At Clarendon, we aim to follow best practices when it comes to Responsible Property Investment and believe that ESG (Environmental, Social Governance) considerations are of immense importance and add long-term value to our business, community, and customers. As a result, we incorporate ESG considerations into all investment and key decisions.
ESG focuses on key performance indicators that address our company’s approach to responsible investment, sustainability, and its overall impact on society and the environment.
We aim to create more sustainable and desirable assets by putting ESG performance at the heart of our decision-making process from acquisition through the development cycle.
When it comes to sustainability, Clarendon’s purpose is to move beyond what is already a strong baseline to drive best practices in our industry.
We set clear targets and KPIs and hold ourselves and our partners to account. We will digitalise these workflows and ensure that our data quality is reliable and captured at the appropriate resolution.
We will also engage our portfolio in ESG initiatives, driving a culture of sustainability through social value.
This document will inform our guiding business practice and set the standard for reporting and governance going forward.
‘’To build this strategy, we embarked on an in-depth process that underscores its commitment to understanding the ESG Landscape.’’
To build this strategy, we embarked on an in-depth process that underscores its commitment to understanding the ESG landscape. This began with a diagnosis phase to assess current practices, industry benchmarks, stakeholder feedback, and policy frameworks. Through this, Clarendon identified key gaps and opportunities for improvement, setting a clear direction for its strategy.
Clarendon actively participated to ensure the strategy is inclusive and aligned with broader organisation’s view and societal needs. This engagement provided valuable insights into stakeholder expectations, potential impacts, and collaborative opportunities for fostering a sustainable approach.
This forward-looking approach helps the company stay ahead of changes, minimising risks and facilitating a seamless transition as global sustainability standards evolve.
The resulting ESG strategy integrates environmental, social, and governance principles into Clarendon’s operations. It is a dynamic framework addressing carbon reduction, community engagement, and transparency, all while supporting Clarendon’s core business goals. This positions Clarendon as a leader in sustainable practices, providing a competitive edge in an evolving market.
By prioritising responsible business practices, Clarendon ensures long-term value creation for the company, its stakeholders, and the environment. This approach balances economic performance with reducing environmental impact, promoting social well-being, and maintaining high governance standards. Clarendon is committed to leaving a lasting, positive impact and contributing to a more sustainable future.
Our ESG Strategy will guide us as market leaders in sustainability.
By setting progressive targets for the coming years, we aim to track our progress over time and assess our performance.
Our pillars include effective data management as a prerequisite to measure, reduce impacts and create value. The ESG pillars identified are the following:
Our goal is to design, construct, and manage real estate in our portfolio according to the objectives and KPIs identified in each areas.
Note: % of portfolio has been calculated based on % of assets weighted per income.
Clarendon is committed to undertaking actions on the identified ESG objectives with the ambition to improve performance and create value.
Clarendon are committed to target 60% of portfolio with implemented data management system that collates, measures and monitors key sustainability performance indicators at the individual property-level and aggregated portfolio-level (electricity and gas consumption, district heating, renewable energy generated, water and waste. consumption) by 2026.
Data management plays a crucial role in enhancing Environmental, Social, and Governance (ESG) performance for several reasons:
Clarendon targets 40% of portfolio with roadmap of decarbonisation initiatives that can be implemented to improve the energy and carbon performance at asset level by 2026.
To undertake this journey, Clarendon will follow these steps:
Baseline establishment:
Opportunities Identification:
Impact Analysis:
Net-Zero Implementation Plan:
GHG Emissions Monitoring:
Net-Zero Roadmap:
Net zero carbon – Operational energy: When the amount of carbon emissions associated with the building’s operational energy on an annual basis is zero or negative. A net zero carbon building is highly energy efficient and powered from on-site and/or off-site renewable energy sources, with any remaining carbon balance offset.
Source: UK Green Building Council
Buildings are significant contributors to global emissions, accounting for 36% of global energy use and 39% of carbon dioxide emissions*.
Green building certifications can help to mitigate these impacts by ensuring that buildings are designed, constructed, and operated with sustainability in mind. Through GBC, it is possible to reduce energy and water use, carbon emissions, and encourage the use of eco-friendly materials. Certified buildings provide healthier indoor environments, enhancing occupant well-being and comfort. Economically, they offer long-term savings through lower utility and maintenance costs, while also increasing property value and Marketability.
At Clarendon, we believe that green building certifications can prove a building’s efficiency and reduced environmental footprint, aligning with broader sustainability goals and market demands.
We will target 50% of our portfolio with high-rating green building certifications by 2030. Where possible, we will consider certifications such as:
We will also encourage Energy Performance Certificate 10% better than NZEB for residential and commercial properties, as this aligns closely with green building
certifications like LEED or BREEAM because both focus on improving energy efficiency, enhancing a building’s marketability, as energy-efficient buildings are more attractive to buyers and tenants. Essentially, improving EPC ratings supports broader sustainability goals
*World Green Building Council
Energy Performance Certificate (EPC) means a certificate recognised by a Member State or by a legal person designated by it, which indicates the energy performance of a building or building unit, calculated according to a methodology adopted in accordance with Article 3 of Directive 2010/31/EU of the European Parliament and of the Council.
