HONGKONG Land Holdings : H78 0% topped a well-tracked environmental, social and governance (ESG) benchmark for the real estate sector for the first time this year, despite stiffer competition all around.

The Global Real Estate Sustainability Benchmark (GRESB) rankings released on Tuesday (Oct 17) named the Singapore-listed diversified property group as a global sector leader among listed entities under its development benchmark.

This puts Hongkong Land in the same league as Castellum, touted as the Nordic region’s most sustainable property company, and Hong Kong’s Swire Properties, which had topped the benchmark at least three years in a row. 

Hongkong Land subsidiary MCL Land is currently developing Copen Grand, Tengah Town’s first executive condominium, and Piccadilly Grand, a mixed development off Race Course Road, alongside its partner City Developments Limited (CDL) : C09 0%.

GRESB – which is used by more than 170 institutional and financial investors to inform decision-making, including interest rate savings from sustainability-linked loans – ranks entities yearly based on two benchmarks.

The development benchmark ranks real estate companies according to how ESG-centric their development of new construction and major renovation projects are, while the other benchmark looks at how well their standing investments are managed.

A NEWSLETTER FOR YOU

Friday, 12.30 pm

ESG Insights

An exclusive weekly report on the latest environmental, social and governance issues.

Sign Up

The standing investments benchmark featured Lendlease Global Commercial Real Estate Investment Trust : JYEU 0% (LReit) as a global sector leader for retail across listed and non-listed entities. Parkway Parade Partnership, in which LReit owns shares, also made the same list. 

This is the fourth consecutive year LReit has emerged as Asia’s sector leader in retail.

The ranking also showed CapitaLand Ascott Trust : HMN 0% (Clas) retaining its top position as a global sector leader among listed entities in the hotel category for a third consecutive year.

The assessment results were made known to companies on Oct 2.

Implications on sustainability-linked loans

In an Oct 4 statement, CapitaLand Investment : 9CI 0% (CLI) described CapitaLand as the “first real estate company in Singapore to be consistently ranked among the top 20 per cent since 2011”.

CLI made the claim as it revealed that it maintained its five-star GRESB rating, which places it in the top 20 per cent of the benchmark globally. The rating is based on the entities’ GRESB score and its quintile position relative to the GRESB universe. 

It also said this is the first year CapitaLand China Trust : AU8U 0% managed to get a five-star rating, while CapitaLand Integrated Commercial Trust : C38U 0% (CICT) maintained its five stars. CapitaLand Ascendas Reit : A17U 0%, Clas and CapitaLand India Trust : CY6U 0% received a four-star rating.

CLI, CICT and Clas’ achievements on GRESB meant the three entities “will obtain interest rate savings from their existing sustainability-linked loans”, CLI stated.

As at Jun 30, CLI and its listed Reits and business trusts have partnered with 19 financial institutions, including HSBC, MUFG and JPMorgan Chase, to secure a total of S$14 billion in sustainable finance. They comprise sustainability-linked loans and bonds, green loans, green bonds and perpetual securities.

Of the lot, some S$2.8 billion were secured in the first half of this year through 11 sustainable financing instruments, of which S$1.6 billion from six sustainability-linked loans are pegged to their performance on GRESB, CLI noted. 

CLI’s chief sustainability officer Vinamra Srivastava said interest rate savings from its sustainability-linked loans are reinvested to fund its decarbonisation initiatives and innovations.

Meanwhile, CDL disclosed that the company fell back two places in Asia’s “Diversified – Office/Retail” category for listed entities. It secured second place last year but took fourth place this year among 19 companies ranked under the list.

Its spokesperson, however, said none of the company’s sustainability-linked loans are tied to its GRESB performance, adding that the benchmark is used rather to ascertain gaps in the group’s sustainability strategy and reporting.

Frasers Property : TQ5 0% said Frasers Property Singapore had the highest increase in scores among five-star rated entities, jumping from a 2022 score of 85 to 90 this year, earning it the title of regional sector leader in Asia’s “Diversified – Office/ Retail” category for non-listed entities. (*see amendment note)

The group’s Frasers Property Industrial was recognised as regional sector leader for its existing assets in Australia as well, while Frasers Centrepoint Trust and Frasers Logistics and Commercial Trust maintained their five-star ratings for the third consecutive year.

Keppel Corporation : BN4 0% said its real estate division placed second in the “Diversified – Office/ Residential/Non-listed/ Core” category under the development benchmark.

Its chief executive Loh Chin Hua said more Keppel funds have participated in the GRESB assessment. They include Keppel Asia Macro Trends Fund IV and Keppel Education Asset Fund, which achieved a score higher than 50 per cent of the points allocated to each component, despite this being their maiden assessment year.

The keen participation underscores “our commitment to comprehensive disclosure, transparency and accountability to our investors, as well as the importance that we place on integrating ESG considerations into our investment strategies”, Loh added.

Reits that have disclosed their scores include OUE Commercial Reit : TS0U 0%, which achieved an improved score of 77 points to secure a three-star rating, and Cromwell European Reit : CWBU 0%, which scored a record-high 85 points this year to bag its four-star rating. 

The average score for standing investments this year was 75. This benchmark rose by a point from last year, despite a 15 per cent jump in participation to cover 2,084 portfolios representing some US$7.2 trillion in gross asset value, GRESB said. 

The development benchmark rose by two points to 83. 

Drastic actions for Singapore

Last year’s assessment found that Singapore-based operational assets were on track to escalate their greenhouse gas intensity, instead of step it down, from now until 2050. None of the 12 other key countries GRESB then analysed featured this trend.

There was a marked improvement this year, with the collated GRESB submissions showing that Singapore assets are on track to glide from an average greenhouse gas intensity of 92.7 kilogramme per metre square of floor area (kg/m2) in 2022, to 67.8 kg/m2 by 2050.

But Singapore’s real estate industry still has to take far more drastic action if it wants to achieve a decarbonisation pathway that is aligned to the Paris Agreement goal of limiting global temperature rise to 2 degrees Celsius.

With a projected carbon intensity of 67.8 kg/m2 by 2050, Singapore assets will remain the most pollutive across properties in 11 countries studied this year.

The carbon intensity of buildings here will have to average 2.4 kg/m2 by 2050 to set it on the 2 degrees Celsius pathway.

*Amendment note: An earlier version of this story incorrectly stated the category that Frasers Property Singapore emerged as regional sector leader in.