Environmental, Social

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Environmental, Social Economic Responsibility
around the World

• Michael Creamer, Cushman Wakefield Healey
  Baker
• Francesca Hughes, Jones Lang LaSalle
• Johannes Ketel, Deutsche Bank
• Nick Axford, CB Richard Ellis
• Tim Tourville, Motorola
• Juliet Filose, BP

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Our Agenda Today

• Introduction Michael Creamer, CWHB
• Key Themes and Issues Nick Axford, CBRE
• BP Case StudyJuliet Filose, Global Real Estate
  General Manager
• Motorola Case StudyTim Tourville, Director of
  Real Estate Development EMEA
• Discussion Francesca Hughes, JLL
• Actions and Next Steps - Johannes Ketel, Deutsche
  Bank

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Introduction
Who cares about all this conservation stuff?
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Which world is your world?
By 2010, ONE of them will be coming your way
Enron
Corruption
License to Operate
Contamination
Risk
Good Governance
Insider Trading
Added Value
Sensitive
Green
WorldCom
Reputable
Oil Spill
Responsible
Shredder
Clean
CSR
Ethical
Child Labour
Oppression
Pollution
Sustainable
Balanced
Short Termism
Arthur Andersen
Respect
Aware
Exploitation
Equality
Efficient
and CRE will be in the front line
Good Business
Return
Triple Bottom Line
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Sustainability is

• Sustainability is about living and working in
  ways that meet and integrate existing
  environmental, economic and social needs without
  compromising the well being of future
  generations.

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CSR is

• Corporate Social Responsibility refers to
  corporate behaviour that demonstrates open and
  transparent business practices based on ethical
  values and respect for employees, communities and
  the environment.

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The Research Team
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The Interviewees
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From Beards To Boardrooms !

• We will demonstrate today that
• these are very real business issues,
• they are growing in importance,
• and they are having a very direct impact on the
  world of CRE.

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The Network of Stakeholders
Investor
Customer
Employee
Government
Supplier
Your Business
Community
Media
Activist
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The Risks are Significant
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Key Drivers

• Globalisation and outsourcing- more complex
  networks of relationships- a new range of
  cultural and social issues- lower levels of
  awareness and control- proactive supply chain
  management on the increase
• Consumers- not a major source of pressure in
  most cases yet- but the most significant
  source of risk if you get it wrong
• Legislation- environmental and energy
  legislation on the books- CSR a growing issue eg
  Sarbanes-Oxley- will be the principal driver for
  many businesses
• Investors- Socially Responsible Investing is big
  business- DJSI and others are bringing
  transparency and rigour to reporting- And
  highlighting that sustainable businesses are
  better investments

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Its About Good Business Practice

• Corporate sustainability is an attractive
  business approach to create long-term shareholder
  value. By integrating economic, environmental and
  social success factors in their strategies and
  operations sustainability-driven companies
  position themselves for the future.
• Dow Jones

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And It Produces Results
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Real Estate in the Spotlight

• Half of the UKs total CO2 emissions are related
  to property.
• 40 of the EUs greenhouse gases are due to
  energy consumption in buildings.

We have a cross-functional committee responsible
for CSR, diversity, charitable and community
activities, etc. The EMEA group used to meet
quarterly, but now meets monthly because it has
such a busy agenda. Around 40 of the actions
that come out of the group fall to CRE to
implement.
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Impacts on Real Estate
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Impacts on the CRE Function

• Corporate Triple Bottom Line Reporting
• Impacts on Building Location and Design
• CRE Reporting on Sustainability and CSR
• Changes in Building Specification and Pricing
• A Leadership Role for CRE

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Our Five Big Bets
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A Price Premium For Sustainable Buildings?

• As long as there is no regulatory requirement to
  produce sustainable buildings landlords will do
  little unless asked to by future tenants. Given
  that the increased cost will result in a higher
  rent, it is doubtful whether tenants will ask for
  sustainable buildings unless they themselves are
  pushed for it by shareholders, peers or specific
  rules.
• We would pay a premium where there are benefits
  from doing so decisions dont always need to
  make pure financial sense, and we may even pay
  more than life-cycle costing would suggest if
  this secures some other kind of benefit this
  may be difficult to cost but we would take these
  issues/benefits into account.

