delivering

Corporate responsibility and sustainability report 2013

SEGRO is a leading owner, asset manager and developer of modern warehousing and light industrial properties, with £4.1 billion of assets (including joint ventures at Group share) principally concentrated in London’s Western Corridor (including the Thames Valley) and in key conurbations in France, Germany and Poland. We also develop and own warehouses in important distribution markets in the UK, Belgium, the Netherlands and the Czech Republic, and offices in Slough, Brussels and Milan.

The Group serves around 1,250 customers spread across a diverse range of industry sectors. It has 5.3 million square metres of built space under management and a gross passing rent roll of £258 million (SEGRO share).

OVERVIEW01 Contents/About SEGRO02 Introduction from David Sleath03 Mandatory Greenhouse Gas Emissions Statement04 SEGRO 2020 Progress06 SEGRO 2020 Performance Highlights07 Engaging our Stakeholders08 Case Study – Waste Management09 Case Study – Building Certifications 11 Case Studies – Reducing Carbon and

Renewable Energy 12 2013 Customer Review13 2013 Employee Review15 Our Suppliers and Investors16 Health and Safety17 2013 Community Review22 EPRA Sustainability Best Practice Recommendations 23 Advisor’s statement - JLL

Contents welCome to segro

01

Chief exeCutive’s statement

INTRODUCTION FROM DAVID SLEATH

We have continued to support and invest in local communities where we have a presence. This support can take the form of either monetary donations to good causes, or our employees giving of their time and skills to local organisations or through the donation of business space. In 2013, SEGRO donated £1.7 million to good causes through money, time, land and business space. We also increased our commitment to LandAid during the year. LandAid is the charity of the UK property industry and is committed to improving the lives of young people in the UK who have been disadvantaged due to their economic or social circumstances.

Other stakeholders, namely our employees, our investors, our customers and our suppliers, continue to be important to us and during 2013, we undertook a range of activities to engage with these groups, to keep them informed about our business activities and to understand how we can meet their expectations of us.

teChniCal sustainabilityIn 2013, we introduced our new sustainability strategy, ‘SEGRO 2020’. This strategy is aimed at realigning our sustainability goals for the Group in response to changing customer demands, and increasing legislation across the UK and Europe. Our ‘SEGRO 2020’ targets focus on building design, new buildings and refurbishments, energy and water efficiency, and obtaining building certifications that support our sustainable approach.

2013 was the first year of reporting against these new targets. The move to our new strategy has required us to undertake a number of projects which allow us to report and improve our performance against our long-term goals. We have improved the way in which we collect sustainability data as well as our metering coverage, and have developed Sustainability Toolkits for developments and refurbishments.

We believe that this was our transitional year, setting the foundations for us to embed sustainability throughout all the relevant parts of our business, and we are now in a position to make further progress from 2014 onwards.

Overall as a Company, we have been continuing with our work to reshape our portfolio. This investment and divestment activity affects our sustainability performance in a number of ways as there is movement in the number of buildings, floor area, metering arrangements, and also the technical specification of buildings within the portfolio, which inevitably have an effect on our sustainability KPIs.

‘SEGRO 2020’ is our long-term vision of what sustainability means for SEGRO, and with our commitment to embed the strategy throughout our business we have set a good foundation in 2013 for improvement year on year, to 2020, and we are pleased with the results of this report.

DAVID SLEATH

“ In 2013, we introduced our new sustainability strategy, ‘SEGRO 2020’. This is aimed at realigning our sustainability goals for the Group in response to changing customer demands”

in 2011, we set out our strategy to be the best european owner-manager and developer of warehouses/industrial property and to be a leading income focused reit. to deliver on our strategy this means we have to be the best for our customers by providing them with high quality, sustainable buildings in the strongest markets, we have to be the best for our employees by providing them with the right equipment and working environment to do their jobs and we have to be the best for our shareholders by providing them with attractive returns.

at segro we take corporate social responsibility very seriously. in 2013, our employees continued to deliver on our business objectives as well as supporting the communities in which we operate. in 2013, we continued with our focus on technical sustainability and we are pleased to report on the progress we have made with our ‘segro 2020’ sustainability targets.

02

MANDATORY GREENHOUSE GAS (GHG) EMISSIONS STATEMENT

greenhouse gas emissionsThis is the first year we are reporting our Greenhouse Gas Emissions in our Annual Report and Accounts. SEGRO has, however, been managing its energy intensity previously through its sustainability reporting which is available to view on www.segro.com/sustainability.

METHODOLOGY

In order to determine the emissions that we are responsible for, we have used the GHG Protocol Corporate Accounting and Reporting Standard and have applied the ‘Operational Control’ consolidation methodology.

This means that we have included all emissions arising from our assets under management, excluding any emissions arising from those parts of the portfolio that are the responsibility of our customers. We have called this ‘responsible space’ and have used this term when we are reporting our GHG emissions as well as when we are reporting the progress we have made with our ‘SEGRO 2020’ sustainability targets (see table on pages 4 and 5). We have also included transport emissions from activities such as business travel arising from our fleet vehicles, both owned and leased, as well as emissions from space occupied directly by SEGRO personnel.

Our emissions are set out in the table opposite. They arise principally through the combustion of gas for heating, fuel for transport (together, scope 1 emissions) and the purchase of electricity (scope 2 emissions). Consumption data has been collected from third party energy providers and the usage has been converted into a carbon dioxide equivalent using the UK Government’s Conversion Factors for Company Reporting 2013. Further details can be found on www.defra.gov.uk.

segro 2020 performanCe highlights

DB SCHENKER

GLOBAL GHG EMISSIONS DATA FOR PERIOD: 1 JANUARY TO 31 DECEMBER 2013

EMISSIONS FROM: TONNES OF CO2e

Scope 1 emissions – combustion of fuel and operation of facilities 10,894

Scope 2 emissions – purchased electricity, heat, steam and cooling 26,645

Total Carbon Footprint (tonnes of CO2e) 37,539

SEGRO’S CHOSEN INTENSITY MEASUREMENT:

Emissions reported above normalised to per m2 of responsible space 0.02 tonnes CO2e/m2

03

our performanCe

SEGRO 2020 PROGRESS

our ‘segro 2020’ targets focus on building design, refurbishments, energy and water efficiency and obtaining building certifications that support our sustainable approach.

68%OF CONSTRUCTION WASTE REUSED OR RECYCLED

60%OF DEMOLITION WASTE REUSED OR RECYCLED

2020 TARGET 2013 PERFORMANCE COMMENTARY TARGET UPDATE IN 2013

operational performanCe

By 2020, we will reuse or recycle 80 per cent of construction and demolition waste and 60 per cent of excavation waste. Target restated to include excavation and demolition waste to reflect our findings in 2013.

We reused or recycled 68 per cent of construction waste across our development projects in 2013. Furthermore, we reused or recycled 60 per cent of demolition waste and 33 per cent of excavation waste.

