ESG Fengate Real Estate
2023 Report
Contents Our Approach to ESG Firmwide ESG objectives Objectives and material topics Governance structure Real estate ESG integration Real estate progress and roadmap Notable achievements
06 06 07 08 10 11 13
Environment Climate action: TCFD report Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
15 16 24 25 26 28
Social The Fengate culture Real estate social initiatives
30 31 33
Governance Firmwide governance commitments Real estate governance
35 36 37
Looking Ahead
38
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03 03 04 05
Fengate Real Estate ESG Report 2023
Introduction Letter to our stakeholders Notes from real estate ESG leaders About this report
INTRODUCTION
Letter to our stakeholders
Contents Introduction Letter to our stakeholders Notes from our real estate ESG leaders About this report
Our approach to ESG Environment Social
At Fengate Real Estate, we continuously look for innovative ways to turn our commitment to environmental sustainability, social responsibility, and corporate governance into meaningful action. This vision drives the exceptional value we deliver to our clients, and informs the strides we take in growing vibrant and connected communities.
Safeguarding the future for our generation and the generations to come requires continued, collective, and concerted effort, and Fengate Real Estate is embracing its role in this endeavour. I remain confident that embodying the values of environmental sustainability, social responsibility, and corporate governance
are vital in weathering the shifts in the global and local landscapes to steer our business to success. I invite you to read through this report to learn how we have incorporated ESG to our work thus far, and I look forward to keeping you updated as we continue to progress our commitments.
Jaime McKenna Managing Director and Group Head Fengate Real Estate
Looking Ahead
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While we have celebrated several milestones along our ESG journey, we look to expand our work and develop a more robust program to span across our entire portfolio. Our integrated investment, development, and asset management platform, which is driven by a wide team of real estate professionals, is a tremendous opportunity to create a positive
impact as we forge a path forward. To this, we have formed the Real Estate ESG Impact Initiative, a dedicated group of representatives from different departments within our team, whose diverse perspectives are critical in identifying opportunities for ESG action at each stage of the real estate lifecycle.
Governance
Fengate Real Estate ESG Report 2023
This report outlines our team’s work across the three pillars of Environmental, Social, and Governance (ESG), with a focus on the initiatives we have implemented across the commercial properties we manage on behalf of our investors.
Safeguarding the future for our generation and the generations to come requires continued, collective, and concerted effort, and Fengate Real Estate is embracing its role in this endeavour.
INTRODUCTION
Notes from real estate ESG leaders
Contents Introduction Letter to our stakeholders Notes from our real estate ESG leaders About this report
What does Environment, Social, and Governance (ESG) mean to Fengate Real Estate and what are the group’s priorities over the next five years? Della Wang Director, ESG
Environmental, Social, Governance is a strategic business imperative for Fengate Real Estate, as we look to drive long-term value from the real estate assets we manage. In addition to the responsible stewardship we undertake on behalf of our investors, tenants, and the communities we serve, we strive for thoughtful improvement of our ESG results over time. At Fengate, we take pride in our corporate culture that drives exceptional performance, making Social an inherently significant aspect of our work. We look forward to bolstering efforts that exemplify our commitment to social responsibility, while continuing to enhance our efforts in environmental sustainability and corporate governance.
Integrating operational excellence with our unwavering commitment to ESG principles creates a powerful alchemy that ensures future-proofing and paves the path towards a sustainable and prosperous tomorrow. Over the next five years, the Fengate Real Estate team is dedicated to advancing our commitment to environmental sustainability, social responsibility, and corporate governance. These principles are vital to our business’s resilience in a changing local and global landscape. We are determined to further embed ESG practices into every facet of the real estate lifecycle. Our key priorities for this period include continuous review and management of our ESG efforts and exploring new opportunities to incorporate them into our work. We anticipate expanding this list as we pursue our mission to make a positive impact on the planet.
We recognize the pivotal role that real estate investments can play in shaping a sustainable and thriving future. To that end, we are excited and committed to developing a strategy in the coming year that prioritizes both the continuous improvement of the environmental impact of our real estate portfolio and seeks additional opportunities to enhance the lives of our communities. We will refine the ways we think about and prepare for climate change scenarios, explore opportunities to decarbonize our emissions, improve the nature and biodiversity impact of our assets, and most importantly, continue to find opportunities to build thriving communities. The Fengate Real Estate team is aligned with our collective sustainability ambitions and is excited about the future we will build alongside our investors, partners, and communities.
Social Governance Looking Ahead
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Rachna Morgado Vice President, Commercial Property Management and Sustainability
Environment
Fengate Real Estate ESG Report 2023
Scott Caverley Senior Vice President, Commercial Asset Management
Our approach to ESG
INTRODUCTION
About this report
Contents Introduction Letter to our stakeholders
The Fengate Real Estate 2023 ESG Report discloses relevant information regarding material Environmental, Social, and Governance (ESG) topics for our business in 2022/2023. This report highlights key initiatives we have undertaken over the past year, and contains forward-looking statements on the pace and direction of our ESG efforts. Fengate Real Estate’s ESG Report 2022, as well as our firmwide ESG Policy and Case Studies are available on the Fengate website.
Notes from our real estate ESG leaders About this report
Our approach to ESG
Reporting scope
Environment
This report covers the Fengate Real Estate business, including all investment, development, finance, legal, leasing and asset management activities within the Fengate Commercial Income Fund (FCIF) and Master Development Fund (MDF). Fengate’s Real Estate’s portfolio is diversified across investment strategies and asset classes, providing clients with access to investment solutions and expertise through the real estate continuum. All figures in this report are represented in Canadian dollars unless otherwise stated.
Land Entitlement •
Acquire land, existing buildings or land assemblies to entitle or change entitlements.
•
Focused on both industrial and residential.
Build-to-Core Develop high-quality assets to hold as long-term, incomeproducing properties.
•
Our successful track record includes apartments, retirement, hospitality and industrial assets.
•
•
Invest and manage portfolio of stabilized income-producing properties with long-term, stable cashflows. Includes both commercial and residential asset classes, specifically industrial, office, retail and purpose-built residential.
Looking Ahead
Opportunistic •
Development or intensification of self-liquidating real estate assets (e.g., condominiums).
•
Enhances returns and provides flexibility in large residential developments.
Reporting standard
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This report includes a dedicated section addressing the disclosure recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). As this is Fengate Real Estate’s inaugural ESG report that references TCFD, the contents of the 2023 ESG report along with the structure of the presentation is not directly comparable to our 2022 report. For any questions or feedback on the report, please contact Fengate’s Investor Relations team at investorrelations@fengate.com.
Governance
Fengate Real Estate ESG Report 2023
•
Core
Social
OUR FIRMWIDE APPROACH
Fengate’s firmwide ESG objectives
Contents Introduction Our approach to ESG Firmwide ESG objectives Objectives and material topics Governance structure Real estate ESG integration Real estate progress and roadmap Notable achievements
Environment Social Governance
To quantify the risk and return impact of ESG factors where possible
To promote responsible investment principles to our employees, partners, service providers and investors
To report and be accountable on ESG-related matters to our investors
Looking Ahead
Fengate Real Estate ESG Report 2023
To integrate and assess ESG factors throughout our investment process including origination, investment due diligence, approval, asset management, and disposition
Exclusions In principle and fundamental to our core investment strategy, Fengate conducts an ESG-related exclusionary screening that prohibits investment in assets or entities whose principal operations and revenue generation are in sectors deemed unethical, harmful to society, or in breach of laws or regulations including but not limited to tobacco, palm oil, civilian and nuclear weapons, or thermal coal power generation. Case Studies
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Firmwide ESG Policy
OUR FIRMWIDE APPROACH
ESG objectives and material topics
Contents Introduction Our approach to ESG
At Fengate, ESG principles and considerations include a variety of material topics that align with Fengate’s firmwide corporate culture and vision that may have an impact — on its own or in combination — on the risk and return profile of investments. We identified and prioritized a set of ESG topics material to Fengate. Materiality is defined based on an internal review and stakeholder consultation of a longer list of candidate material topics and assessing them based on the potential impact of these topics on Fengate’s financial return, and also the potential impact on the environment, people, and economy. Impact is defined by both likelihood and severity of occurrence. We also relied on the Sustainability Accounting Standard Board’s (SASB) definition of materiality to select the topics most relevant for Fengate, supported by an alignment with other industry benchmarks such as GRESB, and disclosure frameworks such as TCFD and Sustainable Financial Disclosure Regulation (SFDR). We also considered impacts commonly associated with the sectors and geographic locations of our investments to determine materiality. We embed these material ESG considerations, and evaluate risks and opportunities related to each of these topics into every stage of our investment process:
E
S
G
Minimize our investments’ environmental impact and support the global energy transition
Amplify the health, safety and well-being of our employees and our communities
Uphold strong governance principles and ethical conduct
Alignment to SDG:
Alignment to SDG:
Alignment to SDG:
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12
13
15
3
5
8
10
8
12
13
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GHG Emissions
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Human Rights and Community Relations
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Board Composition and Governance Rights
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Water and Waste Management
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Employee Engagement
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Energy Management
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Diversity and Social Inclusion
Critical Incident and Systematic Risk Management
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Building Certification
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Employee Health & Safety
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Cybersecurity
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Nature and Biodiversity
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Responsible Labor Practices
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Remuneration Policies
■
Accounting Integrity
Firmwide ESG objectives Objectives and material topics Governance structure Real estate ESG integration Real estate progress and roadmap Notable achievements
Environment Social Governance Looking Ahead
Fengate Real Estate ESG Report 2023
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We have aligned our material topics to the United Nation’s (UN) 17 Sustainable Development Goals (SDGs) 1. The Sustainable Development Goals, also known as Global Goals, were adopted by the UN in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. The 17 SDGs are integrated — they recognize that action in one area will affect outcomes in others and that development must balance social, economic, and environmental sustainability. We support and recognize the importance of contributing to the advancement of the sustainable development topics within our broader corporate ESG strategy.
