INTRODUCTION EXTERNAL BENCHMARKING

Transcription

1 CORPORATE RESPONSIBILITY PERFORMANCE 2005

2 This document reviews the measurable aspects of Hammerson s Corporate Responsibility (CR) performance in the financial year ending 31 December 2005, and lists the Company s detailed targets for Information on both the scope of the report and data quality is provided in the relevant sections. Hammerson continues to follow the Global Reporting Initiative Sustainability Reporting Guidelines ( where practicable. Hammerson s approach to Corporate Responsibility can be found in the printed document: Corporate Responsibility The Hammerson Approach and at CONTENTS Introduction 01 External benchmarking 01 Key performance indicators 02 Case study Merthyr Tydfil 04 Environmental performance 05 Detailed review of progress against our 2005 targets 07 Adviser s statement CR targets 11 Additional information 13

3 INTRODUCTION This document is Hammerson s second CR performance report and covers achievements for the calendar year It provides detailed information, both qualitative and quantitative, regarding Hammerson s achievements for the year. PROGRESS AGAINST TARGETS 12 No. of targets n/a % achieved Particular successes in 2005 are summarised below: Hammerson continues to achieve good BREEAM ratings, as illustrated by the Very Good rating achieved for Bishops Square in central London which has a very large installation of photovoltaic panels on the roof for electricity generation A 14% increase in the proportion of waste recycled at UK shopping centres, which helped Brent Cross to win a Green Apple award during the year. There has also been an increase in the total weight of waste recycled from the UK multi-let offices portfolio Reduction in water consumption at both multi-let offices and Hammerson s own head office Continued strong Health & Safety record, with no injury lost days amongst employees and only two reportable major injuries for all staff and visitors across the UK shopping centre portfolio Increased funding provided by Hammerson to each shopping centre for community investment and charitable donations Recognising the need for further improvement, challenging goals are set annually. Targets for 2006 are provided on pages In a changing business environment we recognise that CR performance is fundamental to our long-term success and profitability. We strive to achieve continual improvement and pay close attention to how our performance compares with our peers. EXTERNAL BENCHMARKING Hammerson continues to be listed in the UK s FTSE4Good Index. Consultation has now begun to establish tightening climate change criteria and Hammerson will be keen to ensure that its CR efforts continue to meet the demands of the FTSE4Good Indices. In an attempt to reduce the resource implications of responding to CR surveys, Hammerson joined the London Stock Exchange s Corporate Responsibility Exchange ( in This on-line tool allows us to fill out a single questionnaire on our corporate governance, economic, environmental and social performance, and gives investors a single site where they can locate and analyse company data. Hammerson no longer participates in the Dow Jones Sustainability Index as this is not encompassed by the CRE scheme. Hammerson continues to participate in the annual Property Environment Group (PEG) benchmarking survey undertaken by Upstream, a strategic sustainability consultancy with a specialist focus on the property sector. In 2006 Hammerson came fifth out of nine near peers (property companies), achieving an overall average score of 72%. Hammerson also continues to participate in Upstream s annual Environmental Benchmarking of Shopping Centres survey. 1

4 KEY PERFORMANCE INDICATORS The following tables highlight Hammerson s performance against a number of key performance indicators (KPIs). Some are recommended by the 2002 Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, while others are the group s own. We have included our performance in 2004 in order to provide historical perspective on our progress. ECONOMIC PERFORMANCE GRI reference Stakeholder group Performance indicators 2005 performance 2004 performance EC1 Customers Net rental income 210.3m 189.5m EC2 Customers Geographic breakdown of portfolio by value UK 71% 69% France 26% 28% Germany 3% 3% EC3 Suppliers Cost of all goods, materials and services purchased 750.3m 764.7m EC5 Employees Total payroll and benefits (including wages, pensions, other benefits, and associated payments) 20.6m 19.3m EC7 Providers of capital Increase/decrease in retained earnings at end of period Year-on-year change in adjusted earnings per share +8.7% +0.7% Year-on-year change in dividend per share +10.0% +6.5% Year-on-year change in adjusted net asset value per share +30.9% +6.9% Shareholders Engagement Individual meetings and/or group presentations to institutional investors representing percentage of issued share capital 61% 62% EC8 Public sector Total sum of all taxes charged The corporation tax (credit)/charge ( 1.0m) 80.9m Social security contributions and stamp duty 7.3m 2.6m Restated from the 2004 Performance Report to bring reporting in line with the International Financial Reporting Standards (IFRS). ENVIRONMENTAL PERFORMANCE 1 GRI reference Issues and performance indicators 2005 performance 2004 performance ENERGY AND CLIMATE CHANGE Total energy consumption at UK managed and occupied buildings EN4 Electricity (gigajoules) 278, ,742 EN3 Gas (gigajoules) 82,844 64,233 EN4 Chilled water (gigajoules) 1,602 2,428 EN4 High temperature hot water (gigajoules) 4,965 3,944 EN3/4 Total (gigajoules) 361, ,347 WATER WASTE EN11 Total associated CO2 emissions (tonnes) 37,671 35,109 Total water consumption at UK managed and occupied buildings Mains water consumption (m3) 278, ,7982 Proportion of waste reused/reclaimed/recycled (including Material Recovery Facility) at UK shopping centres (by mass) 46.4% 39.9% EN11 Total weight of waste landfilled/incinerated (tonnes) 4,242 4,828 EN11 Reused/reclaimed/recycled (including Materials Recovery Facility) (tonnes) 3,677 3,201 EN11 Total weight of waste recycled at UK managed and occupied offices (kilograms) 29,538 25,511 Savings defined by trees (kwh) 323 (107,870) 283 (91,633) BIODIVERSITY EN6 Location and size of land owned, leased or managed in biodiversity-rich habitats Nil Nil EN23 Total amount of land owned, leased, or managed for production activities or extractive use Nil Nil UK Government KPI Proportion of new development undertaken on brownfield land 100% 100% ENVIRONMENTAL DESIGN EN14 BREEAM ratings achieved at new developments Bishops Square Very good Very good (design stage assessment) 2

