We made substantial progress in 2009 in reducing the carbon footprint of our existing properties against our 2006 baseline.

We have two principal objectives relating to climate change and energy. First, we seek to reduce the carbon footprint of each of our properties, ensuring we meet, and preferably exceed, government targets relating to energy consumption. Equally, in our development activities, we seek to design buildings which minimise energy consumption in their construction, and are designed to be efficient in their operation. Second, over the longer-term, we are adapting our buildings where necessary to mitigate the effects of climate change, and ensure our investment strategy takes into account the possible negative impact of changes in weather patterns.

We made substantial progress in 2009 in reducing the carbon footprint of our existing properties against our 2006 baseline. Since 2006, we have reduced our carbon emissions at our UK shopping centres by 15.9%, UK offices by 19.6% and French shopping centres by 17.3%. Overall in 2009, our carbon emissions fell, despite the fact we included energy consumption at the two major shopping centre extensions completed in 2008 (Highcross, Leicester and O’Parinor, near Paris). We also started reporting on two additional assets in the office portfolio.

Our success in this area is dependent on rigorous measurement and reporting in both the UK and France, where we have continued our programme of installing meters in anticipation of the Carbon Reduction Commitments Energy Efficiency Scheme (CRCEES) in the UK and Carbon Tax in France. We also embarked on a process of understanding the carbon footprint of our managed properties. We met our target to measure the carbon footprint of six managed assets in the UK, and gathered carbon data for most of our UK retail properties as part of an assessment for the Carbon Trust Standard, including transport data. We will continue this project in 2010 to complete our Carbon Trust Certificate for the CRCEES. For the second year running, we also measured the carbon footprint of our head office in London, recording a reduction in emissions of 7%.

Although development activity was lower in 2009, we continued to refine our approach to future development. In 2009 we developed a standard monitoring and reporting template for the measurement of energy, water, waste and timber during construction. This work grew out of a construction leadership forum jointly created by Hammerson and Skanska, facilitated by Forum for the Future. We will introduce the use of this reporting template on all construction sites. In France, we created a blueprint Sustainability Implementation Plan (SIP), which will form the basis of a SIP for Les Terrasses du Port, a major retail development in Marseille, where construction is scheduled to start towards the end of 2010. We were also pleased to be awarded an HQE rating for the proposed extension to our Italie2 shopping centre in Paris.

As part of our ongoing management of environmental impacts, a focus in 2009 was on environmental training. We developed our own training course, externally certified by the Institute of Environmental Management and Assessment (IEMA), which we used to train 85 people at WestQuay, Southampton. The aim was to ensure that the Environmental Management System (EMS) we have put in place is successfully followed. We plan to roll out this initiative across the portfolio as part of our aim to achieve ISO 14001 for each of our properties. In France, where our operations are more centralised, all 92 of our head office staff at Washington Plaza and our French shopping centre portfolio underwent environmental training.

Expenditure on sustainability initiatives in 2009 totalled £540,000 (UK and France), a proportion of which is rechargeable to occupiers or joint venture partners. Initiatives in both countries focused on the installation of low-energy lights in shopping centres and more energy efficient air conditioning. These programmes have demonstrated consistent success: at The Oracle, one of the first shopping centres to change lighting systems, carbon emissions have fallen 27% since the programme was implemented in 2006. Initiatives in the UK were assessed by our Sustainability Programme for Innovation, which reviews social and environmental initiatives against economic criteria. These initiatives will be of additional benefit in 2010 as reductions in carbon emissions equate to savings in CRC tax. For 2010, we have identified new initiatives for our UK shopping centre portfolio which will cost around £2 million to implement, save in the region of £650,000 per annum. and equate to a reduction of around 20% in carbon.

Targets relating to our longer-term objective to minimise the impacts of climate change were deemed in progress. Following a report commissioned in 2008 into climate change mitigation and adaptation for managed assets and developments in the UK and France, we developed an action plan to implement the findings at a number of properties and will use the findings when designing future developments and their related SIPs.