Waste FY Introduction. 2. Waste. 3. Management Approach

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1 1. Introduction This document forms part of our Disclosures on Management Approach (DMA) series, prepared in accordance with the Global Reporting Initiative s G4 Guidelines. The DMA series is designed to support and complement our annual corporate reporting by providing a detailed overview of our approach to managing key sustainability issues of significance to our business, our industry and our stakeholders (see Appendix A). The series will be reviewed annually with performance updates and progress against targets disclosed each year as part of our sustainability reporting process. 2. Stockland is committed to protecting and enhancing the natural, built and human environment. We acknowledge that waste disposal has significant environmental impacts, both locally and globally. treatment and disposal can have a major impact on the surrounding environment, with nutrients released during waste breakdown potentially polluting groundwater and waterways, incineration contributing to air quality and pollution issues and landfills constituting a reasonable component of the world s total greenhouse gas emissions. We take these impacts very seriously and are committed to managing our waste efficiently and seek to reduce, reuse and recycle our waste whenever feasible, minimising our contribution to landfill. 3. Management Approach To ensure waste is appropriately segregated, stored and disposed of in accordance with regulatory requirements, we have a national approach for each asset class (embedded in sustainability policy documents). and recycling management plans are prepared for each asset both in operation and in construction to successfully manage the environmental issues associated with production and disposal of waste. The plans outline the waste and recycling systems employed at the asset for the disposal of waste produced during operation or in development. Key objectives for the waste and recycling management plans include to: Reduce the amount of general waste produced by office tenants, retailers, contractors and customers and encourage greater levels of recycling; Implement management systems to measure, record and monitor waste and recycling at the asset; Find ways to continuously improve on these metrics and benchmark against other assets; and Provide training and education to tenants, contractors and Stockland employees promoting good waste management habits. The waste management plan outlines how various waste streams should be managed including: Communal waste areas and recycling points; Solid waste; Liquid waste; water; Hazardous waste; Special waste (e.g. clinical, pharmaceutical, drug or medicine waste); and Construction and demolition waste. In addition to general waste management, our business-specific sustainability policy outlines the minimum standards and requirements with regard to waste diversion. It also sets minimum requirements for asset performance and natural resource consumption during the life of the asset, which further minimises wastage. In our development projects, contractors are required to provide a strategy during the tender phase which outlines how they will meet the minimum requirements specified in the policies. During the construction period, documentation is submitted to Stockland to validate the adherence to these standards. We have set minimum waste recycling targets for our operating businesses. These are particularly important for our Commercial Property business where we have a high degree of influence to help reduce waste and manage the use of materials.