On track

By 2020, we will reduce energy intensity for SEGRO responsible space by 40 per cent against our 2012 baseline. (Baseline reset from 2011 to 2012 due to improved data quality for 2012.)

For SEGRO responsible space where we have full-year data available for both 2012 and 2013, our energy intensity was 73 kWh/m2/year during 2012, and 81 kWh/m2/year during 2013. This equates to a 10 per cent increase overall. However, energy intensity for space occupied by SEGRO personnel improved by 1 per cent. See commentary on page 6.

Work to do

By 2020, we will reduce water intensity for SEGRO responsible space by 20 per cent against our 2012 baseline. (Target restated and quantified following assessment during 2013.)

For SEGRO responsible space where we have full-year data available for both 2012 and 2013, our water intensity (m3/m2/year) decreased by 7 per cent overall, with an 18 per cent reduction seen at space occupied by SEGRO personnel.

On track

KEY: on track We have made progress with the goal in line with internal expectationswork to do Some/limited progress has been made to support this goal, and we

will prioritise performance improvement from 2014

04

our performanCe

SEGRO 2020 PROGRESS

2020 TARGET 2013 PERFORMANCE COMMENTARY TARGET UPDATE IN 2013

asset design and refurbishment

By 2020, we will install water efficient technology in all our new buildings and qualifying major refurbishments, and rainwater harvesting/grey water recycling where viable.

In 2013, 16 out of the 20 newly constructed buildings across our portfolio installed water efficient technology, including dual flush toilets, rainwater harvesting and low flow/automatic sensored urinals. We will report our qualifying refurbishments against this target in 2014, through our Sustainability Toolkits.

On track

By 2020, all new buildings and qualifying major refurbishments will be at least 40 per cent more energy efficient than our typical 2009 buildings in each country.

In 2013, SEGRO’s newly constructed buildings were on average 30 per cent more energy efficient than the local base build standard in 2009. We will report our qualifying refurbishments against this target in 2014, through our Sustainability Toolkits.

On track

By 2020, all new buildings and qualifying major refurbishment projects will be certified to be BREEAM ‘Very Good’ or equivalent in the recognised environmental certification for that region (LEED, DGNB, HQE). Target subject to local market commercial viability.

In 2013, four new buildings were certified to BREEAM: one ‘Outstanding’ (Unit 1, Tudor Gate), one ‘Excellent’ (Unit 2, Tudor Gate) and two units ‘Very Good’ (at Southern Approach, Feltham). We achieved one Silver DGNB rating (at Alzenau, Germany), which is deemed equivalent to BREEAM ‘Very Good’. We did not undertake any qualifying major refurbishments during 2013. See commentary on page 6.

Work to do

By 2020, all new buildings will be EPC or equivalent ‘B’ rated, or ‘C’ rated for qualifying major refurbishments. Target subject to local market commercial viability.

55 per cent of newly constructed buildings in 2013 achieved an EPC rating of ‘B’ or above (or country equivalent). See commentary on page 6.

76 per cent of qualifying refurbishments achieved an EPC rating of ‘C’ or above (or country equivalent).

On track

renewable energy

We will seek to increase our renewable energy capacity across the Group, subject to commercial viability.

During 2013, 97,602 kWh of renewable energy generation capability was added to the portfolio. As of 31 December 2013, the total renewable energy generation capability across the portfolio was 7,563 MWh.

On track

30%NEWLY CONSTRUCTED BUILDINGS WERE ON AVERAGE 30% MORE ENERGY EFFICIENT THAN BASE BUILD STANDARDS

16 out of 20NEWLY CONSTRUCTED BUILDINGS INSTALLED WATER EFFICIENT TECHNOLOGY

KEY: on track We have made progress with the goal in line with internal expectationswork to do Some/limited progress has been made to support this goal, and we will

prioritise performance improvement from 2014

05

SEGRO 2020 PERFORMANCE HIGHLIGHTS

OPERATIONAL PERFORMANCE

‘SEGRO 2020’ commits us to reusing or recycling 80 per cent of our construction and demolition waste and 60 per cent of our excavation waste. In 2013, we have reported figures for diverting excavation, construction and demolition waste from landfill. These figures show that we reused or recycled 68 per cent of construction waste across our development projects, we reused or recycled 60 per cent of demolition waste and we reused or recycled 33 per cent of excavation waste. This information will inform our waste management programme throughout 2014, and will enable us to target effectively the areas that require the most attention.

Across SEGRO responsible space, our energy intensity increased by 10 per cent, when comparing sites where we have a full data set for both 2012 and 2013. Part of this result can be attributed to weather conditions becoming more challenging from 2012 to 2013, requiring our shared services equipment to be in use for longer, in order to maintain a comfortable working environment for our buildings. This result shows us that we need to focus on how we tackle this issue for 2014 onwards, and our property management teams will work to identify projects that will help reduce our energy intensity.

Our water intensity across SEGRO responsible space decreased by 7 per cent, with a particular improvement seen at space occupied by SEGRO personnel, where there was an 18 per cent reduction. These are positive results, and we will continue to focus on this area during 2014.

ASSET DESIGN AND REFURBISHMENT

We continued to install water efficient technology in our new buildings and qualifying major refurbishments in 2013. We are pleased with the progress we are making against this target and in 2013, we installed water efficient technology across 16 of the 20 completed buildings, including dual flush toilets, rainwater harvesting and low flow/automatic sensored urinals.

A qualifying refurbishment for water efficiency is defined as a refurbishment where the scope of works includes the upgrade of water fixtures or where such upgrades can be added to the scope of works in a commercially viable way. To support this target, we have set ourselves minimum water fixture performance standards, which our development and refurbishment teams use to inform the specification of water consuming products.

We continue to improve the energy efficiency of our buildings, and our newly completed buildings during 2013 were on average 30 per cent more efficient than the local base-build standard in 2009. A qualifying refurbishment for energy efficiency is defined as a refurbishment where the scope of works includes the upgrade of elements that affect the energy performance of the building, such as lighting, HVAC, the building fabric, or where such upgrades can be added to the scope of works in a commercially viable way.

‘SEGRO 2020’ also introduced two goals relating to building certifications which set minimum Energy Performance Certificates (‘EPC’) and Building Research Establishment Environmental Assessment Methodology (‘BREEAM’) standards, or country equivalents, for our new developments and major refurbishment projects. These were put in place to ensure the development and refurbishment pipeline would provide our portfolio with efficient, high-quality buildings to proactively respond to increasing energy efficiency legislation and greater demands from customers for sustainable buildings.

Our results for these goals show that we have made a good start. However the market demand and legislative landscapes across Europe which help drive the development of certified buildings varies greatly and we need to work with our European teams to drive forward our progress. Through utilising our Sustainability Toolkits on every project, we expect 2014 to yield an improvement on our 2013 figures.

A qualifying refurbishment for our ‘BREEAM’ or equivalent target is defined as a refurbishment where there is a commercial case for targeting certification.

