Letter to stakeholders 2023 of the Chairman and the CEO
We would like to present our 13th Sustainability Report referring to 2022, a year in which all our activities were steadily resumed following the two-year period marked by the Covid-19 pandemic. It was also a year, however, in which we had to face new problems which, like the pandemic, were of an external nature but which directly impacted our business. Indeed, from the end of 2021 we started to see an exponential increase in energy costs, added to this was the climate of uncertainty caused, at the end of February, by the start of the war in Ukraine and by the increase in inflation to levels not witnessed in the last 40 years or so. This put both our tenants and consumers temporarily under pressure. In the last few months of 2022 and the beginning of 2023 we witnessed a positive evolution in the scenario, which makes us feel more confident when looking ahead at 2023.
In this difficult context we have had further demonstration of how important it was to have undertaken in 2011 a process aimed at sustainability and to have continuously and increasingly integrated it into our way of doing business. Indeed, our intent when we named our sustainability strategy by using the acronym «G.R.E.A.T.» was to clearly explain our priorities: environment, people, ethics, attractiveness of the structures and cooperation with our stakeholders. With regard to the environment, it is with this in mind that we have carried out investments in order to make our structures increasingly less energy-consuming. We are now pleased to observe that, over the last ten years, consumption by our Shopping Centres has decreased by over 25%. If, therefore, we had not invested in photovoltaic systems, led lighting, and system improvements and if we had not worked on the monitoring of consumption and on the ordinary management of our Shopping Centres, in this period of increased energy costs we would have had structures that were more energy-consuming and less sustainable both from an economical point of view and an environmental one.
Furthermore, the external situation has demonstrated how important it is to be able to cooperate with you, our stakeholders. It is one of our pillars of our sustainability strategy («T» for «together»), and during the year we exchanged views and ideas with you in order to understand needs and to define responses that were appropriate in the context. With our tenants, in particular, we interacted with greater assiduity compared to the past (the significant increase in the number of calls organised during the year bears witness to this) so as to identify each time the most appropriate solutions in order to get through this period in a profitable manner.
The sturdy sustainability process that we have undertaken and the CSR targets that we have set ourselves within the 2022-2024 Business Plan have enabled us to seize the opportunity to receive green financing, capable of meeting the preferences of investors in that specific market context. It was for this reason that we defined the Green Financing Framework at the beginning of the year and we have obtained new financial resources equalling 215 million euros, by means of a green loan with a maturity of up to 5 years.
With regard to the Business Plan, 2022 represented the first year of its application. Every six months we monitor and share with the Board of Directors the progress made of the work included within the entire Plan, with focus on the achievement of the sustainability targets. By the end of the year we had achieved 43% of the latter. This means we are heading in the right direction and that we are indeed achieving what we had resolved to do within the three-year timespan. In this Report we have described with precision the progress made on each target, openly stating both the actions carried out and those programmed for the following years.
In 2021, when defining the Sustainability Targets for the Business Plan, we had begun to carry out an initial analysis to review our material issues. In 2022 we finalised this activity, taking into account the developments introduced by the Global Reporting Initiative (GRI), the global standards for sustainability reporting. Compared to the previous definition of materiality, focus is now on the impacts that our organisation has on the environment, economy and people.
The analysis carried out enabled us to identify 10 material issues, which have been reported within the 5 strategic corporate aspects (GREAT) and, as the previous ones, they form the basis of IGD’s sustainability strategy. In this Sustainability Report we have described the actions carried out and the results obtained over the year for each of these material issues.
In this regard, in section «Green» we have reported how environmental performance was affected by two factors during the year: on the one hand, by the fact that IGD decided to invest 3 million euros divided between Italy (€2.4 million) and Romania (€600,000) in environmental impact measures to improve energy efficiency, resilience to climate change and to mitigate the pollution produced by our structures (reaching a total of 8.8 million euros invested over the last 4 years); on the other, by the necessity to identify particular forms of consumption saving, made even more pressing due to the unexpected energy price increase. With regard to this, we were amongst the first ones to adopt «Guidelines for energy saving in shopping malls» published by the Consiglio Nazionale dei Centri Commerciali (National Association of Shopping Centres).
In terms of energy efficiency improvements the results were positive: our Shopping Centres reduced their Co2 emissions by 10% compared to 2021 (year in which the first few months were marked by opening restrictions). By taking 2018 as the baseline, the decrease in carbon dioxide emitted into the atmosphere was equal to 26%.
These results were made possible thanks to the contribution of the actions carried out over time. Primarily, the impact of the electricity produced by the 8 photovoltaic systems increased (which represented 5.8% of the total electricity consumption). In 2022 we signed letters of intent for the installation of 5 more photovoltaic systems starting from 2023. Furthermore, we believe that the contribution given by the installation of led lighting systems was also significant: these are present in 20 of our Malls and in 2022 this resulted in an average decrease of over 300,000 kw/h in each Shopping Centre (equal to the average annual electricity consumption of 115 families of 4).
