Sustainability

Introduction

At The Crown Estate we have a corporate responsibility, not just for today but for future generations, to ensure that we bring benefits to our own business and at the same time benefit the economy, and the communities and environments in which we operate.

This is The Crown Estate's vision for sustainability. It owes its origins to an extensive review of our approach to delivering sustainability ensuring that it is truly embedded within our organisational structure and business strategy. The review, undertaken over the past year, has already resulted in a much deeper understanding of how sustainability is a core feature of our business and is explicit in the diligent and responsible management of our varied assets across our marine, rural and urban environments.

I am particularly proud that we are able to communicate in this report on the unique ability of The Crown Estate to support innovation in the renewables sector. The marine estate team has long been central to the successful development of offshore wind energy technology and is now playing a similar role in exploring the opportunities for wave and tidal power.

At the same time, there is ongoing work to understand the possibility of renewable energy generation across our rural estate. The urban estate has a role to play in its use of electricity from climate change levy exempt sources and through investigating the installation of renewables on-site.

The review has also resulted in the restructuring of our sustainability governance and a re-evaluation of our long-term sustainability aims, evidence of which is our decision to recruit a specialist. Much of this work is ongoing and we have therefore decided to focus on our performance in the past year in this report and fully launch our revised strategy in autumn 2009. At this point we will be in a position to set out our long-term targets and discuss in depth how sustainability will be effectively managed throughout The Crown Estate.

We have long recognised that it makes sound business sense to conduct business in a responsible and sustainable manner and this has been essential in order for us to live up to our values of commercialism, integrity and stewardship. A recognition of the value of sustainability is now of even greater importance as the world economy struggles with recession. There is no room in successful business for sustainability as a ‘bolt-on'; only a truly embedded sustainability strategy will be able to deliver real value.

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Addressing opportunities, risks and challenges

Running our business in a sustainable manner means that we are presented with real opportunities.

  • We have an exciting chance to realise the commercial potential of renewable energy generation in the UK.
  • We are exploring the carbon sequestration potential of our rural and marine assets and are also looking into other ways of quantifying the non-financial value of our assets.
  • Managing our buildings sustainably can enhance their long-term value and save money for our tenants.
  • Ensuring that sustainability is part of the design process for new developments will create more marketable, usable and healthy buildings.
  • Working to create sustainable communities will ensure the long-term success of our business and the tenants on whom we depend.
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There are also certain risks and challenges associated with sustainability within our business strategy. Like many of our real estate industry peers, we are managing our capital expenditure very carefully and this can mean that sustainability improvements to building stock are delayed. However, we expose ourselves to risk if we do not, for example, continue to work hard to monitor and reduce both our impact on the environment and how the environment impacts us, especially with the tightening of regulations such as the Carbon Reduction Commitment. We are mindful of this risk and despite minimising capital expenditure as much as possible, this does not mean that we are failing to make any sustainable improvements to our assets. For example, Windsor Great Park has invested £304,000 on installing energy efficient windows at some of its domestic tenancies (this accounted for 19% of Windsor's total housing investment this year). Within the urban estate the housing business group invested £3.4 million in its housing stock to improve its environmental performance.

Balancing the different aspects of sustainability can be a challenge. An action which is positive in terms of reducing carbon emissions – such as investment in tidal and offshore wind power – may not necessarily be good for local biodiversity. Similarly production of renewable energy through development of offshore wind farms may raise environmental concerns about ‘industrialisation' of the sea but it is a case of balancing one long-term environmental imperative – CO2 reduction – against another – protection of the marine environment and following our core values.

Sustainability: Climate change and energy security

We see it as our responsibility to understand and manage our carbon emissions. We are measuring and monitoring CO2 associated with energy use and transport on our urban estate but on our rural and marine estates this is a far more complex process. We have been exploring the opportunities of carbon modelling and some of the results are represented here.

