Materials FY Introduction. 2. Materials. 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. Materials Stockland acknowledges that the development and operation of buildings accounts for large quantities of material usage and waste which have an impact on the environment. We therefore focus on materials selection, specification and construction to reduce the overall impact of our projects across their life-cycle. We equally acknowledge that the use of virgin materials can impact the environment and human health. By specifying the use of ecologically and health preferable materials in our developments, we are able to deliver tangible environmental, social and business benefits. 3. Management Approach The materials and equipment used within our assets have a significant bearing on the capital cost of our projects and on the operating cost and efficiency of the assets we retain and manage as owners. We therefore endeavour to control aspects of the material supply chain by specifying minimum sustainability requirements wherever possible. Development Materials selection in development projects is guided by our development sustainability policies as well as the Green Building Council s Green Star tool for each asset class, which cover materials selection such as timber, steel, concrete and PVC. The Green Star Materials category consists of credits that facilitate and recognise the efficient use and management of building and fit-out materials. Materials credits reward overall reductions to the amount of materials used, the reuse of building materials, and the specification of recycled and recyclable materials wherever possible. Green Star Materials credits aim to address and improve the environmental impacts of building products and materials by taking into consideration issues pertaining to the lifespan, lifecycle and end-use of these resources within Green Star certified projects (Source: Green Star Design & As Built v1.1 Submission Guidelines) All Commercial Property developments are required to achieve a minimum 4 Star Green Star design and As-Built ratings. As part of our commitment to deliver projects with sustainable materials practices, we ensure that our development contracts incorporate our materials selection policies. We produce Green Plans for development projects across all business units to set the design parameters for our engaged contractors. The Green Plans form part of the tender documents and specify minimum material sustainability requirements to achieve the minimum Green Star rating. Contractors are required to submit their designs to GBCA for a design rating assessment. Our ESD (Ecologically Sustainable Development) consultants are engaged on our commercial projects to develop the project Green Plan, which specifies the sustainability initiatives to be pursued by the project team and sustainability deliverables to be included in builder contracts. We engage directly with contractors to ensure adherence to Green Plans throughout development. Contract specifications include the Green Plans and standards set out in the business-specific sustainability policies. Upon project completion the contractor is required to submit the project for a GBCA As-Built rating. On all projects, we prioritise initiatives to promote responsible material selection where possible, including: Use of materials with Chain-of-Custody certification. Chain-of-Custody certification provides assurance that the materials used are those that we specified by establishing and assuring each person or group that has had possession of the material throughout its supply chain, from composition to delivery to installation. At least 95% (by cost) of all architectural timber used in buildings is certified by a Forest Certification Scheme that meets the Green Building Council of Australia s (GBCA s) essential criteria for forest certification; or is from a reused source; or a combination of both. Reduced use of toxic or harmful materials. Use of materials that reduce heat load, including performance glazing and cool roofing materials. These offer the opportunity for substantial reductions in power consumption which equates to significant cost savings over the life of the asset.

2 2 Re-use of recycled concrete and quarry materials. Low Volatile Organic Compound (VOC) products. Strategic plant and equipment selection, which considers capital and operating costs and water/power efficiency for key areas including light fittings, lifts and escalators, mechanical and hydraulic plant. This will reduce demand on the environment and realise net savings across the asset life cycle. Where appropriate, fly ash supplement is utilised in concrete to reduce the embodied energy (the energy used to produce cement) of the building development. Incorporation of locally sourced and manufactured materials. Our Retirement Living business is also committed to achieving a minimum 4 star Green Star rating on new retirement living villages. Our Retirement Living sustainability policy outlines the minimum standards for materials usage and specification where we target materials credits on our Green Star projects. In Retirement Living, our focus is on understanding which credits provide the most value back to our projects, and we anticipate that over time we may define a position similar to that of the Commercial Property business. Operations The most significant opportunity we have to influence the materials used in the operation of our business is in Commercial Property, most specifically Retail. We are constantly exploring opportunities to enhance the materials used in the operation of our retail assets to improve efficiency, enhance performance and minimise impacts on the environment. While opportunities for materials use and specification are much rarer in operations than in development, we are constantly seeking innovative approaches, which (once proven) are promoted to all our retail centres with support provided from our Group operations team. For office and retail tenancy fitouts, we have specific guidelines for materials selection, set out in our Green Office Fitout Guide and the Retail Design and Fitout Guide. Our office, logistics and business parks, and retail leases now contain clauses which encourage tenants to implement fitouts in line with these guides. Roles and Responsibilities Our Chief Operating Officer assumes ultimate responsibility at Group level for environmental performance, including materials, and reports directly to the Managing Director. The National Sustainability Managers are responsible for identifying risks and opportunities with regard to material use and for developing policy and business-wide performance standards. Sustainability Managers work with business units to ensure specifications are set for material use across our three business units Living developments. Development, design and project managers are responsible for ensuring materials used in development meet these specifications and the standards set by our policies and external certification requirements. The General Manager of Project Management and Direct Procurement is responsible for ensuring that minimum material sustainability requirements are effectively incorporated and administered into Commercial Property, Residential and Retirement Living construction contracts to ensure maximum influence on the performance of our supply chain, and on the quality of the products delivered. 4. Review and Evaluation We continue to monitor industry standards regarding material selection and specification. We keep abreast of material innovations and advances for use in the design, development and operation of our assets, and also collaborate with industry partners to identify, develop and/or trial innovative materials. We engage with our development contractors to ensure adherence to our Green Plans and use of specified sustainable materials. Upon project completion contractors are required to submit projects for a GBCA As-Built rating.