We also continued the Breeam certification process of our assets. In 2022 we certified two more Shopping Centres (one of which, Maremà, obtained the double evaluation score of «Excellent»). Currently 64% (in value) of our portfolio is Breeam certified (in addition to 95% with ISO 14001 certification).
Furthermore, following various analyses carried out during the year, we believe that it is feasible for IGD to set itself a reduction target regarding emissions (Scope 1 and 2) which is «Science Based», that is, aimed at limiting global warming to 1.5°, as recommended by the 2015 Paris Agreement. In line with our ambition to contribute to a «net zero society», it is our intention to continue to work following this approach which is one of the most widespread (and challenging) standards at international level.
In addition to the environmental aspect, our sustainability strategy places people at its core: we undertake to act in a «Responsible» manner both with regard to our employees and to the people that are present in our Shopping Centres.
In line with the material issue that we identified («Good employment»), during the year we invested particularly in employee training. Indeed, investment increased and, in Italy, 100% of employees took part in at least one training activity. We concentrated on IT skills and on soft skills, continuing a process that was started last year. We also focused our attention on the engagement and wellbeing of people who work for IGD. With regard to the first issue, we carried out our third internal atmosphere assessment, with 85% of the employees taking part. The overall outcome was positive, with various strong points and a few weak ones. With regard to the latter we have identified the necessary improvement actions which will be implemented from 2023. With regard to wellbeing, the corporate Welfare Plan continued (used by 100% of those entitled) and petrol vouchers were distributed to the employees without company cars, to help them cope with the extraordinary increases in that period.
Remaining on the issue of wellbeing, we decided to continue the Bio Safety Certification scheme developed by the accreditation board RINA in all our Shopping Centres as well as the headquarters. It is a management model which is designed to prevent and mitigate the spread of infections to protect the health of individuals from biological agents.
In section «Ethical», we have reported on how the Legality Rating was renewed and confirmed with the maximum score (three stars). In Italy only 8% of companies that obtained the Rating achieved this score: this is the demonstration of our commitment to maintain ethics and legality at the core of our conduct. Obtaining ISO37001 anti—bribery certification in 2019 in Romania and in 2020 in Italy was also a demonstration of this commitment. In 2022 we carried out periodic audits and took the necessary actions to resolve any issues that had emerged.
During the year we also implemented the ERM risk management system by outsourcing the position of Risk Manager. As envisaged in our Plan, in 2023 we are committed to increasing the integration of sustainability risks into the internal control and risk management system.
The attractiveness («Attractive») of our Shopping Centres is one of our primary objectives. We decided to pursue this in such a way to make sustainability one of the drivers. For this reason, as part of the restyling work in La Favorita Shopping Centre in Mantua, we placed particular focus on energy efficiency improvement (replacing the existing lighting system with led lighting) and on the liveability of the structures (creating new green areas and pedestrian areas). Continuing with our approach to ensure a high level of attractiveness of the structures, we resumed the organisation of events, the number of which had decreased considerably due to the pandemic. Altogether we organised 531 events and we placed particular attention on both social-environmental events (the impact of which on the total was 9 percentage points higher compared to the pre-pandemic period) and on the implementation of opportunities provided by the Digital Marketing Plan.
The close relationship with the local area, working together («Together») with the local community, represents, furthermore, a way of life for our Shopping Centres. During the year we interacted with 247 local associations and non profit organisations and one out of three events that we organised were local ones.
The results obtained during the year fall within a general context shaped by an ever-increasing focus on ESG issues. As far as we are concerned, we are committed to contributing to the debate both at national and European level. Indeed, by means of the roles we hold, we represent both the Chair of the Consiglio Nazionale dei Centri Commerciali (National Association of Shopping Centres) and the Chair of the ESG Commission within the Association itself and we contributed during the year, giving our input to the position paper defined at national level on «Energy Performance Building Directive» (EPBD), the most important European directive on the subject of decreasing building energy consumption. By participating in the Sustainability Groups of both EPRA (European Public Real Estate Association) and ECSP (European Council of Shopping Places), we are able to monitor changes in legislation and constantly discuss and share ideas with our peers.
At the same time, we have noticed an increase over time in the attention paid to IGD’s sustainability initiatives. In 2022 alone, the number of unsolicited rating companies that assessed our ESG commitment was equal to 12 (2 more compared to 2021), from these it has emerged that there has been an overall improvement in our performance.
Being included in 10 stock market indices with focus on ESG (the number was 8 in 2021) and being mentioned in no less than 86 articles which talk about our sustainability, leads us to believe that the track upon which we embarked over 10 years ago and which we are continuing to follow with such commitment, is the right one.Share