At Clarendon, we understand the importance of considering the EU Taxonomy for assets that will be placed on the market in the near future, given the market authority gained by the EU Taxonomy for sustainable investment.
We target, in fact, 25% of the portfolio aligned with the EU Taxonomy by 2026.
The EU Taxonomy will increasingly dictate the conversation regarding sustainable real estate investment. This needs to be considered for any assets that will be placed on the market in the near future. It will also guide funders and lenders regarding access to and the cost of capital. A Taxonomy-aligned asset has demonstrated assessments in terms of resilience to physical, commercial, and transition risks, which reduces the likelihood of negative screening during due diligence.
In several EU markets, Taxonomy alignment is increasingly seen as a minimum requirement for new developments, e.g., in Ireland, where most prominent developers and the Land Development Agency have set this as a standard requirement for residential development.
In addition, an EU Taxonomy-aligned asset can be held within an Article 9 Fund as a verified sustainable investment. This removes any barriers to trading this asset to an Article 9
fund in the future. Article 8 funds increasingly seek to report a minimum % of taxonomy-aligned assets and sustainable investments. In 2023, those who did not report any sustainable investments saw two-thirds of capital outflows.
(Source: Morningstar).
EU Taxonomy Alignment: The EU Taxonomy is a classification system that helps companies and investors identify “environmentally sustainable” economic activities to make sustainable investment decisions. Environmentally sustainable economic activities are described as those which “make a substantial contribution to at least one of the EU’s climate and environmental objectives, while at the same time not significantly harming any of these objectives and meeting minimum safeguards.”
Source: EU Commission
At Clarendon, we are aware that to limit global warming to safe levels, a significant increase in renewable energy share is necessary. A report from the World Economic Forum suggests that to align with the 1.5 degrees Celsius pathway, renewables need to reach 55 to 95% of global electricity by 2030 and 98 to 100% by 2050.
At Clarendon, we are committed to installing on-site renewable energy, such as rooftop solar PV on new developments, redevelopments, and major refurbishments where practical and appropriate. Specifically, we target 40% of the portfolio with installed renewable energy on-site by 2027.
We are aware that installing renewable energy, such as photovoltaic (PV) systems, at the asset level is important because it reduces reliance on fossil fuels, lowers energy costs, and decreases a building’s carbon footprint. It enhances energy independence by generating clean, sustainable power on-site, contributing to long-term energy security. Additionally, PV installations improve the asset’s market value and appeal, often leading to higher property valuations and occupancy rates. They also help meet regulatory standards for sustainability, supporting environmental goals like reducing greenhouse gas emissions and aligning with green building certifications.
Reducing water and waste consumption in real estate is not
just good for the environment, but it can also have direct economic benefits. Some reasons can be identified in the following:
Properties with efficient water and waste systems may have higher market values due to their lower operating costs and appeal.
Clarendon is committed to achieving a recycling rate of 75% by 2025 across the directly
managed portfolio where there is a landlord waste contract in place. Clarendon also aims to achieve 100% diversion from landfill through the primary disposal route.
We are also committed to reducing water consumption YoY for the directly managed
like-for-like portfolio. Also, we aim to achieve a water AMR coverage of our portfolio up to 100% over the long term.
Community engagement is important because it fosters positive relationships with local stakeholders, ensures smoother project approvals, and reduces opposition. By involving the community early in the development process, developers can address concerns, incorporate local input, and build trust, which leads to greater public support. This engagement also helps developers understand the needs and priorities of the area, allowing for more tailored, successful projects that are better integrated into the community. Additionally, strong community ties enhance a developer’s reputation, encourage long-term relationships, and improve the social and economic impact of their projects.
Clarendon is also committed to identifying opportunities to facilitate community engagement and activate initiatives.
In particular, Clarendon aims to improve its tenant engagement and satisfaction levels by conducting annual surveys, providing feedback mechanisms, and implementing initiatives that address tenant needs and expectations. It also aims to promote sustainability awareness and best practices among tenants and encourage them to participate in environmental and social community programmes.
At Clarendon, we are also committed to increasing the number of assets that target social well-being certifications.
Clarendon developed this strategy through a structured process, emphasizing a deep understanding of ESG challenges and opportunities. It began with a thorough diagnosis phase, evaluating current practices, industry benchmarks, and policy landscapes. This helped identify gaps and set a clear path for strategic improvements.
Engaging with stakeholders was a cornerstone of the strategy. Clarendon gathered insights from suppliers, customers, community representatives, and employees, ensuring the strategy was inclusive and aligned with broader needs. This engagement allowed Clarendon to identify critical areas such as supply chain transparency, carbon reduction, and diversity initiatives.
Policy alignment was also central to the process. By working closely with regulatory experts, Clarendon ensured the strategy not only met current standards but also anticipated future regulatory shifts. This proactive approach minimizes compliance risks and helps Clarendon stay ahead of industry changes.
The final ESG strategy integrates environmental, social, and governance principles across Clarendon’s operations. It focuses on reducing carbon emissions, fostering responsible sourcing, and maintaining transparency. This dynamic framework helps Clarendon stay competitive while delivering measurable positive impacts on both the environment and society.
With this strategy, Clarendon is positioned as a leader in sustainable practices, balancing economic goals with its commitment to a sustainable future. It ensures long-term resilience, value creation, and a positive legacy for both the company and the communities it serves.