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AMP Capital Investors

PRI reporting framework 2019

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Outputs and outcomes

PR 15. ESG issues affected financial/ESG performance

15.1. Indicate whether your organisation measures how your approach to responsible investment in property investments has affected financial and/or ESG performance.

15.2a. Describe the impact on the following.

Describe the impact on:
Impact
Funds' financial performance

15.2b. Describe the impact on the following.

Describe the impact on:
Impact
Funds' ESG performance

15.3. Describe how you are able to determine these outcomes.

Measures we assess to understand impact(s) upon financial or ESG fund performance include:

  • asset valuation and capital expenditure analyses, including those linked with energy efficiency benchmarking and future climate change impacts
  • the relative impact of energy, water and waste performance on operating costs
  • the correlation between community engagement programs and shopping centre sales, and
  • workplace health and safety statistics such as the number of incidents and their severity.

PR 16. Examples of ESG issues that affected your property investments

16.1. Provide examples of ESG issues that affected your property investments during the reporting year.

ESG issue
          Physical risk to assets
        
Types of properties affected
          Shopping centre (retail assets)
        
Impact (or potential impact) on investment

Physical damage & temporary cessation of trade: due to the region occasionally experiencing cyclone activity, potential impacts on property assets can include structural damage, loss of income, asset devaluation, as well as impacts on the local community (access to services).

Evaluated during initial screening and due diligence prior to acquisition.

Activities undertaken to influence the investment and the outcomes

Through the acquisition process, due diligence was conducted on the asset's risk from flood damage, the ability to obtain current and future insurance cover, the ability to ensure business continuity and the future population growth/decline (demographics) in the local region.

ESG issue
          Key stakeholder relationships
        
Types of properties affected
          Commercial office portfolios
        
Impact (or potential impact) on investment

Regular stakeholder engagement mitigates risk of vacancy, supports lease negotiations/renewals and protects against reputational damage.

Addressed during operation through ongoing investment monitoring.

Activities undertaken to influence the investment and the outcomes

AMP Capital's 'Building Connections' program is focused on developing strong relationships with our tenants via robust discussions on sustainability objectives and themes, the timely evolution of assets to improve working conditions of people occupying our buildings and ensuring an optimal service delivery. Across our portfolios these programs have improved tenant engagement and relationships.

ESG issue
          Energy efficiency
        
Types of properties affected
          Across commercial and retail assets
        
Impact (or potential impact) on investment

Reduced operating costs leading to improved investment returns

Addressed during development and capital upgrade works and through ongoing investment monitoring.

Activities undertaken to influence the investment and the outcomes

Energy efficiency projects (including LED lighting upgrades, building management system control optimisation, chiller and boiler upgrades and solar photovoltaic installations) were undertaken across the portfolio.

ESG issue
          Community partnerships
        
Types of properties affected
          Retail assets
        
Impact (or potential impact) on investment

Retail sales, affected by length of time spent in the centre, and visitation rates

Addressed during operation & ongoing investment monitoring.

Activities undertaken to influence the investment and the outcomes

Communication and marketing of social sustainability, charitable giving and volunteering opportunities across retail shopping centres aim to engage with local communities, to build trust and perception of values-alignment between centre management and customers.

ESG issue
          Improve building environmental performance
        
Types of properties affected
          Development of commercial assets
        
Impact (or potential impact) on investment

Increased NABERS and Green Star ratings leading to reduced future operating cost of building, higher rents, shorter vacancy periods.

Addressed during design development, operation& through ongoing investment monitoring.

Activities undertaken to influence the investment and the outcomes

A valuation analysis was completed for the 4, 5 and 6-star Green Star rating levels, incorporating changes in rent, capital requirements and vacancy periods. The analysis supported a 6 Star Green Star rating for a new development, a 5 Star NABERS rating and pursuit of a WELL Certification.

16.2. Additional information. [Optional]

Further examples include:

Modern Slavery Act 

  • Types of properties affected- Across commercial and retail assets 
  • Impact (or potential impact) on the investment - Potential governance risk from not understanding exposure to Modern Slavery risk; and Addressed operation management
  • Activities undertaken to influence the investment and its response - A Modern Slavery working group was established to understand and minimise AMP Capital’s exposure to Modern Slavery risks, in preparation for the commencement of the Modern Slavery Act (2018) (Cth) and the publication of annual Modern Slavery statements under the equivalent UK legislation.

Aluminium Composite Panels

  • Types of properties affected- Across commercial and retail assets 
  • Impact (or potential impact) on the investment- -Potential fire (and consequent health and safety) risk from ACP Panels; and addressed during operation through ongoing investment monitoring
  • Activities undertaken to influence the investment and its response- AMP Capital has implemented an ACP Management Action Plan across its real estate portfolio to identify assets where ACP may be present and to identify and rectify any potential risks that may exist as a consequence (including, where required, removal of areas of ACP cladding and/or installing additional fire safety measures). 

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