Artis REIT 2018 Environment Social Governance Report

Environment
Social &
Governance

2018
Report

Concorde Corporate Centre, Toronto, ON

Message from the President & Chief Executive Officer

At Artis, we have always valued corporate sustainability, and are pleased to release our fourth annual report. This year, we are expanding our report to include valuable information on our social and governance practices as well as continuing to report on our environmental progress. Our hope is that this expanded report will provide a more comprehensive overview of our values and commitment to improving in all areas of our business.

As one of Canada's most prominent landlords, we are responsible for setting a high standard of sustainable practices and demonstrating the importance of environmental care and protection for our investors, tenants, employees and communities. We create a culture that values and prioritizes the environment, and consider it our mandate to invest in, develop and manage buildings in an environmentally prudent and resource efficient manner. As one of our core values, we believe that promoting and investing in environmentally sustainable assets is in the best interests of all of our stakeholders.

We value three globally recognized programs, LEED®, BOMA BEST and Energy Star. We consider certification by one or more of these programs integral to our asset investment and management strategy. This year we teamed up with GRESB to track, monitor and rank our progress in environmental, social and governance practices. We look forward to sharing our results with you in the years to come.

Socially, we seek to foster positive relationships with employees, tenants and the communities in which we operate. We are committed to creating a diverse, inclusive and safe work environment. Employees make meaningful contributions to local charities through fundraising activities and by volunteering their time. Our active social committee and health and wellness committee provide opportunities for social engagement and an array of valuable information on health and wellness. This focus on a positive culture in the workplace and strong community relationships fosters an environment that is conducive to an engaged and dedicated workforce.

Our Board endeavours to continuously review and improve our governance practices to better align with industry best practices. In 2017, the Board's Governance and Compensation committee conducted a widespread unitholder outreach campaign that focused on engaging in open and active dialogue with unitholders to elicit input and feedback. As a result, in 2018, a number of new policies were implemented that are described in more detail later in this report.

Sustainable and responsible environmental, social and governance practices will continue to be a focus at Artis. We continue to demonstrate our commitment to these practices, which support the long-term success and efficiency of our assets and help the company to attract and retain the best tenants and employees. I look forward to sharing our progress and the results of our environmental, social and governance initiatives throughout the year.

Armin Martens
Armin Martens, P.Eng., MBA
President & C.E.O.

Environmental Objectives

Overall Performance

Practice dedication and commitment to the highest standard of environmental responsibility as it relates to the acquisition of assets, development and redevelopment projects and the ongoing management of the portfolio.

Strive to Improve

Perform continuous review and analysis of building efficiency to assess and adopt best practices, policies and procedures. Utilize leading edge technologies where possible, including in the modernization of older buildings.

Be Transparent

Implement systems to measure progress, keep tenants informed of sustainability initiatives and report results to stakeholders and the community.

Promote Comfort & Safety

Strive to provide a clean environment and attentive building management at all of its properties and offices.

Conserve Energy

Monitor and continuously make efficiency improvements at properties and work with tenants to facilitate their energy conservation needs, contributing to lowered emissions and reduced energy use.
 

While Artis continually improves its properties to enhance the tenant experience, management always looks to do so in a way that will reduce the building's environmental footprint over the long term. Many of Artis' continuous improvement initiatives focus on sustainability and energy reduction strategies to ensure buildings are as efficient as possible. As buildings are upgraded and equipment is replaced, it is done with technology that promotes energy efficiency and best practices.

Concorde Corporate Centre, Toronto, ON

Preferred Environmental Programs

Artis is committed to mitigating the impact of our operations on the environment, minimizing its carbon footprint and promoting the use of energy efficient tenant practices in its buildings. We value energy certification and consider it an asset, both with respect to our existing portfolio and when acquiring new properties. The three major property certifications we pursue are:

LEED

LEED
Leadership in Energy & Environmental Design

LEED or Leadership in Energy & Environmental Design is a green building tool that addresses the entire building lifecycle, recognizing best-in-class building strategies.

Energy Star

Energy Star

Energy Star is a voluntary U.S. Environmental Protection Agency (EPA) program that certifies buildings in the U.S. for superior energy performance.

BOMA Best

BOMA Best
Building Owners and Managers Association Building Environmental Standards

BOMA or the Building Owners and Managers Association promotes energy efficiency and sustainability for new and existing buildings by assigning certification levels based on achievement of energy targets.

Measured Performance

Total like-for-like electricity comsumption

Electricity Consumption

142M ekWh
in 2018, down 3.0% vs. 146M ekWh in 2017

Total like-for-like water consumption

Water Consumption

437K m3
in 2018, down 2.0% vs. 445K m3 in 2017

Total like-for-like ghg emissions

GHG Emissions

59,210 tCO2
in 2018, down 1.0% vs. 59,640 tCO2 in 2017

Certified Properties
3,391,547
square feet of properties with LEED certification
3,252,116
square feet of properties with Energy Star certification
4,588,740
square feet of properties with Boma BEST certification

Millwright Buidling, Minneapolis, MN

Social Objectives

  • Ensure the well-being and safety of employees
  • Support charitable organizations in the communities in which we operate
  • Promote equal opportunities for men and women at every level
  • Promote diversity in the workplace
  • Encourage employee engagement through surveys, health and wellness training, continuing education and more

Artis takes pride in its people and its properties, recognizing that success is made possible by great people and great assets. With a total of 225 employees, (184 of which are based in Canada and 41 of which are based in the U.S.), the REIT depends on a healthy, diverse and productive culture to achieve its business objectives.

