University College London Sustainability Finance Framework, Lecture notes of Finance

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University College London

Sustainability Finance Framework

May 2021

Contents

1 The Foreword 2 Introduction to UCL 3 UCL’s Sustainability Strategy 4 Framework Rationale 5 Framework Alignment 6 Sustainability Finance Framework

6. 1 Use of Proceeds 6.2 Process for Project Evaluation and Selection 6.3 Management of Proceeds 6.4 Reporting 6.5 External Review 7 Case Studies Disclaimer

1 The Foreword

Sustainability inquiry has a long history at UCL; we undertake research into everything from the health impacts of climate change to novel plastic polymers, and provide sustainability-related education on subjects from global health, to the natural and physical sciences. In many ways, this continues the disruptive thinking that has been the status quo at UCL since 1826. But to truly embed sustainability into UCL, we believe that we should be practising what we preach – and implementing higher standards of sustainability throughout our core activities and operations. This has been exemplified by our work over the past ten years. UCL’s campus transformation programme has promoted the highest standards of sustainable performance, with our New Student Centre, opened in 2019, amongst the first BREEAM outstanding HE buildings in the UK. Working with our academic community, we have created tools such as the Lab Efficiency Assessment Framework (LEAF), aimed at improving the sustainability of scientific research and inquiry. This is now shared across the UK sector. And we have worked with external partners such as the Royal Institute of Chartered Surveyors, to develop the SKA HE standard for small projects. Again, this is now being widely used across the HE sector to deliver higher performing spaces in terms of sustainability. Our Sustainability Strategy launched in 2019 sets out a bold framework for sustainability at UCL and is arguably one of the most ambitious across the UK HE sector. It seeks to draw on the talent, knowledge and experience within our community to deliver sustainable outcomes. We want to take the lessons from our research to inform the sustainable operation of a global university, use our operations as a test-bed for research and teaching, and inspire our students to be responsible citizens through what they see on campus and our research impact. These foundations are the building blocks for embedding sustainability across our institution, and delivering our headline objective of achieving net zero carbon by 2030. This ambitious commitment, as well as constructive engagement with our student and staff bodies, was central to recently earning the highest score in the University Carbon League Table out of 519 institutions. The UCL Sustainability Bond represents the means by which we can deliver the ambition which we have set out in our Sustainability Strategy. It reinforces our commitment to sustainability, a hugely important facet of the University’s activity, and supports our role as a catalyst for sustainable change across our wider society. Dr Michael Spence President and Provost

2. Introduction to UCL

 Addressing global challenges through our disciplinary excellence and distinctive cross- disciplinary approach  An accessible, publicly engaged organisation that fosters a lifelong community  London’s Global University: in London, of London and for London  Delivering global impact through a network of innovative international activities, collaborations and partnerships UCL is one of the world’s pre-eminent research-led institutions, and now more than ever, the world looks to powerful research communities like ours to lead the push for change and to effect real impact. UCL’s environmental research activities are addressing the climate change challenge on multiple fronts, ranging from what we can do today, pioneering future system change, and putting sustainability at the heart of our campus. UCL conducts world-leading research, from climate modelling to the green economy, providing evidence for how climate change affects all aspects of life on earth, and idea generation for actions to address these challenges. UCL’s interdisciplinary approach means that researchers from all across UCL are collaborating to address sustainability challenges. A number of specific sustainability research centres have been established including the UCL Anthropocene, the Centre for Behaviour Change, the UCL Energy Institute, the UCL Plastic Waste Innovation Hub and the UCL Institute for Global Prosperity. Our research is having a real world impact - since 2020, UCL has played a central role in supporting the UK’s response to COVID-19. UCL was involved in developing testing and tracking systems, predicting the future of the outbreak and advising, challenging and critiquing the government’s response to the crisis. Expert and practical assistance has been provided to external bodies and the global community, notably with the CPAP breathing aid which has won multiple awards from the Royal Academy of

Engineering and the 2020 Health Service Journal Award for Acute Innovation of the Year for engineering a “just-in-time” COVID-19 solution. A number of UCL staff members and honorary academics have been named on the UK Government’s Scientific Advisory Group for Emergencies (“SAGE “) and its sub- committees, and have taken a prominent role in advancing public knowledge about COVID-19 by advising world leaders and urgently researching new ways of tackling the virus. UCL has a diverse and global supply chain and is committed to eradicating modern slavery. We want to ensure all staff and workers are paid a fair wage and feel valued, and as an example, pay the London Living Wage and are working towards the Mayor of London’s Good Work Standard. In our annual Modern Day Slavery Statement(^4 )^ we outline our steps to minimise slavery throughout our supply chain; for example using the Ethical Trading Initiative’s ETI Base Code to take targeted action in our high risk areas and requiring our suppliers to evidence how they are enforcing effective systems to tackle slavery in their supply chains. UCL’s endowment fund is managed in accordance with an ethical investment policy(5) which is overseen by UCL’s Investments Committee. The Investments Committee meets four times a year and reports through Finance Committee to Council. The Investments Committee membership comprises three external members with investments expertise and appointed by Council, and has two Ex Officio posts, including UCL’s Treasurer. (^5 ) UCL divested from fossil fuels in December 2019 and committed not to invest in companies involved in fossil fuel extraction or production in future. UCL adopts investment strategies that seek to minimise and ideally eliminate irresponsible corporate behaviour, focusing on avoiding investments which encourage (amongst others):  Environmental degradation  Armament sales to military regimes  Human rights violations  Institutionalisation of poverty through discriminatory market practices  Racial or sexual discrimination  Tobacco production and manufacture ( 4 ) https://www.ucl.ac.uk/sustainable/modern-slavery ( 5 ) https://www.ucl.ac.uk/sustainable/sustainability-ucl/positive-climate/ethical-investment

