CEO STATEMENT

Dear Stakeholders,

For several years now, most especially in the wake of the 2007-2008 global financial crisis, there has been a growing recognition that the financial system must not only be sound and stable, but also sustainable. Specifically, in January 2014 the United Nations Environment Programme launched an inquiry into policy options for guiding the global financial system to invest in the transition to a low-carbon, green economy. In response, global sustainable investment assets have increased dramatically in recent years, rising from US$13.3 trillion at the outset of 2012 to a total of US$21.4 trillion at the start of 2014. Similarly, in 2015 the Singapore Exchange (SGX) recently released its plans and proposed guidelines for sustainability reporting on a ‘comply or explain’ basis from financial year 2017.

2015 was a year marked with significant developments in sustainability. The unprecedented COP21 Paris agreement in December saw 195 nations pledge to limit global warming to below 2°C by 2100. Singapore also submitted its Intended Nationally Determined Contribution (INDC), stating its intention to reduce its Emissions Intensity by 36% from 2005 levels by 2030, and stabilise its emissions with the aim of peaking around 2030.

The financial and environmental alignment around sustainability issues is expected to increase and this will impact policy decisions in the political and business arena. As a result, calls for better environmental, social, and governance (ESG) targets, performance and accountability can be expected to increase for all major corporate actors.


Last year, for the first time, CDL adopted the International Integrated Reporting Council’s (IIRC) Integrated Reporting < IR > approach for our Sustainability Report. We are continuing to use this framework, by harnessing our six reservoirs of capital – financial, organisational, natural, manufactured, social and relationship, as well as human – to enhance value for our brand, business and stakeholders.

Integrating Strengths, Creating Future Value
For over 20 years, CDL’s ethos of ‘Conserving as we Construct’ and integrating sustainability into our business has been fundamental to our corporate strategy. Our commitment to achieving a balanced triple bottom line has delivered the right mix between financial results, social engagement and environmental stewardship. As environmental regulations are progressively applied to the property sector, our leadership in ESG performance provides a clear first-mover advantage.

Last year, for the first time, CDL adopted the International Integrated Reporting Council’s (IIRC) Integrated Reporting <IR> approach for our Sustainability Report. We are continuing to use this framework, by harnessing our six reservoirs of capital – financial, organisational, natural, manufactured, social and relationship, as well as human – to enhance value for our brand, business and stakeholders.

Financial Capital – Increasing Values through Sustained Growth
Despite challenging market conditions both domestically and overseas, CDL posted resilient earnings of $773.4 million in 2015, comparable to the $769.6 million for 2014.

In light of persistent headwinds in the local market, since 2014, CDL has made deliberate efforts to focus on our diversification strategy via both geographic expansion and development of new investment platforms. One of them is to actively grow our funds management business.

In December 2015, CDL unveiled our second Profit Participation Securities (PPS 2) programme involving a joint investment in a Singapore office portfolio comprising three of CDL’s prime office assets. PPS 2 generated $1.1 billion of incremental cash flow and $314 million of incremental profit before tax. It enabled CDL to recycle capital for our growth plans, rebalances CDL’s office portfolio exposure in Singapore, while retaining a substantial investment in these prime assets for further capital appreciation. To date, CDL has $2.6 billion in funds under management through its two PPS vehicles.

Organisational Capital – Instilling Responsible Best Practices
Good corporate governance and risk management are key components of our operations and planning processes. Where applicable, we strive to align our policies and practices with best-in-class standards, especially in terms of Environment, Health and Safety (EHS).

We were honoured to be conferred the prestigious title of “Best Corporate Governance in the Real Estate Developer Sector” at the Ethical Boardroom Corporate Governance Awards 2015 and the “Most Transparent Company Award 2015” in the Real Estate category by the Securities Investors Association (Singapore).

CDL also understands the importance of effective risk management and mitigation in realising strategic business objectives in today’s increasingly dynamic environment. Against the backdrop of unprecedented global climate actions and public commitments, a review was conducted in 2015 to expand our Enterprise Risk Management portfolio to include emerging EHS risks material to our business operations.


Driven by our commitment to play our part in mitigating the effects of climate change, and etched in the firm belief that what gets measured gets managed, we made yet another bold move to become the first developer in Singapore to embark on the stringent ISO 14064-1 Greenhouse Gas verification in March this year.

