Independent Assurance Statement

To the Corporate Responsibility and Sustainability Board Committee and Management of Stockland Corporation Limited:

Stockland Corporation Limited (Stockland) commissioned Net Balance Management Group Pty Ltd (Net Balance) to provide independent assurance of the Corporate Responsibility and Sustainability Report 2011 (the report). The report presents Stockland's corporate responsibility and sustainability (CR&S) performance over the period 1 July 2010 to 30 June 2011. Stockland was responsible for the preparation of the report and this statement presents our opinion as independent assurance providers. Net Balance's responsibility in performing its assurance activities is to the Corporate Responsibility and Sustainability Board Committee (CR&S Committee) and Management of Stockland in accordance with the terms of reference agreed with them. Other stakeholders should perform their own due diligence before taking any action as a result of this statement.

Assurance Standard and Objectives

The assurance engagement was undertaken in accordance with the AA1000 AS (2008) assurance standard (AA1000AS). The standard provides a comprehensive way of evaluating whether an organisation is responsible for its management, performance and reporting on CR&S issues. This is achieved by evaluating the organisation's adherence to the AA1000 AccountAbility Principles (2008) and by reviewing the accuracy and quality of disclosed CR&S performance information. The AA1000 Accountability Principles (2008) used to assess Stockland's processes include:

Inclusivity: How does the organisation include stakeholders in developing and achieving an accountable and strategic response to corporate responsibility and sustainability

Materiality: How does the organisation include in its report the material (most important) information required by its stakeholders to make informed judgements, decisions and actions

Responsiveness: How does the organisation respond to stakeholder concerns, policies and relevant standards and adequately communicate these in its report

Assurance Type and Scope

Net Balance provided Type 2 moderate level assurance in accordance with the AA1000AS (2008). This involved assessing the organisation's adherence to the AA1000 AccountAbility Principles (2008) and assessing the accuracy and quality of the CR&S information contained within the report, which focused on the following material areas:

• People

  - Employee health and safety
  - Employee engagement (including diversity)
  - Capability development
  - Employee metrics (including turnover)

• Climate Change & Energy and Natural Resources

  - Climate Change
  - Energy efficiency (including NABERS ratings)
  - Water usage
  - Biodiversity
  - Waste generation

• Customers, suppliers and government relations

  - Engaging with suppliers
  - Housing affordability
  - Political donations
  - Customer satisfaction

• Community

  - Community development
  - Community involvement (qualitative information)

Assurance Level and Limitations

Net Balance provided a high level of assurance over the Principles of Inclusivity, Materiality and Responsiveness and a moderate level of assurance over data and statements in the report. The assurance scope covered the online report content and focussed on underlying systems and activities of Stockland during the reporting period with the following exceptions:

• Net Balance did not verify financial data, other than that relating to environmental, social or broader economic performance.
• Net Balance did not verify Scope 1, 2 and 3 greenhouse gas emissions data including information that Stockland will report to the Australian Department of Climate change and energy Efficiency under the National Greenhouse and Energy Reporting scheme for the reporting period.

While the majority of the interviews with data owners were conducted at Stockland's head office in Sydney, additional site visits were also conducted, which included the following Stockland locations:

• Riverside Plaza (VIC) - Office
• Highlands (VIC) - Retirement
• Oak Grange (VIC) - Retirement
• Selandra Rise (VIC) - Residential
• Freshwater (QLD) - Residential
• Glenmore Ridge (NSW) - Residential
• Stockland Shellharbour (NSW) - Retail
• Stockland Rockhampton (QLD) - Retail

Assurance Methodology

The assurance engagement was undertaken from May to August 2011, and involved:

• Preparation of a materiality register (list of key CR&S issues) using the five-part materiality test.
• Interviews with 29 Stockland personnel including the Managing Director, EGM Human Resources, EGM Corporate Affairs, CEO Residential, CEO Commercial Property, CEO Retirement Living, Chief Financial Officer, and members of the Board of Directors.
• Visits to a number of Stockland operational and development sites to understand how CR&S is integrated within and across the organisation.
• Interviews with 12 external stakeholders to understand how Stockland engages such stakeholders to identify material issues and the effectiveness of Stockland's response to the issues that matter to them.
• A review of the materiality process and stakeholder engagement activities undertaken by Stockland during the reporting period and how this informs the CR&S strategies and performance of the organisation.
• A review of Stockland's key CR&S strategies, policies, objectives, management systems and reporting procedures.
• Interviews with 27 key personnel responsible for collating and writing various parts of the report to substantiate the reliability of selected claims.
• A review of the report for any significant omissions and anomalies, particularly in relation to claims as well as trends in data.
• Verification of over 180 selected data points and statements and the systems and processes that support the information reported.
• A Global Reporting Initiative (GRI) G3.1 application level assessment.

