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.

We undertake regular materiality assessments to ensure our ESG Strategy continues to respond to the most material risks and opportunities across our portfolio as these evolve over time. We conducted our first materiality assessment in 2021, with a subsequent assessment completed in 2024 which included research on current and emerging megatrends and extensive engagement with external and internal stakeholders. Outside these formal materiality assessments, we monitor our material themes on a regular basis, including 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 KPIs of our Senior Leadership, and other relevant team members who play a leading role in their delivery. These are linked to remuneration outcomes.

Table 1: QIC Real Estate materiality assessment process

* 12 external stakeholders were interviewed as part of both the 2021 and 2024 materiality assessments.

Figure 1: Material sustainability themes

Figure 2: Description of material issues 

QIC Real Estate’s ESG strategy aims to amplify our efforts on ESG themes identified as most material and strategically important to the real estate portfolio. Through our ESG strategy, we endeavour to align our approach with best practice and the evolving expectations of clients and other stakeholders, to best position ourselves 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. We focus 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.

During the year, we reviewed and updated our ESG strategy, using the 2024 materiality assessment as the main input to the process. As a result of the refresh, the previous ‘Resource efficiency and circular economy’ pillar of the strategy has been pivoted to focus on ‘Nature and circularity’. This recognises the emerging importance of nature and biodiversity as an ESG topic for the property sector, with resource efficiency having become less strategic and instead, part of business-as-usual activities. Our updated ESG strategy was endorsed by QIC Real Estate’s Sustainability Committee in June 2024.

Figure 3 illustrates our ESG ‘strategy on a page’, which focuses our efforts around four priority areas. 

Figure 3: QIC Real Estate ESG Strategy

A set of long-term (to 2030) and short-term (FY25) 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 six of the United Nations Sustainable Development Goals (SDGs) to ensure they reflect both global sustainability priorities and issues that are material to our stakeholders.

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 that are incorporated into key business decision making processes. This ensures that ESG considerations are driven across the business in accordance with our ESG strategy. We have several governance processes in place to oversee our approach within QIC Real Estate (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 5: QIC Real Estate ESG Integration framework

Capital transactions

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

We undertake an early stage ESG assessment on capital transactions to aid our understanding of how the potential acquisition might impact our existing performance levels, and support or hinder the ongoing delivery of our ESG strategy and long-term objectives. This assessment is informed by our ESG strategy focus areas and 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 2028 net zero carbon emissions target. We also consider other ESG performance factors related to historical energy and water use intensity, waste generation and diversion from landfill, and property level benchmarking results such as NABERS and Green Star.

Where a potential property acquisition progresses to technical due diligence, we require a deeper assessment of factors across our ESG strategic focus areas. This provides us with a more granular view of the effort and cost associated with maintaining our existing ESG performance levels and achieving future ESG objectives if we were to acquire the asset into the portfolio. The results of this assessment are incorporated into the overall evaluation of the investment opportunity.

Potential asset divestments are also assessed against how the divestment may impact our existing performance levels and ongoing ability to achieve our ESG strategy and related long-term objectives, and the findings are incorporated into the divestment opportunity evaluation.

Development projects

QIC Real Estate designs, develops, and manages vibrant urban destinations that anchor thriving communities. Our development pipeline comprises future expansion and improvement opportunities across several of our assets. 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 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 our 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 assets⁹, as well as requirements related to the actions of our contractors and suppliers. These include the promotion of diversity, the facilitation of workforce participation and economic development of disadvantaged and under-represented groups, and the reduction of physical and mental health impacts on construction sites. 

As part of the implementation of the Sustainable Design Brief, a separate ESG consultant must be engaged on each development project to act as peer reviewer, challenging status quo thinking and ensuring our ESG strategy objectives are being met through these projects. This is in addition to the ESG consultant engaged as part of the development project team.

The Sustainable Design Brief also incorporates an Indigenous Design Framework, intended to support our developments to meaningfully and effectively engage with Aboriginal and Torres Strait Islander communities and respond to the needs and aspirations of First Nations peoples through the design and delivery of our projects. 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.

Figure 6: 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 its delivery are incorporated into strategic asset plans, capital plans, and annual budgets. Portfolio-level initiatives are developed and implemented in collaboration with our Investment Management, National Operations and Marketing teams, and asset-level management employees are engaged to address ESG risks and opportunities specific to their assets. Key performance indicators that align with our ESG strategic objectives are incorporated into business unit plans and individual team member scorecards to incentivise continued commitment to the delivery of our ESG strategy.

⁹ Assets 100% owned and operated by QIC Real Estate.

We leverage sustainable finance instruments to enhance our integration efforts and accelerate ESG performance improvements across our real estate assets and Funds. 

We began this journey in 2019, when the QIC Town Centre Fund (QTCF) issued a A$300m Climate Bond Initiative (CBI) certified Green Bond, a world-first for the retail property sector and an important milestone for our ESG journey. In FY24, we developed an updated Sustainable Finance Framework (the Framework) with support from a consortium of selected banks. The Framework outlines the parameters for the issue and management of sustainable finance instruments across the Funds within the Real Estate portfolio.

The Framework has been developed in line with our ESG strategy and voluntary process guidelines accepted as best practice for the issuance of sustainable finance instruments globally. These guidelines have been issued by the Loan Markets Association, the Asia-Pacific Loan Markets Association, the Loan Syndications and Trading Association and the International Capital Markets Association, and are collectively known as the ‘Market Standards’, sustainable finance instrument.

Sustainable finance instruments issued under the Framework will commence implementation in FY25 and beyond, and may include Sustainability Linked Instruments, such as sustainability linked loans, and Use of Proceeds Instruments, such as green bonds.

Our Sustainable Finance Framework can be found here.

We 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. 

Figure 7: Summary of QIC Real Estate's Environmental Management System

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

Our business 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.

In FY24, we engaged an external consultant to undertake a gap analysis of QIC Real Estate’s existing EMS to understand the level of effort needed to meet the requirements of the International standard ISO 14001. The findings from this review will be used to identify opportunities for improvement and plan their implementation over the coming years.

The integration of our separate environmental and workplace health and safety management systems into a single WHS&E system continued during FY24. This work includes reviewing and updating numerous policies, procedures and standards and will help to further integrate the effective management of our health, 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:

• UN-backed Principles for Responsible Investment (UN PRI)
• Responsible Investment Association 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)
• Climate Action 100+
• Business for Societal Impact (B4SI)
• UN Global Compact Australia Network
• Net Zero Asset Managers (NZAM) initiative
• World Green Building Council Net Zero Carbon Building Commitment

Within QIC Real Estate, we are also active members of a range of ESG-related forums and working groups, which included the following during FY24:

• Shopping Centre Council of Australia
• Property Council of Australia, National Sustainability Roundtable
• Property Council of Australia, National Social Sustainability Roundtable
• Property Council of Australia, Human Rights and Modern Slavery Working Group
• 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