We have adopted the following short-, medium- and long-term time horizons to assist in our consideration of climate-related risks and opportunities: 

Table 2: Short-, medium- and long-term climate change considerations  

Climate-related risks and opportunities have been considered with reference to two Network for Greening the Financial System (NGFS) transition scenarios that broadly align with the low, medium and high emissions scenarios described by the Intergovernmental Panel on Climate Change (IPCC) developed Representative Concentration Pathways (RCP) 2.6, 4.5 and 8.5.

Table 3: NGFS transition scenarios

To account for large variability in climate under each emissions scenario, we used four climate models (downscaled General Circulation Models) to understand the climate-related risks and opportunities across our asset portfolio. These model a range of changes to climate and provide variances for different regions of Australia. For each asset, we considered the results of these models at the asset’s location and classified them into: Hot/Dry, Cool/Dry, Hot/Wet, and Cool/Wet to represent variability in projected temperature change and rainfall change relative to current levels. This allowed us to explore the potential consequences for our assets across a range of outcomes produced by the climate models (reflecting the scientific uncertainty related to the impact of emissions on climate), including potential relative financial effects across our asset portfolio under each climate scenario.

This has enabled our assessment of climate-related risks and opportunities across various scenarios and climate variances at the asset and Fund level, and has provided a view of our exposure across the entire Real Estate portfolio.

Net zero carbon emissions

In June 2020, QIC Real Estate announced a commitment to achieving Net zero carbon emissions (Scopes 1 and 2) by 2028 for our core managed portfolio of Australian retail assets within QPF and QTCF. In FY21, the same target was expanded to cover QOF, and in FY22 it was extended to QARP and QACPF^37,38.

All QIC Real Estate funds are also signatories to the World Green Building Council’s Net Zero Carbon Buildings Commitment, and we align our definition of Net zero carbon with this framework. Being a signatory demonstrates our commitment to achieving Net zero in operational carbon emissions (Scopes 1 and 2), and drives our focus on reducing embodied carbon within our new development and renovation projects. As a signatory, we are committing to achieving Net zero carbon in operational emissions (Scopes 1 and 2) by 2028 and Net zero in embodied carbon within any new developments from 2030 onwards.

In FY24, QARP achieved its target four years ahead of time, with the three assets held in the fund achieving Climate Active Carbon Neutral Certification using the NABERS Buildings (base building) pathway³⁹ which is awarded to businesses and assets that have reached Net zero carbon based on an agreed emissions boundary for a specific certification type. The Climate Active Carbon Neutral Standard for Buildings (base building) certification pathway broadly aligns with the boundaries of the Fund’s Net zero carbon emissions (Scopes 1 and 2) target, and includes a number of additional Scope 3 carbon emissions from water supply, wastewater treatment and waste which must be accounted for in QARP’s carbon neutral operating status under the certification standard. The target was met primarily through various energy efficiency initiatives alongside the installation of large-scale rooftop solar, with a small amount of residual emissions accounted for via the purchase of offsets which meet the Climate Active standard. The early achievement of this target is a significant milestone not just for QARP, but also for QIC Real Estate’s broader ESG journey. These certifications were maintained throughout FY25, and will be renewed and reported on each year moving forward.

Each QIC Real Estate fund has a bespoke Net Zero Carbon Emissions Roadmap, built up from detailed asset-level plans which include various carbon emissions reduction initiatives required at an asset level to achieve Net zero carbon emissions (Scopes 1 and 2) by 2028. The roadmaps are aligned with each asset’s 10-year capital plan and annual budget, and are reviewed and updated annually to maintain currency. An aggregated roadmap for the real estate portfolio is presented below, demonstrating the progress we have made to date, as well as planned future initiatives to achieve Net zero carbon emissions by 2028 (Scopes 1 and 2) across our five funds.

Figure 10: QIC Real Estate portfolio summary – Net zero carbon emissions roadmap⁴⁰

Fund-level roadmaps detailing our strategy to achieve Net zero carbon emissions by 2028 can be found here: Fund-level Net zero carbon emissions roadmaps.

FY25 carbon emissions performance

To track performance towards our 2028 Net zero carbon emissions objectives, we set interim, year-on-year carbon emissions reduction targets for each of our funds, which act as stepping stones to achieving our longer-term carbon ambition. Performance against our FY25 targets is presented in Table 4.

Table 4: Fund-level FY25 carbon emissions reduction performance against annual targets⁴¹, reported using a market-based approach to Scope 2 emissions calculation to enable like for like comparison

The below table provides an overview of onsite solar systems installed in recent years across QIC Real Estate’s asset portfolio. The energy generated by our onsite solar systems accounted for 20% of QIC Real Estate’s total direct energy consumption and 26% of total electricity consumption in FY25. System sizes and supply commencement dates can be seen in Table 5.

