Environmental, social and governance ( ESG ) matters are an important part of our role as responsible and

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1 Environmental, Social and Governance Policy November 2014 Overview Environmental, social and governance ( ESG ) matters are an important part of our role as responsible and effective investment managers. Cordea Savills believes that awareness and consideration of ESG issues throughout our investment process are a key part of our primary responsibility towards investors, clients, employees and other stakeholders, as well as those in the wider community. Our corporate vision and values are consistent with our objective to encourage, promote and enforce good corporate governance and awareness of ESG issues across our business activities wherever possible. Cordea Savills Corporate Vision To be the property investment manager of choice recognised for our investment performance and client focus Cordea Savills Corporate Values Our business is built on four values which determine how we conduct ourselves on a daily basis: Integrity by acting in the best interests of our clients at all times Diligence in applying rigour and processs to manage risk Accountability is integral to the management and governance of our business Innovation in finding solutions for our clients An ESG Committee has been appointed for the development, promotion and implementation of appropriate policies to meet this objective; its responsibilities are covered later in this policy. There are sound practical reasons for embracing good corporate citizenship and considering the environmental impact of our business activities, and consequently Cordea Savills is a signatory to the United Nations Principles for Responsible Investment (UNPRI). The principles entail a set of internationally agreed guidelines which aim to help institutional investors incorporate ESG issues into investment decision making and ownership practices. The principles are based on the notion that ESG issues can affect the performance of investment portfolios and should therefore be considered alongside traditional financial analysis. This aligns with our belief that, as an investment manager, there are pragmatic as well as ethical reasons for the considerationn of ESG issues in our investment making decisions. Further details of the UN Principles can be found in the last section of this policy. Core elements of Cordea Savills ESG Policy Environmental Sustainability Cordea Savills adopts best practice procedures for the promotion of sustainability issues across its business. We seek to engage with and, where possible, provide training for our staff and clients to proactively lessen their impact on the environment. Social Equity Cordea Savills recognises that our business has social obligations to our employees and trading partners. We also accept that the operation of our business should include consideration of the communities in which we work. Responsible Corporate Governance Cordea Savills undertakes to observe a set of fundamental standards of sound management and good business conduct. Reporting and Disclosure Cordea Savills is committed to transparent monitoring and disclosure of ESG aims and asset performance for the wider business and investment community.

2 Environmental Sustainability Driving Environmentally Sustainable Investment Practices The combination of changing investor sentiment, legislative pressures and technological advances means the issue of sustainability is becoming more prominent in society and in the property investment industry in particular, due to the significant carbon footprint of the real estate sector. Cordea Savills recognises that, as a property investment manager, it is increasingly important for us to focus on sustainability objectives; these include sustainable development, energy, waste, water and carbon monitoring and reduction. We endeavour to apply these objectives at each stage of our investment process: stock selection - review of energy performance benchmarked against industry standard purchase due diligence - Green due diligence undertaken asset management - energy efficiency programmes - water efficiency programmes - waste management plans - consideration of Energy Management Systems (EMS) where appropriate - reduction targets and performance monitoring disposal strategies - the core Cordea Savills ESG principles are to be evaluated within disposal strategies We are also committed to engaging with internal and external parties including employees, clients, tenants, project partners and service providers in order to raise awareness of the environmental impact of our activities. Where possible, we also endeavour to encourage our stakeholders to proactively lessen their impact on the environment. Investment Management As an investment manager, our prime objective is to meet the investment return requirements of our investors whilst protecting them from inappropriate risk. We recognise that attitudes towards sustainability may impact investment risk and return, and both asset and fund level performance. We seek to identify both opportunities for, and the inherent risks of, sustainable practices as part of our investment process. Opportunities may include tenant engagement to help meet sustainability targets, the installation of greener technology and infrastructure within an asset, or participating in benchmark surveys and reporting at both a fund and corporate level. Cordea Savills evaluates and manages the impact that sustainability has on investment performance; for example this may include depreciation costs due to additional capital expenditure or the ability to let or sell a property. We seek to manage these elements in a manner appropriate to each fund or mandate s risk and return profile. For all investment management mandates Cordea Savills aims to: Meet and where possible exceed the minimum requirements of any relevant planning, construction or environmental legislation; Consider the sustainability credentials of an asset or development prior to purchase and include details in the papers presented to the Transaction Advisory Committee; During ownership, ensure sustainability forms part of each property s asset plan, the progress of which is regularly monitored by the Portfolio Management Committee; Collect and analyse energy consumption data for all properties where we have control of the supply, and attempt to do so where we do not; Consider Green Leases or a Memorandum of Understanding on Sustainability with tenants where commercially viable, to formalise co-operation between landlord and tenant to improve sustainability; Engage with tenants and other stakeholders to promote sustainability and investigate opportunities to reduce the environmental impact of each asset; Monitor energy and sustainability legislation for changes and potential financial risk to the portfolio; Take a proactive stance with regard to regulatory changes, anticipating and exceeding requirements to preserve long-term value; Provide annual reports to investors indicating carbon emissions and mitigation undertaken during ownership; and Disclose all consumption data for reporting under GRESB and UNPRI with results issued to investors.

