Methodology and Governance

Methodology

This GRI-compliant report follows the GHG Protocol, and UK Green Building Council and Better Buildings Partnership Climate Change Commitment frameworks for carbon reporting.

All environmental targets reflect the operational boundary of The Cadogan Estate, including all Cadogan Group Limited owned buildings and investments. In 2022, 6 new properties were acquired and added, and 54 were sold therefore removed from the reporting scope.

Scope 1 emissions are direct emissions from activities controlled by us that release emissions into the atmosphere, and scope 2 emissions are indirect emissions associated with our consumption of purchased energy. Cadogan’s scope 1 comprises emissions from natural gas, diesel, fuel oil and refrigerant gases, and scope 2 emissions are from electricity purchased for common areas and shared services. All material sources of scope 1 and 2 emissions are reported, with only 2% of electricity and 39% of gas consumption estimated. Fuel oil is reported where information is available, but the small data gaps are not material to total impact. Energy is reported in kWh and converted to tCO2e using location-based DEFRA emissions factors, with no normalisation applied. Intensity metrics refer to the floor area served by the energy measured, taking note of where electricity might only supply common parts but gas supplies whole buildings.

Scope 3 emissions are those that are a consequence of our business activities, but which occur at sources we do not own or control. The GHG Protocol identifies 15 categories of which 9 are relevant to us. The table below describes how each scope 3 category is treated in our reporting. In 2022 we made a significant effort to increase the percentage of actual data used in scope 3 reporting, meaning that 30% of scope 3 emissions in 2022 are based on actual utility data rather than estimated. This includes actual data covering 36% of occupier space and 26% of supplier spend.

Scopes 1 and 2 calculation methodologies have remained the same as previous year’s reporting, and scope 3 has been updated as follows:

- Upstream emissions now use the US EnvironmentallyExtended Input-Output (EEIO) emission factors rather than Quantis factors, in order to improve the accuracy of reporting given their improved granularity and more recent issuance. This has led to a 10-fold decrease in previous emissions estimates, and therefore we have restated relevant emissions for every year since our baseline of 2019.

- Cadogan Income Fund properties are accounted for in scope 1 and 2 (as direct managed properties) rather than scope 3 (as investments). With a carbon impact of 16 tCO2e, this has not required a restatement of previous years.

- FERA (Fuel- and Energy-Related Activities) emissions for scope 3 categories (development energy, occupier energy, business travel, commuting, and other transport) are now accounted for within those scope 3 categories, rather than in the FERA category, according to best practice.

- Water emissions from development activity, investments and occupiers are now excluded, according to best practice. Water consumption is still measured and reported as part of or water reduction target, but exclusion from the footprint led to a 1.5% decrease in occupier emissions and a restatement.

- Commuting now includes the new DEFRA factor for working from home, replacing our own estimation methodology used in previous years. With only 0.2% of emissions coming from this category, no restatement has been made.

- Occupier emissions have been restated, with an improvement in floor area data and vacancy rates resulting in better estimations. The same BEES benchmark has been used as in previous years where actual data is not available.

More detail on our scope 3 emissions calculation methodology can be found on the next page.

This category includes emissions from developments: site energy (including FERA), waste generation, and embodied carbon of materials used in construction. We work with a consultant to calculate the total embodied carbon emissions for each medium and large development, with these emissions reported in the year of project completion. Where embodied carbon data is not available, emissions are calculated by multiplying procurement spend by EEIO emission factors for each relevant economic sector of spend. Site energy and waste data are reported per project using data provided by relevant contractors. Purchased

Supplier-reported emissions (pro-rata for turnover derived from Cadogan activities) are calculated from energy reporting and DEFRA emissions factors. Where primary supplier data is not present, emissions are calculated by multiplying procurement spend by EEIO emission factors for each relevant economic sector of spend. Landlord

Emissions from landlord-purchased water, including water subsequently consumed by occupiers. This excludes water used in construction activities and water procured directly by occupiers, but includes properties managed by a third party who buy water on Cadogan’s behalf. Actual consumption in cubic meters is converted into emissions using location-based DEFRA emissions factors. Capital activities Yes

This category reflects emissions from capital goods purchases made by Cadogan in 2022, including but not limited to new vertical transport, HVAC equipment and machinery. Emissions are calculated by multiplying procurement spend by relevant EEIO emission factors – noting to deduct spend from supplier emission estimates above to avoid double counting.

