rating and a number of environmental initiatives implemented
- Carbon offset strategy formalised and climate risk assessment undertaken
- 100% of main developments BREEAM Very Good/Excellent
-
Significant reduction in embodied carbon seen on developments
Read more on pages 3 to 9
Social
Our actions consider the long term interests of all our stakeholders including those of our employees, suppliers, customers and local communities as well as ensuring that we maintain a high standard of business conduct.
Key progress in 2022
- Green debt financing completed post year end and reporting obligations met
- Strong occupier feedback from survey
- Continued high staff satisfaction levels from employee survey
-
Continued charitable and local community focus
Read more on pages 10 to 17
Governance
The Board is committed to upholding high standards of corporate governance. In particular, it ensures that appropriate health and safety procedures and supply chains are in place.
Key progress in 2022
- Full TCFD compliance and climate risk governance gap analysis undertaken
- 100% compliance by contractors with our contractor development checklist
- Health and safety audits undertaken on projects
- Annual contractor compliance audit
Read more on pages 18 to 22
LondonMetric Property Plc | Responsibility Report 2022 |
2
Our sustainability performance
Responsible Business and ESG review
Our sustainability benchmarking, targets and financing
We have maintained our ratings in external benchmarks, made good progress against our internal ESG targets and have put in place green financing solutions.
External benchmarking | ESG targets | Green financing |
Maintained our Green Star
Achieved a score of 65% in the 2021 Global Real Estate Sustainability Benchmark survey, maintaining our Green Star status. This score is up from 34% in 2014 and unchanged on the prior year.
Continued inclusion in the
FTSE4Good Index
In the latest assessment, we achieved a score of 3.4 out of 5.0 compared to 2.6 for the peer group and continue to be included in the index.
BBB rating
In the latest assessment we continued to be rated BBB, which is in line with the sector average.
Maintained our Gold
In EPRA's last review, we maintained our Gold Award in their Sustainability Best Practice Recommendation assessment.
Improved our score
We continued to respond and improve our score over the year from D to C-, above the peer group average.
Targets achieved in 2022
81%
with the remainder partially achieved or in progress
Our 16 Responsible Business targets in the year focused on:
- Further reducing our energy usage, environmental improvements to our buildings and greater scrutiny on physical climate and transition risks;
- Formalising a carbon offset strategy as part of our net zero carbon framework;
- Working in partnership with occupiers to reduce their energy consumption and improve their occupational satisfaction;
- Ensuring developments are built to a high environmental standard and our supply chain acts in accordance with our procedures and policies;
- Developing community and other stakeholder relationships; and
- Climate change risks and opportunities assessment undertaken.
We made good progress against these targets with 81% achieved and the remainder partially achieved or in progress.
A full review of performance against our 2022 targets are detailed on pages 23 to
24. Many of the targets remain relevant for next year and will be rolled forward with modifications to further align with our Net Zero Carbon framework. Once set, these updated targets will be available on our website.
Sustainability linked refinancing
£450m
Over the year, we completed significant debt refinancings across our debt facilities.
£50 million of Green Notes
As part of a £380 million private debt placement with UK and US investors, a £50 million green tranche was put in place with a 15 year term maturity. This tranche is subject to a green framework under which spend has been allocated to buildings which have high sustainability standards.
The green notes were priced two basis points inside the equivalent non green 15 year tranche.
£400 million of new revolving credit facilities completed with a green framework
Simultaneously with the completion of the private placement, we completed two new revolving credit facilities totalling £400 million.
These facilities have a green framework structured in accordance with the Loan Market Association's sustainability linked loan principles. Sustainability performance targets ('Targets') were set and are aligned to LondonMetric's corporate ESG targets. The Targets focus on:
- Improvements in EPC ratings;
- Renewable installations; and
- Developments meeting a minimum BREEAM Very Good standard.
The pricing of the facilities is subject to a two basis point adjustment for compliance/non compliance with the Targets which is tested each year of the facility. Where targets are met, the margin paid will be reduced and LondonMetric will use this saving to add to its funds allocated for charity giving.
We continue to look at further green financing facilities.
LondonMetric Property Plc | Responsibility Report 2022 |
3
Environmental
Overview
Net Zero Carbon ('NZC') ambitions:
Through our activities we look to minimise the environmental impact of our business, maximise building efficiency opportunities whilst improving business and asset resilience to climate change and the impact of transitioning to
a low carbon economy.
Net Zero Carbon
We understand the importance of addressing climate change and the significant impact that
1
Our operations will be net zero by 2023*
3
We will work with our occupiers to ensure our buildings are net zero by 2035***
2
We will continue to reduce emissions from developments which will be fully net zero by 2030**
reducing emissions from real estate can have on the UK's 2050 Net Zero Carbon target. LondonMetric recognises that it can have a material impact by reducing its emissions as well
- Encompasses Scope 1,2 and 3 emissions. Includes landlord-controlled energy, water, waste, refrigerants and purchased goods and services at our assets, along with energy, waste, refrigerants and business travel relating to corporate activity and offsetting residual carbon to achieve net zero
- Encompasses Scope 3 emissions, includes embodied carbon, supply chain emissions and offsetting residual carbon to achieve net zero
- Encompasses Scope 3 emissions, includes emissions from occupier-controlled energy use at our asset and offsetting residual carbon to achieve net zero
as supporting its occupiers in reducing theirs.
In the previous year, we formalised our Net Zero Carbon Framework through internal workshops and adviser input. Net Zero Carbon is a rapidly evolving area and, during
this year, as well as preparing to be fully Net Zero from our operations in 2023, we also analysed the Net Zero potential
Climate risk assessment
As covered in more detail on pages 20 to 21, we undertook an assessment of our climate- related risks, assessing our resilience to these risks at the portfolio and asset level.
For the portfolio, two climate change scenarios were used to test a range of outcomes and identify material climate- related risks over the short, medium and long term with likelihood and impact scores assigned to each risk.
The table below shows that under the less extreme scenario (RCP4.5), transition risks are the most significant, whereas under the more extreme scenario (RCP8.5), physical risks are the most prevalent.
At the asset level, an in-depth review was undertaken on representative assets, assessing their resilience to physical and transition risks. Again, transition risks were higher for the assets we assessed.
across several assets.
Climate risk
Our ESG focus has increasingly turned to understanding the climate risks on our portfolio. During the year, we undertook a significant assessment
of our business and asset resilience against climate- related risks. The third party assessment concluded that our sustainability strategy is well- positioned to manage climate-
Physical risks (risk scoring on key risks)
Extreme weather events
13.1
17.1
Heat Stress
12.8
16.6
Flooding (coastal, fluvial)
9.9
13.9
Heavy rainfall & pluvial flooding
8.4
13.3
Transition risks* (risk scoring on key risks)
Occupier/market demand changes
17.6 13.7
Increased building standards
16.4 7.6
Financial markets impact
15.1
19.0
Fuel source transition
13.8 7.5
related risks and opportunities.
IPCC RCP4.5 global emissions scenario (1.7-3.2°C of warming by 2100)
IPCC RCP8.5 global emissions scenario (3.2-5.4°C of warming by 2100)
- Risks shown in graphs are top risks for IPCC RCP 4.5. Under RCP 8.5, risks from insurance challenges and increased energy demand and cost would have been included as top four transition risk with scores of 14.0 and 13.0
LondonMetric Property Plc | Responsibility Report 2022 |
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LondonMetric Property plc published this content on 12 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 July 2022 14:43:01 UTC.