Task Force on Climate-related Financial Disclosures (“TCFD”)

We are committed to implementing the relevant recommendations of the TCFD, providing our stakeholders and investors insight into the key climate-related risks and opportunities which are relevant to our business and how these are identified and managed.
 

Governance and risk management

Ongoing oversight of climate-related issues is carried out by our sustainability group (see sustainability governance section). The Group meets quarterly and is the forum for determining our sustainability strategy and reviewing performance. This includes identification of climate-related risks which are included and managed by the Board via our corporate risk management process (see the Audit Committee report for details of our approach to risk management).

In particular, the Board primarily manages climate-related risk through the established investment appraisal process where it scrutinises proposed acquisition, development and refurbishment plans which may include climate-related aspects of design.

Our commitment to address climate-related risks is embedded across the business, through a carbon reduction KPI. The performance against this KPI is linked to executive remuneration, aiming to incentivise progress against carbon reduction target and energy efficiency commitment.
 

Strategy

Our business is exposed to both risk and opportunity from climate change primarily as a result of owning and operating property assets. The nature and level of risk is dependent on government, business and society’s response in the short and long term. In the event of a strong response to climate change in the short term up to 2030, our business will be affected positively and negatively by the transition.

With a limited global response to climate change, our business will be affected in the long term, beyond 2030, by physical effects such as extreme weather and higher temperatures.

Accordingly, our analysis focuses on both transitional risks, up to 2030, and physical risks beyond 2030.
 

Transitional risks and opportunities

Our primary transition risk is regulatory changes relating to minimum energy efficiency standards. This has the potential to increase both operating and compliance costs. An increase in capital investment may be required to ensure Group assets meet minimum standards.

In the event specific assets cannot be cost-effectively improved, there may be a downward pressure on their valuation due to shifting market demand. The corollary of this is that assets well above minimum standard may attract premium valuations.

As of 2020, 26% of the Group portfolio by floor area was certified with 68% of this area in buildings with an EPC rating of C or higher. It should be noted that prevalence of EPCs for non-residential buildings varies markedly by country within Europe. Very few non-residential buildings in France and Spain are currently certified.
 

Physical risks

The physical risks to our business relate to the increasing likelihood of extreme weather events and their consequences, including impact on asset availability (local shutdowns) and higher maintenance, capex and insurance costs.

In relation to the UK property portfolio, the primary physical risk is flooding related. Based on current data, our insurer’s flood assessment at the last renewal indicates that 88% of Safestore’s portfolio is located in zones rates as low, negligible or moderate (both on a store count and insured value basis). Where Safestore does invest in property in higher risk areas, risk mitigation measures are usually proactively deployed.
 

Metrics and targets

The self storage sector is not a significant consumer of energy when compared with other segments of the real estate landscape.

Nevertheless, as part of our commitment to SDG 13 (Climate action) we have set near and medium term carbon reduction targets to 2020 and 2022 (see sustainability targets and KPIs). We report and analyse our absolute and like-for-like energy consumption and greenhouse gas (“GHG”) emissions in line with the EPRA sBPR recommendations.

These are disclosed in the Our Environment section of this report (pages 48 to 57). Supplementary data can be found on our corporate website.

Through a range of energy efficiency initiatives and a switch to 100% renewable electricity we have met our 2020 target to reduce our absolute carbon emissions vs 2013 baseline by 47%, and are on track to meet the 50% reduction vs baseline by 2022. This progress in absolute emissions reduction is despite the significant expansion of our portfolio. Emissions intensity (per sq ft) is currently 60% below 2013 levels exceeding the 2020 target of 53% below baseline.
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