Corporate governance and performance
Goodman’s commitment to robust corporate governance helps maintain our reputation, workplace culture, operations, and strong financial and ESG results. We integrate these practices into our broader risk management approach, and comprehensive governance policies, helping us meet stakeholder expectations.
We operate under a risk management framework that is overseen by Goodman’s Boards and the Audit, Risk and Compliance Committee. Risk management is integral to our core operations and shapes Goodman’s property investment approach, encouraging innovation and long-term decision making. It impacts how we fund our operations over the long-term, supporting financial resilience and sustainability-linked finance opportunities. Importantly, it helps set a culture where we can pursue opportunities, that not only manage our risks, but target positive sustainability outcomes. The Sustainability and Innovation Committee provides oversight specifically of Goodman’s sustainability performance, as well Goodman’s adoption of technology and innovation to support the broader business.
Our risk management framework extends to our workforce, who work under a Code of Conduct with clarity on our standards and the expectations that come with being part of the Goodman team. Our Code shapes how we operate responsibly and consistently across regions and supports efforts to manage risks within our global supply chains. It also helps to identify emerging risks, such as cybersecurity.
An effective corporate governance approach drives ESG accountability and regular performance disclosures. The effectiveness of our ESG disclosures is measured by our external ESG ratings and benchmarks.
Material drivers
- Sustainable operations and results
- Effective disclosures of ESG performance
- Investing responsibly with defined governance and sustainable capital structures.
PROGRESS AGAINST TARGETS
Target
Retain investment grade credit rating
FY23 Activity
Continued to meet financial targets to underpin capital sources and retain credit rating. Maintained credit rating at BBB+ (S&P) and Baa1 (Moody’s).
Progress
Target
Retain strong ESG benchmark performance
FY23 Activity
Strong GRESB, MSCI and Sustainalytics ESG benchmark performance in FY23.
Progress
Target
Maintain effective annual climate risk disclosure aligned to the TCFD guidelines
FY23 Activity
Adopted Task Force on Climate-related Financial Disclosures (TCFD) guidelines in 2020 and updated in 2023.
Progress
Developing, owning, and operating modern, efficient, and sustainable logistics properties in strategic city locations around the world, inevitably exposes Goodman to risks. These risks span short and long-term, financial and non-financial aspects, including health, safety, reputation, operations, market, climate, and other factors.
Risk management is integral to Goodman and our ability to sustain our business and safeguard our assets and investments. It helps maintain our financial stability, meet our ESG targets, and deliver on our overall business strategy. Our approach focuses on the identification, evaluation and controls to manage risk, as well as responding to opportunities that contribute to the delivery of our core business. The treatment of risks through this approach supports the development and delivery of world-class logistics properties for our customers.
Goodman’s Risk Management Framework outlines our risk culture, governance, and management process. It’s aligned to Australia/New Zealand Risk Management Standard ISO31000:2018 and ASIC’s RG259 – Risk management systems of responsible entities, which provide guidance on how to identify and manage sources of risk. We take a bottom-up/top-down approach to managing risk at Goodman. All employees are responsible for identifying and managing risk, while the Group’s Risk team, Audit, Risk and Compliance Committee as well as Goodman’s Boards oversee the global framework. The Sustainability and Innovation Committee oversees specific climate-related and ESG risks.
The Goodman Risk Management Process
Cybersecurity
Cybersecurity is an increasing corporate risk for companies, and Goodman is not exempt. We’re actively managing our cybersecurity risks, safeguarding critical systems, networks, and Goodman’s sensitive information from cyber-attacks.
Information and data security is part of Goodman’s risk management framework and a priority for our Risk and Information Technology teams. Our security approach aligns with the principles of the globally recognised National Institute of Standards and Technology (NIST) Framework and involves:
- Identifying key information systems and data
- Applying controls to protect data and reduce business impact
- Testing and detecting vulnerabilities
- Being prepared to respond and recover systems and information in a cyber event.
Our overall program is assessed and measured annually, with quarterly updates provided to the Audit, Risk and Compliance Committee.
At Goodman, we are committed to the highest standards of corporate governance, recognising the role an effective governance framework plays in driving long-term business performance. This extends to governance concerning ESG matters, which is essential for maximising sustainable value for our securityholders.
Goodman’s Boards and Sustainability and Innovation Committee oversee our 2030 Sustainability Strategy, including our climate risk management response and progress against our sustainability targets. The Committee also reviews how we integrate innovation and technology, including investment and collaboration opportunities to support our business and sustainability outcomes.
The Boards, the Audit, Risk and Compliance Committee and Remuneration and Nomination Committee are responsible for overseeing performance relating to our social objectives and governance more broadly, including our commitments relating to our supply chain, human rights, and modern slavery.
We believe the sustainability of our business requires long-term strategic direction that prioritises ESG performance alongside financial outcomes. These measures are connected to our performance-linked remuneration strategy, which is integrated into the business to influence behaviour and incentivise outcomes.
