LaSalle Investment Management Global Sustainability Platform Annual Report At LaSalle Investment Management, we remain committed to the growth of our global sustainability platform as an integral part of our global business. LaSalle s Environmental, Social Responsibility and Corporate Governance Policy is consistent with our belief that ESG factors can have a positive impact on investment performance across companies, sectors, regions, and assetclasses. Further, we continue to believe that our ESG commitments are consistent with our fiduciary commitment to our investors to deliver superior investment returns. In the following document, LaSalle Investment Management is pleased to report on the progress we have made in 2012 with our global sustainability platform. Primary strategic objectives for 2012-2013 include a focus on increased portfolio performance benchmarking and tracking, development of performance improvement goals, and development of Social and Governance Guidelines for our global business platform. Further, we remain committed to reporting into a number of important global ESG reporting initiatives, including Greenprint, the United Nation s Principles for Responsible Investment mandate (UNPRI and the Global Real Estate Sustainability Benchmark (GRESB). In response to evolving market and client demands, we did make minor adjustments to our planned activities in 2012. Overall, we made measured progress on our key objectives, and are on the right path with our focus on performance measurements and reductions in energy and emissions. Sections I through III outline our progress in 2012, while Appendices A and B give a broader view of the five-year history of LaSalle s Global sustainability platform. I. Global Sustainability Committee 2012-2013 Objectives: G3. Enhance our Data Tracking Platform. In 2012, we were successful in aligning our data tracking platform with the global environmental tracking software systems that Greenprint has developed. We are integrally engaged with Greenprint in developing and improving their systems and recognize significant cost savings from using Greenprint s software platform. 2011-2012 Greenprint Report Results. LaSalle s Global Portfolio Energy and Emissions decreased across the 2010-2011 Like-for-Like portfolio (74 assets with at least two full years of data) as follows: In 2011, our Global Sustainability Committee established the following four global strategic objectives as important two-year growth initiatives for 2012-2013. G1. Double LaSalle s Greenprint Portfolio Asset Submission (from 137 to 275 global assets). G2. Development of Internal Energy/Carbon Reduction Targets G3. Enhance our Global Data Tracking Platform G4. Development of Social Responsibility (S) & Corporate Governance (G) Guidelines II. 2012 Progress and Accomplishments (G1) Greenprint Benchmarking + (G3) Data Platform Enhancements A key component of our global sustainability platform is our commitment to increased performance measurement and benchmarking. The Greenprint benchmarking platform is an essential tool for us as we track performance metrics initially Energy and Carbon, and later Water and Waste at a growing number of our global portfolio assets. G1. Double LaSalle s Greenprint Portfolio from 137 to 275 Global Assets for carbon and energy tracking. LaSalle s Global Sustainability Committee successfully met this goal by submitting 283 assets to Greenprint in Q3 of 2012., We continue to be challenged by the industry-wide issue of limited access to utility data for non-gross-leased assets. 2010-2011: Energy consumption decreased 4.1%, emissions decreased 4.0%. 2009-2010: Energy consumption decreased 2.7%, emissions decreased 2.7% We are pleased to see this progress in reductions in both energy and emissions across the global portfolio of assets we are tracking under Greenprint Global Reporting: UNPRI, GRESB In addition to engaging with Greenprint on creating best practices, we also engaged with UNPRI and GRESB on sustainability reporting as described below. 2013 Reporting Consultation with UNPRI: LaSalle continues to collaborate with the PRI to enhance the newly overhauled PRI reporting format. GRESB Fund Submission: Completed and submitted Japan Logistics Fund II to the 2012 GRESB survey. JLF II was recognized as an industrial sector leader for Asia Pacific region with a Green Star rating under the GRESB scoring system.
