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AMP Capital Investors

PRI reporting framework 2019

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Post-investment (monitoring and active ownership)

Overview

PR 08. ESG issues in post-investment activities

08.1. Indicate if your organisation, and/or property managers, considers ESG issues in post-investment activities relating to your property assets.

08.2. Indicate whether your organisation, and/or property managers, considers ESG issues in the following post-investment activities relating to your property assets.

08.3. Describe how your organisation, and/or property managers, considers ESG issues in post-investment activities related to your property assets.

Effective ESG management is fundamental to the long-term investment performance of our clients' assets. Therefore, the entire investment team takes on the responsibility to identify, analyse and manage ESG risks and opportunities as part of AMP Capital's day-to-day property and asset management.

There are five main processes that assist AMP Capital in this active management of ESG exposures:

  • Life-cycle audits. Asset registers are kept for all relevant plant, equipment, fixtures and fittings. Asset registers inform a 10-year life cycle capital plan which identifies upcoming expenditure required to maintain or replace end of life items. ESG considerations, particularly energy efficiency, are taken into account in determining whether a like-for-like replacement will be made or an upgrade to a more efficient alternative.
  •  Research. In addition to the life-cycle analysis of the physical asset, we undertake regular in-depth research into factors that will contribute to its financial and ESG performance, including demographic analysis and tenant satisfaction surveys. These surveys help us determine the needs and expectations of our office portfolio's tenants and many of our national retailers in our shopping centre portfolio.
  • ESG strategy. AMP Capital sets an ESG strategy for each fund, including benchmarks, targets and performance indicators for various environment, social and governance issues. Asset level targets are set to ensure the Fund ESG targets are met. Implementing these strategies in managing assets helps ensure that long-term, sustainable performance is achieved for our clients. The activities pursued under these strategies are discussed in indicator sections below.
  • Performance analysis. AMP Capital monitors progress against fund- and asset-level ESG benchmarks, targets and performance indicators. These include environmental performance targets and compliance with legislative and internal policy requirements. Continued tenant satisfaction surveys help us measure how well we are meeting their needs and expectations, focusing our attention on our tenant relationships and, in turn, the investment performance of our clients' assets.
  • Development and refurbishment. AMP Capital's Development Team considers ESG factors throughout the development process, whether for green-field or existing sites, or redeveloping and evolving an existing asset in the portfolio for longer-term investment performance. Development and refurbishments consider ESG factors to manage risks, as well as help ensure the final development meets the needs of future occupants. Green Star ratings and AMP Capital's own policies are among the measures used to assess ESG factors during development and refurbishment.
  • Master-planning of a new asset development or redevelopment takes into consideration the interactions and impacts of the asset on its occupants (tenants) as well as the surrounding environment and community. The design and feasibility phases consider studies on environmental impacts, impact on transport, ground plane activation, over-shadowing, local demographics and the impact on services such as sewerage and the electricity network. ESG factors are again considered during the construction contract and may include prescriptive requirements for the demolition process, use of recycled materials, choice of new plant and equipment, safety of contractors, and impact on tenants and neighbouring communities.
  • Site self-assessments. We undertake regular self-assessments of potential ESG risks, including climate change adaptation risk assessments, site vulnerability self-assessments and health & safety audits. The property and operations managers are responsible for completing these self-assessments, which help us determine our exposure and develop plans to mitigate ESG risks, as well as quantify the mitigation costs.

Property monitoring and management

PR 09. Proportion of assets with ESG targets that were set and monitored

09.1. Indicate the proportion of property assets for which your organisation, and/or property managers, set and monitored ESG targets (KPIs or similar) during the reporting year.

(in terms of number of property assets)

09.2. Indicate which ESG targets your organisation and/or property managers typically set and monitor

Target/KPI
Progress Achieved
          Energy and Climate Change
        
          Water consumption
        
          Waste generation and percent recycled versus sent to landfill
        
          NABERS Energy ratings achieved for all rateable assets. Energy performance is primarily measured through NABERS Base Building Energy Ratings and improvement of area-weighted portfolio average.
        
          Water performance is primarily measured through NABERS Water Ratings and improvement of area-weighted portfolio average for each Fund. Asset-level NABERS Water targets developed.
        
          Waste performance is primarily measured through average recycling rates for each Fund. Coverage has been steadily increasing across all funds, and data quality has improved.
        
Target/KPI
Progress Achieved
          Undertake annual environment, health and safety (EHS) risk audit. (Environmental Legislative Compliance Committee - ELCC)
        
          Apply appropriate metrics to measure and report staff diversity and inclusion.
        
          Measure and report outcomes of community engagement activity.
        
          ELCC meet monthly & discuss environmental legal, risk & compliance. Internal quarterly hazard inspections on all assets. Bi-annual external audits against risk incident management system & EHSHandbook.
        
          Diversity and inclusion committee meet regularly. We have written a Reconciliation Action Plan (RAP) that has been endorsed & is anticipated to launch in May 2019.
        
