Independent Assurance Statement

To the Management and Stakeholders of CapitaLand Limited

CapitaLand Limited (CapitaLand) engaged Ere-S Pte Ltd (Ere-S) to carry out an independent assurance of CapitaLand’s Sustainability Report 2016 (the Report). The engagement took place between March and May 2017.

Scope

The assurance encompassed the entire Report and focused on all figures, statements and claims related to sustainability during the reporting period January 2016 to December 2016, with the limitations stated below. This covers the selected information provided with reference to the GRI Standards disclosures as shown in the Assurance column of the Report’s GRI Content Index. A verification on the alignment of the entire Report with the Singapore Exchange (SGX)’s new rules on sustainability reporting for listed companies was also included as part of the assurance process.

Limitations

The assurance did not cover financial data, risk management structures, technical descriptions of buildings, equipment and production processes or other information not related to sustainability or already supported by existing documents, such as previous CapitaLand Sustainability Reports, which were externally assured by Ere-S, CapitaLand’s Annual Report and third-party audits and certifications (e.g. BCA Green Mark, LEED, ISO 14001 and OHSAS 18000).

Ere-S did not check whether all elements provided in the GRI guidance (What to Report) on each indicator had been fully reported and whether CapitaLand’s approaches listed in the Sustainability Development Goals (SDGs) table were specifically aligned with the SDGs.

Type of assurance and criteria

The assurance engagement was conducted in accordance with the International Standard on Assurance Engagements 3000 (ISAE 3000) and in line with the requirements of a Type 2 assurance of the AA1000 Assurance Standard (AA1000AS 2008).

AA1000AS consists of evaluating the company’s sustainability framework and processes using the criteria of the AA1000 AccountAbility Principles (AA1000APS 2008), namely inclusivity, materiality and responsiveness. AA1000AS also requires an evaluation of the quality of the reported sustainability performance information. For this, Ere-S employed the reporting principles of the GRI Standards (reliability, accuracy, balance, comparability, timeliness, clarity, sustainability context and completeness).

A moderate level of assurance under AA1000AS was provided for this engagement. A moderate assurance is restricted to desktop review, management-level evidence gathering and data verification.

The verification on SGX’s reporting rules was based on clauses 3 to 6 of the “SGX-ST Listing Rules Practice Note 7.6 Sustainability Reporting Guide”, which include SGX reporting principles and the required five primary components of a report (material ESG factors, policies practices and performance, targets, sustainability reporting framework and board statement).

Responsibility and independence

This statement represents the independent opinion of Ere-S, whose responsibility was to provide the assurance, to express conclusions in relation to the agreed scope and to prepare the assurance report and this assurance statement for the management of CapitaLand alone and for no other purpose. The management of CapitaLand was responsible for the preparation of the Report and all statements and figures contained within it. Ere-S has not been involved in the development of the Report or the disclosed management processes; neither has Ere-S been engaged by CapitaLand for other projects. The activities of EreS are independent of CapitaLand and contain no financial interest in CapitaLand’s business operations.

Assurance methodology

The assurance procedures and principles used for this engagement are compliant with ISAE 3000 and were drawn from a methodology developed by Ere-S, which consists of the following steps:

1. Identify statements and data sets, which are classified according to the relevant data owners and the type of evidence required for the verification process.

2. Carry out interviews with key functional managers and data owners at CapitaLand’s corporate office in Singapore. Data verification included the following:

• Enquiring about the quantitative and qualitative aspects of the Report disclosures, including performance information, policies, procedures and underlying management systems.
• Requesting evidence of the data sources and explanation of relevant collection and calculation methods to substantiate the figures and claims. This includes limited sampling of quantitative data to validate relevant sources and other supporting documents.
• Challenging the claims made in the Report and, where possible, confirming the presented evidence, including calculation methods, criteria and assumptions, with multiple data owners and other documentation from internal and external sources, such as previous CapitaLand sustainability reports.

3. Assess the collected information and provide recommendations for immediate correction where required or for future improvement to the Report content.

For statements on the number (or absence) of complaints, incidents and cases of non-compliance to regulations (GRI disclosures 205-3, 307-1, 406-1, 416-2, 417-3, 418-1 and 419-1), Ere-S assessment was essentially based on internal documents from CapitaLand’s feedback and reporting systems.

Findings and observations

Evaluation of the adherence to AA1000 AccountAbility Principles

Inclusivity - How the organisation engages with stakeholders and enables their participation in identifying issues and finding solutions.

Multiple platforms for engaging with the company’s key stakeholder were observed throughout the whole company. These include diverse surveys, meetings, online channels and use of social media. Employees, customers and investors benefit the most from continuous and strong engagement by the company. While collaboration with other stakeholder groups tends to be less sustained, it also appeared solid on a project or event-basis.

Particular engagement with stakeholders was observed during the reporting period in Singapore and included interactions with the local union relating to changes affecting staff. There was also evidence of additional effort in engaging with first-tier contractors to further strengthen the company’s global sustainable supply chain management.

Materiality – How the organisation recognises issues that are relevant and significant to it and its stakeholders.