Current terms of office (Dummy table taken from last year)
Board member Date of most recent appointment Date of expiry Length of service
as at 31 March 2008
Ian Grant (Chairman)* 1 October 2006 31 December 2009 5 years
Roger Bright (Chief Executive) 1 September 2005 31 September 2009 7 years
Christopher Bartram 1 January 2007 31 December 2010 1 year
Sir Donald Curry** 1 January 2004 31 December 2007 8 years
Hugh Duberly 1 January 2006 31 December 2009 6 years
Jenefer Greenwood 1 January 2008 31 December 2011 4 years
Martin Moore 22 April 2006 31 December 2010 6 years
Dinah Nichols 16 January 2007 31 December 2010 5 years
David Fursdon*** 1 January 2008 31 December 2011 3 months

*Formerly a non-executive board member.
**Sir Donald Curry’s appointment expired on 31 December 2007.
***David Fursdon’s appointment commenced on 1 January 2008.

The table above shows our CO2 emission figures. This is made up of the energy use in the commercial buildings that we manage and in the offices that we occupy ourselves. Emissions from business travel are also included. Our overall increase from 2007/08 arises from the following:

  • The portfolio of commercial buildings we manage has grown by 40 properties.
  • We are gathering energy data for an increased proportion of our portfolio, with 89% now reporting data (compared to 80.5% in 2007/08 and 77% in 2006/07).
  • The marine team monitored its employee business travel for the first time and this information has been included in the total CO2 figures.

This increase in data coverage is part of our ongoing efforts to ensure compliance with the Carbon Reduction Commitment. A focus for this year will be to establish effective energy monitoring systems at the Windsor Estate and for our residential portfolio. We also aim to collect energy data for all employee business travel. We have achieved some reductions on individual estates. At Windsor we have reduced the CO2 emissions from our fleet of vehicles by 21% compared to 2007/08, when they were 157 tonnes. This year emissions were 124 tonnes.

Like other property owners, we face challenges in monitoring our performance over time, across a portfolio that is constantly shifting (through acquisition, disposal and refurbishment). In order to give an accurate indication of our performance, therefore, we have taken the set of buildings (38 in total) that have been consistently in our portfolio for two years, comparing them on a ‘like-for-like' basis. This allows us to look at how management of, and improvements to, buildings have improved their energy efficiency in the past year. The results show that the total CO2 emissions for these properties have decreased by 0.1% in the last financial year. We made improvements to building management and invested in energy efficient technology. However, a cold winter made it difficult for us to achieve the greater energy savings that we were expecting.

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Sustainability: Driving environmental value

It is our responsibility to manage and reduce our environmental impacts. To do this, we collect data. In this section of the report we have included performance data graphs on what we consider to be the biggest impacts we have on the environment.

A total of 2,260 tonnes of waste was produced from those parts of the portfolio where The Crown Estate manages waste collection (12 buildings). As can be seen above 55% of this waste was diverted away from landfill through recycling (segregated at source), processing at a materials recovery facility (MRF), incineration to create energy or processing of food waste into Grade A slurry. The latter disposal route is one example of a number of initiatives taking place across The Crown Estate to minimise waste to landfill. Similarly, on the Windsor Estate, an estimated 2,800 tonnes of green waste is composted each year and reused on-site. As can be seen in the above graph, we achieved a reduction of 8% in water use at like-for-like properties. We consider this to be a significant achievement given that our target was to achieve a 3% reduction. This comparison is based on 29 properties out of a total of 56 for which we purchase water.

Increasing visitor numbers at the Windsor Estate together with the water demands of the agricultural tenants there has meant that water consumption increased from 186,953m3 to 232,916m3. Alongside establishing a robust energy and waste monitoring/reduction system, the Windsor Estate will be looking to engage with tenants through newsletters and forums in order to manage water consumption. Total water consumption across the Windsor Estate and the commercial buildings we manage was 340,572m3.