A qualifying refurbishment for our ‘EPC’ target is defined as a refurbishment where the scope of works includes the upgrade of elements that would affect the ‘EPC’ rating of the building, or where such upgrades can be added to the scope of works in a commercially viable way.

RENEWABLE ENERGY

During 2013, 97,602 kWh of renewable energy generation capability was added to the portfolio. As of 31 December 2013, the total renewable energy generation capability across the portfolio was 7,563 MWh.

We seek to increase our renewable energy across the Group through integrating renewables in our new developments and refurbishments. We have a number of exciting projects in the pipeline for 2014, which contain a mix of technologies such as solar photovoltaics, ground and air source heat pumps and solar thermal heating.

7%DECREASE IN WATER INTENSITY ACROSS SEGRO RESPONSIBLE SPACE

segro 2020 performanCe highlights

SAINSBURY’S, GREENFORD

06

ENGAGING OUR STAKEHOLDERS

industry perspeCtive

“Over the last 10 years sustainability has moved from the fringes to the mainstream for the construction and property industry. But for the most part this still means it is widely talked about, rather than acted upon in a meaningful way. The ‘SEGRO 2020’ strategy demonstrates a commitment to take sustainability to the heart of the business.

There is evermore evidence that buildings designed, built and operated in a sustainable way can attract asset and rent premiums, reduce void rates, reduce operating costs, and reduce the risk of exposure to forthcoming regulations. But one of the most compelling reasons to embed sustainability from the very beginning of the development process is that good buildings promote good health, well-being and productivity of the people who occupy them. It’s therefore great to see SEGRO’s achievement of 100 per cent for Health and Wellbeing within the BREEAM ‘Outstanding’ rating for the Rolls-Royce Heathrow Service Centre building.

SEGRO recognises the needs of a wide range of stakeholders in the business. Exceeding the ever-growing expectations of policy makers, investors, customers and employees will help put SEGRO ahead of their competitors. There is a lot to be gained from taking a proactive stance and the Green Building Council welcomes SEGRO’s active involvement in our training, education and policy programmes. In turn, we will help to increase awareness and the profile of SEGRO’s successes in a way that will hopefully translate into reward and new business won.

SEGRO should continue to push the boundaries with its public targets and sustainability commitments. No one has all the answers, but SEGRO will be given credit for striving for the best in terms of delivering optimal outcomes for people and minimising negative impacts for society and the wider environment.”

“In 2012, SEGRO took a hard look at its sustainability strategy and performance to date, and consulted with its employees on how it could improve sustainability considerations within its core business decision making. The result was the ‘SEGRO 2020’ strategy. Where the previous approach had been very broad, SEGRO now has a pragmatic and value-driven approach to its portfolio, one which prioritises resource efficiency and renewable energy generation throughout the building life cycle.

As an external stakeholder, I now have the opportunity to comment on a full year’s progress in implementing this revised approach. What I see is a very positive focus on enabling more employees in more markets to understand sustainability data and performance, and to support the Group’s long-term target achievements.

Those of us working in sustainability know that our biggest challenge is building the capability of an entire workforce. SEGRO’s emphasis on spreading skills and best practices in core processes, through tools such as the Development and Refurbishment Toolkits, is a wise investment of resources.

What I also see is a substantially improved in-house capacity to manage, collate and understand energy and water data. I look forward to seeing this significant change translate into operational performance improvements as the ‘SEGRO 2020’ strategy achieves further traction in 2014.”

“SEGRO’s commitment to customer care is as a pioneer of the customer focused approach to property ownership and management. Following the maxim ‘what gets measured gets improved’, SEGRO has commissioned independent research into customer satisfaction for the last 10 years. The results of the 2013 RealService Customer Satisfaction Survey have been eagerly awaited and reveal that the company is making real progress in raising service standards.

The RealService 2013 survey, which comprises in-depth personal interviews with 200 customers across the five business units, explores performance across 17 aspects of service from communication and responsiveness to value for money and willingness to recommend.

2013 has been a breakthrough year with, for the first time, four out of five occupiers now rating the overall performance of SEGRO as a property supplier as ‘good’ or ‘excellent’. In fact one in five customers now rate SEGRO as an ‘excellent’ property supplier (up 8.3% on 2012).

Not everything is perfect though. The feedback also shows that customers would like SEGRO to do more to improve communication and value for money. RealService has also identified opportunity for SEGRO to achieve greater consistency across the international markets where it operates.

However, SEGRO continues to impress with the visible commitment of senior management to raising standards each year. Customers need not worry that feedback is left on the shelf. They would be really impressed to see how much energy is placed into actioning the feedback. The challenge of raising service standards is never ending within SEGRO!”

howard morgan, managing director

emma hoskyn, associate director, upstream sustainability services

paul King, Chief executive

07

Case study waste management

WASTE MANAGEMENT AT SLOUGH TRADING ESTATE

we sought to provide a solution that would make waste management easier for our customers, more cost effective and better for the environment.

KARL STORz ON THE SLOUGH TRADING ESTATE

As a result of feedback from our 2012 Customer Satisfaction Survey, our occupiers said that they wanted more assistance from us in helping to reduce their waste management costs. We took this feedback on board and sought to provide a solution that would make waste management easier for them, more cost effective and better for the environment. We spent some time in early 2013 discussing our requirements with waste management providers. Once we had a suitable idea, we chose a company to partner with and set about promoting the scheme whereby our occupiers could participate in a collective waste management offering. The scheme provides our customers with access to reduced waste removal and recycling rates, and it is quick and easy to set up – reducing the administrative burden for the customer.

This initiative gained traction in 2013 across the Slough Trading Estate and the number of participants is steadily increasing. We are continuing to promote the scheme to our existing and new customers to help them increase recycling rates and save on costs. So far, we have recycled 18 tonnes of dry waste.

We look forward to more of our occupiers taking part in the scheme in 2014, and we are currently considering opportunities to roll out similar schemes on other estates across the Group.

18 tonnesDRY WASTE RECYCLED

GYRON ON THE SLOUGH TRADING ESTATE

08

Case study building CertifiCations

ROLLS-ROYCE HEATHROW SERVICE CENTRE ACHIEVES BREEAM ‘OUTSTANDING’ RATINGThe 8,900 sq m Heathrow Service Centre for Rolls-Royce was built by the Airport Property Partnership (APP) in 2012. The APP is a joint venture formed between SEGRO and Aviva Investors in June 2010. SEGRO is the asset manager and development manager to the fund while Aviva Investors is the fund manager.

We are delighted that this building has recently received a Post Construction Review ‘BREEAM 2011 Outstanding’ award from the Building Research Establishment. Built in approximately 10 months to a full turnkey fit out, the team involved with this fast track build sought to identify opportunities early on in the design process to enhance the BREEAM rating.

Throughout the design development stage, the team was focused on value engineering to secure maximum credits in key areas of the assessment as well as exploring additional credits that were not normally achievable. Thanks to their determination and teamwork, a final score of 86.17 was achieved which converts to the ‘BREEAM 2011 Outstanding’ rating.