Sustainable Development Goals
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1
OUR FIRMWIDE APPROACH
Governance structure
Contents Introduction
We acknowledge and underscore that robust Environmental, Social, and Governance (ESG) governance is a shared responsibility across all our business units. ESG roles and responsibilities are defined across our business functions and are integrated into our broader governance framework.
Our approach to ESG Firmwide ESG objectives Objectives and material topics Governance structure Real estate ESG integration Real estate progress and roadmap
EXECUTIVE OVERSIGHT
Notable achievements
OVERSIGHT COMMITTEES
ESG Committee
Investment Committee
EBID Think Tank
Environment Social Governance Looking Ahead
WORKING GROUPS
Infrastructure
Private Equity
Real Estate
ESG Impact Initiative
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PORTFOLIO
Corporate Services
Fengate Real Estate ESG Report 2023
BUSINESS GROUPS
ESG WORKING GROUP
OUR FIRMWIDE APPROACH
Governance structure
Contents Introduction Our approach to ESG
Executive Oversight The Fengate Executive team is responsible for allocating sufficient attention and budget to the ESG Working Group and ESG Committee to operationalize Fengate’s ESG strategy. The Executive team is also responsible for overseeing strategic ESG decisions that cut across business units and corporate services. The ESG Working Group supports the Executive team in monitoring and reporting progress against the ESG Strategy. The Executive team is also responsible for the final approval of any externally disclosed ESG reports, including disclosure topics and performance outcomes prior to final publication.
ESG Committee
Investment Committee The Investment Committee (IC) ensures the robust integration of ESG considerations into due diligence, risk assessment, and investment decisions. The Investment Committee will review and provide strategic guidance on the potential ESG-related risks associated with an investment. In addition, the IC evaluates how ESG factors align with an investment’s potential risk-adjusted returns, long-term value and resilience prior to approvals.
EBID Think Tank
The ESG Working Group is constituted of representatives from the three business units and the corporate services team, under the guidance of the Director of ESG. The Working Group is entrusted with the responsibility of defining, delineating and communicating Fengate’s overarching strategy and initiatives to the business units. They are also responsible for overseeing and supporting the business units on portfolio-specific ESG strategy and execution and providing practical guidance on leading practices, industry trends, and key risks and opportunities.
Fengate Real Estate
ESG Impact Initiative The business units are responsible for planning and executing on portfoliospecific ESG priorities and initiatives, working closely with the ESG Working Group to make progress on our ESG strategy and against our targets. While we are all empowered to find ways to adopt the values of ESG in our day-to-day work, forming a dedicated group of like-minded individuals with diverse skill sets and experiences will maximize the team’s impact. Fengate Real Estate’s ESG Impact Initiative empowers its members to be leaders in forging a new and exciting path that will open opportunities for ESG action within the group. With an integrated investment, development and asset management platform, Fengate Real Estate has a tremendous opportunity to realize our firm’s purpose to make a lasting global impact through the integration of an Environmental, Social and Governance program to our business.
Firmwide ESG objectives Objectives and material topics Governance structure Real estate ESG integration Real estate progress and roadmap Notable achievements
Environment Social Governance Looking Ahead
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Fengate’s dedicated Equity, Belonging, Inclusion, and Diversity (EBID) Think Tank, cochaired by Jaime McKenna, Managing Director and Group Head of Real Estate, and Darryl Sam, Managing Director, Private Equity, drives our ongoing strategy to foster a diverse, inclusive, and equitable workplace. We are committed to ensuring all backgrounds and perspectives — including race, ethnicity, culture, nationality, faith, spiritual beliefs, sex, gender identity, sexual orientation, age, and abilities — are valued, sought after, and celebrated at our firm.
ESG Working Groups
Fengate Real Estate ESG Report 2023
Fengate’s ESG Committee has main oversight over the firm’s ESG strategy. The Committee is co-led by Kevin Reid, Executive Vice President and Head of Investor Relations, and Vernita Tsang, Chief Compliance Officer and General Counsel. The Committee is comprised of Della Wang, Director of ESG, senior representatives from each business unit (Infrastructure, Real Estate, and Private Equity), and other members of Fengate’s corporate services team. The ESG Committee is responsible for the ongoing development, monitoring, and improvement of Fengate’s responsible investment activities. The
Director of ESG is responsible for overseeing the firmwide implementation of Fengate’s ESG strategy and providing updates and decisions to the ESG Committee for review and approval.
OUR APPROACH
Real estate strategy and integration
Contents Introduction Our approach to ESG
Fengate Real Estate integrates ESG considerations into all phases of our investment process across all asset classes. Given our group’s long-term approach to investing, ESG factors present inherent risks and opportunities that Fengate Real Estate must evaluate and manage throughout the real estate lifecycle.
Firmwide ESG objectives Objectives and material topics
Investment Sourcing
Development Planning
Asset Management Property Management
•
Initial screening of material ESG topics
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•
•
Ensure screened investment opportunities meet mandate commitment to responsible investing
Engage with stakeholders, including local communities and governments
Review assets for ESG issues through ongoing assessment and data system monitoring
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Identify opportunities to provide employment in building new housing and communities
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Identify areas of improvement (e.g., meet or exceed minimum LEED certification, pursue BOMA BEST certification where possible)
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Continued monitoring of any material ESG developments in the market
Diligence and Approval
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Alignment of values and objectives with institutional investors and project partners
Construction and Project Management
Detailed internal review of relevant ESG factors
•
•
Seek appropriate environmental and technical diligence from independent third-party experts
Implement a transparent process for procurement
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Initial ESG Assessment completed in the Investment Committee Memorandum (ICM)
Review opportunities to use sustainable and recyclable construction materials
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Provide a safe and equitable workplace for our project teams
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Pursue LEED and BOMA BEST certifications, where possible
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Annual reporting to UNPRI on ESG activities and processes towards implementation of responsible investment principle
Real estate ESG integration Real estate progress and roadmap Notable achievements
Environment Social Governance Looking Ahead
Fengate Real Estate ESG Report 2023
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•
Governance structure
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OUR APPROACH
Real estate ESG progress and roadmap ENVIRONMENT Climate and energy management
Water and wastewater management
2023 Progress In 2023, Fengate Real Estate expanded efforts to track the GHG footprint of the office and industrial properties we manage, covering 81% of our commercial portfolio.
We continued to use Smart Water Systems’ (SWS) Irrigation Management Systems (IMS) at the office properties we manage. These systems help ensure efficient water use, minimize waste from leaks, and allow for water use reporting by the litre.
2024 Roadmap
Contents Introduction Our approach to ESG Firmwide ESG objectives
In the coming year, we aim to expand tracking our GHG footprint to all standing real estate properties through a third-party data management platform to increase the accuracy, transparency, and completeness of our data.
Objectives and material topics
We recognize that embodied emissions in development activities contribute to GHG emissions. We will endeavor to work with our development partners to track our embodied emissions during the development phase where possible and identify opportunities to decarbonize.
Real estate ESG integration
We will continue to monitor water consumption across the properties we manage to identify areas of potential consumption reduction meeting or exceeding our 1% year-over-year reduction target.
We conducted our first water risk assessment using the World Wildlife Fund (WWF) Water Risk Filter Tool to identify operating areas with potential overlap with high water stress locations.
Governance structure
Real estate progress and roadmap Notable achievements
Environment Social Governance Looking Ahead
Looking forward, we will continue to build upon our current assessment framework identifying sites with potential substantial impacts and critical dependencies on nature, and understand our material nature and biodiversity risks and opportunities. We will continue to review the TNFD disclosure framework and the guidance provided by the locate, evaluate, assess, prepare (LEAP) approach to inform our assessment.
