Natural capital: Environmental impact(1)

Highlights

  • 79% of waste recycled
  • Cost savings of R9,5 million due to implementation of LED lighting in common areas
  • Fourth submission to CDP on carbon emissions
  • Fourth participation in GRESB.

Although our business has a low environmental impact, we aim to reduce this where possible in daily operations. Management regularly monitors the execution, reporting and review of our environmental policy, culminating in an annual review by the social and ethics committee.

After identifying the most relevant environmental impacts of our operations – water, energy and waste – we introduced an environmental strategy in 2014 (see below). This strategy explains how our approach is informed by best practice, proven methods, ease of implementation, and the benefit and cost of retrofitting green-design principles to existing buildings. Identified opportunities include lower operating costs, reduced liability and risk of higher utility costs.

Our environmental strategy illustrates how Hyprop mitigates related impacts where possible and proactively manages natural resources.

Hyprop environmental strategy - primary targets (baseline June 2013)


(1) South African portfolio plus Ikeja City Mall in Lagos, Nigeria

International benchmarking

Hyprop voluntarily participates in global benchmarking programmes.

  • CDP is the global standard for environmental carbon reporting. This non-profit organisation provides the only international system for companies and cities to measure, disclose, manage and share vital environmental information necessary for building sustainable economies. Our CDP submission is audited and assured by KPMG's climate change and sustainability services division (fourth submission).
  • The Global Real Estate Sustainability Benchmark (GRESB) is an industry-driven organisation that assesses the sustainability performance of global real estate portfolios (public, private and direct). It is used by institutional investors to improve the sustainability performance of their portfolios and the global property sector (fourth submission).
  • The MSCI Investment Property Database tracks and publishes related electrical and water consumption analytics (third submission).

Fines

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

Key environmental projects completed in 2017

We have completed three projects, totalling R5 million, which focused on energy-efficient lighting to reduce electricity consumption and maintenance costs.

The third phase of our solar photovoltaic (PV) plant on Clearwater Mall's parking roof was installed in June 2017. Total solar generation now makes up some 15% of the mall's total consumption, generating on average 4 750 000kWh of electricity per annum (equal to the consumption of 430 average households). The panels cover an area of around 17 000m², saving 2 680 tonnes of coal and reducing carbon emissions by over 930 tonnes per annum.

Energy-efficiency initiatives

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

  Total electrical consumption 2017   2016  
  Direct non-renewable energy consumption (GJ)(1) from diesel burnt 8 656   8 145  
  Direct renewable energy consumption (GJ) from solar PV 8 444   7 886  
  Direct energy consumption (GJ) from electricity consumed but not recovered 106 312   114 452  
  Indirect energy sold (GJ), ie electricity recovered from tenants 857 872   905 992  
  Electricity consumption (megawatt hours or MWh) 267 828   283 456  
  Energy consumption (GJ) – calculated 964 184   1 020 440  
(1) Gigajoules

To monitor the effectiveness of these initiatives and year-on-year consumption patterns, we calculate our energy-use intensity.

    2017   2016   2015  
  Energy-use intensity (GJ/m2) 1,27   1,30   1,26  

  Kilowatt hours per occupied space (m2) 2017   2016   % change  
  Retail 345   359   (3,9)  
  Office 275   242   13,6  

Determining our carbon footprint

For an accurate baseline, we determined the group's scope 1 and 2 carbon footprint using the UK Department for Environment, Food and Rural Affairs (DEFRA) voluntary reporting guidelines and the revised reporting standard of the Greenhouse Gas Protocol, the accepted international tool for government and business leaders to understand, quantify and manage greenhouse gas (GHG) emissions.

Hyprop again participated in the CDP, submitting our audited carbon footprint for the year to June 2017. We achieved an A-score (based on the new scoring chart that emphasises actions to mitigate climate change rather than just reporting on carbon footprint). This is considered above average.

Hyprop's carbon emissions

  Total carbon emissions (tonnes of carbon dioxide equivalents (tCO2e) – calculated 2017   2016   2015  
  Total carbon emissions broken down as: 280 990   289 939   296 770  
  Scope 1(1) 17 912   7 096   3 260  
  Scope 2(2) 27 942   30 457   31 925  
  Scope 3(3) 235 136   252 386   261 585  
  Average volume of carbon emissions (scope 1 and 2) per hour worked (tCO2e/h) 0,076   0,085   0,085  
(1) Scope 1: all direct GHG emissions. Scope 1 skewed by Nigeria as 50% of power is from diesel generators. Nigerian contribution 9 447 tonnes
(2) Scope 2: indirect GHG emissions from consuming purchased electricity, heat or steam (scope 3 covers other indirect emissions, which for Hyprop are calculated as kWh purchased from the supply authority and resold to tenants)
(3) Scope 3: includes tenant-driven increase in scope 3 emissions. 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 in South Africa will apply to companies' carbon emissions (measured in tCO2e) and is expected to be phased in from 2018 to help South Africa reduce its carbon footprint. The mooted figure is R120/tCO2, with a 40% scale for the first year. This is currently envisaged as an additional surcharge on each kWh consumed and will equate to 12 cents per kWh.

Based on current advice from our auditors, Hyprop will not be liable for any direct carbon tax under the anticipated law.

Water

We continue to investigate viable opportunities to reduce water consumption, such as installing water-efficient equipment, while improving our measurement and monitoring standards.

