ESG

With ESG taking on increased importance globally, the S (social) dimension of ESG has received considerable attention recently. This reflects the need to prioritise the health and well-being of staff and customers, as well as supply chain issues, and equity and diversity issues in the workplace. This article highlights these issues and the major initiatives in the S space now being actively implemented by the real estate industry in Australia and Asia.

Doing ESG Well

Importantly, the real estate industry has clearly recognised the importance of ESG in their activities. This mandate has moved on from “doing ESG” to “doing ESG well”. This sees the ESG agenda actively promoted by the professional organisations in the real estate industry in our area; this includes APREA, ANREV and the Property Council of Australia; check their websites for fuller details.

Specifically concerning the S dimension of ESG, this covers a range of social aspects needed for effective businesses today. This includes staffing aspects, concerning equity, diversity and inclusion issues such as gender equality and cultural diversity to address under-represented groups at all levels in the organisation (ie: staff, senior management, board), as well as staff turnover, retention and pay. Wellness and well-being have also been a focus, around issues such as safe workplaces and staff mental health (particularly during COVID). Many organisations have also developed supply chain codes of conduct, with aspects such as modern slavery issues and fair pay being critically important. This sees many real estate companies giving their historic performance metrics to show they are moving forward in the delivery of these S issues.

All of these S activities are important, as they now play a key role in real estate funds’ decisions on whether to invest in these real estate companies, as well as the real estate companies showing a strong commitment to ESG. This is essential for investors today as ESG takes on increased importance at all levels in our communities. Companies clearly face the risk of being excluded from these investment mandates if they do not actively address these ESG issues.

Examples and Best Practices

There are many examples in the real estate industry in Australia and Asia who are world leaders in ESG, as recognised by all of the ESG benchmarks from the various international ESG rating agencies. These real estate exemplars include Stockland, Dexus, Mirvac, GPT and Lendlease in Australia, and CDL and CapitaLand in Singapore. They produce highly informative annual ESG reports which are available on their websites, which clearly highlight how they deliver the S dimension in ESG, with many exciting examples and delivery metrics. I have only given a few examples here; many others are also actively involved in this area; check their websites for fuller details. All of these examples are relevant to both those well progressed in the ESG process and those only just starting out. They will give you lots of ideas on how you can achieve your ESG “best practice” mandate; particularly concerning the S dimension of ESG.

I recently did a report for Investment Property Forum in the UK regarding ESG benchmarks in real estate investment. Using 60 interviews with global leaders in ESG, it gave a fuller international context to ESG in real estate, as well as identifying the priorities and challenges for delivering ESG. There were some amazing examples globally. We found that generally  Australia and Europe were the leaders, with Asia needing to catch-up in their delivery of ESG. Also read some of the excellent ESG reports produced by the leading real estate advisory groups (eg: CBRE, JLL); many have a strong Asia context and Asia case-studies.                                                                  

As more real estate companies begin or expand their ESG journey, it is important to have benchmarks and “best practice” role models for what is being achieved. There are many examples in the real estate industry in Australia and Asia (indicated above) who are world leaders in the ESG space. I strongly recommend you review their ESG reports on their websites for a fuller understanding of what can be achieved by your company. Enjoy your ESG journey and your increased focus on the S issues in delivering your ESG mandate.

In future articles, I will drill into more specifics about how to effectively deliver your S agenda in ESG.

Professor Graeme Newell

Professor of Property Investment
Western Sydney University ×

Professor Graeme Newell

Professor of Property Investment
Western Sydney University

Professor Graeme Newell is Professor of Property Investment at Western Sydney University. He has over 40 years’ experience in property education and research, having received numerous research grants and his applied research has been published widely. Graeme has strong links to the property industry, both in Australia and internationally. He has been a member of APREA for many years and has done several research reports for APREA concerning Asia REITs, and the significance of real estate in Asian pension funds.

This guide addresses how the developing issue of Business and Human Rights (BHR) affects property ownership and management industries. Addressing BHR is a way to strengthen cultures of respect, dignity and ethics within our member organizations and mitigate risk.

