ADVANCING ECONOMIC RESILIENCE
5-Year Sustainability Roadmap (2019-2023)
Goal 1: Building a Smart, Safe and Sustainable KLCC Precinct
The way we manage the business – through the life cycle of our assets, reflects our financial, physical, and social approach and priorities. We constantly look to strengthen our portfolio to ensure it meets the changing needs of our customers and communities. We always bring social, economic, and environmental benefits to the areas where we operate. Great design increases efficiency, encourages people to spend time in our spaces and enables buildings to adapt to changing customer needs. We design with long-term value in mind. We design our buildings to support wellbeing and productivity.
We aim to make meaningful contributions economically and socially and grow with our stakeholders which includes our suppliers, customers, tenants and business partners to maintain long-term partnerships across our business portfolios.
We invest to attract and develop great people who add value to our business. We take engagement, wellbeing, diversity, and reward seriously and conduct regular reviews. We help those furthest from the jobs market access opportunities in our industry. We believe that everyone who works on our behalf must be treated and paid fairly and our business should reflect and support our diverse communities. We strive to maintain a high standard of health, safety and security in all the working environments we control and partner to help raise standards in our industry.
Our strategy to deliver sustainable growth and long-term value to our stakeholders were underpinned by four strategic pillars of maximising value of investments, resilience in soft market conditions, creating sustainable value and embracing digital for business enhancement which saw us responding to the harsh impact of COVID-19 on our businesses.
CONTRIBUTION TO NATION BUILDING AND INDUSTRY GROWTH
Our business is driven by our clear Statement of Purpose – We Create Places People look forward to, Progressing Lifestyle for a Sustainable Future. We create positive experiences for our stakeholders in the places they work, shop, socialize and live. Our chosen sectors offer us numerous market opportunities that we address by managing our portfolio of assets.
Our success is based on our expert team and solid balance sheet. Together, these provide resilience in uncertain conditions and the power to address opportunities. Across the Group, our approach is characterised by customer centricity and a culture of accountability with an enterprise mindset – all underpinned by an industry-leading approach to sustainability.
Ultimately, our aim is to create sustainable shareholder returns, together with significant social and economic value for our stakeholders.
We collaborate with our stakeholders, particularly our tenants and customers, to ensure we emerge from the COVID-19 pandemic in a strong position. As part of our obligation towards the nation’s economic growth, we paid RM81.9 million in tax to the Government for the year.
COMMITMENT TO CAPITAL MARKET DEVELOPMENT
We forge strong relationships with our shareholders as well as with our banks and sukuk holders who provide our equity and debt funding. As a listed company we have a responsibility to those individuals and institutions who have invested money in our business either through equity (our shareholders and joint venture partners) or debt (our banks and sukuk holders) to deliver long-term and sustainable returns on their investment.
We ensure regular communication with our investors through an extensive programme, mainly managed by a dedicated Investor Relations team. The engagements were conducted via various platforms – one-on-one meetings, conference calls, analysts’ briefings, and site visits to KLCCP Stapled Group properties as well as at capital market conferences. The Annual General Meeting normally also provides an excellent opportunity to meet many of our retail shareholders and answer their questions about the business but due to the pandemic we transitioned to host the AGM in a fully virtual mode which allowed shareholders to participate online and raise their questions. We had 1,003 shareholders who logged on to the Remote Participation and Voting Facility and all 74 questions raised by the shareholders were answered during the live AGM proceedings, including those from our major shareholders, EPF, MSWG and PNB.
Our website contains comprehensive information about our strategy and performance, regulatory news and press releases as well as information about our debt and our approach to ESG issues.
During the year under review, the Senior Management and the Investor Relations team held meetings with representatives from 125 institutions and parcitipated in 7 conferences and analysis briefings to update them on our performance and to provide an opportunity for them to ask questions. These investor interactions enable our investors to be updated on our business and allow us to understand their priorities and concerns. This feedback is vital to help shape our strategy and our communications and disclosure to make sure that we are meeting their expectations.
The creation of our Digital Roadmap (2020-2023) was an important part of digilization process, reflecting our belief that we should consider investments in data and technology in the same way that we consider investments in physical assets. The industry within which we operate offers significant opportunities to make changes that not only help improve efficiencies, but also help us make better and more informed decisions. Key to this is a focus on enhancing operational excellence in the areas of project management, facilities management and safety and security.