A sustainability initiative was established from the outset which helped to shape the design of the project. This included a detailed metering strategy, energy efficiency, waste minimisation, biodiversity by design and many

more features. The end result of BREEAM ‘Outstanding’ was greater than the original requirement to achieve BREEAM ‘Excellent’.

The team reviewed more than 20 possible options for environmentally sustainable improvements that could be used on the project. This allowed them to quickly assess and incorporate the most appropriate elements into the new building during the briefing and design stages, so these were fully integrated into the design from the outset.

The building features high levels of air-tightness and thermal insulation, and it is orientated to make maximum use of natural daylight where applicable, whilst maintaining thermal comfort. The selection of construction materials was based on life cycle carbon impacts, including embodied carbon, longevity and their impact on operational emissions. Lighting throughout the building utilises movement and daylight controls in zones appropriate to the use of each area. Energy and water consumption is controlled by an automatic monitoring and targeted building management system which allows the building users to continually review and improve their energy performance as they operate the building year on year.

Key features of the heathrow service Centre for rolls-royce include:

• Early consultation with the client to determine the design and layout of the accommodation to maximise the BREEAM score.

• Responsibly sourced materials used on site.

• Diverting 96 per cent of waste from landfill through the construction process.

• Photovoltaic panels.

• Heating in the building is provided through an air source heat pump.

• Rainwater harvesting.

the building performed exceptionally well in the following categories that formed part of the assessment:

HEALTH AND WELLBEINGThe building achieved 100 per cent in this category by providing building users with sufficient daylight and allowing occupants to refocus their eyes from close work and enjoy an external view which reduces the risk of eye-strain. There is also a good working environment in smaller office areas.

ENERGYThe building achieved 87.5 per cent in this section which was achieved through ensuring it was designed to minimise the CO2 emissions associated with operational energy consumption. The design of the building also led to a reduction in carbon emissions and atmospheric pollution by encouraging local energy generation from renewable sources to supply a significant proportion of the energy demand.

This ‘BREEAM 2011 Outstanding’ rating is a great achievement and reflects the commitment and effort from all the parties involved.

100%ACHIEVED IN ‘HEALTH AND WELLBEING’ CATEGORY

ROLLS-ROYCE HEATHROW SERVICE CENTRE

09

ASICS IN GERMANYGARONOR LOGISTICS PARK, PARIS

GARONOR, PARISIMAGE OF THE NEW ASICS BUILDINGS

ASICS IN GERMANYIn 2013, at our Logistics Park in Krefeld-South, Düsseldorf, we started construction of a high specification distribution warehouse for the sportswear manufacturer, ASICS. Phases one and two will total 74,000 sq m making this the biggest development in the SEGRO portfolio, by space.

From the outset, discussions have been ongoing between SEGRO and ASICS to determine the right specification and features to ensure the building has excellent sustainability credentials.

some key features of the building will include:

• Highly efficient LED warehouse lighting.

• Excellent levels of insulation.

• Efficient HVAC systems to ensure the building can be heated, cooled and ventilated effectively.

• Rainwater harvesting will be used to flush toilets.

• A seepage basin will be used to allow rainwater to disperse away naturally, as opposed to being washed away through the surface water drains. This will reduce the burden on the surface water drains, as well as saving ASICS surface water drainage charges.

• A Solar PV system is under consideration for the roof, which could potentially provide over 710 mWh of green electricity per year.

In line with our ‘SEGRO 2020’ strategy, this development will be built to DGNB ‘Silver’ standard as a minimum.

REFURBISHMENTS TO GARONOR IN PARISGaronor Logistics Park is situated in northern Paris and comprises of a 37,000 sq m multi-let logistics park, consisting of two buildings. During 2013, SEGRO embarked on a significant refurbishment including a new façade, upgraded insulation, and external energy efficient LED lighting, significantly improving the specification and sustainability credentials of the development. The building is 30 years old, and we are aiming for the refurbishment to be our first ‘BREEAM’ accredited project for SEGRO in France.

By refurbishing the building rather then redeveloping the site, SEGRO has been able to meet market demand for urban logistics space in this sought-after location in one of the main logistics zones in Paris, close to the motorway corridor running from Lille to Marseille.

Case study building CertifiCations

10

Case studies reduCing Carbon and renewable energy

LEIGH ROAD BUILDING RELOCATION

segro is helping to reduce its carbon emissions through the innovative relocation of an existing building at the slough trading estate. SEGRO is in the process of moving a 3,250 sq m warehouse building from 816 Leigh Road to 9 Cambridge Avenue. We believe it is one of the first relocations of its kind in the UK. The relocation of the building will save 530 tonnes of carbon, providing a 38 per cent lower carbon footprint than a benchmark building. This is the equivalent of one hectare of rainforest (2,500 trees) or 115 return flights from London to Hong Kong.

Due for completion in spring 2014, 9 Cambridge Avenue will offer customers an attractive low carbon office and warehouse environment. The complete steel frame, office glazing system, lift, raised floor plans, joinery, block paving, fence and trees are all being reused from the Leigh Road site. A new roof, cladding and internal finishes will complement the original design, offering modern and up-to-date warehouse space.

530tonnesOF CO2e WILL BE SAVED

38%LESS CARBON FOOTPRINT THAN A BENCHMARK BUILDING

THE BUILDING ON LEIGH ROAD BEING RECONSTRUCTED ON CAMBRIDGE AVENUE

1,600

1,400

1,200

1,000

800

600

400

200

0benChmarK 9 Cambridge ave

oCt 13

38% reduCtion 530 tonnes

Carbon footprint Comparison (t Co2e)

plant/building service

external works

sanitary fittings

facade

lifts

roof

internal fitout (Cta)

super structure

sub structure

Key:

renewable energy

In 2013, SEGRO launched a scheme to install solar photovoltaic panels at some of our existing buildings and offer occupiers the opportunity to reduce their energy costs by purchasing this green electricity at a rate approximately 30 per cent cheaper than their existing tariff. This is an excellent example of landlord and occupier working together to improve environmental performance, while also offering an attractive cost saving for the occupier. The first project to go ahead within this new scheme is a 50 kWp solar array at our Greenford Park estate, which will go live in quarter two, 2014.

The scheme will save the occupier approximately £3,500 in operational costs in year one, with an annual CO²e saving of 29 tonnes.

11

2013 CUSTOMER REVIEW

84%OF CUSTOMERS LIKELY TO RECOMMEND SEGRO

76%CUSTOMER SATISFACTION AS AN OCCUPIER

our Customers

At SEGRO, we take great pride in the strength of our customer relationships and our aim is to put our customers first. It is vital to the continued success of our business that we ensure our customers are consistently satisfied with the product and service levels they receive from us, and it is our ambition to exceed their expectations. We see our customers as partners and we value the relationship we have with them by regularly monitoring this through our independent annual Customer Satisfaction Survey to measure how we are performing.

