Case analysis framework City Developments Limited

Case analysis framework City Developments Limited

City Developments Limited: a journey in sustainable

Hwang Soo Chiat and Havovi Joshi

Hwang Soo Chiat is an Associate Professor based at the School of Accountancy, Singapore Management University, Singapore. Havovi Joshi is Head of the Communications & Dissemination Centre for Management Practice, Singapore Management University, Singapore.

Companies with sustainability in their DNA are more resilient and make a better business model for success and long term growth. In the mid-1990s, building sector was seen as “destroying before constructing”, CDL as a pioneering developer was determined to change this perception and committed to transforming our business strategy to one that “conserves as we construct” for long term sustainability. From design, construction, procurement, maintenance and even user engagement, the entire cycle has been aligned with environmental sustainability in mind – Kwek Leng Joo, Managing Director, CDL[1].

It was January 2013, and Esther An, Head of Corporate Social Responsibility (CSR) and General Manager (Corporate Affairs) of City Developments Limited (CDL), was busy in meetings with the members of her CSR Committee, planning key strategies for CDL’s proposed sustainability framework for the coming year. CDL was one of Singapore’s leading international property and hotel conglomerates, involved in real estate development and investment, hotel ownership and management, facilities management and the provision of hospitality solutions. The group had developed over 22,000 luxurious and quality homes in Singapore, catering to a wide range of market segments. In addition, its London-listed subsidiary Millennium & Copthorne Hotels plc (M&C) owned and managed over 100 hotels spanning 70 locations in 19 countries.

CDL was widely recognised as a champion of sustainable practices in Singapore. It was the first company to be honoured with the President’s Social Service Award and President’s Award for the Environment in 2007. It was also the only developer to be accorded the Built Environment Leadership Platinum Award in 2009 and Green Mark Platinum Champion Award in 2011 by the Building and Construction Authority (BCA), the governing authority for Singapore’s built environment. CDL was the first Singaporean company to be listed on all three of the world’s top sustainability benchmarks – FTSE4Good Index Series since 2002, Global 100 Most Sustainable Corporations in the World since 2010 and the Dow Jones Sustainability Indexes since 2011. It was a founding member of Singapore Compact for CSR, and one of the pioneer Singapore signatories of the United Nations Global Compact to lend support to the advancement of responsible corporate citizenship in Singaporean industry.

How could CDL reinforce the culture of sustainability that it prided itself on? What could it do to increase awareness of their sustainability vision in the stakeholders? How would they influence stakeholders to adopt sustainability best practices? These were questions that An hoped to find solutions for in the meetings with her CSR team.

CDL

CDL was founded in 1963, with the purpose of acquiring, developing and selling property. The company went public in the same year, and its shares were listed on what was then known as the Malayan Stock Exchange. In 1965, CDL completed its first housing project in Johor Bahru, Malaysia, and also launched its first condominium, Clementi Park, in

© 2013, Hwang Soo Chiat & Havovi Joshi Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; financial and other recognizable information to protect confidentiality.

DOI 10.1108/EEMCS-11-2013-0049 VOL. 3 NO. 8 2013, pp. 1-23, Emerald Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1

http://dx.doi.org/10.1108/EEMC-11-2013-0049

Singapore. This was followed by the 1966 launch of its first high-rise residential development

in Singapore, City Towers. In 1972, the Hong Leong Group acquired a controlling interest in

CDL and embarked on strategic diversification into commercial and industrial

developments. CDL then acquired more investment and development properties such as

Tanglin Shopping Centre, Katong Shopping Centre, and Queensway Shopping Centre and

The Arcade. It thus emerged as a major property developer in Singapore. The company

soon after ventured into the hotel business.

The 1990s witnessed a period of rapid expansion and regionalisation. CDL’s hospitality arm,

M&C, which was the first Singaporean company to be listed on the London Stock Exchange,

expanded to become one of the largest hotel owners and operators in the world.

These milestones saw CDL embark on a substantial growth path, and in 2010, the group’s

profit before tax surpassed the S$1 billion (US$0.8 billion[2]) mark.

By end 2012, CDL had an extensive global network that included over 300 subsidiaries and

associated companies across more than 80 locations in 20 countries. Further, five

companies were listed on the stock exchanges in New Zealand, Hong Kong, London and

Philippines.

For the financial year ending 31 December 2012, CDL recorded revenue of US$2.72 billion

with profit after tax of US$699 million[2].

Sustainability in Singapore

An commented:

CSR is fast becoming a licence to operate in some areas. For, in 2005 the ‘‘Green Mark’’

was launched. But in 2008, the basic certification level of Green Mark was made mandatory that

any new development must meet that standard.

In 2005, the BCA Green Mark Scheme was launched by the Singapore Government as an

initiative to drive Singapore’s construction industry towards more environment-friendly

buildings. It was intended to ‘‘promote sustainability in the built environment and raise

environmental awareness among developers, designers and builders when they started

project conceptualisation and design, as well as during construction’’ (Building and

Construction Authority, 2013).

Then in 2009, in another key development, the Singapore Government, in consultation with

its people, came out with a Sustainability Blueprint. It defined sustainable development for

Singapore as growing the city state in a way that (Singapore Government, 2013):

B Was efficient: develop with less resources and waste.

B Was clean: develop without polluting our environment.

B Was green: develop while preserving greenery, waterways and our natural heritage.

Listed companies were encouraged to adopt sustainability reporting, with the release of the

Singapore Exchange Policy Statement on in June 2011, which

stated that:

(I)ssuers should assess and disclose the environmental and social aspects of their organisational

performance, in addition to the financial and governance aspects that are already part of the

customary and regulatory disclosure practiced