Group CEO and Executive Director’s Statement

CDL’s strong track record in ESG performance, guided by our four key pillars of strategy – Integration, Innovation, Investment, and Impact – will enable us to forge ahead in the new climate economy, futureproofing our business and sustaining growth in the right manner.

Dear Stakeholders,

2020 is a critical year to kick-start a decade of urgent and robust climate action. The past 10 years have gone down in history as the planet’s hottest decade, the environmental impacts of which have reverberated throughout the world. In the five years since COP21, climate change morphed from a serious challenge to a full-blown emergency, leaving impending threats and uncertainties in its wake.

This year, countries that have pledged their support for the Paris Agreement are preparing to submit their new or revised national plans with much higher ambitions since the world is currently on track towards a global temperature rise of 3°C, double the target set out in the 2015 Paris Agreement on climate change.

2020 is also a crucial year for addressing the Sustainable Development Goals (SDGs) that set targets for the world to become safer, healthier, fairer and more sustainable by 2030. To achieve these ambitious goals, both policymakers and businesses share the same level of responsibility to mitigate and adapt to the climate emergency, which makes it vital for all to work together to form a strong force for good.

Increasingly, the business case for ESG integration is strengthening, as seen in the rise of ESG investing.1 According to Morningstar, ESG funds amassed US$20.6 billion of new money in 2019 – four times as much as the previous high bar2 of US$5.5 billion in 2018. Companies that manage sustainability risks and opportunities tend to have stronger cash flows, lower borrowing costs and higher valuations over time.3 Financiers are also increasingly pegging lending rates to the ESG performance of corporate borrowers.

The need for a sustainability mindset has never been greater and more critical for businesses to unlock opportunities in a low-carbon economy. As a pioneering force in sustainability, CDL’s strong track record in ESG performance, guided by our four key pillars of strategy – Integration, Innovation, Investment, and Impact – will enable us to forge ahead in the new climate economy, future-proofing our business and sustaining growth in the right manner.

INTEGRATION:
Creating Enduring Value Through Our Ethos “Conserving as We Construct” Since 1995

ESG integration is fundamental to creating long-term value for our business and all our stakeholders. As an expansion of our sustainability commitments, we have aligned our ESG efforts with 14 relevant SDGs and we are also the first Singapore company to embrace the SDGs in our Integrated Sustainability Report since 2016. Guided by the “CDL Future Value 2030 Sustainability Blueprint” that mapped out strategic goals and ESG targets, we have continued to track and report our performance on a quarterly and annual basis since 2017. In the year under review, I am glad to report that we are on track to achieve all our key ESG targets, with some areas requiring further adaptation due to operational changes.

Singapore recently announced its goal to halve its emissions by 2050 and to achieve net-zero “as soon as viable in the second half of the century”4 . CDL has been an early mover to lower our carbon footprint through best practices and innovation. Being the first private sector property developer in Singapore to achieve the ISO 14001 Environmental Management and ISO 50001 Energy Management System certifications in 2003 and 2014 respectively, we continually build on our efforts to expand our natural capital as we grow our business for a low-carbon future. In 2019, we achieved a 38% reduction in carbon emissions intensity from baseyear 2007 against our 2030 SBTi-validated target of 59%, meeting our interim 2019 target and we are on track to achieving our 2030 goal.

Since 2009, CDL has stayed ahead of the curve by voluntarily reducing our annual carbon emissions to net-zero for our corporate office operations including our data centre, and 11 Tampines Concourse – the first CarbonNeutral® development in Singapore and the Asia Pacific. Besides carbon neutralising the construction phase of 11 Tampines Concourse, we also annually offset emissions from its operations, including that of its tenants.

As the first real estate company in Singapore to have our carbon reduction targets assessed and validated by the SBTi, we took a step further in our carbon management by joining the pioneer batch of 87 companies worldwide to pledge support to UNGC’s Business Ambition for 1.5°C campaign in September 2019.5 We pledged to set climate targets across our operations, aligned with limiting global temperature rise to 1.5°C.

To raise CDL’s business resilience and readiness for potential climate-related risks, we completed the first phase of our climate change scenario planning on the 2°C and 4°C warmer scenarios in 2018. We have since expanded our study to a 1.5°C warmer scenario and included our key operations in the United States. The study provided greater insight and clarity for the Group to better prepare for the potential impact of both climaterelated physical and transition risks, such as higher carbon taxes and stricter building regulations.