At existing properties, we rely on close cooperation of tenants and customers to reduce water consumption. For new developments, renovations and upgrades, efficiency is one of the criteria in choosing technical equipment such as toilets, taps and cooling systems.

We monitor bulk water consumption daily at centres to identify unusual patterns that might indicate leaks.

  Water measures 2017   2016   % change  
  Total consumption (kilolitres (kℓ)) 1 028 094   1 037 011   (0,85)  
  Average volume consumed per hour worked (ℓ/h) 2 236   2 349   (4,8)  
  Target for consumption, or reduction, against specific denominator (ℓ/h) 2 350   2 398   (2,0)  
  Retail: kℓ per occupied space (m2) 1,36   1,35   0,7  
  Office: kℓ per occupied space (m2) 1,01   0,97   4,1  
  Total: kℓ per occupied space (m2) 1,36   1,31   0,7  

  Water intensity 2017   2016   2015  
  Water use intensity (kℓ per occupied space (m2)) 1,3   1,3   1,6  

Recycling

Our approach to waste management aims to maximise recycling, minimise disposal to landfill and comply with legislation. Tenants are regularly informed of on-site waste management systems, and Canal Walk and Clearwater Mall have public recycling stations. All centres have suitable waste-segregation facilities.

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

In 2017, Hyprop recycled 79% (by volume) of total waste, up from 78% (by volume) in 2016. While higher in percentage terms, lower group volumes reflect greater individual recycling efforts from our tenants.

  Waste 2017   2016   2015  
  Total non-hazardous waste disposed (t) 3 963   5 646   6 165  
  Total hazardous waste disposed (t) 51   43   34  
  Total waste sent for recycling (t) 2 851   2 998   2 757  
  Waste sent for recycling (% t) 40,6   34,5   30,8  

  Recycling 2017   2016   2015  
  Number of loads ordered 7 689   7 293   6 790  
  Quantity of units collected (t) 64 769   68 166   64 240  
  Recycled (volume) (%) 79   78   75  
  Recycled (m3) 55 692   64 861   60 033  

Current energy and carbon emission savings update

  Initiative   Objective   Progress/current activities
  At Clearwater Mall, phase 3 of the photovoltaic plant increased capacity to 2 914kWp and is to be commissioned September 2017 (kilowatt peak)   Reduce carbon emissions and reliance on the grid   Total energy produced by phase 1 and 2 from 1 July 2016 to end April 2017 is 8 444GWh
  Capital replacement programme   Ensures that capital equipment at the end of its lifecycle is replaced with energy-efficient equipment against specific criteria: non-ozone-depleting refrigerant gas; reverse-cycle heating instead of electrical elements; and performance co-efficient 3,5 or better  

All capital replacements are approved by the national technical manager.

At Somerset Mall, three package units were replaced in the review period using non-ozone-depleting R410 refrigerant and a unit performance co-efficient of 3,6. At Canal Walk, only half of planned units (45 units) were replaced with R410 refrigerant and energy-efficient inverter units. The balance was rolled over to FY18. At Hyde Park Corner the Nu Metro wet condenser units were replaced with dry condenser units ensuring no water use by AC

  Modify thermostat set points and supply temperature for chiller water   Lower energy costs in winter and summer   Building management systems upgraded at Woodlands Boulevard
  Variable speed drives (VSDs) for heating, ventilation and AC systems   Match speed to required output to reduce consumption   VSD drives installed where practical
  LED lighting and occupancy sensors   Improve lamp life and reduce required power factor correction   LED lighting installed in parking area at Canal Walk and open parking at Somerset Mall
  Implement preventive maintenance programmes on AC equipment   Ensure optimal operation of equipment   National service-level agreement signed with third party for seven sites. Regional agreements signed for Pretoria sites. Remaining sites have signed agreements with local contractor or agent. All sites now covered by service-level agreements
  Peak energy demand reduction (on the grid)   Reduce power consumption in peak periods (premium tariff) and avoid expensive peaks, reducing the cost of consumption   Solar PV at Clearwater has reduced peak demand from 8 200kVA to under 7 000kVA. All power factor units serviced under contract, reducing kVA. Phase 3 should reduce kVA by another 800kVA.

Water efficiency initiatives

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

  Initiative   Objective   Current activities   Progress  
  Smart metering   Improve consumption measuring and monitoring; identify leaks from unusual flow patterns   Anomalies immediately flagged, limiting risk and consequential loss

Council errors able to be challenged
  Bulk check meters installed at certain sites  
  Fire system water consumption   Identify leaks and illegal use of water   Save water and avoid abuse of infrastructure   South African and Nigerian buildings monitored  
  Waterless urinals   Save water   Waterless urinals under test at Hyprop head office   Waterless urinals installed at Clearwater Mall  

Climate change

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

  • Change in temperature extremes – higher temperatures mean air-conditioning equipment will not cope in peak summer
  • Sea-level rise – danger of flooding coastal centres, notably Canal Walk
  • Change in rainfall – extreme rainfall can cause more leaks and damage to tenant and Hyprop property.

Environmental sensitivity

Canal Walk and Willowbridge (sold in the review period) are in biodiversity-rich areas.

Canal Walk is part of the greater Century City precinct, 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: 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.

Clearwater Mall solar project