ESG Risks And Opportunities

CDL’s Material ESG Risks and Opportunities

A disconnection between sustainability and risk management can lead to strategic and operational risks, as well as missed opportunities for growth. CDL’s stakeholder engagement and materiality assessment complements our Enterprise Risk Management (ERM) framework in the identification and assessment of ESG risks and opportunities. CDL will continue to monitor and review the risks and mitigating controls in line with emerging global trends and evolving business landscape.

For more information on CDL’s ERM framework, please refer to the Risk Management Report found in CDL’s Annual Report 2017.

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CDL’s Material ESG Issues Risks Opportunities Supporting SDGs
Innovation CDL’s business can be outpaced, if our services and products are not relevant in this age of technological disruptions. Innovation is key to driving CDL’s business to the next level. In 2017, an Enterprise Innovation Committee (EIC) was formed to study and adopt initiatives to differentiate our value proposition and offerings.
Energy Efficiency and Renewable Energy From 2019, Singapore will impose a carbon tax of $5 for each tonne of carbon emissions on large direct emitters, which will likely increase electricity charges and operational costs for CDL.

More countries, including our key overseas markets – China, United Kingdom / Europe, Japan and Australia are also expected to capture the external costs of carbon emissions, with carbon pricing ranging from US$1 to US$33 per tonne of carbon emissions.

CDL can leverage our green building track record and expertise to minimise energy use in all stages of a building’s life-cycle, maximise inbuilt and natural efficiencies, minimise embodied resources, and raise renewable energy consumption in the design and construction of new buildings.

Existing buildings can be upgraded and retrofitted with energyefficient features. In 2017, CDL launched our inaugural green bond to repay a loan which financed Republic Plaza’s retrofit and upgrade projects.

Beyond brick and mortar, we can influence building users to adopt sustainable lifestyles (e.g. providing charging stations for electric vehicles at carparks and cultivating good energy saving habits).

Product Quality and Responsibility Failure to meet customers’ expectation on quality and responsibility will affect reputation and sales.

CDL prioritises 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, we target to rectify defects reported at new developments within 30 days.

CDL’s stringent quality assurance processes are benchmarked against all industry standards. Our robust evaluation of partners ensures our internal quality KPIs are maintained or exceeded.

For five consecutive years, CDL has been recognised as one of the highest CONQUAS scoring property developers, exceeding the average industry score.

This has differentiated CDL’s products and enhanced stakeholders’ confidence in CDL.

Occupational Health, Safety and Well-being The safety, health and well-being of our employees and contractors’ workers may affect their performance and productivity.

It is therefore important to manage occupational health and safety risks whilst promoting healthy lifestyles and holistic wellness at the workplace.

As most activities at our construction sites and managed buildings are carried out by contractors, CDL has also extended our safety and health risk management efforts to cover our contractors.

CDL advocates a safe, healthy and conducive work environment as this has a positive impact on operational performance and productivity.

In 2017, we implemented an integrated ISO14001 and OHSAS18001 EHS Management System (EHSMS) across all our key operations in Singapore, to effectively manage the safety, health and wellbeing of our employees and workers. The Company also continues to implement the CDL 5-Star EHS Assessment System, an independent audit tool established since 2005, to monitor contractors’ onsite EHS performance.

Anti-corruption CDL has a zero-tolerance policy towards fraud and corruption, and whistle-blowing procedures for employees and other persons to raise in confidence concerns of possible improprieties. CDL’s zero-tolerance policy towards fraud, bribery and corruption provides assurance to all our stakeholders including investors and customers. Currently, CDL has benchmarked its practices with the Singapore Standard ISO37001 to narrow any gaps in accordance to industry practices.
Business Ethics and Compliance Legal non-compliances may result in fines and nonfinancial sanctions which impact operations and affect CDL’s reputation. Failure to comply with local and international laws will also threaten CDL’s licence to operate in those markets. Within the EHSMS, the applicable legal requirements are regularly monitored and evaluated for compliance. Incentives and penalties have also been implemented to improve and tighten contractors’ site management. CDL firmly believes in establishing long-lasting trust with stakeholders, and conducts its business ethically and fairly. We continuously validate business processes and benchmark them to industry best practices.
Climate Change Policy and Legal
Introduction of new policies and more stringent regulations such as carbon pricing, water tariffs hike and stricter building standards, and risk of climaterelated ligation.

Technology
Displacement of existing processes with innovations and emerging technologies such as biomimicry, renewable energy, internet of things (IoT) and 3D printing at unprecedented rate.

