2007/8 Corporate Targets review

In January 2008 we commissioned Upstream Sustainability Services to benchmark our corporate approach to sustainability. This not only fulfilled our target but provided us with a useful analysis upon which to further develop our strategy.

The main recommendations arising from this benchmarking exercise were:

• Publicly report Key Performance Indicators
  - We have done this in this report
  
  
• Develop economic targets for sustainability
  - We have set a target to assess all our directly managed properties using the SRS methodology to further understand the valuation impacts on our properties.
  (See Investment section).
  
  
• Develop KPIs for occupier engagement and report on progress
  - Occupier Engagement has been a priority in 2008, with the development of our green lease clauses, conducting an occupier survey and taking forward specific initiatives. This programme will continue in 2009 and we will report on progress in our next report.
  
  
• Evaluate impacts of transport associated with our investments
  - We developed a transport fuel measuring tool in 2008 and have set a target to develop a green travel plan guidance document for our Property Managers by the end of 2008.
  (See management section).
  
  
• Develop KPIs for Community engagement
  - Through the development of our Community Engagement Programme we will be setting relevant and appropriate KPI’s (see Community section).

Since the publication of our 2007 report, we have submitted to the Estates Gazette Green Awards, Building Magazine Sustainability Awards and Fund Europe Awards.

In our last report we introduced our Carbon Management Plan. This plan is embedded in our RPI integrated approach including all our activities giving rise to carbon emissions and identifying what level of control we have over these activities. Through our management program we measure our carbon footprint and have set carbon reduction targets (see management section). In our development program we have included carbon impact assessment and mitigation in our RPI Development Guidelines (see development section). Finally, we have initiated our head office sustainability action plan (see target below).

We have run three separate sustainability training sessions for our in house teams, covering the purpose and use of our Sustainability Rating System, our comprehensive RPI strategy and the Hermes Emissions Trading Scheme.

The 2007 RPI Report was made available on the Hermes web site. Our 2008 report is also available online.

We have been working closely with our on site facilities manager, our landlord and neighboring occupiers to firstly understand more about the building we occupy and secondly to identify opportunities for improvement. We have developed a working document which identifies possible improvements to the way the building is managed and how our occupation can enhance its sustainability. Hermes’ internal policies ensure every employee is made aware of the importance of energy and water efficiency, the staff restaurant is phasing out the use of plastic take away containers and there are recycling points provided for plastic, paper, printer and toner cartridges.

A comprehensive ‘Sustainability Action Plan’ is currently being drawn up for our internal operations and all associated activities.

We have also developed a checklist questionnaire for our landlords, which will allow us to better understand the technical aspects of our occupation, such as utilities metering and waste management facilities. This information will help us understand in more detail our impact as an occupier, and will identify improvements that could be made to the way in which we occupy the building or how our landlord manages it.

In the interests of developing best practice, we included our internal operations within our real estate report in 2007. However, as these activities fall under the responsibility of parent organisation Hermes Fund Management, we will no longer be reporting on the progress of our internal activities in future real estate reports. This will be covered in our parent company report.