Focus on mineral extraction: balancing stakeholder opinion

In the marine environment there were 21.5 million tonnes of marine aggregates extracted in 2008/09. This activity makes a significant positive contribution to the economy and society. It helps to meet the demand for construction materials (12.47 million tonnes in 2008/09), is the primary source of materials for beach replenishment (2.15 million tonnes), and hence coastal protection, and is also a significant export activity (6.88 million tonnes – to nearby European countries). However, extraction of marine aggregates from the seabed around the UK and the extraction of minerals on land can be contentious. This seemingly large volume of materials actually comes from a very small area of the UK seabed (90% of the extraction comes from around 50km2) but despite this small area there are significant environmental concerns which the regulator has to be satisfied are either non-existent, or minimal, before approving an application for extraction. These concerns include impacts on marine life, possible interactions with fragile coastlines and recovery after the (generally) former glacial deposits are extracted.

Extraction also takes place on the rural estate, where remedial action taken by operating companies can sometimes mean that areas that were previously of little environmental value can be transformed into areas rich in biodiversity. We also work with operating companies to explore innovative practices such as underground rather than open mining. This means a reduction in noise, blasting and dust and also means that other activities can continue above the area. Extraction of aggregates also creates local employment. The ability of the UK extraction industry to provide locally sourced building materials for UK developments is also significant. It not only creates employment and boosts the UK economy but it also means that there is less of a need for material to be transported from elsewhere, thus saving significant amounts of CO2.

Ultimately, it is our responsibility to continue to conduct research into the range of possible negative and positive impacts of all of our activities and to make business decisions which are true to our values of commercialism, integrity and stewardship.

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Sustainability: Working together

For us, ‘working together' encompasses working not only with our employees but with our customers, our business partners and stakeholders too. In this 2009 annual report, we have focused specifically on employees and how we support them. We have also provided information on our approach to stakeholder engagement.

Whilst we always recruit on merit, we are conscious of the need to give everyone a fair chance. In 2008/09 there was an increase in the proportion of female employees from 32% to 35% of the total workforce. Broken down by department, our head office functions are majority female, with the rural team approaching an even split, with 44% of its workforce being female. Within all other teams, female employees represent only 30% or less of the workforce.

The graph above compares the salary distribution of males and females employed by The Crown Estate. The lowest paid employees (paid under £20,000) are primarily male, with 41% of all men employed by The Crown Estate in this category. In lower- to mid-range positions (salaries between £20,000 – £59,000), female employees tend to be slightly over-represented, with 59% of the females falling into these categories and 43% of the males. However, only 8% of the females at The Crown Estate are paid £60,000 or above, compared to 16% of the males.

As can be seen in the table above, the median salary for women is higher than the national average and higher than that for men. Broadly speaking, national gender pay gaps are not reflected at The Crown Estate which is largely due to our culture of diversity and inclusiveness. However, the male median salary is lower than the national average because of the high number of non-professional male employees at Windsor.

In the past year, we have focused our training activity on core competencies Training in key areas continues to be a priority.

Consulting with our stakeholders

Effective stakeholder engagement is central to our commitment to ‘working together', playing a key role in placing our sustainability strategy at the heart of our operations. We are currently a stakeholder management system, which will allow us to consult with our stakeholders in a more effective way.

However, stakeholder engagement already forms a central part of the development of our business strategy. In the past year we have undertaken the following projects:

  • We helped to establish the Stakeholder Advisory Group (SAG) in the Pentland Firth, where we are involved in a joint project to generate marine renewable energy from these waters. The SAG acts as a forum for local parties such as environmental Non- Governmental Organisation (NGOs) and marine industries. The aim is to maximise the potential for socio-economic gains for surrounding communities and minimise conflict between existing use and new developments.
  • We held a two-day session for our marine estate team in Northern Ireland to enable them to consult with managing agents, staff, NGOs and local government.
  • We met with local stakeholders, including tenants, at our rural estate in Dunster to develop our strategy for economic growth in the area with the aid of the Dunster Development Project.
  • We ran a consultation with the local planning authority and residents regarding the planned housing development in Wolverhampton.
  • We sought input from local stakeholders, including commercial and residential tenants, before developing a strategy for economic growth in the St James's area.
  • We held two public consultations and exhibitions with local authorities, councillors, tenants and the general public for both the refurbishment of the malls and the development of a new retail unit in Worcester.