All Goodman employees participate in the Long-Term Incentive Plan (LTIP). Goodman believes that ownership through the LTIP provides our team with a stake in the business, helping to embed a culture of inclusion in the organisation, which is reflected in the Group’s performance in recent years.
ESG performance forms part of all Goodman employees’ performance reviews and remuneration, including adhering to the Group’s Code of Conduct and values. This promotes integration of sustainability within our core business and encourages working together as a global team to achieve our targets and sustainable financial results. Notably, vesting of awards under the LTIP is linked to specific financial and environmental targets.
The ESG performance targets approved by the Board in relation to the September 2023 award are linked to the remuneration structure and our 5-year and 10-year long-term incentives and include:
- 100% renewable electricity use within Goodman’s operations by 2025
- 400MW of solar PV installed or committed by 2025 with an additional 100MW installed or committed by 2030
- Achieving and maintaining carbon neutral operations by 2025
- Maintain and update our climate disclosures in line with the TCFD guidelines
- Maintain a >95% occupancy rate
- Embodied carbon emissions calculated and included in all Group Investment Committee development papers
- 42% Scope 1 and 2 science-based emissions reductions by 2030 in line with 1.5°C Paris Agreement pathway and validated by SBTi.
Under the LTIP, up to 20 percent of performance rights that satisfy the Operating EPS hurdle can be forfeited if the Group underperforms on the Board-approved targets for each grant. The sustainability performance targets are reviewed annually by the Board. Our Remuneration Report, part of our Annual Report, provides further detailed information on our ESG targets and remuneration.
Code of conduct
At Goodman, we prioritise conducting ourselves and our business with integrity as it is critical to maintain our reputation and is one of our key values. Our Code of Conduct (the Code) reflects these beliefs and establishes clear standards of professional and ethical behaviour for all who represent us.
This year, we reviewed our Code and the corporate governance policies referenced in it, confirming their continued appropriateness and relevance to Goodman.
Our Boards endorse the Code, which applies to everyone who works for Goodman, including non-executive directors (Directors), employees and contractors (team members). The Code also guides our interactions with all individuals we encounter at work, such as customers, suppliers, investment partners, regulators, and securityholders.
At Goodman, we maintain zero tolerance for any improper or unethical conduct, including bribery and corruption. All team members receive training on ethical behaviour, including bullying, harassment and anti-bribery and corruption. This year, we also conducted face-to-face Respect at Work training (sexual harassment) in Australia in line with the new positive duty on our business to prevent workplace sexual harassment, with 100 percent attendance from Group employees.
The Code outlines nine guiding principles to uphold Goodman’s reputation for doing the right thing by our customers and team members. These principles complement Goodman’s values, policies and procedures, and everyone representing Goodman is expected to follow them.
Goodman uses ESG performance and rating benchmarks to assess and communicate our sustainability efforts to investors, enabling us to identify areas for improvement. We participate in global benchmarking programs such as Global Real Estate Sustainability Benchmark (GRESB), Sustainalytics’ ESG Risk Ratings, the MSCI ESG Index, and the Carbon Disclosure Project (CDP).
GRESB
As a leader in real estate sustainability assessments, GRESB has been instrumental in assessing our sustainability progress. Over the past decade, we have performed well, and the number of Goodman participating entities and our scores have increased. For the 2023 submissions, 11 Goodman entities submitted data with the results to be released in October 2023. Notable achievements from the year prior include:
- Goodman maintained its ‘A’ rating for its public ESG disclosure
- Goodman Japan Core Partnership was ranked #1 in its peer group in the GRESB Standing Investments benchmark
- Goodman European Partnership, Goodman UK Partnership, and Goodman Brazil Logistics Partnership were ranked #1 in their respective peer groups in the GRESB Development benchmark
- Goodman Japan Core Partnership, Goodman Hong Kong Logistics Partnership, Goodman European Partnership, and Goodman UK Partnership all achieved the maximum 5 Stars for ESG performance
- Goodman Australia Partnership received Regional Sector Leader status (Oceania, Diversified – Office/Industrial).
Sustainalytics
Sustainalytics recognised Goodman Group as “ESG Industry Top Rated” and “ESG Regional Top Rated”. Our strong 9.7 rating sees us remain in the lowest ESG risk category of ‘Negligible’, reflecting our strong and consistent management of ESG.
MSCI
We have maintained our MSCI rating of ‘AA’, recognising our robust corporate governance, health and safety and human capital development.
CDP
Goodman New Zealand was one of only four entities to be awarded an A- CDP Climate Change score, the highest score achieved in the country.
Together these achievements demonstrate our ongoing commitment to sustainability and our efforts to disclose our performance.
Sustainable finance
A sustainability financing approach serves as a win-win, as it incentivises us to improve our sustainability performance while at the same time strengthening Goodman’s capital structure.
Following the development of our Sustainability-Linked Bond Framework and release of our first US$500 million of Sustainability-Linked Bonds in 2022, Goodman progressed sustainable finance initiatives in four of our operating regions during FY23.
