case analysis framework City Developments Limited

City Developments Limited: a journey in sustainable business development

Hwang Soo Chiat and Havovi Joshi

Hwang Soo Chiat is an Associate Professor based at the School of Accountancy, Singapore Management University, Singapore. Havovi Joshi is Head of the Communications & Dissemination Centre for Management Practice, Singapore Management University, Singapore.

Companies with sustainability in their DNA are more resilient and make a better business model for success and long term growth. In the mid-1990s, building sector was seen as “destroying before constructing”, CDL as a pioneering developer was determined to change this perception and committed to transforming our business strategy to one that “conserves as we construct” for long term sustainability. From design, construction, procurement, maintenance and even user engagement, the entire cycle has been aligned with environmental sustainability in mind – Kwek Leng Joo, Managing Director, CDL[1].

It was January 2013, and Esther An, Head of Corporate Social Responsibility (CSR) and General Manager (Corporate Affairs) of City Developments Limited (CDL), was busy in meetings with the members of her CSR Committee, planning key strategies for CDL’s proposed sustainability framework for the coming year. CDL was one of Singapore’s leading international property and hotel conglomerates, involved in real estate development and investment, hotel ownership and management, facilities management and the provision of hospitality solutions. The group had developed over 22,000 luxurious and quality homes in Singapore, catering to a wide range of market segments. In addition, its London-listed subsidiary Millennium & Copthorne Hotels plc (M&C) owned and managed over 100 hotels spanning 70 locations in 19 countries.

CDL was widely recognised as a champion of sustainable practices in Singapore. It was the first company to be honoured with the President’s Social Service Award and President’s Award for the Environment in 2007. It was also the only developer to be accorded the Built Environment Leadership Platinum Award in 2009 and Green Mark Platinum Champion Award in 2011 by the Building and Construction Authority (BCA), the governing authority for Singapore’s built environment. CDL was the first Singaporean company to be listed on all three of the world’s top sustainability benchmarks – FTSE4Good Index Series since 2002, Global 100 Most Sustainable Corporations in the World since 2010 and the Dow Jones Sustainability Indexes since 2011. It was a founding member of Singapore Compact for CSR, and one of the pioneer Singapore signatories of the United Nations Global Compact to lend support to the advancement of responsible corporate citizenship in Singaporean industry.

How could CDL reinforce the culture of sustainability that it prided itself on? What could it do to increase awareness of their sustainability vision in the stakeholders? How would they influence stakeholders to adopt sustainability best practices? These were questions that An hoped to find solutions for in the meetings with her CSR team.

CDL

CDL was founded in 1963, with the purpose of acquiring, developing and selling property. The company went public in the same year, and its shares were listed on what was then known as the Malayan Stock Exchange. In 1965, CDL completed its first housing project in Johor Bahru, Malaysia, and also launched its first condominium, Clementi Park, in

© 2013, Hwang Soo Chiat & Havovi Joshi Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; financial and other recognizable information to protect confidentiality.

DOI 10.1108/EEMCS-11-2013-0049 VOL. 3 NO. 8 2013, pp. 1-23, Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1

Singapore. This was followed by the 1966 launch of its first high-rise residential development

in Singapore, City Towers. In 1972, the Hong Leong Group acquired a controlling interest in

CDL and embarked on strategic diversification into commercial and industrial

developments. CDL then acquired more investment and development properties such as

Tanglin Shopping Centre, Katong Shopping Centre, and Queensway Shopping Centre and

The Arcade. It thus emerged as a major property developer in Singapore. The company

soon after ventured into the hotel business.

The 1990s witnessed a period of rapid expansion and regionalisation. CDL’s hospitality arm,

M&C, which was the first Singaporean company to be listed on the London Stock Exchange,

expanded to become one of the largest hotel owners and operators in the world.

These milestones saw CDL embark on a substantial growth path, and in 2010, the group’s

profit before tax surpassed the S$1 billion (US$0.8 billion[2]) mark.

By end 2012, CDL had an extensive global network that included over 300 subsidiaries and

associated companies across more than 80 locations in 20 countries. Further, five

companies were listed on the stock exchanges in New Zealand, Hong Kong, London and

Philippines.

For the financial year ending 31 December 2012, CDL recorded revenue of US$2.72 billion

with profit after tax of US$699 million[2].

Sustainability in Singapore

An commented:

CSR is fast becoming a licence to operate in some areas. For example, in 2005 the ‘‘Green Mark’’

was launched. But in 2008, the basic certification level of Green Mark was made mandatory that

any new development must meet that standard.

