Long-term prioritiesIn addition to our focus on safe people and eco-efficiency, we have identified four additional long-term priorities that represent opportunities to create shared value for our business, society and the environment.
They are intended to address the principle long-term sustainability risks facing our operations and safeguard our continued capacity to do business, within the context of:
- Scarcer and costlier natural resources.
- Pressures on tenants to adapt to radical technological, environmental and demographic changes.
- Increasing importance of employee skills and knowledge as a source of competitive advantage.
- Growing consumer demand for green and ethical/fairtrade products and services.
The ChallengeOur business is reliant on limited supplies of natural capital as we require mainly fossil-fuel based energy, water and non-renewable raw materials in order to build and operate shopping centres, which in turn generate GHG emissions, waste and wastewater. There is significant upward pressure on global fossil fuel reserves which is likely to increase the cost of energy over the long-term and contribute to growing volatility in global oil and gas markets. In addition, the GHG emissions generated by the burning of fossil fuels represent a significant environmental impact, and they are coming under greater scrutiny as governments across the globe respond to pressure to reduce the potential impacts of global climate change. Likewise with water; we rely on some 1.159 million m3 per year of water to deliver day-to-day services such cleaning, WC facilities and irrigation. There is significant upward pressure on global water reserves, which is likely to become more severe in the context of global climate change. This could lead to an increase in water shortages leading to constraints on supply and emergency controls on the way in which water is used, with some locations where Sonae Sierra operates being more directly and acutely affected than others. These pose immediate and long-term risks to our business. Having alternative, efficient and clean natural resource strategies in place will be essential for assets to maintain their long-term value.
StrategyWhilst improvements in our management of GHG emissions, energy, water and waste have enabled us to reduce our environmental impact and avoid costs, research into solutions for effective resource resilience is vital to protect our assets against higher costs and penalties associated with natural resource consumption and environmental pollution, as well as the risk of water and energy shortages. We are investigating ways to future-proof our assets by becoming energy independent and reusing water on our sites, exploiting the latest innovations and technology in natural resource management to rethink processes. This will protect our assets against natural resource shortages and cost increases, and reduce operating costs in the short to medium term through alternative energy and water management strategies. Altogether, this approach will enable us to reduce the detrimental impacts of our Company on the environment and help us to maintain the essential services that nature provides.
Future objectivesWe have set the following long-term objectives to:
- At least 10% of total water consumed at Sonae Sierra owned shopping centres to be reused “grey water” or harvested rainwater, by 2020.
- Develop and implement a long-term strategy to ensure a secure water supply at our owned shopping centres, with a particular focus on locations that are vulnerable to water shortages, by 2020.
- We have not yet defined specific targets for sustainable energy. Nevertheless our Resource Resilience Working Group is actively on identifying opportunities for the installation of renewable technologies with a particular focus on photovoltaic systems.
Performance, up until 31st December 2014We have incorporated actions designed to improve water efficiency and reduce water consumption into our Safety, Health and Environment Development Standards (SHEDS). Furthermore, following our decision to proceed with our research into the roll-out of water reuse and rainwater harvesting systems, 43% of our centres have such systems in place, and a further eight have been identified for this investment to be made. With regards to energy, we have undertaken research into new technology and conducted feasibility studies and pilot projects with a view to becoming energy independent. Due to market and regulatory constraints, we are not currently able to proceed with initiatives such as the installation of on-site energy generation from waste, but we have committed to monitor local developments closely should conditions change.
The ChallengeThe wider operating context of diminishing household incomes and reduced public spending that has affected the Eurozone in recent years, and Southern Europe in particular, has lead companies to look at ways to strengthen the socio-economic value of their operations as a new source of competitive advantage, evaluating how their projects can most effectively inject wealth into the local economy. Supporting local businesses - and other more sustainable forms of consumption - is also becoming more important to shopping centre visitors. At the same time, a revolution is occurring in the global retail industry. Spurred by the fast-growing use of mobile internet devices, modern consumers are creating new challenges and opportunities for shopping centres as they increasingly rely on a combination of digital platforms and new communication channels to define their physical shopping experience. Shopping centre visitors want to engage more actively in the consumption process; and increasing sales in ethical, eco-friendly and artisan products as well as growing interest in hands-on experiences (such as craft workshops and fashion shows) all point to a move in this direction.
StrategyAdapting to this changing world is vital to our tenants’ success. Retailers who embrace social and environmental challenges through their business models stand a better chance of sustaining their businesses in the long-term and can deliver benefits to local communities. We are taking action to partner with current and potential tenants to make their businesses more resilient, in particular enabling small, local and sustainable businesses to thrive in circumstances in which they might not have done so otherwise. At the same time, this approach supports our business strategy by allowing us to promote new concepts that deliver unique experiences to customers. Consequently, we can sustain our income streams and maintain innovation at the heart of Sonae Sierra’s business values. On such initiative is the Coop Store format that supports entrepreneurs and small businesses by allowing operators to share vacant shop space while splitting the associated operational costs, and providing an additional rental income for the shopping centre. Our efforts to support the prosperity of tenants are bolstered by our Go Digital strategy that seeks to integrate online digital strategies aimed at improving the customer experience.
