Sustainability Statement

Chief Executive Statement

We published the first edition of the Moorfield Group Sustainability Statement in August 2009, having spent some while researching and understanding the available information. It was a timely and pragmatic response to an emergent agenda which was beginning to inform the thinking of real estate investors and, in some cases, the decisions of occupiers, across a range of asset classes.

It is indisputable reality that when the balance of political and economic power shifts over periods of time, this has a material impact on the global economy through the distribution of wealth and the influence it affords. The supply of energy and natural resources which fuel our economy is increasingly uncertain and volatile and the implications of this can not be ignored. Perhaps above all, global climate change poses a fundamental threat to our way of life and is now progressively impacting on livelihoods and economies across the world.

Individually and together, these socio-political, economic and environmental changes have profound implications for all real estate asset classes. The recent and rapid emergence of the ‘sustainability’ agenda within the real estate industry reflects the magnitude of risk that is anticipated for all the asset classes. However, these macro issues not only highlight the responsibility that generations have for those that follow, they also offer opportunity for businesses that embrace and respond positively to the challenge of sustainable investment and development.

At Moorfield Group, it is this sense of corporate and social responsibility and opportunity which motivates and characterises our commitment to sustainability. Our awareness of these key global pressures implies not only an understanding of the moral responsibility needed to safeguard the environment, but also the opportunity to continue to deliver outstanding returns to our investors through the rigorous assessment of emergent trends and their impact on the asset classes. We must be sufficiently educated in this area to secure any possible advantage as the industry progresses towards a more sustainable future.

It is with that in mind that we have continued to focus on our approach to sustainability and responsible real estate investment and management, particularly in developing our understanding of the measurable risks to investment performance across all of our assets under management and in relation to their performance expectations.

I am pleased with our progress to date, but am equally mindful that there is more for us to do, to ensure that we continue to monitor, assess and respond to the changing risk profile and outperformance opportunities presented by the evolving legal framework and market context.

Marc Gilbard, Chief Executive

January 2012

Introduction

Picture kindly provided by Drivas Jonas LLP ©

Our corporate strategy is to acquire and create real estate, real estate related opportunities and asset rich companies in the UK where active corporate, asset and financial management is expected to enhance both income and capital returns.

To this end, our activities span most areas of investment and development of real estate and related opportunities, all of which are underpinned by a combination of analytical rigour and opportunistic endeavour. Our investment approach is predicated on a thorough appreciation of long-term trends and the early identification of emergent markets and asset classes.

Accordingly, Moorfield Group has responded proactively to the challenges and opportunities posed by the sustainability agenda, which in recent years has taken hold as a matter of genuine risk for real estate funds and their assets, whilst at the same time giving rise to some notable value creation prospects across the asset classes.

We continue to believe that the business and fiduciary case for sustainable investment and development is compelling. Whilst a direct correlation between environmental performance and real estate value continues to be largely unproven in the UK market, it is clear that investment sentiment is increasingly recognising that, over time, more environmentally efficient and productive buildings will likely yield higher net income growth, attract lower risk and therefore deliver higher returns.

This Sustainability Statement affirms the principles which underpin our approach to the environmental, social and governance aspects of our real estate investment, development and management processes, and through which we will continue to engage positively with our stakeholders (investors, occupiers, service providers etc). It also provides a summary of the specific activities we have undertaken since 2009 and the procedures we have put in place.

Principles for Responsible Real Estate Investment

Picture kindly provided by Drivas Jonas LLP ©

The basis of our approach to sustainability is to embed the principles of responsible real estate investment into each stage of our ‘Investment Process’ and across our corporate operations.

We believe that the environmental and social impacts of our investment and development activities are inextricably linked to the economic performance of our assets. Furthermore, we believe that the strength of this relationship will become greater over time given the clear trend of growing occupier demand for resource-efficient and climate adapted real estate, especially in prime markets, and as environmental regulation and related fiscal instruments further increase the pressure on real estate owners and their tenants.

Influenced in particular by the Principles of Responsible Investment advocated by the UNEP Finance Initiative and The Global Compact, we have adopted the following core principles across our real estate investment and related activities:

We incorporate a rigorous assessment of sustainability risk and related value creation opportunities into our investment analysis and decision-making processes.
We seek to incorporate the guiding principles of sustainable development into our capital projects.
We strive to be proactive owners and have incorporated sustainability measures into our ownership policies and practices.
We engage with our employees, investors, tenants and other stakeholders on sustainability issues and their effects, but recognise that we need to do this more as the agenda continues to evolve and becomes increasingly sophisticated.
We aim to use our procurement influence to improve the sustainability performance of our suppliers, and the products and services that we buy.
We seek to avoid or minimise adverse impacts arising from our corporate operations and to deliver positive benefits wherever appropriate, including through the Moorfield Foundation.

To achieve adherence to these overarching principles, a number of specific measures have been integrated into our Investment Process, as shown in the diagram below.

We monitor macro environmental, socio-political and economic trends closely.

We monitor and, where relevant, contribute to industry research on the impact of sustainability performance on asset value and other relevant investment/development concerns.

We engage with our investors and occupiers to ensure firm understanding of their expectations in respect of sustainability performance.

We disregard investment / development opportunities and funding sources that are connected to illegal activity or which have unacceptable adverse environmental or social impacts.

We strive to foster strong relationships and networks with organisations that are committed to sustainability and environmental management.

We communicate our sustainability expectations clearly to our service providers.

