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ESR Group Limited Annual Report 202459STRATEGIC REPORTSCORPORATE GOVERNANCEFINANCIAL STATEMENTSprofessional development, all staff are required to complete a minimum of 16 training hours annually as part of their individual development plans.With increased scrutiny on climate change and its associated impacts, along with tighter climate-related regulations, ESR Group is cognisant of the implications that climate change poses for the business. By identifying and assessing climate-related risks and opportunities at the highest level of the organisation and mitigating their associated impacts, the Group is able to build a climateresilient, future-proof portfolio.In its transition to a low-carbon and climate resilient future, ESR is committed to enhancing the Group%u2019s environmental performance by embedding sustainability throughout the life cycle of its assets. A comprehensive ESG Checklist, approved by the Investment Committee, was established focusing on ESG requirements by fund investors, which covers climate-related risks, building certifications, renewable energy adoption, indoor environmental quality, material sourcing and sustainable procurement, building technical assessments and environmental management systems, energy, water and waste management efficiencies, occupier considerations, amongst other factors, where applicable. Through this checklist, ESR is able to integrate ESG considerations in its due diligence for better decision-making and risk management.As part of its overall decarbonisation efforts, the Group will strive to incorporate sustainable design features, use environmentally friendly materials, implement low-carbon construction processes, optimise energy efficiency of its operations, obtain sustainable building certifications and ratings, and increase its adoption of renewable energy solutions, where feasible.ESR Group adopts the principles recommended by the TCFD Framework, which now comes under the purview of the ISSB. The principles seek to integrate climate-related considerations into strategic, investment, and operational decision-making, and to quantify the potential financial implications of the associated climate-related risks and opportunities (both physical and transition). Across the Group, climate risk assessments are progressively being conducted, using climate scenario analysis, to determine both the financial and non-financial impacts on the business over different time horizons. In addition, ESR Group is committed to reducing the physical vulnerability of its real assets, as well as identifying opportunities to enhance the resilience of the business against the effects of transitional impact caused by climate change.Financial RiskThe Group believes that financial prudence is integral to business sustainability and adopts a disciplined financial management by maintaining a strong balance sheet and robust capital management. Management closely manages and monitors financial risks %u2014 including liquidity, credit, currency, and interest rate risks %u2014 through a comprehensive strategy of maintaining a wellstaggered debt maturity profile, actively monitoring credit spreads and interest rate volatility, implementing strategic hedging approaches, and maintaining a low gearing ratio. Management also maintains a robust cash flow position and ensures that there are sufficient working capital lines to meet financial obligations. The Group also proactively diversifies its funding sources to reduce dependency on any single funding source for its financing and refinancing needs. Financial reports and key risk indicators are submitted to the Board at least twice a year.Operational RiskThe Group has established a set of comprehensive policies and procedures designed to identify, manage, monitor and report operational risks associated with its day-to-day activities and to facilitate the understanding and implementation of different work processes. These operational procedures and guidelines are reviewed regularly to ensure its relevance and effectiveness. In addition, compliance with standard operating procedures are assessed through training of employees and regular reviews by the Group Internal Audit department to provide recommendations on any gaps identified. As part of the business continuity procedures, incident reporting and escalation protocols are established and communicated to all staff for emergencies. This is to ensure the Group is able to respond effectively to disruptions resulting from internal and external events, while continuing its critical business functions and minimising impact on its people, assets and operations. ESR also recognises that human capital is key to the business and has put in place talent attraction and management measures, including succession planning, periodic benchmarking of staff remuneration, performance-based rewards, among others. The Group has established a performance management framework to review employees%u2019 performance annually. A rating will be given to each of the employees depending on their performance and remuneration will be rewarded accordingly based on the rating. ESR has a dedicated Talent Management and Learning team within the Group HR function, designed to drive group-wide talent management and learning strategies. Training activities include job-related training opportunities, such as those pertaining to new regulations, external certification, safety-related courses and other customised leadership workshops. To ensure continuous