City Developments (CDL) was the first Singapore-listed company to issue sustainability reports back in 2008, but the real estate developer continues to mark many firsts today — 17 years into its sustainability reporting journey.
For this reason, CDL has received the Best ESG Risk Rating award at The Edge Singapore’s Billion Dollar Club 2024. In March, CDL became the first company in Singapore to publish nature-related disclosures that are aligned with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD).
Some 20 pages of CDL’s 229-page report are dedicated to its TNFD-aligned disclosures, where the company sets out its strategy to minimise its impact on nature and mitigate nature-related risks. To manage its biodiversity footprint, the company is using a cloud-based AI platform that supports the measurement and management of biodiversity impact by relying on data-backed information.
CDL’s sustainability report reads: “Businesses benefit from considering climate and nature-related risks, enabling them to make informed decisions that contribute to a sustainable future. Investors seeking environmentally responsible companies find insights from having both perspectives valuable, recognising the interconnectedness of climate and nature considerations.”
Among CDL’s nature-related dependencies, impacts, risks and opportunities, the developer acknowledges the built sector’s use of natural resources as well as the possible effects of air, water, soil and noise pollution on nature. This acknowledgement is not new to the company — CDL’s chief sustainability officer Esther An set the firm on its sustainability journey in 1995 precisely to counteract the environmental impact of its operations, creating the developer’s corporate ethos of “Conserving as we Construct”.
In the early days of CDL’s sustainability journey, most players in the built environment sector saw sustainability only as a cost, says An. “Now, more businesses consider sustainability initiatives an important investment to generate long-term value, reduce their climate-related risks, capture opportunities, and get ahead of environmental regulations. We’re glad that we started our environmental journey early and are pioneers in many areas, including reporting on the Task Force on Climate-related Financial Disclosures since 2017, and Taskforce on Nature-related Financial Disclosures, which we published in March this year.”
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TNFD was established in June 2021 with the support of the G20 and G7 governments. The Taskforce published its corporate reporting recommendations on nature-related issues in September 2023 after a two-year process led by its 40 members and supported by 20 knowledge partners.
Aligned with Target 15 of the Kunming-Montreal Global Biodiversity Framework, which was adopted in December 2022 at COP15, the 14 disclosure recommendations guide organisations in reporting and acting on evolving nature-related dependencies, impacts, risks and opportunities. These “drivers of nature change” include climate change, pollution and use of land, freshwater and ocean, among others.
In January, CDL was among five local firms that formed TNFD’s “first cohort” of 320 organisations from around the world that committed to adopting the disclosure framework by FY2025. By issuing its report just two months after, CDL has made good on its commitment ahead of time.
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At London Climate Action Week in June, TNFD announced 96 additions to its list of adoptee firms. The Taskforce also announced that the Singapore Exchange S68 would step down as a member after close to three years, with CDL’s An taking its place.
An says: “TNFD and the recently launched sustainability standards by the International Sustainability Standards Board (ISSB) complements CDL’s sustainability reporting framework built up since 2008. The framework is anchored on two pillars: financial value and impact on the environment and people.”
Nature-positive capital
CDL marked another first in June this year with a $400 million sustainability-linked loan (SLL) from DBS Bank. The SLL comes with nature conservation targets aligned with the TNFD recommendations.
SLLs are loans that are structured to allow customers to pay variable interest depending on their achievement of pre-agreed sustainability performance targets (SPTs), validated by an independent verification party. If CDL achieves certain SPTs by a pre-agreed deadline, the developer should enjoy lower interest on its loan.
The SLL is marketed as the first of its kind globally as it incorporates SPTs related to “biodiversity conservation and waste management”. According to the June 25 announcement, the proceeds will be used for general corporate funding and working capital purposes, including the redevelopment of CDL’s existing assets.
The loan has a five-year term, and all SPTs are assessed annually at the end of each financial year. Unlike green loans, which restrict borrowers to using proceeds for a particular green project, SLLs are agnostic. This is why CDL can use the proceeds for its own purposes.
CDL and DBS have partnered on similar instruments in the past. In 2017, DBS supported CDL to launch the first green bond by a Singapore company. In 2019, CDL pioneered a first-of-its-kind SLL with DBS, securing a discount on the SDG Innovation Loan provided for piloting DigiHUB, an in-house digital platform to raise building management efficiency.
CDL has also worked with other banks to pioneer new sustainable loan structures. In December 2023, CDL became the first corporation to obtain the OCBC 1.5°C loan, a three-year GBP200 million ($344 million) sustainability-linked revolving credit facility from Oversea-Chinese Banking Corporation (OCBC), with interest rate incentives pegged to annual decarbonisation performance targets.
CDL has secured over $9.5 billion in sustainable financing to date. Yiong Yim Ming, group chief financial officer of CDL, says robust sustainability reporting can channel capital to expedite green building and climate action. “We aim to enhance our triple bottom line through sustainable development, achieve our net-zero ambitions and align finance with sustainability performance through innovative capital management initiatives.”
