The aim of our integrated approach is to inform investors and others stakeholders on how our business performance, strategy, governance and prospects lead to the creation of value over the short, medium and long term. It is also to provide a concise document including material matters that may be of interest to our stakeholders.
Stockland has used the materiality definition from the Integrated Reporting Framework that states ‘an integrated report should disclose information about matters that substantively affect the organisation’s ability to create value over the short, medium and long term’. We identified our FY16 material matters using the following process.
The issues identified through this process and the sustainability content in the Annual Review are reviewed and approved by Stockland’s executive team and the Board.
|Identify||Evaluate and prioritise||Alignment and disclosure|
We combined the outcomes of the following two materiality processes to identify draft material matters:
The resultant list of matters served as a starting point for our integrated reporting materiality workshop.
An integrated reporting materiality workshop was held with members of the leadership team to identify any additional relevant issues, rank issues of greatest significance and prioritise them based on their ability to affect value.Material matters were mapped in terms of their potential impact on value creation over the short, medium and long term.
|Following the materiality workshop, the identified material matters were validated via a six stage collaborative assessment undertaken by Group Strategy. This included input from teams across the whole business.
The final list of material matters was presented to our internal Integrated Reporting Committee.
Once confirmed, the matters formed the basis of the Board and Executive Committee’s strategy discussion.
Through our materiality research, we have identified emerging societal issues that impact the landscape in which we operate. They represent future risks and opportunities for our business and our stakeholders over the short, medium and long-term.
Our material matters also align with the core focus areas of our sustainability strategy. We anticipate that these matters will evolve over time and we will continue to work with relevant stakeholders to shape these issues going forward.
All of our businesses are impacted by local and global economic conditions. International economic markets remain volatile and the outlook for specific markets in Australia remains uneven. We expect conditions to remain reasonably supportive. Interest rates are anticipated to be stable and we expect the economy to continue to grow, albeit at below trend levels.
We have capitalised on supportive market conditions throughout the year, while ensuring the decisions we make now will serve our business well through the cycle. We will maintain asset and geographic diversification and will continue to focus on retaining a strong balance sheet with low gearing and diverse funding sources.
We will also concentrate on efficiency and cost management and maintaining a prudent approach to provisioning.
Our growth is supported by a strong medium-term organic pipeline. In the longer term, however, the continued growth of our business is dependent on our ability to acquire new land and assets. Strong domestic and offshore investor demand for property assets is expected to continue, supported by relatively high asset yields, the decline in the Australian dollar and Australia’s record of economic and political stability.
We will continue to ensure discipline and agility in our investment decision making so we can take advantage of opportunities that will deliver the appropriate risk-adjusted returns. We will use a rigorous whole of business approach informed by detailed research to drive our capital allocation process. Within our existing portfolio we have significant organic development opportunities supported by a strong balance sheet to provide funding flexibility.
Other stakeholders potentially impacted by this issue include customers, investors and the property industry in general.
Australia’s growing population requires physical and social infrastructure services to support the growth and development of new suburbs. This includes the provision of sustainable and accessible transport and community facilities. Delay in the provision of these services can result in unhappy customers at our assets and negative sentiment on social media.
Effective stakeholder engagement on our projects with suppliers, customers and government has resulted in positive outcomes across several projects. We will continue to use our proprietary Liveability research to understand the priorities of residents in our communities and drive property management and development decisions. We will also continue to ensure that all active projects have stakeholder engagement plans that minimise obstacles to infrastructure and amenity delivery and ensure appropriate communication with all stakeholders about these matters.
The resilience of our supply chain is also key in the delivery of our projects. We are continuing to enhance our supply chain risk management and seek to provide greater clarity of sustainability expectations with the development of a Sustainable Supply Chain Charter.
Other stakeholders potentially impacted by this issue include government, providers of infrastructure services and customers.
See Our Business, A better way to shape thriving communities, A better way to enrich our value chain and our Community DMA, Stakeholder Relations DMA and Supply Chain DMA at www.stocklandsustainability.com.au
Stockland’s Residential business is influenced by the dynamics of the Australian residential market. Housing affordability remains of key concern for Australians as the price of housing and rental properties in some areas continues to increase.