Over the course of the next year, we will be using the stakeholder management system to gather feedback to influence our sustainability strategy. We will also be undertaking a very detailed, UK-wide, stakeholder engagement programme on the offshore renewable energy opportunities in 2009/10 in partnership with the UK and devolved governments. The marine estate will also be using the marine spatial planning tool that has been developed to engage with stakeholders and involve them more directly in the planning of the UK's marine environment. We anticipate that this trial will involve national agencies, NGOs and local communities.

The diagram below shows the stakeholders that we have identified for consultation:

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Sustainability: Sustaining communities

As a landowner of a large and varied portfolio across the UK, The Crown Estate has contact with many and varied communities and we work hard to ensure our impact is a positive one. The performance indicators below demonstrate some of the ways in which we bring benefit to the communities in which we operate.

In 2008/09, 234 full-time employees spent time volunteering, representing 56% of the total workforce. This is a significant increase from former years as demonstrated in the graph above. In 2007/08 6% of employees volunteered and 3% in 2006/07. The Windsor team had a big part to play in this uplift, with the entire team of 203 employees spending the day showcasing their work to 1,600 primary school children, giving them the opportunity to understand the activities and dynamics of a large rural estate. (This will be a biennial event). Thirty one employees, including three Management Board members, were involved in volunteering from other areas of the business.

The marine stewardship programme is divided into two categories. The Marine Research Fund invests in projects that provide scientific evidence to support a range of pertinent marine issues such as aquaculture, aggregate-based studies, offshore renewable energy and socio-economic issues linked to the marine assets. The Marine Communities Fund invests in projects that contribute to the development of best practice and sustainable management of the marine environment. In 2008/09, The Crown Estate invested £800,000, supporting a total of 60 different projects. Project size varies from very small (£500) to the more extensive (£85,000).

As part of our continued efforts to support the establishment of London as a World City and to have a positive impact on the communities of which we are a part, the urban estate supported a number of community groups in 2008/09. Examples are the Westminster Small and Minority Business Council, the Heart of London BID, both the Jermyn and Regent Street Associations, the St. James's Conservation Society and the New West End Company.

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Sustainability: Progress against 2008/09 targets

We are proud to report that we achieved 69% of our targets this year.
Target Progress
To develop an E-Procurement policy. 75%
To incorporate sustainability considerations into purchasing decisions with a view to reducing pollution, enhancing energy efficiency and reducing waste. This will initially be applied to the following product areas: IS equipment, paper for legal deeds and print management systems. 100%
To pilot the ‘Customer Focus' projects, which involve the implementation of business efficiency and development measures, at Taunton, Dunster, Bryanston, St James's (London) and on the Scottish west coast. 100%
To launch the report ‘Socio-economic indicators of marine-related activities in the UK economy' and extend this work by developing sustainability indicators, and gather Q1 data, for two marine business strands. 100%
To promote Health and Well-being to all employees via a programme of at least three awareness-raising events and via a web-based lifestyle questionnaire for completion by employees, to help inform relevant health promotion activities for delivery in 2009/10. 100%
To achieve all of those objectives in the Housing Energy Efficiency Strategy that are designated for completion within the first year. 65%
To reduce water usage, in those parts of the urban estate that are under our control, by 3% compared with 2007/08 levels (‘like-for-like' properties only). 100%
To develop a Sustainable Development Brief for development and refurbishment in Regent Street, London. 100%
To reduce carbon dioxide emissions associated with energy use in those parts of the urban estate that are under our control by 3% compared with 2007/08 levels (‘like-for-like' properties only). NB In line with DEFRA guidance, target achievement is based on the carbon emissions from all energy use, regardless of whether it is from Climate Change Levy (CCL) exempt sources. In fact, 56% of the electricity that we buy for the buildings that we manage is CCL exempt. 3%
To reduce the carbon emissions associated with vehicle usage in the administrative functions of our HQ building by 6% compared with 2007/08, in order to support the Government target to reduce carbon emissions from vehicles by 15% by 2010/11. 100%
To develop an action plan to reduce carbon emissions from the marine estate's employee business travel. 100%
To increase the number of employees participating in the Employee Volunteering Scheme from 6% of permanent employees to 10%. 100%
As a minimum to meet the Decent Homes Standard across the whole of The Crown Estate's domestic portfolio by 2010. Deemed unviable
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Sustainability: Plans for the year ahead

