When it comes to sustainability, Lendlease Global Commercial REIT JYEU is ahead of its peers. In 2022, it became the first Singapore REIT to achieve net-zero carbon emissions, and it did so three years ahead of its 2025 target. “Excellence in delivery through setting and attaining goals is one of our greatest strengths,” says its CEO Kelvin Chow.
Set up in 2019 to invest in a diversified portfolio of retail- and office-focused real estate assets around the world, the REIT is managed by Lendlease Global Commercial Trust Management, a subsidiary of the international real estate group Lendlease Corp. Chow is the REIT’s founding CEO.
The REIT’s portfolio currently comprises a leasehold interest in two malls in Singapore, namely Jem and 313@somerset, and three freehold office properties in Milan, with a total appraised value of $3.65 billion. Chow attributes the company’s net-zero milestone to a diverse range of measures to curb the developments’ energy, water and other resource consumption.
At Jem, sensors slow escalators and switch off lights when these are not in use, while regenerative lifts create energy as they go down to power them on their way up. LED lights, a highly-efficient air-conditioning system and other features add to 13 gigawatt-hours of energy savings yearly, equivalent to the power usage of 2,400 Singapore public flats.
Many of these and other innovations continue over at 313@somerset. The atrium is designed to maximise the use of sunlight and minimise the need for artificial lighting during the day. A rooftop carpark acts as a natural heat shield, cutting the mall’s air-conditioning load. The mall also collects rainwater for flushing toilets and to irrigate its greenery.
In Milan, the REIT’s properties and the neighbourhood they are in are all gold-certified by the Leadership in Energy and Environmental Design (Leed) global certification programme. Gold is Leed’s second-highest recognition for green efforts, after platinum. “For us, sustainability is a key differentiator and way to raise our competitiveness and performance,” Chow says.
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Journeying to absolute zero emissions
Looking ahead, the REIT has already launched initiatives to reach its next goal: absolute zero emissions by 2040. For net zero, it reduces its emissions as much as possible, and incorporates Renewable Energy Certificates. Absolute zero is harder. It must not only get to zero emissions without offsets, but also get suppliers, tenants and other indirect sources of emissions to zero too.
Its green leases, which require tenants to outline minimum energy, water and waste-related aims to be sustainable, are a step in this direction. These leases boost transparency and enable the REIT and its tenants to collaborate to accomplish the goals. “We are the first Singapore REIT to have all of our Singapore tenants on such leases,” Chow highlights.
“We also do an annual survey with them to understand how we can all do better. We ask them things like whether there is anything that can be improved, or if they have any difficulties,” he says. “This keeps the communication open and enhances the connection between us. Tenants come to us feeling that we are all walking on the journey together.”
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He adds that investing in sustainability future-proofs both the REIT and its tenants. “Everyone is becoming more eco-conscious, from consumers to investors. When you put in the work to be more environmentally-friendly, such as projects to save energy, you can lower your costs and avoid upcoming government emission penalties. People will like your products more too.”
As part of its environmental, social and governance (ESG) commitments, it also provides space to non-profit organisations to help promote them. “We partner associations too. For Project Dignity, which has a mission to restore dignity to the differently-abled, Lendlease Foundation sponsored its train-and-place programme to equip people with disabilities with culinary and other skills.”
When a new 313@somerset tenant shared its plans to build green walls that grow vegetables, the REIT suggested that it donate the harvests to Project Dignity’s Dignity Kitchen, which has a canteen with seven stalls run by the differently-abled and disadvantaged. “The outcome is a win-win for everyone. I strongly believe that when we work together, we get better results.”
Demonstrating leadership in sustainability
To encourage more companies to move forward on sustainability, Lendlease Group has published a book on how it reports its Scope 3 emissions — the indirect ones that come from its suppliers and tenants, and other upstream and downstream activities — that can serve as a guide for others. Such emissions often make up the majority of a firm’s carbon footprint.
With growing concerns about greenwashing, the REIT is also showing the way in transparency. With its comprehensive ESG disclosures, the independent Global Real Estate Sustainability Benchmark (GRESB) organisation, which provides validated ESG performance data and peer benchmarks for investors and managers, gave it an ‘A’ for public disclosure last year.
This is in addition to the REIT holding on its top spot in GRESB’s Regional Sector Leader in the Asia Retail (Listed) category for the fourth consecutive year, with the highest score among its peers, and the maximum, five-star GRESB rating for its ESG performance and strong leadership in sustainability. For the first time, the REIT is awarded the Global Sector Leader across the listed and non-listed retail category.
Chow points out that the REIT’s accountability extends to using baselines from 2016 to 2022 for its water, energy and waste-related measures. “We could have set the baselines as 2010, which would have made it very easy for us to realise our targets. But that wouldn’t have been right. We also try to always challenge ourselves.”
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Even in his own life, he strives to lead by example. “I’ve never driven in my whole life, and if I can take public transport, I do that. That’s one way I decrease carbon emissions. I think if you are trying to be more sustainable, how you live your life is important too. You shouldn’t just be sustainable in business and then drive a petrol car around,” he explains.
For investors that are sceptical about how these sustainability efforts have translated into returns, Chow believes that the best way to convince them is to show results. He emphasises: “Our energy usage cost has been lower compared to others. I think that’s very strong evidence that through these different initiatives, we are able to bring about cost efficiencies.”
About Lendlease Global Commercial REIT
Listed on Oct 2, 2019, Lendlease Global Commercial REIT is established with the principal investment strategy of investing, directly or indirectly, in a diversified portfolio of stabilised income-producing real estate assets located globally, which are used primarily for retail and/or office purposes. Its portfolio comprises leasehold properties in Singapore, namely, Jem (an office and retail property) and 313@somerset (a prime retail property), as well as freehold interest in Sky Complex (three Grade-A office buildings) in Milan. These five properties have a total net lettable area of approximately 2.1 million sq ft, with an appraised value of $3.65 billion as at June 30, 2023. Other investments include a stake in Parkway Parade (an office and retail property) and development of a multifunctional event space on a site adjacent to 313@somerset.
The company’s website is https://www.lendleaseglobalcommercialreit.com/
About ESG Brew: the Sustainability Blend
ESG Brew is a regular column by SGX Research in collaboration with Beansprout (https://growbeansprout.com), a MAS-licensed investment advisory platform, that features sustainability leaders of companies listed on SGX. These interviews are profiles of individuals who drive the sustainability agenda and initiatives within these corporations.