Building certification
We continue to pursue building certifications across the office properties we manage. Following our achievement of BOMA BEST Gold certification in 2022, we earned the WiredScore Silver and Portfolio certifications for all office properties in March 2023.
Fengate will continue to identify opportunities to obtain Green Building certifications such as BOMA BEST, LEED, and Energy Star across the development and operating assets we manage.
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In the wake of the UN Biodiversity Conference (COP15), a landmark event that underscored the urgent need to protect and restore biodiversity on a global scale, we have undertaken an ongoing commitment to address nature and biodiversity risks within our operations. We have conducted our inaugural high-level nature and biodiversity risk assessment, following the framework recommendations put forth by the Task Force on Nature-related Financial Disclosures (TNFD).
Fengate Real Estate ESG Report 2023
Nature and biodiversity
OUR APPROACH
Real estate ESG progress and roadmap SOCIAL Employee engagement, and health and safety
2023 Progress
2024 Roadmap
In 2023, Fengate Real Estate established the Real Estate ESG Impact Initiative, a formal internal ESG group that empowers employees to actively participate in sustainability efforts, fostering a sense of ownership in our environmental and societal goals.
In 2024, Fengate will be rolling out firmwide and real estate-specific ESG training modules. These modules will equip our team members with essential knowledge on sustainability, ethical conduct, and social responsibility, and encourage active participation in exemplifying our corporate values.
Simultaneously, our firm’s comprehensive wellness and health and safety training programs prioritize the well-being of our workforce, ensuring a secure and healthy workplace.
We will also seek to continue to expand the tracking of health and safety metrics across the development assets we manage aligned to GRESB requirements.
Contents Introduction Our approach to ESG Firmwide ESG objectives Objectives and material topics Governance structure Real estate ESG integration Real estate progress and roadmap Notable achievements
Environment Social
GOVERNANCE
2023 Progress
2024 Roadmap
We have defined a dedicated role within the Real Estate group to oversee sustainable building operations, and appointed dedicated ESG personnel to oversee Fengate’s ESG strategy and implementation. The team is also in the process of refreshing our firmwide ESG Policy to better reflect our ESG strategy.
We will define additional dedicated roles and responsibilities across real estate activities to execute our ESG strategy and align our team’s efforts towards more sustainable outcomes from the investments we manage. We will explore integrating ESG-specific objectives into the compensation and incentive structure of select roles to align with our firm’s ESG objectives.
GRESB assessment
In 2023, we participated in our inaugural GRESB assessment for the Commercial Income Fund with support and detailed validation from a third-party consultant. We have also conducted a gap assessment based on the scoring outcome to develop a GRESB roadmap for the coming years. As a first-year participant, this assessment established a baseline measurement for the team and is an instrumental tool to inform future improvement areas.
We will expand our GRESB assessment to include other funds. A number of initiatives geared towards improving our sustainability outcomes aligned to GRESB standards are underway, and will be reflected in the assessment outcomes in the next reporting year, in June 2024. We are working on the roadmap to progress and enhance our sustainability efforts in the coming years.
Looking Ahead
Fengate Real Estate ESG Report 2023
ESG governance
Governance
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OUR APPROACH
Notable achievements
Contents Introduction Our approach to ESG
Fengate’s Firmwide Awards Fengate has been acknowledged for its outstanding workplace culture by various renowned organizations. Earlier this year, the Firm was recognized as one of Canada’s Best Managed Companies, and received the Canada’s Most Admired Corporate Cultures™ award. Additionally, Fengate ranked fifth on the Great Place to Work® Best Workplaces™ in Canada.
2265-2275 Upper Middle Road East in Oakville won The Outstanding Building of the Year (TOBY®) International Award in the Suburban Office Park Mid-Rise category, besting finalists from across the United States and Canada. The award was presented at the International Building Owners and Managers Association (BOMA) awards gala held in July 2023 in Kansas City, Missouri.
Governance structure
Canada’s Best Managed Companies For the 16th consecutive year, Fengate has been recognized as one of Canada’s Best Managed Companies. With this achievement, Fengate maintains its Platinum Club member status which recognizes the winners that have earned this status for seven consecutive years or more. The Best Managed awards program recognizes excellence in privately-owned Canadian companies on the basis of their leadership in strategy, culture, commitment, capabilities, innovations, governance, and financials.
Real estate ESG integration
Waterstone Human Capital’s 2022 Canada’s Most Admired Corporate Cultures™ Fengate is a proud recipient of Waterstone Human Capital’s 2022 Canada’s Most Admired Corporate Cultures™ award. This national program, now in its 19th year, annually recognizes best-in-class Canadian organizations for having cultures that have helped them enhance performance and sustain a competitive advantage. Only 50 organizations are awarded this prestigious corporate culture award.
Governance
Best Workplaces™ in Canada This year, Fengate placed fifth on the Best Workplaces™ in Canada list for organizations with 100-999 employees. The 2023 Best Workplaces™ in Canada list is compiled by the Great Place to Work® Institute. The competition process to be ranked on this list is employee driven and represents multiple industries and sizes of organizations.
Real estate progress and roadmap Notable achievements
Environment Social
Looking Ahead
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TOBY® is the most prestigious and comprehensive program of its kind in the commercial real estate industry recognizing quality in commercial real estate buildings and rewarding excellence in building management. Properties are evaluated based on overall excellence for community impact, emergency preparedness, sustainability, health and wellness and additional performance metrics.
Objectives and material topics
Fengate Real Estate ESG Report 2023
The Outstanding Building of the Year (TOBY®) International Award
Firmwide ESG objectives
OUR APPROACH
Notable achievements
Contents Introduction Our approach to ESG Firmwide ESG objectives Objectives and material topics Governance structure Real estate ESG integration Real estate progress and roadmap Notable achievements
Environment Social Governance Looking Ahead
CREST Climate Champion Award
1111 and 1122 International Boulevard in Burlington won The Outstanding Building of the Year (TOBY®) Award and achieved the Certificate of Excellence in the Suburban Office Park – Mid Rise category at BOMA Toronto’s Celebration of Excellence Awards Gala in May 2023. The property went on to win BOMA Canada’s 2023 National TOBY Award in the Suburban Office Park - Mid Rise Category, besting nominees from across Canada. This prestigious honour was presented at the Pinnacle Awards Night during BOMA’s National Building Excellence Summit in September 2023.
LiUNA Centre at 1315 North Service Road East, Oakville was presented with the Climate Champion Award for buildings over 100,000 square feet at BOMA Toronto’s 2022 race2reduce CREST Awards.
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TOBY®, one of the most comprehensive programs of its kind in the commercial real estate industry in North America, recognizes quality in commercial real estate buildings and rewards excellence in building management.
The race2reduce Commercial Real Estate Trailblazers (CREST) Awards honours participants who have demonstrated continual commitment to improve building performance and reduce emission. CREST’s Climate Champion Award recognizes a building that has demonstrated exemplary effort to reduce emission from the building or business operation. Candidates are assessed on emission intensity, commitment to ESG (policies, programs, and business practices), tenant and employee engagement, and community action.
Fengate Real Estate ESG Report 2023
National TOBY® and Certificate of Excellence
ENVIRONMENT
Fengate Real Estate is actively engaged in pursuing opportunities to reduce our environmental impact in the built environment, with a focus on operating greenhouse gas emissions, water and wastewater management, and nature and biodiversity impact.
ENVIRONMENT
Climate action: TCFD report Fengate Real Estate recognizes the urgency of addressing climate change in the coming decades. The Intergovernmental Panel on Climate Change’s (IPCC) Climate Change 2023 Sixth Assessment Report (AR6) highlights the rise of global temperatures from 2010 to 2019, and notes how climate change is affecting many weather and climate extremes in regions across the globe.
TCFD REPORT INTRODUCTION
Our approach to ESG
The Financial Stability Board created the Task Force on Climate-Related Financial Disclosures (TCFD) to improve and increase the reporting of climate-
Environment Climate action: TCFD report Climate and energy initiatives Climate and energy case studies
related financial information. Fengate Real Estate
Water and waste management
is pleased to release our inaugural TCFD report
Nature and biodiversity
this year.
Social Governance Looking Ahead
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We also believe this challenge presents a seminal opportunity to make the properties we manage, the communities we work within, and the wider economy more innovative and resilient. To these ends, we are on a multi-year journey to fully embed a climate lens in our business strategy, investment practices, and financial planning.
Introduction
Fengate Real Estate ESG Report 2023
Fengate Real Estate’s work is not just about buildings and land, but about people, communities, and sustainability. As such, the Fengate Real Estate team is focused on longterm and resilient value creation, and we acknowledge the foreseeable, material risks presented by climate change. While the specific impacts will vary in frequency and severity, it is already apparent that climate change will affect every stage of the real estate lifecycle and that comprehensive action is required.
