Independent assurance statement

To the Board and Executive of Landcom:
Landcom commissioned Net Balance Management Group Pty Ltd (Net Balance) to provide independent assurance of the sustainability content of the 2011 Annual Report (the ‘report’). The report presents Landcom’s sustainability performance over the period 1 July 2010 to 30 June 2011. Landcom was responsible for the preparation of the Report and this statement represents the assurance provider’s independent opinion. Net Balance’s responsibility in performing its assurance activities is to the Board and Executive of Landcom alone and in accordance with the terms of reference agreed with them. Other stakeholders should perform their own due diligence before taking any action as a result of this statement.

Assurance standard and objectives

The assurance was undertaken in accordance with the AA1000 Assurance Standard (AA1000AS, 2008). Assurance undertaken using this standard, provides a comprehensive way of ensuring an organisation is responsible for its management, performance and reporting on sustainability issues. This is achieved through the evaluation of the organisation’s adherence to the AA1000 AccountAbility Principles (2008) and by reviewing the accuracy and quality of disclosed sustainability performance information.

The AA1000 Accountability Principles (2008), against which Landcom’s processes were assessed include:

Inclusivity: An assessment is made on whether the organisation has included stakeholders in developing and achieving an accountable and strategic response to sustainability.

Materiality: An assessment is made on whether the organisation has included in its report the material information required by its stakeholders to be able to make informed judgements, decisions and actions.

Responsiveness: An assessment is made on whether the organisation has responded to stakeholder concerns, policies and relevant standards and adequately communicated these in its report.

Assurance type and scope

Net Balance provided Type 2 assurance in accordance with the AA1000AS (2008). This involved assessing the organisation’s adherence to the AA1000 AccountAbility Principles (2008) and assessing the accuracy and quality of the sustainability information contained within the report.

Assurance level and limitations

The level of assurance provided is moderate as defined by the scope and methodology described in this assurance statement. The assurance covered the sustainability section of the report and focussed on related systems and activities of Landcom during the reporting period, with the following exceptions:

  • The scope of work did not involve verification of financial data, other than that relating to environmental, social or broader economic performance.
  • The Landcom Head Office in Parramatta was the only site visited as part of this assurance engagement.

Assurance methodology

The assurance engagement was undertaken between June and September 2011, and involved:

  • The development of a materiality register (list of key sustainability issues) using the five-part materiality test. This included a comparison of Landcom against its peers, a risk review, a review of selected Australian media reports and a policy review.
  • Interviews with the Managing Director, Director Sustainability and Policy, General Manager Urban Development/Oran Park, Development Director Riverstone/ Urban Renewal and Senior Development Manager/Rental Housing Portfolio Project.
  • A review of Landcom’s key sustainability strategies, policies, objectives, management systems, measurement and reporting procedures.
  • Interviews with key personnel responsible for collating information for Landcom’s report to substantiate the veracity of selected claims.
  • A review of the report for any significant anomalies, particularly in relation to claims as well as trends in data.
  • Verification of 47 selected data points and statements and the systems and processes that support the data.
  • A review of Global Reporting Initiative (GRI) G3.0 application level assessment.

Our independence

Net Balance was not responsible for preparing any part of the report. During the reporting period Net Balance was commissioned by Landcom to independently interview a range of industry stakeholders to identify potential areas of sustainability and policy leadership in the land development sector. This project was seen as complementary to the assurance engagement given the independent nature of the review.

Net Balance has, in previous years, provided advisory services to Landcom on carbon neutrality methodology and stakeholder engagement strategy. These projects have been discussed with Landcom, and considered as part of Net Balance’s independence policies. To maintain independence, separate teams undertook the advisory and assurance engagements. Net Balance has procedures in place to ensure independence and partition of project teams at all times. Potential conflicts were discussed with Landcom and managed effectively.

