The principles of Schroder Real Estate's responsible investment approach are set out publicly on the Schroder Real Estate website with the policy document referred to above in PR01.2 on our website at:
Schroders seeks to ensure sustainability is embedded throughout the investment management process. We believe this should deliver improved long-term returns, contribute to tenants' business performance and create tangible benefits to the local communities and societies in which they operate. A comprehensive approach should deliver investment resilience.
We maintain an environmental management system aligned with ISO 14001 (the internationally agreed standard for such systems) to manage the deliverable actions derived from our Sustainable Investment Policy. The Policy is revised annually and approved by the Investment Committee. Our framework applies to all aspects of real estate investment including acquisition due diligence, asset management, property management provided by third parties, refurbishments and developments.
We participate in the Global Real Estate Sustainability Benchmark "GRESB" which is the global standard for assessing ESG performance of real estate funds and companies.
Our overall aim is to manage sustainability credentials to understand assets, prioritise improvements and achieve energy reduction. Examples of ESG commitments and targets within this approach are as follows:
E: Energy Performance Certificate risk profiling is undertaken to ensure appropriate building ratings in the market context and in the UK to manage Minimum Energy Efficiency Standards Regulations 2015: we have an EPC "D" rating ambition for UK assets.
S: Training employees and principal managing agents to develop their general and Policy understanding
G: We review property manager service levels to ensure sustainability risks, opportunities and responsibilities are adequately addressed and that services provided align with Schroder requirements.
Sustainability objectives are integrated into financial objectives for assets, from property management to investment level, to deliver space befitting occupiers and investor returns. Sustainability considerations are discussed with the investment committee to develop our responsible investment approach.
Our approach can be best demonstrated by looking at examples of our activity over 2018:
Case study: Energy target achieved for the UK portfolio
Our sustainability programme involves driving continual improvement in building operations, which includes setting energy targets for each building. For the UK portfolio we targeted a 6% consumption reduction over two years to 2018. Over the period we implemented a number of initiatives including LED lighting, voltage optimisation and improving the efficiency of heating, ventilation and air conditioning systems supported by general improvements to building management. The programme achieved an 8.1% reduction which equates to 3.8 million kWh, £340,000 savings and 930 tonnes CO2-equivalent avoided. As a result of this achievement, we were named as finalists in the energy efficiency category of the 2019 Edie Sustainability Leaders Awards together with our sustainability consultants Evora Global.
Case study: LEED Gold renovation, Helsinki, Finland
In Helsinki, the renovation of an office held in one of our portfolios will see sustainability and wellbeing credentials improve; it is our ambition to achieve LEED (Leadership in Energy and Environmental Design) Gold, an internationally recognised green building certification. The refurbishment behind the listed facade will create 3,200 square metres of high quality space. The scheme provides for restaurants on the ground floor opening into a new glazed atrium shared with office tenants on six upper floors. The atrium will provide fluid, light, working, community and circulation spaces. New efficient electrical, heating and ventilation systems will further support internal environmental comfort for tenants. The renovations are scheduled for completion in late 2019.
Case study: Waste management and Energy reduction, Cardiff UK
Mermaid Quay, Cardiff is a waterfront retail and leisure scheme that is committed to reducing its carbon footprint, reducing waste and energy consumption, whilst increasing recycling and reducing costs.
A new waste solution has been implemented, which includes installing a food digester to reduce volume, moisture and weight of restaurant food waste by approximately 70%. This has lowered disposal costs and vehicle movements, reducing service charge costs to businesses in the scheme from £126,000 to £95,000 per annum. The digestate matter produced is used as “soil enhancer” in Mermaid Quay planters and for landscaping and farming. By 2019, 150 tonnes of food waste has been collected and digested down to 50 tonnes of compost.
Mermaid Quay has achieved 100% diversion of general waste from landfill to a waste-to-energy facility situated 3 miles away in Cardiff Bay, and increased recycled material from 18% in 2015 to 55% of total waste in 2018. As a result, general waste reduced by 40% from 2015 to 2018.
To reduce the scheme’s carbon footprint, Schroders implemented a phased LED lightbulb conversion which resulted in an electricity consumption decrease of 120,144KW and cost saving of £30,000 per annum. Future improvements include the installation of electric vehicle charging points, which will be introduced to the car park in 2019.