CDL: CREATING VALUE THROUGH SUSTAINABILITY In 1975 research showed that cipproximately 83% of the market value of the US S&P 500 could be accounted for in company accounts. There was a high degree of visibility for investors. By 2010, just 20% of a company's market value could be seen through the lens of the financial statements. The majority of a company's value is composed of capitals - including specifics such as the patents, people, copyrights and trademarks that are not easily visible or accessible through traditional financial reporting, - Intemational Integrated Reporting Council It was January 2016, and Esther An, the chief sustainability officer (CSC) of City Developments Limited (CDL), picked up a few copies of the company's 2015 sustainability report as she walked to the elevator on the 36 floor of Republic Plaza in Singapore's financial district. The unique double-deck elevator, which served two levels simultaneously, brought her to the Tower Club, a premier business club that occupied the three highest floors of the 280-metre building. This innovative double-deck design reduced wait times and maximised transportation efficiency. CDL's ability to combine creativity and functionality made it a market leader in the property sector. The lofty club offered unblocked views of the Singapore skyline; An particularly liked to gaze at the Gardens by the Bay on the other side of the Marina Bay area that showcased garden artistry. The surrounding greenery broke up the concrete urban landscape and helped Singapore gain its reputation as a garden city. A property pioneer and market leader in Singapore. CDL was widely recognised as a champion of green building and sustainable practices. The company understood that businesses could not keep trading clean air and water for economic growth with impunity. Having begun its Corporate Social Responsibility (CSR) efforts 21 years ago, CDL preserved its green tradition by incorporating green philosophies into innovative architectural projects that reduced environmental impact. In 2014, CDL completed the development of its Tree House condominium which featured the world's largest vertical garden CDL was committed to continually raising its CSR standards and providing its stakeholders with regular updates of its practices and the latest developments in sustainability. The company's sustainability report had been positively received since its initial publication eight years ago in 2008. Going forward, integrated reporting would be the future of corporate disclosure. The accounting community was still debating its merits as govemments pondered if integrated reporting should be made mandatory. In this regard, An saw an opportunity for CDL to futher its leadership role. Despite the current economic malaise, CDL ensured environmental and social issues were not neglected. CDL's latest sustainability report adopted an integrated reporting approach that incorporated a more holistic form of reporting, linking the impact of the firm's social and environmental accomplishments to its financial performance. As An exited the elevator, she greeted her investors with the report before starting the breakfast meeting. She was confident that the new sustainability report was a more useful tool for communicating CDL's sustainability- centric business story. She would soon discover if CDL's investors felt likewise. Singapore Homebuilding Industry Since gaining independence in 1965, Singapore had transformed its built environment from rural villages into a modem metropolis and developed into a leading global financial hub. The industry was constrained by Singapore's small size of roughly 700 square kilometres. Accordingly, most of the island-state's 5.4 million residents lived in high-rise buildings. In 2013, the homebuilding industry in Singapore generated revemes of SS4.4 (US$3.3) billion and accounted for as much as 15% of Singapore's total electricity consumption in 2014. However, the growth rate of the sector was expected to be commensurate with slowing population growth? The industry was dominated by a few large companies such as CapitaLand, CDL and Far East Organization and they competed through price, location and design differentiation As a whole. Singapore had to rely on technology to improve living standards and strive to become a Smart Nation, one that harnessed information technology. The core infrastructure, data centres, consumed a lot of energy and the emphasis was to become a green data centre and promote energy efficiency. The goverment controlled the property market through regulations and the approval of land sales. The Urban Redevelopment Authority (URA) of Singapore was in charge of land use planning and conservation. It analysed the trade-offs between various land zoning altematives to optimise the usage of scarce land and to ensure long-term sustainability. 10 The URA identified sites for residential commercial or hotel purposes before allowing competitive bidding for the land. The Building and Construction Authority (BCA) in Singapore regulated the built environment, which included buildings, structures and infrastructure in order to maintain high standards of safety and promote quality excellence in sustainability." As Singapore continued to urbanise, the focus shifted to improving energy efficiency. Many initiatives were launched to encourage sustainable growth. In January 2005, BCA launched the BCA Green Mark Scheme to direct the industry to become more ecologically responsible. The aim was to increase sustainability and environmental awareness in the built environment from the project conceptualisation stage through to the design and construction stages." The Singapore Green Building Council was launched in October 