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At LXi we believe that ESG considerations should play a key role in the company’s business strategy. There is now a strong consensus amongst scientists that climate change is posing a significant threat to our economies and way of life. This has been highlighted in the Intergovernmental Panel on Climate Change’s (IPCC) latest report. In addition, there is abundant evidence that companies with robust approaches to governance, diversity, equity, inclusion and an emphasis on employee wellbeing achieve stronger business performance. In short, a holistic integration of ESG considerations into investment strategy is becoming synonymous with sound governance and long-term value creation.
Our Commitments
Our ESG strategy captures the long-term horizon of our investments and how on-going relationships and collaboration with occupiers will lead to achieving positive environmental and social outcomes. We aim to ensure our investment approach secures a long, sustainable future for our stakeholders, the planet and society as a whole in the following areas:
ENVIRONMENTAL | Buildings: decarbonisation, climate resilience and nature based solutions
Our Net Zero Commitments:
Areas under our control (Scope 1 & 2 emissions) will be Net Zero by 2025 at the latest, and are already most of the way there.
Major focus of our occupier engagement plan is on immediate action out to 2030: the portfolio has the potential to achieve 50% of all available building-efficiency driven emission reductions over the next seven years, translating into Scope 3 CO2e reductions of 30% by 2030.
The entire operational portfolio (Scope 1, 2 & 3) will be Net Zero no later than 2050, with the potential to achieve 100% of all available asset-efficiency driven emission reductions by 2045.
Our occupier partners’ long-term commitments to their leased sites fundamentally dictate the approach to pathway delivery. A large proportion of current occupiers will still be in our buildings by 2050 and many will want to extend beyond this point given the strategic importance of the sites to their businesses. They are fully committed to on-going upkeep of the assets through the FRI lease mechanisms and the vast majority have their own targets to reduce Scope 1 & 2 emissions to Net Zero levels ahead of 2050. The delivery of our strategic goals is therefore centred around supporting occupiers with delivery of their own decarbonisation plans.
SOCIAL | Places & people: social value and wellbeing
In addition to actively participating in initiatives to increase DE&I in the built environment through our work with the Academy of Real Assets and the 10k Black Interns programme, we are at the beginning stages of scoping out opportunities across the portfolio to deliver positive social impact and foster human wellbeing.

We have allocated dedicated resource within our team to exploring potential for the delivery of projects resulting in positive social impact across the portfolio. Our immediate target is to identify specific opportunities and initiate collaboration with occupiers on social value initiatives by the end of FY2023/24.
GOVERNANCE | Accountability: governance across all levels of our organisation

The Group has a mature and robust structure of governance, compliant with the AIC Code of Corporate Governance and with its enhanced ESG policy. Its oversight over the integration of environmental and social considerations into investment strategy ultimately sits with the Board of Directors, facilitated by the Climate Risk Working Group (CRWG) and the Investment Advisor’s Head of ESG, supported by the wider property team and a suite of external consultants. Alignment with occupiers’ responsible investment strategy and governance is paramount to our success.
Climate Risk Working Group:
Representatives from the Investment Advisor and the Board of Directors came together to form the Company’s Climate Risk Working Group (CRWG) in 2022. This working group acts for, and reports into, the Board on ESG matters. It also has direct presence of two Board Directors, including the Chairman. The CRWG aims to meet a minimum of once a quarter to progress and assess implementation of climate strategy and reports directly to the Board at each quarterly Board meeting.
Cyrus Ardalan
Non-Executive Chairman
Ismat Levin
Non-Executive Director
Barbora Melezínková
Head of ESG
Simon Lee
CEO
Robert Ward
Head of Real Estate
Charlotte Price
Head of Financial Planning and Analysis
Simon Haarer
Asset Management Director
Monitoring and measurement of progress: Targets & KPIs
This set of KPIs is clearly monitorable and consists of indicators perceived as most critical at this point. It is to be revisited on an annual basis and can be modified as strategy delivery progresses. On-going progress against the KPIs is reviewed quarterly by the Board of Directors, with an in-depth annual review. Progress against these will be reported to investors through our annual and interim reporting.
Environmental - Immediate (to 2025)
 
