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Universities Superannuation Scheme - USS

PRI reporting framework 2018

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Pre-investment (selection)

PR 04. Incorporating ESG issues when selecting investments

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

04.1. Indicate if your organisation typically incorporates ESG issues when selecting property investments.

04.2. Provide a description of your organisation's approach to incorporating ESG issues in property investment selection.

The risks of ESG impacts are investigated when considering direct acquisitions.  Any material impacts which have a financial bearing are mitigated following purchase against agreed key performance indicators.

ESG impacts are an important consideration within our pre-investment process.  We carry out detailed due diligence, in line with our Responsible Property Investment Policy commitment of “investigating the risk of environmental and social impacts when considering direct acquisitions and aiming to mitigate them following purchase”.

04.3. Indicate which E, S and/or G issues are typically considered by your organisation in the property investment selection process, and list up to three examples per issue.

ESG issues

Description [OPTIONAL]

          A Phase I Environmental Audit will always be undertaken as part of any acquisition to ensure we fully understand any contaminated land risks.

Description [OPTIONAL]

          A flood risk assessment will always be undertaken to ensure the property is not at risk.  The vendor is also asked if they are aware if flooding has ever occurred at the property.

Description [OPTIONAL]

          An Energy Performance Certificate (EPC) will always be required as part of any transaction.  The vendor is also asked what energy efficiency improvements have been undertaken at the property.

Description [OPTIONAL]

          A copy of the landlord/tenant meeting minutes will always be asked for to understand tenant sentiment.

Description [OPTIONAL]

          If the property is considered to be in an area where access is constrained we may seek from the vendor a green travel plan.  We also encourage bike storage and changing facilities.

Description [OPTIONAL]

          In a recent residential acquisition we looked at what procedures were in place if a tenant were to fall into arrears, ensuring a grace period was in place and assistance was provided where possible.

Description [OPTIONAL]

          As part of our due diligence we ensure a robust anti-bribery and corruption policy is in place, and it is being enforced.

Description [OPTIONAL]

          Again, as part of our due diligence we also ensure a robust governance structure is in place, and it is being enforced.

Description [OPTIONAL]

          Our legal team particularly look at the regulatory framework relating to acquisitions. This ensures the property purchase, condition and day to day operation does not fall foul of any regulatory requirements.

04.4. Additional information. [Optional]

PR 05. Types of ESG information considered in investment selection

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

05.1. Indicate what type of ESG information your organisation typically considers during your property investment selection process.

05.2. Provide a brief description of how this ESG information was incorporated into your investment selection process.

An example of raw ESG data we explore prior to acquisition is energy consumption. The data enable us to understand better the efficiency of the asset, what parts are the responsibility of the landlord and the tenant, what potentially could be done to make the asset more efficient, and whether the ownership will affect the scheme under the Carbon Reduction Commitment.

Environmental Consultants are typically appointed as external advisors to undertake environmental Due Diligence.

Further case studies are outlined in PR4.3 and PR.16.


PR 06. ESG issues impact in selection process

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

06.1. Indicate if ESG issues impacted your property investment selection process during the reporting year.

06.2. Indicate how ESG issues impacted your property investment deal structuring processes during the reporting year.

06.3. Additional information.