Quintessentials

Transcription

Quintessentials

Foreword
In twelve years, Ethical Property has grown from two
people with a vision to a family of five companies and one
charity, operating in four countries and employing over
seventy people.
Central to our success has been holding fast to our
faith in the Ethical Property model. Built around strong
management, transparency and a firm conviction that it is
possible to make money whilst doing good, we have worked
hard to ensure that the values with which we set up the
business are as strong as they were twelve years ago.
With our expansion into Belgium, France, the Netherlands
and perhaps even Kenya, and the creation of new service
companies such as Ethical Property IT, the need for a shared
set of values looms large.
In the interest of strong and transparent governance, we
have chosen to enshrine the very essence of our ethical
model in the Quintessentials – five essential principles for
running a successful Ethical Property company. These
principles allow us to provide clear guidance to anyone
wanting to join the Ethical Property family, and also offer a
way to make accountable family members who might later
stray from the path.
Who should we rent our properties to? How do we balance
social, environmental and financial returns? What are the
principles of good governance for an ethical business?
And how much time should we dedicate to social auditing
and reporting? It is questions such as these that the
Quintessentials are designed to answer.
The Quintessentials lay out a number of governance and
management practices that are considered best practice for
a member of the Ethical Property family. All members of the
family must adopt and adhere to them in return for the right
to use the Ethical Property name.
The Quintessentials are based on a set of five fundamental
management principles, policies and practices that are
designed to ensure that members of the Ethical Property
family meet their common aim.
Quintessentials
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1
The Triple Bottom Line
Investment in the Ethical Property family offers its investors
an appropriate financial, social and environmental return.
2
Ethical criteria for tenancy and other services
Property and other services provided by the Ethical Property
family is only made available to organisations that meet our
ethical criteria.
3
The Code of Practice for the management of the company
The Ethical Property family always provides property in
accordance with its ethical principles. 4
The Governance Procedures
All members of the family maintain a high standard
of governance, transparency and honesty in their
business and manage their business in a way that
safeguards its ethicality.
5
Conforming to these principles, and meeting the targets laid
down, is seen as a model for running a successful Ethical
Property company. These practices and targets are as much
a recipe for business success as a set of ethical standards
to be met.
Ethical Property family members are then expected to be
guided by the Quintessentials in the running of their business,
to aspire to the targets they set, and to meet them in so far as
they are best able.
We want to build a family of organisations that share the same
values and philosophy and are able to work together and
support each other. Through adherence to the Quintessentials,
we feel the possibilities for strong collaboration will be greater.
Working as one, we will be better positioned to help others
to join us in achieving our aim of supporting the development
of the social change movement by making the better use of
property for society and the environment.
We also hope that by sharing with you our knowledge of how
best to run a successful ethical business, we can in some small
way bring wider benefits to all.
The Reporting Procedures
Adherence to the four objectives above is reported in the
Social Accounts, which form an integral part of
the strategic business planning process.
Jamie Hartzell
Founder of the Ethical Property family
February 2011
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Ethical Property Company
Quintessentials
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Quintessential 1:
The Triple Bottom Line
We aim to ensure that investment in the Ethical Property
family offers its investors an appropriate financial, social and
environmental return.
Social and environmental returns
Family members should aim to maximise social and
environmental returns offered to shareholders and report
these returns in the Social Accounts according to the
Reporting Procedures.
The central social and environmental aims of any ethical
property family member are:
To support and strengthen the most progressive and
innovative social change organisations and to ensure
that the range of organisations supported is as diverse
as possible.
To make as positive as possible a contribution to the
environment, by minimising environmental impacts,
and in particular greenhouse gases, through the
company, property and customer supply chains
and by developing and supporting new positive
environmental initiatives.
To make as positive as possible a contribution to
tackling inequality, by investing in deprived areas,
making properties as accessible as possible and
being an outstanding equal opportunities employer.
To be honest and transparent to all stakeholders in
all areas of the business and to treat honesty and
transparency as a guiding principle of managing
the business.
Social and environmental returns are integral to the business
model and should be fully incorporated into the business
planning process, and given equal weight as financial returns.
Social and environmental returns are expected to support
and complement financial returns in the long term and not to
detract from them.
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One person working at senior management level should
be given overall responsibility for environmental and
social performance.
Financial returns
Financial returns accrue to shareholders through dividends and
any rise in the share price.
The company’s policy is to aim to offer an overall average return
to shareholders of around 5% per year.
One person working at senior management level should be
given overall responsibility for financial performance.
Dividends A significant proportion of the financial return should be paid
through an annual dividend. Dividends should be paid in either
one or two payments a year except in the very first year of
establishment of the company when it may not be necessary to
pay a dividend. The year on year value of dividends should be
maintained in real terms.
The company’s business position will be considerably
strengthened if it is consistent in paying a dividend every year.
The company should value its property portfolio sufficiently often
that shareholders are able to buy or sell shares at a price that
reflects its true value as closely as possible, whilst not wasting
shareholders funds on the valuation process. Every property
held should be valued as a minimum once every three years. In
between valuations, the company should consider applying a
recognised index to its portfolio value in order to give an estimate
of likely current value.