In 2005, the BCA Green Mark Scheme was launched by the Singapore Government as an

initiative to drive Singapore’s construction industry towards more environment-friendly

buildings. It was intended to ‘‘promote sustainability in the built environment and raise

environmental awareness among developers, designers and builders when they started

project conceptualisation and design, as well as during construction’’ (Building and

Construction Authority, 2013).

Then in 2009, in another key development, the Singapore Government, in consultation with

its people, came out with a Sustainability Blueprint. It defined sustainable development for

Singapore as growing the city state in a way that (Singapore Government, 2013):

B Was efficient: develop with less resources and waste.

B Was clean: develop without polluting our environment.

B Was green: develop while preserving greenery, waterways and our natural heritage.

Listed companies were encouraged to adopt sustainability reporting, with the release of the

Singapore Exchange Policy Statement on Sustainability Reporting in June 2011, which

stated that:

(I)ssuers should assess and disclose the environmental and social aspects of their organisational

performance, in addition to the financial and governance aspects that are already part of the

customary and regulatory disclosure practiced.

In May 2012, the Monetary Authority of Singapore stated that sustainability should be

considered as part of corporate governance and directors ought to consider sustainability

issues, such as environmental and social factors, as part of their strategic formulation (refer

to Exhibit 1 for regulatory developments in Singapore).

However, Christie Lee, Manager, CSR, CDL commented, ‘‘The push to CSR is still not

that big in Singapore. In fact, many companies have little understanding of CSR and

sustainability.’’

PAGE 2jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 3 NO. 8 2013

CSR at CDL

This is CDL’s 50th anniversary. In 1999, our MD spearheaded the work improvement plan, which

involved all the CDL staff. The idea was that we must brainstorm within the organisation. We

talked about global warming then, and we recognised that energy, particularly increasing

electricity costs, was a key issue. At that time, there was no green mark or any real push from the

government. So it was our own initiative to cut down our carbon footprint. We were the pioneer

and the first to receive the Green Mark Gold award for existing buildings in 2005 – Anthony Goh,

Deputy General Manager, Property and Facilities Management.

The seeds for CDL’s endeavours in developing new benchmark for CSR excellence can be

traced to almost 50 years ago to the mid-1960s, based on its founder’s firm belief that the

success of the company should be shared with the community. However, it was years later,

around the mid-1990s, that the company’s CSR vision:

To be a leader in business and a champion of CSR,

along with its CSR Mission:

To be a responsible corporate citizen who believes in creating value for stakeholders, conducting

sustainable business practices (SBP), caring for the community and protecting the environment,

was integrated with its business and operations.

CSR was promoted after taking into account a broad range of stakeholder engagement from

several parties such as CDL’s investors, customers, employees, contractors, suppliers and

the community (refer to Exhibit 2 for the CSR philosophy). Soon after, the company also

began to develop and adopt international benchmark and standards for reporting, which led

to further awards and achievements (refer to Exhibit 3 for CDL’s sustainability rankings,

benchmarking and awards).

In 2005, CDL became a founding committee member of Singapore Compact for CSR, which

was (and continued to be) a national society promoting CSR among the business community

through awareness dialogue and workshops. In the same year, it also became one of the

founding Singapore signatories of the United Nations (UN) Global Compact to lend support

to the advancement of responsible corporate citizenship in Singapore.

By 2011, CDL had been selected as an index component in the Dow Jones Sustainability

Indexes (worldwide and in Asia Pacific), which were the first global indices to track the

financial performance of leading sustainability-driven companies worldwide. It thus was the

only Singapore property developer to be listed on both the Dow Jones Sustainability Indexes

and FTSE4Good Index Series. CDL was also the only Singapore company to be ranked

amongst the ‘‘Global 100 Most Sustainable Corporations in the World’’ for three consecutive

years (refer to Exhibit 4 for Global 100 methodology).

In 2012, CDL became one of the five founding members of the Business Council for

Sustainable Development (BCSD) in Singapore – which had been established as a

membership organisation comprising leading local businesses and the regional arms of

international companies, with the objective ‘‘to work with businesses locally to help foster

economic development in harmony with environmental preservation and social

development’’[3].

CDL’s CSR strategy

CDL had a well-developed and rejuvenating corporate strategy which was entrenched in the

triple bottom line (TBL) approach. This implied developing properties that were sustainable,

functional and financially marketable.