Overall, evidence of regular review of sustainability risks and opportunities, including identification of issues, setting targets and assessing performance, was observed at the top levels. These processes belong to CapitaLand’s frameworks on enterprise risk management, audit and global sustainability management, which are all overseen by the Board.

More specifically, evaluation of material issues was also observed through the company’s certified environmental, health and safety (EHS) management structure, which provides regular internal and third-party assessments on the compliance of the company’s processes and performance to regulations and international standards. Observed mechanisms to identify other social-related issues include the above-described engagement channels and internal reporting platforms.

Commitment from top management to recognise and mitigate sustainability issues is also reflected in the environmental and social topics found in CapitaLand’s risk register and key performance indicators (KPIs) linked to the remuneration of top managers.

Responsiveness – How the organisation responds to stakeholder issues and feedback through decisions, actions, performance and communication.

Response to stakeholders’ concerns during the reporting period was evidenced globally for employees, customers, investors and community partners (for philanthropic projects). While actions taken as a result of engagement with government agencies, suppliers, unions and industry bodies were mostly observed in Singapore, nothing came to our attention to indicate that the response mechanisms would not be equally applied at overseas business units.

Sharing of information on CapitaLand’s sustainability policies, processes and performance appeared comprehensive, timely and ongoing. Key information was made available to all stakeholders through diverse platforms and events, such as the company’s website, sustainability report, intranet, newsletters, emails and meetings with relevant staff, including senior managers.

Evaluation of the adherence to the GRI reporting principles (quality of the Report content)

Overall, the Report presents CapitaLand’s sustainability priorities, processes and performance in a clear and detailed way. The scope of the Report is global and reflects the industry value chain and sustainability context. There is evidence of CapitaLand’s effort to align its reporting approach with the latest industry practices and reporting requirements, specifically regarding the company’s investors and the new SGX rules.

Compared to previous sustainability reports, the Report is more comprehensive. Additional disclosures include information on Sustainable Development Goals alignment, new targets on carbon and water intensity, and new performance indicators such as turnover by gender and age, gender pay gap and the number of employees on paternity leave.

Report content is moderately balanced with statements pertaining to work-related injuries and fatalities in the workforce and the supply chain, business malpractice incidents and cases of non-compliance, as well as supply chain stop orders and fines.

Data sets and descriptions of the relevant calculation methods provided during the assurance interviews were comprehensive and well-structured. In most cases, data sources were generated by the company’s in-house data systems, such as the environmental tracking system (ETS) and the HR system, which allow effective assessment of the data collection and calculation processes, including formulas, conversion factors and units used to generate the reported performance figures.

The level of reliability and data accuracy was reinforced by the internal desktop audit repeated in 2016 by the reporting team to validate data entries from various business units. In addition, Ere-S executed this year a more thorough assessment of some data trails, such as the collection of performance figures on construction material used by contractors. These additional control procedures provided stronger confidence in the overall level of reliability and accuracy of the quantitative performance disclosures found in the Report.

All figures and statements within the assurance scope could be validated through evidence and clarifications presented by the data owners during interview. A few minor inconsistencies, such as unclear statement or missing definition of a term, were found during the assessment and subsequently addressed by CapitaLand’s reporting team.

Evaluation of the adherence to SGX rules on sustainability reporting

According to Ere-S verification findings, the Report content adheres adequately to SGX sustainability reporting principles and rules, including the required five primary components.

Moving forward

For further improvement of sustainability reporting by CapitaLand, Ere-S recommends the following:

• Although overall high quality is observed in the current data collection and reporting processes, stronger reliability and accuracy could be achieved through the further standardisation of sustainability data systems. For example, additional quantitative performance indicators could be incorporated into the ETS and more consistency could be applied to the provision and formatting of the relevant datasets and supporting documents and, where applicable, details of the calculation method(s). Such standardisation will also facilitate the reporting process and improve the effectiveness of quality checks by internal (audit and reporting teams) and external (assurance provider) parties.
• CapitaLand is encouraged to continue reporting on negative performance in its operations and supply chain, covering both environmental and social aspects. Future sustainability reports will benefit from more details on the actions taken by the company, including engagement with the relevant stakeholders, to mitigate the negative outcomes. Ideally illustrated through case studies, such disclosures should also cover CapitaLand’s operations overseas and, where applicable, include evidence of top-management participation in assessing the issues and setting the response processes.

The above findings and additional suggestions for improvement have been presented to the management of CapitaLand in a more detailed assurance report.

Singapore, 17 May 2017

Jean-Pierre Dalla Palma Director and Lead Certified Sustainability Assurance Practitioner

Ere-S Pte Ltd is a consulting company specialising in business sustainability and provides services in the domains of sustainability reporting, sustainability report assurance, stakeholder engagement and CSR training. Our assurance team is composed of assurance practitioners with expertise in CSR and each member is required to follow Ere-S’ assurance code of conduct, which can be found at http://www.ere-s.com/assurance-code-of-conduct/. Ere-S is not responsible for any actions taken by other parties as a result of the findings presented in this assurance statement.