As the company grows and share trading mechanisms become
better established, share price is more likely to be set at the price
at which recent share trades have taken place.
Family members are not always in a position to control their
share price, as it is based on the market value of its property
portfolio, however management decisions that affect the asset
value of the property portfolio should maximise its financial
value without compromising the social and environmental
objectives of the company.
Share trading The company should make every effort possible to create a
market in the company’s shares. This ensures that shareholders
can buy and sell shares whenever they want to. The aim of this
market should be that no shareholder should wait more than
three months to buy or sell their shares at a fair price.
Determining the share price
All family members should have a mechanism by which
shareholders and potential shareholders can determine the
value of their shareholding. This mechanism should be spelt out
in a written pricing policy. This policy should be made available
to all shareholders.
Initially, the company’s share price is likely to be set at net asset
value per share (in other words shareholders funds, or net equity,
divided by the number of shares in issue). In some cases the
price may be set at a discount or premium to net asset value.
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However, the company should not list on any recognised stock
exchange, as this is likely to greatly jeopardise the Triple Bottom
Line of the company.
Speculation in the company’s share should be avoided. Speculation
is considered to be taking place when shareholders or their
agents are taking a short term position in the company’s shares
in order to profit from them, rather than because they are
interested in being a member of the company.
The company should be managed on the basis that shareholders
intend to hold their investment for at least 5 years.
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Dividend Waivers All shareholders should be entitled to waive their dividends in
order that they can be used by the company to develop further
its social and environmental objectives. Any dividends waived
should be held in a balance sheet fund and should not be
distributed as dividends to other shareholders.
This fund can be used only for activities that cannot be
considered as part of the company’s core business. The
fund should predominantly be used for activities that can be
considered to offer high social and environmental returns,
but cannot be immediately judged to be of financial benefit.
However it is expected that these activities should prove their
financial worth within a maximum of three years and from that
point be incorporated into the core business of the company.
The dividend waiver fund is then a kind of ethical development
fund. Any activities that do not prove their financial worth within
three years should no longer be supported by the fund.
The fund can also be used for offering short term rental
subsidies to tenants facing short term hardship. There is no
requirement to end this element after three years and it can
continue indefinitely.
Use of the dividend waiver fund must be fully reported in the
company’s Annual Report.
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Quintessentials
Quintessential 2:
Ethical criteria for tenancy
and other services
We only work with organisations that we think are delivering
substantial social change. We therefore aim to ensure that
property and other services provided by the Ethical Property
family is only made available to organisations that meet our
ethical criteria.
The criteria fall under three headings:
1. Essential/Preventative qualities
2. Desirable/Undesirable qualities
3. Preferred/Discouraged qualities
Organisations that fail to meet the essential criteria or possess
a preventative quality will not be offered space in a centre.
Organisations with desirable characteristics will be given
preference over those with undesirable characteristics.
The ‘preferred’ and ‘discouraged’ criteria will only in a very
few cases affect the choice of whether an organisation is
offered space. Rather, the company would wish to engage
with the tenant organisation to develop the preferred qualities
and to lose the discouraged qualities once the organisation is
in occupation.
Essential criteria
(you must)
Preventative criteria
(you must not)
Have a defined social purpose
that accords with the company’s
overall objective of building
a sustainable society and a
sustainable environment.
Be an unethical business.
Be a charitable or non-profit
organisation, a social enterprise,
an ethical business, or a business
of strong local benefit to the
regeneration of an area.
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Be a government organisation or
department, national or local, with
the exception of specific projects
that enhance the activities of other
non-governmental tenants of the
Centre occupied.
Be an organisation which has the
promotion of one particular faith or
philosophy as its objective.
Desirable characteristics
(it is better to)
Undesirable characteristics
(it is best not to)
Be a social change organisation.
Be an organisation receiving money
from unethical businesses.
Be an organisation with long-term
prospects and opportunities.
Have diverse and transparent
funding sources.
Be a good mix with other groups
in the centre.
Be an organisation in any
way undemocratic or
discriminatory towards its
stakeholders or employees.
Be an organisation that lacks
the support of the community
it serves.
Be an organisation that
understands, supports and
practices a self-help culture
akin to that of the Ethical
Property family.
Preferred characteristics
(You should be
working towards)
Discouraged characteristics
(You should be moving
away from)
Equal opportunities policy
and practice.
A differential between the highest
and lowest paid worker of more than
6 to 1.
Environmental policy
and practice.
Any staff member not being paid a
living wage, which is higher than the
minimum wage.
Local, regional or national
government funding of over 50%
of turnover.
What we mean by social change
A social change organisation recognises that certain problems within
society are structural – they can only be solved if some aspect of society
is changed. The change required could be in the law, in the political or
economic system, or in societal behaviour or attitude, or some or all of
these. The problem will not be resolved until the cause is addressed.