Our competency

The Landcom assurance engagement was carried out by an experienced team of professionals led by a Lead Sustainability Assurance Practitioner (Lead CSAP), accredited by the International Register of Certified Auditors UK (IRCA UK). The project team included personnel with expertise in environmental, social and economic performance measurement across a range of industry sectors. Net Balance is a global leader in the use of Accountability’s AA1000AS, having undertaken over 100 assurance engagements in Australia in the last five years.

Findings and conclusions

Adherence to AA1000 Principles

Inclusivity:
Landcom engages a wide range of stakeholders including State and Local Government, industry groups, local communities and residents within its developments on economic, social and environmental issues. At a strategic level, Net Balance was asked by Landcom to independently engage a range of land development stakeholders to seek their feedback on Landcom’s sustainability and policy leadership and on future opportunities. This level of engagement is important to helping Landcom maintain a leading position in providing sustainable housing for NSW as well as testing and developing innovations that can be adopted by the industry at large.

Materiality:
Net Balance found the report appropriately addresses Landcom’s environmental, social and economic material issues. This year, Landcom included a number of internal social sustainability indicators such as OHS, Guarantee of Service and Ethnic Affairs within the Sustainability  erformance section of the report. Whilst the indicators reported against have not changed, they complement the project social sustainability indicators and provide a more complete representation of Landcom’s sustainability performance. As a consequence, these indicators were assured for the first time as part of this engagement.

Responsiveness:
Net Balance tested the responsiveness of Landcom to its stakeholders through a review of management systems and policies that govern the way that Landcom responds to stakeholder concerns and interests. Landcom was found to be responsive to stakeholder concerns and  expectations during the reporting year with a number of improvements such as improved systems for reporting against the revised sustainability indicators which help to ensure consistency in data collection and reporting.

Reliability of Performance Information

Based on the scope of the assurance process, the following was observed with regard to performance information:

  •  The findings of the assurance engagement provide confidence in the systems and processes used for managing and reporting sustainability performance information.
  • Data trails selected and investigated were generally identifiable and traceable, and the personnel responsible were able to reliably demonstrate the origin(s) and interpretation of data.
  • The sustainability performance disclosures presented within the report appropriately reflect environmental, social and economic performance achieved during the period.
  • The GRI application level check found that the Report was classified as A+.

Overall, it is Net Balance’s opinion that the information presented within the report is fair and accurate. The report was found to be a reliable account of Landcom’s sustainability performance during the reporting period.

The way forward

Net Balance found the report appropriately addresses Landcom’s environmental, social and economic material issues. To ensure that Landcom continues to improve, Net Balance recommends that Landcom:

  • Improves the implementation and monitoring of the sustainability requirements within its tenders. Net Balance observed that whilst Landcom has sustainability criteria as part its tender application process, the implementation of the criteria was not applied across all projects or applied in a consistent way. Implementation of the sustainability criteria could be improved through improving Development Managers’ understanding of the criteria, applying a weighting to sustainability criteria and monitoring the application of the criteria to approved tenders.
  • Improves the systems for monitoring the implementation of the Landcom Sustainability Guidelines. Net Balance observed that whilst Landcom requires all new developments to apply the Sustainability Guidelines, it is difficult to determine the extent to which the Guidelines have been implemented. To help demonstrate the application of the Guidelines, Net Balance suggests Landcom implements a process that enables Development Managers to demonstrate how the Guidelines have been considered and incorporated into new developments.
  • Improves the systems and processes for reporting on the Social Sustainability Indicators. This year, Landcom included a number of Social Sustainability Indicators such as Ethnic Affairs, Guarantee of Service and OHS within the scope of the assurance engagement. As a  consequence, this is the first time these indicators have been assured. Whilst there were no errors, Net Balance believes the systems and processes for managing and reporting against these criteria could be improved to ensure consistency and auditability.

These recommendations  have been outlined in a more detailed report presented to Landcom’s Board and Executive.

On behalf of the assurance team
5th October 2011
Melbourne, Australia

Terrence Jeyaretnam, FIEAust
Director, Net Balance & Lead CSAP (IRCA UK)