3 3 5. Update Development We undertook our first Life Cycle Assessment (LCA) on a retail development project at Stockland Baldivis in (as outlined above) as part of our Green Star commitments. LCA is an emerging opportunity for our development projects to understand the life cycle impacts of materials, energy and water through procurement, construction and operation. The LCA outcomes will assist in the design process to reduce the environmental impacts of future projects. The LCA at Baldivis demonstrated that our minimum design standards (4 star Green Star rating) achieve significant life cycle improvements over the reference building against which it is measured. The improvements were mainly due to the energy efficient design, which reduced energy consumption over the life of the asset. We are planning to undertake further LCAs on specific development projects in FY16. We identified opportunities in our Residential business in for greater impact on materials selection using our first 6 star Green Star certification at Caloundra South. The learnings gained through the certification formed the basis for a framework that helps us use more sustainable materials across our residential projects. Our focus for FY16 will be on embedding specifications into our contracts that drive more sustainable timber and concrete choices on our projects. Operations In, we focused on validating the financial savings of a 3M project that we profiled in our FY14 report. In FY14, a new 3M penetrating sealer was applied to the terrazzo tile surface of seven shopping centres, following a successful trial at Riverton in FY13. In, we were able to validate the financial savings at more than $350,000. The environmental savings are measured in terms of a reduction in the use of floor stripping chemicals (approximately 1 kilolitre per Centre/year), and a reduction in water consumption (approximately 800 litres per Centre/year). We are looking at opportunities to extend this as appropriate. Case Study: Recycling for Habitat for Humanity Habitat for Humanity is a global not-for-profit housing provider working in more than 80 countries around the world. It helps lowincome families achieve the dream of building and owning their own home, and to date, has built more than 140 homes in New South Wales, Victoria, South Australia, Queensland and Western Australia. Habitat for Humanity has a division called ReStore that collects materials, fittings and fixtures to recycle and reuse, or sell to help fund its affordable housing projects for under privileged families who would normally not be in a position to purchase their own home. Stockland and Habitat for Humanity trialled a recycling initiative in at our Tooronga shopping centre. We selected a retail fit-out (an old day spa) that was to be demolished. This process is frequently managed by the tenant and traditional demolition approaches send a large amount of reusable materials to landfill as waste. With Habitat for Humanity, we walked through the Tooronga tenancy and identified items that could be retained. These items were then either provided by Habitat for Humanity to people to help them with building their home, or sold to help fund housing. This is an innovative project as not only does it help low-income families own their own home, it also helps reduce the amount of waste going to landfill from our shopping centre fit-outs, and reduces costs for either the centre or the tenants. In we have ran this process at two assets, Tooronga and The Pines. We have committed to carry out the same process at Point Cook in FY16. Items to be retained

4 4 6. Targets and Progress Priorities Performance FY16 Priorities Pilot a Cradle-to-Grave assessment on a Commercial Property development to inform materials selection in the design process. Review our minimum standards and guidelines with regards to material selection and utilisation. LCA Assessment undertaken on Stockland Baldivis as part of Green Star commitments. This review was completed in and specific materials and sustainability requirements are now being incorporated into development contracts. Commercial Property Conduct a minimum of one LCA assessment on a retail development project. Residential Embed sustainable materials selections into developments. Retirement Living Conduct workshops nationally to identify sustainable materials practices that could be applied across our developments in collaboration with our supply chain. Workshops have been undertaken as part of the Residential specifications process. This process will continue into FY16. Trial an LCA Assessment on a Retirement Living development, review applicability and identify opportunities for further use.

5 5 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 13. Waste 14. Materials 15. Asset ratings and certification Shape Thriving Communities 16. Community investment 17. Community development 18. Customer engagement 19. Customer safety and security