Sustainability is an important value indicator for our business, and by using our unique approach we see our spaces let quickly and on better terms
Developing and maintaining strong relationships within the communities in which we operate is an essential part of our management approach.
At Derwent London, we do not view corporate governance as an exercise in compliance but as an evolving and core discipline which generates value for our stakeholders and underpins our success.
We’re building a business that’s net zero – balancing the carbon that we put in against that which we take out. In 2020, we pledged to reach that landmark within ten years, and we published our Net Zero Carbon Pathway to show how we are going to get there.
One of the cornerstones of our efforts is everything we do to reduce the carbon footprint of our new developments and refurbishments: cutting their embodied carbon (the emissions generated by every production and construction process required to complete a scheme), as well as minimising their energy and emissions in operation.
In 2020, we completed 80 Charlotte Street W1 in Fitzrovia, a 377,000 sq ft mixed-use scheme and our first all electric and net zero carbon development. Other major schemes in the pipeline will follow suit, but our targets for decarbonising apply just as much to the many small and medium-sized properties in our portfolio as they do to the larger ones.
In 2021, we were able to add four more properties to our all electric list. As part of the refurbishments of 6-8 Greencoat Place SW1, 88-94 Tottenham Court Road W1, 19-23 Fitzroy Street W1 and 3-5 Rathbone Place W1, all in Fitzrovia and completed in 2021, we replaced the existing gas-fuelled heating and hot water systems with state-of-the-art equivalents such as air source heat pumps (ASHPs), powered by renewable electricity. Likewise, Francis House SW1 in Victoria and 43 Whitfield Street W1 in Fitzrovia are comprehensive refurbishments with new, all electric heating systems, both due to complete in H1 2022 and representing 71,100 sq ft.
To inform the Net Zero Carbon Action Plans that we are putting in place for each property and drawing on the all-electrification appraisal conducted across our portfolio in 2019, we are mapping out the decarbonisation route for specific buildings from now to 2030. We are also running assessments of embodied carbon and operational energy for our smaller projects and looking into new measures and technologies for reducing both, across the portfolio. For more on embodied carbon and operational energy, go to the Net Zero Carbon section of our report, and for this year’s numbers, head to the Data section.
We are raising our expectations for our new and modernised properties all the time, and it’s essential that our consultants and contractors have crystal-clear guidance on what those expectations are. Our newly updated Responsible Development Framework (RDF) sets out the guiding principles for our project pipeline: the actions, deliverables and responsibilities of consultants and contractors at each stage of a development, and the reporting frameworks they should use to help meet the Project Sustainability Plan created for each scheme.
The RDF aims to set the sustainability performance bar higher with each project. The update puts more emphasis on embodied carbon reporting into the framework and sets more demanding minimum performance targets in areas such as water consumption.
From 2021, all new-build projects and major refurbishments are required to achieve, as a minimum, a 4.5-star NABERS UK rating. NABERS UK is an assessment tool originally developed in Australia for rating the energy performance of buildings, and which is now being administered by the Building Research Establishment (BRE) as a benchmark system in the UK. Derwent London is one of the first developers in the UK to adopt the system and was part of the group that brought it to the UK. For commercial office buildings, NABERS UK provides a rating from one to six stars, with six stars representing market-leading energy performance.
Alongside our latest requirements – minimum BREEAM Excellent rating, EPC rating of ‘A’ for new-builds and at least a ‘B’ for all refurbishments, and LEED Gold mark for new-builds – the 4.5-star NABERS rating adds to an already stringent suite of sustainability standards that our building projects must attain, shifting the focus on to ongoing performance.
Progress on our developments over 2021 - continuing to cut embodied carbon minimising energy and emissions in operation.
Progress on our developments over 2021 - continuing to cut embodied carbon minimising energy and emissions in operation.
This mixed-use scheme completed in June 2020 and comprises 322,000 sq ft of offices, 43,000 sq ft of residential (10,000 sq ft affordable housing), 12,000 sq ft of retail and a new public realm park.
The project is our first all electric scheme with all the central heating and cooling provided from air source heat pumps, significantly reducing carbon emissions.
