AEW UK REIT plc
Climate Impact & Sustainability Data (2021, 2023, 2024)
Reporting Period: 2021
Environmental Metrics
ESG Focus Areas
- Environment
- Social
- Governance
- Resilience
Environmental Achievements
- GRESB scores improved for AEW UK Core Property Fund, AEW UK Real Return Fund, and AEW UK REIT in 2021 compared to 2020.
- Asset Sustainability Action Plans (ASAPs) developed for all Fund assets.
- Initial assessment of the pathway to net zero using Carbon Risk Real Estate Monitor (CRREM).
Social Achievements
- Support of KidsOut for Christmas 2021.
- Creation of the Catherine Delplace Scholarship.
- Establishment of European Diversity, Equity and Inclusion Committee.
Governance Achievements
- Funds participate in the GRESB benchmark and report against relevant reporting frameworks.
- All Funds reported progress against TCFD in 2021 annual accounts.
- ESG training program for all staff in 2021.
Climate Goals & Targets
Long-term Goals:
- Net zero emissions (target year not specified)
Medium-term Goals:
- 15% reduction in absolute energy consumption by 2030 (based on 2018 baseline)
- 15% reduction in absolute GHG emissions by 2030 (based on 2018 baseline)
Environmental Challenges
- Lower data collection from tenants affecting AEW UK Real Return Fund's GRESB score.
- Need to achieve EPC C by 2027 and EPC B by 2030 for all properties.
Mitigation Strategies
- Improved data collection from tenants.
- Assessing all lease expiries to understand the risk and potential cost to achieve EPC C by 2027 and EPC B by 2030.
Supply Chain Management
Responsible Procurement
- Support and encourage supplier responsibilities and sustainable best practices
Climate-Related Risks & Opportunities
Reporting Standards
Frameworks Used: GRESB, TCFD, EPRA, AREF
Awards & Recognition
- Green Star Awards (GRESB)
Reporting Period: 2023
Environmental Metrics
Total Carbon Emissions:664.1 tonnes CO2e
Scope 1 Emissions:239.03 tonnes CO2e
Scope 2 Emissions:425.10 tonnes CO2e
Renewable Energy Share:100%
Total Energy Consumption:3,507,792 kWh
Water Consumption:30,252 m3
Waste Generated:83.6 tonnes
ESG Focus Areas
- Climate change
- Energy efficiency
- Waste reduction
- Biodiversity
- Governance
Environmental Achievements
- Reduced overall energy usage by 15% in the managed portfolio since 2018.
- Reduced emissions by 19% in the managed portfolio since 2018.
- Reduced waste transferred to landfill to zero in the managed portfolio.
Social Achievements
- Participated in the KidsOut Charity ‘Giving Tree’ initiative.
Governance Achievements
- Appointed Mark Kirkland as Non-Executive Director and Audit Committee Chairman designate.
- Maintained EPRA Silver rating for Sustainability Best Practice Recommendations (sBPR).
Climate Goals & Targets
Long-term Goals:
- Consider adopting net zero target and pathway.
Medium-term Goals:
- 40% reduction in absolute energy consumption by 2030.
- 40% reduction in absolute GHG emissions by 2030.
Short-term Goals:
- Improve EPC ratings to at least C grade by 2027 and to B by 2030.
- Complete climate resilience audits on 3 assets during 2023/4.
- Complete net zero assessment pathway on 2 assets during 2023/4.
Environmental Challenges
- Higher than average vacancies, predominantly linked to assets in Oxford and Glasgow.
- High percentage of assets with tenant-procured utilities impacting GRESB score.
- MEES compliance for assets with no valid EPC.
Mitigation Strategies
- Actively managing assets to maximise income and capital returns.
- Implementing a plan to improve overall data coverage and data collection for all utilities.
- Undertaking gap analysis to identify assets below MEES regulations and implementing improvement plans or lodging exemptions.