Quintessentials
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We like to work with the social change organisations that we
see as the most effective at addressing the cutting edge social
issues of the day. We support organisations working for a better
world through:
Civil rights
Local business
Providing services and employment to the local
community through trading, particularly in areas
of high deprivation.
Local community
Promoting participation in national or local political life,
especially by marginalised people.
Community arts
Working to strengthen bonds and identity in
communities, particularly those deprived of a minimum
standard of well-being and quality of life.
Using the arts to empower communities.
Organisational support
Environment
Providing support or representation for groups working
on the issues described here.
Working for solutions to environmental problems.
Ethical finance
Investing and lending based on financial, social and
environmental criteria.
Global justice
Opposing corporate globalisation and promoting equal
distribution of economic resources.
Providing support to poorer communities in
developing countries.
Peace and conflict resolution
Working towards the elimination of hostility and
violent conflict.
Refugee and minority issues
Health
Working to improve human or animal health and nutrition.
Homelessness
Working to eradicate homelessness and to support
people who lack a fixed, regular and adequate residence.
Human rights
Working to realise the universal rights to which every
person is entitled because they are justified by a
moral standard that stands above the laws of any
individual nation.
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Overseas development
Supporting refugees and minorities or working to
remove the conditions that restrict their civil rights and
tackling discrimination.
Women’s rights
Working to realise the freedoms inherently possessed by
women of all ages, which may be ignored, illegitimately
or institutionally suppressed by law, custom, and
behaviour in a particular society.
Unethical business
By an unethical business we mean one causing damage to
the environment or creating greater inequality; engaged in the
manufacture or sale of armaments, petroleum, cars, pornography,
tobacco, or with a poor human rights or employment rights
record or other activities determined by The Guardian as
unethical from time to time.
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Business of strong benefit to a local area
By a business of strong social benefit to a local area we mean
one that contributes to the sustainable development of its local
area by:
Furthering the sense and practice of local ownership
amongst the people in the area;
Providing local jobs that are reasonably paid and that
contribute to building self-esteem;
Providing a useful local service known to be of need to
the local community and that stands to lead to a better
quality of life for that community;
Building a sense of local community by creating a
positive local identity and breaking down barriers
between different sectors of the community.
Religious organisations
We welcome organisations which are inspired by their faith to
contribute to building a sustainable society or a sustainable
environment, provided that they do not also actively promote
that faith as part of their activities. In addition, we do not
generally work with organisations which benefit only followers
of one particular faith or philosophy, but would consider doing
so if their aim is to provide culturally appropriate support for
an entire community rather than to discriminate in favour of a
particular faith group.
Political parties
We do not have a blanket rule about political parties. We
assess each application from a political party or other political
organisation against our criteria on a case by case basis.
The company should make a brief assessment of every
potential tenant when first starting work with them. This only
needs to extend to a formal assessment if the organisation is
not already known to the company or if there is cause for
doubt that the organisation meets the company’s ethical
criteria for tenancy.
If the potential tenant is not known to the company, or if there
is cause for doubt, an assessment should be made of the
potential tenant’s website, annual report and accounts or
similar documents. References should also be sought from
organisations known to the company.
In the case of doubt remaining, the directors of the company
will collectively be asked for a further opinion on the suitability
of the tenant.
On taking occupancy, tenants must sign a lease that
requires that:
The tenant will on request provide the landlord
with information about the tenant’s aims, activities
and finances.
The tenant will comply with the landlord’s reasonable
ethical regulations as set out in documents such as
the Code(s) of Practice, the company Annual Reports,
Share Issue Prospectuses and other documents
defining the ethical position of the company.
Once tenants move in, the company will request further
information from time to time. In particular tenants must
complete a short questionnaire once a year as part of the
annual Social Accounts.
If tenants are considered to no longer meet the ethical criteria,
action should be taken for their removal either by mutual
agreement or by cause of infringement of the lease.
How the criteria are enforced
Every organisation must supply a web address and a brief
description of their work when they first apply for space. This is
best done through a form that sets out the organisation’s space
requirements, called a ‘basic needs questionnaire’.
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Quintessential 3:
The Code of Practice for the
management of property
We aim to ensure that we always provide and mange property
in accordance with our ethical principles. It is important that
all the terms of this code are broadly met for it to be clear that
property is let on an ethical basis.
Rental discount
The company should aim to set rents at a discount to the
commercial rate. This discount can be measured in two ways:
By comparing the current market commercial rent
for the property on a fully repairing and insuring
basis with the rent charged by the company less
the cost of all services.
By comparing the commercial charges for similar
serviced offices premises in a similar location.
This discount will vary with market conditions, but for
commercial rent it should be no less than 5% and no more
than 30%. For similar serviced offices it should be from 0%
to 10%.
It is good practice to regularly survey comparable premises
and ensure that prices offered are competitive. Lease terms
Lease terms should be at least as favourable to the tenant as
the standard commercial lease, and more so in areas where
the law might be considered unreasonable or weighted heavily
in favour of the landlord.
Leases should be designed to offer tenants long term stability,
predictability of costs and flexibility. Rent rises should be
linked to inflation and/or cost of living increases. The lease
should offer break clauses to the tenant but not the landlord.