2009 to promote a world-class and sustainable built environment." In addition the Singapore government also released the Sustainable Singapore Blueprint 2015. an action plan to foster a better living environment by incorporating more smart technology in homes. CDL CDL, a Singapore company incorporated in 1963 that primarily engaged in property development, had diversified operations that included hotel management and hospitality services. CDL'S subsidiary Millennium & Copthorne Hotels (M&C). the first Singapore company listed on the London Stock Exchange, operated over 120 hotels worldwide in 2015. Altogether. CDL and its subsidiaries were listed on five different exchanges. For the financial year 2014, CDL recorded revenue of S$3.76 (US$2.79) billion with a net profit of S$770 (US$570) million CSR Journey CDL began its CSR joumey in 1995 by adopting a vision of "Conserving as we Construct" in a sector widely perceived to have a negative impact on the environment. Over time, it strengthened its commitment to CSR and stakeholder engagement. In 2007. Merrill Lynch, an American investment bank. had organised an Asian Investment Forum in Singapore, where it noticed CDL'S CSR-focused strategy. After discussing global reporting trends, they suggested that CDL was well- placed to feature its green accomplishments. CDL took their advice and published its first dedicated sustainability report in 2008. It became the first Singaporean company to produce a sustainability report with its application level reviewed by the Global Reporting Initiative (GRI), an independent organisation that pioneered sustainability reporting and developed the most recognised global reporting standard. However, gathering the necessary information required a lot of effort. An descnbed the initial difficulties in forming the sustainability initiative: I hard to engage all heads of department to explain why the company was embarking on thus sestability reporting journey. Most of our colleagues accepted that sestability reporting was a natural progression from our CSR-focused strategy. From the second year onwards, we started extemal assurance by independent autors Since 2009, CDL engaged credible verification bodies to review the data and provide external assurance. An believed the external assurance was a positive experience: "During the audit, we identify the gaps in our processes and operations and the auditors help us make improvements." An believed that audited reports were more credible and CDL should adhere to the widely recognised GRI framework: "We have been using GRI from day one. It is the global reporting standard by default because it provides a very comprehensive framework with a focus on stakeholder engagement." A commitment from top management was necessary to overcome the initial resistance in the early days it was not easy to gain internal acceptance, but the backing of the then managing director and board of directors helped effect the change The CSO role was elevated to the top management level to reflect the importance of sustainability within the company. A company-wide CSR committee was also formed to align CSR initiatives with the company's business strategy in the Late 2000s. The committee comprised various levels of staff from senior management to line officers, cutting across all key operational units. The committee was also responsible for choosing introduced rules gradually: When Green Mark started in 2005, it was on a voluntary basis. It's like dangling a carrot in front of you. In 2008, the basic level became mandaron. If you want to develop a plot of land, you must adhere to the Green Mark certification imel because it is ime. If you don't comply. you can't build. SG.I has talked about introducing sustainability guidelines before. The only question was when . 2017 In January 2016, SGX announced plans for sustainability reports to be published with effect from financial year An sensed that the pattern might be repeated and wanted to be prepared should integrated reporting become compulsory. There were many similarities between integrated reporting and sustainability reporting, Integrated reporting classified a firm's assets into various capitals. Using that approach, An prepared CDL for a possible integrated reporting regime (refer to Exhibit 1 for CDL's capitals) Integrated Reporting Integrated reporting was a new approach of reporting that aimed to provide more relevant, material and holistic information to investors. As businesses became more complex, financial reports became more voluminous but less informative. Integrated reporting was mooted as a way of linking the company's activities with financial impact. This form of narrative reporting would improve traditional annual reports that relied on historical financial information. The report sought to show providers of financial capital tine fimm's value creation process. The principles-based approach used certain guidelines and content elements (refer to Exhibit 2 for the framework outline) that allowed flexibility for individual companies but still retained a degree of comparability. Providing more relevant information would also increase transparency and reduce the uncertainty around the company's business prospects and prevent investors from making wrong assumptions. A company's resources would be classified as various stocks of value, or capitals, which contributed to how the company created value The decision to transition to integrated reporting took a couple of years. In 2015, An prepared a sustainability report with an integrated reporting approach to make stronger business sense of the company's ESG integration. Initially, when integrated reporting was required to include both financial and