For many years now, CDL has ventured beyond practicing to also advocating corporate responsibility to our supply chain, tenants, customers, academia, and students through thought leadership platforms. With more key stakeholders on board in the eco-system, we believe sustainability goals with the wider community can be better achieved.

Natural Capital – Intensifying Efforts in Environmental Sustainability
For the past two decades, we have continuously innovated, invested in, and improved on the way buildings sustain life. Our pioneering adoption of green and low carbon strategies such as maintaining our carbon neutral operations in our corporate head office, early adoption of extensive solar panels at our commercial and residential developments, as well as vertical greening have helped to make Singapore more sustainable and liveable.

We have also upheld our unwavering commitment to environmental management and energy efficiency. As the first private property developer in Singapore to achieve the ISO 14001 Environmental Management System and ISO 50001 Energy Management System certifications since 2003 and 2014 respectively, we continue our efforts to overcome inherent environmental challenges today and tomorrow.

Driven by our commitment to play our part in mitigating the effects of climate change, and etched in the firm belief that what gets measured gets managed, we made yet another bold move to become the first developer in Singapore to embark on the stringent ISO 14064-1 Greenhouse Gas verification in March this year.

In addition to the carbon intensity reduction targets established in 2011, we also further introduced electricity and water intensity targets in 2015 – to achieve a reduction of 22% by 2020 and 25% by 2030 from baseline year 2007, across CDL’s core business.

To reinforce our efforts in helping Singapore achieve its INDC, CDL is also reviewing our carbon emission targets based on the Sectoral Decarbonisation Approach.

Manufactured Capital – Innovating for Smart Green Spaces
We invest between 2% and 5% of a new development’s construction cost on green building design and features and deliver on quality eco-spaces. Today, we continue to be the private developer with the largest portfolio of Building and Construction Authority (BCA) Green Mark buildings and office interiors in Singapore – over 801, including 33 Platinum projects.

At our latest project, The Brownstone Executive Condominium (EC), we are adopting the use of the innovative Prefabricated Prefinished Volumetric Construction (PPVC) technology. This PPVC application is the first in Asia and also we understand the world’s largest for a major residential development. The Brownstone emerged as the best-selling EC in 2015 at the time of its launch in July 2015, a testament to the marketability of our green developments.

In Singapore, buildings account for about 39% of energy consumption and users can certainly make a difference in conserving energy. With active engagement to raise eco-consciousness, over 90% of our existing commercial tenants have signed the CDL Green Lease Memorandum of Understanding as at March 2016.


In this year’s report, we aligned our material issues with the Sustainable Development Goals (SDG) launched by the UN in September 2015. This allows us to further pave the way in sustainable development through innovative business approaches and partnerships in finding solutions for the world’s economic, social, and environmental challenges.

Social and Relationship Capital – Inspiring Stakeholders to Build a Sustainable Future
In this year’s report, we have aligned our material issues with the Sustainable Development Goals (SDGs) launched by the UN in September 2015. This allows us to further pave the way in sustainable development through innovative business approaches and partnerships in finding solutions for the world’s economic, social, and environmental challenges.

As a longstanding advocate of the Government’s 3P model which encourages partnerships between the People, Private, and Public sectors, we are committed to sustaining established partnerships and forging new collaborations to create a positive impact on the community.

In December 2015, CDL partnered Eco-Business to launch a new initiative – EcoBank, to promote waste reduction and sustainable consumption. With the support of our tenants and shoppers at City Square Mall and at six of our commercial properties, over 6,000kg of “pre-loved” (i.e. second-hand) items were collected and sold through a weekend bazaar, raising nearly $48,0002 for disadvantaged women and children. CDL employees and partners also contributed over 500 volunteer hours to help realise this meaningful initiative.

Celebrating the successful inscription of the Singapore Botanic Gardens as Singapore’s first UNESCO World Heritage Site, CDL organised a charity gala dinner to raise some $350,000 for the Garden City Fund in support of its outreach and conservation efforts. As a personal contribution, our late Deputy Chairman Mr Kwek Leng Joo launched a special photo book titled “Embrace”, capturing the natural and cultural beauty of the Gardens. Sale of 20 copies of the book autographed by Prime Minister Lee Hsien Loong raised $320,0003 for the National Heritage Board’s National Monuments Fund.