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Potential Price Movements?
Building Price

• Sustainable buildings currently attract a price
  premium relative to a standard institutional
  specification, but this will diminish over time
  due to
• Improved production techniques
• Changing perceptions of what is standard

100
Time
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Potential Price Movements?
Building Price

• Sustainable buildings currently attract a price
  premium relative to a standard institutional
  specification, but this will diminish over time
  due to
• Improved production techniques
• Changing perceptions of what is standard

100
Time
Thus over time, there will not be a price premium
for sustainability but there will be a price
discount for buildings that are sub-standard
because they are not sustainable. Legislation
(particularly regarding energy efficiency and
materials recycling) and life-cycle costing will
be major drivers.
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Who Wants An Unsustainable Business?!

• Business must be run at a profit, else it will
  die. But when anyone attempts to run a business
  solely for profit and thinks not at all of the
  service to the community, then also the business
  must die, for it no longer has a reason for
  existence.
• HENRY FORD, 1926

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Our Case Studies

• A sustainable business doesnt happen by
  accident. Our case studies show what two leading
  global organisations are doing to proactively
  build a business that will endure.

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BP Case Study Slides
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Motorola Case Study Slides
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Question Answer Session
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Action Points Getting Started

• Who in the company is leading sustainability or
  CSR initiatives?
• Identify which areas are most relevant to your
  company and to CRE.
• Identify who the companys stakeholders are.
• Review current policies, processes and
  performance.
• What performance measures, if any, are already in
  place?
• Does your industry support a performance
  measurement standard?
• Do any of these measurements relate to topics
  involve real estate or facilities management?
• Secure senior management commitment and
  resources.
• Build collaboration from across the business from
  the start
• Engage employees, customers and other
  stakeholders.

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Action Points Getting Results

• Define strategy, plans and targets.
• Put into practice, step by step, securing easy
  wins.
• Measure performance and work for continuous
  improvement.
• Report and communicate essential for success.
• Remember this is a journey not a one-off.
• Visit the web sites of standards setting bodies
  such as DJSI, LEED, BREEAM and European Union
  Environmental Directives.
• Visit www.sustainability.com for information and
  guides to monitoring and reporting on each aspect
  of the Triple Bottom Line, including advice on
  how to construct a business case for different
  types of activity.
• A copy of the BREEAM Offices 2004 Prediction
  Checklist can be found at www.products.bre.co.uk/b
  reeam .

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Action Points Getting Started - detailed
comments (1)

• Who in the company is leading sustainability or
  CSR initiatives?
• Establish who is leading sustainability CSR
  co-ordination within your company. For example
  is this
• managed by a particular department such as HR,
  manufacturing, etc., or is there on the other
  hand a
• corporate committee or even a separate corporate
  function that co-ordinates these issues and
  policies within
• your company. During our research we found that
  in most cases CRE is not be the leading
  department.
• Identify which areas are most relevant to your
  company and to CRE.
• This is closely linked to the type of industry
  you are in, we have seen the examples raised by
  BP as an
• energy company and Motorola as predominant
  manufacturing company in their case studies. In
  contrast, for
• the financial industry much focus will be on
  their lending and investments activities, e.g.
  which clients do
• they get involved in. Others may be more
  focussed on the immediate environment they
  operate in and for
• example fund on local projects and initiatives.
  Some of the general sustainability and CSR issues
  apply to
• the CRE world, but in relation to your portfolio
  specific issues will come up. You will notice
  that from an CRE
• perspective dealing with sustainability issues in
  a manufacturing plant will differ to an office
  building or a
• retail unit.

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Action Points Getting Started - detailed
comments (2)

• Identify who the companys stakeholders are.
• As has been highlighted in the presentation there
  are a number different stakeholders involved with
  the
• company. However, CRE need to assess which ones
  are most important to us. For example, are your
• premises directly accessed by your customers,
  such as retail units and certain offices, or are
  they accessed
• by employers and suppliers only, which could
  apply to manufacturing plants. Asses in what
  type of location
• and community your premises generally located.
  For example, are they pre-dominantly in central
  office
• districts, or are they rather located suburban
  areas. This often impacts the way your buildings
  are
• designed, fitted-out and maintained. There is
  also a relationship to the impact your company
  has on local
• employment, i.e. are you a major local employer
  or a just small employer within your community.
  Even more
• important, what reputation do you have as an
  employer and community member? Other questions
  you
• could ask yourself relate to the benefits you as
  an organisation offer your employees, such as do
  you
• provide catering and other type staff facilities
  or not? All these factors will play a role in how
  your company is
• being perceived by the different stakeholders.
  CRE are in a strong position to determine the way
  we design
• and maintain our premises and thus directly
  influence our stakeholders assessment of our
  organisation.