To adapt to the rapidly changing business landscapes and stakeholder expectations, we started conducting biennial materiality assessments with internal and external stakeholders in 2014. Similar to 2017’s findings, the 2019 study concluded that “Innovation” remains CDL’s top material issue. The second was “Energy Efficiency and Adoption of Renewables”, followed by “Climate Resilience”.

INNOVATION:
Adopting Technologies and Solutions to Strengthen Climate Resilience and the Transition Towards a Low-Carbon Future

Advances in low-carbon technologies present a huge opportunity to make business sense out of long-term decarbonisation. For the past two decades, we have driven innovative solutions to develop strategic low-carbon and resilient buildings. With innovation identified as our top material ESG issue since 2017, we have intensified our search and application of viable innovations and technologies to reduce our carbon footprint.

Formed in 2018, the Enterprise Innovation Committee (EIC) is an inter-department and multidisciplinary establishment that scouts for latest technologies and solutions. Chaired by CDL Group Chief Strategy Officer Mr Kwek Eik Sheng, the EIC will continue to shape corporate innovation culture and implement innovative ideas that contribute to the company’s balanced triple bottom line and long-term sustainable growth.

In 2019, we embarked on an exciting pilot project in partnership with the Solar Energy Research Institute of Singapore, combining new building and solar technologies for greater efficiency. The project integrates high-efficiency BIPV modules with PPVC, using The Tapestry, our new residential development in Singapore, as a testbed.

Since 2017, CDL has formed a R&D partnership with NUS School of Design and Environment (SDE). In addition to the NUS-CDL Tropical Technologies Laboratory (T2 Lab), which has been operational since late 2018, the NUS-CDL Smart Green Home Laboratory was opened in 2019 at NUS’ SDE Building 4, Singapore’s first new-build net-zero energy building. The two labs will conduct innovative experimental studies on smart features, green building technologies and design for sustainable living.

The recent Singapore Budget 2020 announcement to increase adoption of electric vehicles (EVs) and phase out internal combustion engines by 2040 validates our early efforts in enabling the accessibility of EV chargers to the public. We partnered with BlueSG and Greenlots in EV sharing programmes by providing carpark lots with charging stations at our commercial properties including Republic Plaza, Tagore 23, Central Mall and City Square Mall. In 2019, we were one of the leading landlords to partner with SP Group to provide direct current fast chargers at Republic Plaza. Going forward, CDL will look into expanding the EV charging infrastructure for our new residential and commercial developments as well as review our existing managed properties. These efforts will help support the transformation of the local urban mobility landscape.

Putting people at the heart of what we build, urban greenery and landscaping have always been key differentiators for our developments. All our new residential developments go beyond the mandatory requirement by BCA, devoting over 40% of the site area to unique landscaping and communal facilities. In 2019, we also invested $3 million in Gush – a Singapore-based start-up specialising in sustainable paints and advanced building materials – to explore new building solutions. Through the EIC, Gush was also involved in a pilot programme to testbed a mould-prevention paint at Nouvel 18, a residential development that CDL manages.

Higher energy efficiency often contributes to lower operational costs. Through robust resource management and regular asset upgrading and enhancement efforts, we have been able to maintain efficient energy performance for our managed properties. Since 2004, CDL has retrofitted all our managed buildings by upgrading chiller plants, introducing motion sensors, installing energy-efficient lighting and recladding facades. From 2012 to 2019, we achieved savings of more than $28 million in energy expenses amongst eight of our commercial properties.

Recognising that user behaviour is equally important in achieving energy efficiency and cost savings, we have been actively engaging and encouraging our tenants to adopt lowcarbon practices at the workplace, resulting in the continuation of 100% tenant participation in the CDL Green Lease Partnership Programme.

Corporations are increasingly expected to be accountable for the environmental impact of their supply chain. Last year, we commenced a risk analytics and segmentation exercise on our supply chain, which utilises a risk-based and leverage-driven approach to identify environmental and social-sourcing risks posed by our top 100 suppliers and the products and materials they supply. With data-driven input, the findings will help CDL to prioritise our supplier engagement efforts and mitigate the environmental impact and sourcing risks of our supply chain.