We will be fully launching our new sustainability strategy in the autumn, with a view to integrating sustainability into our business decision making. In the meantime we will continue to manage our existing impacts and work to achieve our targets. As well as our targets, as set out below, we have given an indication of a number of other areas in which we will be taking action. Whilst progress against targets will be formally monitored and scored at the year-end in accordance with normal practice, we will provide only an update on progress against these actions.

Standards and accreditation

Target: Achieve Silver in the BITC CR Index by January 2011.

Target: Achieve certification for the following management systems:

  • ISO14001 for the urban property management function by March 2010.
  • ISO14001 for head office functions in London (16 New Burlington Place and Camberley House) by March 2011.
  • OHSAS18001 for the Occupational Health and Safety management system by March 2011.

Target: Develop a ‘Crown Estate Quality Standard' for all direct let residential property, initially focused to ensure high levels of energy efficiency.

Biodiversity

Target: Continue to maintain 95% of SSSIs in recovering or favourable condition to meet the Government target.

Resource use

Target: Achieve a 3% reduction in water use in those parts of the urban estate under our direct control compared with 2008/09 levels (‘like-for-like' properties only).

Target: Achieve a 40% diversion of waste going direct to landfill on the Windsor Estate over the financial year 2009/10 (to include waste streams from all activities, offices, green waste composted on-site, Savill Building, hazardous and chemical waste produced on-site and fly tipping).

Target: Reduce CO2 associated with energy use in those parts of the urban estate under our direct control by 3% compared with 2008/09 levels (‘like-for-like' properties only).

Actions: We will increase the scope of our carbon data baseline to give a more accurate carbon footprint, which will enable us to better focus our efforts to reduce carbon emissions. Understanding our carbon emitting and sequestering activities better will allow the urban estate to help finance the establishment of a native pine and birch woodland, on a 40 hectares area of the Glenlivet Estate in Scotland, as an ‘offset' to our Regent Street Christmas lights. We will also introduce initiatives to reduce our paper consumption by 10% at 16 New Burlington Place (our head office).

Renewable energy

Action: We will prioritise land-based renewable energy opportunities, with a view to initiating at least 10 renewable energy projects.

Travel

Target: Develop a green travel strategy to establish the carbon baseline for all employee business travel, to set targets for reduction and to report on our performance in next year's report.

Action: We will further reduce the CO2 emissions associated with vehicles engaged in file movement and with our fleet employed at Windsor.

Development

Action: We will deliver an exemplar scheme at Burnhill Green, Patshull, as an example of a high quality sustainable development.

Customers

Action: We will undertake a structured audit of diversification opportunities in which to co-invest with tenants to provide alternative revenue streams across the rural portfolio, with a view to investing in, or facilitating, at least five new business development projects.

Employees

Action: We will develop and implement a stress management policy and procedure.

Sustainable communities

Target: Develop a Community Investment strategy by March 2010. This will include a commitment to maintaining a minimum level of 15% of employees participating in the Employee Volunteering Scheme.

