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Ashmore Group plc

PRI reporting framework 2020

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Post-investment (monitoring and active ownership)

Overview

PR 08. ESG issues in post-investment activities

08.1. Indicate if your organisation, and/or property managers, considers ESG issues in post-investment activities relating to your property assets.

08.2. Indicate whether your organisation, and/or property managers, considers ESG issues in the following post-investment activities relating to your property assets.

          Sustainability certifications
        

08.3. Describe how your organisation, and/or property managers, considers ESG issues in post-investment activities related to your property assets.

Considering the most important post-investment activity is the construction of the real estate projects and that in this activity the ESG risks can be materialised, the consideration and management of those same issues during the construction stage is vital for our business.

The first post-investment activity is to pass the covenants and conditions precedent agreed with the project management team to coordinate with them the monitoring and management of the construction site and its activities. The ESG team tracks, on a monthly basis, the environmental, occupational health and safety, labor and community activities aligned with the standards stated in our AAIF. This information is the main input to develop a data based analysis of the ESG performance across projects. Our methodology includes the alignment of our activities with the Sustainable Development Goals (SDG) and its key performance indicators (KPI), which we adapt to our specific activities. Considering this, we designed a pool of KPIs that allows us to track our performance and to compare project efficiency and impact across the portfolio. This data based methodology is helping us to monitor the compliance of the agreed conditions but also to improve in other ESG areas as it makes possible to transfer best practices across the various portfolio projects. Additionally, by regularly monitoring our KPIs we can identify ESG problems in an early stage, improving our response time to properly manage any unexpected situation.

Moreover, during our post-investment activity we assess the appropriate environmental certification according with the various sustainable frameworks such as EDGE or LEED in order to improve the sustainability of our projects and reduce the environmental impact of our business. The projects with certification guarantee reductions in water and energy consumption as well as less CO2 emissions through the implementation of efficiency measures or new technologies. We engage our assets’ occupiers to comply with the certification requirements. In this sense, the occupier will be the direct beneficiary of the sustainable measures implemented in the project.

Besides the ESG activities inside the construction site we also consider community relations in our projects. Therefore, community surveys “actas de vecindad” are conducted to determine the state of the neighbours’ properties before the beginning of the construction activities. These surveys are the baseline that we can use to solve future complaints regarding impact on the surrounding structures due to the construction activities. Moreover, a grievance mechanism is established to allow the community to raise their complaints or concerns. This mechanism follows the recommendations of the IFC Performance Standards using proper channels of communication and allowing for the raising of anonymous complaints.


Property monitoring and management

PR 09. Proportion of assets with ESG targets that were set and monitored

09.1. Indicate the proportion of property assets for which your organisation, and/or property managers, set and monitored ESG targets (KPIs or similar) during the reporting year.

(in terms of number of property assets)

09.2. Indicate which ESG targets your organisation and/or property managers typically set and monitor

Target/KPI
Progress Achieved
          Design and execute according to responsible investing policy including sustainable certifications
        
          Qualified Staff
        
          Water and energy consumption, waste disposition and recycling rate
        
          - Our projects have sustainability targets for design and construction. One project received the EDGE Certification and three received preliminary Certification during the reporting period.
        
          - Depending on projects’ complexity having dedicated generalist environmental and OHS professionals working alongside specialists is a contractual condition and is monitored for all investments.
        
          - Monitor water and energy consumption, designing a model to assess the savings associated with efficiency measures. 
- The recycling rate during 2019 was 36%.
        
Target/KPI
Progress Achieved
          Affordable housing units
        
          Jobs created
        
          Occupational Health and Safety(OHS) Standards
        
          - Over 73% of the residential units in the portfolio are affordable (over 31,000). 
- 69% of our portfolio is adjacent to public transport.
        
          - Each portfolio project creates approximately 350 direct jobs. We have created approximately 15,000 direct jobs through our portfolio.
        
          - Strict OHS standards, in-line with the IFC standards. 
- During the reporting period our accident and incident rate was well below national average.
        
Target/KPI
Progress Achieved
          Transparency
        
          Anti-bribery/corruption
        
          AML/KYC
        
          Local governing boards for investment vehicles established including independent members.
        
          Character risk due diligence conducted for prospect partners and integrated as part of the overall risk assessment for the potential portfolio investments.
        
          AML and KYC procedures established and implemented in collaboration with the funds' administrators in-line with best international practices.
        

09.3. Additional information. [Optional]

Considering the ESG risks and impact our business model is exposed to, as well as the potential for shared value creation and the developmental needs of the communities in our target markets, we decided to align our investment activities with the Sustainable Development Goals (SDG). The alignment with the SDGs provides us with a blueprint to improve the sustainability of our projects’ operations in the long term by developing measures to efficiently use resources and enhance relationships with stakeholders, which are critical factors for the success of our long-term investment strategy and to maintaining a social licence to operate.  

