Susta ina bility Inv estor & Ana ly st ev ent 2 July 2020
Introd uction Simon Carter, CFO
Agenda Simon Carter, CFO 15.00 Introduction 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 Anna Devlet, Head of Community 16.00 Social Commitments 16.10 1 Triton Square Tim Downes, Regent’s Place Development Simon Carter, CFO 16.20 Conclusion & Questions 16.30 End 3
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 4
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 5
New 2030 Environmental Commitments • Net zero carbon portfolio by 2030 – All future developments to be net zero embodied [more appropriate pic] 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 10 0 Liverpool Street 6
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 7
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 8
Env ironm enta l Com m itm ents Juliette Morgan Matt Webster
Net Zero carbon portfolio requires a whole life carbon approach to reduce embodied & operational emissions Building Construction Building Use End of building life Materials & processing Fit-out, maintenance Circular economy Embodied & refurbishment (materials re-use) Manufacturing & transportation Energy use Operational Efficient design Deconstruction Renewable energy Net Zero: Red ucing ca rb on em issions a nd offsetting rem a ining em issions throug h a ccred ited schem es 10
We have made good progress to reduce embodied carbon in development & improve operational efficiency Past Present: Good Present: Great The Leadenhall Norton Folgate 100 Liverpool Street (>1500 (c.560 Embodied (c.350 kgCO 2 e/m 2 ) kgCO 2 e/m 2 ) kgCO 2 e/m 2 ) >1100 kgCO 2 e/m 2 <800 kgCO 2 e/m 2 2030 Target: <500 kgCO 2 e/m 2 Meadowhall Meadowhall 2/3 Finsbury Avenue (2009, >300 (Today, c.150 (55 Operational kWh/m 2 /year) kWh/m 2 /year) kWh/m 2 /year) >225 kWh/m 2 /year <170 kWh/m 2 /year 2030 Target : 55 kWh/m 2 /year 11
Minimising operational carbon will require investment in retrofits & use of renewables Grid decarbonisation k tonnes / CO 2 e Tenant’s plans Retrofits Energy management Renewables Today 2030 <£1m p.a. offset cost 75% reduction in operational carbon achievable through decarbonisation of the grid, complemented by retrofits, energy management and renewable energy 12
Embodied carbon reduction should focus on early stages of development process Ability to influence whole life-cycle carbon Commissioning Operation Concept Design Construction End of Life & Procurement (incl. maintenance) 13
Substantial embodied emissions from the Leadenhall building, largely from materials c.92,0 0 0 tonnes of embodied carbon 8 4% Generated by materials 14
Concrete is the largest contributor to embodied carbon, especially in flooring and walls Embodied energy (GJ) Embodied Carbon (Kg CO 2 e, k) 250 1200 210 Rebar 1000 200 Concrete Steel 800 140 150 600 100 400 45 50 35 30 200 10 0 0 Floor Wall Foundation Framing Columns Concrete Steel Glass Timber Stainless Stone Steel 15
A pragmatic and progressive approach to adopting new materials 3 Longer Term 2 Short-Med ium Term • Bamboo; Mycellium 1 • Requires R&D and increased Now • Cross-laminated timber public profile • Ashcrete, hempcrete • Re-used / recycled materials • Concrete & steel manufactured using low carbon processes 1 Triton 16
Circular economy – Circular Offset Offset Payment Buildings Timber/ Bamboo R&D Building Materials 17
Opportunity to build on existing progress and deliver 1 Triton Square as an embodied carbon net zero building Exceeded minimum sustainability Low upfront payment to get standards at 1 Triton Square 1 Triton Square to Net Zero Embodied Operational Item Value Significant retention Operational Total Embodied Carbon 21,150 tonnes structure performance prediction Supply chain Assumed Price of Carbon £60/tonne engagement BREEAM Outstanding; EPC A 448 kg/CO 2 e/m 2 (Offices) Mitigation Cost to Deliver embodied in £ 1.3m construction Green Energy Triton Square as Net Zero 0 .8 % of Total Construction Costs Trialing new innovations… Low carbon cement substitute 0 .3% of Net Development Value High efficiency thermal heat wheel pumps Recycled & refurbished facade 18
Pathway to net zero 20 20 20 30 Launch transition fund Begin annual offset of portfolio emissions – BBP target Developments net zero 20 25 75% reduction in carbon emissions Review strategy at interim stage across the portfolio 20 22 Embodied carbon 750 kg C02/m2 50% reduction in embodied carbon Asset audits complete emissions to <500kg/C02e/m2 UKGBC 2030 targets achieved. 20 22/ 3 Achieve scope 1 and 2 SBTi 20 29 targets met – REGO / PPAs Commence design of new strategy 19
Tra nsition Fund Cressida Curtis
In practice: 1 Triton Square Net Zero Buildings 21,150 £ 0 .4 m Higher rents & faster leasing tonnes CO 2 e offset paym ent Firm er values - £ 60 / tonne Internal price of carbon - £ 1.3m Tra nsition m itigation £ 0 .9m Fund paym ent paym ent into fund Retrofit of Standing Portfolio 1 • Low er energy costs Other • Clim ate resilience £ 5.3m • Firm er values d ev elop m ents paym ent contributing 1 2 Customers / service charge loans • Low er energy costs • Closer custom er relationships £ 5m p .a . 3 Research & development Green Loans from BL • Low er carbon costs 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 1 Includes 100 Liverpool Street, Norton Folgate, 1 Broadgate, 5 Kingdom Street, Phase 1 at Canada Water 21
Environmental leadership – GRESB performance vs peers British Land Peer average Top quintile 100 90 80 70 60 50 40 30 20 10 0 Policy & Risks & Monitoring Performance Building Stakeholder Construction Management disclosure opportunities & EMS indicators certifications engagement & renovation 22
Indices Performance and Responsible Business 20 19 Perform a nce Resp onsib le b usiness com m itm ents Prom oting diversity & inclusion Carbon Disclosure Project Global Real Estate EPRA Sustainability Sustainability Benchmark Reporting Awards 2019: B Against m odern slavery 2019: Green star for 10 th year 2019: Gold for 8 th year 2018: A- Mandating prom pt paym ent Sustainalytics MSCI ESG Ratings ESG Ratings FTSE4Good 2019: 96 th percentile 2019: 98 th percentile 2019: AAA rating Integrating wellbeing Other benchmarks and awards Cham pioning responsible em ploym ent MSCI disclaimer available http://www.britishland.com/sustainability/performance/benchmarks 23
Susta ina ble Fina nce James Pinkstone
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