The offices are now fully pre-let following lettings to Arup (133,600 sq ft, £9.7m pa), The Boston Consulting Group (164,150 sq ft, £14.0m pa), Elliott Wood (11,000 sq ft) and Lee & Thompson (13,000 sq ft).
A comprehensive refurbishment at this former six-storey Victorian warehouse completed in June 2021. The entire property has been let to Fora.
Multi-let freehold office building. In August 2018, we exchanged contracts on a 36-year leasehold interest acquisition at the property to gain control of the site and, in conjunction with our adjoining ownerships, have the redevelopment potential to increase the floor area from 129,000 sq ft to in excess of 220,000 sq ft.
After the embodied carbon of our major developments, one of the biggest slices of our emissions comes from the energy consumed across our portfolio: to heat and cool our occupiers’ workspaces, and to power their lighting, computers, servers and other equipment. These are our Scope 3 emissions – they occur within our value chain, but we have no direct control over them. Even so, there’s still a lot we can do to help drive them down.
There is a wealth of opportunity to work with our occupiers to, where necessary, influence their thinking and behaviour, and encourage good, energy-efficient habits.
Our occupiers are as diverse as our buildings. They range from small creative studios occupying one corner of one floor to blue-chip, global brands leasing entire buildings. We need to engage them all. First, though, we need to understand in detail where they are in their sustainability journeys. Where are they in terms of policies and practices? How can we help them reduce their emissions? Do they have their own pathways towards net zero? And who is driving these changes within their organisations?
In September 2021, we carried out a net zero carbon occupier survey, to get to the heart of what’s happening across our portfolio. The survey gave us a much deeper understanding of where occupiers are in terms of their own energy, water and waste measures, carbon offsetting and employee climate engagement programmes, as well as how best to support them in reducing their overall emissions.
Key findings show that our occupiers support our Net Zero Carbon Pathway and are striving for similar goals. However, they are looking for help and support in a number of areas, such as understanding their emissions, data collection and setting their own targets, as well as influencing employee behaviour and their supply chains.
We are developing a conversation around these issues, starting by refreshing our Green Forums and enabling the sharing of best practice between occupiers and buildings, as well as providing tips and case studies relevant to each property – something that was flagged as a preferred communication method by our survey. We are also working closer than ever with our mechanical and electrical (M&E) contractors to track and monitor the energy demand and performance of occupied buildings against our targets. We are introducing energy project and reporting templates, monthly building meetings, and changes to the M&E contract specification to include environmental performance reduction targets.
Head here for more on the net zero carbon occupier survey.
London is our home. However, there are two particular neighbourhoods that are close to our heart – Fitzrovia and the ‘Tech Belt’ (between King’s Cross and Whitechapel).
Behind the main thoroughfares that most people see are living, breathing communities where local services, support networks and schools serve local residents. Our focus on these has allowed us to build close bonds and partnerships with our neighbours across each community.
Those relationships often start with our Community Fund, which annually distributes funding to projects chosen for their potential to promote social cohesion, with a focus on community events, environmental improvements, health and wellbeing activities, music and culture, and all sorts of ongoing help for individuals and groups.
The fund allows us to reach out to groups, initially financially and then with other kinds of support such as volunteering, but it’s not a one-way street. The lines of communication we are able to open, and the inputs and advice local groups are able to give us, aid our understanding of what’s needed in the area, and guide much of what we do on the ground. Dozens of organisations, from schools, soup kitchens and sports clubs to playgrounds and theatre groups, have benefited from our support in the nine years the fund has been running.
Community Fund for 2021
projects funded through our Community Fund during 2021
In 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.
Recipients ranged from a children’s literacy project and a neighbourhood greening initiative in Fitzrovia to a group providing musical and artistic activities for a care home and a cookery school for refugees, migrants and asylum-seekers in the Tech Belt.