non-financial reporting in a single document, An had reservations: "We were invited by the International Integrated Reporting Council to be part of the pilot project. But I told them we were not ready. I did not want to produce a 'phone book', which was just piling the sustainability report on top of the annual report." Eventually, An felt that taking steps toward integrated reporting was a natural progression She decided to adopt the integrated reporting concept when IRC changed the requirements and allowed for the integrated report covering the sustainability content to be a separate document from the financial report. An understood that she would have to help forecast the future looking features of the report. She would also have to assess how external stakeholder relationships would contribute to value creation Determining which KPIs to use would also have to be a dynamic process. Even though it was not mandatory at the moment, the time was right to produce a sustainability report using the integrated reporting approach However, she acknowledged that the financial considerations were still paramount. "An integrated report is a more holistic report. The three components (financial, environmental and social) cannot stand alone but have to be well connected to achieve the company's business and corporate objectives. You still need to be profitable. If your company goes bust, you can't do any good for the community or the environment." Creating Value for CDL As part of its value creation framework, CDL defined six interconnected capitals (financial, manufactured, organisational, social and relationship, human and natural). The integrated reporting approach would help the company link its use of these capitals to its strategy and explain how they were being managed to generate value from its business activities CDL's financial capital was boosted by record revenues. Due to cooling measures by the government and the weak market sentiment in Singapore, the management decided to step up geographic and portfolio diversification. It would also slow investments and make use of its strong capital base to wait for acquisition opportunities. CDL's geen building developments - a core business - represented its manufactured capital Developing quality and environmentally sustainable properties helped differentiate CDL's projects while reducing its operating expenses. It had also improved its construction productivity through the adoption of prefabricated bathroom units from the early 2000s to reduce construction waste With an innovative spint, CDL continued to explore larger scale prefabrications, as it has done with The Brownstone Executive Condominium - likely the world's largest application of advanced Prefabricated, Prefinished, Volumetric Construction technology for a residential development, consisted of around 5,000 modules and built on the principles of smart building management to achieve resouce efficiency. This was set to raise productivity by 40% and save 55,000 man days. CDL had always priontised landscaping in its condominium developments. The construction of its Tree House condominium included almost 2,300 square metres of greenery. Despite the lack of ground space, the company raised the bar by planting flora on the building walls, leading to the development of the world's largest vertical garden in 2014 (refer to Exhibit 3 for an illustration of the Tree House). The innovative garden was not only aesthetically pleasing but also reduced hat absorption, saving up to 30% of air-conditioning energy consumption. The plants also helped reduce its carbon footprint by filtering carbon dioxide and improving air quality Organisational capital at CDL involved strong review and communication of policies and processes to facilitate employee engagement. Evidence for that culture could be glimpsed by receiving recognition in the form of Dow Jones Sustainability Indices, MSCI Environmental Social and Governance indices, FTSE4Good Indices and Global Real Estate Sustainability Benchmark. It also set high standards for suppliers by installing green procurement guidelines, which were reviewed on an on-going basis. The social and relationship capital involved the multiple connections and goodwill it bad established with stakeholders over time. CDL promoted work-life balance for its employees, provided high standards for customer experience and had set high compliance standards for its suppliers. CDL also participated in regular consultations with regulators and the media. As CDL improved its efforts to communicate with customers, its customer satisfaction rate increased from 60% in 2013 to 65% in 2014. For its buman capital, CDL ensured good remuneration and benefits for its employees. It provided good leaming and development programmes that resulted in an employee turnover rate of 15.9% compared to the national average of 24.3% in 2014. Its commitment to EHS issues also resulted in CDL having accident frequency and workplace injury rates that were less than half the industry average . For natural capital, CDL's consistent conservation efforts over the years resulted in a reduction of greenhouse gas emissions across its operations by 21% in comparison to 2007. Furthermore, it had committed to environmental conservation and aspired to reduce the intensity of its energy and water usage by 22% by 2020 and 25% by 2030, against its baseline year of 2007. Between 2008 and 2014, CDL's 57 BCA Green Mark awarded developments saved $36.5 million from reductions in electricity consumption This contributed to a lower carbon footprint by both CDL and its customers. What Next? CDL reached a significant milestone in its sustainability journey, it was ranked 10 in the Global 100 Most Sustainable