Generating Long-term Value The Evolution of our Approach
Investa's first Sustainability Report was published within our 2003 Annual Report. In that report we committed to targets for reducing electricity, water and waste to landfill because we believed there was a clear business case for doing so: each of these resources costs money so reductions would deliver savings. Now, while we remain committed to ever tightening efficiency targets, our focus is increasingly on sustainability initiatives that complement other core strategies; strategies that are designed to support leasing, increase sales and make us a preferred business partner. The following diagram illustrates the evolution of our sustainability platform.
The essential starting points of tight risk management and operational efficiency in our commercial office portfolio are locked into our business processes and we recognise that they are essential to our sustainability platform. We also recognise that they give us the base from which to create innovation and build respect for our brand. In this way, reducing risks and costs enhances revenues and supports asset values.
From now into the future, however, we have expanded our strategy from risk and cost reduction to increasing business value by taking a strategic approach to sustainability across the Group. For example, learning and initiatives from the commercial office portfolio are now being applied in the Clarendon Residential Group. Leveraging our purchasing power across the Group means that all business units have access to environmentally preferred products at lower cost. The value of spending time investigating innovative solutions to sustainable design problems is recognised by our staff, for example, because they've seen the value placed on greener buildings by tenants and investors. In these ways, and others, sustainability is becoming a tool for adding value and increasing revenues for the long term across the Group. The rest of this section sets out some of the dimensions of this approach to integrating business activities and multiplying value.
Policies and Governance
The foundation for the Group's sustainability platform is a robust governance structure and set of policies and procedures governing sustainability, safety and environmental performance. The Board's Sustainability, Safety, Health and Environment Committee (SSHE) has authority to review all matters under its charter. Management is accountable to the Committee. The Committee reports to the full Board regularly.
Central to the management of Safety, Health and Environmental risks at Investa is the Group-wide Safety, Health and Environmental Management System (SHEMS). The SHEMS is modelled around AS/NZS/ISO14001 (EMS) and AS/NZS4804 (OH&S). The system requires the key operational divisions: Asset Services, Commercial Developments and Clarendon Residential to maintain management plans that address system requirements. The SHEMS is externally reviewed and management plans are externally audited at least annually.
The SSHE Committee's charter and relevant policies and details of the Group's governance structure can be accessed from our website and have not changed materially from last year.
Integration
In 2006/07, Investa generated 99% of its revenues from three business categories:
While each business unit operates independently, a stated aim of the Group is to maximise the complementarity that exists between them. Our sustainability platform seeks to fulfil this objective by threading common themes, approaches and practices throughout the organisation. Examples of how this works are the Sustainable Responsible Investment (SRI) accreditation achieved in May 2007 by our two principal external funds and our signing of the UN's Principles for Responsible Investment (PRI). Both initiatives involved our funds formally committing to acquire, manage and dispose of assets in the manner described in the Investa Funds Management Limited SRI Guidelines (April 2007) which set out clear sustainability requirements. The effect of this, as illustrated in the following diagram, has been to challenge the approach of not only the funds' managers themselves, but also our asset services department which manages the assets on their behalf, and our development divisions that endeavour to service their acquisition requirements.
Lighter, Faster, Enduring
Investa's business, like all businesses, converts inputs into outputs. We have recognised that to be sustainable we must shift away from inputs that are non-renewable and potentially harmful towards alternatives that are renewable and less harmful. At the same time we are working to minimise our creation of harmful by-products and expand our creation of positive outputs that are highly valued by our customers and stakeholders and command a premium in our markets. The following diagram gives examples of the inputs and outputs we are seeking to increase and decrease through our sustainability strategy.
Note that there are a number of other inputs and outputs that are not identified in the above illustration, that are addressed throughout this report.
Anticipating the Market
Investa was among the first property companies to recognise the impact that growing awareness of climate change and other environmental issues would have on the commercial office leasing market. Our performance in reducing energy consumption in response to the threat of climate change has become a genuine point of difference which tenants value. We are expecting similar changes to occur across our industry, including in volume housing. We are constantly monitoring and evaluating possible future scenarios. The following diagram gives an example of a recent scenario analysis for Clarendon's new display homes.
Click image to enlarge
Earlier in the year we held a 'Sustainability Offsite' for Group Executives where expert presentations focussed on some of the factors that need to be taken into account when considering possible market shifts in response to climate change and broader sustainability challenges. The workshop also considered ways to address the divergence between many consumers' preferences for socially responsible products and their variable willingness to pay a premium for them. A series of initiatives have since been implemented in response to the issues raised at the offsite.
Capacity Building
We recognise that better results are usually achieved when sustainability objectives are understood and 'owned' by staff and integrated into our operating platforms. Investa's philosophy is to build sustainability expertise throughout the organisation to support our culture and enable broad change and innovation. To achieve this, during the year we enhanced our focus on internal communications and established strategies to develop and communicate the importance of addressing sustainability within each business unit.
Stakeholder Engagement
We regard our staff, investors, tenants and residential customers as primary stakeholders for the purposes of our sustainability report. Due to the Group's vertical and horizontal integration, accessing their views is relatively straight-forward and we elicit them formally through surveys and informally via face-to-face relationships. We find the informal approach is most effective because it enables interactive communication. One benefit of publishing our Sustainability Report online is that we can request meaningful feedback from stakeholders about the report. We can also analyse page view statistics and ask for comments. We hope you will provide your comments here.
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