The three pronged approach was as follows:

1. developing quality and environmentally sustainable properties (refer to Exhibit 5);

2. managing properties in a cost efficient and energy efficient way (refer to Exhibit 6); and

VOL. 3 NO. 8 2013 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 3

3. influencing stakeholders through outreach initiatives, working closely with government

agencies and non-governmental organisations (refer to Exhibit 7).

There were many reasons that CDL’s CSR strategy was successful. The company clearly

had a passion for CSR, which was far beyond legislative requirement. Allen Ang, Deputy

General Manager, Projects commented:

At the project departments, our role is to develop residential and commercial properties and hand

them over to our customers on time, within budget and in good quality. We define the

sustainability context ‘‘as conducting responsible business operations at a level over and above

the statutory and regulatory requirements’’. We are very mindful of the impact that our

development activities have on the environment. Globally, one third of greenhouse gases are

contributed by the building sector. Large amounts of energy and water are consumed, and

construction generates a lot of wastes, noise and dust. How do we mitigate this, and how do we

address the safety and health of the workers? We approach all these concerns and more with a

very integrated approach. From planning to design, and right through to procurement and

construction – our job is to ensure that as we build, the impact of our operations on the

environment, health and safety (or EHS), is mitigated.

We have very stringent ‘‘Green Procurement guidelines’’ that covers sustainable design and

construction. In the procurement of our contractors and consultants, they must be committed to

upholding high EHS standards. Our contractors must not have any fatalities as well for the past 1

year. Similarly, we have stringent requirements for the procurement of suppliers and materials:

materials with green label, ‘‘green’’ concrete, energy efficient air-conditioners, etc. that we use for

projects. These materials and equipment may be more expensive than the normal ones, however

we believe that besides mitigating the potential impact on the environment, the use of such

materials and equipment will also translate into tangible benefits for the end-users.

In the area of social impact on account of employees’ health and safety too, the company

clearly aspired to make a strong positive impact on its stakeholders.

A culture of leadership

At CDL, we recognise that we are living in an interdependent world. Business leadership will not be

sustained without stewardship in both social and environmental aspects. CSR is not a theory but an

important management approach to achieve good TBL, do good and do well at the same time for

long term sustainability. If applied strategically, practising CSR will certainly add value to the

business and achieve long term growth and sustainability. Currently, the uptake of CSR amongst

Singapore companies remains slow as many still see CSR as a cost. Based on our humble

experience at CDL, we see CSR as an investment and we have indeed reaped tremendous benefits

in both tangible and intangible ways. Most importantly, we are happy to say that while we operate to

meet the needs of the present, we are not compromising the ability of our future generations to meet

their needs – Esther An, Head of CSR and General Manager (Corporate Affairs), CDL.

Ang commented:

We were among the very first to adopt the ‘‘Green Mark’’ scheme. This stems from our top

management’s commitment and firm advocacy of EHS. They have clearly supported the

implementation of green design and features in our projects, agreeing to allocating 2-5%

construction costs of a new development for such features and innovations in our developments

[. . .]. We have a very open and supportive top management in terms of innovation and CSR. As a

market leader, we believe we must do things that others don’t do. This differentiates us. And what

others do, we must do better. That’s how we started this EHS journey and began driving

innovations in every of our developments, so as to be a leader in our field. Every project we want

at least one innovation that no one else has done. This is our personal KPI – that we should be a

leader in our field. An example of one such innovation is the implementation of a home energy

management system for one of our developments that helps the home owner monitor their overall

energy consumption and control their air-conditioner units individually through their I-pads.

Organisational structure as a key CSR enabler

In 2008, CDL formally established a framework listing CDL’s significant CSR issues and the

core stakeholders involved. In a significant CSR development, it established the CSR

Committee to better align its CSR initiatives with the company’s business strategy. The CSR

Committee comprised senior managers from the company, and reported directly to the

PAGE 4jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 3 NO. 8 2013

Managing Director Kwek Leng Joo. It was responsible for CDL’s CSR key performance

indicators (KPIs) and targets, and formulating and managing programmes to improve its

social and environmental performance in the areas of focus. These key CSR areas of focus

were the environment, employee relations, corporate governance and risk management,

stakeholder relations and community.

The culture is such that missing a KPI is not deemed a failure, but a case for providing

positive reinforcement.

Excellent reporting and communication standards

CDL was one of the few companies in Singapore that produced dedicated sustainability

reports. The report was externally validated by Ere-S, a consulting company that specialised

in business sustainability and provided services in the domains of sustainability reporting,

sustainability report assurance, stakeholder engagement and CSR training. CDL’s SR was

also GRI certified[4].

