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2020 ESG report: Our environment

At QIC Global Real Estate (QICGRE), we recognise the investment performance benefits of embedding practices that reduce our environmental footprint, and continually monitoring our performance against key objectives.

Targeting Net Zero Emissions by 2028

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

This net zero 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 CO­2 emissions.

Net Zero Emissions

To find out more, read our Case Study.

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

Solar Power Project

QICGRE is investing in a national solar technology project for its portfolio of Australian retail assets, delivering PV Solar panels, battery storage and 24/7 system monitoring.

In Australia’s largest ever 100% onsite solar power agreement to date, this investment includes installation of solar infrastructure and ‘behind the meter’ solar generation technology, energy management and building automation.

The project is being rolled out in stages across the retail portfolio, reducing grid electricity consumption by around 30% and significantly lowering the carbon footprint of QICGRE’s retail assets. To find out more, read our Case Study.

Automated Operations Monitoring

QICGRE has partnered with leading Australian technology company, CIM, to undertake a major redesign of its property operations, using advanced automation technology to interrogate individual asset performance data on energy consumption and equipment maintenance, which is delivering real-time information that materially enhances operational efficiency and sets a new standard in best practice asset management.

This system uses a data-driven approach that collates and interrogates data from all the existing sensors across a building, where failures and deteriorations in asset energy performance instantly generate an alert that details the location of each fault, the root cause, the cost impact and the solution. Each alert automatically becomes an assigned maintenance ticket for onsite teams to close out rapidly, ensuring energy wastage is addressed without delay.

This technology is already delivering significant savings and reducing energy consumption across our retail portfolio. One example of this is at Eastland in Melbourne, where a project focusing on optimising equipment during critical peak demand periods has leveraged data insights and a strong partnership between QICGRE and CIM to deliver a 15.4% combined power reduction, significantly reducing pressure on the electricity network during times of extreme grid stress.

CEFC Partnership

Since 2017, QICGRE has been partnering with the Clean Energy Finance Corporation (CEFC) to reduce the carbon footprint of the QIC Shopping Centre Fund (QSCF) portfolio of shopping centre assets. In early 2020, the CEFC made an $80 million equity commitment to QSCF, following its earlier support through green debt facilities, and is continuing to support improvements in energy performance across the portfolio.

For more on this important partnership, listen to our QPod featuring CEFC’s Director of Investments, Michael Di Russo and QIC Fund Manager for QSCF, Michael Fattouh, where they discuss how their shared vision is delivering industry leading environmental goals and supporting the Fund’s commitment to net zero emissions for its core Australian retail assets by 20281.

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

QSCF Green Bond Update

In 2019, QIC Shopping Centre Fund (QSCF) issued a AUD300 million Climate Bond Initiative (CBI) certified green bond, a world-first for the retail property sector and an important milestone for QSCF, endorsing QICGRE’s progress and ongoing focus on sustainability.

The QSCF green bond was five times oversubscribed and attracted new debt investors with green and ESG investment mandates to the Fund from across Asia and Australia.

In the first year, focus has been on planning and implementation commencement for a range of significant new initiatives which are expected to provide long-term reductions in GHG emissions and GHG emissions intensity across the QSCF portfolio.

Each of the three shopping centres financed by the QSCF Green Bond proceeds (Eastland, Robina Town Centre and Grand Central) continue to demonstrate aggregate actual and forecast modelled carbon emissions intensity reductions in excess of the minimum requirement for Climate Bond certification of 30.8% for a 6 year tenor green bond.

The 2020 QSCF Green Bond Report is available here.

Climate Change

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. Climate Risk is embedded as one of six focus areas of QIC’s Responsible Investment Framework, understanding the risks and opportunities presented by climate change allow us to make more informed decisions across the asset classes we invest in.

In collaboration with QIC's Responsible Investment team, QICGRE has been actively involved in work to better understand and manage climate risk, including 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. For more information on this project, read our Case Study

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 (TCFD) recommendations in our QIC Sustainability Report. To view our TCFD report, and additional information on QIC's approach to understanding and addressing climate risk, see the 2020 QIC Sustainability Report.

