We aim to deliver financial value and societal benefits by balancing the commercial objectives with the environment and social needs of our stakeholders

At KLCCP Stapled Group, our goal is to conduct our business activities in a socially and environmentally responsible manner. This includes maintaining high standards of conduct for maximising long term value creation, essentially in benefitting our stakeholders.

Our business strategy takes into perspective the risks and opportunities affecting the industry and organisation, while keeping abreast of evolving stakeholder expectations in the discipline of sustainability, such as climate change and social risks including human rights. We are focused in our efforts to address the material sustainable matters of KLCCP Stapled Group across our five priority areas – Corporate Governance, Environmental Stewardship, Security, Safety & Health, Our People and Reliable Partner.

OUR APPROACH

Our business is centered on real estate development, investment and management. We focus on how we manage our operations, mitigate our risks and grow our business to create competitive advantage whilst leveraging on the changes in the external environment, creating long term growth and stakeholder value. This entails maximizing performance of our assets and investments, and managing expectations of our stakeholders, namely our employees, tenants, shoppers, guests, suppliers and contractors.

Our focus on sustainability is shaped by five priority areas reflecting the FTSE4Good themes and indicators for the construction and real estate sector and taking into consideration our unique business requirements, wider industry landscape while being mindful of stakeholder requirements.

OUR SUSTAINABILITY FRAMEWORK

In managing the risks and opportunities which supports the business strategies, goals and aspirations, we developed a Sustainability Framework which encapsulates our principles on sustainability and aligns to our five priority areas. We took into perspective our strategic and operational risk profile and opportunities presented by the changing business environment, particularly in the real estate and construction industry.  Premised on the PETRONAS’ Corporate Sustainability Framework, we adapted it to our context and framed the KLCCP Stapled Group Corporate Sustainability Framework which embodies 8 focused areas, comprising Shareholder Value, Corporate Social Investment, Climate Change, Natural Resource Use, Health, Security, Safety & Environment, Workforce Development, Human Rights and Governance & Business Ethics.

KLCCP Stapled Group’s Sustainability Governance Structure was established to ensure Board’s oversight on the formulation and execution of sustainable strategies for the organisation. This involved the formation of KLCCP Stapled Group’s Sustainability Steering Committee (SSC) to ensure accountability, oversight and review in the identification and management of sustainability matters within the organization. The SSC has joint chairmanship comprising the Chief Financial Officer and Head of Health, Safety & Environment whilst members of the SSC comprise leaders of diverse areas of expertise covering all facets of KLCCP Stapled Group’s business operations. The SSC is supported by a working committee to ensure sustainability is considered and integrated throughout our business operations.

The Chief Executive Officer (CEO) is responsible for driving the implementation of sustainability strategy for KLCCP Stapled Group and reports the progress to the Boards of KLCCP and KLCC REIT. The Boards represent the highest authority and is ultimately accountable for managing sustainability matters in KLCCP Stapled Group. The governance structure facilitates regular reporting on sustainability matters to CEO with updates to the Boards.

MATERIAL SUSTAINABLE MATTERS

We identify our material sustainable matters by taking into account the potential risks in our business activities in light of the social and environment needs and the economic factors impacting the real estate industry.   Our material areas are also identified based on inputs from both our internal and external stakeholders through observation and enquiries received. An internal materiality assessment is carried out annually to map out our sustainability matters.

IDENTIFYING MATERIALITY

Step 1 : Issue Identification

The materiality process began by identifying which of the sustainability issues are important to our external and internal stakeholders from a combination of internal and external source documents and analysis of megatrends relevant to the industry. We benchmarked against our real estate and REIT players, both globally and locally to identify the sustainability matters that are common to the real estate and construction sector. As a constituent of FTSE4Good Bursa Malaysia Index, our identification of material areas were also based on the FTSE4Good themes and indicators for the real estate and construction sector which we fall under. The identification step was also aligned to the boundaries in which we operate in and determined if the issues were within or outside our direct operational control. The stakeholders considered for the development of the list of sustainability issues were:

Internal: Employees

External: Suppliers and Service Providers, Customers and Consumers, Shareholders/Investors/Business Partners, Government/Local Authorities, Regulators, Community and Media

Step 2 : Prioritisation

Prioritisation is the process of determining how important the identified topics are to our stakeholders and to us. We translated the issues into sustainability risks and opportunities to determine which are material. Based on the identification process, we then engaged with the SSC and narrowed down the list of relevant sustainability issues for KLCCP Stapled Group based on the significant Economic, Environmental and Social (EES) impact to the organisation and the matters that substantively influence the decisions of stakeholders. With that, we identified 12 material sustainable matters for KLCCP Stapled Group.