3 Environmental Sustainability (continued) Policy into practice: Cordea Savills as a sustainable business We are aware of the impact of our own corporate activities on the environment. Whilst the direct impact of our operations may be low compared to many industries, steps have been taken to measure our energy consumption and waste production, with the intention of identifying possible reductions or improvements in efficiency. As a subsidiary of Savills Plc, Cordea Savills is committed to the Savills Group Environmental Policy, the adherence to which has led to an ongoing programme of office-based initiatives including reduced paper wastage, sourcing recycled or sustainable paper products, powering down idle desktop equipment and encouraging sustainable commuting. The London office s move to a new, greener building in 2013 has led to the introduction of more initiatives designed to reduce waste and carbon emissions. Initiative Full video and teleconferencing facilities in all meeting rooms in London and European offices Fewer printers and smart or follow me printers Objective Discourage overseas, interoffice air travel Waste paper reduction Dual monitor screens Reduction in printed and waste paper 100 bicycle racks Encourage employees to commute by bike 10 showers with eco-shower heads Grey water system: water from rain water collection and kitchen/toilet sinks is treated onsite and reused to flush toilet systems Reduction of water waste for those employees who cycle, run or walk to work Reduction of water waste The London office building has been rated BREEAM Excellent, and has an EPC rating of B with a score of 40, exceeding the minimum requirement by 42%. It has also been awarded Forest Stewardship Council (FSC) project certification. 33 Margaret Street s water and waste facilities have been specially developed with sustainability in mind. The building boasts a green roof featuring solar panels and a soil ecosystem to minimise rain water run off and encourage bio diversity. Furthermore 0% of rubbish generated in the building is sent to landfill. Improvements to the sustainability of the building are proposed and reviewed annually by a group comprising representatives from different parts of the business. The consideration of ESG matters also extends throughout our European offices. Our Munich office features floor to ceiling windows for increased natural light, noise insulated work spaces and a cooling system using water in place of other toxic refrigerants. There are videoconferencing facilities throughout the office to decrease the necessity for overseas travel and a number of initiatives are in place to promote staff well-being, such think-tank noise insulated rooms and the opportunity to work from home, reducing the need to travel to the office. The Munich office s building has been awarded the EU GreenBuilding-Zertifikat due to its new, hybrid, double façade which allows natural ventilation, and automated lighting, cooling and heating systems for minimum energy consumption. The primary energy demand of the building is 56% lower as required by the German Energy Saving Ordinance (EnEV). Many of these green features and initiatives are prioritised in our Milan and Paris offices, including videoconferencing, separated waste collection for recycling and the use of bio detergents for cleaning. The ESG committee includes members from international office locations who are responsible for encouraging the consideration of ESG issues and promoting awareness of and adherence to the ESG policy. We continually aim to incorporate sustainability into the training and development for all employees and include sustainability linked objectives where appropriate.