5 KEY PERFORMANCE INDICATORS (CONT) SOCIAL PERFORMANCE GRI reference Issues Performance indicators 2005 performance 2004 performance LA1 Employment UK total staff % permanent full-time 94% 94% % part-time 3% 3% % temporary 3% 3% France total staff % permanent full-time 85% 85% % part-time 6% 6% % temporary 9% 9% LA10 Diversity and Women as proportion of total staff 52% 52% opportunity Women as proportion of senior management 30% 30% Proportion of women on the Board of Directors 0% 0% Proportion of female staff working full-time 92% 92% Proportion of female staff working part-time 8% 8% Number of employees declaring a disability 1% 1% Ethnic minorities as a proportion of total staff 7% 7% LA7 Health & Safety Injury lost days amongst Hammerson employees Nil Nil Work-related fatalities amongst Hammerson employees Nil Nil Training and Total budget for staff training 200, ,000 education Corporate charitable donations (cash only UK) 112, ,000 Community initiatives across the UK shopping centre portfolio Total spent in cash and in kind3 Not available 58,467 Total number of staff days Not available 1,627 Total raised by collections at Hammerson UK shopping centres Not available 171,465 SO5 Amount of money paid to political parties and institutions whose prime function is to fund political parties/candidates Nil Nil Amount of money paid in planning agreements Not available 2.7m PR4 Number and type of instances of non-compliance with Health & Safety regulations across UK portfolio (including fines and penalties) Nil Nil Number of fatal accidents across the UK property investment portfolio Nil Nil Number Shopping centre portfolio 2 18 of RIDDOR reportable major injuries across the UK property portfolio Property Office portfolio 1 1 investment portfolio 1Please see data qualifying notes on page 6. 2Please note that this figure is different from that reported in the 2004 CR Performance Report in that shopping centre water consumption (landlord and tenant) is now included, to be consistent with 2005 data. 3This includes the donation of cash to charity and community projects and also money spent on marketing, staff training, and donations in kind such as gift vouchers, promotional space, etc. However, it excludes donation of staff time which is reported separately. 3