Corporations in the World in 2016 and top amongst all listed real estate companies." An believed that with the unprecedented global commitment at the Paris climate conference to combat climate change in December 2015, sustainability issues would become a more important factor in investors' decisions. Listed companies would need to hasten their efforts to adopt a sustainability strategy as SGX increased its disclosure requirements. For CDL, An was confident that the company would continue its sustainability journey with greater vigour and conviction She felt positive that the company's investment in sustainability over the last two decades would soon yield greater returns and create value for the company and its stakeholders. The integrated reporting approach helped the company connect more clearly its ESG performance with financial impact and value creation An was hopeful that CDL's sustainability efforts would lead the industry to complement Singapore's broader vision to build a clean, green and low-carbon environment. Student Assignment Questions 1. Why is sustainability important to companies such as CDL? 2. How have corporate reporting practices evolved to include sustainability issues? 3. What are the similarities and differences between annual reports, integrated reports, and sustainability reports? 4. What are the challenges to producing an integrated report? 5. How did producing a sustainability report using an integrated reporting approach help CDL produce an integrated report? EXHIBIT 1: COL'S CAPITALS FINANCIAL Earnings Equity Investments Assets MANUFACTURED Green building and innovation Quality developments Sustainable construction methods and technologies ORGANISATIONAL Leadership and culture Corporate governance Policies and practices Risk management SOCIAL & RELATIONSHIP Stakeholder relations Partnerships Social licence to operate Community development HUMAN Health and safety Benefits and remuneration Learning and development Job creation and security NATURAL Carbon emissions Energy management Water stewardship Waste and resource management Source: CDL, Sustainabiliry Report 2015, btp://www.col.com.se/sustainabilit report2015.pdfcdl ar 2015.pdf accessed October 2015. EXHIBIT 2: IR FRAMEWORK Guiding Principles Content Elements Strategic focus and fitue Organizational overview and orientation external environment Connectivity of information Goverance Stakeholder relationships Business model Materiality Risks and opportunities Conciseness Strategy and resource allocation Reliability and completeness Performance Consistency and comparability Outlook Basis of presentation Source: The International CIR> Framework, http://integratedreporting.org/wp-content/uploads/2013/12/13-12-08- THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf, accessed October 2015. EXHIBIT 3: TREE HOUSE CONDOMINIUM DOUSe Source: Provided by CDL CDL: CREATING VALUE THROUGH SUSTAINABILITY In 1975 research showed that cipproximately 83% of the market value of the US S&P 500 could be accounted for in company accounts. There was a high degree of visibility for investors. By 2010, just 20% of a company's market value could be seen through the lens of the financial statements. The majority of a company's value is composed of capitals - including specifics such as the patents, people, copyrights and trademarks that are not easily visible or accessible through traditional financial reporting, - Intemational Integrated Reporting Council It was January 2016, and Esther An, the chief sustainability officer (CSC) of City Developments Limited (CDL), picked up a few copies of the company's 2015 sustainability report as she walked to the elevator on the 36 floor of Republic Plaza in Singapore's financial district. The unique double-deck elevator, which served two levels simultaneously, brought her to the Tower Club, a premier business club that occupied the three highest floors of the 280-metre building. This innovative double-deck design reduced wait times and maximised transportation efficiency. CDL's ability to combine creativity and functionality made it a market leader in the property sector. The lofty club offered unblocked views of the Singapore skyline; An particularly liked to gaze at the Gardens by the Bay on the other side of the Marina Bay area that showcased garden artistry. The surrounding greenery broke up the concrete urban landscape and helped Singapore gain its reputation as a garden city. A property pioneer and market leader in Singapore. CDL was widely recognised as a champion of green building and sustainable practices. The company understood that businesses could not keep trading clean air and water for economic growth with impunity. Having begun its Corporate Social Responsibility (CSR) efforts 21 years ago, CDL preserved its green tradition by incorporating green philosophies into innovative architectural projects that reduced environmental impact. In 2014, CDL completed the development of its Tree House condominium which featured the world's largest vertical garden CDL was committed to continually raising its CSR standards and providing its stakeholders with regular updates of its practices and the latest developments in sustainability. The company's sustainability report had been positively received since its initial publication eight years ago in 2008. Going forward, integrated reporting would be the future of corporate disclosure. The accounting community was still debating its merits as govemments pondered if integrated reporting should be made mandatory. In this regard, An saw an opportunity for CDL to futher its leadership role. Despite the current economic malaise, CDL ensured environmental and social issues were not neglected. CDL's latest sustainability