Sustainability Report 2020

OUR JOURNEY TO NET POSITIVE

Hammerson

Contents

1. INTRODUCTION

P.2

Our approach to sustainability, key ESG figures for 2020, process for managing risk, and our response to the TCFD.

2. OUR PERFORMANCE

P.18

An overview of our journey to Net Positive, including headline performance against targets and progress in each of our four Net Positive areas. We also share our 2021-2022 targets, long-term targets and highlights from our Transition Pathway to Net Positive.

2.1

Carbon

P.28

2.2

Water

P.34

2.3

Resource Use

P.36

2.4

Socio-economic impacts

P.38

3. OUR DATA

P.46

Comprehensive disclosures of the environmental and social impacts of our business activities, our basis of reporting, methodology, boundaries and GRI index.

COVER IMAGE:

Pulse, part of the Festival of Light at event at Westquay, Southampton.

2 Welcome from our

Hammerson

Chief Executive

"Hammerson's forward-thinking approach to sustainability has positioned the business well in responding to the rising ESG expectations of the investor community and our wider stakeholders. Our long-term vision is to ensure we continue to optimise our assets to thrive in a low carbon, city-based, 21st century economy. Our Positive Places sustainability strategy underpins this vision.

Hammerson's sustainability strategy has long been a key strength of the business. Taking over as Chief Executive, I made it clear that this is a position that will not change and that I expect sustainability to become even more central to our strategic thinking.

-39%

carbon emissions intensity for managed retail portfolio over 4 years to end 2019

PERFORMANCE TO DATE AND THE IMPACT OF COVID-19

Unsurprisingly during 2020 we outperformed our annual environmental targets. The trend has been sharply downwards but the impact of closures due to COVID-19 makes 2020 a poor year for comparisons. The trend over the previous four years is more useful and has been very strong. Carbon emissions intensity of our portfolio fell by 39% over the 4 years to the end of 2019, and absolute emissions by 30% even though our portfolio has increased in size. Water intensity for landlord services fell by 28% over this period.

We have yet to achieve our target of becoming Net Positive for landlord carbon, water and resource use, however setting this ambitious target has driven the business to deliver truly exceptional medium term performance in these areas. Three of our flagship assets were Net Positive for landlord water demand in 2020.

A DIFFICULT YEAR FOR OUR COMMUNITIES

The strong relationships we have with our communities has been important during the pandemic. We were immediately conscious of the intense pressures placed on local third sector organisations with reduced funding and increased demand for services. A series of projects was put in place to support local organisations help the most vulnerable within our communities. Our investment in positive socio-economic projects will obviously continue and we are particularly alert to the challenges facing local communities in 2021. We are already working with local service providers and community foundations to target specific areas of need, such as employment and skills and financial exclusion.

Rita-Rose Gagné, CEO

MAINTAINING A CLEAR FOCUS ON MATERIAL ISSUES

My immediate focus moving forward remains on minimising our negative environmental impacts through our ongoing energy, water and resource use efficiency programmes, whilst extending our positive social impacts. Work to reduce key environmental impacts through optimising asset resource efficiency and investing in clean technology will continue over the short and medium term. We have almost £8m of ESG focused investment included in asset business plans to 2023, which we expect to deliver financial as well as environmental and social returns.

POWERED BY RENEWABLES

Our strategy recognises the critical role renewable power has to play in the transition to a net zero carbon economy. Almost 3% of our landlord electricity demand was supplied by our on-site renewable assets in 2020 and additional capacity is planned for 2021. 92% of our electricity demand in the UK and Ireland is currently sourced from REGO-backed clean electricity contracts. However, we plan to source at least 50% of electricity for our UK assets from additional renewable power from the end of 2021. This will bring unsubsidised new capacity to the grid and set a new standard in terms of power purchasing for our market. It will also support the transition of individual assets to net zero carbon over the coming years, helping us achieve our Net Positive targets for the business as a whole.