This Guide provides an overview of the key BHR concepts drawn from the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the Organization for Economic Co-operation and Development Guidelines for Multinational Enterprises (OECD Guidelines). It then applies these concepts to property ownership and management before setting out how to incorporate BHR concerns into your operations. Finally, the appendices provide examples for due diligence and contractual provisions.

Understanding the core

As human beings, we are curious by nature. If you reflect on your choices, profession, passion, you will realize that you resonate with the idea at its very core. It is observed that we are able to respond and perform better when we connect with the thought, concept of what we are doing. When an organization formulates its business strategy, it is always aligned with the vision of the organization. Similarly, it is important that ESG and sustainability are factored in the vision of the organization. It is only when ESG and sustainability as a concept resonate with the organization’s values and its people, they will succeed and have the desired impact.

At IndInfravit, we have attempted to engrain ESG in our DNA. But before doing that we reflected on our business objectives, the ecosystem, our culture and our vision. As an organization, we are continually striving to achieve and maintain the highest quality standards in the operations and maintenance of projects throughout their concessionary term while incorporating environmental and social considerations important for long term survival of business. Being a key player in the infrastructure space, we are cognizant of the impact we have on the overall ecosystem – economy, environment, society and community at large. It has been our endeavour to create a positive impact on the business neighbourhood, environment and the country as a whole. We acknowledge that to drive this, it is important to engage with our stakeholders, work cohesively and hold ourselves accountable. We strongly believe that our ability to take decisions which create a positive impact on the ecosystem forms the very core of sustainability. Imbibing ESG into our business strategy, thus seemed a perfect choice.

Walk the talk

Once you have identified the reason, the next step is to identify specific initiatives and design a framework to drive the ESG agenda. The initiatives could range from implementing solutions, which are readily available, to solutions, which might require innovation and brainstorming. Another important aspect is the oversight and governance around ESG. Typically, an ESG committee comprising of the CXO’s/BODs would augur well for driving ESG related initiatives. Commitment from all stakeholders is essential to ensure that the ESG agenda is implemented in spirit.

At IndInfravit, we have undertaken various initiatives to streamline our GHG emissions. We are in the process of integrating low-carbon energy sources for our operational usage which would significantly reduce our carbon footprint. We have an integrated approach of tolling system operated by solar energy. We have also undertaken the process of conversion of HPSV lamps to LED lights.

We are committed towards lowering our environmental footprint as well as implementing resource- saving practices along the whole value chain. Drip irrigation, ground-water recharge, tracking and measuring pollution, migrating to greener fuels, using green DG sets are some of the initiatives implemented in this regard. We are working towards continual improvement in workforce strategy, terms of employment and employee benefits.

From an implementation and oversight perspective, we have developed an implementation strategy, which penetrates right to the Project Head level. Our aim was to empower our Project Heads to run the initiatives on ground, then have our SBU heads review the pace of implementation and eventually have these dovetail to the CXO’s office for continuous oversight and direction.

I would like to conclude by saying that eventually it is our responsibility to embrace sustainability and pass on to our generations a planet, they can cherish, a way of life that will sustain.

Pawan Kant

Chief Executive Officer
LTIDPL IndVIT Services Ltd
(Investment Manager to the IndInfravit Trust) ×

Mr. Pawan Kant

Chief Executive Officer
LTIDPL IndVIT Services Ltd
(Investment Manager to the IndInfravit Trust)

Mr. Pawan Kant is an Infrastructure & Engineering professional with over 3 decade experience in executing and management of large infrastructure projects including on PPP basis. His areas of expertise besides P&L are Project Execution, Operations and Management, M&A, Bidding, Commercial & Contracts etc. He has worked on large projects in India and Overseas. He has worked with the House of Tata’s besides experience of other domestic and international corporates such as Kalpataru Power Transmission Limited, Singapore Technologies, Hindustan Construction Company Limited, Great Eastern Shipping, etc. He has worked on Roads and Highways, Industrial Park, SEZs, Power Transmission, Townships, etc.

He was also instrumental in successfully executing India’s first integrated project on Relationship Contract model (Alliance Contracts); the largest logistics project in SE Asia, multiproduct SEZ in India, Highway etc. He has also worked on initiatives of World Economic Forum.

