Our focus on responsible property investment (RPI) is consistent with our vision of being the leading manager of Australian retail property, delivering above benchmark returns through active management.
A summarised version of this content was reported in the 2011 CFS Retail Property Trust annual report. To view the responsible property investment excerpt from the annual report, click here, or to view the annual report in its entirety, click here.
To view CFSGAM Property's Responsible Property Investment report click here
Highlights
Overview
Policies
Our commitments and memberships
Environment
Highlights
Our shopping centres1:
- are 8% more energy efficient
- are 20% more water efficient
- have 11% lower emissions intensity
- Four assets achieved accredited NABERS Energy ratings and five assets achieved accredited NABERS Water ratings
- Corio Shopping Centre participated in Australia’s first building envelope air tightness test of an existing shopping centre.
1. Improvement based on 2010 calendar year compared to the baseline (2007 calendar year).
Overview
Colonial First State Global Asset Management (CFSGAM) has a team of six Responsible Investment professionals, three of whom are dedicated to direct property, one of which is instrumental in guiding RPI in shopping centres. Their role is to support CFSGAM Property in becoming a top tier Australian responsible property investment leader and part of the global leadership group on sustainability and responsible property investment.
The Responsible Property Investment team has five key objectives. They include:
- Fiduciary duty: Protect and enhance returns
- Value proposition: Investment process includes RPI as part of strategic planning
- Communication: Articulate the value proposition of RPI
- Operational process: Ratings and performance are maintained and improved across assets and the portfolio
- Reporting: Stakeholders are kept abreast of RPI developments and progress
By ensuring the assets in the CFS Retail Property Trust’s (CFX of the ‘Trust’) portfolio are managed to perform optimally, we can reduce overheads and support the delivery of superior returns whilst maintaining value. Our proactive approach to environmental and social considerations in building design and operation demonstrates our leadership capabilities in the Australian marketplace. Further, through successfully engaging all of our stakeholders, we mitigate the risks to our strategy and, by implementing market-leading governance practices, we can provide our investors with assurance that we take our role in responsible property investment seriously. We incorporate responsible property investment into all stages of ownership and management:
Invest
Each asset we acquire is reviewed through a responsible investment check-list as part of the standard due diligence process.
RPI and environmental, social and governance (ESG) factors are considered in the due diligence process when we look at acquiring new buildings using a standard checklist and approval process. This process investigates the environmental and physical aspects relating to a property (land and buildings), in both its construction and ongoing operation. Social aspects are investigated in relation to how a building is integrated within its local community. Regarding governance, the asset is reviewed for compliance with regulatory controls. These RPI aspects form a part of the entire due diligence investigation, not as a screening process, but rather as part of risk identification and mitigation, which contributes to the price we are willing to pay.
Manage
We set performance targets to improve our assets over time.
The day to day management of the building is closely guided by RPI principles, through our Operational Performance Strategy. This is a strategy is focused on setting and achieving performance targets for the operation of a building based on an appropriate benchmark for the class and use of each particular building.
Once a benchmark is set, we then actively monitor, manage, analyse and report on the actual achievement of these targets.
To drive continual improvement of the performance we:
– train our operations staff to manage our properties more efficiently
– consider life-cycle analysis in the replacement of plant and equipment
– consider the needs of a building’s occupiers, and
– have a detailed Tenant Engagement Strategy, and tenant design fit-out guideline.
Enhance
We refurbish or redevelop to a higher environmental standard when undertaking development works.
When undertaking refurbishment or redevelopment works, as a responsible property investor we aim to improve the environmental standard of our assets. We target a minimum of 5-star Green Star ratings on all new developments.
Creating Value
Property valuations account for both the income from the occupants and the costs in running and maintaining the building. We focus on the sustainability of our assets because it is good business practice and improving the efficiency of our assets reduces operational costs. From an owner’s perspective, we believe that a more sustainable building will attract higher net rents than might otherwise be paid. As such, responsible property investment is a key factor in maintaining property valuations over time, which is aligned with our fiduciary responsibility and the long-term interests of our unitholders.
During the year, our RPI program resulted in real efficiencies being achieved across the portfolio. Our efforts in market-leading governance were recognised when the Trust won the Asia Pacific Real Estate Association (APREA) inaugural best practices award in the Mature Markets (developed countries) category.