Fengate Real Estate’s annual ESG Report, as well as Fengate’s firmwide ESG Policy, describe several of the activities we undertake to minimize the pressures we place on the planet. This document provides additional transparency about our approach to addressing climate-related considerations in particular. For consistency and comparability, we have aligned this information to the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”) and will continue to evolve our reporting to reflect our progress.
Contents
ENVIRONMENT
Climate action: TCFD report
Contents Introduction Our approach to ESG
CLIMATE GOVERNANCE Our climate governance model aims to ensure that climate-related risks and opportunities are integrated into all levels of leadership and management activities, and are addressed throughout the entire investment lifecycle. Our climate governance approach aligns with our firmwide ESG governance framework as described in the ESG Governance section of this report. The framework on this page highlights key functions within our broader ESG governance structure and their climate-specific roles and responsibilities.
Environment
Executive Oversight
Climate action: TCFD report
Provides overall strategic direction and oversight on key climate topics and issues
Climate and energy initiatives Climate and energy case studies Water and waste management
ESG Committee
Investment Committee
Nature and biodiversity
Social
Leads the development and implementation of our climate strategy including assessment of material risks and opportunities and their potential impact on our investment and broader firm objectives
Reviews and provides strategic guidance on potential climate-related risks and opportunities associated with an investment, which are identified during due diligence, prior to approvals
Governance Looking Ahead
ESG Working Group
Business Units
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The business unit leads within each group oversees the implementation of climate-specific initiatives within their portfolios, aligned with their mandate. Leads will collaborate with specific functional teams within a business unit, such as the investment, development and asset management teams to execute on climate-specific priorities for their portfolio companies or potential investments
Fengate Real Estate ESG Report 2023
Designs and coordinates the strategy and execution of climate-related initiatives
ENVIRONMENT
Climate action: TCFD report
Contents Introduction Our approach to ESG
STRATEGY AND RISK MANAGEMENT We recognize that climate change poses unique risks and opportunities, both to our portfolio and the broader real estate sector. As such, greenhouse gas (“GHG”) emissions, energy management and sustainable land use are material ESG factors cited in Fengate’s firmwide ESG Policy, and climate change is a priority topic for our current ESG strategy refresh initiative. We continually look to leading practices for additional ways to enhance the way we assess climate-related risks and opportunities for our portfolio. To support the continued development of our climate strategy, and in line with TCFD definitions, we have identified an initial list of climate-related risks and opportunities material to our business.
Potential Physical Risks Acute risk: Disruptions to local municipal infrastructure from extreme weather events (e.g., electricity grid, water supply, transit, road access)
Potential Business Impacts • Increased operational disruptions at the property level
Climate action: TCFD report
• Increased disruptions to tenants’ businesses
Climate and energy initiatives
• Increased delays to development projects Chronic risk: Broader disruptions to national and/or global supply chains from long-term shifts in climate patterns.
Given the geographic locations of the properties we manage, which are primarily located in suburban and industrial areas of southern Ontario, our portfolio is not currently at heightened exposure to acute physical risk. However, physical risks may have indirect impacts on these properties. The adjacent table presents examples of these considerations.
Water and waste management
• Increase insurance costs and operating costs associated with chronic heat or weather events
Nature and biodiversity
— Transition risks Transition risks refer to the impacts of various potential market changes during the global transition to a low-carbon economy. Transition risks include policy, legal, technology, commercial, and reputational changes. Similar to other real estate investors and asset managers, Fengate Real Estate may be exposed to a variety of transition risks. Primarily, these involve government commitments (e.g., climate action, net zero, energy transition). We also seek to address the evolving preferences and expectations of our key stakeholders, such as our tenants, brokers, development partners and investors.
Potential Transition Risks
Potential Business Impacts
Governance
Regulatory risk: Federal, provincial, and/or municipal regulations and public policy (e.g., carbon pricing, emissions caps, development approvals, building codes)
• Increased capital expenditures to upgrade existing properties or develop new properties to comply with regulatory requirement
Looking Ahead
Financing risk: Investor and lender focus on climaterelated risks (e.g., pricing of transition risks relevant to the local economy, expectations for sustainable building design or green building certifications)
• Increased financing costs or decreased access to capital if investor and lender expectations are not met
Insurance risk: Insurers focus on climate-related risks (e.g., underwriting practices, policy eligibility, premiums costs)
• Increased insurance costs or decreased access to policies if insurer expectations are not met
Market risk: Changes in tenant and broker expectations for properties (e.g., net zero commitments, low-carbon buildings, green building certifications)
• Decreased real estate demand due to a decline in sectors impacted by regulation or other market changes in the local economy
• Increased operational costs associated with carbon taxes and power grid transformation
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The adjacent table presents examples of these considerations.
Social
Fengate Real Estate ESG Report 2023
Going forward, we will continue to increase the focus we place on assessing and preparing for the physical risks of climate change to the properties we manage.
Climate and energy case studies
• Increased delays and costs due to supply chain disruptions and raw material costs
— Physical risks Physical risks refer to the physical impacts of climate change. Physical risks include acute risks (such as the increased severity and frequency of extreme weather events) and chronic risks (such as longerterm increases in average temperatures and changes to local ecosystems).
Environment
ENVIRONMENT
Climate action: TCFD report
Contents Introduction Our approach to ESG
Integration of climate risk management into the investment lifecycle
Environment
Fengate Real Estate integrates climate considerations, including key risks and opportunities, into all phases of our investment process across all asset classes, aligned with our broader ESG integration approach.
Climate action: TCFD report Climate and energy initiatives Climate and energy case studies
Investment
Development
Asset Management
Diligence and Approval
Planning
Property Management
•
Climate risks and opportunities integrated within our due diligence approach and material climate risks and opportunities are presented to the Investment Committee for review and consideration prior to approval.
•
•
Assess physical and transition risks, such as municipal infrastructure connectivity, transit access, electricity supply, and local flooding and wildfire exposure.
Measure and monitor energy consumption and Scope 1 and 2 GHG emissions to understand the load and carbon intensity of our properties.
•
Set targets for energy consumption at our properties.
•
Perform asset-level climate risk assessments for relevant properties using BOMA and LEED benchmarks.
Pursue third-party sustainability certifications, such as LEED and BOMA where commercially feasible.
We are continuing to evolve our climate risk assessment approach and aligning with industry best practices such as the use of scenario analysis in our risk assessment and due diligence activities. We are committed to adapting to the changing climate landscape and incorporating lessons learned along each step of our work in an effort to improve our approach to investment, development, and asset management.
Nature and biodiversity
Social Governance Looking Ahead
Fengate Real Estate ESG Report 2023
•
Installation of renewable energy systems such as geothermal where feasible during development process.
Engage with commercial tenants, brokers, residential property managers, municipalities, and other partners on climate-related matters.
•
Actively seek opportunities to improve resource efficiency and minimize overall consumption.
Development •
•
Water and waste management
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ENVIRONMENT
Climate action: TCFD report
Contents Introduction
We also recognize that the real estate industry
— Transition opportunities The transition to a low-carbon economy presents numerous opportunities, including resource efficiency and clean energy sources, new products and services, and access to new markets. We also recognize that the real estate industry can play a significant role in the transition by spurring innovation, improving resiliency, and increasing the focus on the social impacts of climate change. We have made numerous strategic investments and will continue to prioritize climate-related opportunities within our portfolio such as electric vehicle (EV) charging infrastructure, energy efficiency measures, and on-site renewable energy sources. For further information on our climaterelated strategic investments, refer to page 24.
Our approach to ESG
can play a significant role in the transition by
Environment
spurring innovation, improving resiliency,
Climate action: TCFD report
and increasing the focus on the social impacts of climate change.
Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
Social Governance Looking Ahead
Potential Opportunities
Potential Business Value
Development
Development
• Use of low-carbon materials in development
• Improved building resource efficiency and resiliency, and reduced operating costs • Reduce exposure to future emissions and carbonrelated regulation
Asset management
Asset management
• Development and adoption of new products and services for tenants (e.g., Electric Vehicles)
• Strong competitive position reflecting tenant preferences for on-site sustainable services and green building certifications
• Use of lower emission sources of energy such as renewable technology • Adoption of energy efficiency measures in standing assets
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• Access to incentives for green technology for retrofits and upgrades
• Increased value of assets through energy ratings and green building certifications
Fengate Real Estate ESG Report 2023
• Use of development materials that improve operating efficiency (e.g., R-value insulation)
ENVIRONMENT
Climate action: TCFD report
Contents Introduction Our approach to ESG
METRICS AND TARGETS
Environment
We recognize that understanding the main sources of GHG emissions is an integral component of managing our climaterelated risks and identifying new opportunities.