Table 5: QIC Real Estate solar system sizes and supply commencement dates 

Initiatives completed during the year to reduce energy use across our portfolio are outlined below.

Building Management System Upgrades

As part of our ongoing commitment to smart building innovation and energy efficiency, we undertook upgrades to Building Management Control Systems (BMCS) across several key assets during the year to the latest Internet of Things (IoT)-enabled Niagara Tridium protocol. Upgrades commenced or were completed at Eastland Shopping Centre, VIC; and Robina Town Centre, Kippa-Ring Shopping Centre, Big Top Shopping Centre and 111 George Street office tower (all in QLD). The upgrades enable enhanced real-time monitoring of asset performance through improved connectivity, visibility and integration across systems allowing data-driven performance optimisation outcomes. This supports our broader sustainability and decarbonisation goals, and drives operational savings. Further similar upgrades are planned across several additional office and retail assets in FY26.

Lighting upgrades

As part of our ongoing energy efficiency initiatives, we have continued our rolling program of LED lighting upgrades across the retail portfolio. This included internal lighting enhancements at Epping and Werribee (both in VIC), and Grand Central, Robina and Kippa-Ring (all in QLD) shopping centres during the reporting period, delivering improved lighting and reduced energy consumption outcomes. In addition, we completed carpark lighting LED upgrades at Pittwater Place, NSW; and Forest Lake, Nerang Mall, The Village Mount Gravatt and Big Top (all in QLD) shopping centres, significantly improving safety, visibility and operational efficiency while supporting our carbon emissions reduction targets. This program of upgrades will continue through FY26.

Mechanical plant optimisation

As part of our capital upgrade planning, which supports our decarbonisation program, we have undertaken HVAC system enhancements across multiple sites during the year to improve energy efficiency and reduce carbon emissions. This includes air handling unit (AHU), fan, duct and variable speed drive upgrades at 33 Charlotte Street, QLD; Canberra Centre, ACT; and Pacific Epping and Pacific Werribee (both in VIC). Chiller replacements have also been completed at Robina, QLD, while package air conditioning upgrades were delivered at 111 George Street, QLD. Vertical transport (VT) upgrades were additionally implemented at Castle Towers, NSW and Logan Hyperdome, QLD. The program targets end-of-life system upgrades, replacing old plant and equipment with more energy efficient and fully electrified (where commercially viable) HVAC solutions aligned with our sustainability and carbon related goals, which also reduces operational energy costs.

Data analytics and plant optimisation

QIC Real Estate continues to leverage CIM’s PEAK Platform to enhance operational efficiencies and sustainability outcomes across our retail portfolio. The analytics software is deployed across 16 assets, integrating data from five Building Management System (BMS) vendors, and monitoring nearly 9,000 pieces of equipment. With approximately 1.5 billion data points captured annually and over 1,100 actions resolved at a 93% closure rate, the PEAK Platform continues to drive sustainability, operational efficiency and cost savings across our portfolio.

The CIM Peak platform is an important tool for planning and validating energy and water efficiency initiatives across our centres. It provides real-time insights that help identify inefficiencies, guide targeted improvements and verify the impact of implemented measures, supporting smarter, data-driven sustainability decisions.

QIC Real Estate saw a 7% reduction in total energy consumption in FY25 compared to FY24. The portfolio also maintained its energy intensity in FY25 compared to the prior year. This was driven by:

• A 10% reduction in natural gas consumption as a result of:
  • BMS upgrades and improved control measures for boiler systems.
• A 7% reduction in electricity consumption as a result of:
  • Lower electricity consumption driven by efficiency and control actions carried out across FY24 and FY25.

The sale of Westpoint from QTCF and QPF in January 2025 was also a driver of the above results, as its operational performance has been removed from our reporting as of its sale date. In particular, Westpoint was a major contributor to overall natural gas consumption across the QIC Real Estate Portfolio (~9% of natural gas consumption in FY25).

The above energy performance insights also offer an explanation for our FY25 carbon performance outcomes, which include:

• Absolute Scope 1 and 2 (location-based) carbon emissions reduced by 4% in FY25 compared to FY24, whilst carbon emissions intensity increased by 4% compared to the prior year.
• Absolute Scope 1 and 2 (market-based) carbon emissions reduced by 7% in FY25 compared to FY24, whilst carbon emissions intensity was maintained compared to the prior year.

