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Charter Hall Group

PRI reporting framework 2019

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

The Charter Hall Sustainability Policy 2018 provides the foundation for Charter Hall’s commitment to sustainable business practices.  This policy creates a formal sustainability and shared value framework for the Charter Hall Group, which sets the sustainability strategy and targets that apply to all funds under management, assets and operations under operational control.  At Charter Hall, our shared value and sustainability framework enables integration of responsible investment, sustainable and community outcomes into our business practices, which aligns with UN Principles for Responsible Investment (PRI), recognises the UN Sustainable Development Goals and is aligned with our corporate strategy Access, Deploy, Manage and Invest equity in our core real estate sectors – office, retail and industrial – to create value and generate superior returns for our customers.

Our corporate strategy considers long term and emerging trends and risks on an annual basis, which are presented annually to the Charter Hall Group Board for discussion and noting. The material risks are then aligned to the Charter Hall Group formal Risk Management approaches that are approved by the Board annually and informs our shared value and sustainability framework.

The Charter Hall Sustainability Policy is disclosed at https://www.charterhall.com.au/About-Us/Corporate-Governance/ 

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

The Charter Hall Group Corporate Governance Statement outlines our overarching approach and reporting structures and frameworks. Charter Hall Group (comprising Charter Hall Limited and the Charter Hall Property Trust, listed jointly on the ASX as a stapled security) is committed to delivering strong and sustainable returns to Securityholders and investors. The Board of Charter Hall recognises the importance of good governance in achieving these corporate objectives and in discharging its responsibilities to all stakeholders of the Group.    This statement is further supported by our Corporate Governance Policies on Sustainability, Diversity and Inclusion, Human Rights, Risk Management, Codes of Conduct (for Directors, Employees and Suppliers), Conflicts of Interest, Anti-Bribery, Fraud and Corruption Risk Management and Corporate Governance, which guide our employees in how they consider ESG factors and real economy impact.  

https://www.charterhall.com.au/About-Us/Corporate-Governance/

The Charter Hall Risk and Sustainability Policies outline our focus areas and long-term trends and methods to address these trends in our operations and developments and can be found at disclosed at https://www.charterhall.com.au/About-Us/Corporate-Governance/ 

01.6. Additional information [Optional].

          
        
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SG 01 CC. Climate risk

01.6 CC. Indicate the climate-related risks and opportunities that have been identified and factored into the investment strategies and products, within the organisation's investment time horizon.

In 2016, Charter Hall undertook Climate Change Risk Assessment (CCRA) on all assets under management and developed an Adaptation Framework

The overall methodology aligns with the AS5334-2013 standard for climate change adaptation for settlements and infrastructure. Since the initial assessment Charter Hall has also undertaken climate change adaptation plans for all assets, under operational control and integrated climate risk assessments with all transaction and investment due diligence.

Risk assessments considered a combination of exposure, weather and climate events and vulnerability.

  • Exposure risk was rated for each climate variable according to the potential exposure of each asset to the variable.
  • Vulnerability refers to predisposition of an asset to be adversely affected by a climate or weather-related event. This includes the characteristics of a building/site, including design, operational management and objectives of that site.
  • Natural hazards and climate events include the climatic and weather-related extreme events which may occur today and into the future. Figure 3 shows how changing climate can lead to changes in weather extremes.

Risk assessments undertook modelling, with the following considerations:

  • Time Horizons - considered the most up to date CMIP5 products based in the RCP8.5 emission scenarios are made available by CSIRO for 2030 and 2070-time horizons.
  • Emissions scenario - Both scenarios represent a high growth/worst case/current trajectory of emissions and are very similar in trajectory and magnitude. The NARCliM projections are specific to the South East of Australia and use the SRES A2 emissions scenario (AR4). For all other areas, the Climate Change in Australia (CCiA) projections are used which are based on the IPCC updated RCP 8.5 emissions scenario. The OzCOASTS scenario 3 is the high-end scenario used in AR4.
  • Global climate model – utilised the  NARCliM (OEH) and CCiA (CSIRO) modelling

Charter Hall have identified the following climate change-related opportunities for our business operations and our customers:

  • Setting a pathway to net zero- Charter Hall has adopted the Science Based Targets approach to determine our pathway to net zero
  • Efficiency in assets – Charter Hall has set higher NABERS energy ratings targets for our office portfolio, Green Star Performance ratings for our assets, and energy efficiencies in our operations.
  • Efficiencies in our developments – Charter Hall has set minimum 5 Star Green Star Design and As Built ratings for our new large developments and NABERS Energy Commitments.
  • Investing in renewable energy – Across our office, industrial and retail sectors, we have now invested in 2,456kW of solar PV installations, generating over 3,670MWh of electricity per annum. Our retail portfolio has also committed to generating to installation of 11,316 kW of solar PV, across 14 retail shopping centres.  
  • We will continue to work in partnership with our customers to expand the energy efficiency and renewable footprint of our entire portfolio, resulting in mutually beneficial outcomes for both our customers and our business

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

01.8 CC. Indicate the associated timescales linked to these risks and opportunities.

Climate change projections and exposure to natural hazards and opportunities were carefully selected considering the likelihood of risk to any of Charter Hall properties. These variables are:

  • Increase in mean temperature
  • Increase in extreme temperature
  • Sea level rise
  • Present exposure to bushfire
  • Historical exposure to extreme storms
  • Historical exposure to cyclones

Although future projections for bushfire, extreme storms and cyclones are still general and qualitative, the scientific community largely agree (see Climate Change in Australia) that these natural hazards events tend to increase their frequencies based on the projected changes in precipitation and temperature.

