Introduction

DEXUS aspires to the highest standards of corporate governance and has embedded policies and procedures to enhance corporate performance and protect the interests of key stakeholders.

Good governance is about doing the right thing - complying with laws, managing risk, upholding human rights, building honest relationships and being transparent. DEXUS is committed to an open and transparent workplace that is free from corruption, anti-competitive behaviour, bribery and discrimination. 

Management objectives and goals

 The Group's governance approach aims to:

  •  Maintain the health and safety for employees, tenants, customers and visitors
  •  Maintain a working environment free of harassment, bullying and discrimination
  •  Uphold labour standards and respect human rights
  •  Create a workplace culture of diversity and work-life balance
  •  Manage environmental, financial and social risk

Management approach

DEXUS's corporate governance supports the Group's strategic objectives. The Group's governance structure ensures accountability and a balance of authority by clearly defining the roles and responsibilities of the Board and executive management. This enables the Board to provide strategic guidance while exercising effective oversight.

DEXUS's Governance approach

 

Environmental Governance

DEXUS Board and Executive Committees

DEXUS Board of Directors The board sets the tone, culture and objectives of risk and compliance management at DEXUS. It sets the corporate standard, establishes effective governance, monitors business performance and provides ultimate accountability for the Group. The Board implements a corporate governance framework that applies to the investments of DEXUS and its funds, mandates and capital partners
DEXUS Board Risk Committee Responsible for overseeing group risk management, including implementation and management of sustainability practices and initiatives throughout DEXUS, as well as overseeing compliance and internal audit. The DEXUS Board Risk Committee reports directly to the DEXUS Board
Group Management Committee (GMC) Oversees business operations including its management of compliance, risk and sustainability. The GMC reports directly to the DEXUS Board.
Group Risk Committee Oversees compliance and risk initiatives and reports to the DEXUS Board Risk Committee. It assures the Board and the Board Risk Committee that major business risks have been identified and assessed, and effective plans are in place to mitigate the risks
Corporate Responsibility, Inclusion and Diversity (CRID) Committee Oversees the development and implementation of corporate responsibility policies and practices that support DEXUS's business strategy, and responds to emerging corporate responsibility issues within the built environment

 

Risk & Governance team

The Risk & Compliance team oversees risk and compliance programs. The Head of Risk & Compliance has an independent reporting line to the DEXUS Board and DEXUS Board Risk Committee.

The Risk & Compliance team is responsible for:

  • Assessing compliance risks
  • Providing advice on remediation plans for risk and compliance issues
  • Reviewing and analysing compliance issues and exceptions
  • Drafting and agreeing risk and compliance policies and procedures
  • Providing training on relevant risk and compliance matters
  • Conducting monitoring and preventative review procedures to avert or detect incidents of non-compliance
  • Reporting to management (including GMC, Board Risk Committee and the Group Risk Committee) on compliance incidents and risk and compliance initiatives within DEXUS
  • Liaising with Regulators

Management frameworks

DEXUS applies a Compliance Management Framework and a Risk Management Framework to underpin the approach taken to address compliance and manage risk. The third arm to DEXUS's responsible investment approach is its Sustainability Approach which integrates sustainability throughout the Group's operations.

These frameworks support the development and implementation of compliance, risk management and corporate governance procedures across the business. The programs allocate the responsibilities of DEXUS employees to identify and minimise risk.

The management frameworks support tenants, capital partners, people development, supplier partnerships and engagement within communities.

1. Compliance Management Framework

Compliance is a vital component of DEXUS's corporate governance and assists in:
  • Building trust with investors and clients
  • Protecting DEXUS's brand and reputation
  • Promoting DEXUS's values
  • Demonstrating to stakeholders a commitment to doing the right thing
  • Complying with the law

DEXUS's Compliance Management satisfies the requirements of the Australian Standard on Compliance Programs - AS3806-2006.

Activities conducted within the framework comply with the relevant legislation and regulations including, the Corporations Act, Privacy Act, Competition & Consumer Act, WHS legislation, Tax & Stamp Duty legislation, Retail Leases Act, Real Estate Licensing Acts, Environmental Acts and Regulations, and Anti-Money Laundering & Counter

DEXUS aims to promote a culture of compliance where all employees contribute and participate through this framework. DEXUS's Risk & Compliance team oversees the compliance management framework while the entire business is responsible for ensuring that their business procedures adhere to DEXUS's policies.