3 UCL’s Sustainability Strategy

At UCL, we believe that everyone has the potential to create new possibilities. That’s why our students and staff work together to embed sustainability through our campus and culture. Our world-leading sustainability research informs how we run our institution and provides inspiration for our teaching. Two hundred years ago we challenged the accepted idea of who could study together at University. We changed ourselves to make inclusivity possible and we now live in a country that embraces diversity in education. That same pioneering spirit drives us forward to become sustainable. Sustainability is embedded within all aspects of the University’s operations, through its teaching, research and campus. We have been granted a “First Class” award by People & Planet’s University League (2019)(^6 )^ which ranks UK universities on their environmental and ethical performance. We’ve also achieved ISO 14001 : 2015 standard accreditation (environmental management) for 2019(^7 )^ and ISO 50001 (^8 )^ (energy management) accreditation in recognition of our commitment to reducing our impact on the environment. We are also playing a leading role in responding to challenges across all United Nations Sustainable Development Goals (UN SDGs)(^9 ). That’s why we have established an ambitious sustainability strategy: ‘Change Possible: The Strategy for a Sustainable UCL 2019-2024’ (the “Sustainability Strategy”), which is our plan for a truly Sustainable UCL. We want to tackle the climate emergency, the ecological crisis and the pressing social and environmental issues facing our local community. The Foundation Programmes have been designed to focus on embedding sustainability across our operations, our core activities and the way we undertake and promote research. Our three Signature Campaigns are reflected in the Use of Proceeds of this Sustainability ( 6 ) https://peopleandplanet.org/university/129411/ul ( 7 ) https://www.ucl.ac.uk/sustainable/news/2019/jul/ucl-celebrating-re-certification-iso ( 8 ) https://www.iso.org/iso- 50001 - energy-management.html ( 9 ) https://www.ucl.ac.uk/sustainable-development-goals/

Finance Framework and are underpinned by strong Foundations which guide all key aspects of our strategy. Sustainability Foundations :  UCL Inspires Action – inspire sustainability action on an international scale through our education, research and engagement. Every student has the opportunity to study and to be involved in sustainability through the UCL education programme  UCL is Run Sustainably – embedding the value of sustainability through the way we operate and demonstrating what a truly sustainable University looks like. Sustainability is fully integrated into our planning, processes and delivery and we are focused on making the UCL campus a showcase of how a city-centre global institution can operate  UCL Shapes the Debate – making the most of our research agenda which is rooted in positive social change, environmental protection and social equality. We increase the impact of our research by sharing best practices and connecting researchers with industry and community partners globally Sustainability Campaigns:  Positive Climate – UCL will use its climate change expertise and research to reduce carbon emissions, demonstrating how it is not only possible to limit global warming to 1.5 degrees, but that this offers a more equitable, healthier and happier future, targeting to:  Achieve net zero carbon buildings by 2024 and a net zero carbon institution by 2030(^10 )  Inspire and enable climate change action and research  Seek to generate 100% renewable energy by 2030  Reduce energy consumption by 40% by 2024 (vs. 2019 baseline) ( 10 ) UCL has committed to be a net zero carbon university by 2030. This includes scope 1, 2 and 3 carbon sources with the exception of carbon related to staff and student commuting and investments

Elements of our waste reduction programme include increasing sharing and repairing schemes to reduce the amount of new items that need to be purchased, streamlining the number of suppliers, maximising the value of our waste products through increasing facilities for new recycling streams while maintaining our zero waste to landfill status. The UCL Sustainable Building Standard (2020)(^11 )^ (the “Building Standard”) is integrated into all relevant building projects and provides a standard for the sustainable design, construction and operation of our built environment. We recognise that our interest in the buildings we occupy often spans decades, and even centuries; therefore, we must future- proof our built assets, ensuring that they are robust and flexible enough to withstand the test of time. We design to achieve BREEAM Excellent (Outstanding encouraged) with due regard to lifecycle value, for all new build and major refurbishment projects, and to achieve SKA HE (Gold) or compliance with Mini-SKA /SKA Labs standards for smaller refurbishments and fit out projects. We ensure a buffer of at least 5% above BREEAM Excellent at Design Stage. The Building Standard guides all major projects to require a circular economy statement covering embodied carbon of the superstructure and substructure (with a goal of reducing embodied carbon by 40% and/or to <500kg CO 2 /m^2 ) and to provide an outline of opportunities to retain existing materials, ultimately targeting zero waste to landfill for all construction projects. We have achieved a number of accredited sustainability awards. In terms of UCL estates development, we have 22 projects certified under BREEAM or SKA as well as achieving recognition and national awards, including: ( 11 ) https://www.ucl.ac.uk/estates/policies/2020/jul/ucl-sustainable-building-standard New Student Centre Winner of prestigious Prix Versailles world architecture award BREEAM Outstanding 22 Gordon Street Home of the UCL Bartlett School of Architecture BREEAM Excellent Bentham House Redevelopment shortlisted in New London Awards 2019 BREEAM Excellent