CDL’s sustainability report clearly measured its performance in terms of ‘‘achieving business

excellence while maintaining good social and environmental performance’’. The report

touched upon various dimensions in each of these three spheres – financial, environment

and social (refer to Exhibit 8 for an extract of CDL’s sustainability report 2012).

CDL also ensured that their contractors had in place a comprehensive sustainability

monitoring and reporting system. Every month contractors had to submit the EHS

performance of their respective worksites for monitoring purposes. CDL’s project managers

would monitor the EHS performance of their respective projects individually. At the

departmental level, various sub-committees headed by their project managers monitored and

championed the various aspects related to EHS, such as energy consumption and workplace

safety and occupational health.

CDL had also started carbon accounting[5], and were the fore-runner in the industry. Project

managers provided the collated EHS performance from worksites to CDL’s EHS manager.

At the corporate level, the EHS manager consolidated and monitored all CO2 data for

reporting purposes.

Interestingly, even while managing their database of reports, CDL was driven to ‘‘go green’’.

As Ms Foo Chui Mui (Assistant General Manager, Customer Relations) commented:

We have really cut down on the use of paper. Over the years, we have cut down our paper

consumption. For instance, only the final report is retained, and that too is kept at a shared drive to

maintain transparency while keeping everyone on the same page.

Training as a means to ensure adherence to CSR standards

When CDL started to embark on the sustainability journey, there was a general lack of

knowledge and acceptability of sustainability by the consultants, contractors and other

stakeholders. CDL had to source for information and build up its knowledge from the internet

and other sources. Workshops were then conducted with its stakeholders to obtain their

buy-in to go green by pitching the fact that they were also partners in the project.

CDL continued to conduct quarterly EHS training. Both internal and external experts were

invited to conduct talks on topics which included waste management, water and energy

conservation, and other related issues.

CDL also conducted monthly complex management meeting where experts were invited to

share their views, new innovative products, and other pertinent ideas. Further, Mabel Wong,

Senior Manager, Property and Facilities Management commented, ‘‘More than half of our

PFM managers in charge of operations are Green Mark managers’’.

CDL’s commitment to CSR

Multiple drivers for CSR continue to strengthen globally. Total assets managed under Carbon

Disclosure Project have grown dramatically from US$4.5 trillion in 2003 to US$78 trillion in March

VOL. 3 NO. 8 2013 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 5

2012 with 235 companies responding in 2003 compared to 3,715 in 2011. The growing climate

change-related regulations make CSR not simply a ‘‘good to have’’ item but a licence to operate.

It is becoming more apparent that companies who have yet to embrace the significance of

sustainability issues have placed themselves in an increasingly vulnerable position, putting their

operations at risk, if they have limited expertise and contingency plans to manage the fast

emerging social, political and economic scenarios. In the face of a changing business

environment and mind-set, it is a matter of time before the turn of tide occurs – Kwek Leng Joo,

Managing Director, CDL (Kwek Leng, 2013).

CDL was clearly committed to maintaining and advocating commitment towards CSR. This

often went far beyond what competition did. In an interesting example of the same, Ang said:

We are probably the only developer in Singapore who conducts a bio-diversity impact study for

undeveloped sites with existing natural habitats and sites in close proximity to natural habitats,

before the site is being developed. At our ‘‘Rainforest Executive Condo’’, a biodiversity impact

study was conducted when the site was purchased in 2011. In the course of the site assessment,

a nest belonging to a pair of nesting white-bellied sea eagles was discovered on an existing tree.

We were advised that the tree where the nest was located should not be retained due to its poor

condition, so we called on experts from the Bird Park to advise us on the appropriate measures to

be taken. Eventually, we worked with the main contractor to re-sequence their construction and

work around the existing tree until the young offspring hatched and grew strong enough to be

able to fly off on their own.

The culture was such that a virtuous circle of sustainability appeared to have been

established, where each employee was pushing themselves and the other to achieve newer

heights. Wong commented:

We are all always aligning ourselves to the corporate mission, and personal KPIs are set for our

department far beyond what is required. We have to keep updating our KPIs annually [. . .] We all

walk the talk, all the way from top-down.

Balancing the costs with tangible benefits

To truly grow as a business, we need to develop the right balance between financial performance,

environmental stewardship and social engagement – CDL Sustainability Report, 2012 (CDL, 2013).