2012 Consultation with Global Real Estate Sustainability Benchmark (GRESB): The GSC analyzed the 2012 GRESB survey and provided constructive feedback to GRESB aimed at improving next year s survey. Other Accomplishments Lastly, we would like to highlight our regional goal setting and our global endorsement to CDP. Regional Strategic Action Plans (NA/EU/AP): Senior GSC Regional Leaders set annual regional ESG action plans every year. The regions report back progress at mid-year and year-end to the GSC. Overall, our teams are citing good engagement by the regional asset management teams on global and regional initiatives. CDP Signatory commitment. LaSalle, as of Q1 2013, is a signatory to the Carbon Disclosure Project (CDP). As a signatory, LaSalle s name is publically listed on the letter that is sent from CDP requesting carbon disclosure. Global Challenges 2012 While we are pleased with our successes, the following areas continue to be a challenge for the industry: Data Access and Availability: Our tenants directly pay and control the utilities at most of our global assets. Our ability as Landlord/Owner to access or control utility data is limited and/or prohibited. The collection of data remains challenging, and will remain so until global markets begin to insist on greater overall transparency and access to data by both owners and users. Reporting Requirements: The pace for sustainability engagement and reporting in the industry continues to increase. The GSC regularly considers the benefits of participating in new reporting requests to ensure that we maintain focus on our major strategic initiatives. III. 2013 Global Strategic Goals Our GSC has set the following seven goal initiatives. In addition to these goals, each region developed specific action items in order to accomplish the global priorities. 1. G1. Greenprint Portfolio: Carbon and Energy tracking. Continue to track energy and carbon for as many of our global assets as we can. Over time, we will include water and waste metrics where information is available. 2. G2. Development of Internal Energy/Carbon Reduction Targets. The GSC will consider, and if appropriate, make recommendations (quantitative or qualitative) to the Global Management Committee for setting global reduction targets. The Greenprint report will be used to identify low performing assets and target improving the energy performance at these assets. 3. G3. Enhance our Data Tracking Platform. Collection enhancements will mainly center on streamlining and automating data from our property managers. We will work with Greenprint to achieve this goal. 4. G4. Development of Social and Governance (S&G) Guidelines. The development of S&G guidelines for our global business will complement our Environmental (E) metric tracking, and help us integrate ESG principles into our internal investment decisions, as well as into the 3rd party partners, managers, consultants and vendors with whom we do business. 5. GRESB 2013 Survey Responses 2013 (select funds): LPF, Encore +, JLF II, and likely other LaSalle Funds yet to be determined. 6. UNPRI 2013 Report: Continue to engage with UNPRI on survey revisions in Q2 of 2013. Commence working on the LaSalle UNPRI submission in Q4 of 2013 for the early 2014 reporting deadline. 7. 2014 ESG Education and Training: Continue to educate and update our internal teams on our ESG strategic goals and facilitate asset management s Greenprint data submission. The purpose of the education and training is to make sustainability integral to our investment processes, and to make our asset and fund teams accountable for the sustainability programs within their respective funds and client portfolios. Guiding An in-depth look LaSalle Investment Management is committed to the following Guiding Reduce the environmental impacts of our business operations, in conjunction with our parent company Jones Lang LaSalle. View the expansive efforts of our business by at http://www.lasalle.com/sustainability /Pages/default.aspx; Reduce the environmental impacts of our clients properties and monitor the effects of climate change on those properties; Deliver the best solutions to our clients through meeting and/or exceeding the requirements of environmental laws and regulations; Drive thought leadership and innovation on sustainable property investments; and Collaborate with clients, tenants, property managers and other service providers to ensure the best sustainable solution to the management of properties while maximizing investment performance. Green Rating Alliance In February of 2011, LaSalle Investment Management became a partner with Green Rating Alliance. To date, we have completed 29 European Green Rating assessments. The aim of the Alliance is for real estate companies to join forces and exchange best practices to bring concrete solutions on sustainability to the property industry. The Green Rating assessment, available in 12 countries across Europe, is a decisionmaking tool which offers a new approach to assessing and improving the environmental performance of buildings.