We have the potential to contribute to the SDGs' achievement in terms of biodiversity and ecosystems conservation - one of our projects is preserving 56,573 sq.m. of forest; efficient use of natural resources – in 2019 we consumed, 33,000 m3 of water; efficient use of energy – in 2019 we consumed 964,000 kwh of energy; and employment creation – we employed over 8,200 people in the last year. In 2019 we mapped all the SDGs and contrasted them with our activities, considering materiality and magnitude of the possible impacts of each one in our operations, the environment and surrounding communities. We selected nine SDGs and 37 KPIs related to our business and designed performance indicators to the information we track monthly in the following ESG areas: water and energy, waste and recycling, workers and OHS, community and urbanism.

An additional benefit of our data based sustainability analysis is the improvement in engagement with third parties including developers, allowing us to jointly track compliance with sustainability targets at the project level.


PR 10. Certification schemes, ratings and benchmarks (Private)


Property developments and major renovations

PR 11. Proportion of developments and refurbishments where ESG issues were considered

11.1. Indicate the proportion of active property developments and major renovations where ESG issues have been considered.

(by number of active property developments and refurbishments)

11.2. Indicate if the following ESG considerations are typically implemented and monitored in your property developments and major renovations.

          AshmoreAVENIDA key performance indicators aligned with the Sustainable Development Goals.
        

11.3. Additional information. [Optional]

The core activity of our business model is the development of real estate projects, consequently all the ESG considerations analysed in the due diligence process are implemented and monitored during the construction phase. This aims to guarantee compliance with local regulation and our AAIF in ESG areas including: water and energy, waste and recycling, workers and OHS, community, and urbanism.

All projects implement measures, systems and tools in environmental, social, OHS and labour areas as well as audit systems to assure a good standing throughout the various activities of the project. The tools implemented include:

Environmental

- Environmental management plan
- Waste management program
- Efficient energy use program
- Atmospheric emissions program
- Water contamination prevention program
- Water use program

Social

- Communication, participation and consultation system
- Grievance mechanism
- Coexistence committee

OHS

- OHS policy
- OHS manual
- OHS training
- OHS management system - Roadmap and implementation plan
- Mechanical risk management programme
- Equipment and PPE selection plan
- Programme for safe work at heights and protection from falling objects
- Programme for the management of mechanical risks
- Programme for chemical risk management
- Programme for the management of activities with the presence of electrical risk
- Epidemiological surveillance programme in musculoskeletal disorders
- Psychosocial risk management programme

Labour

- Employment manual
- Human capital policy

 

Additionally, the ESG team monitors the activities developed in the construction sites through on-site dedicated OHS and environmental personnel. Likewise, to ensure the environmental and social programs mentioned above are implemented according to our AAIF, the ESG team conducts regular site visits to the projects during construction, at a minimum once per quarter. The visits are conducted by a member of the ESG team, who checks the compliance with the programmes and contractual measures pre-agreed for the project. Additionally, to confirm the contractually agreed processes, that are the result of the due diligence, have appropriate implementation tools on site, there is an initial visit every time a project starts. There is a site visit form to summarise the visits which includes photographic evidence. Likewise, there are visits to the OHS committee, which is in charge of the promotion and monitoring of the occupational health and safety standards in the construction sites. We also conduct OHS Committee visits at the construction sites to verify the committee is addressing all the relevant subjects related to OHS. Moreover, we confirm the committee includes representatives from the construction partner, contractors and workers, guaranteeing the equal participation of all stakeholders and that during the meetings all complaints or grievances are addressed appropriately.

An important part of the monitoring process is the monthly tracking of qualitative information related to water and energy consumption, waste and recycling volumes, number of workers per sex and migrant status, number of incidents and accidents, and number of grievances. This information is the main input for our data based methodology to asses performance in the projects through KPIs aligned with the SDGs. This methodology was designed in 2019, with the purpose of having quantitative baseline data at the project and portfolio levels to analyse project management and performance. 


Occupier engagement

PR 12. Proportion of property occupiers that were engaged with

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]

Occupier engagement is not a core component of our business model; this is due to the fact that the funds’ positions are self-liquidating as real estate units (either residential or commercial) are sold. Therefore, the only occupier engagement activities developed during the reporting period are related to the TIs (tenants’ improvements) according to the requirements of the various certifications pursued.

For the projects with EDGE certification, we need to guarantee all occupiers follow the efficiency requirements in terms of equipment, materials and sustainability processes. An example of this is a retail center with 75,374 sq. m. of GLA [OA1] and 498 retail spaces, which during the reporting period started the delivery of retail spaces to the occupiers so that they can complete their respective TIs. Hence, it was necessary to consider three instances to ensure occupiers use the same elements required by the EDGE certification. The first is the co-op bylaws, which includes a section with the specific illumination characteristics required according to the certification. Secondly, in each leasing/selling contract, in the contractor’s obligation section, there is a provision regarding reduction of environmental impacts. This includes the use of low energy consumption appliances, like LED lighting. Finally, the construction contractor oversees compliance with all provisions described above.


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


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