We were very pleased with the results from the 2013 Customer Satisfaction Survey. Overall satisfaction as an occupier of our buildings was 76 per cent, up from 72 per cent in 2012. 84 per cent of customers surveyed said they were likely to recommend SEGRO, up 5 per cent from 2012.

77 per cent of customers surveyed were satisfied with the performance of the property management team, an increase of just over 2 per cent compared to 2012. Feedback shows that customers value the premier locations of our properties and the high quality of our buildings. They also place value on the high standard of services they receive, which at 77 per cent in 2013 was up 6 per cent compared to 2012. This continues the upward trend of recent years.

In 2013 and as a result of feedback, we have changed the way in which we communicate with our customers. We have increased the number of times we visit them at their premises and we issue regular updates by email, which includes keeping them up to date with news from SEGRO and details of where further available warehouse space exists across our portfolio.

ANDY GULLIFORD, CHIEF OPERATING OFFICER

“ We take great pride in the strength of our customer relationships.”

“If we have a problem we talk to SEGRO who react immediately.”KAUFLAND POLSKA MARKETY – SEGRO POLAND

“I have an excellent relationship... we collaborate closely, with personal and engaged care from SEGRO. I can always get in touch... site meetings are fairly frequent.”MYSPORT GROUP GMBH – SEGRO GERMANY

“We had a problem with the gas meter and the site manager got back to me straight away on this.”SHOP INC LIMITED – GREAT CAMBRIDGE INDUSTRIAL ESTATE

“SEGRO maintain the Estate to a high standard. The service charges seem very fair to me and they are always looking for ways to save money and reduce costs.”PIPETEK SERVICES LIMITED – BILTON INDUSTRIAL ESTATE

“If we have a worry the answer is generally quite fast, within 24 hours.”ARTS ET ANTIQUITéS – SEGRO FRANCE

“They are very, very good. They come back to us straight away... They are friendly and there is open communication... They deal with our issues straight away.”KARL STORz ENDOSCOPY (UK) LIMITED – SLOUGH TRADING ESTATE“We recently had to complain about

a contractor on the Estate who was parking over four bays. SEGRO dealt with it immediately.”MR CLUTCH AUTOCENTRES LTD – SLOUGH TRADING ESTATE

“The quality of the services is very high, in winter everything is regularly cleaned, there is no snow in the Estate. The service charge cost does reflect the quality of the services.”COMPLEx – SEGRO POLAND

12

2013 EMPLOYEE REVIEW

OUR EMPLOYEESbuilding on our foundations

2012 was the beginning of a period of intense change for our employees as we started work to restructure our business in line with the strategy announced in November 2011. To support our employees with this change, we launched an internal communications programme known as ‘One SEGRO’ to ensure that everyone understood our strategic aims and ambitions. During 2013, this pattern of change continued but due to the work we had done in laying the foundations for ‘One SEGRO’, employees had a clear understanding of the changes that were taking place and what was expected of them.

At the end of 2012, we commissioned an external all-employee survey to give us the objective feedback we needed to assess whether our efforts in communicating the strategy had been successful. The results of this survey exceeded our expectations and demonstrated that we had managed the change well – our employees understood the strategy and were committed to the future of SEGRO.

The survey told us that:

• 96 per cent understood the aims and objectives of SEGRO;

• 91 per cent cared about the future of SEGRO;

• 92 per cent understood how the work they did helped SEGRO to achieve its objectives;

• 93 per cent had the knowledge and skills to do their job; and

• 92 per cent were clear about what they were expected to achieve in their job.

There were, however, some areas where improvements needed to be made. In particular, some employees told us that they didn’t always feel appropriately involved and consulted in change that personally affected them, nor did they always feel recognised for the work they did. To help understand these issues in more depth, workshops were held across the business with teams, led by our functional heads, to get more in-depth views on what and how we needed to change. As a result, all of our senior leaders made a number of personal commitments to do things differently, which we published in a special edition of our internal newsletter, ‘In the Know’. Some of these included involving individuals more in the decision-making process on major projects, reducing our email traffic, and giving more thought to simply saying ‘well done’ more often.

In addition to the activity generated from the employee survey, we continued with our programme of internal communications to keep employees informed and updated about what was happening across the business. This included quarterly all-employee webinars to coincide with our external financial reporting cycle. These are an interactive way in which all employees can hear from members of the Executive Team about our financial performance. At a Business Unit level, Business Unit Directors host monthly briefings to provide an update on performance and there is a mix of news at both a local and Group level. The all-employee newsletter, ‘In the Know’, which was introduced in 2012, continues to be published.

This contains business and social news as well as showcasing individual and team successes.

We ended 2013 with our all-employee conference. The first one in 2012 was such a success that we repeated the format for 2013. Learning from the feedback from the all employee survey, we took the opportunity to recognise even more people at the awards ceremony and said a big ‘thank you’ for the significant contribution individuals and teams had made to SEGRO during 2013 through a range of awards including ‘Best Cross Functional Team Working’, ‘Best Customer Service Initiative’ and ‘Best Community Engagement Award’.

93%HAD THE KNOWLEDGE AND SKILLS TO DO THEIR JOB

96%UNDERSTOOD THE AIMS AND OBJECTIVES OF SEGRO

THE WINNERS OF THE ‘BEST CUSTOMER SERVICE INITIATIVE’ AWARD AT THE 2013 EMPLOYEE CONFERENCE

our employees

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2013 EMPLOYEE REVIEW

2,102HOURS INVESTED IN TRAINING

growing/nurturing our talent

During 2013, the Senior Leadership Team has become more responsible for communicating and driving change throughout the business. This team is formed of 18 senior managers, including the Executive Committee, who normally meet four times a year on a formal basis. These meetings, led by the CEO and Group HR Director, provide an opportunity for discussions about a wide range of business issues. In between these meetings, the team is encouraged to network and communicate amongst themselves as much as possible. We have invested in developing their skills, as well as giving them stretching and challenging opportunities. We are confident that as our business grows, this group will successfully lead our employees through further change.

During 2013, we continued to prioritise internal promotions from within the organisation, reinforcing our belief in the quality of our talent pipeline. In some areas, we took the opportunity to bring in new external hires. At the end of 2013, we appointed Harry Stokes (previously Head of European Real Estate Equity Research at UBS) as Head of Investor Relations and Research and Nick Hughes (previously Global Head of Marketing and Communications at Knight Frank) as Director of Marketing and Communications. Both are members of the Senior Leadership Team.

Throughout the business, we are actively encouraging our employees to look at development opportunities. These include formal classroom events through to one to one coaching and cross border ‘buddying’ amongst our property teams to share best practice and customer intelligence.

In total in 2013, we invested more than 2,102 hours in training.

human rights

We are committed to doing things the right way and this is reflected in our values and our Code of Conduct. A respect for human rights is implicit in our employment practices and the high standards we expect from our suppliers.

valuing diversity

We are committed to offering equal opportunities to people with disabilities and, if an employee becomes disabled while in our employment, we will offer appropriate support, retraining, equipment and facilities to enable them to continue in their role with SEGRO.

