Sustainability
Report
2021

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About this report

This Sustainability Report discloses Downer’s sustainability-related performance for the financial year ended 30 June 2021.

Sustainability performance information relating to Downer entities and joint ventures has been included in the relevant sections of the report.

Changes to the reporting boundaries or measurement methodologies applied with reference to our previous Sustainability Report are addressed in the relevant report sections.

This report discloses the sustainability-related performance of businesses within the Downer Group (Downer EDI Limited) for the financial year ended 30 June 2021. It is to be read in conjunction with Downer’s 2021 Annual Report for information pertaining to the company’s financial sustainability. As such, cross-references to Downer’s Annual Report appear throughout this document.

A message from the
Chairman and CEO

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This report has been prepared in accordance with the Global Reporting Initiative (GRI) Standards: Core option, ensuring it presents a full and balanced picture of Downer’s material topics and related impacts, as well as how these impacts are managed.

Key changes from
previous years

Downer has made changes to the list of material issues and issue boundaries from previous years. Please see the Materiality and stakeholder engagement section for full details.

In FY21, we undertook a comprehensive independent materiality assessment to ensure our sustainability performance and reporting continues to align with the priorities of our stakeholders.

The results of the materiality assessment also led to a change in the structure of this report. The Communities section, which has appeared in Downer’s previous Sustainability Reports, has been expanded and relabelled ‘Relationships’. The scope of this section has been broadened to focus on how Downer builds and maintains relationships with three crucial external stakeholder groups: communities, customers and supply chain.

In this year’s report, we have also included a table outlining Downer’s key FY22 targets and objectives for our five sections. We will review our performance against these targets in next year’s report.

In FY21, Health and safety performance has been expanded to include Spotless and Hawkins.

For the purposes of energy and GHG data in this Sustainability Report, the boundary determination now extends to any facilities that are subject to transfer certificate arrangements under Section 22J of the NGER Act. This means that emissions from the Meandu Mine are now included in Scope 1 and 2 GHG emissions data throughout the report, whereas in Downer’s 2020 Sustainability Report this was limited to the Science-Based Target boundary.

Our reporting approach

Reporting in accordance with the GRI Standards provides investors the ability to benchmark with comparable information relating to environmental, social and governance (ESG) performance.

Our approach is guided by the GRI’s principles for informing report content: materiality, completeness, sustainability context and stakeholder inclusiveness. A focus of this report is to demonstrate how we deliver sustainable returns while managing risk and being responsible in how we operate.

We engage with our internal and external stakeholders to ensure we understand, and report on, our sustainability risks and opportunities. Our comprehensive independent materiality assessment ensures our sustainability performance and reporting continues to align with the priorities of our stakeholders.

Downer has engaged KPMG to provide limited assurance over selected sustainability indicators to assess whether they have been prepared in accordance with Downer’s policies and procedures, and the GRI Standards.

These selected sustainability indicators are:

  • Lost Time Injury Frequency Rates and Total Recordable Injury Frequency Rates
  • Total direct (Scope 1) and indirect (Scope 2) GHG emissions
  • Total energy consumption and production
  • Significant environmental incidents (Category 4+)
  • The total number and value of safety and environmental related fines or successful prosecutions
  • Science-Based Target (SBT) Scope 1 and 2 Greenhouse Gas Emissions Intensity (tonnes CO2-e/AU$m)
  • Hours delivered for Indigenous Cultural Awareness, Te Ara Whanake and Te Ara Maramatanga training
  • Employees trained annually in Downer’s Mental Health First Aid (MHFA) training course.

Downer is committed to reporting our sustainability performance annually and consistently improving our data and information collection processes to ensure better quality data and insights.

Downer discloses all environmental and safety fines received during FY21. In addition, if a fine of more $50,000 is received after 30 June but before publication of the 2021 Sustainability Report, Downer will disclose the fine. If an incident occurs after 30 June but before publication of the 2021 Sustainability Report, and will potentially result in a fine greater than $50,000, Downer will disclose the incident and an estimated fine value, where possible.

All prosecutions known before the publication of the 2021 Sustainability Report have been disclosed.

Our approach
to sustainability

At Downer, sustainability means sustainable and profitable growth, providing value to our customers, delivering our services in a safe and environmentally responsible manner, helping our people to be better and advancing the communities in which we operate.

