SEGRO Methodology for Greenhouse Gas Reporting

Transcription

1 SEGRO Methodology for Greenhouse Gas Reporting Context SEGRO is a UK Real Estate Investment Trust (REIT) and a leading owner, asset manager and developer of modern warehousing and light industrial property throughout Europe. SEGRO currently operates in the UK and throughout Europe through a mix of Equity and Joint Venture models. As a real estate owner, manager and developer, SEGRO recognises that it has a unique opportunity to create the right balance of social, environmental and economic conditions for its communities, customers and investors now and in the future. Fundamental to our strategy are three key pillars of activity which should combine to deliver an attractive, income-led total property return: 1. Disciplined Capital Allocation: picking the right markets and assets to create the right portfolio shape by actively managing the portfolio composition and adapting our capital deployment according to our assessment of the property cycle. 2. Operational Excellence: optimising performance from the portfolio through dedicated customer service, expert asset management, development and operational efficiency. 3. Efficient capital and corporate structure: we aim to underpin the property level returns from our portfolio with a lean overhead structure and appropriate financial leverage through the cycle. The combination of these three elements should translate into sustainable, attractive returns for our shareholders in the form of progressive dividends and net asset value growth over time. Our sustainability strategy integrates with our business strategy and priorities, providing a better way to deliver shared value through four core sustainability priorities: Our Environment, Our People, Our Communities and Our Stakeholders We focus on embedding sustainability considerations in our business operations. This is consistent with our use of the AA1000 Principles of inclusivity, materiality and responsiveness, which has helped us identify, understand and respond to issues that potentially impact the long-term wellbeing of our communities, our people and our customers. Our sustainability reporting focuses on the issues of greatest relevance to our business during the reporting period. Further details of our process for assessing relevance and materiality of issues can be found here. Reporting Period

2 The reporting period for our Environmental reporting is the period 1 st October 2016 to 30 th September This period has changed from previous reporting years where the full financial year was used. This change is intended to reduce the amount of estimation techniques used across the reporting data sets whilst still reporting a full 12 months of data. Reporting standards SEGRO uses the World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD) Greenhouse Gas Protocol (GHGP) to calculate the emissions footprint and use EPRA best practice recommendations for sustainability reporting?. Boundary For the purpose of mandatory greenhouse gas emissions reporting SEGRO will only be reporting emissions from emissions within operational control, as defined by the Greenhouse Gas Protocol. To tailor the operational control approach to our business, we have defined operational control as responsible space. This includes emissions from all assets under management, excluding emissions from those parts of the portfolio where they are the responsibility of tenants (which are reported under Scope 3 emissions). Scopes of emissions The report will collate data for: Scope 1: Direct emissions which includes fuel consumption from owned/leased transport, natural gas consumption and fugitive emissions from air conditioning and refrigeration systems. Scope 2: Indirect emissions from purchased electricity, steam and district heating. Scope 3: Emissions from transmission and distribution losses from purchased electricity and district steam. Where it is possible to monitor actual tenant consumption using sub-meters this is also reported as Scope 3 in line with EPRA guidelines Where such emission sources are not present in our portfolio they will not be not be included in our reporting. Baseline & Restatement Our baseline year is set as 1 st January 31 st December 2012, to correspond with the establishment of our SEGRO 2020 targets. We will restate our baseline, or emissions from previous years in order to account for subsequent changes to structure or changes in calculation methodology. Where we

3 become aware of known and quantifiable errors and corrections would result in a change greater than 1% in our emissions, we will adjust the baseline and/or prior year amounts accordingly. However, where errors cannot be reliably or reasonably quantified then we will not perform any restatements. SEGRO take responsibility for absolute emissions, taking into consideration expansion. As such, we explain and justify such changes that impact upon absolute emissions and performance against targets. In addition, as part of our SEGRO 2020 targets, other performance metrics are recorded in order to assess portfolio development, performance and efficiency. Acquisitions In event of an acquisition during the reporting year (Year Y), we shall seek to report greenhouse gas emissions for Year Y no later than one year after acquisition, but preferably from the date of acquisition. It should be noted that in some instances the new acquisition may be immediately occupied, or leased on a lease type which deems it outside of our direct management control, in which case the greenhouse gas emissions would be excluded or included within our Scope 3 data. Divestments: In the event of a divestment or demolition during the reporting year (Year Y), the asset(s) shall be included in the greenhouse gas reporting of Year Y for the absolute total emission figures, up until the date of disposal or demolition. Please note that acquisitions and divestments are not included in intensity metrics. This is because intensity metrics are based on a like-for-like methodology, meaning that assets are only included where there are two full, consecutive reporting years of data and there has not been a change of responsibility during these two years (i.e. fully occupied for two years or completely vacant for two years). This methodology is in line with the EPRA reporting standards. It enables the comparison of a consistent portfolio over time, regardless of changes to the total portfolio as these changes are excluded from the metric. Acquisitions and divestments are recorded using our property management system, which will trigger the request of consumption data for new assets, and will be used at year end to confirm the cessation of data coverage for disposed assets.