The difference between location-based and market-based outcomes results from the different methodologies for each outlined in the Federal Government National Greenhouse Accounting Factors. Location-based accounting excludes any electricity exported back to the grid from our onsite solar systems and the carbon emissions reduction associated with this, which can happen if electricity generation is higher than centre usage, and relies on State carbon emission factors that can distort results compared to more accurate market-based methods. In contrast, market-based accounting enables us to recognise all renewable energy generation from our onsite solar systems and therefore the full carbon reduction associated with these through renewable energy certificate surrender.

In addition, in FY25 QIC Real Estate commenced reporting Scope 3 carbon emissions, broken down by category in alignment with the GHG Protocol and based on relevance and materiality to our business. Please refer to the Key Data and Trends section of the report for more information on this.

Figure 11: QIC Real Estate portfolio annual energy use and intensity, FY19 – FY25⁴⁶ 

Figure 12: QIC Real Estate portfolio annual carbon emissions (location-based Scope 2), FY19 – FY25⁴⁷ 

Figure 13: QIC Real Estate portfolio annual carbon emissions (market-based Scope 2), FY24 – FY25⁴⁸ 

Figure 14: QIC Real Estate portfolio annual Scope 3 carbon emissions^{49, 50}   

In considering climate-related transition risks and opportunities across our key decision-making processes, we focus on integrating our Net zero carbon emissions by 2028 objectives across each of our funds, and the outcomes of any other relevant assessment work, in the following ways.

Active investment and asset management

Within our active investment and asset management processes, our efforts are focused on transitioning the assets within each of our funds to Net zero operational carbon emissions in the most commercially practical way, identifying and employing new business opportunities, and continually improving internal data management and reporting processes to ensure we can meet rapidly evolving climate-related reporting obligations, and better understand our direct and indirect carbon emissions profile to identify opportunities to reduce it.

QIC Real Estate has committed to achieving Net zero carbon emissions (Scopes 1 and 2) by 2028 across each fund⁵¹. Roadmaps to achieve Net zero carbon emissions have been developed for each fund based on asset level carbon reduction opportunities and are updated annually. Carbon emissions reduction initiatives included in the roadmaps are incorporated into asset-level capital plans and annual budgets. They inform the delivery of our annual carbon reduction objectives which act as stepping stones to achieving our longer-term Net zero goals. We also seek to identify and employ new business opportunities such as the use of supportive policy incentives like the Victorian Energy Upgrades program and the roll-out of electric vehicle charging stations at our retail assets.

QARP achieved its Net zero carbon emissions objective ahead of its 2028 target date, obtaining Climate Active certification for carbon neutral operations (via a NABERS base building pathway) across the three assets in that Fund⁵² in FY24, which has been maintained for each financial year since then. This marked an important milestone in our ongoing management of climate-related transition risks and opportunities across the Real Estate portfolio.

During FY25, we completed a review of and an update to our Scope 3 carbon emissions reporting methodologies, and have commenced reporting Scope 3 carbon emissions broken down by category in alignment with the GHG Protocol, and based on relevance and materiality to our operations. This has provided greater transparency, relevancy and comparability of our Scope 3 carbon emissions profile. It also provides better visibility over the various drivers of our Scope 3 carbon emissions and improves our ability to understand any opportunities to influence these in future. 

Development projects

Within our development processes, our focus is on ensuring our development and major renovation projects align with the concept of a low carbon economy. We want our new developments to be highly energy efficient, low in embodied carbon, avoid the use of fossil fuels and maximise onsite renewable energy generation.

Our Sustainable Design Brief guides sustainability decision making in our development work, and embeds our ESG strategy and long-term ESG objectives into our building design and delivery activities, clearly stating our minimum requirements regarding sustainability performance of new developments and major renovations, and ensuring we maximise the improved investment performance that highly efficient, sustainable buildings can deliver.

Capital transactions

A separate process is used to assess climate-related risks and opportunities within any capital transactions that we undertake, which leverages knowledge gained from progressing our Net zero operational carbon objectives across each fund’s existing portfolio through our fund-level decarbonisation roadmaps.

A review of climate-related risks and opportunities is included in an early stage ESG assessment undertaken on prospective asset acquisitions, to help the business understand how a potential property acquisition might either support or hinder our current ESG performance levels and the ongoing delivery of our ESG strategy and long-term objectives. During this assessment, climate-related transition risks and opportunities are assessed through the lens of the property’s existing energy efficiency and operational carbon emissions and any effort and cost required to bring the asset in line with our current portfolio-level energy and carbon performance, and in time improve energy efficiency and achieve Net zero operational carbon emissions in line with our existing fund level 2028 Net zero carbon emissions (Scopes 1 and 2) targets. An assessment is also undertaken of how any identified risks or opportunities might impact the asset’s current or future commercial performance. 