Our commitments to sustainability are outlined in our policies, which are available on the Downer website (www.downergroup.com).

A core element of Downer’s sustainability approach is to focus on our customers’ success – if our customers are successful, then we will be successful. Our core operating philosophy, ‘Relationships creating success’, encapsulates this theme.

Downer operates in sectors that are closely connected to the investment that is being driven by population growth and urbanisation. These sectors include roads, rail, light rail, other public transport, power, gas, water, telecommunications, health, education, defence and other government sectors.

These sectors are serviced by Downer’s Urban Services businesses – Transport, Utilities, Facilities and Asset Services. These businesses have demonstrated strength and resilience and hold leading market positions and attractive medium-term and long-term growth opportunities. They have a high proportion of government and government-related contracts and a capital light, services-based business model generating lower risk, and more predictable revenues and cash flows.

Downer’s Urban Services strategy delivers many environmental and social benefits including a move to lower capital intensive and lower carbon activities, which supports Downer’s decarbonisation pathway.

Downer is proud of the role we play in creating more sustainable cities and improving the quality of life in Australia and New Zealand. We are also heavily involved in providing services for social infrastructure such as schools, universities, hospitals, public housing and other areas of government such as defence.

Our customers trust us to deliver these services that will have a direct impact on their customers each day.

With our services impacting millions of lives every day, the sustainability of our operations is paramount – for our people, our partners, our shareholders, our customers and their customers.

We deliver these services while managing the impacts of our activities on the environment and communities in which we operate, and working collaboratively with our supply chain. We understand that our ability to do this is fundamental to Downer’s long-term success.

For Downer’s approach to Zero Harm, refer to our website.

Downer has made changes to the list of material issues and issue boundaries from previous years. Please see the Materiality and stakeholder engagement section for full details.

In FY21, we undertook a comprehensive independent materiality assessment to ensure our sustainability performance and reporting continues to align with the priorities of our stakeholders.

The results of the materiality assessment also led to a change in the structure of this report. The Communities section, which has appeared in Downer’s previous Sustainability Reports, has been expanded and relabelled ‘Relationships’. The scope of this section has been broadened to focus on how Downer builds and maintains relationships with three crucial external stakeholder groups: communities, customers and supply chain.

In this year’s report, we have also included a table outlining Downer’s key FY22 targets and objectives for our five sections. We will review our performance against these targets in next year’s report.

In FY21, Health and safety performance has been expanded to include Spotless and Hawkins.

For the purposes of energy and GHG data in this Sustainability Report, the boundary determination now extends to any facilities that are subject to transfer certificate arrangements under Section 22J of the NGER Act. This means that emissions from the Meandu Mine are now included in Scope 1 and 2 GHG emissions data throughout the report, whereas in Downer’s 2020 Sustainability Report this was limited to the Science-Based Target boundary.

Reporting in accordance with the GRI Standards provides investors the ability to benchmark with comparable information relating to environmental, social and governance (ESG) performance.

Our approach is guided by the GRI’s principles for informing report content: materiality, completeness, sustainability context and stakeholder inclusiveness. A focus of this report is to demonstrate how we deliver sustainable returns while managing risk and being responsible in how we operate.

We engage with our internal and external stakeholders to ensure we understand, and report on, our sustainability risks and opportunities. Our comprehensive independent materiality assessment ensures our sustainability performance and reporting continues to align with the priorities of our stakeholders.

Downer has engaged KPMG to provide limited assurance over selected sustainability indicators to assess whether they have been prepared in accordance with Downer’s policies and procedures, and the GRI Standards.

These selected sustainability indicators are:

  • Lost Time Injury Frequency Rates and Total Recordable Injury Frequency Rates
  • Total direct (Scope 1) and indirect (Scope 2) GHG emissions
  • Total energy consumption and production
  • Significant environmental incidents (Category 4+)
  • The total number and value of safety and environmental related fines or successful prosecutions
  • Science-Based Target (SBT) Scope 1 and 2 Greenhouse Gas Emissions Intensity (tonnes CO2-e/AU$m)
  • Hours delivered for Indigenous Cultural Awareness, Te Ara Whanake and Te Ara Maramatanga training
  • Employees trained annually in Downer’s Mental Health First Aid (MHFA) training course.

Downer is committed to reporting our sustainability performance annually and consistently improving our data and information collection processes to ensure better quality data and insights.

