the next phase of sustainability targets for...

The next phase of sustainability

targets for Hammerson December 2014

Hammerson Sustainability and Materiality Review 2014 – Summary Overview and Targets

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Introduction

1. Brief

In July 2014, JLL and Forum for the Future were appointed by Hammerson to provide support in (re)setting the

company’s next phase of sustainability targets through a combination of stakeholder engagement and

leadership benchmarking. This report presents the high level findings of the work undertaken by JLL and Forum

for the Future and the list of sustainability targets that has been drawn up as a result.

A note on terminology:

The term ‘sustainability’ has been used throughout this report to encompass Hammerson’s broadest

environmental, social and economic responsibilities and contributions. This definition of sustainability includes

all of the firm’s core responsibilities to its stakeholders, but goes well beyond these to address longer-term

systemic or strategic change management issues related to political, environmental, demographic or societal

shifts.


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Summary of findings and recommendations

2. Overall ranking of material issues

In order to inform the setting of Hammerson’s next phase of sustainability targets, JLL and Forum for the Future

asked stakeholders to identify the sustainability issues that they felt were most material to Hammerson from a

long-list of eighteen potential sustainability issues.

Stakeholders were also asked to select their top 5 future issues. The results of these future selections were used to test and validate the overall materiality findings. The net result was that ‘energy security and demand’, ‘technology’, ‘place-making’ and ‘adapting to climate change’ were emphasised.

Overall, 11 material issues were identified for Hammerson representing a range of environmental, social and economic issues. The full list of 18 issues and the 11 identified as material, those given a high or medium rating overall, are shown below in Table 1 below.

Table 1: Ranking of current material issues by all stakeholders

Theme Issue Materiality

Environmental Energy security and demand High

Economic Technology High

Social Community engagement, investment and relevance High

Environmental Waste High

Economic Meeting customer sustainability objectives High

Environmental Water Medium

Environmental Material use & sustainable procurement during development & operation Medium

Social Placemaking Medium

Environmental Adapting to climate change and climate change policy Medium

Economic Impact of sustainability on value Medium

Social Local economic development and demographic change Medium

Economic Employees Low

Social Health, safety & labour conditions Low

Economic Building labels (including LEED, BREEAM & EPCs) Low

Economic Governance and reporting (including data and communications) Low

Environmental Biodiversity conservation & enhancement Low

Social Diversity & equal opportunity Low

Social Workforce productivity and well-being Low


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3. Overall assessment of Hammerson’s sustainability leadership position

As part of the targets review Hammerson’s sustainability performance was assessed using the JLL

Sustainability Journey Model©. This was considered important as a means of reflecting on what the company

has achieved relative to its peer group in terms of sustainability and what it wants to achieve.

Over the last 15 years, Hammerson has allocated considerable investment, time and resource to sustainability.

This investment has resulted in mature management processes, a resilient governance structure, transparent

disclosure of performance against targets and KPIs and a culture that encourages innovation and engagement

with stakeholders.

Figure 1: JLL Sustainability Journey Model ©

Summary of in-sector leadership benchmark findings

The leadership benchmarking found that overall, Hammerson is at the ‘Realising the commercial benefits’ stage

of the sustainability journey, performing in line with or better than the majority of peers selected for this

investigation across JLL’s Hallmarks of Sustainability Leadership ©. Within this there are definitely pockets of

excellence by Hammerson which demonstrate true sector leadership.

Across five of our hallmarks – ‘Leadership and Governance’, ‘Everyone Understands Sustainability’,

‘Sustainability delivers value’, ‘Value Chain’ and ‘Culture of Innovation’ - Hammerson was found to be leading

the property sector in relation to JLL’s sustainability journey model. This is a reflection of its mature and

embedded approach to governance, its connected reporting framework, its in-depth engagement with, and

assessment of, the performance of its suppliers, and its previous R&D target (although this commitment will

need to be reset and refined if Hammerson’s leadership position in this area is to be maintained).

For seven of the hallmarks – ‘Vision’, ‘Stakeholder engagement’, ‘Transparent Communication’, ‘Total Impact’,

‘Collaborative Models’, ‘Targets and KPIs’ and ‘Standards and Ratings’ - JLL considers Hammerson to be

realising the commercial benefits. In these instances Hammerson has identified the benefits of addressing


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these issues both for stakeholders and for its own business. It should be noted that in six out of seven of these

hallmarks Hammerson is outperforming the selected peers, but has yet to employ a strategy that JLL considers

to be genuinely sector-leading.