Policies
CFSGAM has a Responsible Property Investment strategy which is endorsed by the Manager and the Board.
In implementing this strategy we also have: a Direct Property Sustainability Policy
Our commitments and memberships
Sustainability indices memberships
– Dow Jones Sustainability Index (DJSI) – included since 2004
– Global Real Estate Sustainability Benchmark (GRESB), formerly Environmental Real Estate Index – included since inception
(2010)
– FTSE4Good Index – included since inception (2001)
– Australian SAM Sustainability Index (AuSSI) – included since inception (2005)
Carbon disclosure
– Carbon Disclosure Project (CDP) since 2006 – our latest submission can be found here.
– Included in the Carbon Disclosure Leaders Index (CDLI) in 2010. To view our announcement click here. For more
information on CDP click here.
Mandatory reporting requirements
– National Greenhouse Energy Reporting System (NGERS) – CFX’s emissions are consolidated with those of Commonwealth
Bank of Australia (CBA or the 'Bank') for reporting
– Energy Efficiency Opportunities Act (EEOA) 2006 – reporting for all of CFX’s assets is consolidated with the Bank’s
submission
Voluntary schemes/partnerships Commonwealth Bank of Australia
– Signatory to the UN Global Compact, for more information on the UN Global Compact click here.
– Signatory to the UN Environment Programme Finance Initiative (UNEP-FI), for more information on the UNEP-FI click here.
Colonial First State Global Asset Management
– Signatory to the United Nations Principles of Responsible Investment (PRI), for more information about the PRI click here. To
view the CFSGAM 2010 Responsible investment report click here.
– Member of the Investor Group on Climate Change (IGCC), for more information on the IGCC click here.
– Board member of the Green Building Council of Australia (GBCA), for more information on the GBCA click here.
– Co-chairman of the UNEP-FI Property Working Group, for more information about the UNEP-FI Property Working Group
click here.
– National president of the Property Council of Australia (PCA), for more information on the PCA click here.
– Deputy chairman of the Shopping Centre Council of Australia (SCCA), for more information on the SCCA click here.
– National sustainability and divisional sustainability representation (NSW and VIC) on the PCA.
– Board representation on and corporate donor to the Property Industry Foundation, for more information on the PIF click here.
Environment
We continue to reduce CFX’s environmental footprint.
We recognise that the risk of climate change may be one of the biggest environmental risks facing investments over the long term. Climate change is high on the global political agenda, and legislative measures have been announced and introduced to mitigate the impacts of climate change associated with buildings. We believe it is important to understand and adapt to the risks that climate change presents and our approach to this can be found in CFSGAM’s Climate Change Position Statement (CCPS).
As a responsible property investor, we understand the need to manage these risks and also to identify opportunities. To that end, CFX reports on emissions to the Carbon Disclosure Project (CDP) and, in 2010, our achievements were recognised through our inclusion in the Carbon Disclosure Leaders Index. To view our 2011 CDP submission click here.
Our continued focus on environmental performance has resulted in more of CFX’s assets being benchmarked using the NABERS protocol, whilst focusing on resource efficiency. The implementation of our Operational Performance Strategy has provided management with the ability to integrate sustainable efficiency improvements throughout the assets’ operations. A pilot of the Asset Efficiency Program (a sub-metering, monitoring, analysis and reporting tool for utility performance) is being implemented this year. We believe that this approach will maintain and enhance asset value, mitigate operational and legislative risk, maximise operational potential and provide quality accommodation for tenants.
We have a number of initiatives to implement sustainability in development. For all developments we target a 5-star Green Star rating and we also aim to achieve the highest possible NABERS Energy and Water ratings, ensuring operational efficiency is maximised post development. During the year Environmentally Sustainable Design principles were incorporated into our standard design specifications. We have a tenant design fit-out guideline, detailing minimum sustainability requirements targeting fit-out materials and illustrating how to minimise energy, water and waste consumption during and post tenancy fit-out. The guideline also provides a resource for tenants aspiring to exceed the minimum requirements. We continue to work with material specifiers to ensure compatibility of materials specified within the guideline, along with training for our employees on their specification and use.
Operational Performance Strategy
The Operational Performance Strategy (OPS) covers the management and operation of CFSGAM’s assets by specifying practices to implement environmental, social and governance (ESG) considerations in each building under management.