We recognise the benefits of diversity and the value this brings to the organisation in terms of skills, knowledge and experience. We have a good record of promoting and appointing women to senior roles. Women hold four out of the 18 positions in our Senior Leadership Team.

our employees

LIz REILLY, GROUP HR DIRECTOR

SENIOR LEADERSHIP TEAM 14

MALE

4

FEMALE

SPLIT OF MALE/ FEMALE WORKFORCE 130

MALE

105

FEMALE

SPLIT ON PLC BOARD 9

MALE

1

FEMALE

“ Throughout the business, we are actively encouraging our employees to look at development opportunities.”

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OUR SUPPLIERS AND INVESTORS

OUR SUPPLIERSSEGRO spends approximately £330 million per annum on the purchase of products, services and works. The way in which we manage our supply chain is extremely important to us in terms of our reputation, alignment with our social responsibility objectives and ensuring that we are receiving best value. During 2013, considerable effort was given to procurement activities across the Group including categorisation of suppliers and application of country-specific environmental, health and safety and commercial criteria for assessment. This process has resulted in a reduced supply base of 2,760 active suppliers from a starting point of 6,800 in 2012. The 60 per cent reduction to the supply base has enabled us to ensure that we work in partnership with companies which are following good industry practices and are compliant with relevant regulations and local country legislation.

Training has been provided to all teams on legislative requirements, including anti-bribery and corruption. SEGRO terms and conditions for contracts have been updated to incorporate our policy objectives and all suppliers have been requested to provide a copy of their anti-bribery policy or sign up to SEGRO’s code of practice.

Across the Company in 2013 we introduced a new purchase to pay system known as Basware. This has enabled us to have a consistent system and payment processes in place for paying our suppliers. In 2013, in the UK, for invoices processed in-house using Basware, suppliers were paid on average, 32 days upon receipt of their invoice.

OUR INVESTORSSEGRO places frequent and open communication with the investment community among the highest of its priorities. During 2013, we met with approximately 350 existing and potential institutional investors through a combination of one-to-one meetings, conferences, roadshows and asset tours in locations including the UK, US, the Netherlands, France, Germany and Poland.

We ensure that the Chairman and Senior Independent Director are available to our shareholders, should they have any concerns and where contact through our usual channels has failed to resolve or is otherwise inappropriate. All Board Directors are available for meetings with shareholders.

The Company’s website, www.segro.com, provides all shareholders with comprehensive information on all the Group’s recent business activities and financial developments. Shareholders can access this information through webcasts, press releases and video-recorded interviews with the Chief Executive.

£330MSEGRO SPENDS PER ANNUM ON THE PURCHASE OF PRODUCTS, SERVICES AND WORKS

our staKeholders

ROYAL MAIL, BIRMINGHAM

TOLL, HEATHROW

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HEALTH AND SAFETY

HEALTH AND SAFETYIn 2013, we further developed our health and safety strategy and completed the recommendations from the independent internal audit we undertook in 2012. This included the launch of the revised Group health and safety policy which clearly describes the expectations, management and commitments made by SEGRO to its employees and all those that may be affected by its work activities.

To build on our revised approach to health and safety, a communications campaign was launched to improve the quality, level of detail and relevance to specific employee roles. For example, this ensured that more technical health and safety information is provided to project and development teams, whereas general workplace health and safety information is issued to employees in more office-based roles.

In 2013, work continued on improving the co-ordination and communication between employees on all health and safety-related activities. This focused on ensuring that each local SEGRO team was kept up to date on the progress and priorities as laid out in our health and safety strategy. It has also provided an opportunity for face-to-face training and for information to be shared between the different country teams. This process will continue to be deployed throughout 2014 to ensure that health and safety is understood as a responsibility for all employees, suppliers and consultants.

SEGRO continues to be extremely proud of its excellent health and safety record. In 2013, our Accident Frequency Rate for SEGRO employees was zero (2012 – zero). There were no health and safety prosecutions, enforcement actions or fatalities in 2013 and therefore we achieved our targets in this respect.

In 2013, for the first time, SEGRO won a ‘Gold’ award from the Royal Society for the Prevention of Accidents (RoSPA) in recognition of our commitment to the prevention of accidents and ill health. We were commended for our health and safety strategy and in particular the focus we have given to raising awareness for accident and incident reporting across the Group through improved communications and providing access to relevant safety legislation in each country.

SEGRO CONTINUES TO BE PROUD OF ITS ExCELLENT HEALTH AND SAFETY RECORD

our staKeholders

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2013 COMMUNITY REVIEW

supporting those communities in which we operate remains an integral part of our operations. in 2013, segro invested a total of £1.7 million in good causes through money, time, land and business space.

Supporting those communities in which we operate remains an integral part of our operations. In 2013, SEGRO invested a total of £1.7 million in good causes through money, time, land and business space.

Category amounts

Donations £133,236

Assistance in kind £1,495,845

Employee volunteering £58,984

In addition, through their own fundraising efforts, SEGRO employees raised £27,757 for a variety of charities throughout 2013.

COMMUNITY ENGAGEMENTWe work closely with a range of stakeholders in the communities where we have a presence. This way we ensure that the local communities understand why we are undertaking or supporting a particular project and the benefits that it will bring to their neighbourhood. We equally listen to what they have to say about our plans and we seek to address any concerns they may have. In the UK, we now have active community engagement plans in place in Hounslow, Ealing, Hillingdon, Slough, Brent and Enfield.

ASSISTANCE IN KINDWe are proud to provide assistance in kind to a number of organisations in the UK in the form of either reduced rent or free accommodation. In 2013, our assistance in kind amounted to £1.5 million.

organisations we have supported by providing them with reduced rent or free accommodation include:

• SkillForce Development – a charity that works in partnership with schools, drawing upon the skills of predominantly ex-Forces personnel, to inspire young people to succeed.

• Berkshire East and South Bucks Women’s Aid – this is a Queen’s Award Slough-based charity which supports all victims of domestic abuse including children and young people.

• Ealing MENCAP – this local branch of MENCAP represents the interests of people with learning disabilities and their carers within the London Borough of Ealing.

EMPLOYEE VOLUNTEERINGIn 2013, SEGRO employees volunteered 1,527 hours to community and fundraising activities. Examples of employee volunteering include:

SEGRO IAS Cycle Challenge 79 hours

LandAid Summer Fun Run 40 hours

Jones Lang LaSalle Property Triathlon 60 hours

£1.7MSEGRO INVESTED IN GOOD CAUSES

our Communities

SEGRO IN THE COMMUNITY

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2013 COMMUNITY REVIEW

in 2013, we significantly increased our support to and ties with landaid, the charity of the uK property industry, which works to improve the lives of children and young people who experience disadvantage due to their economic or social circumstances.

