Sustainability Report in Indonesia Real Estate Sector
A sustainability report is a periodic report (usually annually) published by a company with the aim of sharing the brand's corporate social responsibility actions and results. A sustainability report is a form of report carried out by a company in order to disclose or communicate to all stakeholders regarding the performance of Environmental, Social and Good Governance (ESG) in an accountable manner. Sustainability Reporting must present the data of sustainability in a systematic manner in order to enable readers in comparing the past data of selected targets and its progress up to the reporting date. Sustainability Reporting disclosures in Indonesia are currently voluntary. Although it is still voluntary, almost 9% of companies listed on the Indonesia Stock Exchange (IDX) have published sustainability reports. The current issuance of sustainability reports in Indonesia is mostly based on the disclosure standards contained in the Global Reporting Index (GRI). Global Reporting Initiative (GRI) is an international standard to help the organizations and businesses to take responsibility for the impacts, with providing them with global language to communicate impacts. These standards are advancing the practice of sustainability reporting, and guide the organizations and also stakeholders to take action and make the best decisions to create economic, environmental, and social benefits. GRI helps the organization to be transparent and take responsibility to create a sustainable future. The GRI reporting topic standards include disclosures for providing information on topics (waste, occupational health and safety, and tax). Sustainability reporting is required for some sectors, including government, industry, and real estate. Today, we will focus on the real estate sector.
The real estate sector is a major contributor to GHG emissions and to consumption of non-renewable resources. Living in urbanised areas creates high amounts of wastewater, food, and air pollution. Developers and owners have to understand this impact by switching technology to eco-friendly construction and safety. Real estate has an opportunity to contribute to sustainability in many ways. Real estate sector has to ensure that all of the assets should contribute and give extra effort to meeting the sustainable development goals, including greenhouse gas emissions, water and waste management, and reducing pollutants. Based on recent research, the real estate sector consumes more energy than other sectors (approx. 40%), which contribute more to CO2 emissions. Besides energy, carbon emissions are generated from raw material consumption, solid waste, and water effluents. By most projections, by 2030, the global population will exceed 8 billion and over 60% of the world’s population (4.9 billion people) will be living in urban environments (WEF,2016). The real estate sector requires more stringent targets. According to World Bank estimates, a 36% reduction in total CO2 emissions in the real estate sector is required by 2030 in order to stay within the 2°C threshold. Sustainability reporting can be used as a tool to maintain the environmental impact and also reduce them. The GRESB (Global Real Estate Sustainability Benchmark) survey assesses the environmental, social and governance. Here’s some standards to make sustainability reports.
Sustainability reporting is required under Indonesia Financial Services Authority (Otoritas Jasa Keuangan) rule number 51/POJK.03/2017: Implementation of Sustainability Finance for Financial Services Institutions. Here’s the regulations that regarding Sustainability Reporting in Indonesia:
The Presidential Decree No. 59/2017
Stipulates that both the National Action Plan (RAN) and Sub-national Action Plans (RAD) should be formulated to promote the implementation of SDGs
These action plans are expected to clearly show the connection between the government’s and non-governmental activities and SDG indicators concerned, together with their baselines, targets, budgets, and responsible bodies.
Regulation No.KEP-431/BL/2012 on Annual Reporting for Publicly Listed Companies
To disclose CSR including policies, types of programs, and expenditure on environmental performance, labor practices, social and community empowerment, and product responsibility
Government Regulation no. 47/2012
Stating that companies’ annual reports should contain social and environmental responsibilities.
Imposes a mandatory corporate social and environmental responsibility (CSR) regime on “natural resource-based” and “natural resource-related” companies
Besides the GRI standard, sustainability reporting in real estate sectors is also familiar with GRESB. Global Real Estate Sustainability Benchmark (GRESB) is a mission-driven and industry-led organization that provides actionable and transparent environmental, social and governance (ESG) data to financial markets. It collects, validates, scores and benchmark ESG data to provide business intelligence, engagement tools and regulatory reporting solutions for investors, asset managers and the wider industry. The GRESB Real Estate Assessments capture information regarding ESG performance and sustainability best practices for real estate funds and companies worldwide. ESG is embedded in our investment process through an assessment of the ESG performance of each investment by our Sustainability Centre, the measurement and the reporting of the environmental and climate impact of each property or project, and through portfolio construction driven towards green or sustainable assets. The purpose of this study was to determine the effect of the intensity of disclosure in sustainability reporting on stock returns. Under Rule 51 by OJK, all public companies, issuers and financial service providers must prepare and submit a sustainability report to the authority for sustainable finance implementation. Certain issuers that are not financial services providers are not required to prepare and submit their finance action plan. However, the mentioned issuers must carry out sustainable finance in their business operations. Besides, their sustainability report must reflect the implemented sustainable finance.
Two case studies from sustainable real estate developers in Indonesia
Real estate is central to urban development, consumes physical resources and is a significant source of emissions. PT Intiland Development Tbk is a leading property developer in Indonesia with a primary focus on property development, management and investment. In order to achieve sustainability goals, Intiland publishes the sustainability report to track and develop more about the environment, social, and governance. Their sustainability report is based on the regulation of the Financial Services Authority (OJK) and prepared according to the GRI (Global Reporting Initiative) standard core option. This building is also certified by ISO 9001, EDGE, Greenship, and proper report (blue rating). This 83-page report describes their sustainability highlights, such as revenue, profit, water saving, energy saving, less embodied energy in material, carbon emissions saving, decrease in waste, blue rating, and many more. For their long-term plan, they highlight three main areas. First, they will establish a sustainable guideline for energy efficiency and a green lifestyle. Second, improve the zero-waste program to be more comprehensive and systematic in the supply chain. Third, they believe youths are very important in years to come. Intiland released their first sustainability report in 2020 and will further improve it in the years to come.
Intiland’s Sustainability Report link
In Indonesia, Sinarmas Land is one of the largest property development companies by land bank and market capitalization. Sinarmas’ sustainability report starts with materiality and stakeholder engagement, followed by discussion of their performance, practices and initiatives within each of Sinarmas Land’s four foundation pillars. This sustainability report is in line with the GRI standards and the SGX listing requirements. Their first sustainability report was published in 2017, and have expanded significantly as they mature and grow in their sustainability journey. They also put their sustainability highlights, including revenue, green building certifications, awards, governance highlights, HR highlights, health and safety, community and HR environmental initiatives. Developed in 2017, SML’s Sustainability Vision is based on four foundation pillars, being “Best in Class Real Estate”, “Climate Change & The Environment”, “Sustainable Community”, and “Educational Patronage”. They can wrap their sustainability report for only 65 pages, but they can manage the content very well.
Sinarmas Land’s Sustainability Report link
Source:
https://ecovadis.com//glossary/sustainability-reporting/
https://www3.weforum.org/docs/GAC16/CRE_Sustainability.pdf
https://www.cekindo.com/blog/sustainability-report-indonesia
https://sseinitiative.org/stock-exchange/idx/
https://www.ampcapital.com/asia/en/capabilities/real-estate/sustainability
https://www.indonesia-investments.com/id/bisnis/profil-perusahaan/intiland-development/item556