Out-of-sector leadership benchmarking summary

Whilst the in-sector leadership benchmarking process provides important insight into the company’s

performance, it was also felt important to draw on innovative and emerging approaches from out of sector

companies that are relevant to Hammerson’s business activities. Forum for the Future were asked to bring their

expertise and experience in working with a range of different types of business to this process.

Forum for the Future sees leading companies pushing sustainability forward on two fronts:

• Shaping the context for a brighter future: Companies are reaching beyond their business boundaries – to

customers, investors, NGOs, Government, competitors and other businesses – to overcome specific barriers

and enable the development of more sustainable products, services and operations.

• Innovating to win: At the same time, companies are developing innovations which will help them to succeed in

the new operating context they have created, enabling their customers to live more sustainable lives.

At the start of this project, Forum for the Future worked with Hammerson to identify out-of-sector examples of

companies demonstrating activities in both these areas. They then reviewed their approach, identifying lessons

for Hammerson to learn from each business. A summary of these lessons is provided in the following section.

Lessons for Hammerson from out-of-sector best practice

• Use sustainability to drive growth: Unilever has successfully measured and communicated the business

case for sustainability which demonstrates how sustainability can win new markets and improve efficiency

which benefits the bottom line.

• Use sustainability to drive innovation: Unilever has used sustainability to drive innovation- most notably in

packaging and production efficiency. Hammerson could position sustainability issues such as resource

constraints in a similar way to drive radical innovation in design and building management.

• Focus innovation on meeting the societal needs that are best suited to your skills and expertise: DuPont

identified the major challenges that society is currently facing where they could really make an impact and then

focussed their innovation pipeline around meeting these needs.

• Work collaboratively: Nike identified the need to remove toxics from its supply chain. This could not be

achieved by Nike alone so they invited members of their supply chain and competitors to work together to

establish a road map towards eliminating toxics from the supply chain.

• Be proactive: Nike and others such as Lego have recently found themselves under intense pressure from civil

society, enabled by developments in technology such as social media. The most recent Greenpeace

campaign, for instance, led to Lego ending its partnership with Shell. By focussing activity on its material

impact areas and being transparent in its reporting, Hammerson could reduce the risk of civil society pressure.

• Reach out beyond your immediate operations: Kingfisher identified that a large proportion of its impact is

caused by customers. They have therefore set targets which require them to engage more with their customers.


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This approach has also been used by others such as O2 who have committed to helping 10 million people live

in easier and more sustainable ways. For Hammerson, this could mean working with tenants and shoppers.

• Pilot new approaches and learn from them: Both B&Q and M&S have invested in “Eco-learning stores”

as pilots to learn from.

Lessons for Hammerson from out-of-sector innovations

Change is often not led by big companies and innovations in adjacent sectors and spaces can have a disruptive

effect on the business context. We therefore also identified some innovations which are currently niche but

could have implications for the context in which Hammerson currently operates:

Some disruptive innovations

GoodGuide A smartphone app, which enables consumers to review various health, sustainability

and other criteria by scanning the product’s barcode. It currently catalogues information

about over 210,000 products.

Amazon Filed a patent for “anticipatory shipping” in January 2014, a system that can predict

purchases and prepare products for shipping before the purchase has even been

made.

Brixton Village Developed from a project which aimed to bring life back to an old covered-market,

Granville Arcade. It began by Lambeth Council offering 20 properties rent-free for 3

months. It has become Brixton’s culinary and cultural hub with food, independent

shops and live music

Oxford’s Low

Carbon Hub

A social enterprise that is championing community energy. They are developing

renewable energy schemes with businesses, the public sector and communities which

are owned by and deliver power for the community.

If some of these innovations which are currently quite niche went mainstream it would change the context in

which Hammerson operates. Therefore, Hammerson needs to be looking outside its traditional competitors and

sector for technology and customer behaviour developments that will shape the way people use and view

physical retail space.