Market
Growing concern for sustainability is changing customer’s behaviour towards responsible consumption, low-carbon footprint and circular economy solutions.

Reputation
Increased in stakeholders’ expectation for organisation to be transparent and compliant with both mandatory and voluntary policies.

Physical
Changes in climate patterns and extreme variability in weather events such as cyclones, floods and heatwave damage assets, disrupt operations and affect revenue.

Resource Efficiency
Reduce operating costs by improving operational productivity and adoption of novel technologies that is becoming more commercially viable.

Energy Source
Savings on energy cost by adopting renewable energy sources such as solar energy and designing climate-resilient buildings with net-zero energy consumption.

Product/Services
Enhance competitive positioning by offering smart and energy efficient buildings, designed and built with high standards of workmanship and quality.

Markets
Proactively seek opportunities in new markets and alternative financing stream such as Green Bond.

Resilience
Developing adaptive capacity by innovating and re-engineering business model to better manage climate-related risks and seize new opportunities.

Cyber Security and Data Governance CDL’s Information Systems department constantly scans for cyber security trends to ensure that cyber risks are mitigated effectively.

We are also mindful of our obligation to and regulatory compliance with the Personal Data Protection Act (PDPA).

CDL’s holistic organisation-wide data governance approach and robust Information Technology (IT) security measures can contribute to enhancing our market standing. Our IT response plans are being tested by independent external and internal auditors and benchmarked against best industry practices.
Economic Contribution to Society CDL’s financial performance will have a direct impact on the survival of the Company, vested interest of our stakeholders, and our society at large.

Our economic contributions include the wealth created and distributed to our investors, employees, suppliers, and the community, in the form of dividends, operating costs, employee wages and benefits, and community investments.

Our business activities and community investments can contribute to the economic development of the local markets and communities where we operate.

By hiring locally and ensuring fair remuneration, we provide employment to local talents and help eliminate inequalities.

The economic legacy of real estate and infrastructure assets can extend over tens or even hundreds of years, and can have significant indirect economic impacts that benefit our local communities.

Through our community investments in sustained programmes with community partners and non-governmental organisations, we provide financial aids and in-kind support in four focus areas – environmental conservation, youth development, the arts and helping the less fortunate in our society.

Product Safety and Customer Well-being We recognise our legal obligation and contractual responsibility to ensure the safety of the occupants at our residential, office, commercial and industrial developments. Where their health and safety are affected, customers have the right to seek redress.

Regulations are expected to be tightened in the near term following the Grenfell Tower, West London and Dubai Torch Tower incidents in 2017, and after 36 buildings in Singapore were found to use noncompliant cladding, including an industrial complex where a lethal fire broke out in May 2017.

To ensure compliance and prevent latent defects, CDL identifies design risks and assesses the severity of EHS impacts throughout the design and construction stages of our developments.

For tenants at our commercial and industrial buildings, we set internal key performance indicators for critical safety services, such as response time to attend to trapped passengers in lifts. In 2017, CDL partnered with Singapore Green Building Council and the BCA to hold the inaugural Better Places for People event for tenant engagement.

Responsible Supply Chain and Sourcing The use of virgin materials can impact the environment and human health. We are therefore mindful that our procurement of raw materials can impact nonrenewable resources, and human rights across the supply chain.

A responsible supply chain is also a resilient one, enabling CDL to swiftly adapt to external challenges such as weather impacts and an aging workforce to maintain business continuity. We can establish mutually beneficial relationships with trusted and credible suppliers to create high quality, cost-effective reliable products.

Within our EHSMS, we have Green Procurement Guidelines that clearly state our requirements for sustainable sourcing.

Talent Attraction, Retention and Development The loss of talent will impact CDL’s daily operations and ability to sustain growth. Identification, development and retention of talent are key aspects of CDL’s human capital risk management.

We focus on human capital development and growth, and empower employees to be innovative. This helps to drive service and product differentiation.
Water Management and Efficiency The United Nations Environment Programme projected that by 2030, there will be a 40% gap between demand and supply of water globally. CDL faces the challenge of securing long-term reliable supplies of clean water at a reasonable cost. Water security can also limit our growth, especially in cities facing water stress such as London, Paris and Melbourne.

In Singapore, water prices were raised for the first time in 17 years, by 30% over two years from 2017, which will affect CDL’s bottom line.

As the water market grows and novel technologies become readily available at declining costs, CDL can take advantage of the new technologies and solutions to reduce fresh water consumption, increase reuse and recycling of wastewater, and improve the quality of treated wastewater.

Our developments are designed with a strong focus on water sustainability throughout the lifecycle of the asset.