Our Independence

Net Balance was not responsible for preparing any part of the report. Our team's independence was ensured by selecting team members with no other involvement with Stockland during the reporting period that could impair the team's independence or objectivity.

Our Competency

The Stockland assurance engagement was carried out by an experienced team of professionals led by a Lead Sustainability Assurance Practitioner (Lead CSAP), accredited by the International Register of Certified Auditors UK (IRCA UK). The project included personnel with expertise in environmental, social and economic performance measurement across a range of industry sectors. Net Balance is a global leader in the use of Accountability's AA1000AS, having undertaken over 100 assurance engagements in Australia in the past five years.

Findings and Conclusions

Net Balance has observed that Stockland demonstrates strong internal communication and engagement on its CR&S objectives. Our assessment and interviews with internal and external stakeholders indicate that Stockland is seen as a leader in Building Communities through practical recognition of the linkages of CR&S to core business and how it enhances the organisation's broader corporate strategy. Stockland also demonstrates the management capacity and capability in embedding the AA1000 Principles across each of its key businesses. Net Balance's assessment of adherence to the principles and the accuracy and quality of the CR&S information included in the report provides evidence of Stockland's strength in CR&S and the findings and conclusions presented below represent areas to further strengthen the organisation's position.

Adherence to AA1000 Principles

Inclusivity:

Stockland has a comprehensive approach to identifying its stakeholders and working with them to identify relevant issues that need to be addressed. This was evident at both the corporate level as well as the operational and development site levels. At the corporate level, Net Balance observed robust and regular processes for monitoring high profile and financially material projects, supported by appropriate executive management actions to address issues where required. This process aligns with executive level engagement with key stakeholders such as industry association and all levels of government. Appropriate executive engagement of the recently acquired Aevum business was also evident during the reporting period. At the site level, Stockland has implemented stakeholder engagement plans across the business and is focusing on training staff to better utilise these as planning tools. Net Balance has observed that these plans facilitate an on-going process of engagement, contribute to enhancing the competencies of site managers, and provide a mechanism for stakeholders at a site level (e.g. Councils, residents, community groups, customers, and tenants) to engage with Stockland in a seamless manner. Stockland also has in place a range of mechanisms as well as management competencies to engage with and include the views of investors, employees, suppliers and industry associations. Net Balance identified that improvements could be made in how Aevum employees not yet fully integrated into core Stockland business units could be better included in group-wide engagement and surveying processes. Net Balance believes a more targeted approach to working with suppliers, drawing on the knowledge of the Group's procurement professionals, will help identify further downstream CR&S opportunities across all businesses.

Materiality:
Net Balance found Stockland appropriately identified its CR&S material issues including, but not limited to: embedding CR&S, employee engagement and wellbeing, health and safety, housing affordability, responsible supply chain and local employment, climate change, energy and natural resources. CR&S issues are appropriately recognised at the Group and business unit levels and they have driven the development of CR&S strategies within the Residential, Retirement and Commercial Property businesses. Material CR&S issues are refreshed annually and informed by the stakeholder engagement activities identified above to ensure on-going relevance and importance to Stockland and its stakeholders. Net Balance also observed that a number of key CR&S issues are also identified and considered in the Group wide risk management framework and reporting processes.

Responsiveness:
Stockland has demonstrated that it is committed to responding to issues raised by stakeholders. During site visits and in discussions with external stakeholders, Net Balance found that there is an overall sense that both at site level, as well as at senior management levels, Stockland prioritises responsiveness to stakeholder needs and makes every effort to address material issues identified in a timely manner.

In addition to site level stakeholder engagement plans, the recent establishment of community development plans across all businesses also provides further avenues for responding to stakeholder issues whilst driving enhanced community outcomes and business value. At a Group level, CR&S issues identified by Group Risk are appropriately addressed through prioritised management controls and actions. Business unit CR&S strategies have been designed to respond to relevant material issues and opportunities through appropriate management actions. CR&S related KPIs are also included in personal performance targets of employees at all levels of the organisation. Stockland has also taken a proactive approach to responding to emerging issues as evidenced by their inclusion in the report this year of their response to recent developments in the proposed introduction of a carbon price. During the reporting period Stockland also began actioning findings from last year's CR&S assurance including:

• Carrying out a broad assessment of climate change risks and opportunities across all areas of the business.
• Increasing awareness around the use of stakeholder engagements plans to encourage improved approaches to stakeholder engagement.
• Further embedding CR&S expertise throughout the business to build and strengthen accountability.