6 CASE STUDY MERTHYR TYDFIL In April 2005 Hammerson celebrated the opening of the Cyfarthfa Retail Park in Merthyr Tydfil, in which it had invested some 35 million. Hammerson worked in partnership with the Borough Council and the Welsh Development Agency in the development of the 23,606 m2 scheme, which represents a significant part of the wider regeneration of Merthyr Tydfil and the Heads of the Valleys. The development of the 30-acre brownfield site included major landscape and highway improvements and has created over 500 jobs, contributing to the growing economic prosperity of the area. Hammerson s Cyfarthfa Retail Park represents the type of investment that is an integral part of building prosperity and encouraging economic growth in the South Wales valleys. This represents a significant milestone in the continued regeneration of Merthyr and will improve the quality of life and job prospects for the community. This development is in line with the commitment of the Welsh Assembly Government to regenerate the Heads of the Valleys. Andrew Davies, Minister for Economic Development and Transport, Welsh Assembly. April The construction phase offered significant opportunities for Hammerson to contribute to local economic, social and environmental well-being, some of which are summarised here. SITE REMEDIATION A unique screening process for the Japanese Knotweed found on site was implemented by our contractors Mowlem. This reduced the amount of hazardous waste that needed to be removed, as less-infested sieved material could be carefully sculpted into mounds that could be left on site. Similarly, a successful bioremediation process was used to treat soil contaminated by the presence of a disused petrol station dating from the 1960s. The soil was mixed with good bacteria on site, in a process which organically breaks down the contaminated matter. Environmental benefits of this process include an overall reduction in the amount of hazardous waste, re-use of soil onsite for landscaping, and the reduction in environmental impacts arising from the transportation of hazardous material to an appropriate disposal facility. DESIGN In keeping with the environmental parameters set out in Hammerson s design specification, our architects were able to incorporate a number of environmental features into the landscape and building design of the retail park. Planning agreements restricted the rate of discharge from the site, which meant a Sustainable Urban Drainage System (SUDS) was a commercially viable option. Permeable paving bricks were used, allowing water to drain into an underlying drainage blanket, thereby ensuring that the rate of discharge from the site is maintained at steady levels. This blanket layer also acts as a filter for potential contaminants. Where there is higher risk of contamination, such as at delivery points on site, an impermeable layer incorporating petrol interceptors was used as a further barrier to contamination. The resulting system is more sustainable by virtue of taking account of the quality and quantity of runoff, both on site and within the wider catchment area. A three-metre high timber fence has been erected, designed to shield local residents from the sound and sight of incoming service vehicles, responding to local concerns about the potential noise levels at some units. Landscaping design was led by the objective to improve the quality of the adjacent area and to provide a network of trees and shrubs to the exterior and main access roads into the site. The majority of the tree and shrub species planted on site were native to the area, promoting the local biodiversity and ecological benefits of the development. Over 150 trees were planted on the site, mainly as avenue and gateway trees, providing a living structure to the development. Fastigiate oaks and avenue lime trees line the gateways and access roads. Special cube-headed hornbeam trees where introduced in the centre of the retail park car park, providing a high-quality landscape statement at the main point of arrival for customers. CONSTRUCTION Rather than importing large amounts of aggregate to the site, the existing slag found on site was reused, thereby reducing costs and environmental impacts arising from waste and transportation of materials. By processing materials found on site during the construction phase, our contractors Mowlem avoided the transportation of approximately 100,000 m3 of material onto or from the site, equating to roughly 12,500 lorry movements. The site had a detailed environmental management plan for the duration of the construction phase which was agreed with the local council. This included a bat survey to ensure that migrating bats using the site were not unduly disturbed during the construction process. As at all Hammerson s developments, our contractor was required to participate in the national Considerate Contractors Scheme, which aims to improve the image of construction through scoring sites for their consideration of local communities, health and safety, and general site management. This work included monthly liaison meetings with the local community, and quarterly newsletters providing local residents with updates on progress, details of community activities such as school visits, photographs, and worker profiles. At Cyfarthfa, our contractor Mowlem scored 35 out of a total possible score of 40 for the Considerate Contractors Scheme. Throughout the construction phase Hammerson was keen to ensure that local labour was employed wherever possible, including the use of local sub-contractors, such as site security contractors. Furthermore, at key points in the construction, two local schools (total of 20 children) visited the site and were shown around to teach them about the construction process. 4