We believe that current market prices and volumes in the residential sector are elevated in many markets as a result of historical undersupply combined with strong demand from home owners and investors. We expect the particularly high level of price growth in Sydney to moderate in the short to medium term.
We will continue to seek opportunities to help meet demand and broaden our customer reach by creating market leading sustainable communities and a broad mix of value for money housing options – house and land packages, completed homes, medium density and apartments. We have also sought to balance the demand from home owners and investors to ensure our residential communities remain attractive to future buyers. We continue to engage with all levels of government to seek effective solutions on land supply issues.
Other stakeholders potentially impacted by this issue include the property industry, investors and customers.
To achieve operational excellence we need to ensure that our systems are cost effective and agile to support the diversified nature of our business.
We continue to execute our Information Technology strategy with a focus on long-term strategic investment, and we will continue to identify and integrate technical enhancements across the business.
We have made significant progress on improving the Group’s systems capabilities, including the commitment to implement SAP and Salesforce as core systems. This project aims to reduce the number of legacy systems we use in our business to simplify and streamline our activities, reduce costs, and take advantage of rapid developments in technology to improve customer outcomes. This investment will also position Stockland’s systems to continually improve in line with improvements to SAP and Salesforce. With deployment to take place during the next two years, we will continue to maintain two-way engagement with employees across the business to enable a smooth transition.
Other stakeholders potentially impacted by this issue include employees, customers and suppliers.
Substantial policy reform presents both opportunities and potential impacts for our business and our customers. Tax and planning reform remain key policy areas where we will continue to engage with industry and government. We will continue to focus our development activity in areas where governments support growth and focus on good practice to remain well positioned in the market.
Other stakeholders potentially impacted by this issue include investors, customers and the property industry.
The safety of our customers and employees is a key priority. Ensuring their safety and the resilience of the communities in which we operate is becoming increasingly complex. This includes safety and security risks associated with terrorism, cyber threats and extreme weather events.
We continue to build our resilience to these evolving risks: training our employees and increasing their risk awareness, scenario testing, engaging with peers and across industry, and investing in asset upgrades.
Other stakeholders potentially impacted by this issue include investors, customers, community, industry and employees.
Stockland’s long-term growth is dependent on our ability to access suitable capital at the appropriate time and cost even as capital markets fluctuate in response to domestic and global economic shifts.
Over the past 10 years we have maintained a strong balance sheet at appropriate levels of gearing, enabling us to continue to sustainably fund growth in the business. In the short term we have also been able to refinance borrowings and maintain diverse funding sources.
So that we are able to continue to access sufficient capital to fund growth, we will continue with our prudent capital management policies.
Our well-defined capital management approach enables us to invest, allocate and raise capital across various funding types and geographies at different points in the cycle.
Other stakeholders potentially impacted by this issue include investors, customers, community and employees.
See Capital Strength.
Our ability to develop products that meet anticipated future customer and societal demands is crucial to the sustainability of our business, particularly in light of Australia’s ageing population and changing demographics.
We are continuing to evolve our market leading product innovation and deepen our customer insights using our proprietary Liveability Index research and platforms such as Stockland Exchange (our online research community) and Quantium (which provides de-identified customer transactional data to inform how we view markets and opportunities). We are fostering a culture of innovation where we remain flexible and identify and take advantage of opportunities to leverage movements in stakeholder preferences.
It is also important that we focus on the creation of sustainable and liveable communities and assets. This includes developing understanding of the longer-term impacts of climate change and incorporating our findings into the design and upgrade of assets.
Other stakeholders potentially impacted by this issue include our customers.
See Operational Excellence, A better way to optimise and innovate, and our Customer Engagement DMA, Climate Resilience DMA, Community DMA and Employee Engagement DMA at www.stocklandsustainability.com.au
Enhancements in digital technology have rewired customer behaviour. We need to be accessible, responsive and anticipate future consumer behaviour and disruption to our industry.
We will continue to identify and integrate technical enhancements across the business, including enhancing online residential and retirement living engagement opportunities. We will also continue support our retail centres as thriving community hubs by delivering quality services and retail and community spaces that are e-enabled.
Our innovation hub established in October 2015, Ideas@Stockland, provides employees from across the business a place to share, collaborate and build on ideas, further enabling us to take advantage of new opportunities.
Other stakeholders potentially impacted by this issue include our customers and employees.