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Universities Superannuation Scheme - USS

PRI reporting framework 2018

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Outputs and outcomes

PR 15. ESG issues affected financial/ESG performance

New selection options have been added to this indicator. Please review your prefilled responses carefully.

15.1. Indicate whether your organisation measures how your approach to responsible investment in property investments has affected financial and/or ESG performance.

15.2a. Describe the impact on the following.

Describe the impact on:
Impact
Funds' financial performance

15.2b. Describe the impact on the following.

Describe the impact on:
Impact
Funds' ESG performance

15.3. Describe how you are able to determine these outcomes.

We include ESG issues into the business planning process e.g. the impact of low graded EPCs.  We will be entering the GRESB 2018 assessment.  We also have an active programme which includes the setting and monitoring of waste, water and energy targets against our largest assets. 


PR 16. Examples of ESG issues that affected your property investments

16.1. Provide examples of ESG issues that affected your property investments during the reporting year.

ESG issue
          Poorly rated EPC grades.
        
Types of properties affected
          The whole portfolio albeit a relatively small percentage.
        
Impact (or potential impact) on investment

From 1 April 2018 we will not be able to lease any premises with an EPC below an E. 

If we were to sell the asset and it had a poor grade then this may affect the value.

This may restrict us from leasing assets with poor grades.

Also, a tenant may not wish to occupy an asset with a poor grade.

Activities undertaken to influence the investment and the outcomes

We have reviewed where our poorly rated EPCs are located and have created a programme whereby they are improved on refurbishment. 

ESG issue
          Asbestos within the building fabric.
        
Types of properties affected
          An acquisition of residential apartments.
        
Impact (or potential impact) on investment

We were not comfortable with proceeding until we were assured that the asbestos was known and was being appropriately managed.

Activities undertaken to influence the investment and the outcomes

We contacted the vendor who was able to provide this information.

ESG issue
          Diversion of waste from landfill.
        
Types of properties affected
          Single shopping centre, Scotland.
        
Impact (or potential impact) on investment

This Shopping Centre is the only asset in our portfolio where we do not divert all (i.e. 100%) waste from landfill.

We strive to divert all our waste therefore this single asset is a drag on our overall waste performance.

Activities undertaken to influence the investment and the outcomes

The reason that we cannot divert waste from landfill at this asset is that in Scotland there are more limited recycling facilities, depending on location, to England (particularly the south east).  

We have enquired with the local waste disposal contractor if this situation can be improved. They have told us that they are currently constructing plant facilities so that full diversion from landfill can occur in the near future.

ESG issue
          Provision of cycle storage facilities.
        
Types of properties affected
          Office multi let buildings.
        
Impact (or potential impact) on investment

There is an expectation from tenants, particularly within Central London offices, that internal (i.e. basement) secure cycle bays and showers are provided.

There are obvious health benefits to cycling, supporting the wellbeing of the tenant and providing an alternative mode of transport.

Very often car parking spaces within assets are limited, or do not exist, making the provision of cycle bays even more important.

As a landlord if we provide cycling facilities we are also encouraging the improvement in air quality and reduction in carbon emissions.

 

Activities undertaken to influence the investment and the outcomes

In the last year we have improved the cycling facilities (i.e. more secure bays, improved access and shower facilities) at three of our assets.

We are reviewing where else across our portfolio further improvements, or additional facilities, can be included.

Linked to a shopping centre we sponsored a cycle training programme for students from the University.

16.2. Additional information. [Optional]


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