Sustainability Commitment

As a CapitaLand-sponsored REIT, CRCT is managed by wholly owned subsidiaries of CapitaLand which include the Manager as well as Property Managers which oversee daily property operations for the portfolio of malls. The Manager and Property Managers are responsible for the property operations across CRCT’s portfolio, and abide by CapitaLand sustainability framework, policies, guidelines, as well as ethics and code of business conduct.

CRCT’s sustainability strategies and objectives are aligned to the Group’s credo of ‘Building People. Building Communities’. The Group is committed to improving the economic and social well-being of its stakeholders through the development of its projects and management of its operations. In a rapidly changing business landscape, it actively embraces innovation to ensure commercial viability without compromising the environment for future generations.

The Group upholds high standards of corporate governance and transparency to safeguard shareholders’ interests. It has in place an adequate and effective Enterprise Risk Management framework to enhance its business resilience and agility. The Group’s proactive approach towards environmental, health and safety (EHS) management, which incorporates universal design into its developments, ensures that its properties are future-proof and sustainable. Policies and guidelines are put in place to ensure the efficient use of energy, water and other resources.

The Group’s integrated human capital strategy aims to recruit, develop and motivate employees to drive growth. Community development is also an important component of the Group’s commitment to sustainability. It focuses on providing support to enhance the lives of underprivileged children through corporate philanthropy and employee volunteerism.

CapitaLand is one of the first companies in Singapore to voluntarily publish its annual Sustainability Report and externally assure the entire report. Benchmarking against an international standard and framework that is externally validated helps the Group overcome the challenges to sustainability reporting that arise from its diversified asset types and geographical presence. CapitaLand is also a signatory to the UN Global Compact and its Global Sustainability Report serves as its Communication on Progress, which will be made available at www.unglobalcompact.org when published. Some of CapitaLand’s key efforts and programmes in relation to UN Sustainable Development Goals (SDGs) will be included in the annual Sustainability Report 2017 when published.

For its efforts, CapitaLand is listed in the Sustainability Yearbook, Dow Jones Sustainability World Index and Asia Pacific Index, Global Real Estate Sustainability Benchmark (Regional Sector Leader for Asia, Diversified), FTSE4Good Index Series, MSCI Global Sustainability Indexes, Euronext VigeoEiris Indices World 120, STOXX® Global ESG Leaders Indices, and SGX Sustainability Indices.

The CapitaLand Global Sustainability Report 2017 will be published by end-May 2018 and will cover the Group’s portfolio and employees, including its listed real estate investment trusts CapitaLand Mall Trust, CapitaLand Commercial Trust, Ascott Residence Trust, CapitaLand Retail China Trust and CapitaLand Malaysia Mall Trust, unless otherwise indicated. The report will be externally assured to AA1000 Assurance Standard.

This sustainability chapter references selected GRI Standards¹ to report specific information. It covers CRCT’s properties from 1 January to 31 December 2017 unless otherwise stated. The teams behind the Manager and Property Manager responsible for property and portfolio operations are identified as employees of the Trust.

Board Statement

CRCT is committed to sustainability and incorporates the key principles of environment, social and governance in setting out its business strategies and operations.

The Board sets CRCT’s risk appetite, which determines the nature and extent of material risks that CRCT is willing to take to achieve its strategic and business objectives. The risk appetite incorporates ESG factors such as fraud, corruption and bribery, environment, health and safety.

The Board also approves the executive compensation framework based on the principle of linking pay to performance. CRCT’s business plans are translated to both quantitative and qualitative performance targets including sustainable corporate practices and are cascaded throughout the organisation.

Top Management Commitment and Staff Involvement

The Group’s Sustainability Management comes under the purview of its Sustainability Council, comprising the Group’s top management. It is supported by a Sustainability Steering Committee which oversees two work teams to ensure the Group’s continued progress and improvement in the areas of ESG. The Sustainability Steering Committee and work teams comprise representatives from all business units. The CapitaLand Board of Directors is updated regularly through the Risk Committee and Audit Committee on matters relating to sustainability risks and business malpractice incidents if any. The Board is also updated on the sustainability management performance of the Group, key material issues identified by stakeholders and the planned measures for follow up.