4 Social Equity Ensuring Social Equity Cordea Savills recognises that our business has social obligations to our trading partners and employees, and that the operation of our business should include consideration of the communities and the broader society in which we function. We aim not only to meet legislative obligations but, where possible without prejudicing our investors, exceed these requirements by proactively engaging and promoting the importance of ESG issues. As such, a focused intranet group is used to communicate and share information on sustainability topics, corporate projects and reports, as well as new green initiatives being introduced by the ESG Committee, policies and terms of reference. All new employees are invited to the group, providing an accessible means for the discussion of ESG issues within the Cordea Savills corporate community. Personal Development and Welfare Cordea Savills encourages its employees to acquire skills and knowledge through training and volunteering opportunities, where new skills can be developed and applied, such as fundraising, communication, leadership, teamwork and problem solving. Cordea Savills aims to support the personal development of its staff and encourages employees to develop a sense of personal responsibility and confidence, both at work and in other areas of their lives, through charity volunteering initiatives. In 2013, the company introduced an Employee Assistance Programme (EAP), which is available to all employees and pays particular attention to staff well-being. Through EAP, employees are offered unlimited, free access to practical information, referrals to local services and counselling on a wide range of personal issues. The service is confidential, available 24/7, and easily accessible. Any advice given is completely impartial, since the programme operates completely independently from Cordea Savills and does not represent any particular organisation. Impact on the Community Cordea Savills encourages its employees to volunteer their time for charitable causes. Employees can contribute to charitable activities through specific volunteer leave which is available to all employees on request. We also have a Charitable Giving Committee, which is a delegate of the Cordea Savills Executive Committee and also reports into local management committees. The Charitable Giving Committee meets on a quarterly basis to discuss and consider charitable initiatives in which the firm and its staff can participate. Health and Safety The company ensures adequate controls are provided for health and safety risks arising from work performed for and on behalf of the company, and at properties owned or controlled by the company. We seek to prevent accidents and cases of work-related ill health and provide adequate control of health and safety risks arising from work activities. We engage with employees on health and safety matters and provide or procure advice or training as appropriate. Cordea Savills also ensures safe and healthy working conditions are maintained and implements appropriate emergency procedures for its premises. A full health and safety review is included in the induction of each new employee, and a copy of the Savills Group Corporate Health and Safety policy is accessible to all staff via our intranet. Commercial Relationships Cordea Savills implements and adheres to its own Conflicts of Interest policy as well as subscribing to the Savills Group Conflicts of Interest, Anti Corruption and Environmental policies. We carry out business legally and ethically wherever we operate, never offer, give or receive bribes, and vow never to knowingly be party to any kind of corrupt activity. Business partners are selected on an impartial, best execution basis which considers price, quality, performance and suitability of product, services or technical expertise.

5 Corporate Governance Embedding Responsible Corporate Governance Principles of good governance Cordea Savills believes that it is important to be a responsible business and observes fundamental standards of good management and conduct. These entail: Fair, honest and transparent business practices in our relationships with our customers, employees and suppliers; Respecting the confidentiality of client information; and Obeying the rule of law in all of the jurisdictions in which we operate. The Cordea Savills LLP Members Committee (MC) and the Cordea Savills Executive Committee (EC) are collectively responsible for the long-term success of Cordea Savills. The responsibilities of the MC and the EC include: setting the company s strategic aims; providing the leadership to put them into effect; supervising the management of the business; reporting to the Board of Savills Plc on their stewardship; this includes ensuring that objectives are discussed, satisfactorily communicated and mutually understood with the Board of Savills Plc; and determining the nature and extent of the significant risks they are willing to take in achieving their strategic objectives. The MC and EC maintain sound risk management and internal control systems. It is also the responsibility of all management to actively promote ethical and responsible decision-making and to recognise legal and other obligations to all legitimate stakeholders; these include employees, clients and the community as a whole. The Board of Cordea Savills Investment Management Limited (CSIM) The board of CSIM act as guardian to the investment process and are a key part of the risk management framework at Cordea Savills. It is chaired by the CEO and its membership consists of the senior management team. As well as establishing and enhancing investment policies, processes and procedures, it monitors all stages of the investment process from the production of our house view of countries and markets to reviewing investment opportunities Fund teams and management bodies Cordea Savills funds are overseen by individual management boards and there are further oversight structures in place for specific forms of investment vehicles e.g. Italian SGR and German Spezialfonds. It is encouraged that, during the course of 2014, each fund team will comprise an ESG champion responsible for providing regular ESG updates at asset level, and a senior decision maker who has responsibility for ESG issues within each fund team. During 2014, Cordea Savills plans to encourage each fund to implement a Sustainability Building Management Committee. This should involve building managers, tenants, and other stakeholders working collaboratively on improving the efficiency of assets. Cordea Savills encourages each fund team to ensure that ESG requirements are incorporated within all building management contracts. The ESG Committee The committee provides leadership and guidance on ESG issues. The group is made up of members of staff from each business function and includes the CIO and Head of Investment, Europe. The group reviews the efficacy of ESG policies and procedures to ensure that they remain in line with best practice.

