Understanding the material ESG risks and opportunities that could influence our ability to deliver on strategy and maximise long-term investment returns allows us to anticipate and adapt our approach in a constantly changing environment. Our last Real Estate materiality assessment was conducted in 2021, and included external reviews which consider megatrends and stakeholder feedback. We anticipate our next assessment will be undertaken in 2023, and a QIC-wide materiality assessment is planned for 2024. We monitor our material themes on a regular basis through our involvement in industry working groups. 

We use the outputs of our Real Estate materiality assessments to review our strategic approach to ESG in consultation with QIC Real Estate’s Sustainability Committee, and set long- and short-term targets against which to monitor our performance. These are detailed in this section of the report. Targets addressing material ESG themes are also included in QIC Real Estate’s scorecard and the Key Performance Indicators (KPIs) of the Senior Leadership Team and other relevant team members who play a leading role in their delivery. These are linked to remuneration outcomes.

The process for our materiality assessments is detailed below.

Table 1: QIC Real Estate materiality assessment process

Figure 1: Material sustainability themes

Figure 2: Description of material issues

QIC Real Estate’s ESG Strategy was established with the aim of amplifying our efforts on ESG themes identified as most material to the real estate portfolio. Our ESG Strategy aims to align our approach with best practice and the evolving expectations of clients and other stakeholders, and positions us well to respond to current and emerging ESG themes.

Our approach builds on our sustainability achievements to date and positions us to continuously improve our ESG performance, focused on those themes that we believe drive the greatest value (for QIC, our assets and clients, as well as for the environment and community), realise opportunities and manage risks. Our strategic focus on material environmental and social issues is underpinned by a commitment to high standards of governance.

Our ESG strategy on a page can be seen below, and focuses our efforts around four priority areas identified in the following figure.

Figure 3: QIC Real Estate ESG Strategy

A set of long-term (to 2030) and short-term (FY24) objectives have been developed to guide the implementation of our ESG Strategy, against which we continuously monitor our progress over time. 

Figure 4: QIC Real Estate long-term targets and short-term objectives

We have mapped our four strategic focus areas and long-term objectives to some of the relevant targets or indicators of five of the United Nations Sustainable Development Goals (SDGs) to ensure they reflect both global sustainability priorities and issues that are material to our stakeholders. 

Figure 5: ESG priority area alignment to SDGs

We use our ESG strategy and objectives to guide our integration approach. ESG integration occurs across three key business decision making processes:

• Capital transactions
• Development projects
• Active asset management.

ESG is integrated through tools and guidance documents which are incorporated into key business decision making processes, so that ESG considerations are driven by the business in accordance with our ESG strategy. Several governance processes are in place to oversee our approach within the Real Estate business (see Our Governance for more information on how ESG is governed more broadly across Real Estate and QIC, including the role of the Board). 

Figure 6: QIC Real Estate ESG Integration framework 

Capital transactions

ESG considerations are incorporated into asset acquisition or divestment opportunities through assessment of how the acquisition or divestment will impact our ability to deliver our ESG strategy.

An early stage ESG assessment is undertaken on capital transactions to help the business understand how the potential property acquisition might support or hinder the delivery of QIC Real Estate’s ESG strategy and long-term objectives. This assessment includes a review of climate-related physical and transition risks, such as the asset’s exposure to extreme weather events and its ability to support the achievement of our existing 2028 net zero carbon emissions target.

If our interest in a potential property acquisition progresses to the stage of undertaking technical due diligence, we require, as part of the technical due diligence work, the assessment of several ESG related factors that align with the four priority focus areas within our ESG strategy. The results of this assessment are incorporated into the overall evaluation of the investment opportunity.

Development projects

QIC Real Estate designs, develops, and manages vibrant urban destinations that anchor thriving communities. We have a significant development pipeline across several of our assets, and we are also responsible for the development of the above ground precincts related to the Queensland Government's Cross River Rail Project. 

Our focus on sustainability extends to our development work. In FY22, we created a new Sustainable Design Brief to guide ESG decisions in the design and delivery of our development, major renovation, and capital upgrade projects, and to support these projects to deliver outcomes that align with our ESG Strategy and objectives. The Sustainable Design Brief aligns with our development decision making process and includes ESG checks and reviews at key project gateways.

The brief incorporates various criteria to help achieve QIC Real Estate's ESG objectives across our four priority focus areas. It also includes our target to achieve 5-Star Green Star Building certifications on new developments at core assets¹, as well as an increased focus on the actions of our contractors and suppliers. This includes requirements for contractors to implement practices that promote diversity, facilitate workforce participation and economic development of disadvantaged and under-represented groups, and reduce physical and mental health impacts on construction sites.

As part of the implementation of the Sustainable Design Brief, QIC Real Estate has engaged an ESG consultant to act as the peer reviewer on all development projects, to challenge status quo thinking and ensure our ESG Strategy and objectives are being met through these projects. This is in addition to the ESG consultant engaged as part of the development project team.