Appendix A Key Sustainability Milestone Timeline: Global Sustainability Platform 2007-2013 The following timeline outlines the progress that we have made over the past few years and identifies our current focuses. Year Focus Key Milestones Completed Targeted 2007/ Regional GSC Global Sustainability Committee formed 2007 2008 Focus: Sustainability Guiding Principles developed 2007 Focus: Regional Certification programs and asset certifications (LEED, ENERGY STAR, Green Globes, BREEAM, Green Mark) 2008 Regional initiatives: North America, Europe, Asia Pacific 2008 2009/ Transition LaSalle GreenGuide developed (sustainable 2010 to a Global operations), distributed globally 2009 Platform Sustainability Global Strategic Plan (S5): Focus: S1: Energy and Carbon Reductions; S2: Sustainable Operations; S3: Benchmarking and Certifications; S4 Thought Leadership; S5 Social and Corporate Governance (S & G) 2009 LaSalle s Signatory to UNPRI 2009 LaSalle s Signatory to Greenprint: 137 global assets submitted to Greenprint 2010 LaSalle ESG Policy created 2010 Green Lease Guidelines created 2010 2011 Focus on LaSalle's 1st UNPRI Report submitted 2011 Global 2nd Submission to Greenprint's Data Collection 2011 Initiatives: Green Rating Alliance partner (select European assets) 2011 GSC Restructuring for greater ownership/efficiency 2011 Global G1-G4 (G4) Strategic Objectives 2012-2013 developed: G1: Greenprint Tracking of Enviromental Metrics for AUM; G2: Energy Reduction/Carbon Targets; G3: Continual Enhancements to Data Tracking Platform; G4 Development of ESG Guidelines for LaSalle, Fund Teams and Property Teams. 2011 2012 Focus on G1 Achieved: Double Greenprint Submission Global (from 137 to 275 global assets) 2012 Strategic G2 Achieved: Researched market to understand Goals: options for setting Energy/Carbon Reduction Targets 2012 United Nations Principles for Responsible Investment (UNPRI) In July 2009, LaSalle Investment Management became a signatory to the UN s PRI investor initiative (see UNPRI s homepage at http://www.unpri.org/) and we have since submitted our first PRI report, which documents our 2010 accomplishments. LaSalle Investment Management s alignment with this global mandate marked an important commit - ment by the Firm to begin a process over time wherein ESG criteria became integral to the investment decision criteria of the Firm. As part of our PRI alignment, we have made a commitment to report on our progress toward the six principles of responsible investing. Greenprint global portfolio In June 2010, we committed 137 global assets to the Greenprint Index the first carbon footprint index of Greenprint Foundation (see http://www.greenprintfoundation.org/ Default.aspx). The Foundation is comprised of several of the larger global investment managers and includes Jones Lang LaSalle s CEO, Colin Dyer, as a founding member of the Board. The organization s primary focus is on the energy (carbon) reduction of the portfolio assets of its founding members. LaSalle Investment Management s contribution to this pilot Index represents our first meaningful step toward measuring and encouraging energy reduction in our global portfolios. LaSalle Investment Management achieved a 2.7% (2009-2010) and a 4.1% (2010-2011) year-onyear reduction in energy and carbon usage for its benchmarked assets and doubled its submission from 137 to 275 global assets in 2012. G3 Achieved: Decision to make Greenprint Data Tracking Platform and Enhancements made to data collection 2012 G4 Achieved: Started Developing S & G Guidelines 2012 2013+ Further G1 Target: Continue to submit and add assets to progress Greenprint 2013+ on G1-G4 G2 Target: Develop Internal Energy/Carbon Strategic Reduction Targets 2013 Goals: G3 Target: Conintue to enhance Data Platform 2013+ G4 Target: Development of S & G Guidelines 2013
Appendix B Overview of LaSalle s Sustainability Platform: 2007-2013 LaSalle s Sustainability Guiding LaSalle s primary responsibility in all of its activities is to deliver superior investment results for our clients. In our pursuit of superior investment performance, we also believe that environmental, social responsibility, and corporate governance (ESG) best practices are consistent with enhancing long-term investment performance for our clients investments. LaSalle s operating philosophy with respect to ESG is to set policy and strategy at the global level, and empower the regional and local teams to develop initiatives and priorities appropriate for each country. LaSalle is committed to the following Guiding Reduce the environmental impacts of our business operations, in conjunction with our parent company Jones Lang LaSalle. Reduce the environmental impacts of our clients properties, and monitor the effects of climate change on those properties; Deliver the best solutions to our clients through meeting and/or exceeding the requirements of environmental laws and regulations; Drive