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SustainabilityInvestor & Analyst event 2 July 2020
Introduction Simon Carter, CFO
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Agenda
15.00 Introduction Simon Carter, CFO
15.10 Environmental Commitments Juliette Morgan, Head of Sustainable Development Matt Webster, Head of Smart & Sustainable Buildings
15.30 Transition Fund & Indices Cressida Curtis, Head of Corporate Affairs & Sustainability
15.40 Sustainable Finance James Pinkstone, Treasury
15.45 Questions
16.00 Social Commitments Anna Devlet, Head of Community
16.10 1 Triton Square Tim Downes, Regent’s Place Development
16.20 Conclusion & Questions Simon Carter, CFO
16.30 End
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2020 Sustainability Targets – key achievements • Strong track record of Sustainability at
British Land
• 2020 targets achieved or exceeded– 73% reduction in carbon intensity (scope 1 and 2)
vs 2009 baseline (target: 55%)
– 55% reduction in landlord energy intensity vs 2009 baseline (target: 55%)
– 1,745 people supported into jobs through Bright Lights, our skills and employment programme (target: 1,700)
• More challenging but excellent progress – 96% electricity purchased from renewable
sources (target: 100%)
– 94% progress on our Local Charter (target: 100%)
Young Readers, Ealing
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Shaping our 2030 Strategy • Clear focus on accelerating our progress
– Reflecting increased urgency across our stakeholder groups
• Alignment with corporate purpose – Not a separate workstream – business as usual
• Learnings from our 2020 programme – Refined our focus to two key areas where we can
have the biggest impact
• Best in class Sustainability – Guided by UN Sustainable Development Goals
– Learning from other leading companies Broadgate Connect
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New 2030 Environmental Commitments
[more appropriate pic]
• Net zero carbon portfolio by 2030– All future developments to be net zero embodied
carbon
– 50% less embodied carbon on all major developments by 2030
– 75% less operational carbon across our portfolio by 2030
• Transition fund established – From 2020 we will assume an internal carbon
price of £60 per tonne for new developments
– This will fund the offsetting of embodied emissions associated with developments through accredited offset schemes
– The remaining amount will be paid into the Transition Fund to finance retrofitting of standing portfolio, including R&D
100 Liverpool Street
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New 2030 Social Commitments • Place based approach
– Partner with local stakeholders
– Education and employment partnerships at each place
– Underpinned by our Local Charter, comprising 5 key commitments to local communities
• Piloting our approach at three locations, building on successful partnership model at Regent’s Place and Fort Kinnaird
Tree Shepherd, Canada Water
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Our approach is driven by customer demand • Environmental
– Companies signing up to science based targets has doubled since 2010 driving demand for more sustainable real estate
– Research from JLL demonstrates that buildings rated BREEAM Outstanding or Excellent generally achieve a premium of 10% in Central London compared to prime buildings without a rating
– Average vacancy rate in buildings rated BREEAM outstanding or Excellent of 7% vs. 20% for a building rated Very Good, 24 months post completion
• Social – Ability to make a social contribution increasingly
important to employees
– Creates loyalty, binding occupiers to places Norton Folgate
Environmental Commitments Juliette MorganMatt Webster
Building Construction Building Use End of building life
EmbodiedMaterials & processing
Manufacturing & transportation
Fit-out, maintenance & refurbishment
Circular economy (materials re-use)
Operational Efficient designEnergy use
Renewable energyDeconstruction
Net Zero: Reducing carbon emissions and offsetting remaining emissions through accredited schemes
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Net Zero carbon portfolio requires a whole life carbon approach to reduce embodied & operational emissions
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We have made good progress to reduce embodied carbon in development & improve operational efficiency
Embodied
Operational
Past Present: Good Present: Great
>1100 kgCO2e/m2 <800 kgCO2e/m2 2030 Target: <500 kgCO2e/m2
>225 kWh/m2/year <170 kWh/m2/year 2030 Target: 55 kWh/m2/year
The Leadenhall
(>1500 kgCO2e/m2)
Norton Folgate
(c.560 kgCO2e/m2)
100 Liverpool Street (c.350
kgCO2e/m2)
Meadowhall
(2009, >300 kWh/m2/year)
Meadowhall
(Today, c.150 kWh/m2/year)
2/3 Finsbury Avenue
(55 kWh/m2/year)
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Minimising operational carbon will require investment in retrofits & use of renewables
Today
k to
nnes
/ C
O2e
Tenant’s plans
Grid decarbonisation
Retrofits
Renewables
75% reduction in operational carbon achievable through decarbonisation of the grid, complemented by retrofits, energy management and renewable energy
2030<£1m p.a. offset cost
Energy management
Concept Design Commissioning & Procurement Construction Operation
(incl. maintenance) End of Life
Embodied carbon reduction should focus on early stages of development process
Ability to influence whole life-cycle carbon
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Substantial embodied emissions from the Leadenhall building, largely from materials
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c.92,000 tonnes of embodied carbon
84%Generated by materials
0
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600
800
1000
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Floor Wall Foundation Framing Columns
Concrete is the largest contributor to embodied carbon, especially in flooring and walls
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210
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4535 30
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Concrete Steel Glass Timber StainlessSteel
Stone
Rebar
SteelConcrete
Embodied Carbon (Kg CO2e, k)Embodied energy (GJ)
1 Triton
A pragmatic and progressive approach to adopting new materials
Now• Re-used / recycled materials• Concrete & steel
manufactured using low carbon processes
1 Short-Medium Term• Cross-laminated timber• Ashcrete, hempcrete
2 Longer Term• Bamboo; Mycellium• Requires R&D and increased
public profile
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Circular economy – Circular Offset
Buildings
R&D
Timber/ Bamboo
Building Materials
Offset Payment
Low carbon cement substitute High efficiency thermal heat wheel
pumpsRecycled & refurbished facade
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Opportunity to build on existing progress and deliver 1 Triton Square as an embodied carbon net zero building
Item Value
Total Embodied Carbon 21,150 tonnes
Assumed Price of Carbon £60/tonne
Mitigation Cost to Deliver Triton Square as Net Zero £1.3m
0.8% of Total Construction CostsTrialing new innovations…
0.3% of Net Development Value
Exceeded minimum sustainability standards at 1 Triton Square
EmbodiedSignificant retention structure
Supply chain engagement
448 kg/CO2e/m2
embodied in construction
OperationalOperational performance prediction
BREEAM Outstanding; EPC A (Offices)
Green Energy
Low upfront payment to get 1 Triton Square to Net Zero
Pathway to net zero
2022/3Achieve scope 1 and 2 SBTitargets met – REGO / PPAs
2025Review strategy at interim stage
Embodied carbon 750 kg C02/m2
2029Commence design of new strategy
2030Begin annual offset of portfolio
emissions – BBP target
75% reduction in carbon emissions across the portfolio
50% reduction in embodied carbon emissions to <500kg/C02e/m2
UKGBC 2030 targets achieved.