Sustainable Procurement and Supply Chain plays a significant role in our sustainability practices. Recognising that we are in a position to influence our suppliers to adhere to our principles and values, we included in all our contracts with our contractors, consultants and suppliers, the provisions requiring them to comply with our CoBE. We also promote transparent and fair practices by our supplier by including a provision on supplier code of conduct in the contract terms and conditions on fighting corruption, maintaining business ethics and prioritising HSE practices.
A HARMONISED DIGITAL PROCUREMENT
As part of the KLCC Group’s transformation agenda which aims to achieve higher functional efficiency and effectiveness across our operations, we embarked on transforming our procurement functions to further enhance the procurement role to become a customer focused strategic partner in providing solutions to the businesses within the KLCC Group.
The transformation involved the Standardisation of Work Processes, Centralisation of Organisation Structure and Harmonisation of System and Application.
We believe in building a strong and trusting relationship with our customer and tenants as we continue to engage with them even during the difficult times. We value their patronage and take into consideration their feedback in our effort to expand our outreach and in building a shared sense of responsibility and progressing societal development. We conducted extensive engagements via numerous communication channels to promote social betterment, building strong tenant relationship and meet the evolving customer behaviour and expectations.
We are also committed to provide the best customer experience and endeavour to exceed guests’ expectations, through personalised services that cater to individual needs. We curated loyalty programmes to suit our guests and provide them with the best experience whether they are in offices, at our retail mall or during their stay at our hotel.
KLCCP Stapled Group embraces social responsibility and maintains active engagement with our diverse group of stakeholders who have a direct or indirect impact to our business, reputation and our purpose in creating a sustainable future for all. We continue to establish mutually beneficial relationships through impactful communications and initiatives that suit the different needs of our stakeholders.
DELIVERING AND ADDING VALUE
In 2021, we generated a total revenue of RM1.2 billion. Of this, about 20% went to purchasing costs and other operating expenses. The remaining RM0.9 billion were distributed to our employees, shareholders, and other providers of capital, paid in taxes to government, or retained in the company.
PROTECTING OUR ENVIRONMENT
5-Year Sustainability Roadmap (2019-2023)
Goal 3: Combating Climate Change and Reducing Environmental Impact
The world is facing a climate emergency, and natural resources are being used up faster than they can be replenished. Protecting the environment is an ongoing challenge for businesses of all sizes, in all industries, all over the world. We continue to promote responsible business practices throughout our operations and to support the global Climate Change Agenda.
This year, to strengthen our sustainability performance, we looked to evaluate and manage the risks and opportunities associated with Climate Change and assess our readiness towards supporting the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
In line with our commitment in supporting the United Nation's Sustainable Development Goals in promoting good health and wellbeing, building sustainable cities and communities and taking measures to address Climate Action, we aim to minimise disruption to the environment and its adverse impact to our community by reducing the environmental footprint of our buildings and to efficiently manage the use of energy, water and resources.
GREENHOUSE GAS EMISSION
We embrace our responsibility to understand and manage our carbon footprint and we monitor our carbon emission and track our progress via our 5-Year Roadmap based on:
In support of the climate change agenda, we collaborated with PETRONAS and conducted a workshop on Net Zero Carbon Emission (NZCE) to better understand the technicality involved in moving towards NZCE. We are looking into setting up a task force that will further assess, identify the boundary, sources of our emission, the baseline as well as the various options and technology available in reducing our GHG emission and subsequently propose the way forward for the Group.
EFFICIENT ENERGY MANAGEMENT
As one of the main sustainability agenda and pillar to our effort in reducing our carbon footprint, we continue to implement energy efficient initiatives throughout our business operations to optimise energy consumption towards overall reduction.
Our overall energy consumption during the year increased 15.3% from 88,531 kWh in 2020 to 102,073 kWh in 2021. This was due to the increase in operational activities with the reopening of our hotel and retail businesses.
Initiatives and Performance
Reducing our environmental impact is vital to both the Group and our customers. We take a practical approach in managing natural resources which include promoting the use of renewable energy at our mall.
At Suria KLCC, the photovoltaic system, located at the rooftop has contributed to the mall’s electricity saving of approximately 16.8 million kWh since 2014, equivalent to a total saving of RM1.8 million. This in turn, equates to a GHG emission reduction of approximately 360,000 kg of carbon dioxide (CO2) per year.
