NATURAL CAPITAL: ENVIRONMENT IMPACT
SOCIAL AND ETHICS REVIEW

Highlights

	Cost savings of R15,9 million
	75,5% of waste recycled
	Second submission to CDP on carbon emissions
	Second participation in GRESB

Given the nature of our business, Hyprop has a low environmental footprint. Despite this, reducing our environmental impact remains integral to our commitment to continuously improve our operations. The execution, reporting and review of our environmental policy are regularly monitored by the social and ethics committee.

After identifying the most relevant environmental impacts of our operations – specifically water, energy and waste – we introduced our green design and environmental strategy three years ago. Our approach is informed by best practice, proven methods, ease of implementation, and the benefit and cost of retrofitting green design to existing buildings. Identified opportunities include lower operating costs, reduced liability and risk of higher utility costs.

This strategy is dynamic and continually reviewed against best practice and new developments. We focus on practical implementation within the parameters of a cost/benefit analysis and feasibility of retrofitting green technologies.

As a member of the Green Building Council of South Africa, Hyprop supports the council’s vision and mission.

	ENVIRONMENTAL STRATEGY
	A comprehensive external analysis of our environmental, social and governance strategy in 2014 confirmed the value of initiatives under way and highlighted areas for improvement. This summary of our environmental strategy provides a fuller understanding of how Hyprop is mitigating environmental impacts where possible and proactively managing environmental resources.
	TARGET   Energy (electrical) consumption – 1% reduction on average per annum across the portfolio Water consumption – 4,5% intensity reduction by 2016. 2014 target 1,5% reduction Recycling – 5,9% improvement across the portfolio Carbon emissions – in line with electricity consumption reductions		ACHIEVEMENTS   Electricity: 2,0% reduction in 2015 Water: 12,2% reduction in 2015
	TARGET   Consider best practice in energy, water reduction, waste management and carbon emissions Consider green building principles Manage biodiversity impacts through responsible management by considering best practice Enhance stakeholder engagement by engaging large users and exploring collaborative opportunities Ensure compliance with environmental legislation Embed culture of environmental responsibility across the group Undertake annual environment-specific risk assessments Explore how innovation and technology can support competitiveness

International benchmarking

For the second year, Hyprop voluntarily participated in two global benchmarking programmes, illustrating our commitment to ensuring that best practice is embedded throughout our group, for the benefit of all stakeholders:

	CDP is acknowledged as the international benchmark for environmental reporting. This is an international non-profit organisation providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information in building sustainable economies (see Hyprop's carbon disclosure determining our carbon disclosure)
	GRESB is an industry-driven organisation that assesses the sustainability performance of real estate portfolios (public, private and direct) around the globe. It is used by institutional investors to improve the sustainability performance of their investment portfolio, and the global property sector.

Fines

Hyprop incurred no fines for non-compliance with environmental laws and regulations during the year.

Clearwater Mall, Johannesburg

 

Key environmental projects completed in 2015

We completed six projects totalling R7,6 million, focused on installing energy-efficient lighting to reduce both electricity consumption and maintenance costs.

Phase 2 of our solar photovoltaic (PV) plant was installed on Clearwater Mall’s parking roof (completed in August 2015). The total size of the plant (phase 1 and 2) is 1 500kW at peak, with generating capacity of 2,5GWh per annum.

Energy-efficiency initiatives

A large portion of Hyprop’s total operational spend in any reporting year is on electricity (mostly consumed by tenants), energy efficiency is a financial imperative. We are implementing a range of energy-efficient solutions to better manage costs for the group and our tenants, to improve our environmental performance and to reach our targets.

Electrical consumption	2015		2014
Total direct non-renewable energy consumption (gigajoules (GJ)) – ie from diesel burned	5 609		2 950
Total direct renewable energy consumption (GJ) from solar PV	1 839		No PV
Total indirect energy consumption (GJ) – ie from electricity consumed	10 584		9 999
Total indirect energy sold (GJ) – ie electricity recovered from tenants	914 278		875 080
Total electricity consumption (MWh)	256 906 055		277 774 894
Total energy consumption (GJ) – calculated	924 862		999 989

To better monitor the effectiveness of these initiatives and year-on-year consumption patterns, we began calculating our energy use intensity in 2013.