If our interest in a potential property acquisition progresses to the technical due diligence stage, we require the assessment of climate-related transition risks and opportunities related to the prospective asset using scenarios that align with our existing assessments — Representative Concentration Pathways (RCPs) of RCP 2.6, RCP 4.5 and RCP 8.5 and time horizons of 2030, 2050 and 2070. This provides us with a more granular view of the effort and cost associated with the potential property acquisition to maintain Net zero in operational carbon emissions if already achieved by the fund or reach this by the targeted date of 2028. It also helps us to understand any related impacts to the asset’s current or future commercial performance. The results of the assessment are incorporated into the overall evaluation of the investment opportunity, including review by our Trustee Governance Committee.

Potential asset divestments are assessed against how it may impact our current ESG performance levels and ongoing ability to achieve our ESG strategy, related long-term objectives, and Net zero carbon emissions targets across each fund so that if necessary, the recalibration of ESG objectives can be considered. This includes any commercial-related impacts to ensure possible outcomes are broadly understood. Additionally, information on current energy and carbon performance of an asset is provided as part of a broader suite of ESG-related information to prospective buyers as part of the sale process.

The following tables present the material climate-related transition risks and opportunities, relevant time horizon, potential financial impacts identified through assessment of climate-related risks and opportunities, and our responses to manage these. The risks and opportunities are outlined in Table 6 and our corresponding management responses relate to both the real estate portfolio and fund level (QPF, QTCF, QACPF⁵³, QARP and QOF/QGOP).

Table 6: Climate-related transition risks and opportunities for QIC Real Estate

QIC Real Estate’s approach to managing climate-related risk has been developed in response to the outputs of our work to assess the financial impacts of physical climate risk on each of our assets and funds. Our assessment of the financial impacts of physical climate risk has involved consideration of both acute and chronic risks across scenarios that broadly align with the low, medium, and high emissions scenarios described by IPCC-developed RCP 2.6, RCP 4.5 and RCP 8.5.  

Assessing physical climate risk   

In 2021, we undertook a qualitative assessment to provide an overview of physical climate risk exposure across our managed asset portfolio, including the possible impacts of a set of consistent climate variables across each asset.  

During FY24, we built on our 2021 assessment and continued our work with an actuarial and insurance consultant with specific expertise in physical climate risk to evaluate and quantify the financial impacts of climate change at an asset, fund and portfolio level. This work used a methodology that is specific to our Real Estate and fund level business models, adaptable across our diverse asset portfolio and uses a consistent framework to ensure the results can be rolled up into a fund and real estate portfolio view.   

In trying to understand the possible financial impacts of physical climate risks and opportunities across our portfolio, we undertook an assessment of the relationship between climate events (known as ‘climate drivers’, including both acute and chronic risks) and the Net Operating Income (NOI) for each asset. This included modelling the potential impacts (both positive and negative) up to 2070 under three climate scenarios (RCP 2.6, RCP 4.5 and RCP 8.5) and four climate models (classified as: Hot/Dry, Cool/Dry, Hot/Wet, and Cool/Wet), across several relevant asset level income and expense items, as shown in Figure 15.    

Figure 15: Impact of climate drivers on net operating income for QIC Real Estate^59,60 

Figure 16: Formula for calculating the change in net operating income and asset value as a result of climate drivers  

This assessment has enabled us to identify the expected relative impact of climate change (positive or negative) across relevant asset level income and expense items, and therefore NOI, over each time horizon at a fund level and across the portfolio. The assessment focuses on the relative impact of each climate driver and has highlighted those most material to the financial performance of our assets. The outputs of this assessment are helping us prioritise the implementation of further asset level mitigation measures that respond to the climate drivers identified as having the largest relative financial impact.  

Asset level climate risk exposure is reviewed annually as part of our risk management processes and repeated periodically (likely every five years or as new climate science becomes available) at an asset, fund and portfolio level to incorporate current climate science.  

Our assessment of the financial impacts of physical climate risk has focused on understanding the inherent risk of a set of chronic and acute climate events at each asset. We can then overlay our existing risk mitigation and management measures to understand the residual risk of each identified climate risk at an asset and fund level across our portfolio. In assessing the risks, we consider the worst-case outcomes from the various climate scenarios and time horizons, and existing risk mitigants, as assessed within QIC’s Risk Management Framework.  