In FY23, we engaged an Indigenous design consultant ² to improve our guidance processes related to incorporating Indigenous design into our development and major renovation projects. The Indigenous Design Framework is intended to support our development projects to meaningfully and effectively engage with Aboriginal and Torres Strait Islander communities and respond to the needs and aspirations of First Nations peoples.  Our aim is to create greater First Nations voice and agency, embed sustainable and Country-centred design thinking, create employment opportunities, and continuously protect and be in the right relationship with Country. Within the Indigenous Design Framework there are four ‘Cultural Domains’, which include participatory-based design principles, and a checkpoint/indicator form that acts as an evaluation and accountability tool.

The Indigenous Design Framework will be incorporated into our Sustainable Design Brief in FY24 as part of the continuous evolution of ESG integration into the development process.

Figure 7: Four cultural domains forming the foundation of the Indigenous Design Framework

Active asset management

Our ESG strategy is integrated into our active asset management practices across our property portfolio. Initiatives that support the delivery of our ESG strategy and objectives are incorporated into strategic asset plans, capital plans, and annual budgets. Portfolio-level initiatives are developed and implemented in collaboration with our National Operations and Marketing teams, and asset-level management employees are engaged to identify and manage ESG risks and opportunities specific to their assets. Key performance indicators that are aligned with our ESG strategy and objectives are incorporated into business unit plans and individual team member scorecards to incentivise continued commitment to the delivery of our ESG strategy.

¹ Assets 100% owned and operated by QIC Real Estate.
² Louis Mokok (Djugun).

During the year, QIC Real Estate continued to manage our environmental approach and performance via our Environmental Management System (EMS). The EMS provides a framework to drive continuous improvement in our environmental performance and comply with applicable laws, regulations, and other environment-related requirements. 

The EMS is consistent with the recognised international standard AS/NZS ISO 14001:2016 Environmental Management Systems Requirements with Guidance for Use (ISO 14001). It provides a systematic approach to environmental management, using the Plan-Do-Check-Act approach outlined in ISO 14001:

• Plan: establish environmental goals and processes necessary to deliver results in accordance with QIC Real Estate's environmental objectives.
• Do: implement the processes as planned. 
• Check: monitor and measure progress against the environmental objectives and report the results. 
• Act: take actions to continually improve. 

The principal elements of QIC Real Estate's EMS are outlined below: 

Figure 8: Summary of QIC Real Estate's Environmental Management System

During FY23, we reviewed environmental risks and existing mitigation measures (including those associated with climate-related physical risks) at all assets that we manage and integrated these risks into individual Asset Risk Registers. These risk registers are the key operational risk and opportunity management device used across the business and are maintained via an online platform. A risk-based approach is used to set the frequency of risk review, where risks with a residual risk rating of ‘Medium’ or above are reviewed at least annually to promote a focus on continual improvement and risk mitigation efforts.

QIC Real Estate manages risk in accordance with the QIC Board’s Risk Appetite Statement and Risk Management Framework, including the Enterprise Risk Management Policy. The risk management process is consistent with International Standard ISO 31000: Risk Management. Our Risk Management Framework includes an enterprise-wide methodology for rating risks and provides for assessment of business risks using the consequence and likelihood tables incorporated into the Risk Rating Procedure included in the Board’s Risk Appetite Statement.

During FY23, we also commenced the integration of our separate environmental and workplace health and safety management systems into an integrated WHS&E management system. This work, which will continue in FY24, includes the reviewing and updating of numerous policies, procedures and standards and will help to further integrate the effective management of our health and safety and environmental risks and opportunities across the business.

QIC maintains memberships and affiliations with the following organisations and governing bodies. These memberships allow us the opportunity to contribute to the development of a range of initiatives while also gaining relevant insights into the latest developments in the ESG space. 

QIC’s current memberships and partnerships include: 

• United Nations Principles for Responsible Investment (UN PRI) 
• Responsible Investment Association of Australasia (RIAA) 
• Investor Group on Climate Change (IGCC)
• Financial Services Council (FSC)
• Australian Sustainable Finance Institute (ASFI)
• Property Council of Australia (PCA)
• Global Real Estate Sustainability Benchmark (GRESB)
• Green Building Council of Australia (GBCA)
• World Green Building Council Net Zero Carbon Buildings Commitment
• Climate Action 100+
• Business for Societal Impact (B4SI)

Within QIC Real Estate, we are also active members of a range of ESG-related forums and working groups, which included the following during FY23: 

• Shopping Centre Council of Australia
• Property Council of Australia, National Sustainability Roundtable
• Property Council of Australia, National Social Sustainability Roundtable
• Property Council of Australia, Diversity and Inclusion Committees - New South Wales, Queensland and Victoria committees
• Informed 365 Modern Slavery Property Supplier Platform Group
• Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV) Sustainability Committee
• Sustainable Digitalisation Project (SDP) Steering Group and Roundtable
• World Green Building Council's Net Zero Carbon Buildings Commitment working group
• IGCC Paris Aligned Investment Working Group