Assignment and sub-letting should be allowed so long as
ethical criteria for tenancy can still be enforced.
Quintessentials
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In multiple occupancy buildings, the company should be
responsible for buildings insurance, upkeep of the fabric and
the exterior of the property as well as the communal areas,
major building maintenance and management of the service
charges. These costs should be apportioned equitably
between tenants.
Properties should be managed so that they offer a high
quality of service in terms of security, both on and off the
premises, health and safety, energy and water efficiency,
waste minimisation, green commuting, Internet and
Communications Technology (ICT), and sharing and
co-operation between tenants.
In single occupancy buildings, the tenant may take
responsibility for upkeep of the fabric of the property, but the
company should assist the tenant with this through long term
maintenance planning and a sinking fund.
All properties should meet or exceed legal standards for fire,
security, environmental performance, property and plant
maintenance, cleaning, ventilation, temperature and noise.
Leases should encourage and if possible require tenants to
uphold the company’s ethical principles.
Tenants should be required to complete an annual
questionnaire as laid down in the Reporting Procedures.
Property management
The purpose of the property management service is:
To support tenants in their development as effective
social change organisations, by providing wellmanaged, good quality office space and other facilities
and at an affordable rent, with flexible and supportive
lease and space arrangements.
To seek to foster contact and the sharing of ideas and
resources between tenants and to provide facilities
and services that will strengthen their operations.
Property management should prioritise tenant satisfaction,
and should give full consideration to how to keep tenants fully
satisfied with and supportive of the company.
Communication with tenants
Properties and services should be managed in a manner that
is transparent to tenants and other stakeholders.
The company should keep an open dialogue with tenants at
all times. The property management team should as far as
practicable be available to tenants and tenants issues and
complaints should be promptly dealt with.
One or more common forums should be established in
which tenants can meet and air their views collectively. This
forum should also act as a way to develop the centre and
the services within it, as well as to come to agreement on
property management issues.
To increase the visibility of social change
organisations.
To make our properties sustainable, ecologically
sound and energy efficient, healthy and secure,
accessible to all, and having a positive impact on
the surrounding community.
To support the emergence and development of small
social change organisations.
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Quintessentials
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Quintessential 4:
The Governance Procedures
We aim to ensure that all members of the Ethical Property
family maintain a high standard of governance, transparency
and honesty in their business and manage the business in
a way that safeguards its ethical nature. The Governance
Procedures are broad management guidelines that each
member is expected to strive to meet and to successfully
move towards over time.
Family members should aim to be regarded as leaders in
ethical investment and in delivery of property to the social
change sector.
Code of Corporate Governance
Family members are expected to adopt the principles of
good corporate governance for a public company. The
Guardian will determine if a family member should accord to
the Code of Corporate Governance of the country of the family
member or of another country and this will be specified in the
Ethical Contract.
Threats to ethicality
The key risks to the ethicality of a family member are:
Control
An organisation, individual or group of individuals with
a controlling or influencing interest might push the
company off its ethical path. On the other hand, those
with influence over the company can play as great
a role in safeguarding the company’s ethicality as in
threatening it. No one organisation or individual should
then be allowed to acquire too great a stake in the
company. Maintaining a good relationship with parties
with larger amounts of control can do more to keep
the company on course than knock it off course.
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Mission drift
Communication with shareholders A wide range of factors, in particular staff and board
changes, could lead to a change in the culture of the
organisation and so a drift from the mission over a
period of time. The company should remain true to its
mission at the same time as innovating and pursuing
new opportunities.
All stakeholders should be encouraged to share, understand
and support the company’s values and objectives.
Reputational risk
The company might come to be regarded as unethical,
due to a gradual change in the climate rather than any
change within the company itself. The company should
consider the way it is regarded by the media and the
general public and ensure that that image reflects the
actual values of the company. In particular the company
should ensure that it is not subject to criticisms of
hypocrisy, a lack of transparency, or being regarded as
predominantly a profit making company.
A threat to ethicality is most likely to arise if the company fails
to deliver on its promises. All projections of performance should
then be diligently and prudently considered and consistently
reported in all shareholder prospectuses, annual reports and
marketing materials. Any variations from projected performance
should be carefully anticipated, and fully reported and explained
to all stakeholders at the same time and as early as possible.
Maintenance of a high level of transparency in business and
succession planning is essential to keeping the company on
mission. This transparency is enshrined in the Social Accounts,
which must also remain a key business planning tool rather than
just a report.
Diversity of shareholders
In order that no single shareholder or group of shareholders
acquires undue influence in the company, there should be as
many shareholders in the company as possible. No shareholder
should hold more than 10% of the company. Where possible,
shareholders should be individuals rather than companies or
institutions. The total share capital held by all institutions should
not exceed 40% of share capital.
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All shareholders should be kept well informed about
the company’s plans and performance. The opinion of
shareholders should be sought through AGMs and other
events. All enquiries from shareholders should be dealt with
promptly and consistently.