7 ENVIRONMENTAL PERFORMANCE Trends in utilities efficiency across Hammerson s actively managed multi-let portfolio are detailed in Table 1 and the graphs below. TABLE 1 Scope and control: Please note that own-occupied offices encompasses our head office at 100 Park Lane, London, W1 over which we have a high degree of managerial control. However, for shopping centres and offices, the data presented below includes consumption by tenants to differing degrees. Broadly, energy consumption at shopping centres represents landlord only, whilst offices energy consumption represents landlord plus tenant. For water, both shopping centres and offices data represents landlord and tenant consumption. Shopping centres Offices Own-occupied office (100 Park Lane) Electricity Consumption (kwh/yr) 23,448,395 22,513,634 20,872,056 21,882,060 60,274,380 56,594,377 51,396,752 49,033, , , , ,190 Floor area (m2) 132, , , , , , , ,100 2,582 2,582 2,582 2,582 Efficiency (kwh/m2/yr) Carbon efficiency (kgco 2/m2/yr) Gas Consumption (kwh/yr) 4,930,619 5,213,360 4,456,240 3,475,589 23,941,642 21,090,831 14,501,936 15,482, ,287 1,072, , ,594 Floor area (m2) 109, , , , , , , ,100 2,582 2,582 2,582 2,582 Efficiency (kwh/m2/yr) Carbon efficiency (kgco 2/m2/yr) Building energy CO 2 emissions Carbon emissions (kgco 2/yr) 11,019,627 10,671,401 9,821,670 10,069,648 30,466,895 28,342,840 24,855,971 24,025, , , , ,355 Floor area (m2) 132, , , , , , , ,100 2,582 2,582 2,582 2,582 Carbon efficiency (kgco 2/m2/yr) Mains water Consumption (m3) 176, , , , , ,182 93,904 86,982 2,431 2,760 2,350 2,391 Floor area (m2) 92,139 99, , ,100 Number of visitors or employees (full-time equivalent) 75,500,000 57,041,438 60,800,000 54,180, Water efficiency (m3/m2) Water efficiency (litres/person) ,764 21,231 21,174 18,976 BUILDING ENERGY CO 2 EMISSIONS Shopping centres Offices Own-occupied office (100 Park Lane) kgco 2 /m2/yr kgco 2 /m2/yr kgco 2 /m2/yr For shopping centres, the graph above shows an increase in CO 2 emissions in the most recent year. This is mostly accounted for by increase in electricity and gas consumption at Brent Cross. The slight decrease in consumption in our multi-let office portfolio is largely due to decreasing occupancy during 2005 at 99 Bishopsgate, where electricity and gas consumption has decreased significantly since Energy consumption at our own head office has increased slightly, which may be in part explained by the greater number of staff now based at Park Lane. However, there are undoubtedly inefficiencies in the way energy is used at our own head office and energy efficiency will be a key consideration in Hammerson s move to 10 Grosvenor Street in the summer of

8 ENVIRONMENTAL PERFORMANCE (CONT) WATER CONSUMPTION Shopping centres Offices Own-occupied office (100 Park Lane) litres (landlord and tenant)/visitor/yr m3/m2/yr litres/employee/yr ,764 21,231 21,174 18, Water metering arrangements at UK shopping centres do not currently allow landlord-only water consumption to be measured. Therefore, the figures reported above for shopping centres indicate landlord and tenant water consumption, and it should be noted that tenant consumption is somewhat outside Hammerson s control. Although water consumption at offices shows a slight decrease overall, consumption at individual properties has shown significant movement. In particular we are keen to better understand how water consumption at 99 Bishopsgate increased despite the decrease in occupancy. WASTE MANAGEMENT We have made significant efforts to improve our waste management across our UK shopping centre portfolio in 2005 and have improved our data collection and monitoring processes to have monthly data from each shopping centre broken down by type and disposal route. We are pleased to report that for the third year running the proportion of waste recycled has increased across all shopping centres, as demonstrated in the graph below. Brent Cross has been particularly successful in improving its recycling practices, winning a Green Apple award. We strive for continuous improvement in 2006 and have set performance targets across all shopping centres. See targets listed on pages WASTE BY DISPOSAL ROUTE AT UK SHOPPING CENTRES tonnes 34.7% 30.4% 39.9% 46.4% 2,606 2,425 3,201 3,677 4,911 5,542 4,828 4,242 Reused/reclaimed/recycled (including MRF) Landfilled/incinerated We continue to monitor the amount of waste recycled at two of our offices, in 2005 resulting in: Trees saved in 2005: 323; and Total energy saved in 2005: 107,870 kwh. However, we do not yet monitor the amount of waste recycled as a proportion of total waste produced at our offices DATA QUALIFYING NOTES Data period: Calendar year 2005 Coverage: The aggregated data covers, by floor area (net internal m2): Energy: 44% of Hammerson s entire investment portfolio Water: 39% of Hammerson s entire investment portfolio Waste: Total tonnes: 28% of Hammerson s entire investment portfolio Waste: Recycling: 33% of Hammerson s entire investment portfolio Data coverage is calculated according to the floor area of properties where data is collected as a proportion of all properties over which Hammerson has had at least 33% ownership and a degree of managerial control for all 12 months of Data quality: Energy and water data has been gathered from a combination of invoices, meter readings and Building Management Systems. The Company therefore estimates a confidence level of ±15% for the accuracy of the aggregated consumption data. Shopping centre waste data is gathered from contractors using waste transfer notes wherever possible. This has a confidence level of ±20%. Data notes: Definitions of floor areas, landlord-tenant splits and conversion factors are consistent with reporting in previous years. Please see the 2003 and 2004 reports for more details. 6

