Custodian Property Income REIT plc
Climate Impact & Sustainability Data (2023-03-31, 2024)
Reporting Period: 2023-03-31
Environmental Metrics
Renewable Energy Share:100% (landlord-controlled sites)
ESG Focus Areas
- Improving the energy performance of buildings
- Reducing energy usage and emissions
- Achieving positive social outcomes and supporting local communities
- Understanding environmental risks and opportunities
- Complying with all requirements and reporting in line with best practice
Environmental Achievements
- Weighted average EPC rating improved from C (61) to C (58)
- Installed 31 x 62.5kW or 75kW EV chargers (2,125kW/hr capacity) across public facing assets
- Installed PV on two of six redevelopments and major refurbishments (33%)
- Installed smart meters at 18 sites (19% of floor areas), with plans for 4 more
- Switched all landlord-controlled sites to 100% renewable electricity
- Switched all landlord-controlled sites to green gas
Social Achievements
- One vacant retail property used by a charity, another's frontage used by local BID
- New cycle storage and shower facilities installed at Lochside Way, Edinburgh
- Complied with the Company’s cladding policy within three months of acquisition for all acquisitions made during the year
Governance Achievements
- Published inaugural ESG Report
- ESG factors incorporated into all investment due diligence
- GRESB 'Real Estate' score increased from 49 (2022) to 50 (2023)
- GRESB 'Developments' score increased from 35 (2022) to 46 (2023)
Climate Goals & Targets
Long-term Goals:
- Net zero carbon pathway by 2024
Medium-term Goals:
- Achieve an annual improvement in GRESB score between 2021 and 2025
Short-term Goals:
- Increase EV charging capacity by 2025
- Reduce Scope 1 and 2 emissions by 30% by 2025 (landlord controlled)
- Reduce energy consumption by 15% by 2025 (landlord controlled)
- Reduce water consumption by 50% by 2025 (landlord controlled)
- Remove all 'D' EPC ratings by 2027
- Remove all 'E' EPC ratings by 2025
- Reduce tenants’ emissions by 20% by 2025
Environmental Challenges
- Market driven by weight of incoming capital and cheap debt pushed market valuations to unsustainable levels in the face of rising interest rates
- Decreases in property portfolio valuation due to reduced property market sentiment and investor demand
- Rising interest rates increasing finance costs
- Insufficient data coverage for waste to landfill KPI
- Tenant data collection via a data platform currently covers c. 19% of the Company’s portfolio by floor area
Mitigation Strategies
- Smaller regional property strategy and focus on income returns demonstrated relative resilience and defensive qualities
- Active property portfolio diversification
- Refinanced a £25m variable rate revolving credit facility with a £25m tranche of 10-year debt with Aviva at a fixed rate of interest of 4.10% per annum
- Intensive asset management of the portfolio
- Improved tenant engagement
Supply Chain Management
Climate-Related Risks & Opportunities
Opportunities
- Securing greater tenant engagement and higher rents through MEES compliance
Reporting Standards
Frameworks Used: EPRA Best Practice Recommendations Reporting Framework, GRESB
Reporting Period: 2024
Environmental Metrics
Total Carbon Emissions:13,380 tCO₂e/year
Scope 1 Emissions:645 tCO₂e/year
Scope 2 Emissions:422 tCO₂e/year
Scope 3 Emissions:12,313 tCO₂e/year
Total Energy Consumption:69,050 MWh/year
Water Consumption:168.9 dam³/year
Carbon Intensity:2.26 kgCO₂e/m²/yr
ESG Focus Areas
- Improving the energy performance of buildings
- Reducing energy usage and emissions
- Achieving positive social outcomes and supporting local communities
- Understanding environmental risks and opportunities
- Complying with all requirements and reporting in line with best practice
Environmental Achievements
- Achieved a 13% reduction in operational carbon intensity, resulting in a 33% reduction over the 2021 baseline
- Increased EV charging capacity by 35% across public-facing assets and 337% across non-public facing assets
- Installed PV on 6 assets, bringing the total to 15 installations across the portfolio
- Improved portfolio weighted average EPC score from 58 (C) to 53 (C)
Social Achievements
- One vacant retail property is being used by a charity
- Installed defibrillators on 20% of retail park assets
- Installed changing facilities and secure cycle parking at several locations
Governance Achievements
- Amended Investment Policy to better align with property and growth strategies
- Renewed RCF, increasing total funds available from £50m to £75m
- Appointed a new Director
Climate Goals & Targets
Long-term Goals:
- Operational net zero carbon by 2050
Medium-term Goals:
- Achieve 90% reduction in operational carbon intensity by 2050
- All ‘D’ EPC ratings to be removed or improved by 2027
- All ‘E’ EPC ratings to be removed or improved by 31 December 2025
Short-term Goals:
- Annual 5% reduction of operational carbon intensity
- Increase EV charging capacity
- Annually install PV on 5% of industrial and retail warehouses
Environmental Challenges
- Tenant default due to cessation or curtailment of trade
- Decreases in ERVs resulting in decreases in passing rent
- Reduced property market sentiment and investor demand
- Increased cost of arranging or servicing debt
- Failure to appropriately manage the environmental performance of the property portfolio
Mitigation Strategies
- Diverse property portfolio covering all key sectors and geographical areas
- Active property portfolio diversification
- Investment policy limits the Company’s property portfolio to no more than 50% in any specific sector or geographical region
- 78% of drawn debt facilities at the year end at a fixed rate of interest
- Engaged specialist environmental consultants to advise the Board on compliance with requirements and adopting best practice
Supply Chain Management
Responsible Procurement
- Checks, including anti money laundering checks, conducted prior to transacting any business
Climate-Related Risks & Opportunities
Physical Risks
- Decreases in ERVs resulting in decreases in passing rent
- Insufficient electricity supply to maintain tenant requirements for clean energy
Transition Risks
- Adverse impact of new or revised legislation or regulations
Opportunities
- Investment in carbon reducing technology
Reporting Standards
Frameworks Used: EPRA Best Practice Recommendations Reporting Framework, GRESB, SECR
Third-party Assurance: Deloitte LLP
Awards & Recognition
- EPRA sBPR Gold Award (2023)