National Australian Built Environment Ratings System (NABERS)

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

In the most recent NABERS assessment period (2019), the average portfolio energy ratings achieved were:

  • QIC Property Fund rating of 3.5 stars for energy, 3.1 stars for water
  • QIC Shopping Centre Fund rating of 3.3 stars for energy, 3.2 stars for water
  • QIC Office Fund rating of 5.19 stars for energy, 4.1 stars for water.

The implementation of environmental initiatives is delivering ongoing annual improvements in these scores, with the goal of a portfolio average 4.0 star rating in future NABERS assessments a key target for QSCF and QPF assets.

Green Star

Green Star is an internationally-recognised sustainability rating system for buildings, fitouts and communities. Well suited to assets <20,000m2 GLA, the Green Star Performance Benchmark provides a holistic sustainability performance measure.

In 2018, QICGRE submitted retail assets in our QARP and QACPF portfolios for Green Star Performance Portfolio Ratings, with both receiving 1-star ratings for this initial benchmark. The first review of this rating will be undertaken in 2021.

GRESB

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 its QIC Shopping Centre Fund (QSCF) and QIC Property Fund (QPF) and started reporting for the QIC Office Fund (QOF), QIC Australian Core Plus Fund (QACPF) and QIC Active Retail Property Fund (QARP) in 2016. Our results are detailed in the table below, with QICGRE’s performance remaining well above the GRESB average for all of our Funds in 2020.

It should be noted that this year’s GRESB results 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 have advised that objective comparison between absolute GRESB scores from this year and previous years is not meaningful1. These changes also led to an overall small decline in average scores across the Australian property industry2.

We are working 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.

Fund

2016
Score

2017
Score

2018
Score

2019
Score

 

 

2020
Score

Overall Score vs

GRESB Average

QIC Property Fund

82

89

88

85

77

77 vs 70

QIC Shopping Centre Fund

82

90

84

85

76

76 vs 70

QIC Australia Core Plus Fund

NA

NA

76

84

77

77 vs 70

QIC Office Fund

79

88

84

90

89

89 vs 72

QIC Active Retail Property Fund

83

87

82

83

79

79 vs 70

 

Note: As QICGRE’s fund level 2020 GRESB reports did not include a global ranking for non-listed retail funds, we have not included these in our reporting this year.


1
GRESB, 'Results Communication to Stakeholders', November 2020 https://gresb.com/wp-content/uploads/2020/11/Document-B-Results-Communication-to-Stakeholders.pdf

2Property Council of Australia, November 2020 https://www.propertycouncil.com.au/Web/Content/Media_Release/National/2020/Australia
_continues_to_lead_on_global_ESG_benchmarks.aspx

 

Our Targets

We are implementing the environmental initiatives set out below across our portfolio to deliver our commitments on energy, water and waste reduction targets.

Our short to medium-term (1-5 year) environmental objectives, are:

Target

Status

Reduce our electricity, water and waste intensity by 20% by 2020

Complete*

NABERS energy and water ratings for all core assets

Complete

All new development projects to be designed to receive minimum 5-star NABERS energy rating

Ongoing

Adopt real time energy monitoring to optimise energy efficiency

Complete

Engage with our tenants and communities to grow environmental education across the portfolio

Ongoing

30% of energy sourced from renewables by 2025

In progress

Deliver average 4-star NABERS energy rating by 2021 and minimum 4-star rating by 2023

In progress

*See below for information on our performance against the specific areas of this target.

Guided by our Sustainability Committee, QICGRE are currently undertaking a process of developing new forward looking targets which are aligned with our commitment to significantly improving the environmental performance of our assets for the long term.

Our five-year consumption targets

In 2015, we set five-year targets around our consumption of electricity, water and waste, to help us measure our progress against our ESG strategy. The below outlines our performance against these targets, comparing 2020 to our baseline year of 2015, for common areas of all QICGRE assets (including JV assets but excluding peripheral and associated properties).