The framework:

  • Acknowledges DEXUS's commitment to compliance, good governance, ethical behaviour and continuous improvement
  • Focuses on protecting the interests of investors, mandate clients, capital partners and employees
  • Ensures that DEXUS's financial services and products are provided honestly, fairly and efficiently
  • Seeks to prevent, identify and quickly respond to breaches of applicable laws, industry codes, industry standards and business rules
  • A full list of policies that underpin DEXUS's governance approach is available

Activities within DEXUS's Compliance Management Framework include:

Legislative and regulatory change Identifying and assessing changes in compliance requirements due to laws or regulations, contractual requirements, share market requirements, fiduciary requirements or best practice
Employee training Identifying appropriate compliance training and delivering or facilitating compliance training sessions
Compliance monitoring and reporting Monitoring processes and procedures to ensure that business units are operating in accordance with legal and internal requirements
Handling exceptions and incidents of non-compliance Identifying, managing, reporting and overseeing the resolution of compliance incidents
Handling complaints Overseeing the effectiveness of processes and procedures across business units to manage complaint resolution on a timely basis
Communication Collecting, analysing and reporting of compliance information throughout DEXUS
Continuous improvement

Regularly reviewing and updating Compliance Policies and DEXUS Policies to ensure continued relevance

Compliance matters are reviewed by the Board Risk Committee, the Group Risk Committee and the Group Management Committee

 

Conflicts of interest

DEXUS has two internal compliance policies for personal and corporate conflicts of interest. They inform employees as to what constitutes a conflict of interest and describe the process for identification and management of conflicts. Conflicts may arise in a variety of situations, including:

  • Related party dealings
  • Allocating property transactions amongst clients
  • Tenant conflicts
  • Transfer of assets between schemes or clients
  • Personal conflicts

DEXUS recognises that potential conflicts of interest may arise during the investment process. DEXUS's internal Investment Procedures Compliance policy sets out the procedures for the investment process to ensure that acquisitions are appropriate, permitted and in accordance with the client objectives and strategies.

All real or potential conflicts must be reported to DEXUS's Risk & Compliance team so necessary controls are put in place to effectively manage the conflict. These controls may include:

  • Ensuring the transaction is conducted at arm's length
  • Removal of conflicted employees or team from the transaction or decision
  • Establishing information barriers so that employees and teams operate solely in the interests of their client

DEXUS maintains a Conflict of Interest Register which provides a central record of all material conflicts so they are effectively identified and managed.

Anti-bribery

DEXUS is committed to achieving the highest corporate standards and does not tolerate unethical or unprofessional behaviour including bribery and corruption

The Anti-bribery policy outlines expectations for employee conduct related to lobbying, meetings with law makers and receiving gifts and benefits. DEXUS does not make any political donations.

Employees also adhere to DEXUS's continuous disclosure policy that guides communication about market developments and price sensitive information

Transparency and continuous disclosure

DEXUS takes an industry leading approach to transparency and disclosure of responsible investment practices. This is borne out by its work with the Property Council of Australia on its Voluntary Best Practice Guidelines for Disclosing Funds for Operation (FFO) and Adjusted Funds from Operations (AFO). DEXUS played an active role in developing these guidelines that set a voluntary framework for determining FFO and AFFO as the standard performance metrics in the Australian marketplace. These measures enable a transparent comparison of reports on property fund manager performance.

The Group is committed to giving investors, the market and other stakeholders accurate and timely information about material developments. It complies with continuous disclosure requirements of the Corporations Act and ASX Listing Rules. A Continuous Disclosure committee manages due diligence and compliance against the policy.

DEXUS responds annually to several investor surveys and standards, publishes research papers, and formally discloses its own performance each year in accordance with the Global Reporting Initiative (GRI) framework.

Compliance monitoring

DEXUS conducts ongoing compliance monitoring processes and procedures to ensure that business units are operating in accordance with legal and internal requirements.

DEXUS also ensures that management and the Board have sufficient information about compliance to enable them to exercise their responsibilities and discharge their duties effectively.