Actions: We will be focusing on maximising the value of investment in marine business activities to communities around the UK. To achieve this we will be piloting a programme to enable local communities to benefit financially from renewable energy in the Highlands and Islands, and we will engage with stakeholders and the supply chain of The Crown Estate's offshore renewable energy programme through a series of events across the UK. We will also set up a series of pilot programmes to develop the use of The Crown Estate's marine spatial planning tool, MaRS, to enable local communities to plan the sustainable utilisation of their marine environment and resources.

The urban estate is committed to helping London cement its status as a World City by, for example, contributing to the development of five West End public realm initiatives. We will also support and deliver at least five community focused events in Regent Street and the West End, some with an international profile.

Communications

Action: We will continue to work with external bodies to improve sustainability accountability and reporting for The Crown Estate.

“In a year of significant economic challenges and changes to personnel, it is very encouraging that 69% of targets were achieved.”

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Sustainability: Adviser's statement

Upstream Sustainability Services (a business unit of Jones Lang LaSalle Ltd and hereafter referred to as Upstream), has once again conducted a formal review to establish The Crown Estate's level of achievement against its annual sustainability targets. Upstream is a strategic adviser to The Crown Estate on sustainability issues, and is therefore not fully independent. However, this statement is based on a formal documented audit of the organisation's target achievement levels.

As in previous years, Upstream obtained the necessary information for the audit by attending quarterly meetings of the sustainability committee, and interviewing a number of the Sustainability target coordinators. Each target is awarded a percentage completion score on the basis of evidence submitted to validate its completion. Where target achievement is based on management action rather than quantifiable performance, assessment has been based on the completion of milestones agreed in advance. This has necessitated a degree of professional judgement from Upstream.

From the review findings, Upstream concludes:

  • The level of achievement against the 2008/09 targets represents strong performance, with 69% of targets fully achieved (9 out of 13). This is compared to 75% last year.
  • All targets related to employees and customers were fully achieved. This reflects the significant levels of work that have been undertaken in these areas this year.
  • Of its 13 targets, six were related to the environment and of these, four were achieved. The proportion of environmental targets set demonstrates The Crown Estate's commitment to managing its environmental impacts. There are significant challenges associated with improvement in this area, such as the need for capital expenditure and buy-in from tenants and contractors. These challenges impacted on the ability of The Crown Estate to meet all environmental targets.
  • It has been decided that the long-term target to meet the Decent Homes Standard across the portfolio by 2010 is not appropriate as the level of investment required would not yield significant benefit for tenants. Upstream has had discussions with The Crown Estate about developing an alternative standard, primarily focused on energy efficiency, and is satisfied that this is a sensible strategic decision.

As in previous years, Upstream would again comment that the majority of The Crown Estate targets still principally relate to management actions, rather than quantifying performance improvements. There are significant difficulties in evaluating quantifiable progress against management targets and the variations in the scope and level of challenge presented can make comparisons with previous years and with peers' performance difficult. We are therefore very encouraged by the development of the new Sustainability Strategy and look forward to seeing the long-term performance based targets which are due to be released in autumn this year.

Key highlights of The Crown Estate's performance in the past year include:

  • The extension of carbon emissions reporting to incorporate emissions associated with land management on the rural estate and energy use on the Windsor Estate. There is also wider coverage of the urban estate.
  • The development of sustainability indicators that will be used to assess the impact of different marine industries.
  • The completion of a formal, quantified assessment of the energy efficiency of the entire housing stock of the Housing Business Group portfolio.
  • 56% of The Crown Estate employees undertaking some form of volunteering activity that is of benefit to the community. This is a demonstration of the level to which working with the community is embedded in the ethos of The Crown Estate.

In a year of significant economic challenges and changes to personnel, it is very encouraging that 69% of targets were achieved. The Crown Estate's continued commitment to sustainable business is evident and the efforts taken to address environmental and socio-economic impacts across the estates and to further embed sustainability in the organisation are admirable.

Upstream looks forward to working with The Crown Estate to set long-term performance targets and to further develop and embed its strategy.