Climate action: TCFD report
As part of Fengate’s broader GHG management approach, we have completed an initial GHG baseline for majority of the commercial properties we manage. Going forward, we plan to enhance our baseline measurement and develop a decarbonization strategy for select properties where we have operational control. Our decarbonization roadmap is outlined on page 23. This will further assist us in understanding where commercially-viable decarbonization opportunities exist across our portfolio. For more information on our GHG emissions Scope 1 and Scope 2 data, see page 22. In addition to measuring our GHG emissions, we participate in several initiatives to measure climate and broader environmental-related performance. These include GRESB, Peak Power’s Building Insight Platform, Energy Profiles analytics platform, Irrigation Management System tracking and Energy Star. Participation in these initiatives allows us to continuously monitor and benchmark our progress against leading industry practices, standards and benchmarks.
Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
Social Governance Looking Ahead
Going forward, we remain focused on data quality and data governance and the importance of comprehensive, relevant, high-quality information on the impacts of climate change. As we continue to develop and execute our climate strategy, we are committed to additional transparency through our annual TCFD disclosures.
Fengate Real Estate ESG Report 2023
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Going forward, we plan to use this baseline to develop a decarbonization strategy for select properties where we have operational control. Our decarbonization roadmap is outlined on page 23.
ENVIRONMENT
Climate action: TCFD report Our greenhouse gas emissions footprint Fengate Real Estate is currently tracking GHG emissions and energy consumption across majority of the industrial and office properties we manage, and our group plans on expanding tracking efforts to include the properties within the multifamily portfolio and development activities. We have partnered with a third-party organization, CarbonZero, to perform the GHG Inventory Measurement across Fengate Real Estate’s commercial portfolio. For the completion of the GHG Inventory, CarbonZero has aligned its methodology with the Greenhouse Gas Protocol. The Greenhouse Gas Protocol Corporate Accounting and Reporting Standard provides guidance on GHG accounting with respect to the completion of GHG inventories. The Organizational and Operational boundaries of Fengate Real Estate’s 2022 GHG Inventory are indicated below. The boundaries have not changed relative to the 2021 inventory. Note that the Organizational boundary of the inventory includes 11 office and 20 industrial properties within the group’s portfolio. GHG emission audits started in 2021, with reporting completed for 2022 and continue to be tracked quarterly in 2023. Industrial Portfolio
78%
Scope 1 Direct emissions from operations
Office
Industrial Series1
Series2
Office (11 properties)
Office
92%
Scope 2 Indirect emissions from purchased energy
Scope 1 Direct emissions from operations
Industrial Series1
Series2
Industrial (20 properties)
Scope 1
2,181.83 tCO 2e
Scope 1
3,526.55 tCO 2e
Scope 2
623.08 tCO 2e
Scope 2
304.84 tCO 2e
National Median Office Energy Use: Energy Star – Portfolio Manager Technical Reference: Canadian Energy Use Intensity by Property Type (2022 data)
Our approach to ESG Environment Climate action: TCFD report Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
Social Governance Looking Ahead
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1
8% tCO2e
22%
Scope 2 Indirect emissions from purchased energy
Introduction
Fengate Real Estate ESG Report 2023
tCO2e
Office Portfolio
While 73% of the office properties we manage have energy intensity below the national median1, we continuously look for opportunities to improve our emissions footprint. Since beginning our engagement with thirdparty consultants on energy consumption management and reduction, we have seen a year-over-year 2% decrease in electricity consumption and 1% decrease in natural gas consumption in 2022. We continue to track which buildings are high-emitters and focus our attention to uncovering potential GHG reduction strategies, with budget allocated for such efforts.
Contents
ENVIRONMENT
Climate action: TCFD report
Contents Introduction Our approach to ESG
Our decarbonization roadmap
Environment
We are currently engaged in a thoughtful and strategic process to determine a viable transition pathway. The following represents the initial design of our climate strategy and may evolve as we progress:
Climate action: TCFD report Climate and energy initiatives Climate and energy case studies
We are in the initial stages of determining the pathway of our group’s climate strategy.
Water and waste management Nature and biodiversity
1 Develop baseline GHG emissions •
•
Identify potential abatement levers
Develop a baseline emissions forecast for the assets we manage under our current operating scenario
•
Define our base year for target-setting purposes
•
Review available sciencebased targets to understand plausible pathways for select assets in the portfolio
•
Identify an array of GHG abatement levers for our scope 1 and 2 emissions for select assets Conduct a cost-benefit analysis based on the quantification of marginal abatement cost (MAC) for each opportunity
Develop a decarbonization pathway and set targets •
•
•
Based on the prioritized set of abatement opportunities, develop a feasible decarbonization pathway at the asset and portfolio levels Determine capital requirements and optimize capital allocation for investment opportunities Set absolute and intensitybased targets where applicable
4
Governance Looking Ahead
Monitor and report on our progress •
Disclosure of Scope 1 and 2 emissions for assets in our decarbonization strategy
•
Report on our progress on an annual basis against our targets
•
Identify additional opportunities during our transition journey
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Prioritize abatement opportunities based on MAC curve analysis under different climate scenarios
3
Fengate Real Estate ESG Report 2023
•
2
Social
ENVIRONMENT
Climate and energy initiatives
Contents Introduction Our approach to ESG
Energy management initiatives Fengate Real Estate continues to implement energy management initiatives across the properties we manage, enabling us to improve the environmental performance of our standing investments. Fengate Real Estate is also seeking to implement energy management initiatives across our development projects to improve the environmental performance of the properties in our pipeline. Where commercially-feasible opportunities are identified to reduce energy consumption and/or greenhouse gas emissions, Fengate Real Estate will continue to implement energy efficiency upgrade projects at select properties.
LOOKING AHEAD
— Measurement and target setting We are in the process of creating a robust GHG management and decarbonization program, including the establishment of a comprehensive forecasted baseline emissions and transition pathways.
— Green building certification Fengate Real Estate continues to identify opportunities to obtain Green Building certifications — such as BOMA BEST, LEED, and Energy Star — across our development and operating assets.
— Energy efficiency systems We work with third-party consultants to track energy consumption across the properties we manage; explore opportunities to install smart building systems that can lower emissions through reduced reliance on fossil fuels; and set reduction targets across our portfolio where we have operating control.
— Tenant building criteria Fengate provides tenants, consultants, and contractors with a comprehensive guide, outlining the requirements for the sustainable products to be used in the planning and construction work within buildings.
Green Teams
Energy Star Rating
EV and Bicycle Parking
Peak Power’s Building Insight Platform tracks consumption and uses predictive analytics to generate performance optimization recommendations.
Energy Profiles combines comprehensive data management and analytics platforms to improve cost efficiency and advance sustainable operations.
Our Green Teams are groups of employees and tenants who have volunteered to meet regularly to identify specific solutions to operate in environmentally sustainable ways.
Energy Star certified buildings save energy, save money, and help protect the environment by generating fewer greenhouse gas emissions than typical buildings.
To encourage the use of sustainable modes of transportation, Fengate Real Estate provides for electric vehicle and bicycle parking spots within our multifamily developments.
Climate action: TCFD report
500 Upper Wellington Street will deliver a six-storey, new generation, purpose-built rental building with 261 suites and over 6,000 square feet of commercial space to the Hamilton community. The building will be pursuing LEED designation and is slated to include sustainabilityfocused features such as a green roof, geothermal heating and cooling, and energy-efficient building systems. The project broke ground in May 2023 and is expected to be completed in 2026.
Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
Social Governance Looking Ahead
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Energy Profiles
Hamilton, Ontario
Fengate Real Estate ESG Report 2023
Peak Power
500 Upper Wellington
Environment
ENVIRONMENT
Climate and energy case studies
Contents Introduction Our approach to ESG Environment Climate action: TCFD report Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
Social Governance Looking Ahead
Zero-Carbon-Ready Industrial Building Design 315 Allendale Road, Cambridge, Ontario
2265-2275 Upper Middle Road East in Oakville currently uses the Internet of Things (IOT), a predictive analytics program powered by AI that predicts the buildings’ next-day, hour-by-hour energy consumption to an accuracy of over 93%. With data input from the Building Insight Platform (BIP), which gathers real-time data on occupancy, temperature, humidity, CO2, main building load, and additional sub-loads (e.g., chiller, fans) via sensors installed on all floors of the buildings, the IOT analyzes data and provides custom actions to the building operator through their mobile or desktop devices on how to optimize the building’s performance. The property management team is able to reduce consumption, including Scope 2 GHG emissions, and increase efficiency by acting accordingly on notifications alerting them of unexpected spikes in consumption.