The purpose of compliance monitoring is to:

  • Check that controls are in place to ensure that business and/or system processes are operating adequately, functionally and are compliant with relevant laws, regulations, industry standards, codes and internal organisational standards
  • Confirm that policies and procedures are being applied and adhered to
  • Assist with identification of actual, possible or imminent compliance incidents
  • Test the effectiveness of the compliance structure
  • Determine where problems are being encountered in the business and the reason for them and
  • Identify compliance training needs

Monitoring takes the form of:

  • Self Assessment Checklists
  • Compliance review and verification
  • Detailed monitoring
  • Ad hoc reviews

Board Governance

DEXUS recognises that performance measurement and management are integral to its Board's success. DEXUS believes that board evaluations can contribute significantly to performance improvement at the organisational, Board and individual Director levels.

The Board Nomination Committee oversees the Board performance evaluation program. The evaluation process looks at the performance of the Board and its committees. Individual director performance is also evaluated. When appropriate, an independent expert is retained to conduct the evaluation. Any areas for improvement identified in the performance evaluation process are agreed by the Board Nomination Committee which oversees the implementation of process enhancements.

DEXUS undertakes regular Board evaluations to improve the performance of the Board of Directors an individual and Board level. The Performance Evaluation - Board, Committees and Directors policy outlines a formal approach to review and improve performance management.

2. Risk Management Framework

Effective risk management is critical to the delivery of value to DEXUS investors and requires an understanding of risks during all phases of investment, from asset selection, screening, acquisition, allocation, ownership, management and sale. Responsible investment and active property management principles are integrated in DEXUS's Corporate Responsibility & Sustainability (CR&S) framework.

DEXUS's Risk Management Framework aligns with the Australian and New Zealand standard for risk management (ISO 31000). The framework is built into DEXUS's daily operations in the form of accountabilities, standard operating procedures, tools and templates, management oversight, collaboration and knowledge sharing, and audit and assurance.

DEXUS's Risk Management Framework supports its Risk Management Policy which sets out how the Group identifies and manages risks in a consistent, systematic, credible and timely way, in order to minimise the impact of unexpected and undesirable events. DEXUS monitors operations and conducts audits to address the following sources of risk:

  • Strategic
  • Operational
  • Legal and regulatory
  • Financial
  • Reputational and brand related
  • Work health, safety and the environment

The Framework includes following mechanisms for the identification and management of risk:

  • Risk workshops where managers identify risks and mitigating controls within their business unit
  • Risk Policies and Procedures which set out the minimum acceptable standard of business practice
  • Verification via certifications to ensure adherence
  • Exception reporting
  • Monitoring and review of control processes
  • External review of work health & safety, security and environmental procedures management
  • Employee training to promote DEXUS's risk management requirements and processes

The DEXUS property portfolio varies by geographic location, asset type and tenant type. These variables present a large number of risks that are monitored and managed. The risks relate to health and safety, building safety, environmental, security and insurance risk.

DEXUS has oversight of a comprehensive risk audit and review program to identify, evaluate and mitigate risk in the following areas:

  • Health and safety audits: compliance/spot audits, work health and safety risk profile, OHSAS 18001 audit/gap analysis, BSI certification, Principal contractor audit, incident investigations
  • Building safety: confined space risk assessment, plant risk assessment, façade audits
  • Environmental: Hazardous materials review, initial site audit, site re-inspections
  • Security: security risk assessment, external security review
  • Insurance risk: underwriting assessment

DEXUS tracks its audit program using Periskope, an online property risk management and auditing tool that was developed by DEXUS to enable systematic and rigorous property risk profiling. It is a single point of access for tools and data assisting in property risk management.

Risk Appetite Statement

DEXUS has developed a Risk Appetite Statement. The purpose of the statement is to set an overall tone for the management of risk in the business to support both DEXUS's strategy and Risk Management Framework.

DEXUS operates in a competitive market and strives to deliver on its vision and strategy in a sustainable way to meet the expectations of investors/clients, people, tenants, visitors and the communities in which it operates.

DEXUS’s Risk Appetite Statement identifies risks the Board and management are not willing to accept.

Health and safety

DEXUS recognises its duty of care to investors, tenants, employees, agents and the community to manage any work health, safety and liability (WHS&L) risks in its property portfolio.

DEXUS's Work Health, Safety and Liability (WHS&L) statement outlines how DEXUS manages WHS risks. It states the Group's commitment maintaining safe properties, working with stakeholders to manage hazards, risks and continuous monitoring.

DEXUS uses software SASSI across all DEXUS managed properties to monitor contractor WH&S management systems and manage compliance of contractors regarding insurance, WH&S and inductions.