Each year, our reported sustainability performance data is based on the best available consumption records across our portfolio at the time of reporting. This year, we have undertaken a full refresh of information available over the period included in our five-year sustainability targets, led by QICGRE’s Data Management team and our independent third-party sustainability consultant, WSP. This has included sourcing additional data from a range of sources, and reviewing the methodology used to analyse the data including aligning it with the GRESB environmental benchmark reporting standard, in order to ensure it represents the most accurate information available.

This has improved the consistency and accuracy of our historical data, and therefore meant some changes to previously reported sustainability performance data. The data in this year’s reporting represents the final product of this refresh project and has been verified by our independent third-party sustainability consultant, WSP.

Due to the significant impact of COVID-19 on the operation of our assets, for transparency we are presenting consumption data in this year's reporting for the full financial year (to end June 2020) as well as for the period excluding COVID-19 impacted performance (up until end-February 2020).

Electricity

Target: 20% reduction – achieved (based on 30 June data*)

Note: Reduced operating hours due to COVID-19 during March to June 2020 has impacted performance. Figures shown in brackets are for the non COVID-19 impacted performance period (12 months to 29 February 2020).

ELECTRICITY

FY15

FY20

FIVE-YEAR VARIANCE

Intensity (MJ/m2)

361.72

274.05

(298.66)

-24.24%

(-17.43%)

 

*COVID-19 significantly impacted opening hours and visitation at our centres nationally, resulting in less electricity consumption over the last four months of the reporting period.  Our reduction in electricity consumption over the previous five years was trending toward 20% at 29 February 2020, prior to COVID-19.

QIC has commenced a number of significant projects focused on further reducing electricity consumption as part of our plans to achieve net zero emissions for our core Australian retail assets by 2028.

These projects have already delivered reductions in our electricity consumption and are projected to deliver significant further reductions in the coming years.

Water

Target: 20% reduction – achieved

Note: Reduced operating hours due to COVID-19 during March to June 2020 has impacted performance. Figures shown in brackets are for the non COVID-19 impacted performance period (12 months to 29 February 2020).

WATER

FY15

FY20

FIVE-YEAR VARIANCE

Intensity (KL/m2)

1.16

0.82

(0.91)

-29.38%

(-21.55%)

Since 2015, several initiatives have been implemented throughout the centres that have reduced our consumption, including:

  • Installation of water tanks to supply water to gardens and amenities
  • Water efficient taps and toilets installed in all developments
  • Metering of cooling towers to alert if any over-consumption of water
  • Additional meters to tenancies to increase their awareness of water consumption.

 

Waste

Target: 20% improvement in landfill diversion - not achieved

Note: Reduced operating hours due to COVID-19 during March to June 2020 has impacted performance. Figures shown in brackets are for the non COVID-19 impacted performance period (12 months to 29 February 2020)..

WASTE

FY15

FY20

FIVE-YEAR VARIANCE

Diversion Rate

34.59%

41.40%

(37.69%)

6.81%

(3.08%)

Over the past five years, we have improved our landfill diversion rates through introduction of new contracts to capture more waste streams, as well as individual centres implementing their own focused recycling education and awareness programs. However, we have identified that further improvements can be achieved to our landfill diversion rates through a coordinated, portfolio level approach.

Our process for managing waste and recycling has been an area of additional focus for GRE, with a comprehensive portfolio audit undertaken into waste management at our assets. We are currently determining next steps in our waste management approach as identified by our portfolio audit process, which will be incorporated into our ESG strategy as it evolves in the coming year.


Our Data and Trends

QICGRE’s Environmental Reporting Standards define the scope and methodology for all environmental data reported through this ESG Report and other public interfaces.

