Lendlease Global Commercial REIT (LREIT) primarily invests in a diversified portfolio of income-producing retail and/ or office real estate properties globally. Its portfolio comprises leasehold properties in Singapore — 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 2.2 million sq ft, with an appraised value of $3.6 billion. LREIT’s sponsor, Lendlease Corp, is part of the Lendlease Group.
1. How do you integrate environmental, social, and governance (ESG) considerations into your business strategy/operations?
We integrate ESG considerations into our business operations in the following areas:
• Investment and acquisition: Potential assets that LREIT looks to acquire will have to undergo a stringent ESG checklist to ensure that it meets all the requirements. This ensures that only the best-in-class assets are added to the portfolio. For example, Jem, which was acquired in April 2022, is the first mixed-use asset to receive the Green Mark Platinum version 4 and the Universal Design Mark Gold Plus Design Award from the Building and Construction Authority (BCA). Jem was also ranked the first under the 2022 Global Real Estate Sustainability Benchmarks (GRESB) Asia Retail (Unlisted)1 category.
• Asset management: Green building certification is a key indicator of LREIT’s commitment to resource efficiency and environmental sustainability. Jem and 313@somerset have both been awarded the Green Mark Platinum certificate by BCA. To bring transparency and alignment between LREIT and its tenants, LREIT’s green leases take a holistic approach towards sustainability by outlining minimum obligations on energy, water and waste as well as type of materials used.
• Capital management: We are embarking on a sustainable financing journey to bring interest savings for unitholders. Sustainable financing accounts for approximately 63% of our total debt (or $960 million).
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• Social: In alignment with Lendlease Group’s social target, we aim to create A$250 million ($230 million) of social value by 2025. LREIT is also the business champion for Project Dignity, a social enterprise in Singapore that trains differently-abled people to access employment opportunities.
2. What are some material ESG factors for LREIT and how do you identify these factors?
Some of our material ESG factors in FY2022 include climate change mitigation, resilient buildings, customer and occupational health and safety as well as anti-corruption practices.
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In line with the GRI Standards’ Principle of Materiality, LREIT’s Sustainability Working Committee conducted a materiality assessment to determine the ESG topics that are material to both LREIT’s business and stakeholders.
These factors were identified through extensive consultation with customers, investors, employees, and other stakeholders. We have continued to assess sustainability matters deemed material and relevant to LREIT’s business and its stakeholders annually. In FY2022, LREIT’s material sustainability matters remain unchanged. In FY2023, we plan to conduct a materiality reassessment to assess the relevance of the topics previously identified.
3. Diversity, equity, and inclusion (DEI) is a key focus for many companies. How does LREIT promote DEI among its various stakeholders?
Having a diverse talent pool with a wide range of different skillsets is essential for LREIT to stay at the forefront of its industry. We are committed to driving an inclusive team culture where trust and psychological safety are prioritised. With DEI as a guiding principle, we strive for our workforce composition to reflect the communities in which we work in and for everyone to feel included.
In line with this, Lendlease Group has put in place inclusive policies and practices to ensure respect, equity and equal opportunity, for both current and future employees. The group sets stretch targets for diversity and ensures that policy and programmes in place support those targets — from hiring and selection, to opportunities for career development, compensation and benefits.
Lendlease Group has an ongoing focus on levelling the playing field for women. It conducts an annual review to identify and eliminate gender-based pay gaps. Inclusive leadership behaviours and cultural competency are embedded as part of overall capability building for leaders.
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For LREIT, we support flexible working options and encourage line managers and employees to work together to agree how, when or where to work that would be the most effective. With this, Lendlease Group established virtual tools, events, and leveraged technology to enable knowledge sharing and connections in a hybrid world.
4. What internationally recognised accreditations did LREIT receive last year, and can you tell us more about it?
• 2022 GRESB real estate assessment: LREIT retained the top spot for a third consecutive year as the Regional Sector Leader in both Asia Retail (Overall) and Asia Retail (Listed) categories. It also secured the highest-tier five-star GRESB rating for its ESG performance and strong leadership in sustainability. In addition to clinching these top accolades as the Regional Sector, LREIT also scored “A” for Public Disclosure, underscoring its strong commitment to ESG transparency and stakeholder engagement.
• Best Sustainable Treasury Solution in the Adam Smith Award Asia 2022: This was for LREIT’s $860 million sustainability-linked loan obtained for the acquisition of Jem. The award is the industry benchmark for best practice and exceptional solutions in treasury including sustainable financing.
• Singapore Governance and Transparency Index (SGTI) 2022: LREIT is ranked 10th in the REIT and Business Trust Category, a jump from the 15th position.
5. SGX RegCo has introduced a phased approach to mandatory climate reporting. How does LREIT ensure that its sustainability reporting fulfils the requirements?
We adopted the 27 SGX Core ESG Metrics in our FY2022 sustainability reporting and have successfully reported 25 out of the 27 recommended metrics. Examples of the disclosed metrics include GHG emissions, energy and water consumption, waste generation, gender and age diversity as well as occupational health and safety.
To ensure competitiveness and regulatory compliance, the metrics are tracked via an internal enterprise system, as well as uploaded onto the SGX ESGenome disclosure platform.
As part of our reporting and disclosure process, our reported data is supported by proof of invoices and meter readings for electricity, water, and waste. As an additional layer of safeguard, the data is subjected to independent limited assurance by external auditors each year. This is to ensure that our data is accurate, and our stakeholders understand our environmental impact of our operations.
Did you know?
LREIT was the first S-REIT to attain net-zero carbon in 2022, three years ahead of its target of 2025. On the social front, it has a target to create A$250 million ($230 million) of social value by 2025.
LREIT’s sustainability strategy
LREIT’s vision is to create value through vibrant places where communities thrive and leave a positive legacy for future generations. This is supported by its sustainability framework which spells out three imperatives underpinned by a suite of actionable environmental and social focus areas: (A) sustainable economic growth; (B) vibrant and resilient communities and cities; (C) healthy planet and people. In addition, LREIT is aligned with its sponsor, Lendlease Group’s commitment as a signatory to the United Nations Global Compact (UNGC) and the United Nations Principles for Responsible Investment (UNPRI).
Candace Li is a research analyst with the Singapore Exchange (SGX). Designed to be a short read, 5 Questions in 5 Minutes provides insights into SGX-listed companies’ sustainability efforts through a series of five Q&As with management. Through these Q&As, management will discuss the company’s sustainability journey, governance structure & commitments, material ESG topics and many more
