ENVIRONMENTAL GOVERNANCE Board Oversight of Climate- and Carbon-related Risks and Transition Plans CLAS’ Boards consider sustainability issues as part of their strategic formulation, determine the material ESG factors and oversee the endorse and monitoring of the material ESG factors. The Boards approve the Trust’s risk appetite, which determines the nature and extent of material risks that CLAS is willing to take to achieve their strategic and business objectives. The Boards oversee CLAS’ Enterprise Risk Management (ERM) Framework, and regularly review CLAS’ risk profile, material risks and mitigation strategies. Climate change has been identified as one of the critical material risk issues for CLAS. The Boards are actively involved in discussions on climate-related initiatives. Taking the lead from CLI, the Boards are updated on relevant climate-related topics including CLI’s 2030 Sustainability Master Plan (SMP), green capital expenditure plans to sustain the green ratings of CLAS’ properties, performance metrics such as carbon emissions performance, progress on the reduction targets, as well as stakeholders’ expectations on climate change. Any natural disasters, which may include climate-related damages, disruptions to operations or health and safety risks to our employees are also reported to the Boards. EHS factors are considered as part of CLAS’ investment evaluation process and strategy, and where relevant, are presented to the Boards. For more details on CLAS’ sustainability management structure, please refer to pages 13 and 14 of this report. Climate-Specific Skills and Capacity Building CLAS’ Boards are continuously upskilling with respect to sustainability and climate-related issues. All Board members have undergone the SGX recognised sustainability training, and all new and existing Board members are briefed on sustainability management and the CLI 2030 SMP as well as climate-related matters, including choice of climate scenarios and the decarbonisation journey. Briefings are also conducted to members of the senior management, including topics such as the use of Renewable Energy Certifications (RECs) and carbon offsets in CLAS’ decarbonisation journey. Senior management also reviewed the latest climate scenario analysis, decarbonisation roadmap and workplan for CLAS. Gathering Stakeholder Feedback on Decarbonisation CLAS has regular engagement with its stakeholders with respect to sustainability issues, and feedback on our decarbonisation plan is mainly received through the following channels: • Participating in sustainability surveys and engaging ESG indices and data platforms; • Regular analyst and investor meetings (such as CLI’s 2023 sustainability non-deal roadshow); • Participation in industry panel discussions and conferences; • Annual reports and sustainability reports; • Annual general meetings, financial results and business updates announcements; • Media releases and interviews; • Company website; and • Email enquiries/direct contact to CLAS. STRATEGY Identifying and Addressing Climate-related Risks As a CLI-sponsored Trust, CLAS’ identified ESG issues are aligned and adapted from CLI’s list. The selected ESG issues have been deemed to be material and applicable to CLAS’ business and operations. The selection of these issues is guided by CLI and CLAS’ regular review, assessment and feedback process in relation to ESG topics. Since 2016, and in the CLI ESG factors materiality review performed in 2022, climate change and emissions reduction have been identified as key ESG material issues which are relevant and critical for CLAS and CLI. Climate change has been identified as a key risk as part of the ERM Framework and includes both physical and transition risks. Physical risks are a result of climate change and can be acute or chronic in climate patterns, such as rising sea levels, violent storms, long intense heat waves, flash floods and freshwater depletion. Transition risks result from a transition to a lower-carbon economy, which could entail potentially more stringent regulations and increased expectations from customers and stakeholders. In line with CLI’s SBG, CLAS identifies and addresses climate-related risks and opportunities across the real estate lifecycle, from the earliest stage of the investment process to design, procurement, construction, operations and redevelopment or divestment. CLAS generally considers the short-term timeframe to be within 2-3 years, medium-term timeframe as until 2030, and long-term timeframe to be beyond 2030. 19 CAPITALAND ASCOTT TRUST
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