LANDAIDSEGRO is a long-time supporter and a Foundation Partner. In 2013, our Chief Operating Officer, Andy Gulliford, joined the LandAid Fundraising Committee to help promote their work and increase support from amongst others in the industry.

We have committed to another Foundation Partner Project, whereby through pro bono work, manpower and donations of £120,000 a year for three years, we are refurbishing/redeveloping the Slough YMCA Hostel at Britwell, which is located close to the Slough Trading Estate. The existing facility accommodates eight single person units and, when completed, the extension will provide accommodation for a further five young people.

SEGRO employees, along with our industry peers, have enthusiastically supported other LandAid fundraising initiatives raising just over £19,000 for the organisation. This included taking part in the summer run in Regent’s Park, London, and the LandAid Fundraising Day in October, with a golf day, cake bakes, sailing day and the Industrial Agents Society Cycle Challenge.

CONTINENTAL EUROPEIn Continental Europe we have supported ‘Na Ratunek’ which is an organisation in Wroclaw, Poland supporting children who require a bone marrow transplant and we have continued to support the ‘Gajusz Foundation’ in Lodz, Poland which cares for children with chronic or incurable conditions. In Belgium we continued to support youth football via Diegem Sport. In France, we supported ‘Café Associative des Tilleuls’ at Blanc Mesnil in Paris, which is a volunteer-run community regeneration project.

£120,000OVER THREE YEARS TO REDEVELOP THE SLOUGH YMCA HOSTEL

our Communities

SUMMER RUN

SEGRO EMPLOYEES SUPPORTING THE SEGRO IAS CYCLE RIDE

SEGRO EMPLOYEES ABSEILED FOR LANDAID

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Case study our Communities

2013 COMMUNITY REVIEW

SEGRO YOUNG ARTISTSThe SEGRO Young Artists programme is a series of partnerships between SEGRO, professional artists and selected schools to inspire young people, develop talent and celebrate art.

The annual end-of-programme exhibition at the Royal Society of Arts is the culmination of a four-month programme of activity and celebrates the work and the achievements of the schools taking part.

The ‘World of Work’ has been the consistent theme since 2008 and has provided the project with some very interesting pieces. For the first time, in 2013, SEGRO fund-matched sales of work made at the exhibition so that the students received a £500 bursary towards art college fees or for art materials.

The 2013 programme involved 117 students, 11 art teachers and six visual artists.

Students told us that they now feel more empowered in understanding the world of work, what this entails and how to work in a more creative way.

student feedback:

“I usually avoid challenges but today I embraced them to learn something new.”

“I’ve learnt that the world of work is such a unique and versatile topic which can be interpreted in so many ways. I had a lot of fun today.”

WEST LONDON COMMUNITY PARTNERSHIP BURSARY In 2013, SEGRO announced the successful applicants to its West London Community Partnership Bursary.

The top award of £5,000 went to Skidz, based in Hillingdon, West London, an organisation that delivers accredited informal learning and formal training activities in motor mechanics and road user education. Here young people can develop the skills, knowledge and awareness required for further training and safe and responsible road use. SEGRO also partners with the organisation to give pro bono advice in appropriate areas.

organisations that also benefited under the bursary scheme were:

Age UK Hillingdon £500

West Drayton Young People’s Centre £500

Butts Farm Working Together, Hounslow £500

Safety Net Youth, Hammersmith & Fulham £500

Trinity Homeless Projects, Hillingdon £1,000

Apple, Ealing £500

MAx THE CASHThis was a student business challenge organised by SEGRO and Uxbridge College in West London.

The ‘Max the Cash’ initiative offered 11 teams the opportunity to devise a business plan to develop an initial start-up investment. SEGRO donated £550 to support the initiative.

Through their business plans, the students then raised £950 and, including the SEGRO donation, £1,500 was raised, which was donated to the Michael Sorbell Hospice in Uxbridge.

The winning team, HNC Business students, developed a business plan to provide gardening services to the local area.

In addition, an award for ‘the most innovative idea’ was presented to students who offered a photo booth service with pictures emailed directly to their customers.

The presentation to the winning team was attended by staff from Uxbridge College, SEGRO and the Mayor of Hillingdon, Councillor Allan Kauffman.

The initiative received positive feedback from participating students, with each team benefiting from the experience and the opportunity to reflect on their business ideas.

£1,500DONATED TO A LOCAL HOSPICE FROM ‘MAx THE CASH’ INITIATIVE

£500FOR STUDENTS TOWARDS ART COLLEGE FEES OR FOR ART MATERIALS

DAVID SLEATH VISITING SEGRO YOUNG ARTISTS

WINNERS OF THE ‘MAx THE CASH‘ INITIATIVE

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Case study our Communities

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WOODEN SPOON – HITz PROGRAMMEthe award-winning hitZ programme, delivered by aviva premiership rugby Clubs, works in a number of ways. it aims to:

• initiate behavioural change and foster confidence in disenfranchised young people aged 11 to 19 from challenging backgrounds;

• encourage them to remain in or re-enter education, undertake apprenticeships or vocational training and then enter paid employment.

SEGRO’s three-year local support commitment helps HITz to bring together the expertise of Wooden Spoon, Harlequins RFC and specialist training provider, Prospect Training, to deliver a unique programme based in Hounslow working to engage with disadvantaged and disillusioned young people who are not in employment, training or education, with the ultimate goal of progressing young people on to full-time work or education.

Participants also benefit from a range of interventions, including: completing Foundation Learning (work-related learning through volunteering and placements), CV writing workshops, careers talks and tours, literacy/numeracy/IT lessons.

Now that the programme is launched, SEGRO employees will be encouraged to mentor participants and support their participation in the programme.

THE OUTWARD BOUND TRUSTIn 2013, SEGRO continued its support of The Outward Bound Trust with a donation of £10,000. This money helped fund residential, personal and social development courses for pupils from schools in the areas in which SEGRO operates.

in 2013, a total of 85 young people benefited from the outward bound experience from:

• Greenford High School

• Reading College

• Dormers Well High School

The three school groups are preparing presentations of their experiences of the Outward Bound Trust residential courses to SEGRO employees. Everyone has gained from this experience and the Outward Bound Trust provides valuable support to young people.

feedback from the outward bound trust:

“All pupils have built on their self-esteem and confidence levels. They were put out of their comfort zones and challenged to achieve objectives in new environments. Thank you so much. We would not have been able to provide our pupils with this wonderful experience without your support.” Liz Smith, teacher

feedback from pupils:

“Thank you for giving me an unforgettable experience. I hope further generations get to do and see what I did.” Joel, age 13

“I learnt that you need to believe in your friends because sometimes they’re the ones who keep you going.” Majid, age 13

“Thank you very much… now I can do anything and achieve anything.” Abdirahman, age 12

“Thank you very much for funding our course. I really appreciated it and I will use these skills for the rest of my life.” Benson, age 13

£10,000DONATED TO THE OUTWARD BOUND TRUST

“ Thank you for giving me an unforgettable experience. I hope further generations get to do and see what I did.”