Materiality

The Group has a regular review, assessment and feedback process in relation to ESG. Key to this is an annual Groupwide Risk and Control Self-Assessment exercise which entails the identification, assessment and documentation of material risks and corresponding internal controls. Such material risks include fraud and corruption, environmental, health and safety, and human capital risks which are relevant to ESG. Other channels for feedback include:

Through regular stakeholder engagement, the Group identifies and reviews material issues that are most relevant and significant to the Group and its stakeholders. These are prioritised based on the likelihood and potential impact of issues affecting business continuity and development.

For external stakeholders, priority is given to issues important to the society and applicable to the Group. The Group therefore prioritises its sustainability efforts and reporting on issues that are most material to its business and stakeholders.

Prioritisation of ESG Material Issues

Stakeholder Engagement

Employees

The Group actively engages its employees through various avenues, including regular communication sessions held by senior management, for effective flow of information and alignment of business goals and objectives across all levels of its workforce.

Customers

The Group conducts regular resident satisfaction surveys in all its serviced residences and tenant surveys in its shopping malls and office buildings. The feedback obtained is reviewed and relevant follow-up actions are taken to improve residents’ experience and service levels to tenants.

Supply Chain

The Group proactively engages contractors and suppliers on areas relating to quality of work and commitment to EHS. For more information, please refer to the sub-section on EHS.

The Group also adopts a strong stance against bribery and corruption. Third-party service providers and contractors can provide feedback via a dedicated email address, in addition to the regular feedback channels.

Investors and Media

Underlying CRCT’s investor and analyst communications is its Unitholders’ Communications and Investor Relations (IR) policy which is available at www.crct.com.sg/ir_policy. Please refer to the section on Investor and Media Relations on pages 50 to 51 of this Annual Report.

Government Agencies and Regulators

CapitaLand participates in stakeholder consultations organised by key government agencies so as to furnish feedback on proposed regulatory changes that impact the company’s business. It enables CapitaLand to be aware of industry challenges, placing the company in a better position to leverage existing and future opportunities for growth.

Human Capital

As an externally managed REIT, CRCT has no employees and is managed by the Manager and Property Managers, which are indirect wholly owned subsidiaries of the Group. The employees of the Manager and Property Managers form part of the headcount of the Group. CRCT leverages on the Group’s integrated human capital strategy to recruit, develop and engage employees.

The Group is committed to be a workplace of choice for its employees and has an integrated human capital strategy to recruit, develop and motivate employees. The Group upholds the spirit of international human rights conventions, such as the Universal Declaration of Human Rights and the International Labour Organisation (ILO) Conventions, against coerced labour and discrimination in any form. In 2017, there was no reported incident relating to discrimination, child labour or forced labour in CapitaLand.

CRCT has maintained a diverse workforce in terms of age, gender and skill sets. The teams behind the Manager and Property Manager consist of more than 300 employees, and are responsible for the property and portfolio operations in China. New hires represented 25% of the total headcount in 2017. Our workforce comprises an almost equal proportion of males and females, at a ratio of 60:40. The company’s female employees are well-represented at the middle and senior management level. About 44% of the managerial employees were female. 77% of our workforce is aged 30 to 50. In 2017, we had no employee below the age of 16.

The Group adheres to an ethics and code of business conduct policy which deals with issues such as confidentiality, conduct and work discipline, corporate gifts and concessionary offers. Clear policies and guidelines on how to handle workplace harassment and grievances are also in place. The Group adopts a strong stance against bribery and corruption. All employees of the Group are required to make a declaration on an annual basis when they pledge to uphold the Group’s core values and not to engage in any corrupt or unethical practices. This serves as a reminder to all employees to maintain the highest standards of integrity in their work and business dealings.

A whistle-blowing policy and other procedures are in place to provide the Group’s employees and parties who have dealings with the Group with well-defined, accessible and trusted channels to report suspected fraud, corruption, dishonest practices or other improprieties in the workplace. It also allows for the independent investigation of any reported incidents and appropriate actions for follow up. Substantiated business malpractice incidents are reported quarterly to the CapitaLand Audit Committee and shared with the Risk Champions regularly. Actions taken may include the termination of employment contracts, and/ or reporting to the appropriate external authorities.