As CEO of Investment Manager to the IndInfravit platform, he is responsible for management and growth of the assets under the portfolio. IndInfravit Trust is India’s foremost Public Listed Privately held platform. It owns and operates 13 highway projects accumulating 5000 kms length. Globally renowned long-term Investors – CPPIB India Advisors Private Limited, Allianz Capital Partners GmbH & OMERS Infrastructure Europe Limited are Key Investors into the platform.

BOMA’s latest guide offers practical guidance for operations managers while connecting the data collection practices for operational management and efficiency with corporate portfolio risk management.

We already collect much of what we need to understand our risk exposures, providing an auditable trail of evidence for routine filings and declarations of how the property portfolio is affected by climate change and other contextual trends.

Critically, it allows us to focus on what we can control: our operations.

We can know and manage how a failure in the power supply will affect us, and therefore what we must do to ensure that our tenants and we can continue to operate effectively. It is the underlying concept behind operational resilience: safe-to-fail.

It builds confidence and value in the market, distinguishing properties that can support continued operations over those that fail. When we view our properties through an operational resilience lens, many opportunities present themselves in cost and risk reduction while enhancing operating efficiencies and value.

This guide was originally published in https://www.boma.org/

The Asia Pacific data centre market is one of the fastest developing regions and is on track to become the world’s largest over the next decade. Explosive growth in data centre demand across the region, however, has deepened the sector’s environmental impact.

Leaders in the data centre industry have responded by becoming powerful voices for sustainable change and as per a recent webinar on Data Centres in Australia Driving the Sustainability Agenda, they are interested more in collaborating than competing and agree that newer standards and gauges can unlock the next green wave of impact and value.

Data centres have traditionally relied on Power Usage Efficiency (PUE) as the sustainability metric of choice. While substantial improvements in PUE standards have been made over the years, measuring PUE alone fails to capture the full environmental impact of data centres.

In this report, we explore how PUE, in combination with Water Usage Efficiency (WUE) and Carbon Usage Effectiveness (CUE) can form a more holistic measure of sustainability performance.

This report was originally published in https://www.cushmanwakefield.com/en/insights/a-new-trinity-for-measuring-data-centre-sustainability

AEW published a research report on climate risk. The report, authored by Hans Vrensen, Head of Research & Strategy, explores how physical climate change, in particular river floods and rising sea levels, will impact European real estate returns, and the importance of a proactive investment approach.

This report sets out MAS’ strategy on climate resilience and environmental sustainability to strengthen the resilience of Singapore’s financial sector to environmental risks, develop a vibrant green finance ecosystem, build a climate-resilient reserves portfolio, and incorporate sustainable practices.

This report was originally published in https://www.mas.gov.sg/publications/sustainability-report/2022/sustainability-report-2021-2022

Landmark research from Global Reporting Initiative (GRI) and the National University of Singapore (NUS) Business School has, for the first time, shed light on how companies in the ASEAN region are addressing their obligations for climate-related reporting.

Analysis of the top 100 largest listed companies in six Southeast Asian nations – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – finds 70% (420 companies) published climate-related disclosures in 2020/2021. Climate Reporting in ASEAN: State of Corporate Practices analyzes those 420 businesses, focusing on their approach to reporting, materiality, risks and opportunities, governance, strategy, targets, and performance.

Key findings of the research include:

• Most of the companies (84%) report their material topics on climate change, yet only one quarter (26%) describe long-term factors related to their climate risk strategy;
• 62% of companies disclose their greenhouse gas emissions (ranging from 5% in Vietnam to 80% in the Philippines);
• A majority of businesses (56%) identify climate-related opportunities, compared with less than half (47%) sharing plans on risk mitigation;
• Three-in-four companies (74%) disclose metrics on climate-related performance, however, 46% do not share how targets are discussed;
• Two-third (68%) assign climate responsibilities to a sub-committee, while 8% link management remuneration to climate

In terms of climate reporting:

• A significant majority of sampled companies (85%) use the GRI Standards, ranging from Singapore (99%) to Vietnam (65%);
• In the six markets, reporting using other frameworks is low: 19% use TCFD, 16% apply IIRC, and 14% use SASB;
• At 76%, reporting on the Sustainable Development Goals is widespread by the companies in all six countries, with those from Thailand (95%) and Indonesia (93%) leading the way.