Every effort should be made to communicate to shareholders
the current value of the shares, and any significant events
that are likely to affect that value or the management of the
company in general.
The Managing Director should consider meeting with large
shareholders on at least an annual basis.
A questionnaire seeking shareholders’ opinion on the
company’s progress towards its objectives should be sent to all
shareholders at least once every five years.
The Board and the Senior Management Team
Keeping the company on mission is the responsibility of
the Board, assisted by the Senior Management Team. The
Managing Director leads the Senior Management Team and is
responsible for making recommendations to the Board.
The Board of the company should consist of both Executive
and Non-Executive Directors. There should be more NonExecutive Directors than Executive Directors on the Board.
Consideration should also be given to whether the NonExecutive Directors are also Independent Directors, as defined
in the Corporate Governance Code, and there should also be
more Independent Directors than Non-Independent Directors
on the Board.
Non-Executive Directors are required to resign and stand for
re-election by rotation at least every three years.
A procedure for planning the succession of the Managing
Director, Chair and other Board members should be in place.
This procedure should identify the key skills these individuals
offer the company and how their replacements would
be selected.
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The Board should at all times be aware of the strengths
and weaknesses within the company and should act swiftly
and appropriately.
It is the Senior Management Team’s responsibility to ensure
that the Board are kept fully informed of the company’s
activities and in particular that the structure, content and
conclusions of the Social Accounts are reviewed annually
by the Directors.
Public relations
There should be clear lines of responsibility within the company
for the production and approval of marketing materials, the
handling of media and other stakeholder enquiries, and
the reviewing of media coverage. All media matters and
stakeholder enquiries should be dealt with promptly, precisely
and consistently. In addition, the board should remain aware of
changes to the media climate for ethical investment, and use of
the term ‘ethical’ in general, and should respond accordingly.
Terms of employment for staff and directors Staff salaries should be at least equal to and preferably higher
than the going rates paid by non-profit organisations for the
post, and where private sector rates are higher, between the
charity rates and the private sector rate.
As a rule, salaries for lower paid posts are lower in the
private sector than the non-profit sector, whereas salaries
for higher paid posts are higher in the private sector than
the non-profit sector.
Respecting the condition above will then reduce the
differential between the highest and lowest paid staff
member in the company.
All staff members should receive an ethical and extensive
benefits package on top of salary, for example:
Most staff should have the option of being on a
permanent contract.
Directors’ shares
All board members should be invited to purchase shares in the
company. However, directors should not trade shares if they
are party to information on company or share performance that
is not available to all shareholders. This is most likely to occur
between the year end and the distribution of the Annual Report
to all shareholders.
For more than three staff: An ethical pension could be
provided, with the employer contributing 6% of salary
on top of pay; annual training allowance; option of a
company bicycle.
For more than 20 staff: The above plus employee
share ownership scheme.
The Staff
Remuneration of Directors
Staff should be encouraged to participate in the strategic
direction of the company. This could be achieved through an
annual strategy day for all staff.
The fee paid to Non-Executive Directors should be modest
and calculated on the basis of six to nine days work a year at
a normal consultancy rate for a non-profit organisation, with 10
to 12 days a year for the Chair.
All staff members, and in particular the more senor staff
members, should understand the company’s values and be
able to apply them. Job descriptions and adverts should
emphasise the need for strong values in staff and directors that
reflect those of the company.
The senior management team should involve senior staff in
decision making processes where appropriate.
Tenants The Senior Management Team should at all times be aware
of tenants’ opinion on the overall strategic direction of the
company and in particular should review and act upon the
annual Social Audit questionnaires submitted.
The company should find ways to keep staff aware of social
change issues.
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Suppliers and partners The company should actively monitor its ethical supply chain
and ensure it uses the most ethical suppliers possible. A ‘best
of sector’ approach should be adopted, i.e. for each kind of
service purchased the most ethical supplier in that category of
service should be identified and used.
All business partners that the company chooses to work with
should as far as possible share the company’s values and any
agreements drawn up with those partners should only commit
the company to a long term relationship with that partner in so
far as it shares the company’s values.
Where the company chooses to form a closer link to any
particular organisation, for example through a joint venture or
similar arrangement, it should be considered to what extent the
organisation meets the requirements of the Quintessentials.
Banks are likely to be the company’s most important
suppliers. Where possible, borrowing should be undertaken
from the bank with the strongest ethical policies and with a
management philosophy most similar to that of the company.
A diversified borrowing should also be considered in order to
reduce dependency on any one bank.
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Quintessentials
Quintessential 5:
The Reporting Procedures
We want to ensure that members of the Ethical Property family
report openly and transparently to stakeholders on whether or
not they have adhered to the objectives of the Quintessentials.
The Reporting Procedures determine how company activities
and performance are reported in the Social Accounts. It is
essential that all members produce Social Accounts, which
should be included as part of the annual report and financial
statements. Any prospectus and any other materials produced
should also accord with the Reporting Procedures.
Once a quantified indicator is in place, it is possible to devise
a quantified target. A numerical target should be used where
possible. Targets can be based both on improvements in the
company’s past performance, on targets set by recognised
external bodies or on targets devised and set by The Guardian.