- In Hong Kong SAR, we entered into two sustainability-linked loans connected to our ongoing GRESB performance score
- Our New Zealand business established two Green Loan facilities linked to Green Star Built ratings for multiple new developments
- In our China portfolio, we entered into a Green Loan linked to LEED Gold certification of our Wujiang Industrial Park development and four unsecured sustainability-linked loans connected to our ongoing GRESB performance score
- In Continental Europe, we have adopted a Green Finance Framework, aligned to best practice green bond and loan guidelines, enabling the business to channel investments towards its sustainable investments. In addition, the Goodman European Partnership has transitioned to an Article 8 product that promotes environmental and social characteristics under European Sustainable Finance Disclosure Regulation.
Investment grade credit rating
Critical to our ongoing business sustainability is the ability to maintain a strong balance sheet with available liquidity and continuous access to both equity and debt capital.
Core to our capital mix are our investment partners who increasingly value ESG performance. Our partners include major pension and sovereign wealth groups, many of which have their own ESG policies and targets, supporting the integration of sustainability principles into Goodman’s development and management activities.
As a result, Goodman’s external ESG benchmarks are strong. Our financial sustainability and strength are reflected in our investment grade stable outlook and credit ratings of BBB+ (S&P) and Baa1 (Moody’s) highlighting our commitment to responsible investments and capital stability.
We collaborate with a range of industry groups and policy makers to help achieve positive environmental and social outcomes. We participate in working groups, taskforces and panels, contributing our specialist knowledge and expertise to drive the industry forward.
Some of our collaborations in FY23 include:
Circular Australia – Industry and Precincts and Infrastructure Taskforces – Australia
Industry collaboration working towards a circular economy and raising awareness of the opportunities relating to adaptive reuse of existing sites
Materials and Embodied Carbon Leaders’ Alliance (MECLA) – Australia
Industry collaboration aiming to drive the supply and demand for lower embodied carbon products
NSW Government – Australia
Participation on the NABERS Warehouse and Cold Stores Advisory Panel and Working Group to develop a rating tool for customers to measure and reduce energy efficiency in industrial buildings
NZ Green Building Council – New Zealand
Member of the Experts Reference Panel and contributed to the Green Star Buildings industry consultation process
Property Council NZ – New Zealand
Participation in the Climate Risk Leadership Group and Technical Working Group to help establish climate change scenarios for the property and construction sectors
Property Council of Australia (PCA) – Australia
Industry engagement and collaboration on policy and ESG issues such as ISSB and TNFD disclosure standards, SBTi guidelines, carbon offsetting and issues relating to modern slavery
UK PV Thought Leadership Group – United Kingdom
New member of the working group consisting of developers, real estate agents and consultants to try and resolve practical challenges around the implementation of solar PV
Urbanlab Taskforce – Mainland China
Industry collaboration coordinated by JLL to promote innovation and technology to help meet ESG trends within the Chinese property sector
Urban Land Institute – Sustainability Council – Continental Europe
Collaboration between investors, developers, customers, public officials and academics to explore best practices in sustainable development including climate risks
US Green Building Council – US and Mainland China
Contributed to the LEED building standard specifications update in the US and collaborated to develop a prototype to ‘pre-certify’ Goodman’s LEED Gold for developments and streamline certification in Mainland China.
CASE STUDY:
Sydney, NSW
Australia
PROJECT:
Collaborating with Government to develop a new energy performance rating
INFORMATION:
Even though our real estate sector is fiercely competitive, our local teams realise the benefit of collaboration for greater collective influence and positive environmental impact.
When the NSW Government announced the expansion of the National Australian Built Environment Rating System (NABERS) to cover tenant energy usage in warehouses and cold stores, our Australia business signed up to the Advisory Panel.
The Panel involved nearly 80 representatives from State and Commonwealth Governments, consultants, property groups and customers. Goodman worked together with industry to contribute our knowledge and experience to develop a new operational energy performance rating tool, NABERS Energy for Warehouses and Cold Stores.
The Australia business reached out to its customer, Metcash, to participate in one of 17 pilots, to test and refine the tool at its cold storage warehouse facility at Huntingwood. Following the pilot, feedback was provided to the NABERS team before the final version of the tool was launched in September 2022.
Our Australian warehouse customers now have access to an energy performance tool, enabling them to measure and improve their performance across our stabilised industrial portfolio. The Australian team also created a fact sheet to inform customers across Australia about the new tool and encourage adoption.
Meanwhile, Metcash, after receiving its pilot rating, proactively hired a consultant to conduct an energy audit of its facility, aiming to identify areas for improvement and optimise energy use.
- Goodman properties with onsite solar PV can expect to achieve a higher “NABERS Energy for Warehouses and Cold Stores” rating
- The Australia team continues to work with the NSW Government on the NABERS Warehouse and Cold Store Working Group established in 2023 to improve uptake of the tool.
TCFD
MSCI
GRESB
GREENPOWER
CLIMATE ACTIVE
RECONCILIATION AUSTRALIA
SUSTAINALYTICS
MECLA
SCIENCE BASED TARGETS
CLIMATE LEADERS COALITION