report adopted an integrated reporting approach that incorporated a more holistic form of reporting, linking the impact of the firm's social and environmental accomplishments to its financial performance. As An exited the elevator, she greeted her investors with the report before starting the breakfast meeting. She was confident that the new sustainability report was a more useful tool for communicating CDL's sustainability- centric business story. She would soon discover if CDL's investors felt likewise. Singapore Homebuilding Industry Since gaining independence in 1965, Singapore had transformed its built environment from rural villages into a modem metropolis and developed into a leading global financial hub. The industry was constrained by Singapore's small size of roughly 700 square kilometres. Accordingly, most of the island-state's 5.4 million residents lived in high-rise buildings. In 2013, the homebuilding industry in Singapore generated revemes of SS4.4 (US$3.3) billion and accounted for as much as 15% of Singapore's total electricity consumption in 2014. However, the growth rate of the sector was expected to be commensurate with slowing population growth? The industry was dominated by a few large companies such as CapitaLand, CDL and Far East Organization and they competed through price, location and design differentiation As a whole. Singapore had to rely on technology to improve living standards and strive to become a Smart Nation, one that harnessed information technology. The core infrastructure, data centres, consumed a lot of energy and the emphasis was to become a green data centre and promote energy efficiency. The goverment controlled the property market through regulations and the approval of land sales. The Urban Redevelopment Authority (URA) of Singapore was in charge of land use planning and conservation. It analysed the trade-offs between various land zoning altematives to optimise the usage of scarce land and to ensure long-term sustainability. 10 The URA identified sites for residential commercial or hotel purposes before allowing competitive bidding for the land. The Building and Construction Authority (BCA) in Singapore regulated the built environment, which included buildings, structures and infrastructure in order to maintain high standards of safety and promote quality excellence in sustainability." As Singapore continued to urbanise, the focus shifted to improving energy efficiency. Many initiatives were launched to encourage sustainable growth. In January 2005, BCA launched the BCA Green Mark Scheme to direct the industry to become more ecologically responsible. The aim was to increase sustainability and environmental awareness in the built environment from the project conceptualisation stage through to the design and construction stages." The Singapore Green Building Council was launched in October 2009 to promote a world-class and sustainable built environment." In addition the Singapore government also released the Sustainable Singapore Blueprint 2015. an action plan to foster a better living environment by incorporating more smart technology in homes. CDL CDL, a Singapore company incorporated in 1963 that primarily engaged in property development, had diversified operations that included hotel management and hospitality services. CDL'S subsidiary Millennium & Copthorne Hotels (M&C). the first Singapore company listed on the London Stock Exchange, operated over 120 hotels worldwide in 2015. Altogether. CDL and its subsidiaries were listed on five different exchanges. For the financial year 2014, CDL recorded revenue of S$3.76 (US$2.79) billion with a net profit of S$770 (US$570) million CSR Journey CDL began its CSR joumey in 1995 by adopting a vision of "Conserving as we Construct" in a sector widely perceived to have a negative impact on the environment. Over time, it strengthened its commitment to CSR and stakeholder engagement. In 2007. Merrill Lynch, an American investment bank. had organised an Asian Investment Forum in Singapore, where it noticed CDL'S CSR-focused strategy. After discussing global reporting trends, they suggested that CDL was well- placed to feature its green accomplishments. CDL took their advice and published its first dedicated sustainability report in 2008. It became the first Singaporean company to produce a sustainability report with its application level reviewed by the Global Reporting Initiative (GRI), an independent organisation that pioneered sustainability reporting and developed the most recognised global reporting standard. However, gathering the necessary information required a lot of effort. An descnbed the initial difficulties in forming the sustainability initiative: I hard to engage all heads of department to explain why the company was embarking on thus sestability reporting journey. Most of our colleagues accepted that sestability reporting was a natural progression from our CSR-focused strategy. From the second year onwards, we started extemal assurance by independent autors Since 2009, CDL engaged credible verification bodies to review the data and provide external assurance. An believed the external assurance was a positive experience: "During the audit, we identify the gaps in our processes and operations and the auditors help us make improvements." An believed that audited reports were more credible and CDL should adhere to the widely recognised GRI framework: "We have been using GRI from day one. It is the global reporting standard by default because it provides a very comprehensive framework with a focus on stakeholder engagement." A commitment from top management was necessary to overcome the initial resistance in the early days it was not easy to gain internal