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Action Points Getting Started - detailed
comments (3)

• Review current policies, processes and
  performance.
• Find out what (if any) policies and processes
  regarding sustainability and CSR your company
  already has in
• place. Are these published just internally or
  also externally (e.g. companys web site)? Are
  your key team
• members familiar with these? Do you also apply
  these to your supply-chain and vendor community
  and if
• yes, are they aware of them?
• What performance measures, if any, are already in
  place, and what role does the CRE department play
  in monitoring and reporting these?
• These can include regular monitoring of for
  example (building) energy consumption levels,
  emission levels
• and waste management. In a next stage specific
  sustainability guidelines in relation to
  purchasing materials /
• supplies and even guidelines in relation to the
  acquisition and disposal of premises.
• Are these measures regularly tracked published,
  either as part of the CRE performance reporting
  and / or
• included in an overall company-wide report (and
  hence contributing to triple bottom-line
  reporting). It is
• useful to assess how receptive your companys
  senior management is to these measures, are they
  engaged
• and supportive of implementing such measures or
  do they show little interest in these issues?
  This will have
• a bearing on how much your CRE department can do
  in contributing to establishing and supporting a
• company-wide sustainability program.

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Action Points Getting Started - detailed
comments (4)

• Does your industry support a performance
  measurement standard?
• Try to find out what is generally being developed
  within your industry - and not necessarily just
  limited to the
• CRE world. For example, in the financial
  industry applies a number of guidelines from the
  Equator
• Principles, which focus on Project Finance. In
  Europe there is the example of the EPI-Finance
  2000
• initiative from a number of German and Swiss
  banks and the VfU guidelines (also initiated in
  Germany),
• which cover Internal Environmental Performance
  Indicators for the Financial Industry. More
  generally in the
• UK the BRE's Environmental Assessment Method
  (BREEAM) is being used to assess the
  environmental
• performance of both new and existing buildings.
  The ISO 9001 and ISO14001 guidelines also include
  a
• number of environmental elements.
• Key question to consider is do any of these
  measurements help your department moving forward,
• particularly regarding the sustainability agenda.
• Secure senior management commitment and
  resources.
• This has already been mentioned previously, if
  senior management is not the catalyst for
  implementing a
• proper sustainability and CSR policies, at least
  their buy-in and commitment is highly desired
  otherwise it
• will become difficult to justify the required
  funds and resources in the longer-term and the
  project may
• remain a limited mission that receives no
  company-wide acknowledgement support.

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Action Points Getting Started - detailed
comments (5)

• Build collaboration from across the business from
  the start
• A proper sustainability and CSR program within a
  company can only sustain if it has senior
  management
• support / sponsorship, and if it is implemented
  across all business divisions. There may be a
  particular
• division leading this, such as HR or Corporate
  Secretariat, or for larger companies there may be
  a separate
• function or committee that co-ordinate these
  policies and procedures. However it is
  implemented, the
• contribution of CRE should be significant and
  collaboration across the business functions can
  only be
• benefit the company and its stakeholders. And
  benchmark your results wherever possible!
• Engage employees, customers and other
  stakeholders.
• We found that companies that are most successful
  in putting sustainability and CSR to the
  forefront of their
• corporate agenda are those which have undergone
  to a certain extent a cultural transformation.
  Typically,
• employees, customers and other stakeholders have
  bought into the concept and in many cases openly
• support it. Usually, this is a process that
  started with strong senior management sponsorship
  and evolved
• into good business practise. However, it can only
  become truly successful if engagement with
  employees
• and customers happens at all levels of the
  organisation. Otherwise efforts can easily be
  undermined or
• worse, one can be accused greenwash. To quote
  DJSI Sustainability leaders embrace
  opportunities and
• manage risks, which derive from economic,
  environmental and social developments.