315 Allendale Road is a market-leading, industrial development located in a master-planned industrial campus in Cambridge. The campus is slated to offer close to 900,000 square feet of contemporary industrial space across three buildings with state-of-the-art and zero-carbon-ready specifications.
With this forward-looking design, tenant benefits may include reduced cost and effort required to transition to a net-zero-carbon building in the future compared to a typical code-built warehouse and reduced energy consumption and lower operating expenses through upgraded insulations.
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The pilot program was first launched at 2265-2275 Upper Middle Road East in 2022, and the technology has since been rolled out to 12 office properties. By integrating strategic and unified technological solutions, Fengate Real Estate’s commercial property management team has increased operations efficiency.
A zero-carbon-readyindustrial building includes specific provisions for the development to transition to zero-carbon operations in the future. These provisions include all envelope upgrades, electrical infrastructure upgrades to be prepared for a future electrification of mechanical systems, and a structurally-ready roof to support solar panels. The provisions made with the zero-carbon-readydesign would facilitate a future transition to zero carbon operations, with the option to pursue the CaGBC Zero Carbon Performance Certification 1 based on 12 months of metered hydro and gas consumption.
Fengate Real Estate ESG Report 2023
Integrated Consumption Tracking Technology 2265-2275 Upper Middle Road East, Oakville, Ontario
ENVIRONMENT
Water and waste management
Contents Introduction Our approach to ESG
Fengate Real Estate understands the importance of integrating sustainable water use and responsible waste management to our operations. Our group is focused on providing tenants with high-quality experiences while managing the responsible consumption of natural resources. By providing guidance and implementing efficient practices, we are committed to contributing to the ongoing reduction of water and material waste in the buildings we manage.
— Irrigation management system The Irrigation Management System (IMS) tracks irrigation water and allows for remote schedule adjustment, leak detection, and water use reporting. In May 2022, Smart Water Systems (SWS) installed IMS at Fengate-managed office properties, resulting in significant reduction in consumption in a number of properties. The system promotes efficient water use, minimizes waste from leaks, and allows for water use reporting by the litre. The chart below reflects consumption reduction from 2021 to 2022.
— Flow alarm update In addition to water use reductions from irrigation schedule optimization, Smart Water Systems recorded and fixed over 30 flow alarms. As these leaks may have previously gone undetected, the program has reduced damage to landscaped areas and reduced water waste by over 100,000 litres. — Water audits and targets Fengate Real Estate has engaged third-party consultants to conduct water audits, with the goal of decreasing year-over-year water
consumption by 1%. While the property management team cannot impose water consumption requirements on tenants, the team makes a concerted effort to discuss consumption patterns as necessary with tenants to encourage conservation. — E-waste program The Property Management team bolsters recycling efforts by offering tenants complimentary e-waste pick-up (e.g., computers and related equipment, electronics, toners, batteries) in the office buildings we manage.
Environment Climate action: TCFD report Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
Social Governance Looking Ahead
Water savings realized through the Irrigation Management System
9%
28%
reduced consumption by 330,000 litres
reduced consumption by 464,000 litres
1111 International Boulevard Burlington, Ontario
1122 International Boulevard Burlington, Ontario
2265 Upper Middle Road East Oakville, Ontario
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reduced consumption by 1,600,000 litres
Fengate Real Estate ESG Report 2023
36%
Fengate Real Estate has engaged third-party consultants to conduct water audits, with the goal of decreasing year-over-year water consumption by 1%.
ENVIRONMENT
Water and waste management
Contents Introduction Our approach to ESG
Water risk assessment In 2023, Fengate conducted a high-level water risk assessment of our portfolio to determine our potential exposure to areas with water scarcity based on geographic location. We relied on the WWF’s Water Risk Filter Tool which defines water scarcity by 6 indicators: aridity index, water depletion, baseline water stress, blue water scarcity, available water remaining (AWARE), drought frequency probability, and projected change in drought occurrence. Risk level is determined based on a 5-point scale with scores under 2 ranking as very low to low risk. Currently, 100% of the properties within FCIF are in regions with low or very low water scarcity risk. We will continue to monitor our portfolio for water risk as we expand our portfolio footprint.
Environment Climate action: TCFD report Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
Waste management
Social
Fengate aims to implement waste management initiatives across our portfolio to improve the environmental performance of our standing investments. Where commercially feasible opportunities are identified to improve waste management and reduction, property managers and asset managers will implement waste reduction projects at select properties.
Governance Looking Ahead
As it relates to properties in development, Fengate aims to implement waste management initiatives to improve the environmental performance of these properties. We encourage responsible construction, demolition, and renovation waste management practices for both tenant- and landlord-managed development projects. Fengate Real Estate ESG Report 2023
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100% of the properties within the Fengate Commercial Income Fundcare in regions with low or very low water scarcity risk.
ENVIRONMENT
Nature and biodiversity
Contents Introduction Our approach to ESG
In the wake of the UN Biodiversity Conference (COP15) in 2022, 190 states committed to a set of ambitious goals and targets under the Global Biodiversity Framework (GBF). Biodiversity loss is also now recognized by the world’s central banks as a source of systemic risk alongside climate change. Fengate Real Estate recognizes the significance of the protection and conservation of nature and biodiversity. We also acknowledge that nature loss poses a large risk to the economy as a whole and has a substantial impact on the built environment.
Our goal is to work alongside the TNFD to embed nature-related risks and opportunities into our firm’s strategic planning, operations, risk management processes and asset management activities to create long-term sustainable value.
Environment
— Biodiversity in operations Bees and other pollinators are essential to maintaining balance in every aspect of our planet’s ecosystem. In partnership with Alvéole, Fengate has installed honeybee hives on all the office towers we manage. — Migrating bird protection Each year in Canada, around 25 million migratory birds die as a direct result of collisions with buildings. To protect migrating birds from colliding with windows, we worked with FLAP (Fatal Light Awareness Program) Canada to install window film at Concorde Corporate Centre. — Green cleaning All chemicals used in cleaning Fengatemanaged properties shall bear the UL ECOLOGO certification seal. These chemicals are verified for reduced environmental impact and indicate that a product has undergone rigorous scientific testing and exhaustive auditing to prove its compliance with stringent third-party environmental standards.
Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
Honeybees at work
Social
In Spring 2021, Fengate Real Estate took thousands of bees under its wing. We are proud to play an active role in creating a more eco-conscious city by installing beehives on the rooftops of the office buildings we manage. Our thousands of new colleagues will pollinate the urban flora that surrounds us during the summer. At the end of the season, we harvest their honey and share it with our community.
Governance
Our project is realized in collaboration with Alvéole, a social beekeeping company. Since 2013, Alvéole has been spreading their passion for beekeeping and environmental sustainability to cities across the globe. They have partnered with hundreds of companies and schools on beekeeping projects that integrate urban agriculture to city life. Each hive creates greater ecological awareness, allowing city dwellers to reconnect with nature and adjust their sense of responsibility towards the environment.
Looking Ahead
Urban beekeeping is a great way to educate city dwellers to the crucial role of bees in food production.
Bees pollinate more than 130 varieties of fruits and vegetables around the globe — that’s a third of our food supply.
Population of bees, butterflies, bumble bees, and other pollinators are in rapid decline all over the world.
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— Environmental remediation Aligned with our commitment to build clean and healthy communities, Fengate employs experts to assess environmental risks and carry out the remediation of historically contaminated properties.
Climate action: TCFD report
Fengate Real Estate ESG Report 2023
As such, Fengate is pleased to announce that we have officially become a Taskforce on Nature-related Financial Disclosures (TNFD) Forum Member in 2023.
Our initiatives
ENVIRONMENT
Nature and biodiversity
Contents Introduction Our approach to ESG
Nature and biodiversity risk assessment
Environment
We have conducted our inaugural high-level nature and biodiversity risk assessment, following the framework recommendations put forth by the Task Force on Nature-related Financial Disclosures (TNFD).
Climate action: TCFD report
Our team overlaid a geo-spatial map of the properties within the FCIF with spatial data, including data from existing market tools, which can assist in mapping terrestrial, freshwater and ocean biomes and ecosystems, and their integrity and resilience. For this exercise we used the WWF Risk Filter Tool with underlying data from the Integrated Biodiversity Assessment Tool (IBAT) to identify where properties within the Fengate Real Estate portfolio have potential overlap with areas of high biodiversity importance using two metrics: the World Database of Protected Areas (WDPA), and/or locations with potential overlap with Key Biodiversity Areas (KBA).
Climate and energy initiatives Climate and energy case studies Water and waste management Nature and biodiversity
TNFD disclosure framework recognizes these tools as part of the nature and biodiversity risk screening methodology.
