Loose fit
2021 Responsibility Report
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A word from our Chief Executive “Derwent London takes a ‘long-life, loose-fit, low-carbon’ approach to its distinctive, design-led buildings.”
2021 was an important year for Derwent London. In addition to being the busiest period for investment activity since 2007, we continued to progress and extend our environmental, social and governance (ESG) agenda. All of which is making us stronger, more inclusive and more innovative.
Alongside further increasing our significant focus on the ‘E’ in ESG, our activity is broader, encompassing each of the three pillars. The ‘S’ in ESG is rightly gaining importance and we expect greater emphasis going forward. A particular highlight is the increased funding we made available during the pandemic through our long-standing Community Fund which helps us support those individuals and organisations most in need.
Derwent London takes a ‘long-life, loose-fit, low-carbon’ approach to its distinctive, design-led buildings. As occupiers become increasingly demanding and selective of their space we must strive to remain ahead of the curve. Whilst our portfolio has strong sustainability credentials, our approach reaches across the whole business, incorporating our financing. Including our new £350m green bond, we now have total green debt capacity of £650m.
As part of our net zero carbon programme, we progressed a number of key initiatives. These included the submission of a planning application for a new solar park on our Scottish land and exploring further opportunities for tree planting. We also participated at COP26 to bring greater focus on the actions required across the real estate industry to meet the climate crisis.
Our first Stakeholder Day held in September, together with the results from our net zero carbon occupier survey, identified several collaboration opportunities to reduce our collective impact. It was great to see our ambitions shared by so many of our occupiers and supply chain; the scope for future collaboration and sharing of best practice is exciting.
Energy Performance Certificates (EPCs) are an important part of the UK’s move towards being net zero carbon by 2050. Derwent London is already effectively compliant with the forthcoming 2023 requirements which will apply a minimum rating of ‘E’ to operable leases. Legislation is expected to change, with the minimum rating rising to ‘B’ by 2030. Including on-site projects, our portfolio is already 61% compliant which compares to JLL’s estimate that just 23% of London offices are ‘B’ or better. We commissioned a detailed external report which estimates it will cost c.£97m to uplift our EPC ‘C’ or below buildings to 2030 compliance, which is less than 2% of our current portfolio valuation.
The whole Derwent London team, along with our supply chain, is crucial if we are to meet our net zero carbon targets. We want to deliver high quality, sustainable spaces which positively impact their surrounding communities. To do this, we work with like-minded organisations that share our vision and ambition.
The health and wellbeing of our staff is paramount. In addition to the physical aspects – such as continuing to review our Covid-19 protocols – diversity and inclusion (D&I) was an area of particular focus in 2021 and we were delighted to achieve the National Equality Standard (NES) in December. Being ranked in the top 5% of NES-accredited companies was a great way to end the year, particularly for everyone who has worked to strengthen our D&I culture.
We conducted our fourth employee survey, the results of which were both very encouraging and consistent with previous surveys. Overall staff satisfaction levels remain high at 90.5% and nearly 90% of respondents ‘would recommend Derwent London as a great place to work’.
Finally, it would be remiss of me not to end with a word of thanks: to all of our team for seeing us through unprecedented times; to all of the occupiers working with us to reduce the carbon footprint of our portfolio; to the suppliers who are meeting our ESG standards and to all of the partners and stakeholders who continue to support our work – thank you.
Paul Williams
Chief Executive
Direction of travel “We are pressing on with our work to improve life in our communities, reducing our environmental impact and being transparent in our approach.”
Hello, and welcome to our 10th Responsibility Report – our annual review of Derwent London’s environmental, social and governance (ESG) work and this year presented for the first time in a full online format.
Just like 2020, 2021 was an extraordinary year. As lockdown restrictions eased in the spring, companies moved to a hybrid pattern of working, and occupiers made a cautious return to the office. It was a year of disruption, for our own business, our occupiers, stakeholders and suppliers, and for all our efforts to promote ESG across our activities.
It was never going to stop us though – least of all in our push towards becoming net zero carbon. After the big falls of 2020 due to lower occupancy, our 2021 energy consumption and carbon footprint held more or less steady. Midway through 2020 we launched our Net Zero Carbon Pathway, detailing our ambitions and actions to achieve net zero carbon by 2030. In the pathway’s first full year, we pressed ahead with our aims, stepping up plans for the electrification of our buildings, submitting a planning application for a solar park that could meet almost half of our managed portfolio’s electricity needs, and building stronger relationships with our occupiers so that we can support them in their own low-carbon ambitions.
Our first net zero carbon occupier survey, carried out in September, laid the foundations for future collaboration, establishing a dialogue that will enable us to share with our occupiers best practice and opportunities for setting targets as well as benchmark their performance.
Meanwhile, our study into technical feasibility and costs of upgrading the EPC ‘C’ or below-rated properties in our portfolio to a more energy-efficient ‘B’ rating or above by 2030 returned welcome news. None of our buildings or spaces present unsurmountable challenges, and we expect to have our entire portfolio at EPC B or better by 2030.
Further progress towards net zero carbon came with the strong support for our first green bond, which was listed on the London Stock Exchange in November. This saw us secure £350m of low-interest rate, long-term debt to help finance our net zero carbon development projects.
Covid-19 has not prevented us from playing our part in our communities, either. In Fitzrovia and the Tech Belt, we supported a raft of projects that promote social cohesion through our Community Fund, most of which were facing various challenges. We also continued our contributions to local and national organisations focused on mental health and homelessness.
We are pressing on with our work to improve life in our communities, reducing our environmental impact and being transparent in our approach. With eight years until 2030, we have work to do to reach net zero carbon. But with the sense of purpose that our pathway gives us, and the collaboration of our occupiers, suppliers and stakeholders, I know we will get there.
I hope you find our new report format useful, and it provides all the insights into our work that we always strive to give. If you would like to find out more or have any feedback, please drop us a line at sustainability@derwentlondon.com – thank you.
John Davies
Head of Sustainability
99% EPC compliance for 2023
Scottish solar park could provide 40% of our total electricity needs
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We support numerous charities and organisations working in our local areas. During the pandemic, our priority to support disadvantaged communities and individuals has never been more relevant.
Read MoreIn 2021, our annual fund of £100,000 was divided between 19 projects and, for the second year, provided some core funding to help keep some organisations up and running through the pandemic.
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