2 2 Development We set minimum standards for construction waste recycling for our Commercial Property development projects, with at least 80 per cent of waste to be diverted from landfill. This is clearly specified in our development contracts. Green Plans are also prepared to guide design and construction in our Commercial Property business, specifying minimum sustainability requirements with regards to waste management. We also require the provision of suitable areas for tenant recycling facilities for our Commercial Property development projects. Our construction contracts in each of our business units require that an Environmental Management Plan (EMP) be developed for the project by the relevant building contractor to ensure construction activities reflect the vision and design requirements and respond to policy and regulation appropriately. We encourage and support retailers undertaking a tenancy fit-out in our shopping centres to recycle as much of their construction waste as possible, as outlined in Stockland Tenancy and Delivery Guidelines. We also require our suppliers to comply with all relevant environmental protection legislation including contamination and waste dumping (location control). To help us better understand volumes of waste sent to landfill and/or recycled we collect waste data from our residential and retirement living development contractors. Operations Our retail assets have a minimum recycling target for operating waste of 36 per cent diversion from landfill by FY17. The minimum recycling target across our office and business park assets is 70 per cent diversion from landfill by FY17. We also nominate specific diversion targets for each Commercial Property asset to ensure that our overall operating waste and recycling goals are being achieved each year. We work closely with our waste management contractors to optimise our waste and recycling services to achieve better diversion from landfill figures. We continue to explore opportunities for more effective disposal of organic waste across our retail portfolio. For example, in Cairns our waste is taken to SITA s Advanced Resource Recovery Technology (ARRT) facility which sorts non-organic materials from mixed solid waste. Dry materials are manufactured into alternative fuels that replace fossil fuels in industrial furnaces, and organic waste is processed in accordance with appropriate Australian standards to produce high quality compost which is sold to local horticultural enterprises, such as sugarcane producers. Retirement Living: In Retirement Living we introduced recycling practices into the standard design guidelines for clubhouses and homes in all new developments. In most cases, residents homes are serviced by local council waste services. We therefore have limited visibility or control of waste generation streams and are exploring options with waste contractors that service some of our clubhouses. 4. Review and Evaluation: As part of our commitment to continuous improvement, we review our minimum specified guidelines and standards with regard to waste management and landfill diversion. During the tender phase, contractors provide a strategy outlining how the specified minimum requirements for waste management will be met. During the construction period, documentation is submitted to Stockland to validate the adherence to these standards. We engage and partner with our supply chain to identify improvements to their construction waste management approach, and monitor and review industry developments to identify and incorporate best practice process and procedures across our asset classes. 5. Update Development Commercial Property The table below summarises construction waste collected at retail developments projects. For each project, we have set a minimum construction waste to landfill diversion target of 80% and we require our builder partners to submit quarterly waste reports for the duration of the project. We use these reports as evidence for our Green Star ratings. Our combined landfill diversion rate for construction projects in is 92%, which exceeds our Green Star target by 12 percentage points and is an improvement on our FY14 result of 85%. This demonstrates that we can achieve significant recycling rates in construction and that these results can be achieved by a range of different builders in our supply chain across Australia.

3 3 In this reporting period, construction waste data has been collected for the following projects: Stockland Hervey Bay, QLD (Builder - Lend Lease); Stockland Wetherill Park, NSW (Builder Brookfield Multiplex); and Stockland Baldivis, WA (Builder Probuild). The table below summarises the total levels of waste from our retails assets and the extent of recycling, waste to landfill and diverted from landfill. Table 1: Retail Profile Tonnes FY14 FY13 FY12 FY11 1 FY10 Total 6,428 4,453 7,230 8,596 58, Recycled 5,940 3,778 6,526 6,971 52, to Landfill ,625 6, Diversion from Landfill (%) 92% 85% 90% 81% 89% 83% Percentage of Retail Developments Included (%) Residential and Retirement Living construction waste (tonnes) The table below summarises the waste streams from our greenfield residential and retirement living developments. Due to the nature of greenfield developments, the waste figures generated on a per year basis do not necessarily reflect the level of activity of that year. can be stored for a period of time onsite until reused or exported offsite to landfill when the space becomes unavailable. While our rate of diversion from landfill is down 2% in, it is important to note that the total waste generated has significantly reduced and that we are tracking well above our target diversion rate of 80%. Table 2: Residential and Retirement Living to Landfill FY14 FY13 FY12 FY11 Total waste 82,033 80,135 82, , ,899 diverted from landfill 78,514 78,149 80, , ,811 sent to landfill 3,617 1,986 2,355 6,478 23,088 Diversion from landfill 96% 98% 97% 95% 93% Operations In, we continued to engage with our tenants, retailers and customers to further improve the levels of recycling at our retail sites. The quality of our waste data is dependent on the quality of data provided to us by our waste contractors. Over the last year we have faced challenges with various waste contractors who have provided either inaccurate or incomplete data. We have been working closely with our waste contractors to improve the quality of data they provide through changes in reporting and regular reviews. This year we had issues with a waste contractor unable to provide complete data for the full year. We have therefore excluded these incomplete periods from the reporting, which account for 20% of the portfolio. The quality of waste data remains a key focus for FY16. We aim to improve data quality and have engaged a specialised waste consultant to help us by: Educating both tenants and cleaners to help improve diversion rates by FY17; and Monitoring, reconciling and interrogating the waste data to further improve the accuracy and quality of the information that is provided by the contractors. 1 Significant increase in retail development waste in FY11 due to the development of Shellharbour, Merrylands and Townsville.