Social
Note that at this stage of our assessment, we focused on the direct impact from operations (Scope 1) and therefore the assessment does not cover upstream or downstream nature and biodiversity impact and does not consider any assets under development. Looking forward, we will build upon our current assessment to determine the areas where we invest and operate that have potentially substantial impacts and critical dependencies on nature and understand our material nature and biodiversity risks and opportunities. We will continue to follow the TNFD disclosure framework and the guidance provided by the LEAP approach.
Governance
Fengate Real Estate ESG Report 2023
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0% of the properties within the Fengate Commercial Income Fund overlap with areas of high biodiversity importance.
Looking Ahead
SOCIAL
Fengate Real Estate’s work is not just about buildings and land, but about the people we work with and the communities we operate in. Our team is committed to supporting the advancement of equity, belonging, inclusion and diversity, as well as promoting the health, safety and well-being of our employees, partners and stakeholders.
FIRMWIDE SOCIAL INITIATIVES
The Fengate culture
Contents Introduction Our approach to ESG
Equity, Belonging, Inclusion, and Diversity (EBID) Think Tank
Environment
Diversity and Inclusion are important aspects of Fengate’s culture. Fengate is committed to supporting the advancement of equity, belonging, inclusion and diversity across our Firm and the industries in which we are involved. F engate launched its EBID Think Tank to support the formal development of Fengate’s EBID mission and strategy. The EBID Think Tank consists of professionals from across the Firm who lead and support various internal and external EBID-focused initiatives. — Employee Resource Groups The Women at Fengate ERG is dedicated to advancing the personal and professional development of women by building a network that supports, empowers and strengthens their ability to succeed in their roles. Through collaboration, open discussion, and innovation, the ERG will continually seek to raise awareness on the issues faced by women in the workplace and offer resources for growth, networking, and mentorship.
The Fengate culture Real estate social initiatives
A firmwide corporate culture driving exceptional performance
Looking Ahead
Fengate Asset Management is the recipient of Waterstone Human Capital’s 2022 Canada’s Most Admired Corporate Cultures™ award. This national program, now in its 19th year, annually recognizes best-in-class Canadian organizations for having cultures that have helped them enhance performance and sustain a competitive advantage. Only 50 organizations are awarded this prestigious corporate culture award. Fengate is a driven, high-performance environment, and the firm takes great care to promote employee health, well-being and belonging including: A flexible work framework allowing employees to shift their life at work to accommodate their unique life at home
■
“Recharge” days through a combination of the office closing on Fridays before long weekends and at noon on all other Fridays during the summer months
■
Regularly conducted industry benchmarking followed by remedied solutions
■
Group RRSP program for all employees with an employer match component
■
Championing Equity, Belonging, Inclusion and Diversity (EBID) through the firm’s EBID Think Tank. Recent initiatives, include: creating safe spaces for prayer/employees experiencing stress or anxiety; training for all people leaders to manage hiring and interviewing biases
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Employee Education Assistance Program to encourage eligible employees to upgrade their education and/or skills via college/university programs and courses
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■
— Mentorship program Earlier this year, Fengate launched a firmwide mentorship program through Ten Thousand Coffees, a platform for inclusive mentoring, employee connectivity and skills development. Participants are matched with a mentor/mentee and prompts pairs to meet once a month. The program aims to enable employees to reach their career goals through effective mentor-mentee relationships, and advance the development and careers of diverse employees and allies in support of diversity, equity, and inclusion.
Governance
Fengate Real Estate ESG Report 2023
The Emerging Leaders: Investments Chapter brings together Analysts, Associates, and Senior Associates from Infrastructure, Private Equity, Real Estate, and Corporate Services. The Emerging Leaders ERG seeks to provide a platform to foster connections, improve collaboration, and drive career development among emerging leaders at Fengate.
Social
FIRMWIDE SOCIAL INITIATIVES
The Fengate culture
Contents Introduction Our approach to ESG
EBID Think Tank highlights
Environment Social
2021 • Fengate EBID Think Tank is formed and mission and vision are established • Fengate becomes a signatory for the Institutional Limited Partners Association (ILPA) Diversity in Action initiative • Launched firmwide mandatory inclusion survey to gather feedback around diversity and inclusion at Fengate
The Fengate culture Real estate social initiatives
Governance Looking Ahead
In 2022, Fengate proudly unveiled a Legacy Space at its downtown Toronto office, in partnership with the Gord Downie & Chanie Wenjack Fund (“DWF”). Dedicated to heightening awareness and providing education about Indigenous history and the path towards reconciliation between Indigenous and non-Indigenous people in Canada, the safe and welcoming Legacy Space is one of many initiatives Fengate’s Equity, Belonging, Inclusion and Diversity (EBID) Think Tank has in place as part of its commitment to promote and advance diversity and inclusion, both within its firm and the industry more broadly. A vibrant mural by Haudenosaunee artist, Kyle Joedicke, commissioned through the Art Gallery of Hamilton, adorns the legacy room with an illustration that represents two separate cultures and ways of life, flowing in harmony together, and respecting each other’s differences. With the intention to express a grander sense of community, Joedicke’s artwork incorporates artistic elements from The Seven Grandfathers Teachings: Love, Honesty, Truth, Respect, Wisdom, Bravery, and Humility, considered guiding principles and core values of Indigenous people. As part of Fengate’s commitment with DWF, the Legacy Space acts as a permanent physical space dedicated to promoting truth and reconciliation throughout the year.
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2023 • Recognized as a Best Workplace with the Most Trusted Executive Team, for Women, Giving Back, Financial Services & Insurance, and Today’s Youth by Great Places to Work® Canada • Hosted a panel focused on Black Excellence in honour of Black History Month • For International Women’s Day, Fengate participated in Your Hour, Her Power to raise money towards Dress for Success, in addition to running a Clothing Drive to collect contributions of suits/blazers for women in need • Organized an educational walk of downtown Toronto learning about each of the indigenous historical sites along the route in support of Walk for Wenjack
Gord Downie & Chanie Wenjack Fund Legacy Spaces Partner
Fengate Real Estate ESG Report 2023
2022 • EBID awareness calendar is created to recognize important events and national celebrations that highlight the achievements and contributions of marginalized people and communities in North America • Identify and remedy areas of improvement including an enhanced pay equity structure, benefits package, and non-biased recruitment and hiring processes • Recognized as a Best Workplace for Women, Best Workplace for Inclusion, and Best Workplace for Today’s Youth by Great Place to Work® Canada • Fengate becomes Legacy Spaces partner through The Gord Downie & Chanie Wenjack Fund • Toronto Legacy Space is officially unveiled, dedicated to promoting truth and reconciliation throughout the year
SOCIAL
Real estate social initiatives
Contents Introduction Our approach to ESG
Corporate tenant engagement Fengate Real Estate’s Property Management team is dedicated to fostering positive and productive relationships and ensuring occupant needs are consistently met. The Property Management team strives to enhance the flow of information between staff and tenants through a variety of engagement strategies. The team implements a range of initiatives to elevate tenant satisfaction within the buildings we manage. These include optimizing communication channels, organizing engagement activities, and encouraging active participation in community events.
Social The Fengate culture Real estate social initiatives
Governance Looking Ahead
Art at work
Local artists are creative advocates for their communities and through their work, they are able to communicate their diverse experiences to their audience. By offering emerging and established creative minds the opportunity to share their work in our office buildings, we hope to strengthen our social bonds and sense of community through the appreciation of art. This initiative aims to bring people of all backgrounds together to enjoy visual art of all mediums, techniques, and styles, and strives to bring a lively source of energy and inspiration to our corporate environment.
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— Communications program Along with the Fengate Properties website, which serves as a hub of property information, the Property Management team also sends out a quarterly News Forum. This electronic newsletter introduces Property Management team members, delivers information on available services, highlights achievements, provides important building updates, and more. Main lobby signage are also updated to communicate initiatives, events, crucial dates, and other pertinent information. The Property Management team also values face-to-face communication and conduct periodic meetings with each tenant, tailored to their unique needs, to address any concerns or inquiries.
Environment
Fengate Real Estate ESG Report 2023
— Corporate tenant onboarding program To facilitate a seamless and efficient move-in process once the lease is signed, the Property Management team promptly sends out a welcome email with essential resources such
as the Tenant Information Guide, the Design and Construction Manual, and instructions on accessing the Tenant Portal for any service and maintenance requests.
Fengate Real Estate partnered with Hello Art to present artwork by local artists throughout the common areas in 2265 and 2275 Upper Middle Road East in Oakville.
The team implements a range of initiatives to elevate tenant satisfaction within the buildings we manage. These include optimizing communication channels, organizing engagement activities, and encouraging active participation in community events.
