We set and monitor ESG targets for 100% of the directly managed assets in our portfolio, representing over 80% of our investment (the remaining 20% are indirect investments). These are published as part of our annual responsible property investment disclosure.

For our indirect and international non-directly-managed assets, we engage with the direct investment and asset manager to ensure ESG issues are integrated into the investment process, and encourage them to set and monitor targets on a regular basis. We also ask all of our indirect to report to the GRESB global benchmark and share their GRESB results with us for monitoring on their ESG integration and enable more detailed engagement on the issues.

We use different types of BREEAM certification. Since 2008 we have targets to secure BREEAM certification for new building and refurbishment for all our assets going through refurbishment or new development. Since 2018 we have also been rolling out BREEAM In Use across our operations, with 29 assets having gained the certifications so far.

Federated Hermes' responsible property development and refurbishment guide was updated in February 2019 to take into account progress in the industry, including BREEAM specifications and a more extensive approach to refurbishments. The guide includes minimum requirements and the establishment of action plans for all our directly-managed refurbishment and development projects of a certain size. For smaller projects, ESG criteria that are relevant to the scope of the project are integrated.

For our indirect and international non-directly managed assets, we share our guide and engage with the direct investment and asset manager to ensure that ESG issues are integrated into the refurbishment and development projects.

The Guide is available at: https://www.hermes-investment.com/uki/capabilities/real-estate/responsible-property-investment/

We actively engage with our office and retail occupiers through information sharing, holding energy and waste events, and offering other community engagement activities. They represent on average from 50% to 60% of our direct investment depending on the fund. Through our Responsible Property Management Programme, our property managers raise and discuss environmental and social issues with all occupiers at monthly meetings.

Our new Collaborative Asset Performance Programme+ initiative includes active dialogue with the occupiers to manage the assets aiming to improve health and well-being.

We find it more difficult to engage with occupiers in other asset classes given the type of lease and structure of their activities.

Engagement with our occupiers in our indirect funds are made by the managing partners.

We have developed clauses as part of our standard lease since 2008.  We have proposed a Modern Slavery Act clause in all our leases since 2017.

We negotiate these green clauses in all new leases, however, a refusal (very rare) by a tenant to include them does not stop the lease going forward.

We count all leases where at least one green clause has been included.

We manage our community engagement programme through our property managers and have established a stakeholder engagement tool, which provides support to our property managers, sets minimum requirements and additional community engagement activities. We monitor our community engagement programme once a year and reward best performance at our Responsible Property Investment annual awards.

Following growing awareness in the investment industry, we believe responsible investors need to go beyond standard key performance indicators (KPI) and develop qualitative processes to assess the wider socioeconomic impacts of their investment programmes, occupiers' and tenants' engagements. Since 2006 we have been reporting on our environmental performance using KPIs that we measure and monitor on a continuous basis.

At Federated Hermes, while not labelling our real estate activities as impact investment, we have been exploring how to apply the UNEP FI positive impact principles and can argue that we follow the three key principles with regards to our climate and energy efficiency investment practices. As part of our active responsible property investment programme, Responsible Property Investment in Practice, we have been assessing what positive impact investment would mean for each step of our investment process.

We have also reported on the socioeconomic impacts through a narrative approach based on case studies for the last few years. We are working on expanding our reporting boundaries to provide more specific qualitative and quantitative details on the positive social, economic and environmental impacts of some of our investments, whether large urban regeneration or through community engagement in existing buildings.

Our annual report is available at:

https://www.hermes-investment.com/uki/capabilities/real-estate/responsible-property-investment/