9 DETAILED REVIEW OF PROGRESS AGAINST OUR 2005 TARGETS Stakeholder group % (area of impact) Targets Complete Progress EMPLOYEES Training and development Investigate the potential of achieving Investors in 100% The Shires was successfully re-recognised for the IiP standard in May People accreditation at the group s shopping centres 2005 and The Oracle achieved the standard in December 2005; Upstream has seen documented evidence of the review reports for both of these. Upstream has also been informed that the Bullring achieved IiP recognition in October A meeting has also recently being held with Business Link to discuss the possibility of achieving IiP for Hammerson Management Services (HMS), and Upstream has seen evidence of the initial correspondence and action plan for this. It is intended that this information will also inform the action planning process for other centres. The HR strategy has been aligned to the IiP standards and Upstream has been informed that objectives for 2006 are to ensure that there is a framework in place for the remaining centres to achieve recognition over the next months. Training and development Explore opportunities for possible funding from local 100% All shopping centres have explored opportunities with a range of skills and employment agencies to contribute to organisations, such as Local Government Councils and Business Link. qualifications for shopping centre employees and Upstream has been informed that Brent Cross shopping centre provided retail staff space for the launch of a local educational and careers website. Upstream has also seen documented evidence regarding the following: Brent Cross s work with Addmore to identify funding opportunities The Shires work with Leicester College, which has delivered a number of programmes for Centre Management Staff The Oracle s work with Berkshire Basic Skills for Business Upstream has also been informed that The Oracle has used Business Link funding to support a mentoring programme for the General Manager. Health & Safety To have no days lost through injury amongst 100% Upstream has received confirmation that there have been seven days Hammerson employees as a result of reported since November 2004 in the staff accident report book, but that workplace accidents none of these resulted in days being taken off sick. CR awareness raising To develop the CR content of the group s intranet Upstream has not seen any evidence of CR related information being to include detailed guidance and examples of good included on the group intranet. practice from across the portfolio SHAREHOLDERS Engagement Carry out an external survey of analysts and 100% Upstream has seen presentation slides detailing feedback from a large investors to judge the quality and effectiveness number of investors following meetings held in Europe and the US, of Hammerson s IR programme in March and September Engagement Hold individual meetings or group presentations with 100% Upstream has seen a schedule of meetings/presentations held during 2005 investors who hold in aggregate more than 60% of with investors, covering those investors who hold in aggregate 61.4% Hammerson s issued share capital of Hammerson s issued share capital. Engagement Attain external recognition for the group s investor 100% Upstream has seen evidence of certificates from the Investor Relations relations efforts Magazine UK awards 2005 showing Hammerson achieved awards in the following categories: Grand Prix for best investor relations for a FTSE 250 company (winner) Best investor relations officer Chris Smith (highly commended) Best Annual Report (highly commended) Best investor relations website (highly commended) COMMUNITY Education Develop an education pack for local schools, 50% Upstream has seen evidence of an education pack produced by West Quay which incorporates environmental information for local schools. Upstream has also provided the HMS CR working group and guidance with a list of top green tips in relation to school, work, and home, for adaptation and distribution via various shopping centre communications. However, Upstream is not aware that this information has indeed been incorporated into education packs across the shopping centre portfolio. Community investment Develop a strategy to achieve a consistent approach Hammerson has internal guidelines on its charitable giving which lean in community investment activities at each of the towards medical charities and those involved with the needs of children. group s key investments and developments A specific amount is allocated to charities in the localities where Hammerson owns properties and asset managers are asked to make recommendations. However, these guidelines relate purely to charitable giving, and have been in place for some time. They do not meet the intention of the target which was to review all forms of community investment (i.e. in-kind contributions, staff time, sponsorship, community events etc.) and to bring these together under a formal community strategy for implementation across all the Company s key investments and developments. This target has, therefore, not been achieved. 7