We are proud of what our Community Fund has achieved, but we need to make sure it remains fit for purpose. In 2021, we turned to one of the organisations we support through our wider corporate giving programme to help us review our Community Fund processes and refresh our thinking. Over the course of an afternoon in October, Chickenshed, an inclusive youth theatre company worked with us to explore how we could make the application process more open, inclusive and sensitive to the needs of community groups, looking at language, tone and unconscious bias. The no-filter, blue-sky approach of Chickenshed’s Youth Task Force made it an engaging and eye-opening experience that is reshaping the way the Community Fund is managed and administered.
We are looking forward to making changes in 2022 and getting to know all our 2021 Community Fund projects better in the months and years to come.
“It just felt such a big deal this year to continue to build our relationships with our families, at a time when it’s been incredibly difficult for them.”
As well as teaching the best recipes from around the world, Migrateful cooking classes help support migrants and refugees rebuild their lives.
Across our communities, and across the country, this is a time of need. In recent years, Derwent London’s programme of corporate giving has allowed us to contribute to good causes in our sector and communities, with an emphasis on mental health and homelessness.
In contrast to our Community Fund, which focuses on targeted commitments, corporate giving gives us the freedom to balance instant support for a wide range of small-scale good causes – some identified by Derwent London employees – with longer-term commitments to individuals or larger charitable organisations.
In 2021, our Sponsorship & Donations Committee distributed a budget of around £350,000 across a host of beneficiaries, including:
To help promote diversity and access in property-related higher education, we are also funding two students over the course of their studies. Through the University of Reading’s programme, the ‘Reading Real Estate Foundation’, which supports diversity in the property sector, we are supporting an undergraduate real estate and planning student at Henley Business School. Also in 2021, our full four-year scholarship for UCL’s Bartlett School of Architecture’s new MSci programme entered its second year.
The constantly shifting demands of working amidst a pandemic have made this another challenging year for all our employees. We appreciate that everyone worked extremely hard in difficult conditions, and the company has remained 100% committed to safeguarding and supporting the health and wellbeing of each and every individual.
With the rise of 'pandemic fatigue' and its impact on people's day-to-day lives and work, we have been focusing harder than ever on safeguarding the health and wellbeing of our people. By the close of 2021, we had trained 18 of our employees to support their colleagues as Mental Health First Aid (MHFA) Champions.
Our champions are present in all teams, right across the business, armed with the tools and skills to open a dialogue with colleagues about mental health issues, and promote early intervention if necessary. Together, they are raising awareness and helping reduce the stigma around mental health.
Through a mix of group activities, presentations and discussions, our MHFA Champions are equipped with:
In 2022, our ambition is to go further, and roll out mental health awareness training across the company.
At Derwent London, corporate governance is not seen as simply an exercise in compliance. To us, it is an evolving, core discipline which generates value for our stakeholders and underpins our success.
The oversight of ESG (environmental, social and governance) matters is vital. It not only allows the Board to understand holistically the impact of its decisions on key stakeholders and the environment, but also identifies any significant changes in the market. Emerging trends and risks, for example, can be understood and factored into strategy discussions. ESG is overseen principally by the Board, the Responsible Business Committee and the Sustainability Committee.
Climate change governance
The governance of climate change risk and opportunities is ultimately the responsibility of the Board, but day-to-day management is the role of the Executive Committee and senior management.
The Board monitors the Group’s progress through our science-based targets, which were independently validated and approved by the Science-Based Target initiative (SBTi) in 2019. Our environmental performance data is externally assured by Deloitte LLP and, for 2021, our Scope 1, 2 and 3 greenhouse gas emissions data, intensity ratios and energy data received ‘Public Reasonable Assurance’.
Our strategy and targets for energy consumption and carbon emissions are set and monitored by the Board. The Board, Responsible Business Committee and Executive Committee receive regular updates and presentations on environmental and sustainability performance from our Head of Sustainability.
Executive director bonus dependent upon climate-related targets
Green finance governance
Our Green Finance Framework gives us the ability to clearly link our financing to the environmental benefits generated by our activities. The Audit Committee receives annual updates on our green finance initiatives, as well as our reporting disclosures.
Our Green Finance Framework received independent assurance from Deloitte LLP that its application aligns with the Loan Market Association’s Extended Green Loan Principles; the complete assurance statement is available on our website.