4 4 Operational waste (tonnes) Table 3: Operational Retail Office FY14 FY13 FY12 FY11 FY10 FY14 FY13 FY12 FY11 FY10 Total 16,717 16,809 14,890 13,808 12,907 12,058 1,298 1,607 1,810 2,697 3,644 2,781 Total waste to landfill 11,537 11,549 10,443 9,793 9,275 8, , Total waste recycled 5,181 5,260 4,446 4,015 3,632 3, ,272 1,725 2,455 1,834 Diversion from landfill (%) % portfolio reporting Case Study: Reduction at Stockland Wendouree In, we set out to reduce waste to landfill from the Stockland Wendouree shopping centre by assisting and educating the centre s retail tenants and the general public to recycle waste more effectively. We did this through installing new bins and signage and through an intensive education program for retailers and the general public. This project was made possible by a $25,000 grant from Sustainability Victoria to Stockland Wendouree, which was one of seven Victorian businesses to receive funding in 2014 under the Smarter Business Smarter Recycling program. Stockland s waste management advisors, Kumite Sustainability and Management, also played a key role in securing funding and driving the project. We aimed to deliver a reduction of waste to landfill through implementing on-site collection programs to capture materials for recycling, including soft plastics (plastic bags and pallet wrap), plastic and metal coat hangers and commingled glass, metal, and plastic containers. Recycling systems for the above materials were implemented at all tenancies at Stockland Wendouree and public place commingled recycling bins were installed. The program was officially launched by the Minister for the Environment on October 29. Engagement with stakeholders has been very successful, with a high level of participation by both retail tenants and the general public. Extensive discussions took place with tenants regarding the type and size of bins to be installed within each of their premises. It was important to purchase bins that were small enough to be fitted into retailers existing spaces, most of which did not have much spare room, but were also large enough to accommodate a full day s worth of materials. Following the initial education program, regular engagement with retailers has been one of the key elements to the program s success. Ongoing engagement is crucial with any shopping centre program as there is constant movement of tenants, as well as staff turnover within specific businesses. The project has resulted in an increase in the centre s waste diversion rate from 30% to 37% and the program is currently on track to reduce waste to landfill by around 20 tonnes per year. With planned future changes to the tenancy mixture at the centre, this figure will increase to around 30 tonnes per year.

5 5 6. Targets and Progress Priorities Performance FY16 Priorities Commercial Property Commercial Property 90% construction waste diverted from landfill Retail: 36% of waste diverted from landfill Office and Business Parks: Maintain 70% diversion rate Achieved In Progress Not Achieved Our projects at Baldivis, Wetherill Park and Hervey Bay have achieved construction waste landfill diversion rates of 92% for. Our retail portfolio has achieved a diversion rate of 31% in. Consultants have been engaged to provide tenant education that will assist in improving diversion rates. The change in contractors has led to a different method of sorting contamination. Consultants have been engaged to provide education to both tenants and cleaners that will assist in improving diversion rates. 90% construction waste diverted from landfill by FY17. Retail: 36% of operational waste diverted from landfill by FY17. Office and Business Parks: Maintain 70% operational waste diversion rate by FY17. Work with consultants to provide education to both tenants and cleaners that will help improve diversion rates by FY17. Residential Achieve a minimum 60% diversion of construction waste from landfill for all new residential construction contracts by FY17. Retirement Living Identify opportunities for waste initiatives to divert further waste from landfill in operational and development sites.

6 6 7. Appendix A Complete list of documents in the DMA series: Enrich Our Value Chain 1. Governance and risk 2. Stakeholder engagement 3. Supply chain management 4. Employee engagement 5. Human capital development 6. Diversity and inclusion 7. Health and safety 8. Human rights Optimise and Innovate 9. Energy and emissions 10. Climate resilience 11. Biodiversity 12. Water management and quality Materials 15. Asset ratings and certification Shape Thriving Communities 16. Community investment 17. Community development 18. Customer engagement 19. Customer safety and security