In June 2020, QICGRE announced a commitment to achieving Net Zero Carbon Emissions by 2028 for our core managed portfolio of Australian retail assets¹.

This net zero carbon emissions pathway has enabled QICGRE to become the first Australian signatory to the World Green Building Council's Net Zero Carbon Buildings Commitment for a retail portfolio, contributing to a global effort from the building and construction industry to limit global temperature rises through a significant reduction in ­carbon emissions.

Our plan to achieve this target includes a scaled-up energy efficiency program combined with a large scale onsite solar roll out, both of which commenced during the FY21 reporting period. More information on the activities completed during the year to progress each of these programs can be seen below.

The following table presents QIC GRE's scope 1 and 2 carbon emissions associated with its core managed Australian retail portfolio of assets, demonstrating our year-on-year progress toward our 2028 net zero target.

*Note: Reduced operating hours and foot traffic due to COVID-19 related intermittent lockdowns during FY20 and FY21 has impacted performance across both years, and this should be taken into consideration when comparing year on year performance and considering any related carbon emission reductions.

During FY21, the QIC Office Fund approved a commitment to achieve net zero carbon emissions by 2030. Work is underway for QOF to become a signatory to the World Green Building Council's Net Zero Carbon Buildings Commitment, which is expected to occur in FY22.

Onsite solar rollout

Our large scale onsite solar roll out program commenced during FY21, with solar systems installed at four of our centres. System sizes and supply commencement dates can be seen in the table below.

Installation of onsite solar also commenced during the year at Hyperdome, which is expected to be completed during FY22. The solar networks across these initial five assets (Tranche 1 of the program), once completed, are expected to deliver over 15 megawatts of solar power capacity and reduce carbon emissions across the portfolio by more than 17,000 metric tonnes per year.

We plan to commence reporting on the carbon reductions achieved through these systems in the 2022 QICGRE Sustainability Report, allowing incorporation of a 12-month performance period.

Energy efficiency

A number of initiatives were completed during the year to reduce our energy use across the portfolio, which are outlined in more detail below.

Lighting upgrades

Energy efficient LED lighting upgrades to back of house, carparks and loading docks were completed at Watergardens, Woodgrove, Hyperdome, Canberra Centre and Westpoint during FY21.

Mechanical plant upgrades and optimisation

Major chiller upgrades were completed at Watergardens, Robina Town Centre and Westpoint during FY21.

• Watergardens: Several individual, packaged air conditioning units were replaced with a centralised chiller plant achieving improved operating efficiencies and energy savings. Additional energy savings have been achieved by taking advantage of tenancy air overflow conditioning to common mall area i.e. implementing a spill air system.
• Robina Town Centre: Decommissioned two end-of-life chillers and replaced with one high-capacity energy efficient chiller. This was part of a plan to progressively rationalise from five to three chillers at the Centre by transitioning to more appropriately sized and efficient systems.
• Westpoint: Replacement of a 4-Megawatt chiller with a high efficiency 1.9-Megawatt chiller.

Data analytics and plant optimisation

During FY21 we continued the progressive deployment of CIM's Peak platform across the GRE portfolio of assets. Chiller performance monitoring was initiated at Watergardens and Westpoint which assisted in identifying performance issues with the existing chillers at those sites and guided the optimum sizing of replacement chillers as part of end-of-life upgrades. Equipment run-time tables were also developed for each asset which has allowed asset operation managers to validate the run-time of key plant and equipment and cut unnecessary operation where identified. During FY22, this monitoring will be rolled out across the other shopping centre assets.

¹‘Core assets’ includes those Australian shopping centres held by QIC Property Fund and QIC Town Centre Fund which are 100% owned and operated by QICGRE.

In 2019, QIC Town Centre Fund (QTCF) issued a A$300 million Climate Bond Initiative (CBI) certified green bond, a world-first for the retail property sector and an important milestone for QTCF, endorsing QICGRE's progress and ongoing focus on sustainability.

The Green Bond asset pool included three high-quality Australian retail assets which have undergone staged redevelopment programs and are part of a portfolio-wide energy efficiency program of works which continue to deliver further energy improvements. These assets are:

Our Green Bond update covers performance and activities completed during the 2020 calendar year.

Carbon reduction initiatives implemented over this period included the commencement of installation of a 5.5-Megawatt solar PV system at Robina Town Centre and a 1-Megawatt system at Grand Central, noting these two systems officially commenced supply in the second quarter of the 2021 calendar year. The systems are expected to reduce annual carbon emissions at the centres by more than 8,500 tonnes CO2-e (Robina Town Centre) and more than 1,500 tonnes CO2-e (Grand Central) respectively.

Mechanical plant upgrades at Robina resulted in the decommissioning and replacement of two end-of-life chillers with one high-capacity energy efficient chiller. This work is part of a plan to progressively rationalise from five to three centralised chillers at the centre by transitioning to more appropriately sized and efficient systems. The deployment of our CIM data analytics platform continued through 2020 with chiller performance modelling and equipment run-time monitoring implemented across the three centres. This initiative, along with the support of the CIM engineers assists our centre operations staff to optimise the operation of significant plant and equipment targeting improved energy efficiencies and lowering our carbon emissions.