JOEL, AGE 13

2013 COMMUNITY REVIEW

HITz RUGBY PROGRAMME THE OUTWARD BOUND TRUST

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Case study our Communities

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SLOUGH ASPIRESlough Aspire is one of the country’s most innovative training and development projects, which opened on the Slough Trading Estate in October 2013. It has been designed to be the first port of call for training and development needs for businesses and the local community. Developed by SEGRO, Slough Aspire has been delivered in partnership with a number of locally based businesses and organisations including Mars, Lonza, the Federation of Small Businesses, East Berkshire College and Slough Borough Council.

The project aims to help members of the local community develop the confidence and skills to take advantage of a rapidly changing employment market and ensure that employers have access to a talented and productive local workforce.

The centre is open to companies, schools and local residents and it plays a vital role in enhancing and strengthening links between the community and local businesses. Slough Aspire offers a range of training programmes, events and career advice services which help employers address their training and recruitment needs by connecting them with the local community and training providers.

2013 COMMUNITY REVIEW

SLOUGH ASPIRE SLOUGH ASPIRE SLOUGH ASPIRE OPENS STUDENTS AT THE CENTRE

STUDENTS AT THE CENTRESLOUGH ASPIRE OPENS

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EPRA SUSTAINABILITY BEST PRACTICE RECOMMENDATIONS

SEGRO is a member of the EPRA Sustainability Reporting Committee and has worked with others in the European publicly listed real estate sector to lay out a set of recommendations for standardised reporting on key environmental impacts across the property industry.

We continue to report against the EPRA Best Practice Recommendations. For the first time, our Sustainability Report in 2012 achieved an EPRA Gold Award, primarily due to the quality of our data disclosure around operational energy, water and waste performance. This was an improvement on the Bronze Award we received in 2011 and recognises the progress we have made in the last 12 months. Alongside this success, we also received improved scores in our submissions to the Global Real Estate Sustainability Benchmark and the Carbon Disclosure Project, both of which are key metrics used for measuring a company’s sustainability performance.

ComplianCe

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ADVISOR’S STATEMENT assuranCe

For SEGRO’s Sustainability Report 2013, JLL has been involved in three main capacities – supporting SEGRO in its assessment of progress against the long-term targets; providing assistance on compliance with EPRA Sustainability Best Practice Recommendations; and collecting, validating and analysing data for the performance indicators. Given that JLL is SEGRO’s long-term advisor, this statement does not represent independent verification. It provides an external perspective on progress made by SEGRO to improve the quality of its voluntary sustainability reporting and to drive its future sustainability performance.

data validation

For the reporting year 2013, JLL was responsible for collecting, validating and aggregating environmental and socio-economic data for the purpose of annual reporting and submission into annual investor surveys, such as Carbon Disclosure Project (CDP) and Global Real Estate Sustainability Benchmark (GRESB). Validation of this data is limited to checking performance trends against historical data and identifying anomalies.

Compliance with epra sustainability best practice recommendations

SEGRO uses the EPRA Sustainability Best Practice Recommendations (BPRs) as the key framework that drives its sustainability reporting. SEGRO achieved an EPRA Gold Award for the disclosure of sustainability data in its 2012 Sustainability Report, an improvement on the Bronze Award achieved the previous year. This has been made possible due to the robustness of the data collection and analysis tools now being used and the extensiveness of data coverage across the company. This year, disclosure against the EPRA BPRs has improved even further, particularly reporting of energy and water intensity metrics.

review of progress against targets

JLL supported SEGRO in undertaking a target assessment on the basis of data submitted by SEGRO employees as evidence of progress against each target. Primary evidence was not submitted to support the target assessment process, which was solely based on the narrative information provided by Property Managers, energy bureaus and SEGRO employees.

SEGRO established a new set of sustainability targets in 2012 - SEGRO 2020 - and 2013 represents the first year of working towards achieving these long-term targets. The 2013 sustainability report provides the first opportunity to assess progress against these targets and determine whether SEGRO is on track to meet them, based on its recent performance.

Of the eight targets under SEGRO 2020, six (75%) are on track to be met by 2020 and two (25%) require more work to meet the target, based on current performance. However, it is worth noting that these are long-term targets and SEGRO has six years in which to achieve them.

The targets which require more work between now and 2020 are:

• Improving energy efficiency across the portfolio - between 2012 and 2013 SEGRO’s energy consumption has increased across the like-for-like portfolio. Positively, there was a small reduction noted in energy consumption in SEGRO’s own occupied

offices and there has been a marked improvement in energy data coverage since 2012. SEGRO should use this information to identify high consuming assets and prioritise its 2014 actions to put the business on track to achieving this target.

• Minimum environmental certification – 5 out of 20 of SEGRO’s newly constructed buildings in 2013 achieved BREEAM ‘Very Good’ (or equivalent) or above. The refurbishment and development toolkits will support SEGRO in achieving the desired environmental certification rating across all major developments.

Projects undertaken in 2013 to improve sustainability performance at SEGRO are:

• Formal launch of SEGRO 2020 – the revised sustainability strategy; with particular effort being made by the central sustainability team to communicate this strategy across SEGRO.

• Creation and distribution of the refurbishment and development toolkits – which aim to assist SEGRO in understanding the design specification of each of the projects across the Group, with the longer-term goal of establishing minimum design standards in the future.

• The introduction of a Cross Border Technical Group, bringing together SEGRO’s technical teams to share ideas, information and lessons learned across the Group.

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observations and recommendations

From our perspective, for SEGRO, 2013 represents a year of embedding the SEGRO 2020 strategy and communicating the eight long-term targets across the business. The revised strategy has provided SEGRO with an opportunity to demonstrate how the company can drive resource efficiency through the design and operation of its assets.

In terms of where SEGRO should focus its attention, JLL would recommend the following:

• As a priority, establish and communicate internally and externally the systematic process that SEGRO will take to reduce energy and water consumption in shared services and common parts areas within the existing portfolio.

• Establish waste management protocols and communicate these across the development teams to ensure waste recycling and reuse is maximised.

• Work towards using the information which is being collected in the refurbishment and development toolkits to inform design guidelines which can help to achieve SEGRO’s main sustainability objectives.

• Continue to engage with employees across the Group and use their expertise to deliver operational efficiencies and deliver better building performance.

Looking towards 2020, SEGRO now has six years in which to achieve its current targets. The performance during 2013 does not fully reflect the scale of effort that has been made during the year by the teams within SEGRO. It is expected SEGRO 2020 will gain momentum during 2014, supported by the full roll-out of the toolkits. To be in a stronger position this time next year, we would encourage SEGRO to take a more proactive approach to reducing its operational impact to swing the trend of increasing consumption seen in 2013 to a trend of reducing consumption. This will help to ensure that SEGRO can continue to deliver value for its customers, its investors and for the business.

Sophie Walker Director Upstream Sustainability Services JLL

ADVISOR’S STATEMENT Continued assuranCe

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