CLS Holdings

Corporate Social Environmental Reporting

RESPONSIBILITY
The Group’s philosophy on, and commitment to, corporate, social and environmental responsibility is known to all staff. The Directors actively encourage its integration into the business by employees across the Group as explained further in this document.

The Group aims to ensure that it is compliant with all legislation, including environmental legislation, in those countries in which it operates.

SUSTAINABILITY
The Group seeks to promote sustainability through the business and via its Green Charter. To achieve this, we have assessed our key impacts, which are in the following areas:

Corporate
• Some 400 businesses and organisations of all sizes rely on us as a landlord
• As a public company with a market capitalisation of approximately £300 million and a Premium Listing on the London Stock Exchange, our conduct and level of reporting impacts on shareholders, banks, and the capital markets
• The Company has a reputation as a stable and reliable investment providing attractive returns which we have a responsibility to maintain

Social
• Over 400 employers and a number of residential tenants rely on us as a landlord.
• Our 76 properties make us a neighbour within numerous communities with which we engage and whom we seek to support.
• Our proposed Vauxhall Square and Spring Mews developments will transform and enhance the community by the provision of new public facilities, public spaces, affordable housing and integrated community uses.
• The Company has 61 staff whose livelihood and career aspirations are linked to its continued success

Environmental
• Commercial buildings in the UK are responsible for approximately 20% of the nation’s greenhouse gas emissions; a similar percentage is expected in France, Germany and Sweden.
• The Group is categorised as an intensive energy user and has therefore qualified this year for participation in the CRC Energy Efficiency Scheme (CRCEES). The CRCEES is a mandatory Government scheme aimed at improving energy efficiency and cutting emissions in large public and private sector organisations.

The Board acknowledges the Group’s impact on the society and the environment in which it operates, and through its actions seeks either to minimise and mitigate them, or to harness them in order to affect positive change in keeping with the Group’s “Green Charter”.

SUSTAINABILITY “GREEN” CHARTER
The Group seeks to promote sustainability through affecting continuous improvement through the influence it can have on the environment, the local community, the economy and its key stakeholders. In 2011 the Group adopted its Green Charter, under which it undertakes:

• To mitigate our impact on climate change by reducing our carbon footprint
• To be accountable for our performance relating to climate change by communicating our successes and reporting performance regularly against measurable indicators
• To make the most effective use of the duties, powers and resources we have to minimise the impact of our actions on the environment; and to enhance the environment, community and economy wherever possible
• To monitor our progress by carrying out regular assessments against the key actions of the Green Charter
• To use our Green Charter to influence the behaviour of our partners, tenants, suppliers and other stakeholders, to promote and further the principles on which it is based.

Key Performance Drivers
In order to measure and assess our success effectively against our Green Charter we have identified the following Key Performance Drivers on which we will report annually. For 2012, these comprise:

• Corporate
– Increase the level of reporting and transparency of our business practices.
– Focus on improving coordination and efficiencies within the business thereby reducing wastage and ultimately reducing costs
• Social
– Ensure all developments meet or exceed the required targets for environmental performance and sustainability
– Mitigate unavoidable impacts of our developments by ensuring the views of local stakeholders are taken into account
• Environmental
– Reduction in paper use throughout the business by 10% compared to 2011
– Reduction in both CO2 emissions and electricity use in the London portfolio by 5% per annum compared to the 2010 base year for the next two years.

2011 ACHIEVEMENTS
In 2011 we have made significant progress against our corporate, social and environmental goals, and we have accomplished the following:

Corporate
• Launched our new Green Charter
• Employed a new Sustainability Manager reporting to the Chief Executive Officer who is responsible for the implementation of the Green Charter, embedding its principles across the Group and monitoring its compliance.
• Appointed Mrs Brigith Terry as an additional independent Non-Executive Director, enhancing the Board’s skills set better reflecting corporate governance best practice
• Introduced an Anti-Bribery Policy in line with the UK Bribery Act 2010
• Received a Bronze Award in this year’s European Public Real Estate Association (“EPRA”) Annual Report Survey. The survey is based on compliance with EPRA’s Best Practices Recommendations, which are designed to promote consistency and transparency in annual reporting by listed property companies across Europe.
• Suffered no reportable incidents to the Health and Safety Executive

Social
• Supported Vauxhall Garden Community Centre by assisting in the funding of improvements to its facilities and making available surplus office furniture
• Initiated the Vauxhall One Business Improvement District (“BID”) committee to launch a BID in Vauxhall in April 2012, which is a partnership between a local authority and the local business community to develop projects and services that will benefit the Vauxhall trading environment
• Provided general office based work-experience for students from Danderyds, Sweden and Manchester University
• Introduced an undergraduate work placement scheme for two local students in 2012 with King’s College, London and Surrey University
• Introduced a Give As You Earn scheme which allows employees to donate money to charity through their salary
• Raised our total charitable contributions for the year to £2,731 (2010: £1,831) by events such as a bake sale, participation in the JLL Property Triathlon Mixed Relay and in the Land Aid Fun Run, and direct donations from the Company.

