Ascendas Real Estate Investment Trust : Annual Reports And Related Documents

Sustainability Report FY16/17

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CONTENTS

Ascendas Reit

SUSTAINABILITY REPORT FY16/17

01.

BOARD STATEMENT

01.

Board Statement

02.

About this Report

03.

Significant Changes During the Reporting Period

04.

Materiality & Stakeholders

04.

Materiality Assessment

06.

Harnessing Organisational Capital

06.

Corporate Governance

06.

Regulatory Compliance

06.

Risk Management

08.

Business Ethics & Employee Conduct

09.

Security of Information

10.

Leveraging on Manufactured Capital

10.

End-to-End Premium Quality Solutions

12.

Building a Strong Social and Relationship Capital

12.

Building Relationship with Stakeholders

14.

Customer Satisfaction

15.

Health & Safety Protection of Stakeholders

16.

Security of Properties

17.

Health & Safety Protection of Tenants, Visitors, Employees and Contractors

18.

Employment Practices

18.

Fair Employment Practices

20.

Employee Well-being and Engagement

21.

Developing Human Capital

21.

Learning and Development

22.

Stewarding Natural Capital

22.

Energy and Emissions

25.

Water

26.

GRI Content Index For 'In Accordance' - Core Option

We are pleased to publish Ascendas Reit's fifth Sustainability Report.

This year, we have taken some preliminary steps towards Integrated Reporting. In our Annual Report, we have presented our business model, highlighting how we draw on the six types of capitals and employ our three-pronged strategy to create value for our stakeholders.

In line with this, we have organised our sustainability report based on the capitals, with a focus on value creation in the areas of Environment, Social and Governance (ESG). The Board recognises that adopting best practices in the areas of ESG will lead to more resilient and sustainable business operations and performance in the long term.

Every year, we review our material issues, taking into account the business environment, our business objectives and stakeholder feedback. In our latest review, we further prioritised and grouped our material issues into six key issues that we believe are critical to achieving our strategic objectives: Corporate Governance, Security of Information, Health & Safety Protection of Stakeholders, Employment Practices, End-to-End Premium Quality Solutions & Customer Satisfaction, and Energy and Carbon Footprint.

This year, we also surveyed our investment community to find out which areas they deem most important in their assessment of Ascendas Reit. They have identified Corporate Governance, Security of Information, Employment Practices and End-to-End Premium Quality Solutions & Customer Satisfaction, as material ESG issues in creating value over time. In our next report, we will provide more insights on them.

Maintaining high standards of corporate governance has always been a key focus of the Board. This is reflected in the robust corporate governance framework and our zero tolerance towards lapses in non-compliance with applicable laws and regulations. For greater transparency, we have expanded on our risk management framework on pages 107 to 111 of our annual report.

Our business strategy is linked closely to our sustainability targets. For example, we continuously strive to improve customer satisfaction, which we believe will have a sustainable and positive impact on the performance of Ascendas Reit. Two years ago, we embarked on a holistic service culture programme in Singapore, endorsed by senior management of Ascendas Funds Management

1. Limited (the Manager of Ascendas Reit) and the Ascendas- Singbridge (ASB) Group. The programme, which has now been rolled out to all frontline employees of the Manager, the Property Manager and outsourced security and cleaning staff, is gradually being rolled out to backroom operation employees to ensure that our service culture values are internalised and embraced by the entire organisation.

   Under the direction of the Board, Ascendas Reit's sustainability approach has been formulated to strike a balance between financial results, social engagement and environmental stewardship. We will continually identify, manage and address ESG factors material to the business as we believe that this will enable us to build a sustainable business model that will positively serve our large and diverse groups of stakeholders over the long term.

   In line with our sustainability efforts, we have printed limited hard copies of the annual and sustainability reports. Electronic versions of the reports are available on Ascendas Reit's website at www. ascendas-reit.com.

   02. SUSTAINABILITY REPORT FY16/17

   Ascendas Reit

   Ascendas Reit

   SUSTAINABILITY REPORT FY16/17

   03.

   ABOUT THIS REPORT SIGNIFICANT CHANGES

   DURING THE REPORTING PERIOD

   AYE

   SLE

   PIE

   TPE

   BKE

   CTE

   KPE

   PIE

   KJE

   To expand and diversify the portfolio in Australia, the Manager acquired one Business Park property, 197-201 Coward Street in Sydney (September 2016) and formed a local team of five to assist in the management of the Australian portfolio. One Science Park property, 12, 14 & 16 Science Park Drive (February 2017) was acquired in Singapore, while four properties were divested, namely Four Acres Singapore in Singapore (April 2016), and A-REIT Jiashan Logistics Centre (June 2016), Ascendas Z-link (July 2016), and A-REIT City @Jinqiao (November 2016) in China.

