Independent Assurance Statement

To the Management of CapitaLand Limited

CapitaLand Limited (CapitaLand) engaged Ere-S Pte Ltd (Ere-S) to carry out an independent assurance of CapitaLand Global Sustainability Report 2017 (the Report). The engagement took place in March and April 2018.

Scope

The assurance encompassed the entire Report and focused on all figures, statements and claims related to sustainability during the reporting period January 2017 to December 2017. This covers the information provided with reference to the following GRI Standards disclosures:

• GRI general disclosures on organisation profile (102-8, 102-9, 102-12, 102-13, 102-14, 102-15, 102-16, 102-18), stakeholder engagement (102-40, 102-41, 102-42, 102-43, 102-44) and reporting practice (102- 45, 102-46, 102-47, 102-48, 102-49, 102-54, 102-55)
• Economic GRI disclosures on economic performance (201-2), market presence (202-2), indirect economic impacts (203-1) and anti-corruption (205-1, 205-2, 205-3)
• Environmental GRI disclosures on materials (301-1), energy (302-1, 302-2, 302-3, 302-4, 302-5), water (303-1, 303-2, 303-3), biodiversity (304-1, 304-2, 304-4), emissions (305-1, 305-2, 305-3, 305-4, 305-5), effluents and waste (306-1, 306-2, 306-3, 306-4, 306-5), compliance (307-1), supplier environmental assessment (308-1)
• Social GRI disclosures on employment (401-1, 401-3), labour/management relations (402-1), occupational health and safety (403-1, 403-2), training and education (404-1, 404-2, 404-3), diversity and equal opportunity (405-1, 405-2), non-discrimination (406-1), child labour (408-1), forced or compulsory labour (409-1), human rights assessment (412-1), local communities (413-1), supplier social assessment (414-1), public policy (415-1), customer health and safety (416-1)

Ere-S also checked all disclosures on management approaches (GRI DMA) associated with the above topics, as well as new or updated historical performance data that was not verified during last year’s assurance engagements by Ere-S for CapitaLand’s previous sustainability report.

A verification on the alignment of the entire Report with the Singapore Exchange (SGX)’s 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 CapitaLand’s Annual Report and third-party audits and certifications (e.g. BCA Green Mark, LEED, ISO 14001 and OHSAS 18001).

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. Ere-S did not check the content of CapitaLand’s Annual Report referred to in the GRI Content Index.

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).

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:

For statements on the number (or absence) of complaints, incidents, spills and cases of non-compliance to regulations (GRI 205-3, 306-3, 307-1, 406-1, 416-2, 417-3, 418-1, 419-1), on impacts on biodiversity, water sources and water bodies (303-2, 304-1, 304-2, 304-4, 306-1, 306-5) and on political contributions (415-1), Ere-S assessment was essentially based on confirmation by key data owners and, where applicable, internal documents from CapitaLand’s accounting, feedback and reporting systems.

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 Ere-S are independent of CapitaLand and contain no financial interest in CapitaLand’s business operations.

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.

Employees, customers and investors continue to benefit, at global levels, from multiple engagements platforms, including regular surveys, meetings and online feedback channels. Formal engagement with the other stakeholder groups was also observed but in a less sustained way. Examples of the latter include communication and engagement with contractors, particularly overseas, to cover specific concerns such as environmental and safety approaches, quality of performance data collection and the implementation of CapitaLand’s new supply chain code of conduct. Active relationships to discuss key concerns during the reporting period were mainly observed with unions and government agencies in Singapore. Except for overseas community partners, there was less evidence of similar participation in decision making processes by other stakeholders abroad.

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

Key mechanisms to identify and prioritise material issues, measure relevant performances and impacts and set appropriate targets could be observed for the reporting period. These included CapitaLand’s global sustainability management structure, its certified systems on environment, health and safety, including relevant committees and work units, as well as CapitaLand’s enterprise risk management system. Evidence showed that these mechanisms were overseen by senior management.

In addition to the engagement channels described above, observed approaches to recognise material issues and concerns from stakeholders included non-compliance assessment and reporting systems and the sharing of information. Material shared covered incidents, business malpractices, legal updates and the relevant mitigation measures and best practices. Some concerns were raised by the unions in Singapore, but there was no evidence of other significant issues identified through direct engagement with stakeholders overseas.