Key observable trends in FY20 include:

  • Ongoing reduction in overall consumption intensity for electricity, water, and greenhouse gas (GHG) scope 2.
  • QIC has commenced a number of significant projects focused on reducing electricity consumption as part of our plans to achieve net zero emissions for our core Australian retail assets by 2028. These projects have already delivered reductions in our electricity consumption and are projected to deliver significant further reductions in the coming years
  • Beyond electricity, there is also a strong focus on significantly reducing the amount of natural gas our assets are consuming. Total natural gas consumption has increased in our portfolio over the past five years, largely due to the addition of two super regional assets in Victoria in FY19, where gas is used for heating and hot water. Natural gas consumption will be addressed as part of our overall net zero emissions commitment, which will include the development of a plan to gradually electrify major equipment currently running on natural gas.
  • Our process for managing waste and recycling has been an area of recent focus for GRE, with a comprehensive portfolio audit undertaken into our waste management. We are currently determining next steps in our waste management approach as identified by our portfolio audit process, which will be incorporated into our ESG strategy as it evolves in the coming year.

 

Material changes in data calculation methodology for FY20 have included:

  • Adoption of the GRESB reporting standard for calculating weighted average gross leaseable area for our properties
  • Utility consumption and intensity is calculated using Core properties that participate in GRESB only (previously reported data has included peripheral and associated properties)
  • An external review undertaken by WSP of utility accounts and meters in our external data platform to verify asset allocations for consumption.

 

Note: Reduced operating hours due to COVID-19 during March to June 2020 has impacted performance. Figures shown in brackets below are for the non COVID-19 impacted performance period (12 months to 29 February 2020).

ELECTRICITY

FY18

FY19

FY20

YEAR ON YEAR VARIANCE

Raw data (MJ)

458,129,276

490,277,304

421,588,433

(469,470,721)

-68,688,871

(-20,806,582)

Intensity (MJ/m2)

332.02

303.83

274.05

(298.66)

-9.80%

(-1.70%)

 

GAS

FY18

FY19

FY20

YEAR ON YEAR VARIANCE

Raw data (MJ)

82,912,589

155,396,438

141,532,944

(153,741,397)

-13,863,494

(-1,655,041)

Intensity (MJ/m2)

150.73

207.43

197.79

(213.11)

-4.65%

(2.74%)

 

WATER

FY18

FY19

FY20

YEAR ON YEAR VARIANCE

Raw data (KL)

1,269,229

1,575,176

1,262,988

(1,430,185)

-312,188

(-144,991)

Intensity (KL/m2)

0.92

0.98

0.82

(0.91)

-16.34%

(-7.05%)

 

WASTE - LANDFILL

FY18

FY19

FY20

YEAR ON YEAR VARIANCE

Raw data (tonnes)

17,775.95

23,464.24

18,095.69

(20,158.21)

-5,368.55

(-3,306.03)

Intensity (tonnes/m2)

0.01

0.02

0.01

(0.01)

-20.17%

(-12.35%)

 

RECYCLING

FY18

FY19

FY20

YEAR ON YEAR VARIANCE

Raw data (tonnes)

11,248.98

12,646.52

11,374.78

(12,195.47)

-1,271.74

(-451.04)

Intensity (tonnes/m2)

0.01

0.01

0.01

(0.01)

-5.66%

(-0.97%)

 

WASTE DIVERTED

FY18

FY19

FY20

YEAR ON YEAR VARIANCE

Diversion rate

38.76%

35.02%

38.60%

(37.69%)

3.58%

(2.67%)

 

SCOPE 1 GHG

FY18

FY19

FY20

YEAR ON YEAR VARIANCE

Raw data (tCO2-e)

4,272.49

8,007.58

7,293.19

(7,922.29)

-714.39

(-85.28)

Intensity (tCO2-e/m2)

0.01

0.01

0.01

(0.01)

-4.65%

(2.74%)

 

SCOPE 2 GHG

FY18

FY19

FY20

YEAR ON YEAR VARIANCE

Raw data (tCO2-e)

109,875.75

118,964.73

101,360.68

(113,349.09)

-17,604.05

(-5,615.64)

Intensity (tCO2-e/m2)

0.08

0.07

0.07

(0.07)

-10.63%

(-2.19%)

 

Please note: The information in the tables above represents the best available data at time of report publication.

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