Reliability of Performance Information

Based on the scope of the assurance process, the following was observed with regard to performance information:

• The findings of the assurance engagement provide confidence in the systems and processes used for managing and reporting CR&S performance information included in the scope of this assurance engagement.
• The level of accuracy of CR&S performance information was found to be within acceptable limits.
• Data trails selected were generally identifiable and traceable, and the personnel responsible were able to reliably demonstrate the origin(s) and interpretation of data.
• Due to the different systems in place to manage CR&S information across the business, as well as recent changes with the acquisition of Aevum, particular attention was required to define the scope of some statements within the report this year, which Net Balance believes appropriately represents aggregated performance.
• It is understood that Stockland is currently transitioning to a standard set of centralised performance reporting tools and systems. Net Balance recommends that for future reporting periods, qualitative CR&S data collected for operational and development sites is undertaken using a single centralised system. This will reduce unnecessary reliance on individual spreadsheets, manual calculations and their associated potential for errors.
• The GRI application level check found that the report was classified as A+ in accordance with the GRI 3.1. Stockland has incorporated indicators from the Construction and Real Estate GRI sector supplement.

Overall, it is Net Balance's opinion that the information presented within the report is fair and accurate. The report was found to be a reliable account of Stockland's CR&S performance during the reporting period.

The Way Forward

Net Balance found the report appropriately addresses Stockland's environmental, social and economic material issues. To ensure Stockland continues to improve, Net Balance has identified the following key areas for future focus. These and other areas are discussed in more detail in Net Balance's report to the Stockland CR&S Committee and management.

Measuring and communicating the value of CR&S

Whilst a significant amount of work has been carried out by Stockland to better measure the value of CR&S, Net Balance would like to see the outcomes of this work communicated more widely among key internal and external stakeholders, beyond the CR&S Report. This will be increasingly important to all levels of management who require a more accurate understanding of business value relevant to their roles and responsibilities in order to best allocate resources towards CR&S issues and opportunity management. Net Balance also suggests a greater focus on measuring and communicating shared value created by Stockland within the communities it operates that is outcome focussed, which, over time, will provide case studies and business case information that could be valuable in negotiating new development approvals.

Enhancing synergies between CR&S and Group Risk

Net Balance noted that Stockland have begun the process of increasing dialogue between the CR&S team and Group Risk to incorporate material CR&S issues in the Group risk framework. Expanding on this to draw on the complementary strengths of these areas to identify both short and longer term risks as well as opportunities for Stockland will be important moving forward. Net Balance would like to see further strengthening of the issue identification processes at the site and business level as well as a focus on ensuring that all current and emerging CR&S issues are assessed and measured in a manner that is consistent with all business risks identified at the Group and business unit level, perhaps by integrating these processes in the future.

People and contractors CR&S roles and responsibilities

Net Balance observed some variability in the quality and consistency of skills at the site management level within each of the core businesses. This included some types of contractors that can be critical to day to day stakeholder engagement interactions. Stockland has implemented a number of training and engagement mechanisms to embed CR&S within the organisation. However, a continuing focus on this, particularly with regard to improving consistency across all sites and incorporating key, front line contractors is suggested for Stockland to continue to embed CR&S as well as consistently manage operational CR&S issues and opportunities.

On behalf of the assurance team

26 August 2011

Melbourne, Australia

Terence Jeyaretnam, FIEAust

Director, Net Balance & Lead CSAP

(IRCA UK)

Our conclusions

Reasonable assurance over Scope 1 and Scope 2 emissions In our opinion, Stockland Corporation

Limited’s Scope 1 and Scope 2 emissions of 155,742 tonnes as disclosed in Stockland Corporation Limited’s Corporate Responsibility and Sustainability Report for the year ended 30 June 2011 are prepared in all material respects in accordance with the National Greenhouse and Energy Reporting Act (2007) (the Act) as set out on pages 85 to 89 of the report for the year ended 30 June 2011.

Limited assurance over Scope 3 emissions

Based on the procedures performed, as described below, nothing has come to our attention that causes us to believe that the Scope 3 emissions have not, in all material respects, been prepared in accordance with the GHG Protocol Corporate Standard as set out on page 86 for the year ended 30 June 2011.