Targets should be regularly updated and improved in relation to
changes in society as a whole.
In some cases both ‘Best Practice’ and ‘Satisfactory’ targets
are given for individual centres. As a guide, all centres should
be within ‘Satisfactory’ targets and more than 50% within
‘Best Practice’ targets. Anything below ‘Satisfactory’ requires
immediate explanation and action to address the problem.
The Social Accounts
Recognising and overcoming failure is a central part of the
business planning process. The Social Accounts should highlight
all areas of failure as well as all areas of success. Strategies for
overcoming areas of failure should be devised and reported.
Every effort should be made by a family member to meet the
targets specified below.
Every family member should undertake an external, independent
audit of its Social Accounts within five years of the founding of
the company.
Indicators and targets
An indicator should be devised for every aspect of the
company’s social, environmental and financial performance.
Each indicator should be used to demonstrate the company’s
performance in the Social Accounts.
The format of the report should follow that prescribed by The
Guardian. Currently, the reporting format is set by the report of
the Ethical Property Company in the UK. Means of reporting
new areas of work not covered here should be devised and
discussed with The Guardian.
Performance compared to all targets should be clearly stated in
the Social Audit and reasons for not meeting the targets should
be explained.
Both quantitative and qualitative reports should clearly set out
the aims of the company in the area reported, to what extent
they have been achieved, where and why the company has
failed to achieve them, and how this will be improved upon in
the following year.
The areas that should be reported on, and the indicators and
targets that should be used, are as follows:
Where it is not possible to devise a meaningful quantitative
indicator, a qualitative report should be provided. A quantified
indicator is preferable to a qualitative one and where a qualitative
indicator is used consideration should be given to devising a
quantified indicator at a later date.
28
Quintessentials
29
Area to be reported
Indicator that should be reported on
Target
Full list of all tenants with a short
description of what they do
Adherence to ethical criteria
100% adherence
Composition of the board
Age, ethnicity and gender of board.
Number of executive and nonexecutive directors.
More non-executive than executive directors and more independent than
non-independent directors
Ratio of salary of highest to
lowest paid worker
The ratio
If under 100 employees: Under 5:1.
Employee rights and
benefits offered
Pension provided.
6% employer pension contribution.
Permanent contracts.
100% of staff.
Holidays allowed.
Minimum 25 days a year in addition to statutory holidays.
Employee share ownership.
5% of retained profits for the year distributed as shares to employees.
Over 20 staff: % male/female.
50/50.
For the company
Equal opportunities performance
If under 20 employees: Under 4:1
Over 100 staff: Ethnic distribution.
Means of travel to work
Means of travel during
work hours
% travelling by car alone, car share,
bike, walking and public transport
0% by car, moped or park and ride
% of trips made by above means
and also by plane
0% car and plane travel
Works undertaken
A five year plan covering works required to ensure that any building:
Satisfactory target: 5%
Satisfactory target: 5%
The property portfolio
Renovation, improvement
and major maintenance
works to improve
environmental performance
Meets the operational performance targets detailed below for
energy, water use, carbon emissions, waste and recycling and
means of travel to work.
Uses materials that are non-polluting, certified, sustainably
sourced and natural.
Encourages health and well-being
Uses passive building systems as opposed to mechanical or
electrical ones
30
Quintessentials
Area to be reported
Target
Environmental improvements
Works undertaken
A five year plan covering works required to improve environmental
performance of the properties.
Renovation, improvement and
Works undertaken
major maintenance works to improve
disability and general access
A five year plan covering works required to ensure that any renovation
allows easy access to the building for all members of society, not only
those with a disability.
Choice of electricity, gas or
water supplier
The choice of supplier should be determined by the carbon emissions
from the supplier’s overall mix of fuel sources, not the stated mix for one
individual tariff.
Name and carbon emissions of
chosen supplier
Once the supplier with the lowest emissions is chosen, the tariff of that
supplier with the lowest emissions should be used if possible.
Where a tariff is more than 10% more expensive than other tariffs, the
tariff with the next lowest emissions can be used.
Electricity and gas use
Both total energy consumption and
consumption per square metre of
floor area per year, in Kilowatt hours
120 (One hundred and twenty)
In a ‘normal’ gas heated building, this is likely to be 60 for gas and 60 for
electricity.
Total energy use of 170 (one hundred and seventy) is considered a
satisfactory target for one centre.
Targets are for the year 2006 but should be reduced by 3.5% every year
thereafter.
Generation of renewable energy
Both total energy generated and
generation per square metre of floor
area per year, in Kilowatt hours
10% of energy consumed should be generated by the company from
renewable sources.
Carbon dioxide emissions
Kg of carbon dioxide per square
metre of floor area per year
11.1 (eleven point one).
This target is based on a target of 60 for gas and all electricity being
purchased from 100% renewable sources.
Where electricity is purchased from renewable sources, the percentage
of the supply which is NOT from renewables should be included in these
calculations. Renewable sources are energy from wind, solar photovoltaic,
solar thermal, organically grown locally produced biomass and hydro.