Our mission focuses on providing the highest quality commercial office space while bringing responsible environmental solutions and innovative energy saving strategies to our tenants and the communities where we operate. We know a cleaner future cannot be delayed, thus our commitment to reduce waste, save energy, and manage our resources responsibly across our portfolios.
The solutions we have implemented today for water resource protection and waste management will benefit the long-term health and wellbeing of our employees, tenants and our communities. Our water consumption is relatively low compared with other industries. Our primary use is in our office buildings, retail malls and hotel facility, where we use it for drinking, sanitation, and food preparation. We have in place various initiatives that support our goal of monitoring and minimizing the amount of water we consume across our operations. Weassess water consumption and installations and make site-specific recommendations for water efficiency improvements.
During the year, we achieved a reduction of 27% in water usage, contributed by the ongoing water reduction initiatives as well as the reduced occupancy due to the prolonged lockdown.
Initiatives and Performance
The waste we produce is in the form of our disposal of construction waste during the development and renovation of our buildings. Municipal waste produced during operations from our buildings by users and occupants, which include domestic and hazardous waste make up the balance of waste we produce. We are continuing our effort to reduce waste and reuse resources.
Where our services require us to handle hazardous waste, we dispose them responsibly, without risk to our people, the environment or local communities. We continue to encourage our people to minimise their waste through various initiatives, by minimising printing and optimising use of consumables.
Initiatives and Performance
RESPONSIBLE MATERIAL USE
At KLCCP Stapled Group we promote sustainable consumption by optimising the use of environmentally friendly products throughout our operations.
What we buy and where we buy it matters at every level of our supply chain - from the operations team, the contractors on site to our suppliers producing the materials. We take a thorough approach to sourcing sustainable materials as we have the responsibility in minimising the adverse effect, not only to the environment but also to our people and the community.
This includes environmental and ethical sourcing of eco-friendly products that are safe, non-toxic and biodegradable. Our HSE team is monitoring all chemical usage through permit system prior to work commencement in ensuring eco-friendly products are used in the maintenance works at our premises.
Initiatives and Performance
EMBODYING GOOD GOVERNANCE
We have a strong corporate governance framework, reflecting our commitment to safeguarding the interests of our stakeholders. The corporate governance framework comprise the governing bodies, the corporate governance policies and procedures that define the competencies of the governing bodies and other corporate governance rules, in line with regulations and best practice standards.
Sound corporate governance is implicit in our values, culture, processes, functions and organisational structure. Our values require that directors and employees behave with integrity, displaying consistent and uncompromised moral strength in order to promote and maintain trust.
We have a strong culture of entrenched values, which form the cornerstone of our behaviour towards stakeholders and against which we measure practices and activities to assess the characteristics of good governance. Directors and employees are required to conduct themselves with integrity, consistently and uncompromisingly displaying moral strength and behaviour that promotes trust.
This commitment to good corporate governance is reflected in the CoBE, our foundation in fulfilling our business obligations with utmost integrity and transparency. Our culture of openness, transparency and accountability are strengthened with the adoption of the No Gift Policy and Whistle Blowing Policy and our adherence to the Anti- Bribery and Corruption Policy and Guidelines (ABC manual).
In managing the risk, the Group has a robust KLCC Resiliency Model which provides an integrated view on our overall strategy in managing risks.
CORPORATE GOVERNANCE AND COMPLIANCE
At the highest governance level, the Boards has the ultimate responsibility to monitor that the Group is operating as a responsible organisation. This includes considerations around climate-related risks and opportunities when reviewing the group’s strategy.
Principal and emerging risks are identified through robust Assessments by the Boards and its various subcommittees. The Boards recognize that a balanced board is vital for sustainable value creation and that competency skills are adequately represented within the Board Committees. The Boards composition is both qualitatively and quantitatively balanced in terms of skills, gender, experience, tenure and independence. The Boards regularly review its own effectiveness and undertakes a formal evaluation of its performance and that of its committees and individual directors once in three years.
BUSINESS ETHICS, INTEGRITY AND CORRUPTION MANAGEMENT
KLCCP Stapled Group’s continuous effort in managing integrity risk within the organisation reflects our commitment to conduct business with high integrity and in support of the Group’s zero tolerance against all forms of bribery and corruption.