          Measurable indicators and monitoring process established, e.g. community engagement activities; tenant satisfaction survey results; value of charitable donations raised and staff volunteering hours donated.
        
Target/KPI
Progress Achieved
          Continue to review and maintain policies that reflect best practice governance and ethical operations
        
          Continue to improve quarterly fund ESG reporting
        
          Establish sustainable supply chain policy and procedures.
        
          Ethical operations policies in place. Staff inductions and training carried out. No incidents to report.
        
          ESG reporting process reviewed & updated. Consistent sustainability framework used as the basis for 2018 Fund ESG Strategy documents and reporting covering all real estate assets
        
          Sustainable Supply Chain Governance process is currently being developed as part of AMP Capital’s preparation for compliance with the Australian Modern Slavery Act. 2018 (Cth).
        

09.3. Additional information. [Optional]

ESG strategies and targets are documented for all Funds and cascaded down into asset-level targets and initiatives which are documented in Asset ESG Plans that are signed off by the Head of Sustainability, the Investment Manager, the Property Manager, Operations Manager and Facility Manager. Energy, water and waste targets are benchmarked against competitor buildings.

We monitor performance in various ways, including NABERS energy and water ratings, GreenStar ratings, waste diversion from land-fill, community engagement, charitable activities and financial donations, social events, and outsourced tenant surveys. If a building's rating is lagging, we set strategies with a wide variety of initiatives to improve performance.

The implementation framework for health, safety and regulatory compliance is audited annually, and performance is reported to the AMP Capital Holdings Limited Board on a quarterly basis.


PR 10. Certification schemes, ratings and benchmarks

10.1. Indicate whether your property assets are assessed against certification schemes, ratings and/or benchmarks

10.2. List the certification schemes, ratings and/or benchmarks your property assets are assessed against and what proportion of your property assets they apply to.

Specify
          NABERS
        
Proportion of property assets these apply to

(in terms of number of property assets)

Specify
          Green Star
        
Proportion of property assets these apply to

(in terms of number of property assets)

Specify
          Global Real Estate Sustainability Benchmark
        
Proportion of property assets these apply to

(in terms of number of property assets)

10.3. Indicate if your organisation uses property specific reporting standards to disclose information related to your property investments’ ESG performance.

          GRESB (Global RealEstate Sustainability Benchmark)
        

10.4. Additional information.

NABERS energy and water ratings are conducted across all office and retail assets which fit the rating protocol. At the end of 2018, approximately 95% of office and retail assets had a NABERS energy and water rating. NABERS does not currently cover industrial assets.

Green Star ratings are conducted across new developments and major refurbishments. A Green Star Performance pilot rating was carried out at one asset during 2016, and it achieved a 6 Star rating, only the 4th building in Australia to do so. The lessons learned were then applied to 45 other assets in 2017, all of which achieved Green Star Performance ratings, substantially increasing the proportion of our total portfolio certified using one of the Green Star rating tools.

GRESB is assessed for three of AMP Capital's core funds and three separate mandates, which together cover a significant proportion of our real estate portfolio.


Property developments and major renovations

PR 11. Proportion of developments and refurbishments where ESG issues were considered

11.1. Indicate the proportion of active property developments and major renovations where ESG issues have been considered.

(by number of active property developments and refurbishments)

11.2. Indicate if the following ESG considerations are typically implemented and monitored in your property developments and major renovations.

11.3. Additional information. [Optional]

Developments and refurbishments will always include requirements to comply with ESG performance indicators and benchmarks. It is a core part of the AMP Capital Real Estate Head of Sustainability's job description to drive improvements in property sustainability performance in property developments and refurbishments. AMP Capital ESG drivers for development and refurbishment projects include: investor expectations (largely expressed through analysis and engagement regarding GRESB scores, but also through direct investor engagement); tenant and customer expectations about sustainable performance of the AMP Capital buildings they occupy or use; economic benefits associated with reduced operating costs (e.g. through energy, water and waste initiatives) as well as new income streams (e.g. access to renewable energy via embedded networks or through power purchase agreements); minimising downside risk relating to adverse effects of poor ESG performance on capital value & vacancy rates; and addressing current regulations and anticipating future regulatory requirements.

•    Energy & water efficiency. Targets for operational water and energy use are established in the design stage.

•    Hazardous materials. Sites developed or refurbished are remediated to remove or safely contain any hazardous materials.

•    Waste. Demolished materials are diverted from landfill where possible during development and refurbishment, while designs incorporate strategies for diverting operational waste from landfill. Construction waste is monitored and diversion from landfill targets are set for building contractors.

•    Construction materials. For refurbishment and development, we consider any applicable sustainable materials such as low VOC (volatile organic compound) products, recycled materials and reuse of existing on-site building components.

•    Health and safety. Workplace health and safety systems and procedures are a critical part of development and refurbishment design, both for construction workers and for the public.

•    Biodiversity. Our refurbishment and development works typically surround existing assets in suburban and CBD locations which do not impact the surrounding biodiversity. Opportunities to maintain or enhance existing biodiversity attributes are incorporated into landscape planning, where relevant e.g. shopping centre external landscaped areas.

