Welcome to Landcom's 2009/2010 Sustainability Report.

Wetland at Prince Henry

Water steps at Victoria Park

Victoria Park

This report represents the achievement of two important milestones for Landcom. For the first time, our Sustainability Report has been awarded a GRI A+ reporting standard. In addition, this is our first year of reporting against Landcom's revised sustainability indicators, which we foreshadowed in 2009 following an extensive review over the previous 18 months.

We are pleased to note that the quality and transparency of our sustainability reporting was recognised in independent MBA research in 2009, where our Sustainability Report was ranked as equal best in the world for the sector, drawing from a sample of leading sustainability reports.

We updated many of our first generation sustainability indicators because the ambitious performance targets we originally set ourselves when we commenced sustainability reporting in 2002 have now been achieved. Wherever this has occurred, we have set new “stretch” targets. These will challenge us to continue to innovate and find new ways of delivering higher levels of sustainability through our developments and business processes.

As with our first generation of sustainability indicators, we have set ourselves a five-year horizon to achieve our new targets. This means that from 2009/2010, we will be mapping our performance against both our “old” and our “new” targets where relevant, so that our performance remains transparent and can continue to be assessed over time.

In some cases, we have decided to hold our existing sustainability indicators constant because they remain a relevant and challenging performance target for us. Finally, we have removed a number of indicators from our report because they were no longer a useful description or measure of our businesses impacts. This has usually come about because our business has evolved substantially since the first generation of indicators was adopted eight years ago.

In place of these deleted indicators, new indicators have been introduced which more closely reflect the material impacts of our business as it exists today. These new indicators have been developed after consulting widely with our stakeholders, including our project partners, contractors and service suppliers, local government, other government entities, the general public and our staff.

We have had to introduce new business practices to collect the data which underpin our new indicators. In some cases, data collection for these indicators has not been as complete or as reliable as we would have liked this year. This is common with the introduction of any new business practice and, in fact, reflects our previous experience with the introduction of our original sustainability indicators in 2002. Our greatest difficulty has been where we have needed to rely on second and third parties such as development partners or external project managers for the data. We will systematically address these difficulties to minimise any impacts on next year's report.

With the experience we have now gained from our first year of data collection against the new suite of indicators, it has become clear that the relevance of some of our new or updated governance indicators
could be open to question. While we are still of the view that these governance indicators are helpful in describing the material impacts of our business, we will refine and improve the indicators from next year, to enable more effective data gathering, interpretation and reporting. Our aim here is to ensure that these indicators provide a more meaningful measure of our impacts and achievements. Any changes we make will respect the purpose and intent of the original indicators and our proposed changes are discussed in detail within the following report.

One of our previous indicators related to how effectively we consult with our stakeholders about our business and its impacts. While we have a solid history of consulting with stakeholders, our ability to meaningfully report our performance against our consultation processes has been an ongoing challenge for us. This is because, on reflection, we found our consultation processes were sometimes ad hoc in terms of the stakeholder sample we select and the questions we ask.

The recent review of our sustainability indicators provided us with the opportunity to address this issue in a more systematic way. We have spent the last 12 months working with sustainability consultants
Net Balance to develop a better structured and more considered stakeholder consultation strategy. Our overall strategy for more effective stakeholder engagement into the future is illustrated in the following diagram. It should be noted that the additional consultation we undertake as a result of this strategy will be above and beyond the voluntary and statutory consultation we currently undertake for all our projects.

With a more comprehensive consultation strategy now in place, we will report our performance against the actions identified in this strategy in future Sustainability Reports.

OUR APPROACH TO STAKEHOLDER ENGAGEMENT

http://www.landcom.com.au/AnnualReport2010/downloads/file/aboutus/ourapproachtostakeholderengagement.swf

Our ability to innovate and improve our sustainability performance increases in complexity year by year and is an ongoing challenge for us. Our ability to think creatively and partner with others in developing new approaches to sustainability will be the key to any future sustainability innovations. Fortunately, a number of Landcom projects are expected to enter the planning and development phase in the coming year, and this represents a renewed opportunity for us to place sustainability at the heart of our business. We look forward to recording our successes and challenges in managing these new projects – and our continuing ones – in next year's report.

We welcome your feedback on our Sustainability Report and the results described within it. Any feedback you have can be sent to:- sustainability@landcom.nsw.gov.au

MATERIALITY

We have discussed materiality elsewhere in this report: in the impact of our activities section; in the description of our stakeholder engagement; and in this introductory section.

In essence, Landcom's approach to materiality can be traced back to 2002 when we began our work on drawing up a list of indicators to measure our performance and which allowed us to introduce the idea of sustainable development to the industry. We approached around 150 different entities, from local governments and environmental groups to staff and community organisations, for input into what was material. In hindsight, this approach meant, some of the responses we received were beyond our scope or influence.

Over time, we introduced checkpoints to better manage materiality expectations, going back to selected stakeholders and introducing minor amendments to our indicators and sustainability report to address stakeholders' material concerns. This experience stood us in good stead when it came to identifying and selecting what was material to stakeholders during the implementation of our second generation of indicators. The process was more focused, the questions more targeted, and as a consequence, the responses were more informed. We acknowledge, however, that this process is not a finite one, but rather an ongoing dialogue between ourselves and those for whom, and with whom, we do business.