thought leadership and innovation on sustainable property investments; and Collaborate with clients, tenants, property managers and other service providers to ensure the best sustainable solution to the management of properties while maximizing investment performance. Competitive Requirements and Client Demands: In each of our global regions, but increasingly from large European investors, we are seeing a requirement for LaSalle to provide ESG (Environmental, Social, and Corporate Governance) policies, measurement and performance data, and compliance with emerging, investor-driven, best practice ESG reporting guidelines. The requests appear in RFPs and from investors as they consider our funds and separate account offerings, and are further supported by the new European Association, Investors in Non-listed Real Estate Vehicles (INREV), ESG reporting standards. It is noteworthy that it is no longer sufficient for these ESG leading investors that LaSalle simply have policies in place; rather, they are seeking evidence of implementation. In an increasingly competitive environment, our objective is to meet and exceed these requirements as we pursue new and additional investor capital allocations. LaSalle s Global Sustainability Committee: LaSalle s sustainability initiatives are led by the 21-member Global Sustainability Committee. The GSC is chaired by the nonexecutive chairman of LaSalle, with the sponsorship of LaSalle's CEO and Global Management Committee. The committee members represent each of our global regions and all areas of the business, including senior business leaders, strategy and research, acquisitions, fund managers, asset managers, client services, and public securities, as well as LaSalle s global general counsel, chief compliance officer, and global sustainability officer. The members of the GSC are responsible for disseminating the sustainability policies, procedures and strategies developed by the GSC. With regional senior management, the GSC is responsible for developing local initiatives, implementing best practices, and integrating sustainability into our investment activities, aligned with investment performance and client contractual obligations. Responsible Property Investing: LaSalle s ESG Policy: In 2010, LaSalle developed our global ESG Policy, which can be found on our website at www.lasalle.com/sustainability/pages/our Commitment.aspx. LaSalle s Environmental, Social Responsibility and Corporate Governance Policy is consistent with our beliefs that ESG factors can have a positive impact on investment performance to varying degrees across companies, sectors, regions, asset-classes and timeframes, and should be considered when evaluating real estate securities, real estate-related investments, and the management of real estate assets. LaSalle s Sustainability Industry Involvement and Accomplishments: LaSalle s commitment to sustainability is evident through the organizations in which we actively participate, and through the responsible investment initiatives which we implement throughout the life cycle on our investments. The broader global components of LaSalle s sustainability platform are listed below. Competitive and legislative requirements In each of our global regions, but increasingly from large European investors, we are seeing a requirement for LaSalle Investment Management to provide Environmental, Social, and Corporate Governance (ESG) policies, measurement and performance data, and compliance with emerging, investor-driven, best practice ESG reporting guidelines. The requests appear in RFPs and from investors as they consider our funds and separate account offerings, and are further supported by new ESG reporting standards for 2012 proposed by the European Association for Investors in Nonlisted Real Estate Vehicles (INREV). It is noteworthy that it is no longer sufficient for these ESG leading investors that LaSalle Investment Management simply has policies in place; rather, they are seeking evidence of implementation. In an increasingly competitive environment, our objective is to meet and exceed these requirements as we pursue new and additional investor capital allocations. LaSalle Investment Management seeks to track and comply with the changing energy and sustainability regulatory requirements, which are occurring at an increasing rate within each of our global regions. When developing or refurbishing an asset, our teams take into account mandatory requirements, and evaluate the viability of incorporating further sustainability measures into the design and construction of the asset. For existing assets, we seek to closely monitor and comply with on-going sustainability tracking regulations, examples of which would include Energy Performance Certificates (EPCs) and the Carbon Reduction Commitment (CRC) requirements in the UK, as well as energy and sustainability disclosure mandates in the U.S. for New York and California.