We ensure that internal asset managers and external advisors have the necessary skills and tools to incorporate sustainability risk and opportunity into investment / development appraisals.

We undertake a two-stage sustainability risk assessment during our acquisition appraisal process.

We measure the baseline sustainability impacts of our assets according to the common metrics recommended by the Green Property Alliance.

We undertake periodic reviews of sustainability risk on all of our managed assets and tailor our asset management plans accordingly.

We engage with tenants and building managers to establish sustainable asset plans and targets. We will explore the use of Memoranda of Understanding and appropriate lease covenants where appropriate.

We will look to establish Green Building Management Committees, where appropriate, with support provided to tenants to manage their premises efficiently.

We integrate sustainable design measures and recognised sustainability standards into capital projects and will seek to develop a standard management framework for use on future projects.

We seek to understand the potential for impairment to value of assets that do not meet environmental and social performance expectations though sustainability risk assessments. We consider the timely disposal of those assets, where commercially acceptable.

In addition to the implementation of these measures through our own investment and corporate activities, we continue to promote our adopted principles to encourage our stakeholders to improve the sustainability performance of their own operations.

Our Sustainable Development Action Framework

Our Sustainability Statement in 2009 was the first key milestone in our corporate response to the sustainability agenda. We recognised that there were a number of specific actions required to put in place the systems and skills necessary for a sustainable investment and development practice to be integrated across our portfolio.

Accordingly, our Statement was supported by an extensive Sustainable Development Action Framework. The Action Framework, which continues to be an internal management tool for Moorfield Group, sets out a range of generic and specific asset class actions, many of which have been taken forward.

Actions are agreed and prioritised in response to intelligence gathered on the particular risks and opportunities facing the real estate sector generally and the specific asset classes in which we have, or may have, direct commercial interest. In particular, the actions are prioritised to respond to:

The extent to which individual asset classes are likely to be exposed to reputational, compliance, and value risk, together with the requisite ethical drivers for sustainable progression both now and into the future;
The principal social, economic and environmental impacts arising from our investment, development and corporate activities, and in particular, the commercial implications of these on: asset values, income growth, development costs, and corporate reputation and competitiveness.

Our initial priorities were to engage with our stakeholders by informing them of our commitments and aspirations in relation to sustainability, and to analyse the extent to which individual assets already within our portfolio were exposed to sustainability risks or positioned to take advantage of related opportunities. From this baseline position, we then developed appropriate strategies, underpinned by measurable objectives and targets, to reduce risk exposure and optimise sustainability performance at the asset and portfolio level.

Key Actions and Activities

In accordance with our Action Framework, we have:

Compiled and analysed baseline performance data across our portfolio according to the common metrics recommended by the Green Property Alliance.
Using this data, together with wider measures of environmental quality, we have examined the potential impact of increased statutory compliance costs, non-recoverable expenditure, varying tenant retention rates and extended voids to forecast whether the portfolio will perform in line with current expectations and to identify ways in which any risks of under-performance can be managed.
Undertaken periodic briefing sessions for our management team on emergent sustainability issues facing our managed Funds, particularly in relation to new and prospective regulations and evolving market approaches to sustainability issues.
Established a two-stage assessment of sustainability risks and characteristics as part of our due diligence process:
- The first assessment, undertaken at the pre-acquisition stage, identifies key risks to value which need to inform the pricing of the investment or, in severe cases, the decision on whether or not to buy at all.
- The second assessment, undertaken following completion of the transaction, is more comprehensive and follows the same methodology and reporting structure as that used for the portfolio risk assessment, and is used to help refine the asset management strategy for the acquired asset(s).
Examined our responsibilities under the Carbon Reduction Commitment Energy Efficiency Scheme Regulatory Order and determined that we have no corporate responsibility to participate at the present time. However, we have worked closely with partners who are captured by the Scheme, by undertaking comprehensive compilation of energy consumption data to assist compliant reporting.
We continue to monitor closely the evolution and advent of relevant regulatory mechanisms, such as the Carbon Reduction Commitment Energy Efficiency Scheme and the European Energy Performance of Buildings Directive, to ensure timely and cost-effective compliance (both corporately and in relation to assets under management).

Future Priorities

There are several key initiatives which have still to be progressed/completed in line with our original intentions (or indeed which have arisen as relevant priorities more recently) and which we will therefore be continuing to take forward. These include:

Developing and implementing asset-specific improvement plans where material but manageable risks to investment performance have been identified.
Where necessary, updating our analysis of baseline environmental performance, analysing trends, and developing portfolio-level and asset-specific performance targets.
Developing a programme of active engagement with our tenants, investment partners, employees and managing agents on sustainability issues.
Developing a standardised framework for managing sustainability issues through the design and implementation of capital projects (new development, redevelopment and refurbishments).

Governance and Accountability

In order that the principles established in this Sustainability Statement are honoured, and that the actions set out in the supporting Sustainable Development Action Framework are implemented accordingly, we have put in place the following governance arrangements and procedures:

Marc Gilbard, Moorfield Group Chief Executive, has overall responsibility for ensuring that our sustainability principles are integrated across our investment, development and corporate practices.
We will establish a series of management and performance targets, together with lead responsibilities, to ensure that we can measure our progress and drive continuous improvement.
We will put in place an active stakeholder engagement programme to communicate this Sustainability Statement to all of our employees, our investors, our tenants, our banks, our advisors and our suppliers.
The Sustainability Statement and the Sustainable Development Action Framework will be subject to comprehensive and independent review on an annual basis.

« Back to top