MENU PLACES PEOPLE PARTNERS PERFORMANCE PERFORMANCE (ENVIRONMENT) (ECONOMIC) Governance Strategy Risk Management Metrics and Targets Strategy Addressing the actual and potential impacts of climate-related risks and opportunities related to the Company’s businesses, strategy, and financial planning We recognise that climate change poses different types of risks to our business. Apart from physical risks, such as flooding, extreme weather events and increasing temperatures, which can disrupt or negatively impact our employees, assets and supply chains, we also acknowledge the potential financial impacts that can result from transition risks, which include regulatory, market and reputational risks. Climate change also presents us with opportunities to develop low-carbon and climate-resilient assets to meet the increasing market demand for climate-proof buildings and to mitigate the potential operational costs attributed to extreme weather conditions, such as maintenance and insurance premiums. Also, climate change helps stimulate business innovation and experimentation, which may aid the transition to a lower-carbon economy. We are committed to creating climate-resilient places and communities that are better able to cope with the physical impacts of climate change. We are also committed to developing certified green buildings that are energy-efficient and low-carbon by design and in operation. In 2022, 100% of our new projects under development achieved the highest green building rating; 95% of all existing buildings were certified green buildings; and over 97% of our 2022 gross rental income came from certified green buildings. Under our SD 2030 Strategy, one of our 2025 KPIs is to generate 4-6% of landlord’s energy from on-site renewable energy sources in selected new office developments. At Two Taikoo Place, we are installing solar PV panels, a wind turbine and a waste-to-energy tri-generation system, which we estimate will supply renewable energy equivalent to approximately 6% of the landlord’s building energy. We are also committed to exploring new procurement options for off-site renewable electricity for our portfolio, where feasible. Since 2021, Taikoo Hui Guangzhou became powered by 100% renewable electricity, joining Sino-Ocean Taikoo Li Chengdu in achieving net-zero carbon in its annual electricity consumption for both landlord and tenant operations and setting a new standard for the real estate sector in Asia. In 2022, Taikoo Li Sanlitun became our third portfolio in the Chinese Mainland to enter into an off-site renewable electricity agreement, with 15% of the landlord’s annual electricity consumption from clean energy sources. To prepare for the transition to a low-carbon economy, we have established carbon-reduction targets and initiatives under our SD 2030 Strategy for our Hong Kong and Chinese Mainland portfolios. We have ramped up our science-based targets (“SBTs”) to align with the 1.5°C pathway. These were officially approved in September 2021, making us the first real estate developer from Hong Kong and the Chinese Mainland to establish 1.5°C-aligned decarbonisation goals in line with the Paris Agreement for our global portfolio. Our ambitious new SBTs are approximately 50% more aggressive than our original 2°C-aligned SBTs approved by the SBTi in 2019. These new goals have put the Company on the right path to reaching net- zero emissions by 2050 and support the Hong Kong government’s pledge to achieve carbon neutrality before 2050. SUSTAINABLE DEVELOPMENT REPORT 2022 224