The OPS serves to embed efficiency improvements throughout our assets’ operations, for the benefit of all stakeholders. This approach seeks to maintain and enhance asset value, mitigate operational and legislative risk, achieve full operational potential and provide quality accommodation for tenants in conjunction with social and financial objectives, to achieve a balanced outcome. The ESG principles underlying the OPS are to:
- benchmark the environmental footprint of the Funds and the individual properties managed;
- responsibly improve the operational performance and efficiency of all assets over time by setting measurable short and long term targets as appropriate;
- explore and implement as appropriate, the adoption of management and design practices, systems and technologies that promote innovative performance solutions. For further information on the adoption of innovative design features, please refer to a case study on 101 George St, Parramatta;
- understand and influence the associated supply chain activities;
- influence, direct and educate key stakeholders to act in a sustainable manner;
- report and disclose performance in a format that is tailored to suit the information user (transparent, consistent, relevant and inclusive).
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Direct Property capital equipment lifecycle analysis tool
The lifecycle analysis tool was created to address the desire to improve sustainability across CFSGAM’s shopping centre assets. Across the office assets there are drivers in the forms of legislation and tenants’ requirements, however across retail property these drivers currently don’t exist. The lifecycle analysis tool assesses whether the owners will realise a return if additional capital is spent today to save on operating costs in the future. This analysis allows for selection of more efficient items of plant and equipment which otherwise may not have been selected due to capital costs being too high. Lifecycle analysis presents opportunities to: improve returns to owners which flow through various aspects of the property management business, improve long-term efficiency and sustainability credentials of the assets, and enhance tenant satisfaction through bringing the assets in line with world class standards.
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NABERS performance and benchmarking
CFX has participated in the development of NABERS Energy and Water rating tools through the NABERS technical advisory group to assist in creating a performance industry benchmark for Australian shopping centres. During the year, five of the Trust’s assets undertook NABERS Energy and Water assessments, the results of which are outlined in the table below.
Energy and Emissions
Our approach to energy and emissions management has primarily focused on improving the efficiency of our buildings, which means using less energy to get a better outcome.
During the year, we have focused on improving operational efficiency across the portfolio, with the ongoing implementation of Sustainability Implementation Plans which incorporate energy efficiency projects. Four of our assets have achieved accredited NABERS Energy ratings, which is a positive step forward for the retail property industry and reflects the increase in demand by global investors for transparency on sustainability reporting.
Our Operational Performance Strategy and associated programs are focused on improving the overall performance of the Trust’s assets.
Corio Shopping Centre participated in Australia’s first building envelope air tightness test of an existing shopping centre. CFX collaborated with Deakin University and Air Barrier Technologies to explore the centre’s ‘Building Envelope Efficiency’ and establish the leakage of air from the centre. The outcome of the test provides a benchmark efficiency for the centre with air leakage conservatively estimated to result in losses of 30% or more of the energy used to heat and cool the centre. The information gained from the test can be used for planning energy efficiency initiatives in our existing centres and for development design in the future.
A number of case studies have been developed to illustrate the extent of works that have been undertaken to improve the operational efficiency of the portfolio. These include chiller upgrades at Grand Plaza Shopping Centre, and 15 Bowes Street, Canberra, a Building Management System (BMS) upgrade at Eastlands Shopping Centre and a carpark lighting project, energy saving escalator initiative and a variable speed drive (VSD) monitoring program at Forest Hill Chase.
Progress in 2011
| Commitments |
Progress |
Complete energy management plans for all centres
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Energy management plans have been completed at all sites, except DFO centres, which will be completed in 2012 |
Investigate opportunities for renewable energy generation
|
Renewable energy or co-generation investigated at two sites |
Undertake trial NABERS Energy rating assessments
|
Four accredited NABERS Energy ratings have been achieved |
Four accredited NABERS Energy ratings have been achieved
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Energy use performance
Since 2007, the size of the portfolio increased by 151,834 sqm as a result of acquisitions and completion of redevelopments. This led to an increase in the energy we consumed across the portfolio. However, CFX’s shopping centres have improved their overall energy efficiency by 8% (from 441 MJ/sqm to 404 MJ/sqm). |
Energy use performance
Since 2007, the size of the portfolio increased by 151,834 sqm as a result of acquisitions and completion of redevelopments. This led to an increase in the energy we consumed across the portfolio. However, CFX’s shopping centres have improved their overall energy efficiency by 8% (from 441 MJ/sqm to 404 MJ/sqm).