	2015		2014	2013 baseline
Energy use intensity (GJ/m2)	1,27		1,31	1,56

Kilowatt hours per occupied space (m2)	2015		2014	% change
Retail	357		371	(3,7)
Office	268		212	26,4

Determining our carbon footprint

To establish an accurate baseline, we determined the group’s scope 1 and 2 carbon footprint using UK Department for Environment, Food and Rural Affairs (Defra) voluntary reporting guidelines and the revised corporate accounting and reporting standard of the Greenhouse Gas Protocol, the most widely used international tool for government and business leaders to understand, quantify and manage greenhouse gas (GHG) emissions.

Hyprop participated in the CDP for the second time this year, submitting our carbon footprint for the 12 months to June 2015. Although our official 2015 score will only be available in November, our score for the prior period was 74%. KPMG has independently audited our 2015 submission, providing an indicative score of 74% to 80%, which is considered above average.

Hyprop’s carbon disclosure Total carbon emissions (tonnes of carbon dioxide equivalents, CO2e) – calculated	2015	2014
Total carbon emissions include the following mix:
Scope 1*	3 260	6 571
Scope 2*	31 925	35 738
Scope 3*	261 585	250 370
Average volume of carbon emissions (scope 1 and 2) per person hour worked (tonnes CO2e/HW)	0,085	0,092

*	Scope 1 emissions: all direct GHG emissions.
	Scope 2 emissions: indirect GHG emissions from consuming purchased electricity, heat or steam, scope 3 covers other indirect emissions, which for Hyprop is calculated as kWh purchased from the supply authority and resold to tenants.
	Scope 3 emissions: includes the increase in scope 3 emissions that is tenant-driven. All our sites have bulk meters that measure total kWh consumed, Each tenant has a sub-meter that registers direct electrical consumption. Where tenants have dedicated AC units, 100% of electrical consumption is recovered. Where they share an AC system, they pay a pro rata share of the total area served by the unit.

Carbon tax

This proposed tax is based on carbon emissions, with organisations taxed on their emissions as measured in carbon dioxide (CO₂). The tax is expected to be phased in from 2016 and is being implemented to help South Africa reduce its carbon footprint. The mooted figure is R120/tonne of CO₂. This is currently envisaged as an additional surcharge on each kWh consumed and equates to 12 cents per kWh.

Based on our current submission to CDP, Hyprop has a potential tax liability of R3,8 million, with a liability of R31,4 million for our tenants.

Water

We are investigating all feasible opportunities to reduce water consumption while improving our measurement and monitoring standards. This includes installing water-efficient equipment.

At existing properties, we rely on close co-operation with tenants and customers to reduce water consumption. At new developments and during renovations and upgrades, efficiency is a determining factor in choosing technical equipment (toilets, taps, sprinkler systems and cooling systems).

Bulk water consumption is monitored daily at centres to identify unusual consumption patterns that might indicate leaks.

Water measures	2015		2014	% change
Total water consumption (kilolitres (kℓ))	1 123 687		1 255 043	(10,4)
Average volume of water consumed per person hour worked (ℓ/HW)	2 664		2 976	(10,4)
			Target
Target for water consumption, or reduction, against a specific denominator (ℓ/HW)	2 618		not set
Retail: kℓ per occupied space (m2)	1,7		1,7	0
Office: kℓ per occupied space (m2)	0,32		0,26	2,3
Total: kℓ per occupied space (m2)	1,6		1,6

Water intensity	2015		2014	2013 baseline
Water use intensity (kℓ per occupied space (m2))	1,5		1,4	1,9

Waste

Our waste management approach is designed to maximise recycling, minimise disposal to landfill and comply with legislation. Tenants are regularly informed about on-site waste management systems, and Canal Walk and Clearwater Mall have public recycling stations. Suitable waste segregation facilities are in place at all centres.

For development projects, we adhere to all applicable regulations and consider best practice in optimising the environmental quality of our construction sites. Waste generated by construction is disposed of in line with responsible management plans.

In 2015, Hyprop recycled 75% of total waste, up from 67% in 2014. While higher in percentage terms, lower group volumes reflect greater individual recycling efforts from our tenants.