Environmental
• Completed the installation of a new £2.3 million energy facility at our office property in Vänerparken, Sweden, which is already reducing energy consumption and CO2 emissions by over 80% compared to 2010 levels through the use of a ground source heating system into the bedrock 200 metres below ground.
• Commissioned an independent energy efficiency report on our London portfolio which recommended improvements to lighting, boiler efficiencies and an analysis of photovoltaic and solar thermal opportunities.
• Introduced a scheme of boiler and lighting replacement as a direct outcome of the energy efficiency report at seven buildings within the London portfolio and the Group’s Head Office.
• Trialling energy efficient LED lighting specifications on new build and refurbishments with the aim of adopting them as standard
• Reduced our reliance on fossil fuels in the London portfolio: electricity by 2.2% and gas by 25.2% based on 2010 levels through the introduction of training and awareness of building managers, improved plant equipment and monitoring methods, and tenant engagement at quarterly tenant meetings
• Reduced water usage in the London portfolio by 44.9% by ensuring minimal water wastage through monitoring controls and the installation of water efficient sanitary ware during refurbishments
• Implemented a paper recycling scheme at all of the Group’s offices, which aims to reduce paper usage by 10% in 2012
• Implemented and operated recycling facilities at all our managed properties switched an existing minibus shuttle service we provide to tenants from diesel to a bio-fuelled vehicle

EMPLOYEES
The Directors believe that the Group’s employees are a source of competitive advantage, and recognise that continued and sustained improvement in the performance of the Group depends on its ability to attract, motivate and retain employees of the highest calibre. The Group is committed to the principle of equal opportunity in employment, and seeks to ensure that no employee or applicant is treated less favourably on the grounds of gender, marital status, race, colour, nationality, ethnic or national origin, religion, disability or sexual orientation nor is disadvantaged by conditions or requirements, including age limits, which cannot be justified objectively. Entry into, and progression within, the Group are solely determined by the application of job criteria, personal aptitude and competence. These policies have worked effectively throughout the period.

It is the Group’s policy to apply best practice in the employment of disabled people. Full and fair consideration is given both to every application for employment from disabled persons whose aptitude and skills can be utilised in the business, and to their training and career development. This includes, wherever possible, the retraining and retention of staff who become disabled during their employment.

All staff are informed of matters concerning their interest as employees and the financial and economic factors affecting the business. Established management communication channels have been supplemented by direct presentations to staff by Directors to explain developments of particular significance.

HEALTH & SAFETY
It is a primary concern of the Board that the Company manages its activities in such a manner as to ensure that the health and safety of its employees, tenants, advisors, contractors and the general public is not compromised.

As part of this process the Company employs specialist accredited advisers to advise on all health and safety matters relating to the Group. The Company also operates a Health and Safety Committee, which covers issues related to the London portfolio and its employees. Chaired by the Company Secretary, the committee comprises House Managers, Asset Managers and advisors, and reports to the Chief Executive Officer. The Chief Executive Officer also attends Health and Safety Committee meetings. All regions maintain and follow local health and safety policies and report issues to the Chief Executive Officer. This reporting process has worked effectively throughout the year and has ensured ongoing compliance with health and safety legislation.

BUSINESS ETHICS
The Board recognises the importance of the Company’s responsibilities as an ethical employer and views matters in which the Company interacts with the community both socially and economically as the responsibility of the whole Board. Following the enactment of the Bribery Act 2010 in July 2011, the Company implemented a suitable policy which further demonstrates its commitment to business ethics.

EPRA SUSTAINABILITY PERFORMANCE MEASURES
The following tables show Sustainability Performance Indicators recommended by EPRA and developed by the EPRA Sustainability Reporting Committee in consultation with the wider EPRA membership, of which the Company is part.

The tables below outline the performance indicators which EPRA has identified as being core to sustainability and which should be reported by EPRA members where data is available. It expects to be able to include annual data for our properties in France and Germany in our 2012 reporting but it has been excluded in the table below as our processes for data collection were not in place for 2011.

The offices at 86 Bondway (“HQ”) have been reported separately as they are the largest centre of the Group’s operations.

Table 1 – Sustainability Performance – Absolute Measures

* of which 9,160,941 kWh is supplied by Npower on a renewable energy tariff for all half hourly metered sites. This figure includes 5,761,457 kWh consumed by tenants but which flows through a landlord’s meter. The Group’s annual operating consumption was 4,426,957 kWh.
** of which 52.6% was separated on site and the remaining 18.4% separated at a materials recycling facility.
*** All water is currently supplied via the mains utility supply.

Table 2 – Sustainability Performance– Intensity Measures

* common parts and centrally provided heating, ventilation and air conditioning only.