MENU PLACES PEOPLE PARTNERS PERFORMANCE PERFORMANCE (ENVIRONMENT) (ECONOMIC) Governance Strategy Risk Management Metrics and Targets Risk and Opportunity Drivers Potential Financial Impacts Supply Chain 1. Greater adoption of low-carbon Increased material procurement construction materials expenditures 2. Limited resource availability and Increased expenditures due to higher pricing higher energy costs Technology and 1. Increased adoption of green and Increased capital investments Innovation low-carbon technology in technology Decreased operating costs due to improved energy efficiency 2. Increased adoption of renewable Increased capital investment in energy renewable energy systems Increased revenue from selling generated renewable energy to power companies In 2022, Swire Properties undertook a prioritising exercise, via quantitative and qualitative assessments, to facilitate the most efficient allocation of resources to mitigate risks and capitalise on potential opportunities. With the support of a risk consultant, we facilitated workshops with nearly 50 cross-functional groups of managers to assess individual risks and opportunities from a broad and diverse perspective. For each risk and opportunity driver, these subject matter experts evaluated the vulnerability, current/planned practices and controls, adaptability and future risk exposure. Participants then debated the impact of the risk or opportunity on our financial performance (revenue and expenditures) and financial position (assets and liabilities and capital and financing) as well as the likelihood of the risk or opportunity impacting us under each climate scenario. For certain risks, the outputs from the workshop were fed into actuarial risk models to project what the potential impacts could be across different probabilities. Sensitivity analysis and risk modelling were employed to evaluate the uncertainty and volatility associated with the impact of individual risk and opportunity drivers. The evaluation also covered impacts across our value chain including our supply chain and procurement, construction activities, property management, tenant operations and engagement, property marketing and sales, and the retrofitting and refurbishment of buildings. Risks were assessed in line with our existing Enterprise Risk Management assessment scales to enable comparison of the significance of climate-related risks relative to other risks. SUSTAINABLE DEVELOPMENT REPORT 2022 235