Waste	2015		2014
Total mass of non-hazardous waste disposed (tonnes (t))	6 478		6 028
Total mass of hazardous waste disposed (t)	34		34
Total mass of waste sent for recycling (t)	2 964		3 111
Percentage of waste sent for recycling (%)	31		34

Recycling	2015		2014
Number of loads ordered	6 790		6 469
Quantity of units collected (t)	64 179		83 619
Recycled (%)	75		67
Recycled (m3)	62 785		49 938

Climate change

We have formally assessed the risks and opportunities presented by climate change as part of our annual submission to CDP and group risk management process. The key direct risks lie in:

	Change in temperature extremes – higher temperatures mean air-conditioning equipment will not cope in peak summer
	Sea-level rise – danger of flooding coastal centres, most notably Canal Walk.

Environmental sensitivity

Canal Walk and Willowbridge are in biodiversity-rich areas:

Canal Walk is part of the greater Century City precinct, which is in a national wetland conservation area, Intaka Island. Intaka is an award-winning 16-hectare conservation area, rich in birdlife and indigenous plants. The precinct has an environmental management plan to which Canal Walk adheres. In terms of the plan, no sewerage, fertilisers, herbicides or chemicals are discharged into canals that run through the precinct. Only biodegradable cleaning products are used for parking decks, walkways and walls to minimise water pollution. In addition, Hyprop contributes financially to the environmental management plan

Willowbridge is next to the Elsiekraal River and adheres to the environmental management plan set by the council to guard against water pollution.

Current energy and carbon emission savings initiatives

Initiative		Objective		Progress/current activities
Phase 1: a 500kWp solar photovoltaic plant at Clearwater Mall Phase 2: plant increased to 1 500kWp		The plant started operating in November 2014.		Phase 1 was commissioned between November 2014 and June 2015, and the plant generated 510 729kWh, equating to a saving of 208 tonnes of coal. From August 2015, phase 1 and 2 have a generating capacity of 2,5GWh.
Capital replacement programme		Ensures capital equipment at the end of its lifecycle is replaced with energy-efficient equipment against the following criteria: non-ozone-depleting refrigerant gas; reverse cycle heating instead of electrical element heating; and performance co-efficient 3,5 or better.		All capital replacements are approved by the national technical manager. At Somerset Mall, three package units are replaced every year. Only non-ozone-depleting R410 refrigerant units with a co-efficient of performance of 3,5 or better are installed. At Canal Walk, one-third of console units are replaced annually with R410 refrigerant and energy-efficient inverter units.
Modify thermostat set points and supply temperature for chiller water		Lower energy costs in winter and summer.		Malls with Building Management Systems (BMS) installed, enabled implementation.
Variable speed drives (VSDs) for heating, ventilation and air-conditioning (AC) systems		Match speed to required output to reduce consumption.		All relevant systems fitted with VSDs.
LED lighting and occupancy sensors		Improve lamp life and reduce required power factor correction.		All mall common areas fitted with LED lighting.
Implement preventive maintenance programmes		Ensure optimal operation of equipment.		All equipment is serviced monthly in line with service level agreement.
Peak energy demand reduction		Reduce power consumption in peak periods (premium tariff) and avoid expensive peaks, reducing the cost of consumption.		Buildings that would benefit from time-of-use tariffs have been converted to this structure.
Power factor correction		Reduced consumption (in kVA), which accounts for current and pressure.		Power factor correction technology installed at all buildings where appropriate.
Light-coloured surfaces		Buildings absorb less radiant energy, reducing solar heat gain and reliance on artificial light.		By using heat-reflective paint on the roof at Woodland's Boulevard, we reduced peak load Air Conditioning (AC) consumption by 16%.
Insulating duct and pipework for heating, ventilation and AC		Reduce loss of cold air from AC systems into building environment.		Ongoing and monitored monthly through service level agreements.
Architectural shading and external planting		Reduce solar gain and energy use.		Implemented at Rosebank Mall and Canal Walk as part of extensions and refurbishments.

Water efficiency initiatives

The table below highlights ongoing opportunities to manage water more efficiently.

Initiative		Objective		Benefits		Progress/current activities
Smart metering		To improve measuring and monitoring of water consumption and identify leaks from unusual flow patterns.		Anomalies immediately flagged, limiting risk and consequential loss Accurately tracking consumption patterns optimises financial benefits of time-of-use tariff Balancing sub-meters back to bulk meter at all times to flag any bypassing		Bulk check meters installed at certain sites.
Fire system water consumption		Identify leaks and illegal use of water.		To save water and avoid the abuse of infrastructure.		All buildings monitored.