We have been engaged by the Board of Directors of Stockland Corporation Limited (‘Stockland’) to provide reasonable assurance in relation to Stockland Corporation Limited’s Scope 1 and Scope 2 emissions of 155,742 tonnes and limited assurance in relation to Stockland Corporation Limited’s Scope 3 emissions of 23,214 tonnes as disclosed in the Stockland Corporation Limited Corporate Responsibility and Sustainability report for the year ended 30 June 2011 (the ‘CR&S Report’).

As described in the CR&S Report the Scope 1 and Scope 2 emissions relate to Stockland Corporation Limited’s activity in Australia and have been prepared in accordance with the National Greenhouse and Energy Reporting Act (2007) as described on page 85 of the CR&S Report and the Scope 3 emissions, which are restricted to hire cars, air travel and transmission and production losses from purchased electricity and gas in Australia, are prepared in accordance with the GHG Protocol Corporate Standard as described on page 85 of the CR&S Report (collectively the ‘Frameworks’).

Management’s and Directors’ responsibility for the Specified Energy and Emissions Reporting

Management and the Directors of Stockland are responsible for the preparation and presentation of the Scope 1, Scope 2 and Scope 3 emissions in accordance with the Frameworks. This responsibility includes establishing and maintaining internal control relevant to the preparation and presentation of the Scope 1, Scope 2 and Scope 3 emissions that are free from material misstatement, whether due to fraud or error.

Our responsibility

Our responsibility is to express a reasonable assurance conclusion in relation to Stockland Corporation Limited’s Scope 1 and Scope 2 emissions and a limited assurance conclusion in relation to Stockland Corporation Limited’s Scope 3 emissions. We have performed our work in accordance with Standard on Assurance Engagements ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information, issued by the Australian Auditing and Assurance Board and accordingly have planned and performed such procedures as we considered necessary in the circumstances.

ASAE 3000 requires us to comply with the APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board.

Reasonable assurance over Scope 1 and Scope 2

Our reasonable assurance procedures involved obtaining evidence over the Stockland Corporation Limited Scope 1 and Scope 2 emissions of 155,742 tonnes, sufficient to give reasonable assurance that the amount disclosed is free from material misstatement whether caused by fraud or error. This included an assessment of the appropriateness of the Frameworks and the reasonableness of estimates made by the Directors in the determination of the Stockland Corporation Limited Scope 1 and Scope 2 emissions of 155,742 tonnes reported.

Limited assurance of the Scope 3 emissions

A limited assurance engagement consists of making enquiries, primarily of persons responsible for anagement and monitoring of Scope 3 emissions, and applying analytical and other limited assurance procedures as appropriate. These procedures include:

• Enquiries of key data owner to understand the data flow
• Completing a walkthrough of the relevant processes
• Agreement of emissions data to source invoices or third party confirmations on a sample basis
• Analytical review of emissions data, including year on year comparisons and monthly trend analysis

A limited assurance engagement is substantially less in scope than a reasonable assurance engagement or an audit conducted in accordance with Australian Auditing and Assurance Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit or a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance or audit opinion.

Use of this report

This report has been prepared for the directors of Stockland Corporation Limited for the purpose of assisting the Directors in determining whether the company has complied with the Frameworks. We disclaim any assumption of responsibility for any reliance on this report, or the Scope 1, Scope 2 and Scope 3 emissions to which it relates to any person other than Stockland Corporation Limited or for any purpose other than that for which it was prepared.

Inherent limitations

Because of the inherent limitations of any internal control structure it is possible that errors or irregularities in the information presented in the Scope 1, Scope 2 and Scope 3 emissions may occur and not be detected. Our engagement is not designed to detect all weaknesses in the internal controls over the preparation and presentation of information, as the engagement has not been performed continuously throughout the period and the procedures performed were undertaken on a test basis. Greenhouse gas quantification is unavoidably subject to both scientific and estimation uncertainty. Scientific uncertainty arises because of incomplete scientific knowledge in the field of greenhouse gases. Estimation uncertainty can arise because of:

• The inherent uncertainty in quantifying inputs, such as activity data and emissions factors, that are used by mathematical models to estimate emissions (measurement uncertainty)
• The inability of such models to precisely characterise under all circumstances the relationships between various inputs and the resultant emissions (model uncertainty)
• The fact that uncertainty can increase as emission quantities with different levels of measurement and calculation uncertainty are aggregated (aggregation uncertainty)

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

Independence

In conducting our assurance engagement we have complied with APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board.

 

KPMG

Scott Fleming Partner 7th September 2011 Sydney