The material factors critical to the success of our business include:
Sustainable structure, operations and results
Stakeholder and community engagement
The table below includes the specific targets we have adopted in relation to these factors.
We critically assess our performance and provide investors, regulators, customers and community partners with detailed information about our business activities.
Transparent and robust governance structures give these stakeholders confidence in our reporting and we engage regularly across a variety of communication channels on a range of topics and issues including sustainability.
Financial stability is a prerequisite for a sustainable business. It includes:
Responsible and ethical investing
The long-term returns of our assets
The distributions paid to investors
Access to capital and debt funding
Balance sheet resilience
We have a disciplined approach to investment and manage prudently ensuring we retain a strong balance sheet with diverse sources of funding. The Board’s preferred gearing range of between 20% and 30% is well below the maximum of 50% allowed under GMT’s Trust and debt covenants. With only partly drawn debt facilities and low gearing the Trust has substantial capacity for new investment. This financial flexibility also provides added resilience against unforeseen market shocks that could impact property values.
A revised distribution policy that retains up to 20% of cash earnings is a sustainable approach that ensures GMT can continue to grow.
Maintaining high occupancy and customer retention levels is a key driver of our success. The strength of these businesses underpins our own financial performance, providing the strong rental cashflows that drive earnings growth and returns to investors. The distribution guidance for FY22 is for a 4% increase in cash distributions to around 5.5 cents per unit.
The strength of GMT’s financial position, its prudent management policies and proven business strategy are recognised in the investment grade credit rating of BBB from S&P Global Ratings. The rating has remained stable since it was first assigned in 2009.
The Board has ultimate responsibility for ensuring risk is managed effectively. This includes consideration of all strategic, operational, financial and compliance risks. Non-financial issues, including the impacts of climate change are also included within this risk framework.
The corporate governance section on page 104 provides further detail and compares our approach against the principles and recommendations of the NZX Corporate Governance Code. The full suite of governance polices are available online: https://nz.goodman.com/who-we-are/corporate-governance
Participation in international reporting initiatives, that follow credible and proven frameworks, is a requirement of any business focused on sustainability.
A commitment to reducing its environmental footprint led Goodman to first participate in the Carbon Disclosure Project (CDP) in 2009. The global initiative encourages companies, cities, states and regions to monitor greenhouse gas emissions and implement strategies to reduce carbon pollution and minimise climate change impacts.
CDP released the results of last year’s survey in December 2020. The Trust received a climate score of B- which was consistent with the previous year. There were approximately 25 NZX companies that contributed data (19 publicly disclosed their ratings) with CDP evaluating more than 9,600 organisations worldwide. Of them, 277 achieved an A rating. Both A and A minus are regarded as “leadership level”. Scores B and B minus are considered “management level”, C and C minus are “awareness level” and D and D minus are “disclosure level”.
The implementation of emission management and reduction strategies, together with the independent audit assurance provided by Toitū carbonzero certification are expected to contribute to an improved CDP climate score in the next CDP survey.
You can find out more about the Carbon Disclosure Project and the rating process at www.CDP.net.
Adopting the GRI framework this year has aligned our corporate reporting with the world’s most widely used standards for sustainability reporting. The index on page 50 allows stakeholders to access and review key information around our sustainability programme, enhancing transparency and accountability.
The standard is particularly useful for investors and fund managers who need consistent reporting when screening or assessing investment vehicles on ESG criteria.
As a leading NZX investment entity we have a responsibility to provide timely, balanced and readily available information. We engage with our stakeholder groups on a regular basis, through a variety of communication channels, including formal reporting obligations, regular market announcements and briefings, and more directly through open days, road shows, presentations, meetings and volunteering initiatives.
Our memberships and partnerships include Australasian Investor Relations Association, Diversity Works, Global Women, Greater East Tāmaki Business Association, NZ Green Building Council, New Zealand Shareholders Association and Property Council of New Zealand.
Following the government’s announcement last year that it intends to make climate related financial disclosures mandatory GMT’s future reporting will be extended to ensure it is consistent with the recommendations of the Task Force on Climate related Financial Disclosures (TCFD). Work is already underway assessing the risks and likely performance of the Trust under a variety of climate scenarios across short, medium and longer timeframes.