Greenhouse gas emissions (Scope 1 and 2)a performance
While CFX’s emissions have increased 1% due to the portfolio expansion since 2007, the Trust’s emissions intensity has improved by 13%, with intensity reducing from 109 kg CO2-e/sqm to 95 kg CO2-e/sqm demonstrating the increased focus on emissions reduction programs.
a. Greenhouse gas emissions: Scope 1 and 2 emissions are comprised of emissions associated with Electricity, Natural Gas, and LPG usage only.
Focus
Our focus for the next 12 months is on:
– continuing the implementation of the Operational Performance Strategy through the expansion of the NABERS program. This will include the gradual integration of the Asset Efficiency Program
– investigating innovation initiatives such as renewable energy options that may provide longer term benefits to the underlying portfolio including Solar PV opportunities
– setting and reporting on annual and long-term performance targets for electricity, gas and Scope 1 and Scope 2 emissions for the portfolio, and
– having NABERS rated centres re-accredited (annually) and have a further eight centres undergo NABERS energy assessment this year. Water
Improving water management through operational efficiency has been a long-term focus for CFX.
The identification and implementation of water efficiency measures are considered to be standard practice and good housekeeping. It will be the delivery of management tools such as the Asset Efficiency Program that will allow our property managers to continually improve the water efficiency within our shopping centres.
In recognition of our efforts to date, five of our assets have achieved accredited NABERS Water ratings during the year.
During the year, a number of case studies have been developed to demonstrate our ongoing focus on water efficiency improvements and technology solutions. These include the installation of waterless woks at Coria Shopping Centre, condensation harvesting at Grand Plaza Shopping Centre, and rainwater harvesting at Castle Plaza Shopping Centre. Additional case studies include baseload monitoring and investigation at QueensPlaza.
Improving water management through operational efficiency has been a long-term focus for CFX. The identification and implementation of water efficiency measures are considered to be standard practice and good housekeeping. It will be the delivery of management tools such as the Asset Efficiency Program that will allow our property managers to continually improve the water efficiency within our shopping centres. In recognition of our efforts to date, five of our assets have achieved accredited NABERS Water ratings during the year. During the year, a number of case studies have been developed to demonstrate our ongoing focus on water efficiency improvements and technology solutions. These include the installation of waterless woks at Coria Shopping Centre, condensation harvesting at Grand Plaza Shopping Centre, and rainwater harvesting at Castle Plaza Shopping Centre. Additional case studies include baseload monitoring and investigation at QueensPlaza.
Progress in 2011
| Commitment |
Progress |
| Seek innovative water-saving solutions |
Installed no-flush urinals and waterless woks at a number of assets |
| Incorporate recommendations from Water Management Plans (WMPs) |
Complete |
Performance
Since 2007, we have used 8% less water across the portfolio, which has cumulatively saved over 75,300 kL of water, equivalent to 30 olympic-sized swimming pools. The Trust has also improved its water efficiency by 20% (from 1.1 kL/sqm to 0.9 kL/sqm).
Focus
Our focus for the next 12 months is on:
– continuing the implementation of the Operational Performance Strategy through the expansion of the program. This will
include the gradual integration of the Asset Efficiency Program and the NABERS Water Rating Program
– conducting reviews of the previous Water Management Plans, with the intention of realigning them to match the NABERS
Water Improvement Plan format, and
– setting and reporting on annual and long-term performance targets for potable water consumption and water efficiency for
the portfolio.
Waste
For CFX, reducing the total amount of waste generated within a shopping centre and improving the diversion of that waste from landfill provides a number of benefits. The Trust is able to minimise increasing costs associated with landfill, manage and reduce its Scope 3 emissions , and engage with stakeholders through consumer engagement, retailer awareness programs and contractor education.
Our approach to waste and recycling has been strategic and closely aligned to the delivery of the new waste and recycling contract implementation. A large number of stakeholders have been engaged throughout the process and we now have confidence that our new reporting regime and management systems (which formally commenced in July 2011) can provide us with the accurate, transparent and performance-based outcomes we require as part of our Resource Recovery Strategy.