On Queen Elizabeth Olympic Park, in East London, two buildings – Marshgate and Pool Street West – will provide solid foundations to the UCL East campus. With planning approval received, and construction started on both buildings, they are expected to be completed in time for the start of the 2022 and 2023 academic years. Key sustainability features include a car free site with c.1,500 cycle spaces, 560m^2 of green roof on Pool Street West and 1,000m^2 of solar panels to be installed on the Marshgate building. Pool Street West has received interim certifications, namely Pool Street West (Academic Facilities) – BREEAM Outstanding and Pool Street West (Residences) – BREEAM Excellent. Moreover, PEARL (Person-Environment-Activity Research Laboratory) in Dagenham, our world- leading laboratory and large-scale built- environment simulation facility is set to be our first net zero carbon building in operation. UCL recognises the importance of diversity, in our University and society as a whole. We have worked with AccessAble to provide access guides to staff, students and visitors, and design all new / refurbished buildings according to our inclusive design strategy. We have also made positive steps towards improving access, retention and progression for students across communities, supported by our Access and Participation Plan 2020/21 – 2024/25(^12 ), which sets out how we encourage and support students to apply to UCL and how we will effect institutional change to address the retention and attainment of gaps that appear once students are studying with us. Our approach to diversity is multi-faceted, delivering access to education for all irrespective of race, gender, age, physical and mental well-being and for those who have had more challenging pasts including care leavers and refugees who we will target in our work, while developing ways to identify and track experiences whilst at UCL. We provide more information relating to specific sustainability projects in section 7, Case Studies. ( 12 ) https://www.ucl.ac.uk/widening-participation/about-us/ucl-access-and-participation-plan Queen Elizabeth Olympic Park PEARL, Dagenham Accessibility at UCL

4 Framework Rationale

The Sustainability Finance Framework (the “Framework”) aligns UCL’s strategic and sustainability priorities with its funding and financial strategy. UCL has selected a number of key investment and expenditure areas which are fundamental to its Sustainability Strategy and deliver tangible environmental and societal impacts. UCL looks to attract investors who are supportive of these goals, in accordance with its own education ethos. Stakeholders are valuable partners in supporting UCL’s journey and contribution to a more equitable and sustainable society. The Framework provides UCL the flexibility to issue Green, Social or Sustainability bonds or loans (“Sustainable Financial Instruments”), to support its environmental and social objectives.

5. Framework Alignment

6. Sustainability Finance Framework

6 Sustainability Finance Framework

6.1 Use of Proceeds

An amount equivalent to the net proceeds (the “Net Proceeds”) of Sustainable Financial Instruments raised under this Framework, will be allocated to the acquisition, financing or refinancing, in whole or in part, of new or existing eligible sustainable projects (“Sustainable Projects”) as outlined below. Sustainable Projects are to support the delivery of our Sustainability Strategy and in doing so, make a contribution to the Sustainable Development Goals (“SDGs”) of the United Nations, which are also identified. On a best efforts basis, UCL expects to allocate the Net Proceeds to Sustainable Projects originated, approved, financed or completed between 36 months before the issuance date of a Sustainable Financial Instrument to 24 months after the issuance date, as well as to the refinancing of existing physical Green assets. Type ICMA Eligible Category Use of Proceeds – Sustainable Projects Eligibility Criteria UCL Sustainability Strategy UN SDG Green Green Buildings New construction projects, existing buildings and major refurbishment projects achieving or aiming to achieve at least one of:  New Build – Construction in line with the UK Green Building Council’s (UKGBC’s) Net Zero Carbon Building Framework; BREEAM ‘Excellent’ or higher; giving due regard for life cycle value  Major Refurbishment – Construction in line with the UK Green Building Council’s (UKGBC’s) Net Zero Carbon Building Framework; BREEAM ‘Excellent’ or higher; giving due regard for life cycle value  Minor refurbishment – Construction in line with RICS SKA HE(^18 )^17 with a target assessment level of Gold (16) Positive Climate Green Energy Efficiency Investments or expenditure on projects which may include:  Systems and smart controls which help to optimise environmental management - minimising energy usage and in some cases improving health and wellbeing. For example, through the use of sensors and building management technologies Positive Climate (18) UCL has worked with the Royal Institute of Chartered Surveyors to adapt their SKA building methodology for the HE sector. The methodology focuses on delivering good practice sustainability measures in small refit/refurbishment projects