Further information on health and safety is in the Tenants & Customers Management Approach

Investment due diligence

DEXUS has a rigorous process for evaluating the environmental, social and governance (ESG) risks and opportunities relating to investment decisions.

This includes reviewing long term asset plans and conducting appropriate environmental due diligence on acquisitions so that ESG risks can be identified and effectively managed.

DEXUS's Investment Committee reports to the GMC and is responsible for reviewing all investment, divestment and development proposals for DEXUS and its managed funds and clients.

The Investment Committee recognises its fiduciary duty to act in the best interests DEXUS's clients. The Committee uses a formal process and templates to collect and evaluate a wide range of data relating to risks, opportunities and impacts before approving or endorsing each investment decision.

The Investment Committee screens potential acquisitions to ensure responsible investment principles are upheld. The Committee identifies environmental, social and governance issues that may affect an investment.

It then categorises them as:

  • Material issues that will lead to the abandonment of the potential investment
  • Less significant issues, risks and opportunities that impact the decision and/or the investment price, or the terms of sale
  • Insignificant issues that are not deemed to affect DEXUS or its clients

If an issue is uncovered, decisions are made whether to not pursue the investment opportunity or mitigate the impact. The Board or client ultimately considers the Committee's evaluations and recommendations.

Research papers

Sound investment decisions require an in-depth understanding of real estate markets. DEXUS's in-house research team is an integral part of the investment decision-making process. Research tracks economic conditions and forecasts real estate market performance in all major commercial, retail and industrial property markets nationwide.

DEXUS publishes regular reports on market trends and risks/opportunities that may affect investment decisions. Its sharing of views on market trends with stakeholders is a key point of differentiation in DEXUS's approach to responsible investment.

Further information regarding DEXUS Research and copies of recent reports is available.

3. Sustainability Approach

The Sustainability Approach integrates sustainability throughout the Group's operations. The Group uses this framework to systematically identify, quantify and respond to environmental issues within strategic decision-making and operations.

The framework incorporates the United Nations' Principles for Responsible Investment and aims to add value to investors, suppliers, tenants/customers, employees, the environment and the community.

DEXUS's Sustainability Approach supports the following policies:

  • Environment Statement
  • Sustainable Procurement
  • Human Rights
  • Biodiversity Policy
  • Supplier Code of Conduct

 This Framework is managed by DEXUS's sustainability team and adopts the following principles:

  • Take a holistic view of every aspect of DEXUS's operations and incorporating CR&S initiatives throughout DEXUS
  • Align CR&S initiatives with stakeholder expectations, corporate objectives and values
  • Provide transparent reporting of CR&S activities and progress
  • Demonstrate leadership in CR&S by maintaining the highest standards of corporate governance, ethics, environmental and social responsibility

Portfolio performance is subject to ongoing review through:

  • Daily monitoring of building consumption trends by Building Managers
  • Fortnightly sustainability team meetings that involve stakeholders from DEXUS and its managing agent
  • Monthly reporting of NABERS ratings activity and tracking of rolling portfolio targets
  • Monthly review of energy and water billing data and investigation into adverse consumption trends
  • Formal updates to the DEXUS Board Risk Committee every quarter
  • Further information on CR&S is in the Environment Management Approach

Human rights

DEXUS respects the principles incorporated in the Universal Declaration of Human Rights. It supports the rights of employees, contractors, tenants, investors and suppliers to freedom of expression, sexual belief and sexual orientation and gender identify.

DEXUS rejects the use of forced or child labour and strives for fair treatment and equity in the workplace.

The Human Rights policy outlines commitments to sustainable procurement, indigenous rights, equal opportunity and relevant legislation. DEXUS undertakes human rights assessment and monitoring of the policy internally and with key service providers and business partners.

Supplier governance

DEXUS maintains a sustainable and ethical supply chain through open and competitive processes. The sustainable procurement framework consists of policies, an open tender process and ongoing supplier monitoring and contractor management.

All suppliers must adhere to the Sustainable Procurement policy and Supplier Code of Conduct as part of all engagements. Suppliers are excluded from evaluation if they cannot make this commitment. Environmental, social and governance (ESG) issues are also reviewed and ranked as part of the tender evaluation process and may affect a potential supplier's ranking. Further information on supply chain governance is in the Supply Chain Management Approach

Stakeholder engagement

Government and industry

DEXUS is a member of various industry bodies and voluntary sustainability ratings. These memberships assist the Group to stay at the forefront of market trends, maintain leading portfolio performance and meet stakeholder expectations.