Step 3: Materiality Assessment

To begin the Materiality Assessment process, the SSC identified the internal departments to solicit feedback on material issues from an internal business and external stakeholder perspective. The participants included representatives from the areas of Development and Leasing, Facilities Management, HSE, Procurement, Legal, Corporate Communications, Investor Relations and Business Development and our retail and hotel operations. The participants were requested to rank the importance of these 12 shorlisted material issues based on the five priority areas and in accordance to the impact on the external and internal stakeholders. Based on the degree of impact of either high, medium or low, the scores were given a weighting factor and were plotted on a materiality matrix using the average internal and external score.

Step 4: Review and Feedback

The final materiality matrix was presented to the SSC for review and feedback, and subsequently presented to CEO and the Boards. It was agreed that KLCCP Stapled Group would proceed with this list of sustainable matters for the 2016 Sustainability Report.

Our material sustainable matters will be revisited and reassessed annually.

IDENTIFIED MATERIAL SUSTAINABLE MATTERS

MATERIAL SUSTAINABLE MATTERS	PRIORITY AREAS	KEY INDICATORS
Economic
Financial Sustainability	Reliable Partner	Returns to holders of Stapled Securities
Economic and Industry Growth	Reliable Partner	Current or expected impacts on communities and local economies
Environmental
Climate Change	Environmental Stewardship	Scope 1 and 2 emissions (mtCO2-e) Total energy consumed (kWh) Use of renewable energy (kWh) Energy reduction achieved as a result of conservation and efficiency initiatives
Environmental Management	Environmental Stewardship	Total volume of water used (m3) Total volume of hazardous waste generated (tonnes) Total volume of hazardous waste disposed (tonnes) Total waste intensity (kg per room) and waste diversion (%) Product innovation to reduce impact (e.g. eco-friendly, less chemicals/toxic substances) Assessment of new and existing suppliers to identify environmental impact
Social
Community, Customer and Tenant Engagement	Reliable Partner	Total amount invested in the community (RM)
Supply Chain Management	Reliable Partner	Assessment of new and existing suppliers to identify potential negative social impact Procurement spent on local supplies (%)
Security, Safety and Health Management	Security, Safety and Health	Number of workers undergoing safety and health training Number of fatalities Loss Time Injury Frequency (LTIF), Loss Time Injury Incidents (LTI), Loss of Primary Containment (LOPC) HSE organisational chart and HSE committee
Skills and Capability Development	Our People	Number of employees sent for training Average training hours per employee Amount invested in learning and development programmes (RM)
Diversity and Inclusion	Our People	Number/percentage of employees by gender, age group, ethnicity
Human Rights and Labour Practices	Our People	Compliance to legislations on welfare and rights of employees, workers and service providers Employee benefits Number of discrimination incidents Number of child/forced labour incidents Number of grievances on human rights issues
Corporate Governance and Business Ethics	Corporate Governance	Separate Non-Executive Chairman and CEO Commitment to gender diversity on the board Number of Directors Number of Independent Directors on the board Percentage of women on the board Anti bribery/corruption commitment statement
Risk Management	Corporate Governance	Reference made to external standards to inform the risk management system and reporting transparency Describes the risk management framework Prepares for major Environmental, Social and Governance (ESG) catastrophic events and incidents

Note: Key indicators are with reference to Bursa Malaysia’s and FTSE4Good’s Sustainability Reporting Guidelines and benchmarked against industry’s best practices.

Materiality Matrix

STAKEHOLDER MANAGEMENT

KLCCP Stapled Group recognizes stakeholder management as an important aspect to ensure transparency and accountability. Communication with stakeholders is imperative in understanding and managing their expectations and provide new perspectives in generating positive impact to the organisation. With expectations changing rapidly in the real estate industry, investors, community, regulators and other stakeholders are continuously seeking for greater levels of transparency with respect to the economic, environment and social issues. We continue to engage and manage our stakeholders’ needs and expectations, taking into consideration their viewpoints towards more tangible business value creation.

KLCCP Stapled Group has a diverse group of stakeholders comprising both internal and external stakeholders whom we have been engaging with through the various communication channels to identify and understand the issues that are most important to them.