Upstream transportation & distribution Yes

Waste Yes

Transmission and distribution (T&D) and well-to-tank (WTT) losses associated with landlord-procured electricity and natural gas. This excludes FERA associated with Scope 3 energy (development energy, occupier energy, business travel, commuting, and other transport), as this is included with the respective scope 3 energy emissions figures for those categories.

This category includes emissions generated from the transport of materials delivered to, and waste removed from, our 2 major construction sites. Data is not extrapolated to medium and minor sites. The calculation multiplies primary transport data by the relevant DEFRA emissions factor, and includes FERA.

Emissions associated with waste produced by the landlord, and occupier where reported. Where we don’t have tenant reported waste data, we have not extrapolated across the portfolio. Emissions exclude development and refurbishment waste, which is included in Scope 3: Purchased Goods & Services –Developments. Emissions are calculated by multiplying weight of waste by the relevant DEFRA emission factor for different treatment methods.

Calculated by multiplying distance and type of travel by relevant DEFRA emission factor, and includes relevant FERA.

Emissions associated with the commute of Cadogan employees and homeworking, as reported with no extrapolation. Calculated by multiplying distance and type of travel, and number of homeworking days, by relevant DEFRA emission factor.

Upstream leased assets No

Downstream transportation & distribution No

Processing of sold products No

N/A: Cadogan does not lease assets, so there are no emissions to report in this category.

N/A: Cadogan does not manufacture products, so there are no emissions to report in this category.

N/A: Cadogan does not manufacture products, so there are no emissions to report in this category. Use of sold products No

End-of-life treatment of sold products No

Downstream leased assets Yes

N/A: Cadogan does not manufacture products, so there are no emissions to report in this category.

N/A: Cadogan does not manufacture products, so there are no emissions to report in this category.

Emissions associated with occupier-purchased energy (including FERA), and refrigerants where reported. Occupier water emissions are excluded, and occupier waste is included in Scope 3: Waste. Where actual energy consumption data is available, emissions are calculated by multiplying metered consumption by relevant DEFRA emission factors. Where no actual data received from occupiers, emissions are calculated by multiplying the Net Lettable Area by the most relevant Building Energy Efficiency Survey (BEES) benchmark.

Franchises No

N/A: Cadogan does not have any franchises, so there are no emissions to report in this category.

Investments Yes

Emissions from the four Cadogan owned hotels is calculated by multiplying actual metered energy consumption by relevant DEFRA emission factors, including FERA.

Governance

Our Chief Executive has ultimate responsibility for climate-related risks and opportunities. The Board has overall responsibility for oversight of risk and opportunities, undertaking an annual assessment of principal risks facing the business – which includes climate-related risks. Climate-related risks and opportunities are considered in long-term strategy setting, acquisitions and investment decisions.

The Board is updated on sustainability and climaterelated performance twice a year, which this year has focussed on decarbonisation and a detailed plan to manage risks of transitioning to a net zero estate.

Ongoing ownership and management of all sustainability and climate-related risks and opportunities is led by the Head of Sustainability, with support from all departments. Our commitment to address climate-related risk and generate value for our community is embedded across the business, with all teams owning relevant targets and key performance indicators of Chelsea 2030 reported internally on a quarterly basis

A dedicated Decarbonisation Working Group provides specific oversight and coordination to estate decarbonisation and the journey to net zero, reporting to the Board annually.

We recognise the importance of the Taskforce for ClimateRelated Financial Disclosures (TCFD), with this report including relevant TCFD recommendations as follows:

GOVERNANCE

STRATEGY

RISK

Strategic Report: page 87

Strategic Report: pages 14 to 17, and 64 to 68

Strategic Report: pages 45 to 47

METRICS & TARGETS Strategic Report: pages 64 to 68

Independent Assurance Statement

We have obtained external limited assurance on 2022’s scopes 1 and 2 carbon emissions (metrics identified with * in the tables above), in accordance with ISAE 3410 – please see BDO’s Assurance Statement here. In addition, we have undertaken pre-assurance/ readiness for Scope 3 this year and intend to obtain limited assurance for principal scope 3 categories next year.

SANJAY PATEL FINANCE DIRECTOR

4 May 2023