4 GHG calculation methodology We quantify and report our organisational GHG emissions according to following standards: Scope 1 emissions: WRI/WBCSD: GHG Protocol: A Corporate Accounting and Reporting Standard, Revised Edition (the GHG Protocol) Scope 2 emissions: WRI: GHG Protocol Scope 2 Guidance: An Amendment to the GHG Protocol Corporate Standard for the UK, where possible. A pragmatic, staged approach has been utilised to implement the market-based methodology for reporting across the UK. For Continental Europe (CE), the location-based methodology has been applied and we will review the appropriateness of using the market based method in future in CE as we progress our energy bureau service rollout. Scope 3 emissions: WRI/WBCSD: GHG Protocol: A Corporate Accounting and Reporting Standard, Revised Edition (the GHG Protocol) Scope 1 and 2 emissions are summarised in our Mandatory GHG Emissions Statement as part of our Annual Report and Accounts and EPRA tables are available in the Data Pack available on our website. Scope 3 emissions are also calculated but are not reported externally. Consumption data has been collected by third party energy consultants from a combination of meter readings and invoices. The consumption has been converted into a carbon dioxide equivalent. In 2016, DEFRA no longer publish international electricity emissions factors, and so the IEA set, titled CO2 Emissions from Fuel Combustion, OECD/IEA, Paris, 2016", was applied to CE electricity consumption. For Scope 2 Market Based reporting, the UK supplier specific emissions factors were applied and the emissions factors for any residual supplies were obtained from the European Residual Mixes 2014, Reliable Disclosure Systems for Europe Phase II. Results are reported in tonnes of CO2e (tco2e) for all emissions. The GHG protocol is a voluntary reporting framework, based on the principle of comply or explain, therefore a pragmatic staged approach was agreed with SEGRO to implement market-based method reporting. For the UK, the availability of the energy supplier, per supply, is comprehensive. As such, the average supplier specific emissions factor was applied. For the small number of supplies where the supplier had not made available the specific emissions factor, the national UK factor was used. There are a relatively small number of suppliers in the UK, with 85% of supplies with one supplier who provided their supplier specific emissions factor. For CE, there was limited visibility of the supplier for each corresponding meter. In addition, there are a large number of different suppliers across CE making the burden of collecting this information considerable for SEGRO. For 2017, the

5 market-based method for CE could not be calculated using tariff or supplier specific factors, so to comply with dual reporting the national factors were applied. Going forward, to improve this in future years, it is anticipated that the energy bureau service will include this information. We also report on emissions from our SEGRO fleet, where vehicles are owned, or under our operational control. Annual distance is collated per vehicle, and converted to carbon dioxide equivalent using the corresponding emissions factor associated with the fuel type, for an average car. We report fugitive emissions where they occur across our portfolio, by annually collating the type and quantity of refrigerants replenished, and converting to carbon dioxide equivalent using the emissions factor for the corresponding refrigerant type Estimation Methodology If there is any billed data for the meter in question, then this will be used to extrapolate for the rest of the year for that meter We have built into our formulas the ability to change the minimum threshold for the amount of time covered e.g. only if there is at least 30 days of billed data If there is no data at all for the year (or below previous threshold) then we will estimate using average kwh per m 2, for that EPRA building type (separate gas and electricity calculations) We have built in a calculation that prevents consumption being estimated for a building that has already been estimated in a previous meter at the same building. Calculation of average consumption for each EPRA building type: Where we have at least 11 months of data, (the remaining month would be estimated if missing), we use that in the average for that property type Where there are several meters in one property, then we sum up all meters to get a total for that building, and divide by its total floor area We believe that it is better to increase the sample size and use building type averages, rather than use an average for each country individually, due to the risk of small samples in several countries Emission factors For Scope 1 emissions, emission factors from DEFRA have been used. For Scope 2, we report emissions using both the market and location based methodologies as per the GHG Protocol. For the market based methodology, supplier-specific emission factors have been collected for UK only. For the non-uk portfolio, the Reliable Disclosure Systems residual emission factors have been applied. For future years, SEGRO aims to collate supplier

6 specific emissions factors for the Non-UK portfolio to enable full market based calculations. For the location based methodology, grid averages have been used, utilising DEFRA and IEA emission factors. The electricity transmission & distribution emission factors for 2016 had not been released by IEA at time of reporting and so the DEFRA 2015 electricity transmission & distribution emission factor values were applied. All emission factors are reported in tco2e, bar the IEA values which are available in tco2 only and the UK supplier-specific factors. Emissions resulting from travel within unclassified vehicles has been converted using the DEFRA emission factors for an average car. Similarly, where the fuel is unspecified, the emission factor for unknown fuel has been applied. Tenant sub-metering/recharge For countries where the visibility of tenant meters data is unavailable, recharge information has been used to calculate the proportion of consumption that is Scope 1 & 2 vs Scope 3. Where tenant recharge information is unavailable, the landlord/tenant consumption ratio reported in 2016 has been applied; for example if 80% of the main meter was recharged in 2016, then the 0.8 factor was applied to the 2017 data. Like for like intensity metric The chosen GHG intensity metric is calculated using the Scope 1 & 2 emissions within a like for like sub-set of SEGRO s overall portfolio. The like for like portfolio, used to determine the floor area denominator of the intensity metric, is defined as sites which have both been in the current portfolio for two full years and have remained either fully occupied or fully vacant for both years. This is used instead of absolute figures for comparative purposes, ensuring that the consumption and floor areas are relevant for the full two years of the calculation. Note that the location based emission factors were applied to the Scope 2 consumption for ease of comparison with the 2016 dataset. This like for like approach has been deemed most suitable for SEGRO as it excludes buildings that have been disposed of or acquired during the reporting period. By including these buildings, the additional floor space produces an enhanced reduction in TCO2e/m2.