This article is sponsored by Mapletree
Mapletree’s ESG journey builds on its track record of sustainable practices, which include strong corporate governance and a commitment to environmental and social responsibility, as well as consistently delivering solid returns, says deputy group chief executive officer Chua Tiow Chye. It views its commitment to net zero as the latest step on this pathway, which means raising awareness and engaging with stakeholders, while keeping abreast of the latest technology that can be deployed to achieve its decarbonization goals.
How has your approach to ESG developed over time?
Mapletree’s fundamental business philosophy has always been to create consistent high returns for our investors with long-term value through our core capabilities in real estate development, investment, capital and property management, with a full commitment to sustainability.
We have sought asset classes which provide robust and resilient returns, rather than investing in sectors which offer volatile returns, enabling us to focus on ESG as integral inputs to our business.
This means that maintaining an efficient operation, from building design to management of these assets, has always been in our DNA. With ESG being an increasing priority for real estate companies over the past few years, its integration into the way we run our business has become a natural and integral next step.
On governance, we adopt a zero-tolerance approach to non-compliance and have put in place a transparent ethical governance framework. Upholding the governance aspect is taken as a given for us.
Meanwhile, we have been involved in local communities where we have business operations since the early days, as part of our corporate social responsibility program. This started in Singapore and has now expanded to 13 markets globally.
A portion of our profits are set aside annually to contribute to these programs, which focus on arts, education, environment and healthcare. As of September 2022, Mapletree has contributed a total of S$36.2 million ($25.7 million; €26.1 million). We recently adopted a board diversity policy and committed to achieving an aspirational target of at least 25 percent female representation on the board by 2025. The group senior management team has a 40 percent female representation.
Given that we are a manager of three listed REITs, there are regulatory expectations on sustainability reporting early on and similar standards have been adopted for the holding company. We are a signatory of the UN-supported PRI and we have aligned our material matters with the UN Sustainable Development Goals.
For over a year now, we have established a central sustainability unit at the group level to drive and oversee our ESG policies and initiatives. The operationalization of these initiatives is undertaken at the business units and assets level. This ensures that initiatives proposed are aligned with local regulations and best practices of various markets.
Taking cognizance of the real estate industry’s significant contribution to global carbon emissions, our environmental efforts are directed towards developing a pathway to net zero by 2050.
What are the biggest obstacles to real estate owners achieving net zero?
Organizations may face a risk of fatigue if people do not see their actions yielding results in the near-term. However, the journey towards net zero is a collective marathon. We need to make efforts to continuously keep this foremost in our mind and ensure that ESG is in the company’s DNA and integral business policies and practices.
There are also challenges with the older buildings in our portfolio, which require environmental audits to review enhancement plans to improve their energy, social and health and occupational standards.
For a business with some Singapore-based assets, access to renewable energy is a challenge. Singapore does not have much space to develop its own renewables, although we try to generate as much as we can within our premises. We are also working with energy providers to explore if there are other alternative green energy generation options.
For us to collectively meet this challenge, we also need to incorporate new technologies into our options, whether that is in software, carbon capture or in renewable energy.
What is driving real estate’s move towards net zero?
Mapletree has set our target of net zero by 2050. Our funds and listed REITs investors, especially European companies, have incorporated ESG objectives and targets into their frameworks and very often their first question to us is: “Where are you on ESG?”.
There are regulatory expectations, especially for the listed side of our business, too. However, there are also other stakeholders for whom this is important. One is the markets in which we operate. We need to ensure we don’t contribute negative externalities into these communities and conversely do good on the various ESG fronts.
It is important for our employees too. People would want to work for a responsible organization. This is especially so for the younger generation of colleagues that we have in the organization globally.
ESG is fundamental to futureproofing our organization’s longevity. There may come a day when tenants do not take space except in green buildings and people will not work with companies which do not incorporate green practices.
How far along that net-zero pathway are you?
We are in the early stages of our net-zero journey, implementing a new environmental data management system so that consumption and emissions-related data across our properties can be better tracked scientifically. This will support the development of roadmaps, programs and initiatives for our assets globally and the setting of intermediate and long-term targets towards net zero.
“We need to ensure we don’t contribute negative externalities into these communities”
Of the carbon emissions that real estate contributes, about 30 percent are from embodied carbon and the remaining 70 percent are from operational carbon. As we are both a developer and a property manager, we take into account both the embodied carbon produced during procurement and construction and the operational carbon emitted during asset operations and management.
Many real estate companies are focused on reducing operational carbon emissions, but I believe attention also needs to go into embodied carbon (eg, designing a green building from the start).
What practical measures can you undertake to reduce emissions at the asset level?
There are two ways to tackle this in relation to the embodied and operational carbon emission in an asset. In order to reduce embodied carbon, buildings can be designed to be as naturally ventilated as possible in order to reduce energy consumption (eg, by reducing the use of air conditioning). There are also several initiatives that we have put in place within our China developments, such as procuring lightweight and sustainable construction materials, which have lower embodied carbon.
On the operational side, on-site renewable energy production is important. We have been installing solar PV panels on our industrial and logistics assets and are on track towards increasing our solar generating capacity to 100MWp (megawatt peak) by 2030. Not all the renewable energy generated may be utilized in the buildings they are installed in, so surplus renewable energy may be channeled across the group in the form of a renewable energy credit.
Intelligent building management systems are also important in reducing operational energy use and we can do more across the larger integrated developments in our stable assets. For example, our flagship property in Singapore, Mapletree Business City (MBC), has a district cooling system which helps to decrease total energy consumption. On water management, MBC features a rainwater harvesting system for irrigation, which helps reduce overall water consumption.
In addition, to ensure less waste is produced, Mapletree applies the circularity concept when retrofitting our offices where feasible, such as recycling discarded fishing nets and upcycling them into carpet tiles at mTower, our office in Singapore. We are also exploring nature-based solutions such as planting trees across our assets and urban reforestation projects globally.
Education across stakeholder groups is another important aspect in advancing ESG goals. Employees need to understand the importance of ESG and help embed them in their areas of work. This has to start with commitment from the board and senior management.
It is also crucial for us to engage with our tenants, as they are responsible for most of the energy use in our buildings. It is heartening to see that ESG is now a priority for an increasing number of them. We are starting to implement more green leases so that both the landlord and tenants can work together on this decarbonization journey.
What next steps would you like to see from the wider industry on this ESG journey?
In the wider industry, I think we need to review some of the current practices to ensure embodied carbon is properly accounted for. For example, in Singapore, there have been several en-bloc redevelopment projects where owners who may be more returns-focused sell the properties to a developer for a sizable profit.
This often leads to relatively good buildings being torn down. It is something that comes from failing to take proper account of the buildings’ embodied carbon, which currently accounts for nearly one-third of a building’s lifetime emissions.
We should also explore how to secure more green energy generation options. The private and public sectors should work together to establish workable and practical approaches towards this 2050 net-zero journey.
For us, our most important next steps are to continue educating our employees to get on board this pathway towards net zero, getting our environment data management system in place, setting science-based targets for progress tracking and leveraging technology to advance all of these.