CDL perceived some very tangible benefits of its sustainability initiatives. For instance, there

was an estimated S$19.7 million (US$16 million[2]) in annual energy savings for 37 Green

Mark Awarded Buildings during the time period 2008-2011. Similarly, the buyers of

residential properties too typically enjoyed substantial energy and water savings. An

example was the ‘‘Oceanfront @ Sentosa Cove’’ which was the first private residential

development to be awarded the BCA Green Mark Platinum in 2007, demonstrating savings

of 30 per cent in energy and water. Similarly, it was found that residents could enjoy average

annual energy savings of up to SG$1,000 (US$ 813[2]) on account of energy efficient air-

conditioners in their apartments.

There were clearly distinct benefits of going green for the real estate sector[6]. To begin with,

the company expected average expected savings of 10 per cent in operating expenses and

17 per cent in energy consumption from the retrofitting, and commercial buildings could

increase their capital value by about 2 per cent. Second, the investment in achieving Green

Mark certification was not high, and the cost of the retrofit as a percentage of the current

market value of the property was about 0.5 per cent for retail and 1 per cent for offices.

Finally, the upfront cost of retrofitting energy inefficient buildings could be recovered within

seven years.

However, it was recognised that there was a clear cost associated with going green, which

has to be managed. Lenny Tan, Assistant Manager, Projects commented, ‘‘Construction

costs have risen steadily over the years. This is a challenge that we need to work around

while maintaining our philosophy and commitment towards sustainability’’.

Ang elaborated:

With the market getting more competitive, we have to strategize how to achieve cost

effectiveness for our green investment. One of the most effective strategies is to adopt passive

PAGE 6jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 3 NO. 8 2013

low energy architectural design. Buildings should be designed to minimise external heat gain and

maximise day-lighting and natural ventilation. This concept is always emphasised to our

architects as a first point of consideration. We influence and educate these architects to adopt our

philosophy.

Tan further added:

We have an EHS risk register that cuts across the design and construction phases. The individual

project manager prepares an EHS risk assessment at the start of every new project to assess the

impact of the development activities on the neighbours and other impacts related to safety,

energy efficiency, road traffic, etc. This is then handed over to the consultant to address and

mitigate the risks in their design. Any residual risk not addressed in the design is then highlighted

to the contractor to be properly addressed in their construction stage risk assessment. The

consultants and the contractors are also required to present their EHS risk assessments to the

project teams and our internal colleagues and explain their strategy to mitigate the EHS risks

identified.

The Singapore Government had commenced handing out a number of grants to promote

sustainability. However, as Goh commented:

We have ‘‘missed out’’ on some grants as we do (sustainability initiatives) before the grants are

available. We are doing it for the general good and we are way ahead of the pack. So this

becomes our KPI – to strive for further improvement each year.

Enabling competitive advantage – reputational

CDL believed that practising CSR had helped differentiate their branding and product,

particularly given the company’s long standing commitment and consistent approach

towards encouraging the same. An clarified:

We take a long term view in our CSR commitment and practices for sustainability – financial,

social and environmental. However, given the low level of green consumerism as at date, the

competitive advantage of a green product or green home or space were still limited. But with the

increased awareness of climate change, we are seeing some progress in the preference of green

products.

Catherine Loh, Deputy General Manager, Head, Corporate Secretarial Services stated that:

Being a high profile listed company, our reputation especially as a CSR advocate and pioneer is

at risk every day, whether arising from internal or external factors in connection with the

implementation of our strategies in our day-to-day operations. With the increase in the number of

our stakeholders, we are constantly aware that our risk management policies and practices have

to be continually reviewed and updated in a timely manner, to safeguard the interests of our

stakeholders, our assets and our reputation.

CSR at CDL: what next?

In 2010, in an effort to embrace a holistic approach to CSR and go beyond compliance

initiatives, CDL undertook a self-assessment of its CSR performance. This was based on the

principles of ISO 26000: guidance on social responsibility, which included accountability,

transparency, ethical behaviour, respect for stakeholder interests, respect for the rule of law,

respect for the international norms of behaviour and respect for human rights. The core

subjects listed by ISO 26000 were organisational governance, human rights, labour

practices, the environment, fair operating practices, consumer issues and community

involvement and development. Based on the above results, CDL incorporated a human

rights corporate statement, enhanced its employee engagement, whistle-blowing policy,

corporate governance and involvement in community development projects.

It was important to An that CSR at CDL had to set new benchmark in sustainable

development by doubling its efforts to meet stakeholders’ expectations, and achieve global

standards in sustainability through innovation, rigorous assessment and communication of

the outcomes (Kwek Leng, 2013). New programs had to be initiated to draw in a wider

audience, and the importance of CSR had to be advocated and disseminated to a wider

range of stakeholders.

