Monitoring Physical Risks Physical risks are observed through the regular monitoring of incidents, such as floods, across the portfolio. In 2020, CLI had conducted a global portfolio baseline study to better understand its properties’ physical climate risk in relation to floods. This included insights into whether properties were located in low lying plains, had encountered flooding in previous years, had equipment located in the basement, and had exposure to other flood risks. Globally, most of CLI’s properties already have flood control features / measures in place, such as flood barriers, sensors, water level pumps and flood emergency response plans. To further strengthen climate resilience to flood risk, CLAS, through CLI, regularly engages its operations teams to ensure flood emergency response plans are implemented across its portfolio. Managing Transition Risks CLAS is cognisant of the risk posed by existing and emerging regulatory requirements in relation to climate change as a transitional climate change risk, and will continue to monitor any developments in this area. Some of the risks relating to CLAS’ key markets are tabled below. Type of Transition Risk Country Country-specific Developments Regulatory or compliance risk, prompted by certain regulations in the countries of operation Singapore • In 2020, the Monetary Authority of Singapore (MAS) introduced the Environmental Risk Management Guidelines which require financial institutions and asset managers to place greater emphasis on both physical and transition environmental risks. • In December 2021, the Singapore Exchange (SGX) introduced a mandate that all issuers must provide climate reporting that is aligned to the recommendations of the TCFD in their sustainability reports from the financial year commencing 2024 for the materials and buildings industry. For now, this requirement is on a ‘comply or explain’ basis for CLI and CLAS. • In 2023, ACRA and SGX also launched public consultation on the recommendations by the Sustainability Reporting Advisory Committee (SRAC). The recommendations aim to further advance climate reporting in Singapore. These recommendations resulted in the mandatory climate reporting details for listed and large non-listed companies being confirmed by the ACRA and the SGX Reg Co on 28 February 2024. These include: - From FY 2025, all listed issuers will be required to report and file annual climate-related disclosures (CRD), using requirements aligned with the International Sustainability Standards Board (ISSB) standards. - Scope 3 climate-related disclosures will become mandatory for listed issuers in FY 2026. - External limited assurance on Scope 1 and 2 GHG emissions will become mandatory for listed issuers in FY 2027. • Other developments, such as Singapore’s Green Plan 2030 that charts ambitious and concrete targets that will strengthen Singapore’s commitments under the United Nations 2030 Sustainable Development Agenda and Paris Agreement, and position Singapore to achieve its long-term net zero emissions aspiration by 2050, are also monitored by CLAS as they affect the day-to-day operations and practices of the Trust. • In 2022, Singapore also announced that to achieve the nation’s climate ambitions, the carbon tax will be raised to $25/tCO2e in 2024 and 2025, and $45/tCO2e in 2026 and 2027, with a view to reaching $50-80/tCO2e by 2030. This will provide a strong price signal for businesses and individuals to reduce their carbon footprint in line with national climate goals. ENVIRONMENTAL 35 CAPITALAND ASCOTT TRUST
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