DEXUS Property : 2017 Assurance Report

Independent limited assurance report

What we found

Based on the work described below, nothing has come to our attention that causes us to believe that the Subject Matter for the year ended 30 June 2017 has not been prepared, in all material respects, in accordance with the Assurance Criteria.

To the Board of Directors of DEXUS Funds Management Limited,

What we did

DEXUS Funds Management Limited (DEXUS) engaged PricewaterhouseCoopers (PwC) to perform a limited assurance engagement on the preparation of selected Subject Matter contained within their 2017 Performance Pack in accordance with the Assurance Criteria for the year ended 30 June 2017.

The Subject Matter included within the scope of our engagement comprised the following performance metrics contained within the 2017 Integrated Online Reporting Suite presented at: http://www.dexus.com/who-we-are/corporate-responsibility-and- sustainability/sustainability-performance

• Total net energy consumption 732,323 GJ

• Total Scope 1, 2 and 3 greenhouse gas (GHG) emissions

  181,913 tCO2-e

• Total water consumed 1,818,568 kL

• Total waste 16,518 t

• Percentage of women in workforce 54%

• Percentage of females in senior management team 32%

• Percentage of female non-executive directors 43%

• Absentee rate (sick days lost per FTE) 3.0

• Lost time injury frequency rate (LTIFR) 4.06

Assurance Criteria

The criteria against which we assessed the Subject Matter was prepared by DEXUS and is titled 2017 Assurance Criteria Document presented at: http://www.dexus.com/who-we-are/corporate- responsibility-and-sustainability/reports and included as Appendix 1 to our Assurance Report.

Independence and Quality Control

We have complied with relevant ethical requirements related to assurance engagements, which are founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

The firm applies Auditing Standard ASQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements and accordingly maintains a comprehensive system of quality control including documented policies and

Responsibilities

Our responsibility is to express a conclusion based on the work we performed.

DEXUS management is responsible for the preparation and presentation of the Subject Matter in accordance with the Assurance Criteria.

What our work involved

We conducted our work in accordance with the Australian Standard on Assurance Engagements 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information and Australian Standard on Assurance Engagements and Australian Standard on Assurance Engagements 3410 Assurance Engagements on Greenhouse Gas Statements. These standards require that we comply with independence and ethical requirements and plan the engagement so that it will be performed effectively.

Our procedures consisted primarily of:

• Undertaking enquiries of management regarding the processes and controls for capturing, collating and reporting the Subject Matter

• Reconciling the Subject Matter with DEXUS underlying records

• Agreeing underlying records back to supporting third party documentation on a sample basis

• Undertaking analytical review procedures over data and obtaining explanations from management regarding unusual or unexpected amounts.

• Assessing the reasonableness of any material estimates made in preparing the Subject Matter.

• Assessing the appropriateness of the GHG emission factors applied in calculating the Total Scope 1, 2 and 3 GHG emissions and testing the arithmetical accuracy of the GHG emission calculations.

• Reviewing DEXUS' Assurance Criteria to ensure that it is appropriate for assurance and assessing the preparation and collation of the Subject Matter against the Assurance Criteria

  We believe that the information we have obtained is sufficient and appropriate to provide a basis for our conclusion.

  procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

  John Tomac Partner

  8 September 2017

  PricewaterhouseCoopers Sydney

  Liability limited by a scheme approved under Professional Standards Legislation

  Inherent limitations

  Inherent limitations exist in all assurance engagements due to the selective testing of the information being examined. Therefore fraud, error or non-compliance may occur and not be detected.

  Additionally, non-financial data may be subject to more inherent limitations than financial data, given both its nature and the methods used for determining, calculating and sampling or estimating such data.

  Restriction on use

  This report has been prepared in accordance with our engagement terms to assist DEXUS in reporting its sustainability performance.

  Our report is intended solely for the Directors of DEXUS. We do not accept or assume responsibility for the consequences of any reliance on this report for any other purpose or to any other person or organisation.

  Any reliance on this report by any third party is

  entirely at its own risk. We consent to the inclusion of this report within the 2017 Integrated Online Reporting Suite presented at: http://www.dexus.com/who-we-are/corporate-responsibility-and-sustainability/sustainability-performanceto assist DEXUS' members in assessing whether the directors have discharged their responsibilities by commissioning an independent assurance report in connection with the selected Subject Matter.

