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CapitaLand Investment balances returns and sustainability as it eyes 2030 targets

Jovi Ho
Jovi Ho • 8 min read
CapitaLand Investment balances returns and sustainability as it eyes 2030 targets
Vinamra Srivastava, chief sustainability officer of CapitaLand Investment. Photo: Albert Chua/The Edge Singapore
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As chief sustainability officer (CSO) of CapitaLand Investment (CLI), one would think Vinamra Srivastava would readily pick the planet over profit. After all, CLI aims to cut absolute Scope 1 and 2 carbon emissions by 46% by 2030 and achieve net zero by 2050. To see this to fruition, would CLI be willing to sacrifice shareholder returns to achieve its net-zero targets?

The reality is much more nuanced, says Srivastava after a long pause. “To love your son more or your daughter more? For me, it’s like that. CLI is at a stage where we are very clear that sustainability leadership and business feasibility must go hand-in-hand. It is not an either-or question for us.”

Srivastava likens the question to a zero-sum game between key stakeholders. “Which stakeholder is more important: customers or investors? How will the company answer this question? Both together will drive your business growth, right? So for us, the focus is how do you continue to balance both of these in a way that [lets] you keep moving forward with the right balance.”

Assuming the two ends of the spectrum are financial returns and sustainability leadership, there may be times when certain business decisions and contexts may sway to one side or the other, says Srivastava. “But on average, we will try our best to balance this out on a contextual basis without swinging to any extreme. [It’s] easier said than done.”

Maintaining this delicate equilibrium is the uphill task facing sustainability executives, says Srivastava, who took on the role in July 2022 after four years as CEO of CLI’s India business parks. “All CSOs must be able to make sense of all of this and make decisions. More often than not, you need to incorporate all these angles. [For] anything that you decide, there is always another angle that you need to check. You have to be very broad [and] at the same time very deep because the subject matter is so complex. I think that was the first sort of experience and realisation.”

Srivastava offers another word of advice to his peers: be agile and comfortable with change amid “structured chaos”. “Things are evolving so rapidly — whether it’s about regulation or reporting standards, business viability or the start-up ecosystem, or even how to decarbonise — investors’ and customers’ views [are] changing very rapidly. There are no set proceedings in this area; what is considered a good decarbonisation roadmap versus one that doesn’t work? Nobody has done it in the past. So everybody’s figuring out, in their microcosm, how to do this well.”

See also: SGX RegCo to seek feedback by year-end on mandating ISSB-aligned climate reporting

Still, the dynamic landscape is not an excuse for not having the right strategy, adds Srivastava. As head of CLI’s corporate strategy between 2015 and early 2018, he believes in forming a sturdy overarching plan. “Things will evolve in five years, right? But you don’t keep changing the strategy every year. [However,] you may keep changing the nuts and bolts.”

“We’re at a stage where we don’t need buyin on why we should be doing this or convincing people on the need to address similar issues; I think we’ve all already evolved there,” he says. “So the buy-in is about how we should approach it. What works for business unit X may not be suitable for business unit Y; it’s that level of conversation.”

See also: CapitaLand unveils 10 finalists of its global sustainability innovation challenge

CLI’s refreshed master plan

On June 1, CLI elevated its sustainability targets to “keep pace with the evolving global landscape and to ensure relevance to its business”.

The “refreshed” 2030 Sustainability Master Plan (SMP) includes an increased target for renewable energy use from 35% to 45% by 2030 and a new target to reduce waste intensity in daily operations by 20%.

CLI’s targets were first launched in 2020. The update also introduces new social targets focused on social impact, human capital development and employee wellness, including having at least 40% female representation in senior management.

CLI also released its 14th sustainability report, which has been externally assured since 2010. In 2022, over $4.7 billion in sustainable finance was secured by CLI, its REITs and business trusts, taking the total to more than $11.6 billion since 2018. CLI says interest rate savings from its sustainability-linked loans have been channelled back into decarbonisation investments.

Compared to CLI’s chosen baseline year of 2019, absolute Scope 1 and 2 emissions in 2022 are 16.8% and 6.29% lower, respectively. Notwithstanding the targets, CLI’s absolute Scope 1 and 2 emissions grew 16.4% and 6.27% y-o-y, respectively, between 2021 and 2022.