COVID-19 lockdowns across Victoria and Queensland during 2020 resulted in reduced operating hours and foot traffic due to government mandates on non-essential retail. This has therefore impacted our environmental performance over the same period and significant reductions in the carbon emissions intensity at Eastland and Grand Central during 2020 must be considered in this context. This QTCF Green Bond update report has received limited assurance from Sustainalytics. Their annual review letter can be viewed here.

Transaction Summary

Allocation Reporting for SFT as at 30 June 2021

The A$300 million QTCF Green Bond proceeds have been fully allocated to the QTCF Green Bond project pool as at 30 June 2021, which comprised expenditure incurred for staged redevelopments of Eastland, Robina Town Centre and Grand Central.

Impact Reporting for SFT

*Estimation calculation based on: Final GLA (m²) x (Monthly GHG Intensity - Baseline GHG Intensity) x 12 (months/yr) /1,000 (kg/tonne).

QICGRE continued to monitor our performance against a set of short term objectives during the FY21 year. These targets can be seen in the table below, along with a status update on our performance against them.

As part of our ESG Strategy refresh, we have developed a revised set of long and short term objectives against which to monitor our ongoing performance in future. These can be seen in the Refreshed QICGRE ESG Strategy section and will guide the ongoing implementation of our updated ESG Strategy.

* Target superseded at the end of FY21 by our refreshed ESG Strategy revised set of long and short term objectives.

NABERS is a national ratings system that measures the environmental performance of Australian buildings. QICGRE submits properties in QPF, QTCF and QOF portfolios for NABERS energy and water assessment.

In the most recent NABERS assessment period of the 2020 calendar year, the following average portfolio ratings were achieved:

Note: The above table presents self-calculated portfolio ratings based on formal individual asset ratings provided by NABERS.

QPF

NABERS Energy and Water for Shopping Centre Base Building, 100% of QPF shopping centre portfolio has been rated by NABERS Energy and 99% has been rated by NABERS Water.

• Claremont Quarter (Energy only)
• Castle Towers
• Westpoint
• Canberra Centre
• Eastland
• Watergardens
• Woodgrove
• Hyperdome
• Robina Town Centre
• Grand Central
• Werribee
• Epping
• Helensvale
• Coomera Town Centre

QTCF

NABERS Energy and Water for Shopping Centre Base Building, 100% of QTCF shopping centre portfolio has been rated by NABERS Energy and 98% has been rated by NABERS Water.

• Claremont Quarter (Energy only)
• Castle Towers
• Westpoint
• Canberra Centre
• Eastland
• Watergardens
• Woodgrove
• Hyperdome
• Robina Town Centre
• Grand Central
• Werribee
• Epping

QOF

NABERS Energy and Water for Office Base Building, 100% of QOF office portfolio has been rated by NABERS Energy and Water.

• 111 George Street
• 33 Charlotte Street
• 30-54 Mary Street
• 63 George Street

The ongoing implementation of environmental initiatives is delivering continuous annual improvements in these scores. RE has committed to achieving average 5.5-Star NABERS Energy and 4.5-Star NABERS Water ratings across our office fund by 31 December 2025 and achieving a minimum 4-Star NABERS Energy rating by 31 December 2023 for each of our core retail assets.

Green Star is an internationally recognised sustainability rating system for buildings, fitouts and communities. The Green Star Performance Benchmark provides a holistic sustainability performance measure.

In FY22, QICGRE will submit all retail and commercial assets for Green Star Performance ratings.

The Global Real Estate Sustainability Benchmark (GRESB) is one of many tools used by institutional investors to engage with their investments, with the aim of improving the sustainability performance of their investment portfolio, and the global property sector.

QICGRE has participated in GRESB reporting since 2012 for the QIC Town Centre Fund (QTCF) and QIC Property Fund (QPF) and started reporting for the QIC Office Fund (QOF), QIC Australia Core Plus Fund (QACPF) and QIC Active Retail Property Fund (QARP) in 2016.

As noted in QICGRE's 2020 Sustainability Report, GRESB results from 2020 were based on some fundamental changes to assessment methodology, and it is important to recognise the significance of these methodological changes and their impact on individual fund results.

Due to the significant changes made to the reporting tool in 2020, GRESB subsequently advised that objective comparison between absolute GRESB scores from 2020 with previous years' results was not meaningful. These methodology changes also led to an overall small decline in average scores across the Australian property industry.

We continue to work closely with the Property Council of Australia and its members to ensure the GRESB benchmark further evolves as a useful tool for investors to understand and compare performance, reward demonstrated leadership in real performance, and appropriately measure the industry's contribution to mitigating climate change impacts and the many other significant ESG challenges faced by Australian real estate managers. Our 2021 results, alongside prior year results, are detailed in the table below. Significant variations in the 2020 and 2021 scores for the QIC Office Fund and the QIC Active Retail Property Fund both relate to the types of sustainable building certifications achieved by the assets in the funds. GRESB scoring favours GBCA Green Star Performance ratings due to their holistic approach to rating the overall sustainability of a building. QIC Active Retail Property Fund's assets were assessed under this rating in 2020, leading to higher overall GRESB score. The remaining RE portfolio of assets will be assessed under this rating in FY22.

