Property groups can champion sustainability, but may do little to build an inclusive society 

FOCUSING on sustainability issues is nothing new for property groups such as City Developments Limited (CDL). CDL is the first and only Singapore company to be included in the Global 100 Most Sustainable Corporations index in the world for 13 consecutive years.

CDL ranked fifth on the 2022 Global 100 index by Corporate Knights, having jumped from 40th position in 2021, and kept its position as the world’s most sustainable real estate management and development company. Peer CapitaLand Investment (CLI) also made the 2022 Global 100 index, marking the 10th time that it has been included on the index.

Investors as well as the general public will likely be happy that property groups focus on environmental, social and governance (ESG) issues.   

The ESG efforts of property groups have a major impact on the wider community, such as in the fight against climate change. The built environment contributes about 40 per cent of global carbon emissions. The emissions stem from operating buildings where energy is used to heat, cool and light buildings, as well as from the use of materials and construction processes involved in building new buildings. 

Market forces

Commercially, going green makes sense for property groups. Condominium developments that embrace green features may have added appeal to homebuyers. Think of energy efficient design that supports good natural ventilation and reduces solar heat gain. Or homes that are set in lush green spaces, which have energy and water efficient features. Such features enhance the comfort of occupiers and reduce running costs.

Commercial buildings may achieve better occupancy and rental rates by meeting specific green requirements of certain space users. To attract and retain talent, some businesses may opt for spaces, which improve the health and wellness of their knowledge workers.

Additionally, reducing the use of water and energy in office buildings, malls, hotels and industrial spaces can generate cost savings for building owners.

In short, going green can help property groups financially. Green credentials can also enhance a property group’s branding, which aids in attracting talent and investors.  

With ESG, environmental criteria consider how a company performs as a steward of nature, while social criteria examine how a company manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights.

Market forces can drive property groups to making progress not just on the environment aspects but also on social and governance issues. For example, a mall that builds deep ties with the neighbourhood it serves can better draw shoppers, entrepreneurs and workers to shop, take up space, and work at the mall respectively.  

Ensuring high safety standards at construction sites of properties under development will help to prevent workplace accidents, which can result in costly delays from stop work orders, fines and negative publicity. 

Embracing gender diversity in management ranks can drive the development of homes, malls, hotels and offices that appeal to women, and the creation of working environments that are more conducive to women. Such efforts can help boost sales or leasing, and attract talent.

As at end-2021, 47 per cent of CDL’s heads of department are female. According to Mapletree Investments’ latest sustainability report, female representation in its senior management is 40 per cent.  

Perhaps, many companies can do more to rein in executive pay and share the fruits of business success more evenly among all the staff, and hence improve staff morale.

Groups like CDL are pushing the boundaries in sustainability efforts. CDL has a goal of achieving net-zero operational carbon by 2030 for its new and existing wholly-owned assets, and developments under its direct operational and management control. CDL is also working towards a net-zero whole life carbon-built environment, which will include reducing embodied carbon. 

However, much as we laud the good corporate citizenship of property groups, there are limits to what these businesses can and will do. Mall owners may seek to create spaces that draw people to consume more, possibly at the expense of the environment or personal financial prudence. Hotels may focus on offering experiences and environments that cater to only the select few.  

Should commercial landlords not lease space to businesses that are environmentally unfriendly or have links to unpalatable political regimes or have questionable labour practices? What about the leasing of space to startups or social enterprises that may have weak credit?  

Even though land is a scarce resource in Singapore, developers will build gigantic mansions such as the 8,956 square foot penthouse atop CanningHill Piers, or penthouses, which are sized at over 12,000 square feet each, at Les Maisons Nassim. Many condominium developments are marketed on the basis of offering luxury and exclusivity, with state-of-the art facilities that are available solely for the discerning buyers.

Inclusive society

Invariably, the key task of building inclusive communities has to be led by governments. In Singapore, high quality affordable public housing is provided in estates that are racially integrated.  

The government is building more HDB flats in prime areas. In 2021, it introduced the prime location public housing model to keep public housing in prime locations, such as the city centre and surrounding areas, including the Greater Southern Waterfront, affordable, accessible and inclusive for Singaporeans.

Among 9,000 new homes to be built on the 48-hectare site of Keppel Club on Singapore’s southern waterfront will be about 6,000 public housing flats. Whether there are more affordable housing options near popular schools in the Bukit Timah area or the Singapore Botanic Gardens, which is a Unesco World Heritage Site, will largely depend on the government.

Property development and investment are capital intensive activities. Often, property groups need to serve users with buying power, to ensure their financial sustainability.  

Consumers and investors can push property groups to excel in ESG issues. Still, no matter what accolades property groups receive for doing good, there are limits to what many such groups will do in building inclusive societies.

Various property groups feature among home-grown businesses that have built successful operations abroad, including CDL and CLI. Let us cherish that good jobs are created directly and indirectly here by businesses succeeding at home and abroad. Creating good jobs and paying taxes are fine ways for any business to contribute to society.