INVESTMENT:
Propelling Change to Accelerate Climate Action

Amidst the challenging macroeconomic environment, the CDL Group delivered a resilient set of results. For FY 2019, it posted revenue of $3.4 billion (FY 2018: $4.2 billion)6 and EBITDA of $1.1 billion (FY 2018: $1.2 billion). Net attributable profit after tax and non-controlling interest (PATMI) increased by 1.3% to $564.6 million (FY 2018: $557.3 million), supported by a portfolio with diversified income streams and boosted by substantial gains from the unwinding of the Group’s second Profit Participation Securities (PPS 2) structure. The Group’s total assets grew 11.5% to $23.2 billion. CDL launched a record number of six projects and sold 1,554 units including Executive Condominiums (ECs) with a total sales value of $3.3 billion in FY 2019, emerging as one of the top-selling private sector developers in Singapore. In 2019, the Group successfully privatised our London-based hotel arm, M&C, in line with our focus to enhance recurring income.

The rising trend of responsible investing and sustainable finance provides significant opportunities to unlock alternative financing streams in the built sector which can be capital intensive. Leveraging CDL’s strong ESG track record has helped lower our long-term borrowing cost and expand our pool of ESG-centric investors and lenders. Based on our latest materiality assessment, sustainable finance has also emerged as a new material ESG issue for CDL, reaffirming our pioneering efforts in the issuance of a green bond in Singapore in 2017, and our continued pursuit of sustainable finance in 2019.

In 2019, CDL implemented a Sustainable Finance Framework to prepare for opportunities in which sustainable financing can be used to fund projects that support our business strategy and vision. To accelerate the green building movement and low-carbon developments, CDL secured its first green loans amounting to $500 million for new developments and pioneered a first-of-its-kind $250 million SDG Innovation Loan last year. This was an expansion from our pioneer issuance of a $100 million green bond by a Singapore company in 2017.

Shaping a fair, safe and inclusive workplace is fundamental to CDL’s performance and key to enhancing our human capital. In a traditionally male-dominated industry, CDL is the only Singapore real estate management and development company listed in the 2020 Bloomberg Gender-Equality Index for three consecutive years since the launch of the index in 2018. In 2019, four of our properties won the HPB Healthy Workplace Ecosystem Awards. CDL’s corporate office at Republic Plaza7 also achieved the Platinum rating for the BCA-HPB Green Mark for Healthier Workplaces Award. In addition, we were named “Best Companies to Work for in Asia” by Business Media International’s human resources publication, HR Asia.

Besides contributing to the development of Singapore’s built environment, CDL also actively gives back to society, providing continuous support and amplified positive impact through our various outreach programmes and partnerships. Conceptualised and developed by CDL, the Singapore Sustainability Academy (SSA) is the first ground-up initiative and zero-energy facility in Singapore dedicated to advocacy, capacity building for climate action, and the collective achievement of SDGs. Since its opening in June 2017, the SSA has served over 14,500 attendees through more than 370 outreach events and training sessions as of 31 December 2019. An extensive partnership involving six government agencies and 15 industry and NGO partners, the SSA has become a hallmark of CDL’s community engagement and is recognised as Singapore’s leading knowledge and networking hub for sustainable development.

Since 2018, we have further expanded the SSA’s international outreach to include new partners – UNEP, UNDP, UNGC and the Asian Venture Philanthropy Network. As a reflection of the SSA’s strong 3P outreach and influence, the SSA has been the preferred venue by our partners’ engagement activities. The Academy, an epitome of extensive public-private-people partnership, served as an ideal platform for UNDP to hold its first Private Sector Advisory Group meeting in April 2019.

We believe in the power of youths in driving positive change for a sustainable future. Our longstanding investment in youth development initiatives, such as the CDL-GCNS Young SDG Leaders Award (launched in 2011) and CDL E-Generation Challenge (launched in 2010), as well as the Youth4Climate Festival (launched in 2018) have been growing in their outreach, empowering tens of thousands of youths to galvanise awareness and action to fight climate change and achieve the SDGs.

To further drive our social investment impact, we continued to host notable community outreach initiatives last year, including the high-profile “Singapore’s Greening Journey: 200 Years and Beyond” exhibition to commemorate Singapore’s Bicentennial and the Botanic Gardens’ 160th anniversary. Through a partnership with Jane Goodall Institute (Singapore) and NUS, we featured world-renowned primatologist and conservationist, Dr Jane Goodall, at the 7th Asia Environment Lecture, where her captivating stories on nature and wildlife conservation inspired an audience of over 1,700.

With rising global temperatures causing the rapid melting of glaciers, we launched the “Saving Glaciers Alliance” last year to raise awareness of the importance of conserving the world’s polar regions and glaciers. The event featured motivational speaker, polar explorer and climate advocate Sir Robert Swan – the first person to walk to the North and South poles unaided. The event attracted over 120 supporters of the Alliance at the SSA, including diplomats, senior business leaders and NGO representatives.