See also: TNFD framework launch floats nature-related risks to corporates' attention

According to Srivastava, creeping emissions figures throughout the Covid-19 years reflect an economic rebound across CLI’s properties. “Footfall is increasing; people are returning to the office, and our lodging portfolio is vibrant. So all of that, of course, on a year-round basis means that our portfolio emissions slightly increased, which is not unexpected.”

Instead, he is focused on reducing emission intensity, “at least in the short term”. By 2030, CLI aims to cut carbon emission and energy consumption intensity by 72% and 15%, respectively. “If you look at our emission intensity, both on a per square foot basis and on emissions per dollar of revenue, both are painting a different story.”

Taken together, Scope 1 and 2 emission intensity by gross floor area (GFA) increased from 39.7 to 40.7 kgCO2e/m2 between 2021 and 2022. Meanwhile, Scope 1 and 2 emission intensity fell from 95 to 90 tonnes of carbon dioxide equivalent (tCO2e) per million dollars of revenue.

“Both of these show that while the business activity has grown, we are doing it more energy-efficiently,” says Srivastava, “and that is a principle we want to follow. Otherwise, as the business grows, emissions will grow. So by that logic, our business should not grow, which is another extreme.”

CLI wants 45% of its electricity consumption to come from renewable sources by 2030. This figure was around 5% last year. Srivastava breaks down the task ahead by country. “India already has huge ambitions for renewable energy and will be one of the leaders in generation capacity in this region… One of our parks in India gets more than 90% of its power from renewables.”

The 45% is a global figure, he adds. “India has different targets, Singapore, China, Australia, and so on. These numbers are based on what we think today is possible regulatory-wise [and] commercially.”

CapitaLand also scours for technology via its CapitaLand Sustainability X Challenge (CSXC), which welcomes innovative solutions worldwide. The third iteration began in March, with over 680 innovations from 79 countries.

The 10 finalists will pitch to a panel of judges at CSXC 2023 Demo Day on Oct 26. They will vie for the opportunity to pilot their innovations and scale them at selected CapitaLand properties globally and be awarded up to $75,000 each.

Srivastava says he is not searching for a “silver bullet” among the hundreds of entries. “If there is a solution that I can only scale up in one geography and asset class and not in others, I’m absolutely fine with that. I would rather have 10 different solutions; one may work great for business parks in India, one may do well for malls in Singapore, one for warehouses in China.”

Decarbonisation journeys must be contextualised to each property, he adds. “Companies that can do this well will make more impact on the ground than looking for one or two big solutions that can solve a problem. I wish that had happened; I would be very happy. But until then, you’ve got to do the hard work, roll up your sleeves, and contextualise.”

Coming disclosures

Corporate sustainability reporting has seen two major developments in the four months since CLI’s updated SMP.

First, the International Sustainability Standards Board (ISSB) issued on June 26 its inaugural standards, which incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) from 2021 and aims to align sustainability-related disclosures in capital markets worldwide.

Second, the Taskforce on Nature-related Financial Disclosures (TNFD) released on Sept 18 its risk management and disclosure framework, which aims to enable organisations to report and act on nature-related risks.

Climate reporting is mandatory for Singapore-listed companies in the financial, energy, agriculture, food and forestry industries from FY2023. While there has been no word yet on mandatory nature-related disclosures among companies here, the Singapore Exchange S68 -

Regulation (SGX RegCo) will likely announce ISSB adoption in 2024.

The bourse regulator said in September that it would consult on any possible changes to current listing rules by the end of the year.

Srivastava is confident CLI is ahead of the curve. “Our company is at the stage where our sustainability strategy is driven by our vision and execution, not because regulators are asking us to do it. Regulations are important to ensure we continue to disclose and report consistently and transparently, but the strategy is far beyond what the regulations require.”

As one of Singapore’s largest companies by market capitalisation, Srivastava says CLI will release a “standalone TCFD report” with climate scenario analysis. “We’ve already got the underlying building blocks we have been reporting. So for us, the ISSB integration is a good step forward because it allows us to consolidate all of that into one standard.”

Nature and carbon are “two sides of the same coin”, he adds. “It’s good to see that there is increasing focus on nature. Eventually, that has to happen. Companies are working hard to figure out the climate piece in practice and reality. I can’t say on behalf of the regulators, but as a private player in the market, I suppose there will be many lessons from how TCFD was rolled out, so adopting TNFD should be smoother because you don’t have to reinvent the wheel.” 

Photos: Albert Chua/The Edge Singapore

Infographics: CapitaLand Investment

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