This report was originally published in https://globalreporting.org/news/news-center/asean-companies-get-serious-about-climate-change/

By Alton Wong, Executive Director, Co-head of Sustainability Services, Greater China, Cushman & Wakefield

For businesses in carbon-intensive industries, the challenge of reducing Scope 1 emissions (direct emissions from owned or controlled sources) can be great.

For service-based organizations, Scope 1 emissions may represent only a single-digit percentage of their entire carbon output. In these cases, the majority of their emissions are Scope 3 – they originate further up or down their supply chain through the activities of their suppliers.

So how do service businesses, like financial institutions and consultancies, reduce what they cannot control?

The data challenge

Any carbon reduction journey begins with reporting: you cannot manage what you cannot measure. While we have seen an increase in queries on ISO14064 – the international standard for reporting greenhouse gas emissions – reporting requires data, and capturing reliable data is the greatest challenge we see across the region.

In many cases, the data needed even to establish a baseline year – the year to which emissions will be compared – is not captured. While most, but not all, companies have utility data, few capture emissions for business travel or employee transport. This problem is compounded when tackling Scope 3 emissions.

Collaboration is the only way forward

As a service organization ourselves, Cushman & Wakefield’s Scope 3 emissions account for greater than 98 percent of our total emissions. That is why a key pillar of our net zero commitment is to engage our clients in their own carbon reduction journeys.

For businesses like ours, achieving a net zero commitment – which includes Scopes 1, 2 and 3 – is dependent on our supply chain doing the same. The good news is that it is a two-way street: by reducing our own direct emissions (by implementing energy efficiencies such as updated HVAC and LED lighting, for example) we are also bringing down the Scope 3 emissions of our clients. Similarly, when our clients implement energy efficiencies (their Scope 1), they reduce our Scope 3.

As more companies set net-zero targets, it is increasingly apparent that we are all in this together. At Cushman & Wakefield we have our own data challenges to overcome – especially around Scope 3 emissions. Like all companies, we are working hard to constantly improve, and to share our learnings with others, because we know that we will not reach net zero alone.

Alton Wong, MRICS

Executive Director,
Head of Advisory Services,
Valuation & Advisory Services, Greater China
Co-head of Sustainability Services
Cushman & Wakefield

Alton Wong, MRICS

Executive Director,
Head of Advisory Services,
Valuation & Advisory Services, Greater China
Co-head of Sustainability Services
Cushman & Wakefield

Alton is the Executive Director and Head of Advisory Services in the Valuation & Advisory Department, Greater China as well as Co-head of Sustainability Services, with over 16 years of experience in valuation and advisory services, particularly for due diligence, auditing, public document and financing purposes in Hong Kong, Mainland China and other Asia Pacific countries.

Leading the Greater China Advisory Services team, Alton provides valuation, feasibility and market study, market positioning, performance assessment, development advisory services etc., which covering different areas of alternative investments, including senior housing, logistics property, data centre and life science park.

He also has extensive experience in environmental, social and governance (ESG) advisory services, covering ESG ratings, Global Real Estate Sustainability Benchmark (GRESB), Task Force on Climate-related Financial Disclosures (TCFD), energy solutions, sustainable development, green/ wellbeing building certifications services etc. He is also our committee member of C&W’s Global Corporate Social Responsibility team.

Alton is also one of the drafting members of the HKIS Valuation Standards 2017 and 2020 editions.

An increasing number of institutions, especially financial institutions, have started to disclose climate-related risks and opportunities in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

MSCI ESG Research LLC data and metrics can be used at the portfolio, sector and security level to support reporting on the four pillars of the TCFD recommendations: governance, strategy, risk management and metrics and targets.

This report was originally published in https://www.msci.com/www/research-paper/tcfd-aligned-climate-risk/03306029396