Area KPIs Target
LL controlled Scope 1&2 emissions Emissions reduction alignment to Net Zero Net Zero by 2025
Occupier data coverage % electricity consumption
% gas consumption
% water consumption
% data on waste management
Energy:
2023: 75% | 2024: 85%+
Water & waste: 2023: 50% | 2024: 75%
Embodied carbon Establish measurement approach for forward fundings and tenant fit-outs and refurbishments To be concluded by end FY23/24
Occupier engagement % tenants by rent roll - regular dialogue
% tenants collaborating on initiatives
% tenants with Net Zero targets
Regular dialogue: 75% by end FY23/24
Tenant questionnaire coverage:
2023: 50% portfolio
2024: >90% portfolio
Net Zero plans for buildings % portfolio by rent roll with plans in place 2023: 15% to have reduction plans in place by year end
2024: 30%
2025: >50%
EPCs EPC audit & improvement plans 2023: all assets to have an EPC rating in place by end of FY23/24
2024: improvement plan in place for all EPC D & below
On-site renewables Progress PV projects across the sites with live negotiations
Portfolio-level scoping exercise
To be concluded by end FY23/24
Physical risk Establish appropriate physical risk assessment tool To be concluded by end FY23/24
Biodiversity Pilot and roll-out plan To be concluded by end FY23/24
Environmental - Medium & longer term (2030 to 2050 milestones)
 
Area KPIs Target / portfolio potential
CO2e emissions, intensity & yoy emission reductions tCO2e, % like-for-like reductions vs operational
Scope 3 pathway
2030: 30% reduction
2040: 50% reduction
2045: 75% reduction
2050: Net Zero
Whole life carbon WLC reductions & NZ Tbc
Building Energy Usage Intensity EUI (kWh/m2/yr)
EUI reduction vs pathways
Tbc as site-level audits complete
Delivery against decarbonisation plans for buildings Delivery of asset efficiency-driven decarbonisation potential 2030: 50% reduction
2040: 80% reduction
2045: 100% reduction
EPCs % EPCs by rating 2027: All properties rated >=C
2030: All properties rated >=B
On-site renewables % properties with on-site renewables
% energy generated on-site
30% on-site potential to be delivered by 2030
Physical risk % portfolio rated
% portfolio low risk
Tbc
Biodiversity Net Gain BNG(%)
Biodiversity Units generated
Tbc
Social - Immediate (to 2025)
 
Area KPIs Target
Social impact Increasing DE&I in the built environment Delivery of localised social impact Investment Advisor to take part in minimum three initiatives annually Complete site-level scope assessment by end FY23/24
Wellbeing Establish approach to wellbeing assessment Scoping assessments & framework development: End FY23/2
Governance - Immediate (to 2025)
 
Area KPIs Target
DE&I Board & senior teams composition 50:50 gender balance Ethnic and socioeconomic diversity
Board ESG oversight Direct Board responsibility for ESG oversight, regular engagement on ESG progress Industry best practice
Transactional DD LXis ESG due diligence checklist Adherence to all requirements
Strategy Delivery: Case Studies
OCCUPIER ENGAGEMENT
Travelodge regear
The Company completed a lease regear with Travelodge in Q4-22, extending the unexpired lease terms on 122 hotels by a weighted average of nine years. Green Lease Provisions are included within the updated leases, with focus on the following principles:
  • sharing of energy, water, recycling and waste data
  • co-operating on the environmental, social and governance strategies
  • future proofing the leases to ensure the landlord has the necessary rights to enter the properties to make environmental performance improvements where necessary
Information sharing and frequency of dialogue around energy reduction and decarbonisation has already increased since the provisions came into effect, and we have set out to collaborate with Travelodge and their sustainability consultants on an air source heat pump pilot project at one of the LXi sites.
BIODIVERSITY ENHANCEMENT
Columbus Quarter, Andover
In May ’23, we completed our first biodiversity enhancement project at Columbus Retail Park in Andover in collaboration with The Ecology Co-operation Ltd. Based on their strategy for the site, existing landscaping was replaced with a native mix of plants and shrubs, creating a more varied and resilient ecosystem that thrives in the local climate and encourages birds, insects and other wildlife. This overhaul is calculated to have achieved >200% BNG vs baseline. Although over a relatively small area (c.500 m2), this packs a punch and we are looking to replicate this across our other landlord-controlled landscaping areas, and encourage all our occupiers to do the same across their plots wherever possible.
OCCUPIER ENGAGEMENT
Increasing data coverage
Having access to data is key for setting a reliable baseline for science-based emission reduction targets at the individual property-level. In Q1-23, we focused our efforts on conversations with occupiers around the importance of data sharing and ultimately doubled utility usage data coverage from 27% for calendar year 2021 to 62% for 2022. We are aiming for 75% coverage in 2023 to flesh out gaps. The data will continue to be used to benchmark energy usage intensity across the portfolio, and to identify priority sites for collaboration with occupiers on energy management and decarbonisation initiatives.