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

Responsiveness was observed to issues raised by all key stakeholder groups during 2017. In particular, there was evidence of actions taken in response to concerns from unions about employees affected by CapitaLand’s newly implemented digitalisation programme. Other actions by CapitaLand in response to ongoing material issues that could be evidenced during the reporting period included investigations and information sharing following safety incidents, cases of non-compliance or malpractice.

The assurance showed that, during the reporting period, communication platforms including events, meetings corporate website, intranet, and other online channels continued to be used to share information about CapitaLand’s sustainability strategy and performance with all key stakeholders.

The Report would benefit from additional and diverse case studies showing CapitaLand’s responses to new concerns raised by stakeholders during the year and how effectively and timely the organisation mitigates these concerns and communicates the results and relevant performance data.

Evaluation of The Adherence to The Gri Reporting Principles (Quality of The Report Content)

The content of the Report is sufficiently clear and detailed to provide an overall accurate picture of CapitaLand’s sustainability framework and performance during the reporting period. Reported social and environmental policies, management approaches, targets and their application appear to comprehensively cover all key operations of the organisation and its supply chain. Based on Ere-S assessment of the reported information and underlying processes, CapitaLand showed continuous efforts in aligning its sustainability framework with the latest standards and best practices in the sustainability context of the real estate and construction sectors.

However, more detailed performance data, especially from overseas operations and suppliers, would improve the completeness of the Report. For example, indicators on safety, water, waste and scope 3 emissions could be more exhaustive. Ere-S understands that embodied emissions in the construction sector are still difficult to measure due to lack of clear benchmarks.

Data files and other evidence presented by data owners during the assurance interviews appeared to be detailed and coherent, with some noticeable improvements this year in the data sets structure allowing a more effective examination of the data trails. With only a few exceptions, all figures assessed through sampling could be traced back to their source documents, such as reports and invoices. The majority of the data sets originated from the CapitaLand’s in-house data systems, such as its environmental tracking system (ETS) and its HR system. In addition, the reporting team repeated the internal desktop audit and detailed sampling checks in 2017 to validate the data entries in the ETS. These structured systems and control procedures increase confidence in the overall level of reliability of performance information disclosed in the Report.

Based on the Ere-S assessment, reported statements and figures appear to be accurate, with only a few minor inconsistencies found during the assurance that were promptly corrected by the reporting team. There is still some room to further improve on more detailed reporting of CapitaLand’s global performance.

Report content is moderately balanced with a limited number of statements and numbers showing negative information. These pertain to work-related injuries and fatalities in the workforce and the supply chain, cases of noncompliance, business malpractice incidents and fines imposed upon contractors.

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.

Conclusion

On the basis of a moderate assurance engagement according to the above-listed criteria, nothing has come to our attention that causes us not to believe that, in all material respects, CapitaLand’s Sustainability Report 2017

    – provides a credible and fair representation of the organisation’s sustainability profile and application of the
       AA1000 AccountAbility Principles.

    – includes statements and figures that achieve an adequate level of reliability and accuracy.

The assurance findings also provide confidence that the Report has been prepared in accordance with the Reporting Principles of GRI Standards and the SGX requirements on sustainability reporting.

Moving forward

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

• To be in line with the scope of policies and management approaches covering all key operations and projects, CapitaLand is encouraged to continue its efforts in standardising and expanding data collection and reporting procedures to locations, sites and properties that are currently not included in the calculations of some performance indicators. Due to the multiple challenges that appear to be inherent to the supply chain and local infrastructures (e.g. absence of formal waste collection systems), a selective approach based on each location or supplier may be crucial for the improvement or implementation of the required measurement and collection processes.
• CapitaLand is also encouraged to further improve the balance of the Report by including more disclosures on any identified and significant negative performance, ideally related to concerns and issues raised by local or overseas stakeholders, and the mitigative actions taken by the organisation.

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

Singapore, 22 May 2018

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 training. Our assurance team is composed of assurance practitioners with expertise in corporate sustainability and each member is required to follow Ere-S’ assurance code of conduct, which can be found at 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.