Training, continuing education and professional development at every level is key to the company's growth and continued success. Each full-time employee is entitled to an annual education budget to use for attending courses, conferences and for general professional development endeavours. In 2018, 41% of employees were approved and attended courses or conferences to further their education and professional development.

Safety is a priority for all Artis employees, tenants and contractors in all regions and properties. Artis supports and complies with all regional public agencies dedicated to the prevention of workplace injury and illness. For example, at the head office in Winnipeg, in compliance with Safe Manitoba, Artis has a workplace safety and health committee, which consists of both employer and worker members. This committee meets quarterly to identify risks and take action on any unsafe practices identified. Meetings are well attended, and have resulted in a safer work environment. Safety concerns are not unique to head office, and measures and policies are implemented across all locations to ensure consistency and safety for all.

Giving back to the community is a core value for Artis. Fundraising efforts return long-lasting benefits to society, employees and the REIT. Artis supports a number of charitable organizations through donation of time and financial resources and through creative employee fundraising initiatives. In 2018, over $6,500 was raised by various employee fundraising initiatives, and distributed to nine charitable organizations both local and national.

Artis strives to promote a fun and inclusive corporate culture. The dedicated social committee and health and wellness committee plan a variety of social events, lunch-and-learn education sessions, fitness classes, wellness challenges, employee potluck lunches and more throughout each year. The company recognizes Millwright Building, Minneapolis, MN that a rewarding, fun and positive environment helps to attract and retain the best people.

In addition to these efforts, the company provides a competitive and fair compensation and benefits package, as well as programs such as a transit subsidy, one paid day off per year per employee to volunteer at a charitable organization of the employee's choice, office recycling, e-waste day, school supply donation drives and hazardous material pick-up events that create a culture of sustainability in our workplaces and at our properties.

Staff volunteered 230 hours of their time to organizations they are passionate about!

Blood donation
Christmas Show Boxes for Kids
Volunteering for Siloam Mission
Volunteering for Winnipeg Harvest
Dress For A Cause

of employees who responded to a 2018 engagement survey...

100%
feel comfortable providing feedback to their supervisor
100%
would refer a friend or family member to work at Artis
80%
would reapply for their current job

Two MarketPointe, Bloomington, MN

Governance Objectives

In addition to the objectives set forth in the Board of Trustees Mandate, Artis' Board continuously discusses the vision and long-term strategic direction of Artis and considers corporate governance and compensation changes to better align the REIT with industry best practices.

Additional information on Artis' governance practices can be found in Artis' management information circulars that are prepared in connection with the annual meeting(s) of unitholders. The circular is available on Artis' website at www.artisreit.com or on SEDAR at www.sedar.com. A paper copy can also be requested by contacting Artis REIT at 600-220 Portage Avenue, Winnipeg, Manitoba R3C 0A5, Attention: Investor Relations or by emailing .

Governance

Artis' Board recently conducted a comprehensive strategic review of corporate governance practices and executive compensation to better align the REIT with industry best practices. As part of this review, Artis' Governance and Compensation Committee conducted a widespread unitholder outreach campaign that focused on engaging in open and active dialogue with unitholders to elicit input and feedback. As a result of this review, the Board approved the following policies and initiatives:

  • a diversity policy which requires that, no later than the 2020 annual general meeting, at least 20% of the Trustees are female, a target which was achieved at the 2018 Annual General Meeting;
  • a board renewal policy pursuant to which one trustee did not stand for re-election at the 2018 Annual General Meeting, and three new trustees were elected;
  • the introduction of performance-based compensation for executives, which will be subject to objectively measurable criteria, commencing in the 2018 fiscal year;
  • the adoption of a policy that requires employment contracts for new executives joining Artis or one of its subsidiaries to contain a "double-trigger" provision in the event of a "change of control" with a maximum severance multiplier of 2.0 of base salary and bonuses; and
  • the submission to unitholders of a non-binding "say on pay" vote on an annual basis, commencing no later than Artis' 2019 annual general meeting with respect to compensation practices for the 2018 year.

The Trustees continue to discuss the vision and long-term strategic direction of Artis and the important oversight role that the Board plays, and to consider corporate governance and compensation changes to better align with industry best practices.

2018 Progress Report
Elected two female trustees, achieving the target of 20% female representation
Elected three new trustees
Introduced performance-based compensation for executives
Adopted a policy requiring that new executive employment contracts contain a "double-trigger" provision in the event of a change of control
"Say on pay" advisory vota commencing at the 2019 Annual General Meeting

Female Representation

20%

Board
32%

Senior Management
43%

Supervisors and Managers
50%

Entire Workforce