KLCCP Stapled Group adopts a zero-tolerance towards bribery and corruption by our Board of Directors, management, employees and vendors and we are committed to acting professionally with integrity in our business.
The Group has the responsibility to ensure that the anti-bribery management system, policies and practices are understood by all group levels and communicated through the various internal communication channels and training sessions. During the year, we reinforced our zero tolerance to bribery and corruption commitment and continued to upskill our people through relevant trainings. We underwent a Surveillance Audit by SIRIM QAS International Sdn Bhd to evaluate on our continued compliance of the Group's management system to the required standards. We will undergo a recertification audit in 2023.
CYBERSECURITY AND DATA PRIVACY
The KLCC Group ICT cybersecurity is responsible to govern and manage cybersecurity of the KLCC Group which encompasses ownership, responsibility, and accountability for assessing, controlling and mitigating risks. The team works very closely with PETRONAS Digital and leveraging on PETRONAS cybersecurity expertise and guidance to manage, monitor and mitigate all matters or issues pertaining to cybersecurity.
Our cybersecurity efforts are guided by PETRONAS Enterprise Cyber Security Governance Framework, which aims to protect our systems and data from malicious attacks. The PETRONAS Cyber Security Governance oversees the Enterprise CyberSecurity Governance Framework, which defines the guidelines, standards, boundaries and procedures required to ensure our cybersecurity risks are effectively managed and mitigated. In 2020, we developed The Cyber Security Action Plan in our effort to mitigate cybersecurity crime and to strengthen the existing system and procedures to address the root causes of cybersecurity issues resulting from poor enforcement, weak internal control and acceptance culture.
Initiatives and Performance
Risk management is an integral part of KLCCP Stapled Group’s business at both strategic and operational levels. An effective and sound risk management system is important for KLCCP Stapled Group to achieve its business strategies and objectives. KLCCP Stapled Group has an established KLCC Group Enterprise Risk Management Governance Framework which outlines the risk policy, risk governance and structure, risk measurement and risk operations and system.
The Risk Management Oversight Structure which consists of the Boards, Audit Committee, (“ACs”), and the Management represented by Risk Management Committee (“RMC”) and Top Management. The structure used to assign responsibility for risk management and facilitates the process for assessing and communicating risk issues from operational levels to the Boards. KLCCP and KLCCRM Boards developed the KLCC Resiliency Model to provide an integrated view on the overall strategy for managing risk focusing on the three key areas.
Initiatives and Performance
We take pride and place importance on strong governance culture and implement international best practices across the business segments. We strictly conform to the respective laws, rules and regulations in the country where we operate.
We incorporate elements of sustainability recognising the responsibilities to our stakeholders and acknowledging that the organisation should play an important role in contributing towards the welfare of the community.
We also acknowledge the need to safeguard and minimise the impact to the environment in achieving our objectives. Our good corporate governance reflects our commitment to economic support for longer term sustainability with a focus on the positive impact on the environment, community and society
We are committed to conducting business with integrity, consistent with high standards and business practices and in compliance with all applicable laws and regulatory requirements.
KLCCP Stapled Group adopts and complies with the PETRONAS Code of Conduct and Business Ethics (CoBE) which is embedded throughout our organisation and form the basis for all our policies, procedures, and actions, as well as the personal behavior of our stakeholders.
KLCCP Stapled Group adopts the PETRONAS Anti-Bribery and Corruption (ABC) Manual and has zero tolerance for all forms of bribery and corruption and complies to a No Gift Policy. We also adopt the PETRONAS Whistleblowing Policy which encourages openness and transparency in our commitment to the highest standard of integrity and accountability.
Initiatives and Performance
KLCCP Stapled Group has an established Enterprise Risk Management Framework which outlines the risk policy, risk governance and structure, risk measurement and risk operations and system for the Group. The Risk Management Oversight Structure which consists of the Boards, Audit Committees, Management Committee and Risk Management Committee sets out the structure used to assign responsibility for risk management and facilitates the process for assessing and communicating risk issues from operational levels to the Boards.
Our Boards developed an integrated robust risk management system for business resiliency focusing on three key areas i.e. Enterprise Risk Management, Crisis Management and Business Continuity Management.