Future objectivesOur property management teams will continue to roll out Coop Stores at vacant units and pioneer further projects to support local businesses and diversify our offer to shopping centre visitors. Initiatives that are currently in the pipeline include My 1st Work Experience that aims to support recent graduates in starting their own retail business by providing business planning, project development and funding support and guidance.
Performance, up until 31st December 20142014 saw the roll out of five ‘Coop Stores’ across shopping centres in Portugal and Spain. Together, they generated sales of more than €80,000 for retailers taking part in the scheme who are all local independent businesses. Twenty percent of ‘Coop Store’ retailers have now become permanent tenants in our shopping centres.
The ChallengeIn today’s world, competitive advantage is driven by the ability of a company’s workforce to learn faster and innovate ahead of their peers. The rapid change affecting the retail sector means we need to ensure that our Company has the talent, agility and flexibility required to remain ahead of the game. Furthermore, in the context of high youth unemployment affecting much of the Eurozone, there are increasing opportunities for organisations such as ourselves to contribute to broader community learning.
StrategyOur business relies on skilled and motivated staff to deliver our business strategy and execute our day-to-day activities. In recent years, we have prioritised the well-being and development of our employees, aiming to ensure high levels of staff satisfaction and productivity, and reduce costs and risks associated with high staff turnover and absence. We have developed our capacity to deliver in-house training to meet our staff development needs. Whilst this strategy has been effective, our leveraging knowledge strategy aims to empower our employees by building their skills and knowledge, unleashing their potential on an individual basis and raising the standard of knowledge attainment at a collective level in the communities where we operate. By doing so, we can enhance the intellectual capital of our organisation and the external pool of talent from which we aim to attract ambitious people to join our workforce.
Future objectivesWe are pursuing three long-term objectives:
- Sierra with Universities: To partner with universities and either share our knowledge or create new knowledge with students.
- We Share with Communities: To extend our knowledge to the employees of the organizations that we wish to maintain strong links with such as municipalities, fire brigades, police, and local authorities.
- Engage Tenants through Knowledge: To help develop tenants or potential tenants (both owners and employees) by strengthening their business skills and know-how.
Performance, up until 31st December 2014By the end of 2014 we had completed one Sierra with Universities project (Project Be Well) - an academic partnership which enabled us to gain a comprehensive insight into workplace stress risks present within our company and develop a detailed mitigation plan to improve employee health and wellbeing. Three further projects were under implementation, and four projects were under evaluation. We had also identified our first pilot Sierra with Communities project – a proposed partnership with a local police department to offer IT training. For examples of leveraging knowledge initiatives in action, see case studies.
The ChallengeThe findings of our own consumer behaviour surveys – as well as external data on shopping habits – reveal that consumers are increasingly concerned with the environmental and ethical impacts of their purchases and in many cases want to adopt healthier, more environmentally sustainable lifestyles. In fact, 75% of consumers we interviewed in 2013 reported that they feel more satisfied when they visit a ‘sustainable shopping centre’. Our 2014 consumer behaviour survey covering Portugal, Spain, Italy and Germany supported these findings and indicated that some of our shopping centres are among the most recognised in terms of sustainability in their respective catchment areas. Moreover, it highlighted that consumers want clear communication on these issues and also want to be included and engaged in responsible actions. With our shopping centres attracting 439.8 million visitors in 2014, Sonae Sierra is uniquely placed to be able to engage with a large number of consumers and promote sustainable lifestyle and purchasing choices. This will help Sonae Sierra to meet customer expectations while encouraging new growth markets in sustainable products which can increase or create new revenue streams for tenants.
StrategyOur long-term focus on sustainable lifestyles aims to capitalise on these trends. We will use our reach and public influence to encourage visitors to make the right choices. This involves promoting healthy, green and local goods and services; improving well-being through health activities in our shopping centres; and creating a sense of place. This approach enables us to increase visitors’ satisfaction and loyalty, thereby increasing footfall in our shopping centres, and adds to our brand value as we visibly support health, well-being and environmentally-conscious behaviour.
Future objectivesWe aim to promote positive behavioural change in relation to three main focus areas:
- Environment: Promote best practice in environmental stewardship and enable visitors to make educated decisions about how to develop lifestyles with a low environmental impact.
- Social: Promote civic involvement and community engagement through volunteering.
- Health: Develop a strategy to promote healthy lifestyles amongst consumers.
Performance, up until 31st December 2014Although originally developed under safe people and eco-efficiency, we have stepped up our efforts to communicate our environmental progress to consumers, increase consumer engagement on environmental issues and implement one environmental awareness raising event. SOS Planeta – an augmented reality campaign that helps visitors visualise how their environmental impact affects the planet – has since been rolled out to 15 Sonae Sierra shopping centres across Portugal. We have also taken the first initiative under the social focus area by launching ‘Help Spot’ with a view to positioning Sonae Sierra and each of our shopping centres as leading catalysts for socially responsible volunteer work. The project aims to boost volunteering in Portugal and is present in all 21 Sierra shopping centres across the country. For examples of sustainable lifestyles initiatives in action, see case studies.
Note: At the "Sustainability" all information is comprehensive and refer to the Sierra and its shopping centers in the various countries in which it operates, including Brazil.