United Nations Principles for Responsible Investment (UNPRI): In July of 2009, LaSalle Investment Management became a signatory to the United Nation s Principles for Responsible Investing (www.unpri.org/). In 2011, we submitted our first UNPRI report, which documents our 2010 accomplishments. LaSalle s alignment with this global mandate marked an important commitment by the firm to begin a process over time wherein ESG criteria (Environmental, Social, and Corporate Governance) become integral to the investment decision criteria of the firm. As part of our UNPRI alignment, we have made a commitment to report annually on our progress towards the UNPRI s 6 Principles of Responsible Investing. ULI Greenprint Center for Building Performance: GREENPRINT FOUNDATION REDUCING CARBON. BUILDING VALUE. In June of 2010, LaSalle committed 137 global assets (all regions, multiple property types represented) to Greenprint s first environmental tracking pilot. In 2012, we doubled our Greenprint submission to 283 assets. The ULI Greenprint Center is a worldwide alliance of leading real estate owners, investors, financial institutions and other stakeholders committed to improving the environmental performance of the global real estate industry with a focus on emissions and energy reduction. Greenprint includes, among others, Jones Lang LaSalle CEO, Colin Dyer, and LaSalle Chairman and Global Sustainability Committee Chairman, Lynn Thurber, as Greenprint board members. Greenprint s primary focus is upon the energy (carbon) reduction of the portfolio assets of its members. LaSalle s contribution represents a meaningful step towards measuring, benchmarking, and encouraging environmental reductions at LaSalle owned assets. Green Rating Alliance: In February of 2011, LaSalle became a partner with Green Rating Alliance. To date, we have completed 29 European Green Rating Assessments. The aim of the Alliance is for real estate companies to join forces and exchange best practices in order to bring concrete solutions on sustainability to the property industry. The Green Rating assessment, available in 12 countries across Europe, is a decision-making tool which offers a new approach to assessing and improving the environmental performance of buildings. Property Acquisitions and Sustainable Operations: Acquisition Checklists: When acquiring a new property, LaSalle utilizes environmental acquisition checklist guidelines adapted to specific country and regional requirements as guidance for evaluating property environmental performance. Material result findings from these environmental analyses are included in the acquisition underwriting, which is subsequently presented to the regional investment committees as part of the overall investment decision reviews. LaSalle s GreenGuide for Sustainable Property Operations: LaSalle has developed a guide for our portfolio and asset managers to educate them about a variety of low or no-cost sustainable operational Best Practices for our managed assets. LaSalle s GreenGuide was developed to help reduce energy and water consumption, increase recycling efforts, and reduce the overall carbon footprint of our managed real estate assets. In so doing, we anticipate that a further benefit of these efforts will be reduced operating expenses, increased valuations, and more competitive properties in their respective markets. For a copy please visit: www.lasalle.com/sustainability/pages/ GreenGuide.aspx LaSalle s Green Lease Guidelines: In 2010, we developed the internal Global Green Lease Guidelines for our Regional teams to use when negotiating tenant contracts at our direct investment assets. This voluntary Guideline mutually and beneficially promotes the acceptance and implementation of ESG issues for both LaSalle and our tenants. Sustainability Ratings and Certifications: LaSalle invests globally in five different property types office, multi-family, retail, industrial, and hotel. Our investments are located in 19 different countries, with varying investment structures, and varying control over property operations as defined by lease requirements (Gross and NNN leases). The criteria that we use in our decisionmaking process for ratings and certifications depend on the characteristics of the asset. For new developments, if there is an appropriate rating and/or certification system in the country in which we are developing, we endeavor to meet the highest appropriate sustainability level for that investment consistent with the strategic plan for the asset. For existing assets, if there is a regionally appropriate rating and/or certification for that property type, and we have some operational control at the asset, we then assess the viability of the appropriate sustainability rating/certification. To date, LaSalle has certified a growing number of new development and existing global assets under benchmarking programs such as LEED, Energy Star, Green Globes BREEAM and Green Mark. We have also developed case studies for select global assets, which can be viewed on our website: http://www.lasalle.com/ Sustainability/CaseStudies/Pages/ CaseStudies.aspx Tracking and Monitoring Sustainability Metrics: As with Sustainability Ratings and Certifications, LaSalle determines whether to track and monitor sustainability metrics based on characteristics of the investment asset. If we control and/or pay for a meaningful portion of the utilities at an investment asset, we seek wherever possible to have our property teams track the utility information. For many longer-hold assets, we track sustainability metrics in our Greenprint portfolio. Greenprint s software system compiles and stores the utility information for our global assets, allowing us to complete analysis on a property and portfolio basis, and to benchmark performance improvements over time. Green Statutory and Legislation Requirements: LaSalle seeks to track and comply with the changing energy and sustainability regulatory requirements, which are occurring at an increasing rate within each of our global regions. When developing or refurbishing an asset, our teams take into account mandatory requirements, and evaluate the viability of incorporating further sustainability measures into the design and construction of the asset. For existing assets, we seek to closely monitor and comply with ongoing sustainability tracking regulations, examples of which would include Energy Performance Certificates (EPC s) and the Carbon Reduction Commitment (CRC) requirements in the UK, as well as energy and sustainability disclosure mandates in the US for New York and California.