Signing up
...together

Putting co-operation
at the core of our contracts

As building owners we are responsible for the impacts that our buildings have on the environment and local communities. We recognise, however, that in order to reduce the overall environmental and social footprint of buildings we must actively engage with the occupiers who lease them and with whom we have a shared responsibility.

Green Leases
Active Occupier Engagement
Building Partnerships
Sharing Information
Occupier Attitudes
2008/9 Targets

Green leases
In taking the first steps towards addressing the issue of occupier engagement, we have amended our standard form lease, adding ‘green’ clauses which reflect obligations on both parties to cooperate and ensure the property is managed in the most efficient and sustainable manner possible.

Our green lease clauses are intended to encourage closer engagement between owner and occupier rather then being overly prescriptive or target based. Our new standard form green lease came into effect in April 2008, making us the first major property organisation to launch such a document. To date more than thirty occupiers have agreed to the new clauses, many embracing the initiative very positively. There has, however been a significant amount of concern from some occupiers which has resulted in extensive dialogue and negotiation to find an acceptable way forward.

We believe that green leases provide a very useful tool with which the property sector can make real progress in a spirit of mutual trust and collaboration. For this reason we are willing to share best practice and our experiences. The clauses will undoubtedly be updated over the coming months and years as our knowledge and experience in this area develops.

Active Occupier Engagement
Only if owners and occupiers work together can the full potential of RPI be realised. To this end, we have been actively pursuing occupier engagement as part of our comprehensive RPI strategy for the past few years.
In order to fully understand occupiers’ needs and ambitions we commissioned a comprehensive occupier survey with Kingsley Lipsey Morgan. The survey covered a sample of offices, business parks, industrial assets and shopping centres valued at some £300 million with over 50 occupiers. We received a very positive response rate of 60%.

The results are being used to review and set clear objectives to govern our Occupier Engagement Programme.

• Office occupiers requested prioritisation of recycling; promotion of green fuels and energy efficiency and more communication on RPI.
• Industrial occupiers are particularly concerned with rising energy costs and want more owner engagement to prioritise recycling
• Over 70%, of shopping centre interviewees said that sustainability is either 'important' or 'very important' to their organisation and 50% are 'very interested' in talking to Hermes about energy saving and carbon reduction initiatives.

Building partnerships
Through our active participation in initiatives such as the Better Buildings Partnership and the Green500 we are engaging with key occupiers, both at board level and at individual properties, which we believe will ensure a consistent approach to sustainable building performance.

These partnerships provide an excellent forum to meet with like minded occupiers and discuss opportunities that will be of mutual benefit.

Sharing information
Through our extensive RPM programme, we have a significant amount of environmental and community data and information relating to our portfolio, some of which relates directly to occupied space. We are willing to share this information with our occupiers, which no doubt will be helpful to many of them in addressing their corporate responsibility objectives. In return, we would like our occupiers to share any data and information they may have relating to our assets, so that we can accurately measure and monitor the environmental impact of our buildings. With forthcoming government regulation, such as the Carbon Reduction Commitment (CRC), it will be necessary for occupiers to have more detailed knowledge relating to their occupied space.

As an example, those occupiers who qualify for inclusion in the CRC will need to declare their energy consumption on an annual basis. We currently hold this information for many of our occupiers and we are working hard to understand all metering and billing arrangements across our portfolio, so that when our occupiers request this information, we will be able to provide them with the necessary data. To read more about what Hermes are doing in preparation for the CRC, please visit our Thought Leadership page.

Occupier Attitudes
There is a growing awareness among Property Agents of the need for greater co-operation between occupiers and owners. In February 2008, Jones Lang LaSalle and Corenet carried out a global survey of over 400 occupiers, asking for their views on sustainability, published as ‘Global Trends in Sustainable Real Estate: An Occupier’s perspective’. GVA Grimley also commissioned a research report in the spring of 2007 entitled ‘Towards Sustainable Offices’ also assessing this link.

The findings of both reports indicate that:

• global occupiers believe sustainability is a major issue for their business
• there is a growing awareness of sustainability issues among occupiers
• many occupiers are willing to make financial commitments in order to become more sustainable

All of these findings reveal one thing. We are moving into a new market with new rules. As property owners we have to be more active in working together with our occupiers and provide sustainable products to meet their increasing demands.

Many occupiers and owners share the same goals when it comes to sustainability/corporate responsibility and both have to realise that working in partnership achieves far more than working in isolation.