SOCIAL
Real estate social initiatives
Contents Introduction Our approach to ESG Environment Social The Fengate culture Real estate social initiatives
Governance Looking Ahead
— Community days In an effort to help make a positive impact in the local community, the team sets up charitable initiatives such as toy and food drives. The team also sets up an annual Community Clean-Up event where corporate tenants come together to take meaningful action in protecting our planet for future generations. The events aims to raise awareness about the importance of environmental protection, and to encourage people to become more involved in conservation efforts.
and a QR code to scan and learn more about the artist. Pieces are available for purchase and any unpurchased pieces are rotated quarterly, making it effortless for anyone to enjoy and buy art. This initiative has been rolled out throughout the entire office portfolio.
— Local art feature In 2022, we partnered with HelloArt to make art even more accessible. The Toronto-based company partners with businesses to exhibit original artwork across the GTA, with a vision to be every community’s inspiration for showcasing its artists and their stories. The main lobbies and common area by the elevators feature several wall-mounted pieces complete with interpretive plaques about the artist’s background, their preferred media and works,
— Tenant Green Teams The Property Management team has organized Green Teams at the properties, comprised of volunteers from the corporate tenants. A self-organized, grassroots and cross-functional groups who come together to identify and implement specific solutions to help their organization operate in environmentally sustainable ways.
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— Wellness webinars Corporate tenants are invited to join wellnessfocused webinars organized by the Property Management team. The “Working Towards Wellness” series is centred on the importance
of health and well-being. Recognizing that wellness is not a singular goal but rather a constant commitment to set and keep healthy habits, the Property Management team engages health and wellness professionals to share their expertise and inspire participants to start or enhance their wellness journey.
Fengate Real Estate ESG Report 2023
— Tenant appreciation initiatives In addition to a programmed onboarding process, tenants receive a welcome package when they move into their spaces. This package includes a number of thoughtfullycurated items including ethically-sourced organic coffee, reusable tumblers, jars of honey harvested from the beehives in the properties, and a USB stick conveniently loaded with essential documents such Tenant Information Guide, Design and Construction Manual, Emergency Management Plan, and Fire Safety Plan. On an ongoing basis, the Property Management team also hosts events to bring corporate tenants together. A number of fun and engaging activities are planned to foster a sense of community and build strong bonds within the different properties.
GOVERNANCE
At Fengate, corporate governance is the foundation upon which our firm operates. Our team is guided by and adheres to a system of rules, policies and practices in conducting our work, allowing us to drive our business forward responsibly. We are committed to evaluating our governance policies to effectively assess and manage risks and ensure compliance, in order to continue delivering exceptional results and making a positive impact for our stakeholders and the communities we work in.
GOVERNANCE
Firmwide governance commitments
Contents Introduction Our approach to ESG Environment Social Governance Firmwide governance commitments Real estate governance
As a signatory of the UNPRI, Fengate has committed to upholding UNPRI’s principles in our firm’s activities. Fengate professionals across the organization work together to integrate the principles throughout the full investment life cycle. Fengate is committed to applying the six principles of the UNPRI: We will incorporate ESG factors into investment analysis and decision-making processes.
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We will be active owners and incorporate ESG factors into our ownership policies and practices.
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We will seek appropriate disclosure on ESG factors by the entities in which we invest.
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We will promote acceptance and implementation of the Principles within the investment industry.
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We will work together to enhance our effectiveness in implementing the Principles.
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We will report on our activities and progress towards implementing the Principles.
Looking Ahead
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GPs and LPs who join the Diversity in Action initiative commit to specific actions that advance diversity and inclusion, both within their organization and the industry more broadly. To join the Initiative as a signatory, Fengate provided a summary of concrete actions, sourced from the Initiative Framework, that we are taking within our organization and in the wider industry. At Fengate, these critical efforts are led by our Executive team and Equity, Belonging, Inclusion and Diversity (EBID) Think Tank and are driven by all of us together. As an ILPA Diversity in Action signatory, we participate in regular roundtable discussions, working groups and surveys to provide the industry with greater transparency on the state of EBID today and on EBID best practices that will move private markets forward.
We have aligned our material topics to the UN’s 17 Sustainable Development Goals. The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. The 17 SDGs are integrated — they recognize that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability. We support and recognize the importance of contributing to the advancement of the sustainable development topics within our broader corporate ESG strategy.
Fengate Real Estate ESG Report 2023
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Fengate is a proud signatory of the Institutional Limited Partners Association (ILPA) Diversity in Action initiative. The ILPA Diversity in Action initiative brings together limited partners (LPs) and general partners (GPs) who share a commitment to advancing diversity, equity and inclusion in the private equity industry. The goal of the initiative is to motivate market participants to engage in the journey towards becoming more diverse and inclusive and to build momentum around the adoption of specific actions that advance diversity, equity and inclusion over time.
GOVERNANCE
Our approach to ESG
Leverage relationships to identify and source investment opportunities
Environment
Investment Screening Meeting Investment Committee approval required to proceed with detailed due diligence Evaluate investment risks and implement risk mitigation strategies Deploy capital return reflecting investment risk
Social Governance Firmwide governance commitments
Investment Committee Memorandum Investment Committee approval required prior to commitment on investment
Real estate governance
Looking Ahead
Investment Working Memorandum Annual review meeting to assess historic performance of all assets Determine the most optimal team of consultants for entitlement process Engage general contractors to submit bids for construction and begin tendering process
Investment Screening Memorandum Investment committee approval required to proceed with rezoning submissions Investment Committee Meeting Investment committee approval required to proceed with vertical development
Actively manage investments
Hold investments for duration or realize value through exit
Fund and Portfolio Review Investment, Development, and Asset Management teams provide quarterly reports on project status and fund performance
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Asset Management
Introduction
Fengate Real Estate ESG Report 2023
Development
Diligence & Approval
Sourcing
Real estate governance protocol
Contents
LOOKING AHEAD
Our path forward
Contents Introduction Our approach to ESG
Our team’s commitment to Environmental, Social, and Governance (ESG) will continue to shape our approach to responsible investment, development, and management activities. We recognize the real estate industry’s pivotal role in addressing global sustainability challenges, and as stewards of both physical spaces and community well-being, we are dedicated to making a positive impact to communities while finding ways to reduce harm to our environment. Keeping pace with the evolving landscape of sustainable real estate practices, we will remain agile with an eye towards progressing in our ESG journey. As we move forward, we are committed to refining our strategies, embracing innovation, and collaborating with partners and stakeholders to raise the bar for sustainability in our real estate practice. We have identified a few opportunities that will set us on the path of continuous improvement, including but not limited to:
Environment Social Governance Looking Ahead Our path forward
2023 marks the first year of our GRESB assessments, and we are looking forward to improving our score in subsequent assessments. Outlined below are initial steps we are undertaking towards this goal:
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Commit to strategic investments and process enhancements: We will make strategic investments in sustainability initiatives and identify ways to enhance our processes to address identified gaps and align with industry best practices.
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Invest in ESG training and awareness: Our team members play a vital role in our sustainability efforts. We will provide training and awareness programs to ensure our employees are wellinformed about sustainability practices and GRESB requirements.
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Increase stakeholder engagement: Effective stakeholder engagement is crucial for improving GRESB scores. We will foster better communication with tenants, investors, and local communities to align our sustainability goals with their expectations and needs.
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Continuous monitoring: We will develop a systematic approach to continuously monitor our ESG performance and ensure we stay on track toward improvement.
Enhance our ESG data management with a focus on completeness, transparency, and consistency across our portfolio of managed properties.
Continue on our decarbonization roadmap to identify viable decarbonization levers for transition planning.
Explore opportunities to enhance our climate risk management practices during due diligence, development, and asset management.
Engage our people in dedicated ESG training programs in the coming year to increase competency and awareness of our ESG strategy.
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Review and refine: Our team is thoroughly reviewing the feedback and recommendations provided by GRESB assessors to identify specific areas and opportunities where we can enhance our ESG performance.
Fengate Real Estate ESG Report 2023
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*All values presented in this brochure are in Canadian dollars. “Fengate” refers to the Fengate group of companies which is comprised of Fengate Capital Management Ltd., its affiliated entities and the funds or other investment vehicles that they manage. Fengate has produced this information brochure (the “brochure”) for informational purposes only. The information contained in the brochure (the “Information”) is believed to be accurate at the time of publication of the brochure; however, Fengate does not guarantee or warrant or make any representations concerning the quality, suitability, accuracy completeness or timeliness of the information contained in the brochure. This brochure and the information contained within it does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. In no event will Fengate be liable to any party for any claim or any direct, indirect, exemplary, incidental, punitive, special or other consequential damages arising out of information available in the brochure. Fengate is a trade name of Fengate Corporation. All other trade names, trademarks, service marks or logos found in this brochure are owned by their respective owners. © 2023 Serafini Holdings Corporation. All rights reserved. Designed and produced by Fengate. 2023.11.07
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