Expansion of the Singapore Sustainability Academy
CDL’s green agenda extends beyond just the corporate sphere. In July, CDL’s Singapore Sustainability Academy (SSA), located on the roof terrace of retail asset City Square Mall, unveiled a new 2,690 sq ft annexe, comprising a collaboration space, a conference room and office spaces for its anchor tenant, the Singapore chapter of the United Nations Global Compact Network (GCNS).
CDL partnered with the Sustainable Energy Association of Singapore (SEAS) to open the SSA in 2017, marking the first time a local private-sector property developer and non-profit organisation have together created a training and networking facility on sustainability. The SSA is Singapore’s first ground-up initiative and zero-energy facility dedicated to capacity building and thought leadership for climate action and sustainable development, a result of extensive collaboration with six government agencies and 15 like-minded industry and non-governmental organisation partners.
“Through strategic partnerships, we can harness diverse expertise and resources to accelerate innovative solutions for a sustainable future,” says Sherman Kwek, group CEO of CDL. “Since opening the SSA seven years ago, the facility has hosted over 1,000 events and training sessions, welcomed over 36,500 visitors and engaged more than 100 partners.”
The new annexe aims to help foster collaboration between industry and non-governmental partners, spread industry best practices and promote a low-carbon economy to businesses.
The annexe, like the main SSA section, has achieved the Building and Construction Authority’s (BCA) Green Mark Platinum award. It was built with eco-friendly materials such as mass-engineered timber panels and laminated veneer lumber sourced from sustainably managed forests.
According to CDL, lightweight materials help reduce cooling costs, while a 31.6 kilowatt peak (kWp) rooftop solar panel system allows the annexe to achieve net-zero operational energy consumption.
CDL’s four I’s
“Real estate companies have a social responsibility to reduce their carbon footprint,” says An, as the built environment sector accounts for nearly 40% of global emissions. “Apart from new developments, it is crucial to better manage buildings and their operations, and continual efforts to retrofit older buildings are key because some 70% of buildings that exist today will still be around in 2050.”
CDL has articulated four key pillars in its sustainability strategy: Integration, Innovation, Investment and Impact. “Integration is critical to effectively embed sustainability into your business strategy and operations. Innovation enables you to accelerate change and impact by developing or adapting solutions,” says An.
Meanwhile, investment is essential to deploy new decarbonisation solutions, she adds. “Businesses with a strong sustainability strategy and performance have better access to responsible investment and sustainable finance. Most, if not all, companies need the support of banks and investors for long-term growth.”
Finally, An underscores the importance of impact, especially from business decisions. “Everything we do has positive or negative consequences or both. That is why sustainability reporting is essential. What you don’t measure, you don’t know; and what you don’t know, you can’t manage. If you want to improve performance and be future-ready, you need to identify and work on gaps.”
An says CDL has conducted three rounds of climate change scenario studies since 2018, and is working on its fourth study. “This has allowed us to gain insight into potential risks caused by more severe and frequent climate threats, new regulations and changing expectations of investors, financiers and insurance companies,” she adds. “The cost of inaction can be substantial if companies are not prepared for the physical and transitional risks that lie ahead.”
Advocating for impact and value reporting
Through An’s speaking engagements, interviews and panel discussions, her clarion call about the importance of sustainability reporting is only getting louder. An’s message is clear — companies in Singapore should familiarise themselves with the latest sustainability reporting frameworks because regulators are close to mandating such disclosures. In February, Singapore announced mandatory climate-related disclosures in a phased approach, in line with the recommendations from the Sustainability Reporting Advisory Committee (SRAC).
One of the most significant developments of late came last year when the International Sustainability Standards Board (ISSB) launched in June 2023 the International Financial Reporting Standards (IFRS) S1 and S2. These standards aim to align sustainability-related disclosures in capital markets worldwide; S1 helps companies disclose sustainability-related risks and opportunities, while S2 targets climate-related disclosures.
Since then, more efforts have been made to harmonise the complex sustainability reporting standards and frameworks. In June 2024, GRI and IFRS announced the deepening of their collaboration to deliver full interoperability, and harmonisation with four other frameworks: CDP, TPT, GHG Protocol and TNFD.
The ISSB standards incorporate the TCFD recommendations, which the Singapore Exchange Regulation (SGX RegCo) has mandated for certain listed companies. It launched in March a consultation on ways to adopt mandatory ISSB-aligned reporting, with the final decision announced in September.
SGX RegCo wants issuers to refer to both S1 and S2 standards when preparing climate-related disclosures from FY2025. Issuers should disclose Scope 1 and Scope 2 emissions and the measurement approach from FY2025. SGX RegCo will review issuers’ experiences and their readiness before establishing the implementation roadmap for reporting Scope 3 emissions.
Even Singapore’s large private companies are expected to comply with these coming rules. Private firms with annual revenue of at least $1 billion and with total assets of at least $500 million will be required to report and file annual climate-related disclosures starting FY2027.
To prepare for the transition to the new standards, CDL worked with an external consultant to perform a comprehensive gap analysis evaluating the disclosures in its 2024 integrated sustainability report.
The gap analysis revealed that CDL’s disclosures are largely well-aligned with the ISSB standards. CDL’s 2024 integrated sustainability report has been expanded, and the company aims to fully comply with the ISSB standards by FY2025.