Youth engagement also remains a key focus with our signature outreach programmes such as the annual CDL-Compact Singapore Young CSR Leaders Award and CDL E-Generation Challenge growing year-on-year. Through our sustained partnerships with educational institutions and creation of knowledge sharing platforms, CDL hopes to cultivate a strong sense of social and environmental responsibility in our youth – our future leaders.

Human Capital – Investing in our People
At CDL, we see human capital as one of the Company’s most valuable resources. We are committed to being an employer of choice through competitive remuneration, as well as by developing, engaging, and caring for our people. In 2015, we were awarded with the Singapore Best Companies To Work For 2015 – Watch Out World! (W.O.W) Special Mention Award presented by Great Place To Work® in Singapore for our progressive workplace culture and good people practices.

Biennial Employee Engagement Surveys are also conducted to obtain feedback and insights into employee-related concerns. For the 2015 Employee Engagement Survey, our Employee Engagement score was above the Singapore country norm. Our employee turnover rate remains well below the national average, and we continue to nurture a robust talent pool of high-potential employees as part of our succession planning efforts. In 2015, we introduced the CDL Leadership Programme to sharpen their leadership and management skills.

We have also reviewed our remuneration practices to align appropriate ESG issues with executive management goals and incentive schemes. As a result, an ESG-linked appraisal and remuneration policy was introduced in 2015 which incorporated ESG goals in the setting of individual KPIs for all employees, including Senior Management.

Challenges and Opportunities
The domestic and international economy is expected to remain soft in 2016, challenging businesses across many sectors. Fears of a global recession, stock market volatility, a dramatic fall in oil prices, and other uncertainties, have all made the global economic climate highly sensitive, and an air of caution prevails.

Locally, the effects of oversupply, higher land and construction costs, and property cooling measures, have led to a softening of the property market, dampening both demand and prices, with little impetus for investors. According to the 2016 Budget, cooling measures are also not expected to be relaxed in the short-term.

Amid the looming threat of the Zika virus, the government has also warned that Singapore could experience its worst dengue spell in 2016. This is a significant risk to our business as construction sites are known to have a high potential for mosquito breeding. While our established EHS practices have helped mitigate such risks to a large extent, we will remain vigilant and continue to step up on our engagement with contractors.

The Journey Ahead
As a listed company, strong endorsements of our sustainability performance by global sustainability benchmarks such as FTSE4Good, Global 100 Most Sustainable Corporations in the World, Dow Jones Sustainability Indices, GRESB, and CDP continue to build trust with international investors, in particular Socially Responsible Investing funds.

Innovation will continue to be the key driver for green and sustainable developments. In March this year, we announced a partnership with the National University of Singapore (NUS) to catalyse innovations in smart, green building technologies, which could be pilot tested in our future developments. CDL made a gift of $2.25 million to the NUS School of Design and Environment to establish two new research laboratories – NUS-CDL Smart Green Home and NUS-CDL Tropical Technologies Laboratory (T² Lab). These two laboratories are first-of-their-kind tailored to the tropical climate, and in line with Singapore’s vision to become a cleaner, greener, smarter, and more sustainable city.

As we expand our business and investments, we are mindful that in the near future, businesses will likely be held accountable for their carbon footprint and will have to take into consideration possible carbon pricing. As such, in managing our day-to-day business, we remain committed to low carbon operations, evident from our newly-set targets for electricity and water intensity, and our review of our carbon emission goals. We remain steadfast in ESG tracking and disclosure for continuous improvement.

In the long run, superior ESG performance will not only enhance a company’s reputation, but also assist in risk mitigation and cost management, create greater sales volume, and drive improved operational performance– ultimately contributing to a growing bottom line and the long-term health of the business.


Innovation will continue to be the key driver for green and sustainable developments. In March this year, we announced a partnership with the National University of Singapore (NUS) to catalyse innovations in smart, green building technologies, which could be pilot tested in our future developments.

Grant Kelley
Chief Executive Officer

1 Includes subsidiaries and associated companies.
2 Includes dollar-to-dollar matching by the Government under the Care and Share @ SG50 Movement.
3

Includes dollar-to-dollar matching by the Government under the Ministry of Culture, Community and Youth’s Cultural Matching Scheme.