Part 4: Mirvac Group: “This Changes Everything”
Will Baylis and Sarah Clarke, Group General Manager for Sustainability, Mirvac Group discuss what Mirvac has achieved with their “This Changes Everything” strategy, their in-house Sustainability network and product innovation so far, and how they are tackling modern slavery through collaboration with peers.
Mirvac’s purposes is to reimagine urban life, and that really is at the heart of how we make all of our choices.
Will: Good afternoon everyone, my name is Will Baylis, and I’m a portfolio manager with Martin Currie, and amongst other duties, have a responsibility for our Australian Sustainable Equity Fund
And with me today, I have the pleasure of introducing Sarah Clarke, who heads up Sustainability at Mirvac. Good afternoon Sarah.
Sarah: Good afternoon Will.
Will: So, Sarah thank you very much for joining us today. We've identified Mirvac as a company that looks to us to be well advanced on what we call a “Sustainable Pathway”.
Before we start talking, Sarah, to you about what Mirvac has achieved in Sustainability, would you mind just describing your responsibilities and your role with Mirvac?
Sarah: Thanks, I'll be happy to. So, I’m the group general manager for Sustainability at Mirvac. That's a head of function role. It sits in a in a central corporate function division. So, I have a small team of people who work with me in that group division.
And Sustainability at Mirvac is partially decentralised, so we have a number of Sustainability professionals who are also embedded in our profit centres across Mirvac, and they range from Sustainability engineers to a whole range of other disciplines working in roles from procurement, to legal, to a whole range of different subject matter expertise.
Will: Very good, and it's great to see that Mirvac have committed a lot of resources to what we think is a very important issue for markets and for our economy and society.
Sarah: Well most of those people, Will, are not in what you would call a Sustainability team, even decentralised, they are just doing their roles, but we see that their expertise is really important, particularly as we've expanded from a focus on environmental issues through to social and governance as well, to have that more well-rounded 360 degrees set of capabilities. We call it a Sustainability network, it's quite informal and it really is a group of willing workers who are working together with the group function to deliver our strategy, which is called “This Changes Everything”.
Will: It's very interesting. Could you just elaborate on “This Changes Everything”, because it's a very interesting phrase, let alone a strategy? And I'd be really interested to learn more about that, thank you.
Sarah: Happy to. It's a very ambitious set of goals. They were first laid out like that in Mirvac in 2014, and it was quite bold and experimental at the time.
In 2018 I reviewed and refreshed that strategy in collaboration with senior leaders right across Mirvac to see what was working and what needed to change. And I think one of the main things that we wanted to change was a greater set of focus. So, while we went very broad the first time around, which was excellent for its time, by 2018 we've learned enough about what was really material for Mirvac and removed from 19 material issues to go into six.
And I suppose to answer the other part of your question around the name of the strategy, “This Changes Everything”, I think what it has really shifted within Mirvac is quite unusual and a very precious asset, which is that it really has changed who we are, it's in our DNA, it’s the way we think, it’s the way we plan our work, it’s not just the set of nice to have environmental programmes after we finish doing all about business, you know, it's right the way through Mirvac in a in a very integrated way.
Will: And often companies, and even our own organisation, we talk about our vision. So, if you think how would you describe from a great outcome, how Mirvac looks in 10 years’ time from a Sustainability perspective?
Sarah: Mirvac’s purposes is to reimagine urban life, and that really is at the heart of how we make all of our choices. It really is why we all get up in the morning and if I think about, by extension, what that means in terms of Sustainability, the way we think about it is that we want Mirvac to be a force for good.
And that's not lip service, that really is about us thinking about, what is our Social and Environmental and Governance footprint as an organisation? What risks and opportunities does that footprint generate for us? How does that intersect with a couple of different things, one being the interests of our really key and most important stakeholders, and also what we're really good at?
So we really focus our effort in that sweet spot, and then our purpose there really is to be a force for good, to do what is within our power, what we are good at, to make a positive difference in both the communities in which we operate and also for our planet.
Will: That's sounds an awesome vision to me. What are your Sustainability targets when you think about that vision? What are the actual targets that you're looking at and how do you measure those milestones to get to those targets?
Sarah: We’ve got 6 big targets across E, S and G.
So, we've got a target to be net positive in carbon and water by 2030. We’ve got a target to send zero waste to landfill by 2030, and they are our environmental targets.
In terms of our social targets, we’re looking to leave a positive legacy in the communities in which we operate. We want places to be better off because we were there, and we also have a target around social inclusion which is to direct A$100 million to the social sector by 2030.
And then in terms of our governance targets, we want to be the most trusted owner and developer and we want to have a highly capable skilled engaged diverse workforce.