acceptance, but the backing of the then managing director and board of directors helped effect the change The CSO role was elevated to the top management level to reflect the importance of sustainability within the company. A company-wide CSR committee was also formed to align CSR initiatives with the company's business strategy in the Late 2000s. The committee comprised various levels of staff from senior management to line officers, cutting across all key operational units. The committee was also responsible for choosing introduced rules gradually: When Green Mark started in 2005, it was on a voluntary basis. It's like dangling a carrot in front of you. In 2008, the basic level became mandaron. If you want to develop a plot of land, you must adhere to the Green Mark certification imel because it is ime. If you don't comply. you can't build. SG.I has talked about introducing sustainability guidelines before. The only question was when . 2017 In January 2016, SGX announced plans for sustainability reports to be published with effect from financial year An sensed that the pattern might be repeated and wanted to be prepared should integrated reporting become compulsory. There were many similarities between integrated reporting and sustainability reporting, Integrated reporting classified a firm's assets into various capitals. Using that approach, An prepared CDL for a possible integrated reporting regime (refer to Exhibit 1 for CDL's capitals) Integrated Reporting Integrated reporting was a new approach of reporting that aimed to provide more relevant, material and holistic information to investors. As businesses became more complex, financial reports became more voluminous but less informative. Integrated reporting was mooted as a way of linking the company's activities with financial impact. This form of narrative reporting would improve traditional annual reports that relied on historical financial information. The report sought to show providers of financial capital tine fimm's value creation process. The principles-based approach used certain guidelines and content elements (refer to Exhibit 2 for the framework outline) that allowed flexibility for individual companies but still retained a degree of comparability. Providing more relevant information would also increase transparency and reduce the uncertainty around the company's business prospects and prevent investors from making wrong assumptions. A company's resources would be classified as various stocks of value, or capitals, which contributed to how the company created value The decision to transition to integrated reporting took a couple of years. In 2015, An prepared a sustainability report with an integrated reporting approach to make stronger business sense of the company's ESG integration. Initially, when integrated reporting was required to include both financial and non-financial reporting in a single document, An had reservations: "We were invited by the International Integrated Reporting Council to be part of the pilot project. But I told them we were not ready. I did not want to produce a 'phone book', which was just piling the sustainability report on top of the annual report." Eventually, An felt that taking steps toward integrated reporting was a natural progression She decided to adopt the integrated reporting concept when IRC changed the requirements and allowed for the integrated report covering the sustainability content to be a separate document from the financial report. An understood that she would have to help forecast the future looking features of the report. She would also have to assess how external stakeholder relationships would contribute to value creation Determining which KPIs to use would also have to be a dynamic process. Even though it was not mandatory at the moment, the time was right to produce a sustainability report using the integrated reporting approach However, she acknowledged that the financial considerations were still paramount. "An integrated report is a more holistic report. The three components (financial, environmental and social) cannot stand alone but have to be well connected to achieve the company's business and corporate objectives. You still need to be profitable. If your company goes bust, you can't do any good for the community or the environment." Creating Value for CDL As part of its value creation framework, CDL defined six interconnected capitals (financial, manufactured, organisational, social and relationship, human and natural). The integrated reporting approach would help the company link its use of these capitals to its strategy and explain how they were being managed to generate value from its business activities CDL's financial capital was boosted by record revenues. Due to cooling measures by the government and the weak market sentiment in Singapore, the management decided to step up geographic and portfolio diversification. It would also slow investments and make use of its strong capital base to wait for acquisition opportunities. CDL's geen building developments - a core business - represented its manufactured capital Developing quality and environmentally sustainable properties helped differentiate CDL's projects while reducing its operating expenses. It had also improved its construction productivity through the adoption of prefabricated bathroom units from the early 2000s to reduce construction waste With an innovative spint, CDL continued to explore larger scale prefabrications, as it has done with The Brownstone Executive Condominium - likely the world's largest application of advanced Prefabricated, Prefinished, Volumetric Construction technology for a residential development, consisted of around 5,000 modules and built on the