Targets are for the year 2006 but should be reduced by 3.5% every
year thereafter.
The 11.1 carbon dioxide target is equivalent to a 3.0 carbon target, using
a conversion factor of 3.666.
Carbon dioxide emissions of 16 (sixteen) are considered a satisfactory
target for one centre.
32
Quintessentials
33
Area to be reported
Target
Water recycling and use
Litres per person per day
8 (Eight)
15 (fifteen) is considered a satisfactory target for one centre.
A full range of water-saving and water recycling measures should be
installed – namely either waterless urinals, or cistermisers on standard
urinals, rain/grey-water harvesting, dual-flush toilets (4 litre/2litre), lowflow showers (6 litres a minute), energy-efficient (Grade A) dishwashers,
and spray taps.
Waste and recycling
Reduction or re-use of consumption
of disposable items.Recycling all
recyclable items, including water
100% of what can be recycled is recycled
Their areas of work by issue
Issue areas into which tenants can
be classified are specified
Even distribution of issues
The type of organisation
Charity, non-profit, cooperative or
trading organisation.
Even distribution of type
Their size
Annual turnover
20% of tenants with income under £50,000 (€50,000) a year.
The tenants
Number of tenants
75% of tenants with income under £500,000 (€500,000) a year.
Their means of travel to work
Their means of travel during
business hours
% travelling by car alone, car share,
bike, walking and public transport
Less than 5% of all tenants travel by car, moped or park and ride.
% of trips made by above means
and also by plane
Less than 5% of trips made by car travel, moped or park and ride.
The satisfactory target is 20%
Less than 5% of trips made by plane.
The satisfactory target is 20%
Social measures
Investment in deprived areas
34
Government index of poverty area
by area
50% of centres in poorest 25% of areas
100% of centres in poorest 50%
Quintessentials
35
Area to be reported
Target
Questionnaire (in standard agreed
format) with 1 to 5 score
4 or more
With the communal services
and facilities
Questionnaire with 1 to 5 score
4 or more
With overall management of
the centre
With the fora for common
discussion provided
With the rental charges
Tenant satisfaction
With the quality of office space
3 or above is considered satisfactory for one centre
4 or more
4 or more
4 or more
With the opportunities for sharing
and the support services
With the improvement of the
visibility of the tenants
With the impact of being located
in an Ethical Property centre
in terms of fulfilling a tenant’s
strategic objectives
With the extent to which
tenancy supports a tenant’s
day to day operations
With the extent that the Ethical
Property Company’s practices
are consistent with the values
it proclaims
36
4 or more
4 or more
4 or more
4 or more
4 or more
Quintessentials
37
Area to be reported
Target
Dividends
Actual dividend as a % of forecast
dividend
100% or more
Net asset value per share
Shareholders’ funds divided by
shares in issue
A steady increase over time.
Dividend waivers
Percentage of shares on which
dividends are waived
10% or more
Volume of share trading
% of shares presented for sale that
were sold within 6 months
100%
Liquidity of shares
The percentage of shares presented
for sale in the year that were sold.
Thus if all shareswere sold by the
year end, liquidity would be 100%.
If there are sellers on the market at
the year end, liquidity is less than
100%, whereas if there are buyers
on the market liquidity is over 100%.
90%
Spending on repairs and
maintenance
% of rent spend on repairs and
maintenance, including depreciation
10% or more of rental income
Empty space and lost rent
Number of ‘square metre months’
for which no rent was received
for the year, as a percentage of
the total ‘square metre months’
in a year.
Under 2% a year
Property values
Increase over book cost
A steady increase over time.
Return on all property investment
Rental income after maintenance
and insurance costs divided by
book cost
More than 7%
Rental levels and discounts
1. The commercial rent for
the property
10% to 30% discount when comparing like with like
2. The commercial charges for
similar serviced offices premises
for non-profit organisations in a
similar location.
The same or less, when comparing like with like
Financial performance
38
Additional capital expenditure as required to adequately maintain
each property
Quintessentials
39
The role of The Guardian
The organisation entrusted with protecting the Ethical Property
name is termed The Guardian.
The applicant must also sign the Ethical Contract in which it
undertakes to abide by the Quintessentials, and recognises
that it can lose the right to use the Ethical Property name and
logo if it does not.
The role of The Guardian is to ensure that the members of the
Ethical Property family exercise their responsibilities effectively
and efficiently. The Guardian will notify any family member of a
breach of the Quintessentials and will take appropriate action
should a breach of the Quintessentials not be remedied within
a suitable period of time.
In addition to signing the Ethical Contract, the family member
will need to sign a Statement of Undertaking that it will adhere
to the Quintessentials. This statement may allow the family
member to be temporarily exempted from meeting certain
parts of the Quintessentials for a specified period of time, if so
agreed with The Guardian.
The appointed Guardian is currently The Ethical Property
Company in the UK, although it is expected that the company
will exercise its authority in a collaborative manner with other
family members.