6 ESG Disclosure Transparent ESG Reporting & Disclosure Cordea Savills has developed a robust reporting strategy to disclose the emissions related to the managed portfolio, illustrate how these associated emissions are being reduced and report performance to the wider investment community. As a UNPRI signatory, Cordea Savills follows the mandatory annual reporting and assessment process. More information on these reporting requirements is available on the UNPRI website, and the Cordea Savills report, submitted on an annual basis (permitting a one year grace period from sign up date) will also be available online for public viewing, furthering our commitment to increase transparency around our ESG activities: Internal and Investor Corporate Reporting Quarterly and annual reporting is undertaken on a fund and corporate level. Information is collated and reported for: Energy consumption - electricity, gas, oils, diesels, etc. Water consumption Waste consumption - amounts to landfill and recycling These reports also illustrate the ongoing historic performance of assets, in order to track reductions and challenges on an asset and fund basis. GRESB Disclosure Cordea Savills recognise that taking a responsible approach to property investment can protect and enhance the long term performance of the funds we manage. Measurement and disclosure are vital parts of Responsible Property Investment, and the participation in Global Real Estate Sustainability Benchmark (GRESB) provides an effective means to achieve this. GRESB provides a means of measuring a fund s environmental performance and benchmarks this against the environmental and social performance of 450 other real estate companies and funds. GRESB is a science-based benchmark which measures the sustainability performance of property portfolios, based on an annual survey produced by GRESB. This industry-led initiative has the goal to enhance shareholder value by increasing transparency in environmental and social practices in the property sector. All Cordea Savills managed funds are encouraged to annually report their environmental and social performance to GRESB, thereby; Meeting Cordea Savills commitment to Responsible Property Investment measurement and reporting; Supporting the funds individual sustainability strategies; and Monitoring and managing exposure to the risk of obsolescence and occupancy cost. More information on GRESB can be found at

7 ESG Disclosure (continued) UNPRI (Principles for Responsible Investment) Disclosure As investment managers, we have a duty to act in the best interests of our investors. In this fiduciary role, we believe that ESG issues can affect or influence the performance of investment portfolios, and should therefore be considered alongside more traditional financial factors in investment decision-making. In October 2014, Cordea Savills LLP became a signatory to the United Nations Principles for Responsible Investment (UNPRI). In doing so, Cordea Savills intends that, by following and applying the voluntary and aspirational principles central to UNPRI, we will improve our ability to meet commitments to investors as well as better align our investment activities with the broader interests of society. We will adopt and implement these guidelines, where consistent with our fiduciary responsibilities, and will commit to evaluate the effectiveness and strive to improve the way in which we adhere to the principles over time. Therefore, where consistent with our fiduciary responsibilities, we will: Incorporate ESG issues into investment analysis and decision-making processes; Be active owners and incorporate ESG issues into our ownership policies and practices; Seek appropriate disclosure on ESG issues by the entities in which we invest; Promote acceptance and implementation of the Principles within the investment industry; Work together to enhance our effectiveness in implementing the Principles; and Report on our activities and progress towards implementing the Principles. The Principles for Responsible Investment were developed by an international group of institutional investors, reflecting the increasing relevance of environmental, social and governance issues to investment practices. The principles were agreed by the United Nations Secretary-General in More information on the UNPRI can be found at Important notice This document has been prepared by Cordea Savills. This document may not be reproduced in any form without the permission of Cordea Savills and to the extent that it is passed on care must be taken to ensure that this is in a form that accurately reflects the information presented here. Whilst Cordea Savills believe that the information is correct at the date of this document, no warranty or representation is given to this effect and no responsibility can be accepted by Cordea Savills to any intermediaries or end users for any action taken on the basis of the information. Cordea Savills LLP is a limited liability partnership, registered in England No. OC Registered office: 33 Margaret Street, London W1G 0JD.