This process has helped us understand the overall resilience of existing strategies and measures at each asset to mitigate climate-related risks and identify further actions for implementation, prioritising those that respond to climate risks assessed to have the greatest financial impact.   

In considering physical climate risk across our key decision making processes, we integrate the outcomes of our assessment work in the following ways:  

Active investment and asset management  

The results of our work to understand the possible financial impacts of climate change have informed the assessment, management and prioritisation of climate-related risks in asset level risk registers. These are established and maintained through our WHS&E management system. These risk registers use QIC’s enterprise-wide risk matrix to:   

1. Assess the inherent risk rating  
2. Document existing risk mitigation controls  
3. Assess the residual risk rating considering the controls in place  
4. Identify and manage the implementation of any additional risk mitigation initiatives, focusing on those that respond to the risks assessed to have the biggest financial impact to an asset.  

The specific consideration of climate-related risks in our standard operational risk management processes ensures that:  

• Asset specific experience and operational knowledge contribute to the risk assessment  
• Climate-related risks continue to be assessed and managed within our existing management processes  
• Roles and responsibilities for managing risk are clearly defined  
• The implementation of additional risk mitigation initiatives is incorporated into capital and operational budgets and tracked and reported on.  

This approach enables the management of asset level physical climate-related risks and opportunities to follow the same process at the fund and portfolio level, in line with QIC’s broader risk management processes.  

Development projects  

Within our development processes, the results of our work to understand the possible financial impacts of climate change have informed project-specific climate change risk assessments, and the resulting climate adaptation measures have been incorporated into our projects. The results have also informed climate resilience guidance contained in our Sustainable Design Brief.   

Our Sustainable Design Brief embeds our ESG strategy and long-term ESG objectives into our building design and delivery activities, including those related to physical climate resilience, clearly stating our minimum requirements regarding the sustainability performance of new developments and major renovations, and ensuring we maximise the improved investment performance that sustainable and resilient buildings can deliver.   

Capital transactions  

Our processes include the assessment of physical climate-related risks as part of our capital transactions due diligence. This leverages the knowledge gained from the financial climate risk assessment completed across our existing portfolio and helps evaluate how an acquisition or divestment might impact our overall risk exposure at a fund and portfolio level.   

A review of physical climate-related risks is included in early stage ESG assessments of prospective acquisitions to help the business understand whether an acquisition might pose a risk to, or support, the delivery of our ESG strategy and long-term objectives at the fund and portfolio level. Climate-related physical risks are initially assessed via Munich RE’s Location Risk Intelligence portal. This portal provides location-specific exposure ratings for a range of climate-related physical risks under two climate scenarios (RCP 4.5 and RCP 8.5) over three time horizons (2030, 2050 and 2100) and provides an initial view of the asset’s risk exposure compared to other assets within the fund and broader real estate portfolio.   

If our interest in a potential acquisition progresses to technical due diligence, we undertake a deeper dive assessment of climate-related physical risks (including acute and chronic risks) and opportunities related to the prospective asset using scenarios that align with our existing analysis - RCP 2.6, RCP 4.5 and RCP 8.5, and time horizons of 2030, 2050 and 2070. The results of this assessment are incorporated into the overall evaluation of the opportunity, which includes consideration of the potential financial implications the asset’s risk exposure might have at both the fund and broader portfolio level.  

Potential divestments consider asset-level climate risk as determined by our physical climate risk assessments, which may partially drive our decision to divest. Due diligence information provided to prospective buyers includes an assessment of the potential physical climate risks exposures, as assessed via Munich RE’s Location Risk Intelligence portal. 

Table 7 shows the material climate-related physical risks, relevant time horizon, potential financial impacts identified through assessment of climate-related risks and opportunities, and responses to manage these. Physical climate risks are deemed material if the risk is assigned a residual risk rating of ‘Medium’ or higher⁶¹ as assessed within QIC’s Risk Management Framework.  

The risks and opportunities outlined below, and our corresponding management responses relate at both the real estate portfolio and Fund level (QPF, QTCF, QACPF⁶², QARP and QOF/QGOP).  

Table 7: Material climate-related physical risks for QIC Real Estate  

Table 8 shows the residual risk ratings of the material climate-related physical risks as a percentage of QIC Real Estate’s portfolio gross asset value. The ratings demonstrate the overall resilience of our existing portfolio, and strategy related to managing climate-related physical risks.   

Table 8: Residual risk ratings as a percentage of QIC Real Estate portfolio gross asset value (30 June 2025)  

Fund-level residual risk ratings as a percentage of the Fund’s gross asset value (30 June 2025) can be found here.