Progress in 2011
| Commitment |
Progress |
| Implement sustainability principles into KPIs and reporting for waste and cleaning contracts |
New waste and cleaning contracts from January 2011 have waste efficiency related KPIs |
| Implement additional waste management initiatives |
Initiatives include:
– Chatswood Chase Sydney organics diversion program
– Rockingham oil recycling program |
Focus
Our focus for the next 12 months is on:
– ensuring that our new waste and recycling contract is supported with the appropriate systems, tools and programs
– setting and reporting on annual and long-term performance targets for total waste generated and diversion from landfill for
the portfolio, and
– introducing a public place recycling initiative.
Strategy for waste in 2012
– Waste Management Plan development and formal review.
– Formal monthly meetings with waste contractor, cleaners and building management.
– Development of performance targets.
– Rigorous monthly reporting program.
– Tenant awareness programs.
Social
What it means to CFX
As a responsible property investor, we understand that there are a number of stakeholders involved in what we do and it is our responsibility to treat each of those stakeholders equitably and without discrimination. Our stakeholders include our employees, customers, tenants, contractors, the communities in which our centres are located and our investors.
Our people
CFSGAM encourages the enhancement of our workplace culture and active employee engagement through the CFSGAM Global Culture Council – which includes a range of employees of varying seniority including the CEO of CFSGAM. Our employees enjoy the benefits of working in CFSGAM, the consolidated asset management division of the Bank, which means they are also covered by the Bank’s human resources policies on:
– personal development
– diversity and equal opportunity
– training and development, including graduate programs
– flexible work arrangements
– employee services and benefits
– monitoring employee engagement and feedback
– occupational health and safety, and
– encouraging volunteering and charitable giving.
More detailed information on our employees can be found in the People section, pages 32 and 33 of the 2011 Annual Report or at http://www.commbank.com.au/about-us/our-company/our-people/default.aspx.
Customers, tenants and contractors
We take a proactive approach to stakeholder engagement at our centres. We provide a high standard of safety in our buildings through our rigorous Risk Management practices and OH&S practices. These apply not only to customers, staff and tenants who regularly use the site but also contractors employed at our centres. We also require high standards of our contractors, which require them to undertake our internal OH&S training before working on our sites and to maintain similarly high standards with regard to the treatment of their own workforce. In regard to our supply chain, we have implemented a procurement policy which takes into account our broad sustainability objectives and outcomes. This procurement policy will be further enhanced in regard to social sustainability aspects in the 2012 financial year.
On tenant engagement, we have tenant engagement policies and processes in place.
Our centres create communities
The centres we manage form an integral part of communities in which they are located and we have the ability to interact with those communities. They are more than just an attractive place for customers to shop or retailers to operate; they help create better communities.
Our shopping centres aim to be a vibrant focal point of their communities that are attractive not only for customers but also for tenants and our staff. RPI means collaborating to ensure we get the best outcomes for all stakeholders of our centres. We have an integrated green transport plan at Chadstone Shopping Centre.
We provide space, facilities and funds to local community organisations, charities and schools to raise money. This year, CFX centres donated the equivalent of over $800,000. In addition, all redevelopments we undertake incorporate extensive local community and council consultation prior to commencement.
The investment community
The Manager has regular contact with investors. We aim to maintain the highest standard of disclosure through the Australian Securities Exchange and treat all investors equally. We encourage and respond to feedback from investors through our annual unitholder meetings, analyst briefings, one-on-one meetings with key stakeholders and written correspondence.
As a recognised leader in sustainability, we actively participate in industry discussion to share information with our peers and ensure the industry as a whole works towards best practice. By way of example, CFX was asked to present at the Morgan Stanley Bi-Annual Environment Day in Sydney in October 2010. The presentation highlighted the achievements of CFX and the importance of RPI in managing the Trust’s underlying portfolio to maximise operational performance. To view this presentation please click here.
Further information on investor relations can be found on pages 34 to 35 of the 2011 Annual Report.
Regulators and industry bodies
The responsible property investment team is actively engaged in assisting industry bodies such as the Investor Group for Climate Change (IGCC), the Property Council of Australia (PCA) and the Green Building Council of Australia (GBCA). The team’s involvement is in testing and responding as an industry group to facilitate the implementation of standards regulation and policy, with an emphasis on ESG, as they relate to property.
