MENU PLACES PEOPLE PARTNERS PERFORMANCE PERFORMANCE (ENVIRONMENT) (ECONOMIC) Governance Strategy Risk Management Metrics and Targets 1.5°C – Net-Zero World Scenario represents a world where global warming is limited to 1.5°C through stringent climate policies, innovation and demand-led change reaching global net-zero CO2 emissions around 2050. In addition to meeting all current net-zero pledges, additional pledges from countries are met and there is a significant increase in public and private investment into green technologies. The share of renewables in the global electricity supply increases to more than 60% by 203040 and there are much more stringent government policies such as stricter energy efficiency building codes and carbon taxes. This is reflected by a carbon price of USD162 per tonne of carbon41, which illustrates overall policy intensity. 2°C – Paris Consistent Scenario limits global warming to 2°C through gradually increasing the stringency of climate policies. All current net-zero pledges are achieved in full and there are extensive efforts to realise near-term emissions reductions. There is a comparatively moderate increase in public and private investment into green technologies and the share of renewables in the global electricity supply by 2030 increases to 49%42, shifting the economy from being fossil fuel driven to a renewable energy-driven economy. More stringent government policies such as stricter energy efficiency building codes and carbon taxes help the world achieve net-zero by 2070. The carbon price of USD52 per tonne of carbon4³, which illustrates overall policy intensity, shows less policy action compared with the 1.5°C world. 3°C – Hot House World Scenario represents a world where no additional action is taken above the current policies that are in place in 2022. Fossil fuel subsidies remain in place in the Chinese Mainland, there is insufficient technological investment in low-emission technologies and a continued reliance on carbon-intensive technologies to fuel growth. Consequently, the grid remains largely powered by coal and other non-renewable energy. The Paris Agreement fails and in the longer term many areas across the globe, including Hong Kong and the Chinese Mainland, experience a significant increase in extreme weather events over the second half of the century. The focus for stakeholders under this scenario is on adaptation as the world fails to transition to a low-carbon economy. These scenarios together represent balanced, science-based scenarios that offer a contrast between the best-case and worst-case scenarios for us to sufficiently consider the risks and opportunities posed by climate change that could potentially impact our business operations and our value chain. Swire Properties has identified climate-related risks and opportunities that could affect its business under the different scenarios, and they are outlined in the table below. The risk list was built through reviewing publications of international research organisations and peer companies, engagement with internal and external experts and stakeholders, and through our materiality assessment and extensive public domain research. 40 Net-Zero Emissions by 2050, International Energy Agency (2020), World Energy Outlook 2020, IEA, Paris, https://www.iea.org/ reports/world-energy-outlook-2020/achieving-net-zero-emissions-by-2050 41 IIASA NGFS Climate Scenarios Database, REMIND model, Carbon prices shown for the Chinese Mainland under NZ2050 Scenario https://data.ene.iiasa.ac.at/ngfs/#/workspaces/1989 42 Sustainable Development Scenario, International Energy Agency, 2020, Renewables, 2020, Paris https://www.iea.org/fuels- and-technologies/renewables 4³ IIASA NGFS Climate Scenarios Database, REMIND model, Carbon prices shown for the Chinese Mainland under Below 2 Degrees Scenario https://data.ene.iiasa.ac.at/ngfs/#/workspaces/1989 SUSTAINABLE DEVELOPMENT REPORT 2022 233