2022Asset audits complete
2020Launch transition fund
Developments net zero
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Transition Fund Cressida Curtis
21,150tonnes CO2e-£60/tonne Internal price of carbon-£1.3m mitigation payment
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In practice: 1 Triton Square
Retrofits, loans and R&D will help to reduce 2030 emissions and therefore future offset payments, and generate Net Positive impacts in the long term
£0.4m offset payment
Other developments contributing1
1 Includes 100 Liverpool Street, Norton Folgate, 1 Broadgate, 5 Kingdom Street, Phase 1 at Canada Water
£0.9m payment into fund
£5m p.a. Green Loans from BL
£5.3m payment
Net Zero BuildingsHigher rents & faster leasingFirmer values
Transition Fund
Retrofit of Standing Portfolio• Lower energy costs• Climate resilience• Firmer values
Customers / service charge loans• Lower energy costs• Closer customer relationships
Research & development• Lower carbon costs
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Environmental leadership – GRESB performance vs peers
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British LandPeer average
Management Policy & disclosure
Risks & opportunities
Monitoring & EMS
Performance indicators
Building certifications
Stakeholder engagement
Construction & renovation
Top quintile
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2019 Performance
Indices Performance and Responsible Business
MSCI disclaimer available http://www.britishland.com/sustainability/performance/benchmarks
Global Real Estate Sustainability Benchmark
2019: Green star for 10th year
FTSE4Good2019: 98th percentile
Sustainalytics ESG Ratings
2019: 96th percentile
Carbon Disclosure Project2019: B2018: A-
EPRA Sustainability Reporting Awards
2019: Gold for 8th year
MSCI ESG Ratings2019: AAA rating
Responsible business commitments
Other benchmarks and awards
Promoting diversity & inclusion
Against modern slavery
Mandating prompt payment
Integrating wellbeing
Championing responsible employment
Sustainable Finance James Pinkstone
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Sustainable Finance Framework
• Aligned with the UN Sustainable Development Goals
• Our Sustainable Portfolio will primarily comprise of Green Buildings, but will also include Other Sustainable Projects, as detailed in the framework
• We may raise Sustainable, Green and/or Social finance in an amount up to the value of the Sustainable Portfolio
• We will develop the framework as best practice emerges
Sustainable FinanceSustainability Linked Loan
• £450m Sustainability-Linked RCF
• Margin adjustments based on performance against 2 KPIs
• Incentivises our sustainable behaviour
QuestionsSimon Carter, CFO
Social Commitments Anna Devlet
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Covid-19 demonstrated our strong local connections • Community Investment Fund
– Established in 2008
– Now provides more than £1.3m funding pa for local initiatives
• Refocused to provide targeted support– Provided expert strategic advice to community
partners through the Cass Business School
– Supporting partner organisations address local employment and employability concerns
– Provided equipment to help community partners work from home
– Providing books and activity packs to vulnerable families
– Connecting occupiers with local volunteering opportunities
Julie Hutchinson, ELBA
“British Land is helping to cushion the impact of Covid-19, reinforcing support for people we have placed into jobs, connecting them to new opportunities and delivering training so they are resilient for the future”
Our long term investment strategy, track record, networks and local teams, give us a unique position
Place BasedApproach
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Our priorities for social engagement
License to Operate
Planning / Development
Customer
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Created an effective platform, but need to build on successes to amplify benefits & respond to external focus
=
Hybrid Approach
Underway at Canada Water and Regent’s Place
Next: Three different pilots, across the country
Place-based Initiatives
Centralised Framework
Delivery: Focusing on where we can make the biggest impact
Understanding local context
Common themes Focused actions KPIs
• Review existing progress
• Engaging with stakeholders to understand their priorities
• Work at different levels: local, regional, national
• Roll out customer & supplier networks
• Undertake responsible procurement review
• Identify three clear priorities for local communities (case by case)
• Framework provided by our Local Charter
• Identified key areas: education, upskilling & reskilling, employment
• Providing support to help people be more resilient in future
• Working with existing local teams
• No. of partners involved
• No. of beneficiaries• No. of education
initiatives• No. of employment
initiatives
Builds on the strong relationships we have developed over the past 10 years working in partnership to create positive local impacts
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What does better look like?
CustomersBespoke connections &
programmes tailored to themAmplified local impact
Part of a vibrant community
CommunityAmplified benefits for local people
Greater value from pooled resourcesLocal influence over decisions
Closer customer relationshipsVibrant places that meet customer needs
Positive interactions with local peopleEmpowered employees
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Conclusion and Q&ASimon Carter, CFO