Will: And product innovation, I mean one of the reasons I contacted you originally for this interview is Mirvac seems to be way ahead of, if you like, the average in terms of product innovation. And also, actually when I think about it, you now have your own renewable energy division, correct me if I am wrong? Would you mind just elaborating on product innovation from Sustainability point of view, and how you've approached, if you like, these mini renewable energy sources as they sound fascinating to me in terms of your urban development programme?
Sarah: Yes, I'd be happy to. Products are absolutely essential as part of what we do. It isn't enough for an organisation to have a very beautifully presented an articulated Sustainability strategy and then go on about their business making products which are harmful either environmentally or socially. And so, we are really mindful of about what we produce serves our customers in ever evolving ways.
So, one good example of that is our product which was a research project called the “house with no bills”. And that was launched a couple of years ago. We brought a family of four into a home that we built in Cheltenham in Melbourne and allowed them to live rent free for a year. The project ended up going for 18 months so that we could experiment with how Mirvac can change the way that we build, in the way that we design, to make sure the house was bill neutral as possible
And so, I think that that project shows the change in the customer landscape in that when we first started it, we were really looking at it from an affordability point of view and selling it from that point of view to engage people. And of course, it still is about affordability, that is still really important, but we are now at a point having finished that experiment where our residential customers were getting good strong evidence that we are selling on the basis of the Sustainability credentials of that particular project. Customer are writing to us and telling us that.
Will: That’s very interesting. So what does this really mean for your strategy and your focus on the customer?
That means attracting a different kind of customer and more attractive customer for us. And so those customers, their expectations for that kind of performance, are only increasing and that's probably yet more evidence that we are seeing that Sustainability and performance in terms of environmental Sustainability is a given. It's not a ‘nice to have’ anymore.
Will: Thank you Sarah, that was a very comprehensive summary, and some detail I might add in terms of how Mirvac approaches Sustainability. But my final question is this. Modern slavery is a real risk for any company that sources materials, and I just wonder if you could briefly describe how you're approaching this very worrying issue for all companies in society
Sarah: Yes, I'm happy to. We set out a plan around how we're going to tackle modern slavery with a lot of input from interviews of external organisations who had already started down this path. So, we learned some lessons from some of our peers, not just in our own industry but outside our industry as well.
We put together two-year plan that was authorised by the Mirvac board, so it had the highest level of governance oversight available to us. And that has now cascaded down to a subcommittee and management subcommittee called the antislavery committee at Mirvac. That is chaired by our CFO Sharon Gannon, and that's a really important signal that this is a very high priority. He has functional accountability for our procurement function. And it's not just centralised set of people who participate in that committee, it goes right across our organisation in terms of decision makers and budget owners, heads of functions, so it's a very senior group which is being held to account on how we are delivering against that plan. Will: What steps did you take to implement that plan?
So, we have started with a very first scan for risk across Mirvac and our supply chain, and we scanned for risk by both geography in terms of where we buy our products from, and category. And publish the results so you'll be able to see that on our website . And what we found was in our first year we source mostly from Australia. India is our biggest risk exposure country.
And one of the categories that we found was of particular risk and a good opportunity for us to learn some lessons around how we're going to explore for modern slavery, was around cleaning. So, we have subsequently done a much deeper dive into that category and we will also release the findings of that work later this year in 2020.
Will: And what about collaboration on this key issue?
Sarah: The last thing I’d say is that you know this is new legislation in Australia and we're all learning, so I would characterise us as being at the beginning of the learning journey.
And we're having very open dialogues, both within our organisation, both within our industry in collaboration with a lot of other property companies through the Property Council of Australia where we are all joining forces to share information about risk on modern slavery, really so that we can reduce the impact on our supplies. So, that if suppliers are filling out a questionnaire for us, we can share that with our peers at LendLease, Stockland and other places, and then our suppliers and not having to jump through those hoops again and again.
And also, outside our industry, we are signatures to the UN global compact, and through that I participate, and so does our head of procurement, in a regular set of dialogues with some of Australia's biggest organisations. And we've got a really strong commitment there to share information openly and transparently and, for example, the work that we are doing on cleaning we will bring to that group and share it with them so that they are able to learn those lessons and hopefully when they do similar kinds of work were are able to benefit from that too.
Will: Well Sarah, that's been fascinating. And it's wonderful to hear that you're collaborating with I supposed competitors, if you like, and other companies in your space because seemingly that's the only way we'll ever tackle this issue collectively.
But it's been fascinating to hear your journey, if you like, with Sustainability and certainly as an investor we appreciate that you're well advanced on your Sustainable Pathway.
So, thank you for your time today Sarah.
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