*Average score of all GRESB participants in 2021. 

Note: Since 2020, QICGRE’s fund level GRESB reports have not included a global ranking for non-listed retail funds, and as such we are no longer able to provide this information. Due to the significant changes made to the reporting tool in 2020, GRESB have advised that objective comparison between absolute GRESB scores from this year and previous years is not meaningful.

COVID-19 continued to impact our portfolio during FY21 resulting in reduced operating hours and foot traffic due to intermittent lockdowns associated with government mandates on non-essential retail and stay at home orders. This in turn has impacted on the environmental performance of our assets, resulting in significant reductions across the majority of metrics when compared with previous years. This should be taken into consideration when comparing against previous years' performance.

Aside from this, a number of initiatives were undertaken throughout the year to improve our performance across a number of metrics:

• RE's large scale solar roll out commenced during the reporting period. The new rooftop systems installed at Domain Central, Robina Town Centre, Watergardens and Grand Central started generating energy largely towards the end of FY21 and have contributed to a decline in grid-sourced electricity use and resulting carbon emissions across the portfolio.
• The recycling rate across QICGRE's entire portfolio of retail and office assets has improved during the reporting period, increasing from 39% in FY20 to 49% in FY21. A proportion of this improvement is related to our implementation of Pulpmaster food waste management systems at Grand Central, Nerang Mall and Forest Lake Shopping Centre. Food waste generated by tenants at the centres is collected and deposited into the Pulpmaster systems which macerates the waste before pumping it into a holding tank. The macerated pulp is collected from the holding tank and taken offsite to an organics recycling facility where it is turned into fertiliser and supplied to farms. This process diverts organic material from disposal to landfill, avoiding related carbon emissions.
• Scope 3 carbon emissions have increased in FY21 compared to previous years. GRE's reported scope 3 emissions have historically included emissions from landfill waste generation, energy use and the energy used by specialty tenants. In FY21 RE commenced capturing energy use and emissions from major tenants, which has resulted in an increase due to this broadening of reporting boundary¹. Major tenants generally manage their own energy supply agreements.

¹ To calculate the emissions related to major tenants' energy use, RE has:

1. Used actual FY21 energy use figures provided by the tenant, or
2. Used actual CY20 energy use figures provided by the tenant, or
3. Estimated FY21 energy use based on actual FY21 energy intensity (kWh/m²) of an alternative tenant that most closely matches the expected operational profile of the tenancy that requires estimation. This method was applied to approximately 37% of the total gross lettable area occupied by major tenants across the portfolio of retail assets which accounts for 21% of scope 3 emissions.

2 Scope 3 emissions include Scope 3 emissions from QICGRE's use of energy and generation of landfill waste and emissions related to the use of energy by our retail and office tenants.
³ The FY21 Scope 3 emissions figure includes additional Scope 3 sources compared to previous reporting years.

Note: This table presents aggregated data from QICGRE's portfolio of retail and office assets. The FY21 data in the table has received limited assurance. Data from assets that QIC does not have operational control over are excluded, this includes our joint venture assets, Westfield Coomera and Helensvale and Claremont Quarter.

The following downloadable spreadsheet presents asset level FY21 environmental performance data for each of GRE's five funds: RE FY21 Asset Environmental Performance Data.

QICGRE retail and office portfolio annual energy consumption and intensity, FY19 - FY21

QICGRE retail and office portfolio FY21 recycling rate

QICGRE retail and office portfolio annual carbon emissions, FY19 - FY21

Note: Scope 3 carbon emissions increased in FY21 due to commencement of capturing energy use and emissions from major tenants.

Climate change is an increasingly important focus for QIC. The risks and opportunities posed by observed and projected changes in the climate have the potential to impact the asset classes and companies that QIC invests in, including our real estate portfolio. Climate Risk is embedded as one of six focus areas of QIC's Responsible Investment Framework and Climate Change is a key focus area of QICGRE's refreshed ESG Strategy. Understanding the risks and opportunities presented by climate change allows us to make more informed decisions across the asset classes we invest in.

During FY20, QIC undertook a piece of work to better understand and manage climate risk across its real assets and which included the co-development of a ‘Climate Change Resilience Study’ with an academic partner to understand the potential physical impacts of climate change on our assets. This assessment of physical climate risk was undertaken across our retail portfolio during FY20 and was rolled out across the office portfolio during FY21. The information gathered on physical impact risks and existing mitigation factors will feed into our next phase of work in this space during FY22.

As an investor, we continuously develop and evolve our capacity to manage climate risk on behalf of our clients through processes we are developing to specifically assess our exposure to both physical and transition risks. Since 2018, QIC has responded to the Taskforce on Climate-related Financial Disclosure recommendations in our QIC Sustainability Report. To view this report and additional information on QIC’s approach to understanding and addressing climate risk, see the latest QIC Sustainability Report.