The timescales applied to assess these risks, against various data sources were projections for 2030 and 2070.

01.9 CC. Indicate whether the organisation publicly supports the TCFD?

Explain the rationale

Charter Hall Group supports the TCFD, however has yet to do so publicly.  In FY19, Charter Hall Group will prepare a gap analysis to report to the TCFD framework.  Once this analysis has been completed Charter Hall will publicly support the TCFD and commence reporting against the TCFD framework.

01.10 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

Charter Hall Group’s Sustainability Policy (https://www.charterhall.com.au/About-Us/Corporate-Governance/) outlines the Group approach to identify and manage material climate-related risks and opportunities stating,

We are committed to playing a leading role in achieving a sustainable future by:

• Actively addressing and managing our impact through optimising the use of resources, minimising our carbon footprint, waste and pollution and protecting the environment in which we operate; …

 • Assessing and incorporating the effect of climate change risk, adaptation and resilience into our investment and business decisions…"

Charter Hall disclose climate change as a material issue and the initaitives and targets to address climate change resilience for the property portfolio and our customers in our annual Sustainability report. https://charterhall.reportonline.com.au/fy18/sustainability-report/.

The Charter Hall Group Shared Value Framework outlines our actions and progress in identifying and managing material climate-related risks and opportunities.  The strategy to identify and manage climate-related risks includes undertaking a climate risk assessment of all Charter Hall buildings and the preparation of climate change adaptation plans across our office, retail and industrial portfolios, integrating mitigation intiatives into operational risk processes and capital works planning.

The strategy to identify and manage climte-related opportunities includes the development of a pathway to net zero, iimrpoved energy efficiency of all buildings in the portfolio and investment in renewable energy.

Outcomes and targets to identify and manage climate-related risks and opportunities during FY18 can be found at https://charterhall.reportonline.com.au/fy18/sustainability-report/, specifically  https://charterhall.reportonline.com.au/fy18/sustainability-report/about-charterhall/introduction.html and https://charterhall.reportonline.com.au/fy18/sustainability-report/eco-innovation/our-commitment.html.

1.12 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

specify

          Charter Hall Group respond to CDP which aligned with the TCFD disclosures.  In FY19, Charter Hall Group will commence its TCFD disclosure.
        

SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].

Charter Hall Group (comprising Charter Hall Limited and the Charter Hall Property Trust, listed jointly on the ASX as a stapled security) (the Group or Charter Hall) is committed to delivering strong and sustainable returns to Securityholders and investors. The Board of Charter Hall recognises the importance of good governance in achieving these corporate objectives and in discharging its responsibilities to all stakeholders of the Group.

Charter Hall publicly discloses its Corporate Governance approach and policies on its website, https://www.charterhall.com.au/About-Us/Corporate-Governance/.  This website outlines Charter Hall governance policies, including the Sustainability Policy, Board and Committee Charters and CHC Director Skills Matrix.

The policies include:

  • Auditor Independence Policy
  • Continuous Disclosure and Communications Policy
  • Risk Management Policy
  • Anti-Bribery, Fraud and Corruption Risk Management Policy
  • Securities Trading Policy
  • Conflicts of Interest and Related Party Transactions Policy 
  • Charter Hall Diversity and Inclusion Policy
  • Charter Hall Group Sustainability Policy
  • Charter Hall Group Human Rights Policy
  • Charter Hall Limited - Code of Conduct for Directors
  • Charter Hall Limited - Code of Conduct for Employees
  • Charter Hall Privacy Policy
  • Charter Hall Funds Management Limited - Code of Conduct for Directors
  • Charter Hall Supplier Code of Conduct

The Committees include:

  • Group Audit Risk and Compliance Committee
  • Remuneration and Human Resources Committee
  • Charter Hall Limited Board Charter and Charter Hall Funds Management Limited Board
  • Retail REIT Audit Risk and Compliance Committee
  • Nomination Committee 

Charter Hall's approach to sustainability and community is outlined in our 2018 Sustainability Report as it is considered intrinsically linked.  The Shared Value Report https://charterhall.reportonline.com.au/fy18/sustainability-report/


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Charter Hall defines conflicts of interest as those circumstances where the interests of one or more parties have the potential of interfering, or being perceived as interfering, with fair and equitable dealing. This includes potential, apparent and actual conflicts of interest.

The Charter Hall Conflicts of Interest and Related Party Transactions Policy complies with its statutory legal obligations under section 912A(1)(aa) of the Corporations Act 2001.  Different types of Conflicts of Interests are managed according to a number of specific legislative, regulatory and fiduciary or equity requirements. Therefore, when dealing with Conflicts of Interests, Charter Hall Group utilise a Conflicts of Interest Flowchart, which provides a summary of the various scenarios and is intended to provide simple guidance as to which documents are applicable to each category of Conflict.  We also have documented asset allocation protocols and leasing conflict protocols to manage conflicts at asset level in the transaction process.

https://www.charterhall.com.au/About-Us/Corporate-Governance/

The Charter Hall Conflicts of Interest and Related Party Transaction Policy is reviewed on at least an annual basis with all changes approved by the Charter Hall Board. 

A copy of the Charter Hall Conflicts of Interest and Related Party Transaction Policy is available on our website at https://www.charterhall.com.au/About-Us/Corporate-Governance/.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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