Sustainability Report 2011
City Developments Limited

Independent Assurance Statement

To the Management and Stakeholders of City Developments Limited (CDL)

Ere-S Pte Ltd was commissioned by CDL to undertake external assurance of their Sustainability Report 2011. The assurance engagement was conducted at the corporate headquarters in Singapore between April 25 and May 31, 2011.

Scope and Objectives

The assurance covered the operations of CDL in Singapore and its overseas activities on the community and the environment, as indicated in the Sustainability Report and for the period from January to December 2010.

The assurance engagement was executed in accordance with the AA1000 Assurance Standard (AA1000AS 2008) to verify whether the content of its Sustainability Report is accurate, reliable and supported by solid data collection systems. Following a Type 2 assurance of the standard, we evaluated the sustainability systems and processes using the inclusivity, materiality and responsiveness criteria of the AA1000 AccountAbility Principles (AA1000APS 2008). We also assessed the disclosed performance information and the relevant data collection processes using the GRI G3.1 quality principles.

We verified figures and statements on CSR initiatives, strategy, policies, procedures, key performance indicators, management systems and associated processes. Information not related to sustainability and already supported by existing documents, such as the Annual Report, was not covered. This includes all or part of the organisation profile, corporate structure and corporate financial and economic performance, technical descriptions of buildings, equipment and production processes.

Ere-S did not assure the Sustainability Report for the GRI Application Level check but did evaluate new indicators and other relevant information found in the GRI index table.

We provided a moderate level of assurance with desktop review, management-level data verification and evidence gathering from internal sources. We did not execute multi-level research to determine materiality and stakeholders relevant to the company.

Responsibility and Independence

The responsibility of Ere-S was to execute the assurance engagement, prepare the assurance report and this assurance statement for the management of CDL alone and for no other purpose. The management of CDL was responsible for the preparation of the Sustainability Report and all statements and figures contained within it.

Ere-S was not responsible for any prior work on the Sustainability Report. The activity of Ere-S is independent to CDL and contains no other financial interest in their business operation.

Methodology

We reviewed the Sustainability Report content and the company’s CSR framework, procedures and policies to identify the relevant elements to be audited. Statements and data sets were classified according to the relevant data owners and the type of evidence required for the verification process.

We interviewed 21 managers and data owners from the departments of Corporate Social Responsibility, Environment Health & Safety, Projects, Property & Facilities Management, Human Resource, Corporate Communication, Corporate Secretarial Services, Internal Audit, Marketing, Leasing, Management and Customer Service & Administration.

Specific questions on the adherence to AA1000 principles were asked during the interviews and evidence of the relevant data, collection and calculation methods as well as information on the underlying processes were collected and evaluated. Verified information included internal publications, data sheets, certificates, emails, policies, reports, press releases and web sites of external parties.

After each interview, we provided recommendations to allow immediate amendment by the sustainability reporting team. We checked the final version of the Sustainability Report to confirm the actions taken following those recommendations.

Findings and Observations

Through the assurance engagement, we have seen evidence of work undertaken by CDL during the reporting period to align its sustainability framework with the ISO 26000. Some new policies have already been formalised and rolled out in CDL’s operations and activities.

Enhancements of the CSR framework include the alignment of the CSR Committee’s structure with the core subjects of the standard, the addition of dedicated human resources, such as the Ethics officer and a CSR manager in charge of stakeholder engagement.

Evaluation of Reported Sustainability Performance

In our opinion, the performance information disclosed in the Sustainability Report is fair and accurate. Through the interviews with the data owners, evidence for all reported elements could be collected. We have found only a small number of minor inaccuracies, which were immediately corrected by the sustainability reporting team.

We also found that the report content fairly satisfies the requirements of GRI G3.1 quality principles. With indicators and information on human rights, product responsibility and customers satisfaction, which were not covered in previous versions, the scope of the Sustainability Report has been expanded. Despite some difference in the report format, the content is clear and performance is still comparable with previous versions.

Room for improvement lies in balancing the report content with more disclosure of gaps and negative performance.

Evaluation of the Adherence to AA1000 Accountability Principles

Inclusivity - How the organisation engages with stakeholders and enables their participation in identifying issues and finding solutions.

CDL has processes to engage with its key stakeholders and provide them with channels for feedback. Inclusivity is stronger for employees, investors and customers, with regular surveys, diverse information channels, group discussions and dialogue session with top management. Engagement mechanisms also exist for suppliers, but they are limited to environment and health & safety issues. For community partners, engagement is still on a project basis and one-to-one meetings.

For the reporting period, most significant improvement can be seen in the engagement with government agencies on projects related to green policies and education campaigns. Interaction with commercial tenants was also improved with enhanced surveys and individual or group meetings.

Inclusion of external stakeholders in decision making still represents an area for improvement. However we have found signs of CDL’s efforts in that direction.

Materiality - How the organisation recognises issues that are relevant and significant to it and its stakeholders.

CDL has several processes to determine key material issues across its operations. These are constantly reevaluated at the top management level through working groups, such as the CSR Committee and the Audit Committee. Elevation of issues related to environment and stakeholder engagement to the top tier of the risk register shows the importance given to material issues.

Most significantly, the work done to align CDL sustainability framework with ISO 26000 has highlighted materiality areas in which the company needs to improve, namely human rights and labour practices. Additional GRI indicators covering these areas have been reported and a clause on labour regulations has been included in all new tender agreements with suppliers.

Additional initiatives aimed at formalising material targets within the company policies will reinforce the confidence in CDL’s commitment to extend its sustainability scope.

Responsiveness - How the organisation responds to stakeholder issues and feedback through decisions, actions, performance and communication.

CDL is found to be responsive to stakeholders concerns and offers multiple interaction and communication mechanisms. These include annual meetings, post-survey group meetings, comprehensive information on CDL’s intranet and web site, contact points, frequent newsletters and reports.

We have found evidence of actions taken in response to concerns of employees, investors, residential customers, commercial tenants, government agencies and key contractors. Responsiveness is less evident for other stakeholder groups, such as communities and the supply chain in general.

Conclusion

On the basis of our review, nothing has come to our attention that causes us to believe that the sustainability framework of CDL does not adhere to the AA1000 AccountAbility Principles. In addition, the findings of the assurance engagement provide confidence, within satisfactory limits, that the reported performance information provides a reliable and fair representation of CDL sustainability profile and is supported by comprehensive and verifiable data and underlying management processes.

Moving forward, we recommend continued efforts during the alignment of the CSR framework with ISO 26000 to formalise more structured processes and KPIs for stakeholder engagement. In the areas of environment, labour conditions and human rights, these processes should comprise detailed guidelines for suppliers to implement adequate data collection and reporting procedures within their operations.

The above findings and additional suggestions for improvement have been presented to the management of CDL in a more detailed assurance report.

Jean-Pierre Dalla Palma,
Director

Ere-S
Singapore
16th June 2011

EresAA1000
Ere-S Pte Ltd is a consulting company specialising in business sustainability and provides services in the domains of sustainability reporting, sustainability report assurance, stakeholder engagement and CSR training.