£8m

of ESG focused investment planned 2021 - 2023

3

4

Hammerson

City Quarters at Martineau Galleries, Birmingham< Continued from previous page

The successful businesses of the future will have sustainability at their core and be designed to thrive in a net zero carbon economy.

92%

of electricity for our UK and Ireland portfolio from REGO-backed contracts.

5

THE POWER OF COLLABORATION

Our Net Positive targets include the impacts from the tenanted space within our assets. These represent over 70% of total carbon emissions for the business according to our latest data. Thanks to our extensive environmental foot-printing model and data sharing agreements within our leases, we are already able to calculate the carbon emissions from these areas (Scope 3 emissions) and this data is set out in the report.

Reducing these emissions is essential and requires positive collaboration with our brands. Our work so far to encourage improved fit-out standards has delivered 900 tonnes of carbon savings within stores, reducing carbon emissions and retailer operating costs over multiple years. We are also working with stakeholders beyond our corporate boundaries to support carbon, water and resource use savings elsewhere. We started this work for water in 2019 and are looking to expand it to carbon in 2021 and 2022.

Sustainability and the risks of climate change are a shared business agenda and the power of collaboration is already clear; it will continue to be a central element of our approach. Our customer base is set to change and with it, the expectations and opportunities we must respond to. This, along with a clearer focus on performance-in-use, are pushing new boundaries within the sector that we fully support through our own work and our active industry engagement.

MANAGING THE TRANSITION TO NET ZERO CARBON ECONOMY

The challenges and changes experienced through 2020 made clearer than ever the value for our business and others like ours of taking a leadership approach to sustainability. The sharp increase in focus on climate change and related risks and stronger public expectations of corporate responsibility, place businesses that are ahead of the curve in a positive position. I am confident that our long-term focus on energy andcarbon, climate risk, resource use, water and our social impacts is right for the business and supports our wider business strategy.

As signatories to the Better Buildings Partnership Climate Commitment we published our Net Zero Carbon Transition pathway in December 2020. Setting out Net Positive targets 5 years ago enabled us to publish a detailed pathway that includes all our directly managed assets and encompasses operational, embodied and Scope 3 carbon emissions. This directly aligns with and supports our wider Net Positive targets and Positive Places strategic approach.

This is particularly important as we look to develop our City Quarters. We have set the highest standards for our design teams, including achieving net zero carbon and Passivhaus standards, and this strong steer is delivering exciting results. The buildings that we create now and that will drive the performance of our business for years to come have to be ready for the challenges climate change and a net zero carbon economy will present.

Looking at climate risk specifically, our portfolios have relatively low exposure to physical risks. Where these do present, our planned programmes of maintenance and upgrade will build in resilience in a cost effective, well managed way. Transitional risks presented through increasing regulatory and legislative standards in the UK, Ireland and France are well managed across the portfolio. For example we are now planning for 2030 MEES risk. Having established processes in place to ensure opportunities are taken to upgrade units to higher standards at the most effective opportunity within the leasing cycle, has enabled us to minimise exposure to 2023 MEES risk and will ensure we are well prepared for the next phase.

THE NEXT 12 MONTHS AND BEYOND

One of the few certainties for the next 12 months and beyond is the growing threat of climate change and the urgent need to act. Whilst we can and will ensure our assets remain resilient to direct physical risks and transitional risks, we are indirectly exposed to the risks that our other stakeholders, particularly our customers, face.

For this reason I have tasked my senior management team with carrying out detailed climate scenario analysis this year to better understand these risks and the potential opportunities that flow from them, to inform our wider business thinking and strategy.

We remain focused on our Net Positive targets over the next 12 months and beyond. They represent a clear call to action for colleagues and are driving excellent outcomes. The successful businesses of the future will have sustainability at their core and be designed to thrive in a net zero carbon economy. This is an important opportunity for us as we reach out to communities within our cities and look to provide the local infrastructure they need and deserve and that will serve the business and our shareholders in the decades to come.

Rita-Rose Gagné

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Hammerson plc published this content on 29 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 March 2021 10:47:03 UTC.