4. Hammerson Sustainability Targets 2015 - 2020

The materiality study, in-sector and our of sector reviews and stakeholder engagement have provided a robust and informed foundation from which Hammerson has developed a set of sustainability targets to implement from 2015 to 2020. The full list of targets is set out in Table 2 below. The list is relatively long but has been designed to reflect differences in the portfolios as well as the opportunities that emerge from the two key elements of the business – development and asset management. The targets are stretching, particularly the carbon targets, and will require the ethos of collaboration that exists within the company to be effective with our external stakeholders too. We are clear that moving up to the next level in terms of sustainability requires collaboration with our clients, suppliers, investors and consumers – it is not something we can do in isolation. To support this


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a set of targets relating to workforce productivity have been included to ensure we maintain the internal skills necessary at all levels of the business to collaborate with our external stakeholders to bring about greater change. To conclude, we would like to thank all of the stakeholders, both internal and external who gave so generously of their time and expertise in supporting this process. The external stakeholders are listed in Appendix 1. We would also like to invite feedback on the work we have done. We would welcome comments on the process, the targets themselves or both.


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Table 2 Hammerson Sustainability Targets 2015 – 2020

Hammerson Sustainability Targets 2015 – 2020

Complete by the end

of: Materiality

Protect and Enhance

1 Reduce operational energy use by 10% by 2018 across the like for like shopping centre and retail parks portfolio against a 2015 baseline

2018 Energy Security and Demand

2 Reduce absolute operational carbon emissions by 18% by 2020 against a 2015 baseline for the like for like UK and France shopping centre portfolio


3 Reduce absolute operational carbon emissions by 18% by 2020 against a 2015 baseline for the like for like UK and France retail parks portfolio


4 Build 2 mWh renewable capacity into our existing assets and new developments by 2020 2020 Energy Security and Demand

5 Design and build all new UK shopping centre developments entering planning after 1st January 2016 to be connected to decentralised energy networks or enabled for future conntection

To be reviewed annually Energy Security

and Demand

6 Achieve 100% diversion of waste from landfill for construction projects in the UK by 2020 2020 Material use and sustainable Procurement

7 Achieve 100% diversion of waste from landfill for the UK shopping centre and retail parks portfolio (excluding fit out waste) by 2020

2020 Material use and sustainable Procurement

8 Achieve 98% diversion from landfill for the French shopping centre and retail parks portfolio in France by 2025



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9 Achieve 98% diversion from landfill for construction projects in France by 2025 2025 Material use and sustainable Procurement

10 Achieve 100% diversion of waste from landfill for Hammerson controlled UK fit out waste by 2020 2020 Material use and sustainable Procurement

11 Achieve 100% diversion of waste from landfill for retailer controlled fit out waste in Hammerson UK managed assets by 2020


12 Reduce landlord water intensity by 10% by 2020 against a 2015 baseline for like for like shopping centre portfolio in the UK and France


13 Non-potable water from water capture and recycling systems or similar to meet 100% of irrigation demands AND 25% of flushing demand for all new developments and major extensions entering planning and design after 1st Jan 2015

To be reviewed annually

Material use and sustainable Procurement

Innovate and Learn

14 Establish specific funding approach for sustainability initiatives e.g. Green Bonds, Low Carbon Innovation Fund – at either asset, community or portfolio level by 2020

2020 Technology and Innovation

15 Enter into an innovation partnership focused on carbon efficiency with a technology company by 2020


16 Create a portfolio of “Pioneer Places” to showcase and test innovative sustainability solutions before rolling out learning where appropriate into mainstream portfolio and externally by 2020


17 As part of Hammerson Futures develop and implement a design standard for shopping centres and retail parks by 2016 to ensure they remain flexible and accessible for an increasingly diverse range of customers


18 Work with a partner/partners to trial pioneering, restorative approaches to biodiversity with demonstrable improvements at six managed assets by 2020



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Serve and Invest

19 Community design workshops to be held for all UK shopping centre developments and major extensions by the end of RIBA Stage 2 from 1st January 2015


Community engagement, investment and relevance

20 100% of community investment partnership projects beginning initiated after 1st Jan 2015 to have outcome-orientated KPIs identified using the LBG model (which are measured and adapted over the lifetime of the partnership) by 2017

2017

Community engagement, investment and relevance

21 Perform an assessment in 2015/16 of our total Placemaking impact, establishing a baseline from which to set stretching commitments by 2018

2018 Placemaking & Local Econ Dev

22 Make a measurable, positive impact on the skills and employability profile of target community by 2020, measured at 100% of developments and 50% of operational assets, against, 2016 baseline (target 21)


23 Demonstrate a positive change in quality of life in the local communities around at least 75% of UK Shopping Centre assets by 2025 against a 2016 baseline


24 Produce diversity and demographic plans for managed UK Shopping Centre assets to ensure a diverse array of services are available to meet the needs of the community by 2020