10 DETAILED REVIEW OF PROGRESS AGAINST OUR 2005 TARGETS (CONT) Stakeholder group % (area of impact) Targets Complete Progress EMPLOYEES continued Community investment Review the group s charities policy to develop 50% Upstream has seen evidence indicating the availability of 10,000 consistent charitable donations/sponsorship per shopping centre to be spent on charitable donations/sponsorship during parameters at all the group s shopping centres However, all centre representatives still claim that they have not received more specific guidelines regarding how this money should be spent to ensure consistency across the shopping centre portfolio. Community investment Review community initiatives being undertaken The CR Working Group was due to liaise with, and visit, the French portfolio across the French shopping centre portfolio with during 2005, but Upstream is not aware that this target was progressed a view to sharing experiences and good practice in the relevant time period. OCCUPIERS AND CUSTOMERS Customer satisfaction Develop an action plan to address areas in need of 75% Upstream has received an outlining the actions that have been taken. improvement arising from feedback in the 2004 With regards to joint venture partners this has included the reinforcement retailer and joint venture partner surveys of Hammerson s core values amongst some team members, and improving communication through more structured meetings, clear allocation of responsibilities and a Board Director who is assigned the task of ensuring regular communication. With regards to the retail community there have been a number of actions including the publication of a regular newsletter and a regular programme of retailer meetings. Upstream has not, however, seen documented evidence of the progress that has been made or a detailed action plan. Therefore this target has been awarded 75% completion on the basis that many of the key issues appear to have been acknowledged and appropriately addressed. Customer satisfaction Investigate customer perceptions in France and 100% A study of customer satisfaction was carried out in France by TNS Sofres compare this with the surveys completed in the UK and compared with that produced in the UK by MORI. Upstream has seen a version of this final report. Health & Safety To have no fatalities or RIDDOR major injuries confirmation has been received from UK offices: one RIDDOR across the UK portfolio reportable accident has occurred at Manor House. A KPI spreadsheet returned by HMS suggests two RIDDOR major injuries have occurred at UK shopping centres. On this basis, the target has not been achieved. CR awareness Develop a CR awareness raising campaign amongst 75% Various activities have been undertaken at the majority of centres, including and engagement retailers in all UK shopping centres a very successful themed Green Week at Brent Cross, the incorporation of CR into six monthly presentations to staff at The Liberty Shopping Centre, and the incorporation of CR communications as part of the updating of the information desk at The Shires. However, more guidance is needed from Hammerson UK regarding consistency in the message that is being communicated across all centres, which may require recognition of the need for CR communications via the marketing budget, clauses in tenants leases, sections in retailer handbooks etc. ENVIRONMENT UK Review and update the environmental procedures This target has not been progressed. manual and issue to all UK employees and other key stakeholders UK Review and evaluate social and environmental risks 100% Upstream has seen evidence of an approval form for suppliers, which posed by key suppliers was implemented in August This PDF includes a document put together by Upstream listing Hammerson s Pre-tender Corporate Responsibility Requirements. Upstream has also seen evidence of a review of some of the Company s key suppliers CR policies. UK Develop an environmental guide for the consistent 50% Upstream provided guidance during 2005 relating to appropriate green application of green housekeeping measures for housekeeping measures to be implemented by all management teams, and the management teams of all shopping centres and HMS has issued its own branded version of the Green Office guide to all UK multi-let offices, including the group s head office shopping centres which is in use across the portfolio. Upstream has seen a copy of this, which has been circulated on HMS headed paper. However, this has not been done across the office portfolio or at Hammerson s head office to Upstream s knowledge. France Implement the high-priority recommendations N/A Upstream has received the report prepared by Élan. However, as the arising from the CR review to be undertaken recommendations were not available until recently, it would not have been by an external consultant possible to complete this target during Therefore it will be carried over into