Last year, our longstanding community programmes continued to receive strong support from partners and the community. These included the 4th edition of EcoBank, which aims to promote recycling and responsible waste disposal; and SDG City Challenge 2019, a community and tenant engagement event that brought together over 2,000 people to participate in activities that promote a green, active and healthy lifestyle in Singapore.

IMPACT:
Driving Positive Change for a More Sustainable Tomorrow

In the face of unprecedented climate threats, as well as uncertain global political and economic outlooks, companies with strong ESG performance have proven to be more resilient and are in a stronger position to achieve sustained growth and attract investments. CDL’s track record in effective ESG integration and sustained performance has been widely recognised by leading global sustainability benchmarks, including being the world’s top real estate company on the 2020 Global 100 Most Sustainable Corporations in the World. We are also the only company in Southeast Asia and Hong Kong to score double ‘A’s in the 2019 CDP Global A List for corporate climate action and water security.

In support of the national objective of greening 80% of all buildings by 2030, CDL will continue our longstanding commitment to achieve Green Mark GoldPLUS and above, two levels above the mandatory requirement, for CDL’s new and existing properties, and tap into new green building technologies. To facilitate greater ESG integration into the company’s expansion plan, CDL aims to step up our acquisition risk assessment as recommended by our climate change scenario study.

As a builder of living and workspaces, we are mindful that people spend more than 90% of their time indoors on average8 . It is our goal to step up our innovative technologies and solutions to enhance the health and wellness of building users through the way we design, develop and maintain these spaces in the years ahead.

Energy efficiency and the reduction of our carbon footprint will remain our top priorities. In line with our ambitious carbon reduction targets, the company has set our sights on joining the RE1009 initiative by 2021. In the next couple of years, we will aim to review our GHG reduction targets validated by SBTi, aligning our commitment towards Business Ambition for 1.5°C10.

CDL is honoured to have played a key role in spearheading the establishment of the Global Reporting Initiative (GRI) Regional Hub in Singapore last year. Being the first corporation to publish a dedicated sustainability report in Singapore using the GRI framework since 2008, we will continue to support the GRI’s mission to raise the standards of sustainability reporting and disclosure in Singapore and the region.

The rapid growth of responsible investing and sustainable finance will further enhance CDL’s organisational and financial capital. Going forward, CDL will continue to explore potential growth and investment avenues through green financing and business opportunities that are aligned with sustainable development.

With the completion of M&C’s privatisation in October 2019, the management is looking into enhancing the alignment between M&C’s ESG practices and CDL’s longstanding sustainability strategy. It aims to achieve greater synergy within the CDL Group, raising operational efficiency and capability to be future-ready for emerging challenges.

As 3P collaboration is key to expanding the ripple effect for climate action, CDL is committed to driving the industry and the community-at-large to adopt environmentally responsible practices. Creating positive alignment with the SDGs will remain a strategic focus in CDL’s business.

To conclude, I would like to thank our investors and key stakeholders for their faith and support of CDL’s longstanding commitment to ESG integration, even when climate change was not deemed as a mainstream business agenda. The management would not have achieved top world rankings in sustainability without the guidance and support of the Board, and the immense dedication of our colleagues. In recent years, the support from our customers, shareholders, business partners and supply chain has also been gaining strong traction.

Building a sustainable future will require the commitment of the broader ecosystem. Through collaboration and partnership, we can accelerate changing the climate and changing the future.

Sherman Kwek
Group Chief Executive Officer and
Executive Director
March 2020

1 The remarkable rise of ESG, Forbes, 11 July 2018.
2 Sustainable fund flows in 2019 smash previous records, Morningstar, 10 January 2020.
3 Foundation of ESG investing, MSCI, July 2019.
4 Singapore’s 2050 target: Halve emissions from 2030 peak, The Straits Times, 29 February 2020.
5 Press release: 87 major companies lead the way towards a 1.5°C future at UN Climate Action Summit, UNGC, 22 September 2019.
6 The was due to the timing of revenue recognition for the property development segment as the revenue for certain overseas projects and Singapore EC projects cannot be recognised progressively but only in entirety upon completion.
7 CDL Corporate Office at Republic Plaza (Levels 10, 11, 12, and 36).
8 Indoor air quality report by the United States Environmental Protection Agency
9 RE100 is a collaborative group of influential global businesses committed to 100% renewable energy, led by The Climate Group in partnership with CDP.
10 Business Ambition for 1.5°C by UNGC, January 2020.