  We accept no responsibility for the integrity and security of the DEXUS website, which is the responsibility of DEXUS management. This report is not intended to relate to, or to be read in conjunction with, any information that may appear on the DEXUS website other than the Subject Matter and Assurance Criteria. Readers of this report on the DEXUS website (who may read it for their information only) should bear in mind the inherent risk of the website changing after the date of our report.

  Limited assurance

  This engagement is aimed at obtaining limited assurance for our conclusions. As a limited assurance engagement is restricted primarily to enquiries and analytical procedures and the work is substantially less detailed than that undertaken for a reasonable assurance engagement, the level of assurance is lower than would be obtained in a reasonable assurance engagement.

  Professional standards require us to use negative wording in the conclusion of a limited assurance report.

  2017 assurance criteria Criteria for reporting on selected information included within the scope for assurance

  The following criteria were used by Dexus to prepare the selected subject matter assured by PricewaterhouseCoopers (PwC) included within the 2017 Dexus Performance Pack set out below.

  Section of CR&S Reporting Matter subject to assurance

  Environment

  • Group environmental summary

    Employees

  • Work statistics

  • Engagement and leave

  • Work health & safety, and discrimination

• Total scope 1, 2 and 3 greenhouse gas emissions (GHG) (t CO2-e)

• Total net energy consumed (electricity, natural gas, diesel, solar) (GJ)

• Total water consumed (kL)

• Total waste (tonnes)

• HR Indicators

  • Percentage of female employees

  • Percentage of females in senior management

  • Percentage of female non-executive directors

  • Absentee rate (days per employee)

• Safety indicators

  • Lost time injury frequency rate

    Dexus believes that underlying data presented for other areas of the 2017 Annual Report is sound.

    Parameters used in the preparation of the subject matter - Environment

    Dexus applied the following parameters in calculating the reported GHG emissions, energy and water consumption data, and waste data described above:

    Item Description

    Reporting period 1 July 2016 to 30 June 2017

    Reporting boundary Unless otherwise stated, Dexus applied the principles contained within

    the National Greenhouse and Energy Reporting Act 2007 (NGERA) and its associated guidelines. Unless otherwise stated below, the reporting boundary comprises those facilities in Australia which fall under the operational control of members of the group of which Dexus Holdings Limited is the controlling corporation for part of all of the 12 months ending June 30, 2017.

    The operations covered under the scope of reporting are consistent with Dexus's operation as a property business, being:

  • Property investment including directly owned assets and assets managed on behalf of third party investors. Property investment comprises:

  • Office assets

  • Industrial assets

  • Retail assets.

  • Occupied premises being Dexus occupied tenancies. Property development is excluded from the boundary of operational control for Australia. Operational control of the development site is

  • handed over at Practical Completion of the development.

    Total Scope 1, 2 and 3 GHG emissions

    Total GHG comprises Scope 1, Scope 2 and Scope 3 GHG within the reporting boundary for Australia.

    'Scopes' are defined under the international reporting framework of the World Resources Institute/World Business Council for Sustainable Development reported in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard and have been adopted by the NGERA.

    Reporting is in alignment with the NGERA and its associated guidelines with the exception of Scope 3 GHG emissions as described

    below. GHG are measured in carbon dioxide equivalents and expressed in tonnes (tCO2-e).

    Scope 1 GHG emissions Scope 1 emissions (direct emissions) comprise GHG emission under

    associated with fuel combustion and use of hydrofluorocarbons for the following sources:

    • Natural gas (used for heating air and water). Natural gas data is derived from supply authority billing. Meter data and/or estimated data is applied based on Dexus's methodology, set out below, if billing data is unavailable at the time of reporting.
    • Diesel Oil (Diesel). Diesel data is collected from site operations managers and is sourced from delivery invoices for diesel purchases and periodic diesel tank level readings. Billing data and/or estimated data is applied based on Dexus's methodology if billing data is unavailable at the time of reporting.
    • Refrigerant gases (used within air conditioning equipment). The data for refrigerant gases is derived from a refrigerant register that lists all equipment under Dexus operational control containing hydofluorocarbons reportable under NGERA.