CFSGAM is an active member of the PCA, with both the Head of Sustainability-Property, and the Sustainability Manager-Property, being members of the National Sustainability Roundtable and Sustainable Development Committees (in NSW and VIC). As such CFSGAM actively promotes and encourages other investment organisations to implement RPI/ESG principles in their ownership models. Through these organisations we have actively lobbied government on proposed policy formation and then on practical aspects for implementation of these policies.
The collective members of these committees, who represent the property sector, have now published an industry guide to disclosure under the National Greenhouse Energy Reporting System (NGERS) act. This guide, which assists all owners in completing their ESG obligations to report on emissions from office buildings under the NGERS act, is available on the PCA website.
Progress in 2011
| Commitment |
Progress |
| Commence a programmed green lease roll-out as appropriate with tenants |
Ongoing |
| Continue and improve community and tenant communications |
Ongoing |
| Continue with innovative marketing programs to promote facilities and services offered by the centres |
Ongoing |
| Incorporate sustainability into procurement processes |
Ongoing |
Focus
Our focus for the next 12 months is on:
– introducing the CFSGAM Green Lease Strategy (currently for office properties) and making modifications to it to adapt it to our
shopping centres
– continuing to focus on ‘Building Better Communities’. The beneficiary of the bio-degradable gift card program has been the
Australian Conservation Foundation, and
– further enhancing the socially responsible aspects of our procurement documentation, and concentrating on our
supply chain.
Canteen Rescue
As part of our ‘Building Better Communities’ campaign, we have continued to focus on the Canteen Rescue – Let’s live better campaign. CFSGAM has continued with this highly successful campaign, targeted at eating healthy, shopping locally and giving back to the community through a school canteen ‘makeover’ worth $40,000. CFSGAM partnered with Children’s Food Education Foundation – a dynamic charity focused on educating families and communities on better food choices – and Shannon Ponton and Michelle Bridges from The Biggest Loser television program.
This program has been running since 2009 and, due to its popularity with local families, continues to run across a number of CFX centres.
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Queensland flood response
The Brisbane CBD was flooded in January 2011. All three CFX Brisbane CBD assets were impacted to some extent by rising water cutting off major services, restricting access, forcing asset closures and creating some minor damage.
Staff assisted with the protection of the centres by organising sandbags, contractors and pumping equipment in advance of the flooding. Many staff stayed during the floods to assist in the protection of the 300 retailer businesses within our centres, working tirelessly overnight in shifts for three consecutive days, despite some of their own residences being affected.
Their valued efforts resulted in our assets sustaining minimal damage and, again, we thank our staff for their commitment and dedication during this difficult period.
The Bank provided crisis support and management throughout the disaster and recovery phase to employees and their families.
Governance
RPI is supported by a foundation of robust governance which is fundamental to protecting the long-term interests of unitholders. The Trust’s long-term vision incorporates ESG factors. Our Board receives half-yearly reports on RPI at a minimum.
Good governance is more than just the responsibility of the Board. We have risk management protocols across all facets of our business that are subject to both internal and external auditing. All employees receive regular training on corruption, bribery, anti-money laundering and counter-terrorism financing. We also have policies capturing (but not limited to) related party transacting, insider trading and continuous disclosure.
During the year, our efforts in market-leading governance were recognised when the Trust won the Asia Pacific Real Estate Association (APREA) inaugural best practices award in the Mature Markets (developed countries) category.
CFSGAM has a PRI Steering Committee which sets responsible investment policy and strategy. It comprises 17 senior representatives from across the business and is chaired by the Chief Executive Officer of CFSGAM. Reporting to the PRI Steering Committee are subcommittees and working groups that deal with asset class specific ESG issues, including the property RPI team. These subcommittees ensure that ESG considerations are integrated into the investment strategies of the Trust.
CFSGAM has a team of six responsible investment professionals, three of whom are dedicated to direct property, one of which is instrumental in guiding RPI in shopping centres.
CFSGAM has a team of six responsible investment professionals, three of whom are dedicated to direct property, one of which is instrumental in guiding RPI in shopping centres.
Further information on our extensive processes and reporting on corporate governance can be found on pages 52 to 67 of the 2011 Annual Report or in the about us section of this website, for the Bank more information can be found here.