•    Onsite renewable energy generation. Possibilities for solar and other renewable energy technologies are considered and where possible adopted.

•    Construction contractors. Construction contracts specify sustainability performance requirements to be met by construction contractors and sub-contractors, including processes for carrying out audits and verifying compliance.

•    Development Control Group. The development control group sets the governance framework by which the development is managed appropriately, including high level oversight of compliance with ESG objectives and targets.

•    Resilience. Consideration of resilience and climate change readiness are in the sustainability design brief, which is provided to the design team ensuring consideration early in the design stage.


Occupier engagement

PR 12. Proportion of property occupiers that were engaged with

12.1. Indicate the proportion of property occupiers your organisation, and/or your property managers, engaged with on ESG issues during the reporting year.

(in terms of number of occupiers)

12.2. Indicate if the following practises and areas are typically part of your, and/or your property managers’, occupier engagements.

12.3. Additional information. [Optional]

Further details on our sustainability practices with occupiers and tenants include:

  • Sustainability guides. Tenancy fitout guidelines are provided to all incoming tenants.
  • Building connection events. Events are open to occupiers to promote both sustainability awareness and to maintain and enhance tenancy relationships. This includes quarterly meetings between property managers and tenants, support for Earth Hour, National Recycling Week and World Green Building Week.
  • Energy and water efficiency. AMP Capital's 'Building connections' events and targeted newsletters provide occupiers with tenancy consumption and asset performance data, and suggestions to improve that performance.
  • Waste minimisation. Similar to energy and water efficiency, information on waste minimisation is shared at building connection events, and through newsletters and tenancy walk-throughs by waste contractors.
  • Occupier satisfaction surveys. Annual surveys ask occupiers a broad range of questions about the space they occupy, from sustainability issues to building amenities and operations.
  • Health and wellbeing. We implement wellbeing initiatives including promotion of facilities for cyclists and gym users, access to fitness (Live Life Get Active program), in-house yoga sessions, alliances with local gyms and mental health initiatives (e.g. RUOk day)
  • Green leases: Green Lease clauses compliant with Better Buildings Partnership Leasing Standard were integrated into AMP Capital’s Standard Lease documentation. This includes clauses on both management practices and controls to monitor tenant compliance. 

PR 13. Proportion of green leases or MOUs referencing ESG issues

13.1. Indicate the proportion of all leases signed during the reporting year that used green leases or the proportion of Memoranda of Understandings (MoUs) with reference to ESG issues.

(in terms of number of leases or MoUs)

13.2. Additional information.

AMP Capital's green lease provisions focus on achieving minimum standards in building energy and water efficiency, typically using the NABERS rating system, and complies with the Better Buildings Partnership Green Lease Clauses. We also provide a framework for engagement with the occupiers to educate and inform them about sustainability and ESG issues.

Green Lease provisions in our standard lease typical cover the following issues:

  • General commitment to managing and operating the Building and the Premises to promote energy efficiency and minimise the environmental impact of the use and occupation of the Building.
  • Cooperation between landlord and tenant on environmental initiatives
  • Mutual participation in building management committees
  • Optimisation of the Building Management System to ensure the efficient supply of the Services to the Premises and the Building.
  • Reciprocal commitment to provide relevant information or data
  • Commitment by the Tenant to impose obligations on fit-out contractors not to adversely affect building environmental performance ratings such as NABERS or Green Star
  • Commitments that operations and maintenance contractors will not adversely impact the NABERS rating
  • Cleaning contracts to include requirements for cleaners to comply with waste minimisation strategies, or energy or water reduction strategies as relevant, and use, where practical, least harmful cleaning products.
  • Commitment to use reasonable endeavours to minimise energy and water consumption and cooperate with waste management strategies in place for the Building.
  • Commitment to minimise waste and maximise recycling of waste products, including requirement that only compostable packaging, cutlery, cups are used for food packaging and ban on single use plastic bags or straws (food retail tenants only).

Community engagement

PR 14. Proportion of assets engaged with on community issues

14.1. Indicate what proportion of property assets your organisation, and/or your property managers, engaged with the community on ESG issues during the reporting year.

(in terms of number of property assets)

14.2. Indicate if the following areas and activities are typically part of your, and/or your property managers’, community engagement.

14.3. Additional information.

AMP Capital aims to forge and maintain strong connections with both the occupiers of our assets, and the communities which host them.

For occupiers, AMP Capital Real Estate participates in a number of national collaborative initiatives, including World Green Building Week, National Reconciliation Week and NAIDOC week, National Recycling Week and Earth Hour.

For the host communities, our engagement programmes are based on sustainability themes which are relevant to each asset's local community. They complement the broader community, philanthropic and charitable initiatives of all of AMP Capital's investment and management teams. The extent of our combined community engagement is measured by charitable donations, number of volunteer hours, and the value of space for community advertisements provided at nil cost.


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