Supply Chain Management
Climate-Related Risks & Opportunities
Physical Risks
- Extreme weather events (floods, windstorms, cold weather, heatwaves)
- Rising temperatures
- Rising sea levels and water stress
Transition Risks
- EPC compliance (MEES)
- Carbon pricing
- Occupier demand for energy-efficient assets
- Energy costs
- Investor demand for energy-efficient assets
- Transition to lower GHG emissions technology
Opportunities
- Resource efficiency
- Energy sourcing
- Property services
- Resilience
Reporting Standards
Frameworks Used: TCFD, EPRA sBPR 2017, GRESB
Third-party Assurance: EVORA Global Limited
Awards & Recognition
- EPRA Gold medal for financial reporting
- EPRA Silver medal for sustainability reporting
- Citywire investment trust award
- AJ Bell Shares Magazine ‘Best REIT’ award
Reporting Period: 2024
Environmental Metrics
Total Carbon Emissions:640.9 tCO2e/year
Scope 1 Emissions:223.0 tCO2e/year
Scope 2 Emissions:417.9 tCO2e/year
Renewable Energy Share:100%
Total Energy Consumption:3,236,923 MWh/year
Water Consumption:24,834.7 m3/year
Waste Generated:70.4 tons/year
ESG Focus Areas
- Climate change
- Energy efficiency
- Waste reduction
- Biodiversity
- Governance
Environmental Achievements
- Reduced absolute energy usage by 26.5% and emissions by 40.8% versus the 2018 baseline. Waste transferred to landfill reduced to zero within the managed portfolio.
- All managed assets and units contracted to High Quality Green Tariffs, ensuring electricity supply is from renewable sources.
Social Achievements
- Participation in the KidsOut Charity ‘Giving Tree’ initiative.
Governance Achievements
- Maintained two stars GRESB rating for 2023 (score of 67).
- Maintained EPRA Silver rating for Sustainability Best Practice Recommendations (sBPR) for ESG disclosure and transparency.
Climate Goals & Targets
Long-term Goals:
- Not disclosed
Medium-term Goals:
- 40% reduction in absolute energy consumption by 2030 based on the 2018 baseline.
- 40% reduction in absolute GHG emissions by 2030 based on the 2018 baseline.
- Consider adopting net zero target and pathway.
Short-term Goals:
- Improve EPC ratings across the portfolio to at least C grade by 2027 and to B by 2030 (unless exempt).
- Complete climate resilience audits at 3 assets during 2023/24.
- Undertake climate opportunity projects at 2 assets during 2023/24.
Environmental Challenges
- High percentage of single-let assets with tenant-procured utilities impacting GRESB score.
- Challenging UK economic climate impacting commercial property investment market.
- Higher interest rate environment suppressing investor demand and leading to downward pressure on valuations.
- Low transaction volumes and distressed sales leading to a lack of evidence for valuers.
Mitigation Strategies
- Implementing a plan to improve overall data coverage and data collection for all utilities through increased tenant engagement and automated meter readers.
- Value-focused strategy of investing in mispriced assets where income can be grown and value created through active asset management.
- Crystallizing asset management gains via the sale of lower-yielding assets and recycling capital into higher-yielding ones.
- Maintaining a good relationship with the lender providing the term credit facility and actively monitoring loan terms and engaging in loan extension negotiations.
Supply Chain Management
Climate-Related Risks & Opportunities
Physical Risks
- Flooding
- Extreme weather events
- Rising temperatures
- Rising sea levels
- Water stress
Transition Risks
- EPC compliance (MEES)
- Carbon pricing
- Occupier demand for energy-efficient assets
- Energy costs
- Investor demand for energy-efficient assets
- Lower emissions technology requirements
Opportunities
- Resource efficiency
- Energy sourcing
- Property services
- Resilience
Reporting Standards
Frameworks Used: TCFD, EPRA sBPR 2017, GRESB
Awards & Recognition
- EPRA Gold Medal for Financial Reporting
- EPRA Sustainability Best Practice Recommendations Silver Award
- EPRA Most Improved Award for 2020
- Citywire investment trust award in the 'UK Property' category
- Investment Week Investment Company of the Year awards in the 'Property' category
- Green Apple award