11 DETAILED REVIEW OF PROGRESS AGAINST OUR 2005 TARGETS (CONT) Stakeholder group % (area of impact) Targets Complete Progress ENVIRONMENT continued Portfolio management Achieve a 3% reduction in carbon emissions from Energy data has been received from INENCO. Based upon the assumption the UK multi-let office and shopping centre portfolio that the target refers only to those properties held in the portfolio for the full calendar years 2004 and 2005, there has been an overall 0.9% reduction in CO2 emissions associated with energy use across the UK multi-let portfolio. Carbon emissions increased at the shopping centres by 5.4%, but decreased at the offices by 3.3%. There is a need to be more specific about the scope of this target to reflect the differences between shopping centres and offices, as well as individual properties. Further, the indicator used to assess this target may need to take account of factors such as occupancy levels, hours of operation, and the weather. Portfolio management Investigate opportunities for improving the tenant 100% Various opportunities have been identified and actioned across the shopping waste recycling services provided across the group s centre portfolio which have resulted in a 14% increase in the proportion of shopping centre portfolio, thereby reducing the waste recycled at UK shopping centres. For example, Brent Cross has won amount of waste sent to landfill a Green Apple award for recycling, Europa (Bullring s environmental management contractor) has recycling as a priority and is working with retailers at The Bullring to increase the amount of waste recycled, and The Oracle has introduced a fine for contaminators of the waste recycling bins. West Quay now has a cardboard compactor installed and segregation bins in the mall to encourage recycling, and specific performance targets were identified at all shopping centres for Portfolio management Measure and monitor energy use in common areas Energy management controls have been installed at some retail parks in of retail parks the form of sensors and timers to car park lighting, and Upstream has seen evidence from Donaldsons confirming that in no instances are the lights left on 24/7. However, energy consumption data remains unavailable and this target has therefore not been met. Portfolio management Investigate opportunities for co-ordinating 100% Upstream has seen evidence of a letter template from Donaldsons which integrated waste management plans in the retail was sent to all retailers at Merthyr and Brent South proposing to introduce parks portfolio. Work with tenants to trial a scheme a regime to actively manage the removal of refuse from sites and to include at one retail park recycling wherever possible. Unfortunately tenants did not respond to this request, which may be due to retailers having their own schemes. However, Upstream would suggest the target has been met on the basis of the agents efforts in this regard. Design and construction Achieve a minimum BREEAM rating of Very Good 100% The Bishops Square development achieved a BREEAM rating of Very Good. for all office and retail developments in which There were no other developments during 2005 to which this target would Hammerson has at least a 60% interest have applied. Design and construction Work with a consultant working group to revise 75% Although there is not yet evidence of a formal revision of the standard the standard design brief and include specific design brief, Upstream has seen meeting notes from a meeting held standards of performance against a range of on 18 March 2005 between Hammerson, Hoare Lee, Hilson Mornan environmental impacts and WSP regarding implications of the corporate BREEAM commitments, sustainability and BREEAM in relation to project procurement and issues beyond BREEAM. Design and construction Analyse the data submitted by contractors in their This has not been progressed. While some contractors are submitting data monthly environmental reports against selected against KPIs, there remains some difficulty in ensuring consistency across environmental KPIs all projects. This will be tackled further in 2006 by way of a workshop with Hammerson property managers to raise awareness of the standards that contractors should be asked to aim for across all projects. Design and construction Liaise with joint-venture partners on the 100% Upstream has seen documented evidence of the sustainable development Broadmead development in Bristol regarding profile for the Broadmead development from January 2005, which states environmental objectives the commitment of the Bristol Alliance to updating the profile at key stages throughout the development. Upstream has since received an summarising the social, economic and environmental objectives that are likely to be encompassed in this, although it should be noted that the scheme is still in its infancy in terms of construction and KPI data or benchmarking exercises have not yet been identified, collected or undertaken. Own-occupation Reduce energy consumption per capita at the Evidence has been received from INENCO which indicates that between group s head office by 3% 2004 and 2005 there has been a 1.7% increase in CO2 emissions at 100 Park Lane. However, Hammerson is due to move offices in June 2006 and Upstream would expect that energy efficiency has been considered in the design and management of the new premises. 9

12 ADVISER S STATEMENT The purpose of this statement is to provide assurance that the information presented in this report is an accurate and meaningful representation of Hammerson s CR achievements in the past year. It does not provide a formal external verification of the Company s CR data gathering systems in terms of accuracy or completeness, but it does verify the achievement levels against the 2005 CR targets which are described in detail in this report. Upstream assesses progress against targets through analysis of data, attendance at internal CR management meetings and review of documented evidence against specific targets. Of the 28 targets agreed for 2005, 43% have been fully achieved, and a further 20% have been either partially or substantially progressed. Particular achievements worthy of note include the following: The achievement of quantifiable performance improvements in waste recycling and water efficiency in the UK both at head office, and across the managed portfolio; The achievement of Investors in People (lip) accreditation for The Shires shopping centre, and the subsequent review by Hammerson Management Services, which is likely to result in all UK centres seeking lip accreditation; The liaison between Hammerson Management Services and Business Link to maximise opportunities for shopping centre employees and retail staff to improve their professional qualifications; The introduction of more structured meetings and clear allocation of responsibilities at Board level for communication with joint venture partners and occupiers, as a result of feedback obtained through third-party surveys. This approach was also taken forward across the French portfolio, with a survey of customer perceptions being undertaken by a third-party; and The introduction of Pre-tender Corporate Responsibility Requirements as a standard procedure for major suppliers. Upstream is also pleased to note Hammerson s growing recognition that it has the potential to raise awareness of environmental concerns amongst shopping centre visitors, as illustrated by the very successful Green Week at Brent Cross, and also at various other centres through environmental guidance at their information centres. However, due to personnel changes, and in particular changes to the composition of the CR Committee, accountability for the CR targets has not been as strong as in previous years, and a greater number of the targets remain incomplete. One quarter of the original targets set for 2005 remain unprogressed at year end. Hammerson has struggled to keep up the momentum on CR initiatives which infused its efforts in earlier years, despite the very genuine commitment to CR amongst key individuals within the Company. We would suggest that some of the challenges to be addressed by Hammerson going forward include: The implementation of more formal procedures to ensure consistency across all projects and properties under management, and to ensure the roll out of good practice achievements from individual developments across the portfolio; Improving internal communications to ensure lessons learnt on various sites can be used by all employees without reinventing the wheel ; Measuring and monitoring resource consumption across the portfolio in order to provide a better understanding of resource use patterns, and to set appropriate performance targets. This is a challenge faced by the entire real estate industry, and is by no means unique to Hammerson; and Ensuring that lessons learnt in the UK can be translated to France where appropriate. Julie Hirigoyen Director, Upstream March