VOL. 3 NO. 8 2013 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 7

Looking ahead, CDL remained firmly committed to CSR, and aspired to bring it to the next

level as the environment and marketplace evolved rapidly. An and the team were already

strategizing the right move to achieve the above.

Notes

1. Kwek Leng Joo, Managing Director, CDL, company presentation, January 15, 2013.

2. US$1¼S$1.23 as at January 18, 2013.

3. wbcsd, Peter Bakker launches Business Council for Sustainable Development Singapore,

November 6, 2012, available at: www.wbcsd.org/Pages/EDocument/EDocumentDetails.

aspx?ID ¼ 15143&NoSearchContextKey ¼ true (accessed January 2013).

4. For further details on the GRI sustainability reporting requirements, refer to: www.globalreporting.

org/resourcelibrary/G3.1-Sustainability-Reporting-Guidelines.pdf

5. Carbon accounting is a subset of sustainability accounting, emphasising the management and

reporting of carbon emissions.

6. Joint study by the Building and Construction Authority and the Department of Real Estate, NUS, in

collaboration with the top six real estate consultancy firms, September 2011.

Keywords:

Corporate social responsibility,

Sustainability,

CSR,

Business development,

Asia,

Singapore,

Sustainable business practices

References

Building and Construction Authority (2013), ‘‘About BCA Green Mark Scheme’’, available at: http://www.

bca.gov.sg/greenmark/green_mark_buildings.html (accessed March 2013).

City Developments Ltd (2013), Sustainability Report 2012, available at: http://media.corporate-ir.net/

media_files/IROL/60/60774/CDL_Sustainability_Report_2012_Final.pdf (accessed January 2013).

Kwek Leng, J. (2013), CDL Sustainability Report 2012, Director’s presentation, available at: http://media.

corporate-ir.net/media_files/IROL/60/60774/CDL_Sustainability_Report_2012_Final.pdf (accessed 18

January 2013).

Singapore Government (2013), ‘‘Sustainable Singapore’’, available at: http://app.mewr.gov.sg/web/

contents/ContentsSSS.aspx?ContId¼1291 (accessed January 2013).

Smith, J. (2013), ‘‘The world’s most sustainable companies’’, Forbes, 23 January, available at:

http://www.forbes.com/sites/jacquelynsmith/2013/01/23/the-worlds-most-sustainable-companies/3/

(accessed March 2013).

Exhibit 1. Regulatory developments in Singapore

In May 2012, the Monetary Authority of Singapore (MAS) released the ‘‘Code of Corporate Governance’’. The following is an extract of the 16 principles listed therein:

1. Every company should be headed by an effective board to lead and control the company. The board is collectively responsible for the long-term success of the company. The board works with management to achieve this objective and management remains accountable to the board.

2. There should be a strong and independent element on the board, which is able to exercise objective judgement on corporate affairs independently, in particular, from management and 10 per cent shareholders. No individual or small group of individuals should be allowed to dominate the board’s decision making.

3. There should be a clear division of responsibilities between the leadership of the board and the executives responsible for managing the company’s business. No one individual should represent a considerable concentration of power.

4. There should be a formal and transparent process for the appointment and re-appointment of directors to the board.

5. There should be a formal annual assessment of the effectiveness of the board as a whole and its board committees and the contribution by each director to the effectiveness of the board.

PAGE 8jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 3 NO. 8 2013

6. In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.

7. There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

8. The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate:

B the directors to provide good stewardship of the company; and

B key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.

B Every company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration, in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance.

B The board should present a balanced and understandable assessment of the company’s performance, position and prospects.

B The board is responsible for the governance of risk. The board should ensure that management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets, and should determine the nature and extent of the significant risks which the board is willing to take in achieving its strategic objectives.

B The board should establish an Audit Committee (‘‘AC’’) with written terms of reference which clearly set out its authority and duties.

B The company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.

B Companies should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders’ rights, and continually review and update such governance arrangements.

B Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders.

B Companies should encourage greater shareholder participation at general meetings of shareholders, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

Source: Monetary Authority of Singapore, Code of Corporate Governance, May 2012, www. mas.gov.sg/regulations-and-financial-stability. . . 3May2012.ashx (accessed March 2013).

Exhibit 2. The CSR philosophy – commitment to key stakeholders

CDL had articulated its CSR commitment to the following key stakeholders:

B Our commitment to stakeholders. As a responsible corporation, it is our goal to be transparent and accountable to our stakeholders who have an interest in our operations.

