We are proactive about ESG at Goodman. It is a people-focused approach that achieves positive outcomes for our business, people, stakeholders and the communities where we operate, in the long term.
Goodman’s Boards are committed to managing ESG matters with the highest priority. The Boards monitor progress towards our 2030 Sustainability Strategy and targets. They recently established a Sustainability and Innovation Committee to support the management team. The new Committee, along with Goodman’s Risk and Compliance Committee, will enhance the Board’s visibility and oversight of our ESG initiatives.
ESG has been further embedded into our business recently through our remuneration structure. Meeting environmental and sustainability targets is now a further performance assessment for vesting of our LTIs linked to operational outcomes, and is measurable and disclosed as part of our remuneration structure. It means our people have a long-term financial interest in the environmental and sustainability performance of our business.
Maintaining sustainable sources of capital requires demonstrable governance of ESG priorities. During the year, Goodman established a Sustainability Linked Bond Framework. This provides a structure to link financing with our sustainability strategy and the achievement of our sustainability goals.
Our reputation is important so we act in line with our Code of Conduct (the Code) and comprehensive suite of governance policies, and with integrity wherever we do business. Together, these documents set the standard of professional and ethical behaviour expected from all of those who represent us. They are available on Goodman’s global website. The Code was updated during the year to better align with our revised values.
Effective and regular disclosure of our ESG performance with stakeholders helps maintain trust in Goodman’s governance and leadership teams. We participate in several ESG ratings and benchmarks that our investment partners value, and we use these as tools to identify where we can improve. The benchmarks/ratings we participate in are set to grow in FY23. The list currently includes:
In 2022, 10 Goodman entities participated in the GRESB, with positive results announced in October 2022. Our results across the Group in 2022 were our strongest to date.
Sustainable operations and results
Effective disclosures of ESG performance
Investing responsibly with defined governance and sustainable capital structures
Protecting human rights and sourcing sustainably
Supporting the community through the Goodman Foundation
Retain investment grade credit rating
Continued to meet financial targets to underpin capital sources and retain credit rating. Maintained credit rating at BBB+ (S&P) and Baa1 (Moody’s).
Adopt the TCFD guidelines for climate risk assessment and disclosure by 2022
Adopted Task Force on Climate-related Financial Disclosures (TCFD) guidelines in 2020 and updated in 2022.
$50 million in social investment by the Goodman Foundation by 2030
The Goodman Foundation contributed more than $10.6 million in cash, plus another $1 million in staff fundraising and in-kind contributions. This takes our total investment to $37.3 million since our 2030 sustainability strategy came into effect in 2019. 302 Goodman people contributed 2,196 volunteering hours to our community efforts.
At Goodman, we are committed to the highest standards of corporate governance and recognise that an effective corporate governance framework is critical to the long-term performance of the business. This extends to governance relating to ESG matters, which we believe is essential to maximise long-term sustainable value for securityholders.
The Sustainability and Innovation Committee will focus on Goodman’s sustainability strategy, responding to material drivers such as climate risk, as well as our performance on our ESG targets. The Committee will also oversee and monitor Goodman’s investment in innovation and review the impact of innovation and technological developments on the business.
Goodman’s team will provide quarterly updates to the Sustainability and Innovation Committee as it does for the Risk and Compliance Committee. These committees provide strategic insights to Goodman’s Boards.
We believe the overall long-term sustainability of our business requires long-term strategic operational objectives. These must sit alongside a remuneration system which builds a culture of ownership for our employees as we focus performance on long-term success rather than short-term gains.
Goodman’s remuneration structure is integrated into the business to encourage sustainable financial results alongside improvement in all areas of ESG over time. This includes sustainability targets which are incorporated into the performance reviews and remuneration structure for Goodman’s management teams.
In particular, for LTI awards made since 2021 the Board has discretion to apply a reduction to the number of performance rights that vest where it considers that management’s performance is not sufficient against sustainability targets. For the awards made in September 2022, these targets will include:
Inclusion of these assessments provides real financial impact to our people if they materially underperform on these long-term objectives.
*Subject to government, local authority and network operator approvals, and meeting community or social issues.
At Goodman we believe in conducting ourselves and our business with integrity. Maintaining our reputation is critical.
These beliefs underly our Code of Conduct (the Code), which clearly sets out the standards of professional and ethical behaviour expected from those who represent us.
Goodman updated its Code during the year to better align with our values. The updated Code is more comprehensive and links directly to our corporate governance policies. Our corporate governance policies were also reviewed during the year.
The Code is endorsed by Goodman’s Boards and extends to anyone who works for Goodman, including non-executive directors (Directors) as well as employees and contractors (team members). It also informs how we interact with everyone we encounter at work, including customers, suppliers, partners, regulators and securityholders.
At Goodman, we have zero tolerance for any improper or unethical conduct, including bribery and corruption. All team members complete ethical behaviour training, which includes bullying, harassment, anti-bribery and corruption.