DEXUS engages with policy makers through its membership of industry bodies such as the Property Council of Australia, the Green Building Council of Australia, the Investor Group on Climate Change and the City of Sydney's Better Buildings Partnership.

DEXUS conducts ongoing engagement with state and local government officials and policy makers on an as needs basis to discuss and present its views regarding various issues including local and state planning, local infrastructure, and environmental impacts of proposed developments. DEXUS provides feedback and voices its concerns about policies, standards, environmental planning instruments and controls.

Investors

DEXUS is committed to the disclosure of its performance and engages with investors on an ongoing basis.

DEXUS prepares half year and annual reports that include the following:

  • Site performance metrics, financial performance summary for the last quarter, comparison against benchmarks and commentary
  • Summary of key events that have occurred and their impacts on the portfolio (i.e. acquisitions, divestments, developments, etc.)
  • Sustainability performance summary including current NABERS ratings
  • Intensity figures for energy, water and greenhouse gas emissions
  • Commentary regarding current efficiency improvement projects and results from completed projects

Existing and potential investors have access to an investor internet portal via the DEXUS website, which has additional information to support investment decision making. This includes:

  • Quarterly performance releases (March and September)
  • Documents describing governance processes
  • Links to DEXUS's Sustainability Approach

DEXUS also prepares and distributes quarterly reports to its third party funds and mandates' wholesale investors. These reports are available on a secure investor internet portal via the DEXUS website and include:

  • Site performance metrics, financial performance summary for the last quarter, comparison against benchmarks and commentary
  • Summary of key events that have occurred and their impacts on the portfolio (i.e. acquisitions, divestments, developments, etc.)
Employees

DEXUS strives to recruit and retain staff with the right mix of expertise and experience. All employees are required to uphold the highest ethical and professional standards. DEXUS believes that diversity enhances decision-making. It seeks to maintain a socially and culturally diverse workplace that is tolerant, flexible and adaptive to the needs of the environment.

DEXUS also aims to:

  • Achieve gender equality and equal opportunities
  • Eliminate discrimination, harassment and bullying
  • Provide a positive work culture that promotes excellence, integrity, empowerment, innovation and collaboration

Further information on employees is in the People and Culture Management Approach

Third party property managers and suppliers

DEXUS partners with suppliers to achieve operational efficiencies, tenant and customer comfort and sound environmental outcomes. DEXUS seeks to partner with suppliers that can best meet its needs and have an alignment of interests.

Further information on suppliers is in the Supply Chain Management Approach

Regulators

DEXUS has a respectful and transparent relationship with its regulatory stakeholders and aims to meet all request for information in a timely manner, supports any regulatory examinations and ensures reporting of compliance incidents (where applicable). DEXUS's Risk & Compliance team is the contact point for regulators.

Evaluation and process improvement

Setting Objectives

Each year DEXUS sets, reviews and updates corporate objectives within its responsible investment framework against each of its stakeholder groups (investors, tenants, employees, community, suppliers and environment). Commitments may include:

  • Operational performance targets such as financial targets or building efficiency benchmarks
  • Initiatives to improve collaboration or joint commitment with stakeholders such as suppliers, customers, and industry peers
  • Enhancements to processes, governance mechanisms or internal efficiency
  • ESG projects at specific properties within the portfolio
  • Broader ambitions to make a material impact on staff, the community and/or the environment
Reporting progress

DEXUS measures its success in governance performance in the following ways:

  • Completion of commitment milestones
  • Achievement of targets
  • Feedback from tenants, customers and employees
  • Awards and external recognition
  • Inclusion and rankings in sustainability and leadership indices

DEXUS reports on the progress of its annual commitments in its half year review and includes a scorecard against these commitments within its Annual Review.

The Annual Performance Pack provides the most comprehensive review of current trends for key metrics, with historical comparison spanning the last five years. Recent reports are available from the CR&S section at www.dexus.com

Performance improvement

DEXUS seeks to continuously improve its governance approach through the following:

  • An annual review of the Compliance Management Framework and Risk Management Framework
  • Independent reviews such as Internal Audit and reviews undertaken by industry experts
  • Attending industry forums and seminars, including those provided by law firms and regulators
  • Receipt of circulars and newsletters from law and accountancy firms and regulators