Responsible payment practices
As a signatory to the Chartered Institute of Credit Management (CICM) Prompt Payment Code, Derwent London is committed to best practice payment practices and the fair and equal treatment of suppliers. We are clear about our payment practices: unless otherwise stated, we aim to pay our suppliers within 30 days, or otherwise in accordance with specified contract conditions.
To support our supply chain, we worked to cut the average time to payment from 25 days in 2019 to 20 days in 2021. To provide extra help during the pandemic, we aided supplier cash flow with early partial release of retention and contributions to additional costs caused by the delays. We expect our suppliers to adopt similar practices across their own supply chains to ensure fair and prompt treatment for all creditors.
The average time for payment to suppliers
Supply chain governance
We are one of the first clients in the UK to require our supply chain partners to follow the Common Assessment Standard (CAS), which was developed by Build UK with the support of the Civil Engineering Contractors Association (CECA). CAS’s aim is to improve supply chain efficiency and reduce supply chain risks by helping contractors achieve compliance in 12 key areas of risk management, including health and safety, equality and social responsibility.
All suppliers with whom we spend more than £20,000 per annum are required to provide evidence of how they are complying with our Supply Chain Responsibility Standard (SCRS), which sets out our principles and expectations in terms of the environmental, social, ethical and governance issues which relate to our supply chains. We are fully committed to ensuring our supply chain remains as engaged as we are in setting the highest standards.
In August 2021, we extended the SCRS to include our expectations in respect of diversity and inclusion, environmental issues, and preventing modern slavery. On diversity and inclusion, the SCRS extends beyond basic compliance and requires suppliers to show how diversity and inclusion are embedded in their working practices.
Link to DL website download
Human rights and modern slavery
The protection of human rights and fundamental freedoms is a key ESG priority that we manage from within our business and externally, across our supply chain.
Our ongoing risk assessment indicates that the risk of any slavery or human trafficking in respect of our employees is low. In our supply chain, the greatest potential risk exists in the use of building contractors for our development schemes, as their work involves the use of subcontractors. The same risk exists in some of the companies that provide Derwent London with services such as cleaning and security. We make sure all of these suppliers are aware of the Modern Slavery Act 2015 and require them to formally confirm their compliance with the legislation. We monitor and cross-check our supply chain, from procurement to delivery.
Of employees confirmed they would feel able to speak up
Employee helpline for anonymous reporting of concerns
Honesty and integrity are fundamental to the way we do business. It is our duty to identify any malpractice within or affecting the Company, and to root it out. Our employees share those high standards and are encouraged to speak out if they witness any wrongdoing.
Our whistleblowing procedures are set out in our employee handbook, on our Group intranet and on staff noticeboards. We have an independent telephone line and online portal for anonymous reporting of concerns, and our Senior Independent Director provides a point of contact for whistleblowing matters.
During 2021, the Group migrated to a new whistleblowing system provider, and rolled out new arrangements to all employees, including our building management teams. In the 2021 employee survey, 84% of employees confirmed they would feel able to speak up if they witnessed or experienced behaviour that didn’t line up with our culture and policies – an encouraging figure, but we continue to aim for 100%. That is why we have set ‘Wrongdoing and the reporting of concerns’ as the topic for Q1 2022 on our mandatory compliance training programme.
The Board is updated by the Company Secretary on the operation of the whistleblowing system, and we have procedures for meeting any whistleblowing message with an independent and proportionate investigation. In 2021, as in 2020, the system received no whistleblowing messages. Thanks to the ‘open door’ nature of our business, concerns are often raised directly with management, the CEO or HR team, and investigated appropriately.
We take our obligations as a taxpayer seriously and make sure we have the governance and risk management processes in place to meet our wide range of tax obligations. Our Statement of tax principles, approved by the Board, is available on our website.
We have an open and transparent relationship with HMRC that allows us to intercept any tax risks at an early stage and clarify areas of uncertainty. We keep HMRC informed of how our business is structured and respond to all questions or requests promptly.