Assurance Statement

Stockland Corporate Responsibility & Sustainability (CR&S) Report 2009

To Stockland's stakeholders,

Banarra Sustainability Assurance and Advice (Banarra) was commissioned by Stockland to assure its CR&S Report 2009 (the Report) against the AA1000 Assurance Standard (AA1000AS) 2008. Banarra* was also commissioned to validate the Report against the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines. This is Banarra's third reporting cycle with Stockland, so we have built on our previous understanding of the organisation and its progress.

Assurance scope

The assurance scope is a Type 2 engagement under AA1000AS (2008) and the scope includes:

• Assessing, to a high level of assurance, the nature and extent to which Stockland adheres to AA1000APS (2008) principles of Inclusivity, Materiality and Responsiveness and how it communicates this adherence in the Report.
• Verification of the performance information within the following material issue areas:
- Energy and greenhouse gas emissions to a high level of assurance; and
- Biodiversity, capability development, climate change, community development, community investment, employee engagement, employee profile, employee health & safety, engaging with suppliers, housing affordability, NABERS energy & water ratings, political donations, waste and water to a moderate level of assurance.

The performance information was verified using the criteria in the Guide to Corporate Responsibility Reporting in the Property Sector, Draft, February 2009 and, for performance information not included in this guidance, the GRI Guidelines. In addition, the NGERS Technical Guidelines 2008 were also used as criteria for verification of greenhouse gas emissions.

Banarra Assurance Methodology

Within the above scope, our methodology included:

• Interviews with: a) 11 of the Executive Committee and Board, including Matthew Quinn, Graham Bradley and Nick Greiner, concerning sustainability performance and governance; b) 40 Stockland staff at corporate, divisional and site levels concerning sustainability performance, strategy, policies for material issues, implementation of responses and performance data verification; and c) 12 external stakeholders concerning stakeholder engagement and sustainability performance.
• Review of sustainability policies, strategies, CR&S Board Minutes as well as sustainability management systems and documentation.
• Checks of the methodology, completeness and accuracy of all quantitative performance information and the processes for capturing, aggregating and reporting this data, through interviews and document review, comparison with the assurance criteria, re-calculation and cross-checks with corroborative evidence, including sample testing of source data.
• Checks of the accuracy of sampled qualitative performance information (such as management assertions and case studies), through interviews and document review.
• Visits to Stockland's headquarters in Sydney, NSW and three Stockland sites: North Lakes (residential, retirement living and commercial developments), Qld; Merrylands (retail centre and development), NSW; and Sydney Office developments (Optus and Triniti), NSW.
• An independent check of Stockland's material issues and stakeholder views on these issues, including analysis of peer reports, media articles on Stockland in FY09, Stockland's own documentation and engagement records and issues identified from Banarra's interviews.
• A review of the Report to check consistency with the GRI application level requirements of B+ and that it is consistent with the nature and extent of Stockland's adherence to the AA1000 AccountAbility Principles.

Findings and Recommendations

We believe Stockland has appropriately communicated the nature and extent of its adherence to the AA1000APS (2008) principles in the Report. Findings and recommendations on the nature and extent of Stockland's adherence to the principles are provided below.

Inclusivity - has Stockland a stakeholder engagement and participation process?

Stockland has made a commitment to engage with its stakeholders and Banarra found strong support of this commitment within the Executive team and other staff interviewed. Stockland has identified its key stakeholders and developed stakeholder engagement processes at the corporate and project level. Stockland acknowledges that the quality of engagement processes varies between projects and we are pleased that Stockland has started to develop a framework to enable more consistent stakeholder engagement across projects.

Banarra identified the following areas for improvement:

• Stakeholder participation in Stockland's sustainability decision-making at both a project and corporate level is limited and this should be reviewed;
• Stockland should develop a process to proactively identify and manage conflicting views between stakeholders at both a project and corporate level;
• Stockland should develop a process for stakeholder engagement at operational Retirement Living sites that reflects the unique stakeholder relationships that Stockland has in this part of the business; and
• Stockland engages with its Residential & Retirement Living customers through marketing and satisfaction surveys. It should take this engagement further and provide feedback to these stakeholders on the results of the surveys.

Materiality - has Stockland identified its most important sustainability issues?