The Code has nine guiding principles to preserve Goodman’s reputation of doing the right thing by our customers and team members. The principles are:
These principles operate alongside Goodman’s values, policies and procedures and everyone is expected to follow them when representing Goodman.
Goodman supports the protection of human rights, and equity and fairness within our supply chains. We acknowledge that modern slavery is a global risk and that managing this risk is an ongoing responsibility. Modern Slavery is a serious form of exploitation present in global supply chains, that can take place through labour rights abuses including forced labour, debt bondage and child labour. It can come about through the use of coercion, threats or deception to exploit and deprive people of their freedoms, rights and access to safe and fairly compensated employment.
Modern slavery spans industries, but an estimated 18% of modern slavery victims are in the property and construction industry. Additionally, 22% of forced labour occurs in the manufacture and production of raw materials – key suppliers to the property and construction industry.
Goodman is not immune to the risk of modern slavery. The risk of modern slavery is most likely to be present within our supply chain which includes over 8,000 suppliers (as opposed to our direct employees where we have strong controls in place).
Our Sustainable Sourcing Framework and our robust, risk-based approach to modern slavery both enable us to respond better to these risks, and work with suppliers to mitigate them. We have also committed to developing and implementing global operational and supplier standards and guidance on modern slavery to assist our teams involved in procurement in FY23. Together, these actions represent a strong signal about business ethics that will spread along our operations and through our supply chain.
This year Goodman developed its Sustainable Sourcing Framework. The Framework provides direction to achieve Goodman’s overarching sourcing and supply chain objectives globally. We recognise we have an opportunity to influence the sustainability outcomes of a value chain that consists of over 8,000 suppliers. The Framework will help us to protect human rights within our supply chain and to mitigate the risk of modern slavery, as well as respond to the social, environment and governance targets in our 2030 sustainability strategy.
We have developed a roadmap to successfully implement the Framework from FY23.
The first step of the roadmap is engaging with our internal and external stakeholders to build awareness of our sourcing and supply chain objectives and expectations. Internal working groups have been established to support this task, and to help with implementation of the Framework in each of the regions where we operate.
Goodman recognises the impact of procured products and services on the environment and people. As a result, this year we expanded our procurement policies to support the new Framework – they now prioritise environmental, social and governance objectives.
We aim to adopt procurement strategies which avoid unnecessary consumption and, where possible, benefit society, while considering environmental impact and lifecycle.
We anticipate our new Framework and procurement decision making will see us increase the number of our suppliers that prioritise social, environmental and governance factors. We look forward to working with like-minded suppliers.
We recognise that our suppliers operate in a variety of legal frameworks and cultural environments around the world. However, we believe that engaging consistently with our supply chain on our Framework will lead to broader positive change in our sector.
ESG performance and rating benchmarks allow Goodman to measure and communicate our ESG efforts to our stakeholders. They also allow us to assess opportunities for improvement. We participate in several global benchmarking programs, including the Global Real Estate Sustainability Benchmark (GRESB), the MSCI ESG Index, and the Sustainalytics benchmark.
One of the leaders in sustainability assessments in real estate is GRESB, which helps our stakeholders contextualise our sustainability performance. Over the decade Goodman has been a participant in GRESB, we have continually improved our scores and increased our number of participating entities. This year, 10 Goodman entities made submissions, with the results released in October 2022.
Highlights from the 2022 results include:
We were also active in other benchmarks this year. In March 2022, Goodman received an ESG Risk Rating of 9.5 from Sustainalytics, where we were assessed as being at ‘Negligible’ risk of experiencing material financial impacts from ESG factors – a strong result.
The Group was also upgraded by MSCI to ‘AA’ from ‘A’, reflecting our robust corporate governance and anti-corruption controls.
Maintaining a sustainable and strong balance sheet with available liquidity and ongoing access to capital is important to our business. Increasingly, our finance partners are valuing ESG performance and using their investments to influence sustainable outcomes like those which Goodman supports.
Goodman Group has longstanding relationships with some of the world’s largest pension and sovereign wealth groups through our managed Partnerships. Our approach to sustainability, and the targets we set ourselves, are one way we can build trust with our stakeholders, including our investment partners.
Many of our investment partners operate with their own dynamic ESG policies. As a result, these relationships have supported Goodman’s investment teams to adopt sustainability principles in our own development and management activities. This has contributed to the sustained improvement in Goodman’s external ESG benchmarks.
We measure our financial sustainability and strength through our credit ratings of BBB+ (S&P) and Baa1 (Moody’s). These ratings reflect our sustainable operations and results, capital stability and approach to responsible investments.
During the year, Goodman developed its Sustainability Linked Bond Framework (framework). The framework outlines how Goodman Group can link our financing strategy with our sustainability strategy, helping to deliver on our sustainability goals. Following the development of the framework, Goodman closed its first US$500 million Sustainability Linked Bond into the US144A/Reg S market.