ESG Risks And Opportunities
The disconnection between our sustainability and risk management can lead to strategic and operational risks, as well as missed opportunities for growth. Through stakeholder engagement and materiality assessment, we have further complemented our ERM in the identification and assessment of ESG risks and opportunities, having reviewed the impact of material ESG issues to our business and stakeholders.
Climate Change Risks
This includes risks driven by changes in regulations, physical climate parameters and other climate-related developments. One example is the enforcement of the Paris Agreement that will reshape national economies, development paths, and value chains for companies across the globe. Along with a formalised Climate Change Policy since 2015, CDL also adopted the Sectoral Decarbonisation Approach to set science-based targets to demonstrate commitment to keep global warming below two degrees Celsius.
Health & Safety Risks
Although most work activities at our construction sites and managed buildings are carried out by contractors, CDL recognises that a safe work environment is a productive one.
Within the EHS Management System (EHS MS), CDL established an independent audit tool – the CDL 5-Star EHS Assessment System– to ensure contractors’ onsite EHS performance. CDL also requires contractors to have a minimum of a bizSAFE level 3 or OHSAS18001 certification, to ensure that workplace safety and health risks can be adequately addressed and managed.
This includes fraudulent and corrupt practices amongst employees and business contacts that may result in financial losses and reputational damage. CDL has a zero-tolerance policy towards fraud and corruption, and has in place whistle-blowing procedures enabling employees and other persons to raise concerns of possible improprieties in confidence. In addition, the loss of human talent will impact the company’s daily operations and ability to sustain growth. Identification, development and retention of talent are key aspects of CDL’s human capital risk management.
Property purchase and leasing is a significant investment or recurring expense for CDL’s customers. The failure to meet customers’ expectations on product quality and responsibility will affect CDL’s market performance. CDL makes it a priority to deliver innovative green and safe designs, with high standards of workmanship and functionality, by voluntarily subscribing to the BCA Construction Quality Assessment System (CONQUAS). For quality assurance, CDL has set a target to rectify defects reported at new developments within 30 days.
Raw Materials Supply Risks
Developing new buildings requires raw materials ranging from timber to steel. The stability and the sustainability of the supply production of such materials have direct impact on CDL’s core business operations. Within the EHS MS, CDL has Green Procurement Guidelines that clearly state the requirements for sustainable sourcing.
Legal non-compliance may result in monetary fines and non-financial sanctions which may impact CDL’s operations and reputation. Failure to comply with local and international laws will also threaten CDL’s licence to operate in those markets. Within the EHS MS, the applicable legal requirements are regularly monitored and evaluated for compliance. A system of incentives and penalties has also been implemented to improve and tighten contractors’ site management.
Increases in water tariffs, the supply of water and its subsequent discharge into water systems are key risks to the environment that CDL has identified. To ensure a reduction in the use of potable water in construction, CDL monitors water consumption closely with set targets in place. Water recycling and silt water treatment systems have been set up onsite, and discharges into the water systems are closely monitored.
The UN Population Prospect in 2008 projected that almost 10% of the world’s population will be above 65 years old by 2020 and by 2030, this statistic is projected to go up to 15%. An aging population poses challenges on how businesses design jobs and fulfill customers’ needs. It also presents opportunities for corporations to respond and position themselves to meet these new demands and realities.
As a leading eco-developer, CDL can leverage on our green building track record and expertise to innovate product offerings to capitalise on the emerging senior homes and elderly care markets.
By 2020, the global low-carbon and resource efficient industry is projected to reach US$2.2 trillion*. With Singapore’s pledge for 36% reduction in emissions intensity by 2030, the Climate Action Plan and Sustainable Singapore Blueprint, governmental efforts are increasingly moving towards a green growth economy.
Beyond our long-established commitment to invest 2% to 5% of a new development’s construction cost on green features, CDL has partnered the NUS School of Design and Environment to catalyse innovations in smart and green building technologies, which can be test-bedded in our future developments. Through the NUS-CDL Smart Green Home and NUS-CDL Tropical Technologies Laboratory (T² Lab), CDL will champion novel solutions to meet the future lifestyle needs of homebuyers and tenants in a climate-resilient, urbanised environment.
In the year ahead, CDL will be reviewing the adoption of carbon pricing to stay ahead of the upcoming carbon tax regulation.
* Based on a study by UN Environment, 2013.
Responsible Investment and Green Financing
The UN Principles for Responsible Investment has amassed over 1,500 signatories, representing US$60 trillion in assets under management pledged towards incorporating ESG factors into investment and ownership decisions. The expanding pool of socially responsible investors is also evident in the rapid growth of green bond markets, which saw a 92%** increase in 2016 and is expected to continue growing.
These developments present opportunities for CDL to attract fresh funds from the global responsible investment community, as well as raise capital for future green building initiatives and innovation through the issuance of green bonds.
On 6 April 2017, CDL announced the successful launch of our inaugural green bond which raised $100 million to finance green building initiatives for our flagship Republic Plaza.
** Climate Bond Initiative Green Bond Highlights, 2016.
While the burgeoning sharing economy has disrupted conventional businesses in office and residential lease, CDL has capitalised on these rapidly growing sectors by venturing into new business models in search of long-term recurring revenue streams.
- In January 2017, CDL invested in China’s leading co-working space operator Distrii to create one of the largest co-working facilities in Singapore – over 60,000 square feet of space at Republic Plaza in the heart of the city’s Central Business District, scheduled to open in 2018.
- In September 2016, CDL China invested in the fast-growing Chinese online apartment rental platform mamahome – a one-stop solution for both apartment owners and rental customers – with more than 150,000 apartment listings in 20 China cities.