B Our customers. To offer quality and innovative products, unsurpassed service and value for money.

B Our investors. To maintain profitability and achieve optimum returns for their investments.

B Our employees. To maximise their potential and care for their personal well-being and career development.

B Our contractors and suppliers. To select based on quality work and their ability to complement our commitment to environment, health and safety.

B The community. To serve the community we operate in so as to create a better place for all, especially caring for the less fortunate, enhancing youth development, promoting the arts and conserving the environment.

VOL. 3 NO. 8 2013 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 9

Source: CDL ‘‘CSR philosophy’’, January 2013, www.cdl.com.sg/app/cdl/social_ responsibility/our_csr_philosophy.xml (accessed 11 January 2013).

Exhibit 3. CDL’s 2012 sustainability rankings and benchmarking

Exhibit 4. The 2013 Global 100 methodology

The Global 100 was considered to be the most extensive data-driven corporate sustainability assessment in the world. It was an annual project launched in 2005 by Corporate Knights, a Toronto-based media company, with the annual Global 100 announced each year during the World Economic Forum in Davos.

For the 2013 Global 100 selection for instance, the methodology used was to first consider all companies that had a market capitalization exceeding US$2 billion as of October 1, 2012. Then four screens were employed, based on the companies’ sustainability disclosure practices, financial health, product category and financial sanctions. Companies that passed all four screens would constitute the 2013 Global 100 Shortlist. They would then get assessed on 12 key performance indicators (KPIs). The Global 100 would finally comprise the highest ranking companies in the shortlist, subject to each industry group’s cap.

In 2012, Unicore, the global materials technology group based in Belgium, was ranked the most sustainable company in the world.

According to Doug Morrow, Vice President of Research at Corporate Knights, ‘‘Sustainability is recognizing that a corporation’s long-term interests are intellectually and financially

Table EI

2008 2009 2010 2011 2012

Sustainability rankings and benchmarks Asian sustainability rating (%) 66 76 74 81 NA Carbon disclosure project Participated since 2007, and disclosure to the

public since 2009 Dow Jones Sustainability Indexes Listed since 2011 FTSE4Good Index Series Listed since 2002 Global 100 Most Sustainable Corporations in the World (ranking)

NA NA 81 100 62

Singapore Quality Class Certified since 2009 Sustainability commitments and certifications Anti-corruption and compliance declaration Signatory since 2009 Caring for climate statement Signatory since 2008 Securities Investors Association Singapore – Corporate Governance Statement of Support

Signatory since 2010

UN Global Compact Signatory since 2005 ISO 9001 (15 CDL buildings) Signatory since 2007 ISO 14001 Property Development and Project Management

Signatory since 2003

ISO 14001 Corporate Management and Operations

Signatory since 2008

OHS 18001 Property Development and Project Management

Signatory since 2008

OHS 18001 Property Management Signatory since 2011

Sustainability reporting Global Reporting Initiative C B þ B þ B þ A þ AA1000 Assurance Standard NA – Type 2 Type 2 Type 2 ISO 26000: 2010 Guidance on Social Responsibility

Strategic alignment since 2009

Source: CDL, Sustainability Report 2012, www.cdl.com.sg/sustainabilityreport2012/impacts_srbac. html (accessed February 2013)

PAGE 10jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 3 NO. 8 2013

consistent with resource efficiency, proactive health and safety practices, and responsible leadership’’ (Smith, 2013). Toby Heaps, Editor-in-Chief of Corporate Knights, added:

Sustainability is when what is good for a company is also good for the planet, and vice-versa. It means creating more wealth than we destroy. It means that a company is on balance increasing our overall stock of wealth, grounded in human, produced, financial, natural, and social capital.

Source: Global 100, www.global100.org/methodology/overview.html (accessed February 2013).

Exhibit 5. The first of CDL’s three pronged CSR strategy

Develop: internalising ‘‘safe and green’’ corporate philosophy

B Five-star EHS assessment to raise builder’s EH standards since 2001. Independently appraised and graded quarterly by independent auditors engaged by CDL.

B Established an EHS policy in 2003, incorporating measures to mitigate impact through CDL’s entire operations.

B Investment of between 2 and 5 per cent of each project’s construction costs on green design elements.

B Targets to achieve a minimum BCA Green Mark Gold Plus Rating for all new developments.

B Green procurement guidelines to influence our vendors and suppliers at the corporate office since 2008.