13 2006 CR TARGETS Impact area Proposed target 2006 EMPLOYEES Training and development (UK) To achieve re-accreditation under the Investors in People standard Training and development (France) Initiate an action plan with a view to gaining accreditation under the IiP standard in 2007 Training and development/ To conduct a sustainability workshop for project managers to raise awareness of standards to be achieved for both CR awareness raising (UK) design and construction CR awareness raising (UK) Health & Safety (UK and France) To integrate key CR messages within Hammerson s marketing communications strategy To have no days lost through injury amongst Hammerson employees as a result of workplace accidents Remuneration and benefits (France) To introduce an employee share scheme in France SHAREHOLDERS Engagement (UK) To hold individual meetings or group presentations with investors who hold in aggregate more than 60% of Hammerson s issued share capital Engagement (UK) COMMUNITY Community investment (UK) Community investment (UK) To review the use of electronic communications for key shareholder communications, thereby reducing paper usage To agree a framework for rolling out best practice community investment initiatives across the UK portfolio, to include specific targets and allocated responsibilities All shopping centres to incorporate a minimum of one community investment activity into their events marketing programme for 2006 Community investment (UK) All shopping centres to engage in a minimum of one education programme or local initiative in 2006 Community investment (France) To review community initiatives undertaken across the French shopping centre portfolio so as to identify common themes for further standardisation SUPPLIERS Sustainable procurement (UK) To ensure that environmental standards are included within the fit-out specification for 10 Grosvenor Street Sustainable procurement (UK) OCCUPIERS AND CUSTOMERS Health & Safety (UK) Customer satisfaction (UK) Customer satisfaction (France) ENVIRONMENT UK UK All marketing services suppliers to be contractually obliged to declare and report on their own CR activities To have no fatalities or RIDDOR major injuries across the UK portfolio To improve performance against key service areas enquired about in shopping centre customer satisfaction surveys To draft an action plan to address key service areas enquired about in retailer satisfaction surveys Review and update the environmental procedures manual and issue to all UK employees and other key stakeholders Establish a procedure to report on quantities of paper-based marketing materials produced across the portfolio with a view to reducing quantities from 2007 onwards To achieve ISO14001 certification at two UK multi-let offices, with a view to rolling this out across the portfolio To achieve a 3% reduction in carbon emissions associated with energy use from the UK multi-let office portfolio (like-for-like properties only4) To achieve a 3% reduction in carbon emissions associated with energy use from the UK shopping centre portfolio (like-for-like properties only5) To switch all shopping centre landlord-purchased energy due for renewal in 2006 to a green tariff and communicate this to retailers Increase proportion of waste recycling across UK shopping centres to 29% Establish benchmarks for water use across different usages in UK multi-let offices so as to identify priorities for reducing water use 4 This could be further adjusted to take account of differing occupancy levels and heating requirements for each centre between the two years. 5 This could be further adjusted to take account of differing heating requirements for each centre between the two years. 11

14 2006 CR TARGETS (CONT) Impact area Proposed target 2006 ENVIRONMENT continued Portfolio management (France) Design and construction (UK) Design and construction (UK) Design and construction (UK) Complete at least 50% of non-conformance best practice actions from the National Britannia environmental audits conducted in 2005 Investigate solar panels to power car park lighting, pumps and signage Investigate the use of grey water for general maintenance of the parks To introduce formal procedures to monitor key environmental performance data in selected properties from the French portfolio To undertake a design audit of at least three live developments so as to establish a baseline of good environmental practices being achieved To undertake an audit of at least one construction site so as to compare the environmental performance of contractors against their stated commitments Maintain minimum rating of Very Good for all office and retail developments for which Hammerson has at least a 60% interest Design and construction (UK) To achieve an Excellent BREEAM rating for one development completed6 during Should Hammerson not complete any schemes in the relevant time period, this target will be considered not applicable and will be rolled over into the subsequent year. 12

15 Additional information For more information on any aspects of this report, contact: Andrea Cockram, Corporate Communications Manager or Joanna Axon, Assistant Director UK Offices T. +44 (0) From June 2006 Hammerson s address will be: Hammerson plc 10 Grosvenor Street London W1K 4BJ T. +44(0) F. +44(0)