Our governance indicators demonstrate the extent to which we are successful in influencing and educating our builder partners, contractors and others to operate more sustainably and to understand their sustainability responsibilities.
Through our environmental management system and supply chain indicators, we report on the ways we proactively target higher standards in sustainable performance in our partners. However, we also report on how we manage our partners in their compliance with legislated requirements such as self-audits and occupational health and safety. While we aim for 100% compliance, we recognise that this is the ideal. Where non-compliances occur, we take steps to rectify the issues.
Environmental management and compliance
The thinking behind our indicators
Included in the range of policies and guidelines that govern sustainability practices on our projects is our Environmental Management System (EMS). This establishes the procedures that must be followed. Our EMS is certified to AS/NZS ISO 14001:2004, giving us the confidence that the systems and processes we have in place are working successfully, and that environmental risks are being managed effectively.
Our EMS was developed some years ago, when the nature of our business was substantially different to what it is today. In the past, we were more involved in the supervision and delivery of construction works. Today, our activities typically include masterplanning, design engineering, land acquisition, marketing and sales. Each year we are audited to determine whether the systems we have in place to manage our environmental activities are performing as they should.
Further, to ensure that our systems are aligned to legislated environmental management, we also report on any notifications we receive. This year we reinstated an indicator about projects with breaches from the regulatory authority under the Protection of the Environment Operations Act 1997 (POEO Act) and/or other relevant legislation. We view this as a lag indicator, with all other indicators in the compliance category acting as lead indicators to alert us to business practices that may result in non-conformance notifications. As a government instrumentality, we believe it is our role to lead the industry and set best practice examples, which is why we report any breaches.
The details of our performance against our EMS are indicated below.
How we performed
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Our environmental management system
This year, Landcom received an EMS non-conformance notification because site controls for environmental management at our Sanctuary site were not being implemented. This incident focused attention on the role of our EMS and how it can best serve our business. Following a review
of our EMS, we took the decision to remove construction as an activity under our EMS scope of certification (AS/NZS ISO 14001:2004) because, while our contractors and builder partners must understand our EMS requirements, once they start building, we have little control over the practical management of the site. This was illustrated by an incident on 27 October 2010, when a civil works contractor engaged by us received a penalty infringement notice from the regulatory authority. The contractor was accused of pumping water from sediment basins at a project where Landcom is a development partner and was fined $1,500.
Landcom did not receive any notice concerning a breach of the POEO Act (1997) or other relevant legislation.
Environmental management on our projects
Landcom has developed the compliance category indicators set out below to act as lead indicators, to alert us to business practices that may result in future non-conformance notifications or breaches of environmental legislation. The indicator to test the environmental performance on our projects is the contractual requirement for all civil works, landscaping and builder contractors to have third party environmental audits done. This is a process of continuous improvement for both Landcom and our supply chain. Ultimately, we aim to have 100% compliance with no non-conformances within this category.
This year, 13 out of 16 civil works contracts had environmental third party self-audits. This represents 81% of the civil works contracts let and is a welcome improvement on last year’s 33% result. It demonstrates that the management protocols implemented last year are beginning to work and are being enforced through our contractual arrangements.
Furthermore, through an Expression of Interest process, we have selected a panel of preferred contractors with whom we now work. Managing them as a group means that they can be part of the business improvement process that Landcom embarked upon last year. In addition, we have put greater onus on our development teams to ensure that what is stipulated in the contract is being implemented.
Only one builder out of eight submitted an environmental self-audit. The builder was not required to rectify anything, but of the civil contractors there were 17 instances where the contractors were given immediate action rectifications, based on findings from the environmental audits. Some actions identified related to inappropriate sediment controls, material safety data sheets not being maintained within the due dates and poor storage of hazardous material.
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We are unaware of any repeat offences or repeat noncompliances with immediate rectification requests, since our contractors did not submit more than one audit per contract.
In summary, while there has been a significant improvement in our contractors’ performance, inconsistent levels of reporting and compliance among our builder partners remain a concern. The objective of the environmental audit indicators is to influence and improve supply chain practices. Given builders are not responding to our contractual requirements and not meeting our expectation that audits must be carried out on all dwellings constructed, in the coming year we will need to determine how best to improve compliance.
Occupational health and safety and compliance
The thinking behind our indicators
Our Occupational Health & Safety (OH&S) program provides the governance framework through which we promote and ensure the safety of employees and contractors. All of our contracts include conditions related to this framework and all who work with us are required to meet these contract conditions through self-audits. Since we do not directly manage all of the projects on our sites, this approach promotes appropriate behaviour and transfers risk to those who are actually managing the risk.
A non-compliance target of zero (0%) has been set for many of these indicators. We acknowledge that this represents an aspiration that may never be achieved, but in our efforts to be a responsible developer, a target which contemplated even a small degree of non-compliance did not seem appropriate.
How we performed
Occupational health and safety compliance
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There were 16 civil works contracts completed for this reporting period and nine (56%) delivered OH&S self-audits, a significant improvement on last year’s 33%. We also saw an improvement in the number of builders completing audits, from zero in the previous year to three (two from ADHC and one from Clarendon) out of eight (38%) this year.
Of the civil works contractors and builders, most received immediate action requests, based on the findings of their OH&S audits, resulting in 36 immediate action rectifications being issued.
Examples of immediate rectification requests include those related to signage, fall zones, and easy access to site plans:
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We are unaware of any repeat offences or repeat noncompliances with immediate rectification requests, since our contractors did not submit more than one audit per contract.
Sustainable supply chain
The thinking behind our indicators
Landcom recognises there are significant opportunities to improve our environmental, social and ethical performance by looking beyond our own business operations to those in our supply chain. For Landcom, a sustainable supply chain is about engendering a sustainability ethic with the people we work with. We work, in particular, with our suppliers to influence, manage and assess their practices towards sustainability.
The objective of our sustainable supply chain indicators is to drive change within the building and development industry beyond that of our own business. These indicators measure our ability to influence the business practices of others through our own purchasing decisions.
How we performed
This is the second year of reporting on this indicator and we did not meet our target of ensuring all contractors were on our prequalified list. Landcom currently has 62 prequalified project managers, civil works contractors and landscapers, and of the contracts awarded, 80% went to prequalified contractors. All project managers were from the prequalified list.
Of the civil works and landscaping contracts tendered and let in the reporting period, 47% included sustainability criteria, while the figure for public space design and delivery contracts tendered and let was 67%.
This year, Landcom entered into a project delivery agreement with Housing NSW for the Airds Bradbury renewal which sets out masterplan objectives, including specific sustainability requirements.
We face considerable challenges in delivering against this indicator set and there are a number of reasons for this. The business practices required to report on these targets are relatively new to the industry. We employ a large number of suppliers in our business and, often, our day to day operations are sometimes remote from the work they do. Finally, we understand that many of our suppliers are still unfamiliar with our requirements and the reasons behind them.
Sustainable supply chain
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In response, we have engaged Banarra to assist us in collaborating more closely with our suppliers. During 2011-2012, we will explore opportunities to shift accepted practices towards improved sustainability. We also plan to make more explicit the reasons behind our sustainable supply chain objectives to our suppliers and contractors. We hope to understand the constraints that they operate under, to see whether there are opportunities to align our business practices more closely to their needs. Ultimately, our aim is to engage like-minded organisations that have a sustainability philosophy and commitment that is similar to our own.