Responsible Property Investment (RPI) Summary Policy

Transcription

1 Responsible Property Investment (RPI) Summary Policy

2 Introduction DTZ Investors is a full service vertically integrated real estate manager. We have been operating in the UK since 1968 and in Continental Europe since We recognise that we have a fiduciary duty to our clients to achieve the best returns possible from the assets we manage on their behalf. However achieving those returns should not be at an undue cost to wider society. DTZ Investors therefore understands its responsibility to manage those assets in a manner that is sensitive to the environment, provides social benefit and does not put the reputation of either DTZ Investors or our clients at risk through poor corporate practices. In 2013 we became a signatory to the United Nations Principles for Responsible Investment (UNPRI), a voluntary framework for incorporating environmental, social and governance (ESG) issues into investment decisionmaking and ownership practices. In the same year, we developed a formal Responsible Property Investment (RPI) Strategy applicable to all of our UK portfolios. This document is a summary of that detailed policy which is available to our clients upon request. 2 Summary policy

3 Our approach Acquisition / disposal and design stages Sustainability risk assessments are carried out at pre-acquisition to identify potential ESG issues and mitigation measures. Issues with direct financial relevance are integrated into our valuation process. Operation and maintenance Our property managers (and third party suppliers) must adopt our RPI policies to ensure asset performance is monitored, benchmarked and maintained Our assets are covered by an Environmental Management System (EMS) to minimise their impact on the environment. Improvements/renovations We have developed fit out and refurbishment guides to ensure our contractors take into account sustainability at the earliest possible stage Sustainability improvement plans are carried out across all assets, and form part of annual business planning. Benchmarking and review We participate in the Global Real Estate Sustainability Benchmark (GRESB) and use the results to identify opportunities for performance and ESG policies. With increasing scrutiny of the environmental performance of buildings from occupiers and investors alike, rising energy costs, increasing legislation governing acceptable performance standards for buildings and increased taxation of climate change emissions and waste, DTZ Investors believes that the sustainable credentials of buildings will make an increasing difference to the long-term obsolescence and investment performance of property. Consequently, our strategy focuses on understanding the impact of these issues on future value and minimising the risk to our portfolios. Integrating environmental, social and corporate governance (ESG) considerations into our investment process from pre-acquisition to disposal (see diagram on left) is critical to our approach to RPI. Our approach rests within the context of our clients financial performance objectives as well as legislative requirements. Our specific policies will, as a minimum, be compliant with UK statutory requirements and EU directives, including: the Carbon Reduction Commitment Energy Efficiency Scheme (CRC), the European Savings Opportunity Scheme (ESOS), the Minimum Energy Efficiency Standards (MEES) and the Heat Network Metering and Billing Regulations 2014 (see Annex A for a brief description of the schemes and our compliance procedures). Beyond this we aim to lead in the establishment of best practices in the real estate industry. In deciding upon the policies that we should adopt we follow a proportional cost-benefit led approach. This does not mean that all initiatives must be self-financing or indeed that there must be a proven economic reward, but means that we will consider the relationship between the financial cost of any investment or activity and our evaluation of ESG rewards. Importantly we will also consider our portfolios in the context of market practice and peer group properties to guard against depreciation risk and obsolescence (sometimes referred to as future proofing of investments ). To maintain coordination and leadership, we have established a committee of experts who are representative of our fund management, energy & sustainability and property management teams. It is this committee that has been responsible for the development and approval of the policies and targets set out in this document (Appendix B), and that is responsible for overseeing the implementation of this policy, reporting on results and future modifications. Furthermore, we are committed to fostering the right culture and appropriate training to enable all employees to understand the objectives of our responsible investment policies as well as relevant legislation and best practices. Summary policy 3

4 Our policy Our RPI policies are designed to provide guidance in ten core areas: Energy efficiency Water efficiency Transport Impact on local communities Recycling, waste reuse and reduction of consumption of materials The policies contained in the RPI strategy are applicable to all of our discretionary managed property portfolios and to our advisory mandates in so far as concerns the scope of our contractual services and ability to influence the management of portfolios. These policies are designed to be specific and measurable so that we may evaluate and report upon the success of this policy and its implementation in future years. Our strategy is reviewed by the RPI committee on an annual basis. The intention is that the RPI strategy is a constantly evolving approach, responding to innovation within the market and the needs of our stakeholders. As a result, we will be expanding our strategy to include additional outline guidance on topics such as: Occupier wellbeing Ground and water pollution Refurbishment & Development Renewable Energy Health & Wellbeing Sustainable Procurement Flood risk Air pollution 4 Summary policy

5 Asset Improvement & Performance Management Engagement Occupiers, Staff & Stakeholders We have undertaken a full audit across the asset portfolio to create a baseline from which all future performance can be measured. The audit process also created the opportunity to examine in detail every asset and put in place a property improvement plan which is the starting point for a comprehensive assessment of the options available for driving improvement. We have put in place a formal tenant engagement strategy which allows us to communicate effectively the aims of the RPI strategy and then take feedback from tenants which then helps shape the approach moving forward. This property improvement planning process examines the options available for any building and then tests those options against economic, commercial and operational criteria to create the short list for implementation. This process of continuous improvement is measured against our own baseline and reported internally on a quarterly and annual basis. We also benchmark externally utilising and contributing to GRESB. Our own staff and key suppliers benefit from regular hosted seminars to help with the general understanding of our RPI strategy and how they help deliver our objectives. Our wider stakeholder engagement includes regular dialogue and participation in thought leadership with groups such as the UK Green Building Council. DTZ Investors supports the principles of the UK Stewardship Code, and has developed a policy with our approach in relation to each of the seven principles. We have plans to produce an annual sustainability report to be made in publicly available in 2016 showing the results of the first two years of policy implementation, with a view to integrating this in our annual reporting. Summary policy 5