Exhibit 6. The second of CDL’s three pronged CSR strategy

Manage: optimising water and energy efficiency

1. Improve energy-efficiency:

B Consumer buildings consume 30 per cent of total energy in Singapore.

B Air-conditioning takes up 65 per cent within commercial buildings (other areas of energy consumption include lights 21 per cent, lift/escalator 9 per cent and others 5 per cent).

2. Regular energy audits in particular on aircon plants:

B Preliminary site data and collection of data to understand the chiller plant performance and building load profile.

B Detailed audit.

B Financial study for ROI.

3. Regular training of operations and management staff on energy-efficiency, to be certified as Green Mark managers, Green Mark facility managers and certified energy managers.

Exhibit 7. The third of CDL’s three pronged CSR strategy

Influence: awareness amongst stakeholders through measures as given below

B Contractors and suppliers: through EHS assessment systems, review and peer learning programs, CDL EHS Assessment Award.

B Tenants and business community: 1degree C Up campaign, recycling initiative.

B Residential customers: T.O.P. Fairs.

B Employees: Let’s Work Green! Campaign, Achieve ISO 14001 targets.

B Community-at-large: CDL e-generation challenge, CDL-Singapore Compact Young CSR Leaders Award, Singapore Young Photographer Award.

B Investors: sustainability reports, disclosure surveys and listings, e-mails, web site, etc.

CDL also worked on engaging the community through some of the following measures:

VOL. 3 NO. 8 2013 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 11

B Corporate and social partnership: since 2005, CDL played an active role in mentoring youth, and supported six schools in Singapore.

B BCA-CDL Green Sparks Competition: promoting innovation and raising awareness of green business practices and solutions amongst students who will be future practitioners in the industry.

B CDL-Singapore Compact Young CSR Leaders Award: promoting CSR amongst the youth to promote the ways in which organisations implement CSR into their daily operations.

Exhibit 8. CDL’s reporting standards

Data disclosure was aligned with the seven core areas of ISO 26000 (Figure E1).

Exhibit 9. CDL’s Sustainability Report 2012 – summary of key financial, environment and social impact (in US$ million[2])

Financial highlights

Figure E1

Table EII

Financial Highlights Year ending

31 December 2012 Year ending

31 December 2011 Year ending

31 December 2010

Revenue 2,726.0 2,666.7 2,522.8 Gross profit 1,350.4 1,441.5 1,343.9 Profit from operations 747.9 916.3 804.9 Net finance costs (32.5) (43.1) (26.8) Profit before tax 780.6 923.6 867.5 Net income 699.4 782.1 703.3

PAGE 12jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 3 NO. 8 2013

Capital management

Environmental impact

Social impact

For a full copy of the report, refer to CDL Sustainability Report 2012, www.cdl.com.sg/ sustainabilityreport2012/pdf/report.pdf

Source: City Developments Ltd, Sustainability Report 2012, www.cdl.com.sg/ sustainabilityreport2012/pdf/report.pdf (accessed April 2013).

Corresponding author

Hwang Soo Chiat can be contacted at: [email protected]

Table EV

Year ending 31 December 2011

Year ending 31 December 2010

Year ending 31 December 2009

Employee turnover rate (%) 14.4 13.7 10.7 Total CSR and environment-related training (hours)

3,287 3,694 .3,000

Employee volunteerism participation rate (%)

71 60 85

Employee volunteerism participation rate (hours)

2,838 2,894 5,524

Accident frequency ratea 0.11 0.23 0.38 Injury rateb 30 63 100

Notes: aDefined as number of workplace accidents per million manhours worked at CDL worksites; bdefined as the number of fatal and non-fatal workplace injuries per 100,000 persons employed at CDL worksites

Table EIII

Year ending 31 December 2011

Year ending 31 December 2010

Cash and cash equivalents (in US$ millions) 2,116 1,523 Net borrowings (in US$ millions) 1,476 1,907 Net gearing ratio (excludes fair value gains on investment properties as the Group’s accounting policy is to state its investment properties at cost less accumulated depreciation and impairment losses)

0.21 0.29

Interest cover ratio (times) 21.8 21.3

Table EIV

Year ending 31 December 2011

Year ending 31 December 2010

Year ending 31 December 2009

Total energy used (k kWh) 66,230 71,708 61,496 Total water used (m3) 682,519 764,643 603,558a

Construction waste generated at CDL worksites (kg/m2)

24.50 46.50 61.70

Total carbon emissions (tonnes CO2) 31,589 34,221 30,924

Note: aThis figure included the water consumed at the CDL corporate office, which had not been tracked until 2011

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