      Dexus does not have company fleet vehicles and no vehicle related emissions have been reported.

      Scope 1 emissions have been calculated according to the National Greenhouse and Energy Reporting (Measurement) Determination, July 2016.

      Scope 2 GHG emissions Scope 2 emissions (indirect emissions) comprise GHG associated with

      grid-purchased electricity used for lighting and power. The data is provided by supply authority billing. Meter and/or estimated data is applied based on Dexus's methodology if billing data is unavailable at the time of reporting.

      Scope 2 emissions have been calculated according to the National Greenhouse and Energy Reporting (Measurement) Determination, July 2016.

      Scope 3 GHG emissions Scope 3 emissions (other indirect emissions) comprise GHG associated

      with transmission and distribution losses ("energy losses") associated with energy use, waste sent to landfill and emissions from corporate operations including office paper use, corporate travel and employee commuting.

      Data for energy losses is that used to calculate scope 1 and 2 emissions.

      Data for waste to landfill is provided by waste contractors directly or collated by site managers from data provided by waste contractors. Estimated data is applied based on Dexus's methodology if billing data is unavailable at the time of reporting.

      Data for corporate operations has been compiled in accordance with the Australian National Carbon Offset Standard (NCOS), version 3, November 2015.

      Scope 3 emissions have been calculated according to the National Greenhouse Accounts (NGA) Factors, August 2016.

      Emissions for corporate air travel have been calculated according to the

      2016 Government GHG Conversion Factors for Company Reporting

      and associated 2016 Carbon Factors published by the United Kingdom's Department of Environment, Food and Rural Affairs (DEFRA).

      Total energy consumed Energy consumed comprises natural gas, diesel and electricity

      purchased by Dexus for facilities within the reporting boundary for Australia.

      Energy consumed also comprises secondary electricity that is generated from conversion of solar energy, and natural gas or diesel via combustion, for consumption within the facility.

      Energy consumed is calculated as a total figure converting measured usage to gigajoules using the methods and conversion factors specified within the National Greenhouse and Energy Reporting (Measurement) Determination, July 2016.

      Energy consumption has been based on quantities invoiced or metered by suppliers. Estimates are used when billing data is unavailable and these are based on Dexus's methodology, drawing from secondary sources such as meter data or based on seasonal historical estimates.

      Energy produced Energy produced comprises energy captured from natural sources and

      the manufacture of energy from transformation from another fuel source within Dexus for facilities within the reporting boundary for subsequent consumption onsite or export offsite.

      Energy produced comprises:

    • Electricity production from solar radiation (solar PV). The data for electricity production from solar radiation is derived from site based sub meters. Estimated data is applied based on Dexus's methodology if meter data is unavailable at the time of reporting.
    • Electricity production from thermal generation (cogeneration and diesel generators). Data for electricity production from thermal generation is derived direct measurement or from incoming natural gas or diesel utility data that is multiplied by efficiency factors of 32% for natural gas and 40% for diesel, which represent the estimated electricity yield. Estimated data is applied based on Dexus's methodology if meter data is unavailable at the time of reporting.

      Energy produced is calculated as a total figure converting measured usage to gigajoules using the methods and conversion factors specified within the National Greenhouse and Energy Reporting (Measurement) Determination, July 2016.

      Total net energy consumed Total net energy consumed is defined as the energy consumed minus

      the energy produced within the reporting boundary.

      Water consumption Water consumption is based on quantities invoiced or metered by

      suppliers. Water consumption comprises:

    • Water purchased by Dexus from local water authorities and suppliers for assets for which Dexus has operational control

    • Water purchased by Dexus on behalf of industrial assets which are under the operational control of tenants, but where the asset has water outlets that Dexus can use for landscaping and external cleaning or external amenities

      Water consumption excludes water use from onsite water recycling and rainwater harvesting.

      Total waste Total waste is based on volume or weight quantities invoiced by waste contractors. Total waste comprises:

    • Waste measured in weight that is sent to landfill by waste and cleaning contractors on behalf of Dexus and our customers for office and retail assets for which Dexus has operational control.