   MCE

   ECP

   Several leadership changes were made during the year:

   Business & Science Park Properties

   Integrated Development, Amenities & Retail (IDAR) Properties High-Specifications Industrial Properties and Data Centres Light Industrial Properties and Flatted Factories

   Logistics & Distribution Centres

   Business Park Property and Logistics & Distribution Centres (Australia)

   Western Australia

   AUSTRALIA

   Queensland

   New South Wales

   Victoria

   • Mr Lim Hock San, Independent Director, a member of the Nominating, Human Resources and Remuneration Committee, Investment Committee and the Operational Risk Management Committee

   • Mr Lawden Tan, Head of Investment and Business Development

   • Mr Harry Yan, Head of Singapore Revenue Management.

Please refer to pages 25, 28 and 29 in the Annual Report for their profiles.

This is the fifth annual sustainability report published by Ascendas Reit in accordance with the Global Reporting Initiative (GRI) G4 guidelines

- core, and the GRI Construction and Real Estate Sector Supplement (CRESS). Initial steps have also been taken to incorporate elements from the International Integrated Reporting Framework of the International Integrated Reporting Council in illustrating Ascendas Reit's business model, as summarised on pages 14 to 17 of the annual report.

The report focuses on Ascendas Reit's core activity as a business space and industrial REIT. The scope of this report covers its business operations and properties in Singapore, Australia and China1, recording the performance from 1 April 2016 to 31 March 2017. Ascendas Reit has a strong focus on a broad range of industrial property investments including Business & Science Parks, Integrated Development, Amenities & Retail (IDAR) Properties, High-Specifications Industrial Properties, Light Industrial Properties and Flatted Factories and Logistics & Distribution Centres. As at 31 March 2017, Ascendas Reit had 131 properties in Singapore and Australia (please refer to page 54 and 55 of the annual report for a full list of Ascendas Reit's properties). External assurance has not been sought for this reporting period.

In August 2016, ASB Group launched a new family of corporate logos to refresh its brand image post the completion of the merger in 2015. The new Ascendas Reit logo, which incorporates the infinity symbol, provides a clearer connection to our Sponsor, the Ascendas- Singbridge (ASB) Group, and other affiliated brands.

1 Data included in the report for the China properties is up to the operating period before divestment, i.e. July 2016 and November 2016 for Ascendas Z-Link and A-REIT City @Jinqiao respectively. Its third China property, that was divested in June 2016, was unoccupied and therefore no data was recorded.

04. SUSTAINABILITY REPORT FY16/17

MATERIALITY & STAKEHOLDERS

Ascendas Reit

Ascendas Reit

SUSTAINABILITY REPORT FY16/17

05.

MATERIALITY ASSESSMENT

The Manager's focus has always been to deliver value to stakeholders through its business strategies, operational activities and allocation of capitals. Insights gathered from stakeholder engagements serve to reaffirm the manager's sustainability strategy, enable meaningful reporting and improve practices.

Ascendas Reit's materiality definition is guided by the GRI reporting framework. It states that the report should cover aspects which reflect the organisation's significant ESG impacts, and those that substantively influence the assessments and decisions of stakeholders. An internal review of the materiality assessment was conducted in January 2017 to update Ascendas Reit's material ESG issues. The list of 17 material topics identified in FY15/16 were further prioritised and topics of similar nature were grouped

Figure 1: Materiality Matrix

together. A final list of the six most critical ESG matters were selected and approved by the Board.

As an initial step towards integrated reporting, the Manager conducted an investor perception survey in February 2017 with twenty of its institutional investors and key analysts. The survey (conducted by an independent third party research house) required the investment community to evaluate and rank the importance of ESG issues when deciding whether to invest in Ascendas Reit. Unlike the traditional GRI materiality determination process, the Framework focuses on ESG matters that can influence investors' assessment on the organisation's ability to create value. Figure 1 and Table 1 provides more details.

Table 1: ESG Matters in line with the GRI-G4 Aspects

Investment Community

No.	ESG	Six Most Critical ESG Matters in FY16/17	Six Capitals (as reflected in Sustainability Report FY16/17)
A	G	Corporate Governance High Standards of Corporate Governance Business Ethics & Employee Conduct Regulatory Compliance	Harnessing Organisational Capital
B	G	Security of Information	Harnessing Organisational Capital
C	S	Health and Safety Protection of Stakeholders Employee/ Contractor Health and Safety Protection Health, Hygiene & Safety Protection of General Public and Adjacent Communities Security of Properties	Building a Strong Social and Relationship Capital
D	S	Employment Practices Fair Employment Practices Employee Well-being and Engagement	Building a Strong Social and Relationship Capital
E	S	End-to-End Premium Quality Solutions & Customer Satisfaction End-to-End Premium Quality Solutions Customer Satisfaction	Leveraging on Manufactured Capital Building a Strong Social and Relationship Capital
F	E	Energy and Carbon Footprint Reducing Energy and Carbon Footprint	Stewarding Natural Capital

C B A

IMPORTANCE TO SIMULATED KEY EXTERNAL STAKEHOLDERS

D E F

Existing & Potential Customers

Legend

Material ESG issues Material ESG issues also viewed as important by institutional investors in creating value over-time

Suppliers & Contractors

IMPORTANCE TO KEY INTERNAL STAKEHOLDERS

Employees Property Manager The Manager

For more details regarding Ascendas Reit's engagement with Stakeholders, please refer to section "Building Relationship with Stakeholders", on pages

12-13