6 Benefits The implementation of the DTZ Investors RPI strategy and the overall approach to ESG has a number of benefits for our clients, our tenants and our other stakeholders. These can be summarised as follows: Active management across our portfolio leading to greater efficiency Reduced consumption of commodities across our assets and portfolio leading to reduced costs of occupation Driving greater portfolio performance through efficiency Enhanced levels of stakeholder engagement with occupiers, staff, communities and relevant bodies Effective management of risk Future proofing of buildings and assets Robust and effective approach towards property improvement planning. 6 Summary policy

7 Annex A Legislation that is changing the way we must operate: CRC ESOS MEES The Heat Network (Metering and Billing) Regulations 2014 The CRC Energy Efficiency Scheme is a mandatory reporting and pricing scheme to improve energy efficiency in large public and private organisations. CRC operates in phases. Phase 1 ran from April 2010 until the end of March We are now in phase 2 that runs from 1 April 2014 to 31 March Qualification for the scheme is based on electricity usage. Organisations which participate within the CRC are required to monitor their energy use, and report their energy supplies annually. Participants must purchase and surrender allowances for their emissions. The allowance price for 2015/16 is 16.10/tonne of CO2 and can be expected to rise over time. Qualifying organisations have to comply legally with the scheme or face financial and other penalties. More information is available on the Environment Agency CRC web pages. The ESOS Regulations 2014 were introduced to give effect to a European directive. The Energy Saving Opportunity Scheme (ESOS) is a mandatory energy assessment scheme that applies to large UK undertakings and their corporate groups. Organisations that qualify for ESOS must carry out ESOS assessments every 4 years with the first deadline for compliance on 5 December These assessments are audits of the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures. There is no regulatory requirement for participants to implement the energy saving opportunities identified. This is for each organisation to determine themselves. The regulator may issue civil sanctions including financial penalties if an organisation does not meet the scheme s obligations. More information is available on the Environment Agency s web pages at government/publications/comply-with-the-energy-savings-opportunity-scheme-esos The regulations that introduce Minimum Energy Efficiency Standards (MEES) on the non domestic property sector in England & Wales satisfy the government s obligation under the Energy Act 2011 that aims to reduce emissions of greenhouse gases and the demand for energy. The equivalent Scottish legislation, currently in production, will follow the same principles. Here s a summary of the key dates and implications: Minimum energy efficiency standard for buildings will be set at an E EPC rating From 1st April 2018 it will apply to all new leases & also lease renewals From 1st April 2023 it will apply to all leases including where one is already present Exemptions are possible on certain criteria including diminution of value All exempted properties will require to be registered on a central DECC database Local authorities will be responsible for enforcement. There will be fixed penalties for non compliance ranging from 5, ,000. These regulations implement the requirements in the Energy Efficiency Directive (EED) with respect to the supply of distributed heat, cooling, and hot water. Article 9 of the legislation requires that final consumers of district heating, district cooling, and communal heating and hot water systems are provided with competitively priced individual meters where it is cost effective and technically feasible. Where individual meters are installed, final consumers should be provided with billing information that is accurate and based on actual consumption where it is cost effective and technically feasible to do so. Those supplying and charging final customers for heating or cooling through a network must make a notification under regulation 3 to the regulator on or before 31 December The notification and assessment process will need to be completed at least once every 4 years. Summary policy 7

8 Key RPI policy procedures that help us remain compliant CRC Energy Efficiency Sceme ESOS Energy Saving Oportunity Scheme MEES Minimum Energy Efficiency Standards Heat Network Regulations Quarterly environmental reporting covering supplies and use of energy across all our assets which provide the basis for calculating our portfolio s carbon footprint EPC assessments for fit-outs and refurbishments at pre-aquisition stage Programe of identification of relevant heat networks CRC evidence retained as part of EMS procedures Property improvement plans and EPC+ programmes identify opprtunities for energy efficiency in existing assests. Detailed ESOS audits are carried out on key assets Technical feasibility assessment carried out for qualifying properties 8 Summary policy

9 Annex B Targets to December 2016 The following short-term targets have been set for the two-year period ending December 2016: Increase number of smart meters installed on energy and water supplies by at least 10% each year Encourage tenants to share energy and water data with a view to obtaining at least 10% of tenant energy data each year Improve occupiers awareness of efficient occupational behaviour and tenant fit-outs Assess the energy risk associated to all properties via enhanced Energy Performance Certificate (EPC) assessments Produce sustainability improvement plans for all directly-managed assets Reduce CO 2 emissions per square metre by 5% Establish baselines for all individual assets and monitor and report on energy, water, waste and CO 2 emissions for all UK portfolios Promote green travel plans to occupiers Use ISO certified contractors whenever possible Conduct occupier surveys for at least 50% of each portfolio each year Engage actively with at least one key industry body. As we progress through our programme, we anticipate reviewing these targets annually with the aim of achieving continuous improvement in the environmental performance of our buildings and our approach to sustainability and corporate governance. Summary policy 9

10 Chris Cooper Chief Executive, DTZ Investors Direct Phone: +44 (0) Mobile: +44 (0) Cushman & Wakefield D341 02/16