principles of smart building management to achieve resouce efficiency. This was set to raise productivity by 40% and save 55,000 man days. CDL had always priontised landscaping in its condominium developments. The construction of its Tree House condominium included almost 2,300 square metres of greenery. Despite the lack of ground space, the company raised the bar by planting flora on the building walls, leading to the development of the world's largest vertical garden in 2014 (refer to Exhibit 3 for an illustration of the Tree House). The innovative garden was not only aesthetically pleasing but also reduced hat absorption, saving up to 30% of air-conditioning energy consumption. The plants also helped reduce its carbon footprint by filtering carbon dioxide and improving air quality Organisational capital at CDL involved strong review and communication of policies and processes to facilitate employee engagement. Evidence for that culture could be glimpsed by receiving recognition in the form of Dow Jones Sustainability Indices, MSCI Environmental Social and Governance indices, FTSE4Good Indices and Global Real Estate Sustainability Benchmark. It also set high standards for suppliers by installing green procurement guidelines, which were reviewed on an on-going basis. The social and relationship capital involved the multiple connections and goodwill it bad established with stakeholders over time. CDL promoted work-life balance for its employees, provided high standards for customer experience and had set high compliance standards for its suppliers. CDL also participated in regular consultations with regulators and the media. As CDL improved its efforts to communicate with customers, its customer satisfaction rate increased from 60% in 2013 to 65% in 2014. For its buman capital, CDL ensured good remuneration and benefits for its employees. It provided good leaming and development programmes that resulted in an employee turnover rate of 15.9% compared to the national average of 24.3% in 2014. Its commitment to EHS issues also resulted in CDL having accident frequency and workplace injury rates that were less than half the industry average . For natural capital, CDL's consistent conservation efforts over the years resulted in a reduction of greenhouse gas emissions across its operations by 21% in comparison to 2007. Furthermore, it had committed to environmental conservation and aspired to reduce the intensity of its energy and water usage by 22% by 2020 and 25% by 2030, against its baseline year of 2007. Between 2008 and 2014, CDL's 57 BCA Green Mark awarded developments saved $36.5 million from reductions in electricity consumption This contributed to a lower carbon footprint by both CDL and its customers. What Next? CDL reached a significant milestone in its sustainability journey, it was ranked 10 in the Global 100 Most Sustainable Corporations in the World in 2016 and top amongst all listed real estate companies." An believed that with the unprecedented global commitment at the Paris climate conference to combat climate change in December 2015, sustainability issues would become a more important factor in investors' decisions. Listed companies would need to hasten their efforts to adopt a sustainability strategy as SGX increased its disclosure requirements. For CDL, An was confident that the company would continue its sustainability journey with greater vigour and conviction She felt positive that the company's investment in sustainability over the last two decades would soon yield greater returns and create value for the company and its stakeholders. The integrated reporting approach helped the company connect more clearly its ESG performance with financial impact and value creation An was hopeful that CDL's sustainability efforts would lead the industry to complement Singapore's broader vision to build a clean, green and low-carbon environment. Student Assignment Questions 1. Why is sustainability important to companies such as CDL? 2. How have corporate reporting practices evolved to include sustainability issues? 3. What are the similarities and differences between annual reports, integrated reports, and sustainability reports? 4. What are the challenges to producing an integrated report? 5. How did producing a sustainability report using an integrated reporting approach help CDL produce an integrated report? EXHIBIT 1: COL'S CAPITALS FINANCIAL Earnings Equity Investments Assets MANUFACTURED Green building and innovation Quality developments Sustainable construction methods and technologies ORGANISATIONAL Leadership and culture Corporate governance Policies and practices Risk management SOCIAL & RELATIONSHIP Stakeholder relations Partnerships Social licence to operate Community development HUMAN Health and safety Benefits and remuneration Learning and development Job creation and security NATURAL Carbon emissions Energy management Water stewardship Waste and resource management Source: CDL, Sustainabiliry Report 2015, btp://www.col.com.se/sustainabilit report2015.pdfcdl ar 2015.pdf accessed October 2015. EXHIBIT 2: IR FRAMEWORK Guiding Principles Content Elements Strategic focus and fitue Organizational overview and orientation external environment Connectivity of information Goverance Stakeholder relationships Business model Materiality Risks and opportunities Conciseness Strategy and resource allocation Reliability and completeness Performance Consistency and comparability Outlook Basis of presentation Source: The International CIR> Framework, http://integratedreporting.org/wp-content/uploads/2013/12/13-12-08- THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf, accessed October 2015. EXHIBIT 3: TREE HOUSE CONDOMINIUM DOUSe Source: Provided by CDL