Downer discloses all environmental and safety fines received during FY21. In addition, if a fine of more $50,000 is received after 30 June but before publication of the 2021 Sustainability Report, Downer will disclose the fine. If an incident occurs after 30 June but before publication of the 2021 Sustainability Report, and will potentially result in a fine greater than $50,000, Downer will disclose the incident and an estimated fine value, where possible.

All prosecutions known before the publication of the 2021 Sustainability Report have been disclosed.

At Downer, sustainability means sustainable and profitable growth, providing value to our customers, delivering our services in a safe and environmentally responsible manner, helping our people to be better and advancing the communities in which we operate. Downer’s holistic approach to sustainability is summarised in the diagram below.

EEGS

Our commitments to sustainability are outlined in our policies, which are accessible from the Downer website (www.downergroup.com).

A core element of Downer’s sustainability approach is to focus on our customers’ success. Our core operating philosophy, ‘Relationships creating success’, encapsulates this theme.

Downer operates in sectors that are closely connected to the investment that is being driven by population growth and urbanisation. These sectors include roads, rail, light rail, other public transport, power, gas, water, telecommunications, health, education, defence and other government sectors.

These sectors are served by Downer’s Urban Services businesses – Transport, Utilities, and Facilities and Asset Services. These businesses have demonstrated strength and resilience, hold market-leading positions and attractive medium-term and long-term growth opportunities. They have a high proportion of government and government-related contracts and a capital light, services-based business model generating lower risk, more predictable revenues and cash flows. Downer’s Urban Services strategy delivers many environmental

and social benefits including a move to lower capital intensive and lower carbon activities which supports Downer’s decarbonisation pathway.

Downer is proud of the role we play in creating more sustainable cities and improving the quality of life in Australia and New Zealand. We are also heavily involved in providing services for social infrastructure such as schools, universities, hospitals, public housing and other areas of government such as defence.

Our customers trust us to deliver these services, which will have a direct impact on their customers every day.

With our services impacting millions of lives every day, the sustainability of our operations is paramount – for our people, our partners, our shareholders, our customers and their customers.

We deliver these services while managing the impacts of our activities on the environment and communities in which we operate, and working collaboratively with our supply chain. We understand that our ability to do this is fundamental to Downer’s long-term success.

For Downer’s approach to Zero Harm, refer to our website.

Sustainability Linked Loan

Downer successfully completed the refinancing of the Group’s debt platform in December 2020, with the establishment of a new $1.4 billion syndicated sustainability linked loan facility.

Sustainability linked loans (SLL) are designed to incentivise borrowers, like Downer, to deliver on commitments to sustainability and to support sustainable economic activity and growth.

The new committed facility comprises three, four, five and six year tranches, and has been structured to enhance the debt maturity profile, reduce average borrowing costs and provide flexibility as the Group continues its program of divesting non-core businesses.

The sustainability aspect of the new facility is underpinned by KPI metrics relating to Downer’s greenhouse gas emissions reductions and social sustainability that, if realised, will lead to a reduction in borrowing costs under the facility. These sustainability KPIs are unique to Downer and reflect the

Group’s continued commitment to its sustainability performance and investment in its people.

The refinancing was the final step in the consolidation of the Group’s debt platforms subsequent to achieving 100 per cent ownership of Spotless on 21 September 2020 and provided an ideal opportunity to align the Group’s financing and sustainability strategies.

The $1.4 billion syndicated sustainability linked loan facility was the largest SLL in Australia in 2020. It was also voted the best in Australia and the Asia Pacific region.

Domestic financial markets publication, KangaNews, awarded Downer the Australian Syndicated Loan Deal of the Year in the annual KangaNews Awards, which polls hundreds of market participants each year to determine the award winners. Asia Pacific Loan Markets Association (APLMA), the industry body that governs bank loan markets in the region, then awarded Downer the Syndicated Green/Sustainable Deal of 2020.

Value chain and value creation

Downer has disclosed its value creation process in line with the concepts of the International Integrated Reporting Council’s (IIRC) six capitals. This shows, at a glance, the interlinkages between Downer’s sources of value (inputs), its business model (value creation), and the value that Downer contributes (outputs).

* Economic Value Generated, Distributed and Retained are GRI-specific metrics, and are not reflective of financial performance in accordance with international or domestic accounting standards.