ESG Policy

In 2021-22, we will set meaningful environmental impact targets to be delivered by the Manager.  These will include reducing levels of GHG emissions by ensuring that the environmental performance of our buildings is within regulatory parameters.  Targets will be tailored to the nature of our assets, and the scope and timeline for improving their sustainability performance.  In some cases, we can make continual progress to improve performance.  But, with a portfolio of fixed assets under occupier control, performance on environmental metrics is always going to depend on lease events to create the opportunity for more significant intervention.    We will ask the Manager to explore the potential for mapping direct and indirect operational emissions associated with their responsibilities to Urban Logistics, as a first step to setting reduction targets.

Urban Logistics, working through the Manager, can positively influence but does not control our occupiers’ decisions.  A critical first step is gathering and sharing the data to describe and explain their environmental and social impact.  We then rely on the Manager to build strong and trusted relationships with occupiers, which in turn helps to identify value-adding opportunities for co-operation.  Our goal is to see our occupiers supported and encouraged to operate more sustainably, in terms of energy efficiency, social impact, water consumption and other metrics.  In 2021-22 we will set targets in these areas.

Our stakeholders are best served by future proofing our assets and thus our long-term performance, financially and beyond.  Because our business model is driven by acquiring assets where we see opportunities to improve sustainability and performance, this commitment genuinely sits at the heart of our business.  It doesn’t need to be bolted on.  We believe that ESG interventions can boost growth in sustainable income streams to achieve medium term performance and enhance targeted capital growth to enhance total return over the long term.

In 2020-21, we made our first foray into green finance.  We will review the experience, and the potential for extending our use of green finance, in the course of 2021-22.

We will continue to ensure that our external stakeholders remain informed and engaged with our business, and we regularly test and respond to investor and market expectations.  In 2021-22 we will improve our website information and reporting of key sustainability metrics. These sustainability metrics will include international industry benchmarking, such as GRESB.

Urban Logistics looks to its external Manager to deliver across many dimensions of direct and indirect sustainability performance.

We require the Manager to fully adhere to the EPRA sustainability framework (EPRA sBPR), and we encourage participation on behalf of the REIT in other relevant national and international industry benchmarking initiatives, such as GRESB.  We expect the Manager to promote transparency and collaboration from all our occupiers, in tracking and sharing their resource consumption data.

The Board monitors the company’s portfolio EPC ratings so that, as a minimum, we meet government mandated baselines.  We seek to outperform these, over time, noting however that our business model is largely to acquire properties to which we can add this kind of value, rather than acquisitions which already ‘tick the box’.

In every property acquisition, we require an elevated level of analysis and due diligence on environmental performance.  This includes:

• environmental building certifications or audits;
• enabling a tenant to track resource consumption
• opportunities to mitigate inefficient use of natural resource (e.g. sub-meter installations)
• the consequences of plant and equipment on environmental performance
• the environmental and socio-economic impact of current occupiers’ business operations

potential climate risk factors that may directly or indirectly impact future asset utility.

We expect the Manager to Integrate sustainability considerations within its asset management strategy, positioning it an integral part of the service offered to occupiers, to improve their business performance and their wider positive impacts.

Measures we expect of the Manager in support of this include:

• since January 2020, including green clauses in all newly executed & amended leases. 100% of all new leases agreed since this date now contain green clauses. In total, this means that 27% of all leases include green clauses.  This is a major area of focus because, without the ability to collect environmental performance data from our tenants, we face limited opportunities to understand and deliver environmental improvements
• developing individual asset Environmental & Social Action Plans for each asset, shared with current or incoming occupiers.
• employing resource conservation measures such as low energy efficient lighting.
• where appropriate, promoting and partnering with tenants to pursue resource conservation measures and capital improvements
• investigating potential renewable energy projects (PV, Solar Heating etc).

In some cases, the relationship between Manager and occupier creates the scope for greater value-add.  For example, we encourage the Manager, where possible, to engage with tenants to support community engagement, wellbeing and partnerships to further environmental and social benefits.

Urban Logistics acquires sites for new development and for redevelopment, and we redevelop assets across our existing portfolio.    Our direct development activities offer significant opportunities to enhance the environmental and social wellbeing of the communities in which our assets are built.  When acquiring development land, our preference is for brownfield sites, which is in principle a sustainability positive.  We set minimum standards for development and construction:

• EPC A rating on all newly developed premises
• BREEAM Rating of ‘Very Good’ or better, on all new premises
• EPC B rating or better on all significantly refurbished premises

Ongoing communication with our shareholders is essential to Urban Logistics’ success. At the Board’s request and on our behalf. the Manager holds roadshows for shareholders and investors, to discuss our results and to develop our understanding of their needs and expectations. Our website is kept up to date with information to help our investors keep in touch and understand our business.

We confirm on an annual basis that the Manager completes annual regulatory training on AML, anti-bribery and corruption and the operation of their whistle blowing policy. The Manager’s performance across the suite of ESG considerations is monitored by:

• the company’s ESG Committee, reporting to the Board;
• under the EPRA sBR framework;
• and increasingly, under the GRESB framework.

In addition, Aviva, who provide our green finance facility, contract independent review and benchmarking of our aspects of our performance in line with the terms of that loan.

The structure of the Urban Logistics REIT means we do not directly employ staff, or have an office base or generate a direct environmental impact from our operations.  For this reason, staff engagement measures, gender pay gap reporting, other important diversity measures do not fit the Urban Logistics model. We do however expect our principle service providers - Logistics Asset Management LLP, and our main agents, professional and legal advisers – to conform to benchmark standards as employers and corporate citizens.  In 2021-22, we will develop processes to secure further assurance in these areas.

The ESG Committee scrutinises performance across the full suite of ESG commitments that Urban Logistics places on the Manager, as well as relevant obligations and governance requirements falling directly on the company.  It refers and reports, as appropriate, to the Board, and where appropriate to other committees of the Board, eg the Audit Committee on risk.