We were pleased that Stockland has developed a formal materiality process to identify its most important sustainability issues. All material issues identified for FY09 are included in the Report. In addition, Banarra's independent materiality review did not identify any further material issues or issues of high stakeholder interest for inclusion in the Report.

Banarra identified the following areas for improvement:

• The materiality process is currently not integrated within Stockland's business processes and we recommend that it is aligned with Stockland's other risk and opportunity systems; and
• Currently the materiality process draws from a relatively narrow range of stakeholder views. Stockland should develop a method to capture and consolidate stakeholder views from existing, broader engagement for use in the materiality processes.

Responsiveness - has Stockland responded to these issues?

Stockland has developed a corporate CR&S Strategy outlining responses for its most important sustainability areas. Some progress has been made in the development of divisional strategies and guidance although there is still more to do in this area. From our site visits, whilst we found evidence that site level sustainability management was congruent with corporate strategies, we found that this was mostly due to project based initiatives rather than the result of implementing corporate strategies or guidelines.

Stockland has developed comprehensive responses to the majority of its material issues. In particular we are pleased to see that it has developed monitoring and a greater understanding of sustainability performance in the Residential business. We encourage Stockland to use this information and understanding to further improve its sustainability responses in Residential. 

We believe there are some areas where Stockland could develop a more comprehensive response to its material issues. In particular, The sustainable supply chain program should have greater reach within the organisation. Group Procurement manages the program and has limited visibility of procurement across the divisions. Although some gaps are being closed, Stockland would benefit from a more coordinated effort to ensure consistent sustainable procurement practices.

Stockland has made good progress through development of some quantitative environmental targets. Nevertheless, we believe that Stockland could do more and develop quantitative targets for all material issues. Stockland should also ensure that commitments are specific and measurable and progress against these should be clearly described in the Report.

Performance Information Verification

Based on our methodology we conclude:

• There is evidence that the performance data for Australian energy and greenhouse gas emissions is correct in all material aspects and is a fair representation of Stockland's performance in this area in FY09;
• There is no evidence that the performance information for biodiversity, capability development, climate change, community development, community investment1, employee engagement, employee profile, employee health & safety, engaging with suppliers, housing affordability, NABERS energy & water ratings, political donations,  waste and water is not correct in all material aspects and is not a fair representation of Stockland's performance in these areas in FY09; and
• Banarra could not come to a view on the accuracy of the UK greenhouse gas emissions and energy data. This is due to a lack of transparency on the boundary of the data-set and the lack of complete energy billing information.

Banarra has a number of findings and recommendations to improve the data management and reporting process. These findings are not considered material relative to Stockland's performance:

• Stockland has made improvements to greenhouse gas emissions reporting systems with the implementation of the CCAP tool. However, some of Stockland's other environmental data reporting systems lack rigour and it is recommended that improvements are made to contractor data management, version control and internal data checking.
• Stockland has varying asset boundaries for each of its environmental data-sets. We believe this is confusing to stakeholders. Whilst Stockland have provided a broad description of each boundary in the Report, we recommend that boundaries be reviewed so that all environmental data-sets account for the same group of properties.
• Stockland should review its data-sets against the Draft PCA Reporting Guidelines once they are finalised. In particular we recommend that Stockland report on developments with significant community complaints and hectares of land with high biodiversity value lost to development.

Global Reporting Initiative

We concur with Stockland's own assessment that they have achieved GRI application level B+.

Responsibilities & Independence

Stockland was responsible for preparation of the Report, stakeholder identification and engagement as well as material issue identification and response. Banarra's responsibility was to provide an independent assurance opinion of the Report using AA1000AS. This opinion is provided to Stockland Management and any reliance third parties may place on this statement is entirely at their own risk. Banarra has provided Stockland a management report containing more details on the findings and recommendations in this statement.

Banarra was paid by Stockland to conduct this assignment. Other than this payment, the assurance team declares itself independent in relation to Stockland and its stakeholders. There is a detailed statement on our independence, impartiality and competencies at www.banarra.com.

Richard Boele
Certified Lead Sustainability Assurance Practitioner IRCA No. 1188527

Rebecca Edwards
Principal Environmental Auditor, IEMA

Banarra Sustainability Assurance and Advice
Sydney, Australia
19 October 2009