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Legal & General Investment Management (Holdings)

PRI reporting framework 2018

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Occupier engagement

PR 12. Proportion of property occupiers that were engaged with

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

12.1. Indicate the proportion of property occupiers your organisation, and/or your property managers, engaged with on ESG issues during the reporting year.

(in terms of number of occupiers)

12.2. Indicate if the following practises and areas are typically part of your, and/or your property managers’, occupier engagements.

12.3. Additional information. [Optional]

LGP believe that the only ways assets can become truly sustainable is if everybody involved in the ownership, management and occupation of an asset work together, in order to achieve common goals.  As such our tenant liaison programme is multi-faceted and involves different communication channels depending on the nature of each tenant and the extent of their in-house teams/ professional advisors.

For Multi-Let Properties we have found the following processes to be most effective:

  • Regular meetings –to discuss sustainability actions and issues on which landlord and tenant can co-operate. Minutes are taken and actions recorded.
  • Data – sharing of Quarterly Sustainability Reports on every asset with all involved (occupants and suppliers).
  • Annual Sustainability Action Plans (ASAP) – agreed with tenants and progress reported quarterly.
  • Tenants Handbooks - Guidance for tenants available on our website and sent to every tenant periodically.
  • Tenant refurbishments and fit outs (Licenses to Alter) –Plans checked by our managing agents and feedback given

For FRI tenants discussions are held with tenants by our managing agents and LGP asset managers. Our aim is to share data and establish if as a landlord we can help commission energy/ sustainability audits or help fund any improvement measures, where capital is a barrier.  All discussions and tenant comments are recorded on a handheld tool, which is then downloaded to a website.

PR 13. Proportion of green leases or MOUs referencing ESG issues

13.1. Indicate the proportion of all leases signed during the reporting year that used green leases or the proportion of Memoranda of Understandings (MoUs) with reference to ESG issues.

(in terms of number of leases or MoUs)

13.2. Additional information.

In order to ensure our principles and requirements are embedded from the start of the leasing process we amended our standard lease format in 2011 to include 'green' clauses, that demonstrate our continued commitment to sustainability. Our legal panel are issued with a memorandum of green lease principles that must be considered in the drafting of all standard leases, including clauses relating to the use of environmental contractors and upholding Energy Performance Certificates (EPCs). With a sustainability strategy centred on maximising the efficiency and sustainability of our portfolio, we recognise the fundamental importance of working with tenants to take these changes to the next level. Conditions set out in our green lease clauses include the agreement by both parties to meet regularly to discuss such issues as sharing energy, water and waste data and introducing annual action plans.

However despite that fact that we inlcude our green leases claues in ALL leases put to tenants legal advisors, the majority of tenants/ tenant's lawyers, delete them and refuse to sign them.  This is particularly true in the retail sector where tenants lawyers have reported that they do not have the fees provided to even be able to consider them!