Partner and Collaborate

25 Allocate a dedicated resource with responsibility for improving relationships and realising partnership opportunities on sustainability with retailers by 2016

2016 Meeting customer sustainability objectives

26 Set up a sustainability learning group with major retailer customers (by value and/or floor area) by 2017



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27 Establish and deliver an annual training programme for leasing and marketing teams in how to engage retailer customers in achieving more sustainable outcomes

2017

Meeting customer sustainability objectives

28 Deliver an annual consumer facing event to provide a platform for sustainability engagement and measure change in consumer attitudes in the UK and France

2020

Meeting customer sustainability objectives

29 Run the Positive Growth Awards or similar centre-based retailer engagement activity across all UK and French shopping centres by 2017


30 Ensure that an annual programme of sustainability engagement with shareholders and investors takes place from 2015 onwards


Impact of sustainabiity on value

31 Introduce refreshed sustainable supplier survey in 2016 reflecting different sectors', contract size requirements and material risks in the UK and France


32 Hold a supplier engagement event in either the UK or France to coincide with the publication of annual supplier report every two years (first event to be held by the end of 2016)


Upskill and Inspire

33 Ensure that 75% of Hammerson France employees have received sustainability training by 2017 2017 Workforce productivity and wellbeing

34 Put in place one-to-one sustainability inductions for new Hammerson employees from 2015

onwards 2015

Workforce productivity and wellbeing

35 Re-assess the sustainability training needs of Hammerson UK employees in 2015 in order to roll-out needs-based sustainability training from 2016 onwards

2016 Workforce productivity and wellbeing

36 Review Hammerson’s approach to diversity management in 2015 and put in place a plan to address any issues identified by the end of 2016

2016 Workforce productivity and wellbeing


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Lead and Challenge

37 Calculate Scope 3 carbon footprint for Hammerson Group by 2017 and determine routes to reduction


38 Establish by 2017 a baseline embodied environmental impact (C02e) for the design of new developments and major refurbishments to enable the business to set a reduction target


39 Develop a suite of metrics that demonstrate the value generated by sustainability for the business by 2020

2020 Impact of sustainability on value

40 Embed whole life costing into capital expenditure financial decision making by 2025 2025 Impact of sustainability on value


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Appendix 1: List of external stakeholders engaged

Tenant Dave Rostron H&M

Tenant Tony Jacobs John Lewis

Tenant Suzie Elkerton M&S

Tenant Peter Ravenscroft Alliance Boots

Supplier Amie Shuttleworth Sir Robert McAlpine

Supplier David Jones Eversheds

Supplier Nick Thursby Chapman Taylor

Supplier Bill Addis Buro Happold

Supplier Vicky Cotton Workman

Supplier Julie Hirigoyen JLL

Investor Paul Pulze AEW

Investor Sander-Paul Van Tongeren APG

Investor Mikkel Skougaard Blackrock

Investor Shabab Qadar Invesco

Investor Mark Harland Henderson Global Investors

Investor Guy Barnard Henderson Global Investors

Investor Felipe Gordillo BNP Paribas

Investor Sarah Slater Canada Pension Plan Investment Board

Investor Rod Carnan Canada Pension Plan Investment Board

Investor Angeli Benham LGIM

Investor Matthias Narr Robeco

Investor Andrew Mason Standard Life

Investor Remco Simon Kempen and Co

Communities Glen Waters Samaritans

Communities Helen Drury BCSC

Communities Tina Barton Wot Box

Communities Sally Roberts ELBA

Communities Monique Rebeiro Lives Not Knives

Communities Tracy Duggan National Skills Academy

Communities Andy Tickner Southampton City Council

Sophie Walker

Director

Upstream Sustainability

Services

30 Warwick Street

London

W1B 5NH

T: +44 (0)20 7399 5078

[email protected]

Elisabeth Filkin

Senior Consultant

Upstream Sustainability Services

30 Warwick Street

London

W1B 5NH

T: +44 (0)207 399 5369

[email protected]

Martin Hunt

Head of Networks and Partnerships

Forum for the Future

19-23 Ironmonger Row

London

EC1V 3QN

T: +44 (0)20 7324 3605

[email protected]

Zoe Le Grand

Principal Sustainability

Advisor

Forum for the Future

19-23 Ironmonger Row

London

EC1V 3QN

T: +44 (0)20 7324 3628

[email protected]

mailto:[email protected]




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