Employees are provided with suitable training to be better equipped and so as to contribute effectively to the Group’s performance. For continuous upskilling and improvement, at least 95% of employees are required to attend at least one learning event per year. In 2017, 3% of CRCT’s annual payroll was set aside for employees to attend learning and development programmes and the average number of training hours completed by each employee for the year was more than 80 hours, well above the recommended industry guide of 40 hours per annum.

A total well-being programme has been put in place in CapitaLand to promote personal development, healthy living and work-life harmony which are essential to attract, motivate and retain talent. Initiatives include a flexible medical and benefits plan, flexible work arrangements and employee engagement initiatives.

Community Development Investment And Value

Community development is a key focus of CapitaLand’s sustainability strategy. This has generated strong social capital and goodwill for the Group in the communities it operates in. It supports various stakeholder engagement activities which include environmental sustainability, health and safety, social integration as well as helping underprivileged children.

CRCT is committed to corporate philanthropy and takes pride in supporting employee volunteerism initiatives that contribute to the well-being of the communities served by its malls. CRCT malls also organised a wide variety of community events in support of various causes.

In September 2017, staff from CRCT malls took part in “My Schoolbag” – CapitaLand’s key annual corporate social responsibility programme, which took place for the eighth consecutive year in China. Staff volunteers helped to distribute new schoolbags and stationery to about 18,000 first grade pupils from 220 schools, including 22 CapitaLand Hope Schools. They also visited selected schools to help refurbish ageing facilities and interact with the children.

During the year-end festivities celebrations, CRCT malls organised Christmas charity bazaars whereby proceeds from the sale of festive items such as toys, books and handicrafts were donated to underprivileged children. To raise funds for CapitaLand Hope Schools, CapitaMall Qibao also held a charity carnival which roped in kindergarten children and their families to manage fun fair stalls. These heartwarming events seek to bring hope to the less fortunate while inculcating kindness in the next generation.

A registered charity in Singapore, the philanthropic arm of CapitaLand, CapitaLand Hope Foundation (CHF) invests in the fundamental needs of education, healthcare and shelter of underprivileged children to relieve them of hardship and help them to eventually break the poverty cycle. Every year, the Group allocates up to 0.5% of its net profit to CHF and supports its day-to-day operations with staff from the various functional departments within the company.

CRCT is committed to providing a vibrant and accessible environment that offers convenience for the community that it serves. CRCT’s social integration criteria include ensuring accessibility for people of different age groups and varying mobility, enhancing connectivity to public transportation and roads. Most of our malls are fitted with accessible toilets to cater to people with disabilities, while accessible parking lots are available at CapitaMall Wangjing, CapitaMall Grand Canyon and CapitaMall Xinnan. There are also dedicated nursing rooms in some of CRCT’s malls, to meet the needs of shoppers with young children.

The Group is a strong advocate of volunteerism and was one of the first companies to formalise three days of Volunteer Service Leave (VSL) for its staff.

Environment, Health And Safety (Ehs)

The Group is committed to protecting the environment and upholding the occupational health and safety of its employees and ensuring a safe and healthy environment for the users of its properties. The CapitaLand EHS Management System is externally audited to achieve the International Organization for Standardization (ISO) 14001 and Occupational Health and Safety Assessment Series (OHSAS) 18001 certification across 15 countries. CEOs are accountable for the EHS performance of their strategic business units (SBUs). All staff assume personal responsibility towards occupational health and safety (OHS). They are also encouraged to report all OHSrelated incidents, including non-compliances and nonconformities to the relevant business unit management representatives. The CapitaLand EHS policy can be found at https://www.capitaland.com/international/en/aboutcapitaland/ sustainability.html. The Group has incorporated EHS key performance indicators linked to the remuneration of all staff, as well as top management.

The Group has incorporated EHS key performance indicators linked to the remuneration of all staff, as well as top management. These include:

Energy and Water Usage Reduction²: In 2017, the reduction in energy usage in CRCT malls in KWh/m2/month was 36.8% and the reduction in water usage in m³/m²/month was 25.5% from the 2008 baseline, and the reduction in carbon intensity (kg/m²/month) was 45.7% from the 2008 baseline. CapitaLand will continue to implement energy and water conservation measures to ensure efficient operations and minimise resource wastage.