Enforcing the Quintessentials
At a later date it is envisaged that as the family grows a new
organisation, Ethical Property International, will be created to
fulfil The Guardian role. This organisation would be governed
by a board that represents all the family members.
Joining the Ethical Property family
Any organisation wishing to join the Ethical Property family
must apply to The Guardian. In order to become a member
of the family, that organisation must make a commitment to
adhere to the Quintessentials in its articles. The following text,
or a similar text approved by The Guardian, should be included
in the articles:
Each family member will be expected to seek advice from
The Guardian in the planning of its business. In addition, the
documentation such as the Annual Report produced by that
member will be reviewed by The Guardian and any issues
arising will be raised with the member’s Board.
In the case of more difficult issues, The Guardian will work
with the member to try to find a way to improve performance.
If, and only if, it is felt that the member is unable and unwilling
to resolve the issues and improve performance, and if that
under-performance is considered damaging to the Ethical
Property name, then The Guardian may choose to consider
the Quintessentials breached. Under these circumstances, The
Guardian will withdraw from the member the right to use the
Ethical Property logo, company name and domain name.
“The Board of Directors of the company will manage the
Company in accordance with the Quintessentials. The
Quintessentials, as amended from time to time, contain
management principles, policies and practices relating to
shared financial, social and environmental objectives adhered
to by all members of the Ethical Property family.”
40
Quintessentials
41
The Hard Commitments
The Ethical Property family
In the Ethical contract, certain undertakings in the Quintessentials are
regarded as Hard Commitments. Whilst The Guardian would expect
most breaches to be remedied within 18 months, the Hard Commitments
should be remedied within three months. The Hard Commitments are:
Ethical Property is an international family of organisations
working together with the common aim of supporting the
social change movement by making better use of property
for society and the environment.
Paying a dividend each year;
Establish a mechanism for the trading of shares in the company
of the Family Member;
Letting to ethical businesses;
Not renting at a premium to the market rent;
Establishing a common forum in which representatives of the
tenants can regularly meet with representatives of the company
Revealing to shareholders, within a suitable time frame, any
matter having a significant impact on the running of the business
We achieve this by providing well managed office space
at an affordable rent and on flexible terms; by making our
properties as ecologically friendly and accessible as possible;
by providing services such as IT and training that helps social
change organisations to grow; by providing property advice
services that as far as possible are free at the point of
delivery; and by fostering the sharing of ideas and
resources between organisations.
Ethical Property Company Ltd
The Old Music Hall
106-108 Cowley Road
Oxford OX4 1JE
www.ethicalproperty.co.uk
Keeping the Quintessentials up to date
Ethical Property Foundation
Development House
56-64 Leonard St
London
EC2A 4LT
www.ethicalproperty.org.uk
The Quintessentials can from time to time be varied or updated where
it is felt that this further develops the Ethical Property family’s aims and
objectives. Members of the family can propose amendments to the
Quintessentials though the final decision lies with The Guardian.
Ethical Property Europe
Mundo-b Rue d’Edimbourg 26 1050 Brussels
www.ethicalproperty.eu
Any changes to the Quintessentials will be posted to the website of all
family members within two weeks of them being agreed. In addition,
shareholders of all family members will be notified of any changes to the
Quintessentials once a year as part of the notification of the AGM.
Ethical IT
The Old Music Hall
106-108 Cowley Road
Oxford OX4 1JE
www.ethicalit.net
Producing an annual Social Audit Report that meets the
Reporting Requirements.
Étic Foncièrement Responsable
24 rue Robert Desnos
69120 Vaulx-en-Velin
www.etic.co
Ethical Property Nederland
The Hub Amsterdam
Westerstraat 187
1015 MA Amsterdam
42
Quintessentials
43
Our values
Our values are based on four fundamental principles:
Creation of an equal and just society
We believe in treating all people equally and with respect. We
work to remove all access barriers to our properties, to the
services provided by us and by our tenants, to the jobs we
offer, and to investment in the company. We aim to overcome
colour, gender, class and other barriers by ensuring that all
sectors of society can participate equally in what we offer
and who we employ. We aim to overcome wealth barriers
by ensuring that our services remain affordable, within the
constraints of our business model.
My needs, and maybe those of
many like me, are NOT to invest
in renewable and ethical and
green projects. My needs are to
invest in honesty, justice, health
and fair play.
– Ethical Property shareholder, Gloucestershire
Creation of a sustainable society
We believe in encouraging behaviour and building both
physical and social structures that lead to a sustainable lifestyle
with a positive environmental impact and that uses only our fair
share of the planet’s resources.
Embedding values in business and in society as a whole
We believe that every action we take and decision we make as
a business should be based on the triple bottom line of PeoplePlanet-Profit, reflecting the values we aspire to, not just the
financial return. Complete transparency and honesty allows us
to identify issues, address them, control ethical performance
and celebrate real success. In this, we want to see ourselves as
an example for others to follow.
Creating positive communities
We believe that the world’s problems are better solved by
people working together than alone, and that living in a positive
community leads to a happier and more fulfilling life.
44
Quintessentials

Quintessentials

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