In 2017, CRCT’s operational properties’ total energy consumption was 46,725 MWh. Indirect energy consumption accounted for about 89.5% and direct energy consumption from gas, diesel and other fuels accounted for about 10.5% of total energy consumption. Scope 1 and 2 emissions are 927 tonnes CO₂e and 25,124 tonnes CO₂e respectively³. The REIT’s operating properties’ total water consumption was about 360,674 m³ in 2017.

The Manager has been progressively embarking on asset enhancements initiatives across the portfolio, to ensure that CRCT’s properties stay relevant. Some of the enhancements include the upgrading of two lithium-bromide air-conditioning units to electric chillers at CapitaMall Qibao since 2015 to reduce energy consumption. CRCT continues to implement various energy conservation measures to reduce consumption, which include progressively replacing their lights within the malls with LED lights.

To further aid efficient water management, CRCT’s properties are progressively installed with waterefficient sanitary fittings in the mall toilets to reduce water usage. The Group will continue to implement water conservation measures to ensure efficient operations and minimise resource wastage.

CRCT adheres to the Group’s commitment of ensuring the health and safety of its stakeholders at all times. Emergency response procedures are in place for potential OHS risks. Periodic briefings and annual evacuation drills are conducted to ensure that tenants are familiar with the response plan. Security of the malls are a top priority and the Property Manager ensures strict accordance in its processes. Safety talks and briefings are given to employees and tenants on a periodic basis, and regular emergency evacuation drills are conducted at least once a year at each property to familiarise both employees and tenants on the emergency response plan. The properties are subject to fire safety audits and regular maintenance of safety equipment. The Group collaborated with local fire departments, government agencies and associations to organise fire drills at its malls to raise safety awareness among its tenants and shoppers. These included live fire extinguishing session, involvement of local fire departments, simulation of fire and evacuation, which were well-received by the local authorities.

Stakeholder Engagement: All eight of CRCT’s multitenanted malls participated in the annual Earth Hour initiative in March 2017 which saw the switching off of facade and non-essential lights of participating malls. In addition, CRCT malls organised a series of events relating to the global campaign. At CapitaMall Minzhongleyuan, shoppers and their children participated in a workshop to design T-shirts that spread messages about combating climate change.

In 2017, over 50 CapitaLand malls across the Group‘s portfolio organised a series of cycling-related activities to promote the adoption of carbon-lite modes of transportation, by encouraging shoppers in participating malls to cycle a total of 40,075 kilometres, equivalent to the Earth’s equatorial circumference. At CRCT, staff from CapitaMall Minzhongleyuan, CapitaMall Xinnan and CapitaMall Saihan also took part in mass cycling activities that promoted cycling as a form of green transport. In addition, CapitaMall Xinnan hosted a photography exhibition highlighting the plight of wildlife affected by global warming, and presented an unplugged music performance featuring an acapella group.

Most of CRCT’s properties are strategically located near local transportation hubs, with convenient access to metro stations, railway stations and bus stops. Electric vehicle charging stations are installed at CapitaMall Wangjing and CapitaMall Grand Canyon, bringing greater convenience to the growing pool of electric vehicle owners who are committed in using a greener mode of transportation.

The Group continues to participate in CDP (Carbon Disclosure Project) and retained a “B” score. The Group’s footprint is calculated in accordance with the Greenhouse Gas Protocol, developed by the World Resources Institute and World Business Council for Sustainable Development, which sets the global standard on how to measure, manage and report greenhouse gas emissions.

¹ This material references Disclosure 302-1 from GRI 302: Energy 2016, Disclosure 303-1 from GRI 303: Water 2016, Disclosure 305-1 and Disclosure 305-2 from GRI 305: Emissions 2016, Disclosure 205-1 and Disclosure 205-2 from GRI 205: Anti-Corruption 2016, Disclosure 403-1 from GRI 403: Occupational health & injury 2016 and Disclosure 405-1 from GRI 405: Diversity 2016.
²Computation of energy, water and carbon intensities excludes new properties which have been in operation for less than 12 months, master-leased properties and properties undergoing asset enhancement initiatives (AEI). Computation of indicators considers only properties managed by the Group.
³This is computed mostly from purchased electricity consumption under Scope 2, and some direct energy consumption under Scope 1 as defined by the Greenhouse Gas (GHG) Protocol (operational control approach) and using individual country CO₂ emission factors retrieved from the IEA Statistics – CO₂ emission factors from fuel combustion 2017 edition.