52 Environmental, Social and Governance Report 2023 PILLAR 2: PROPERTY PORTFOLIO Climate Change Resilience ESR-LOGOS REIT has conducted an environmental risk management assessment on their portfolio to identify and assess the potential impacts of transition and physical risks, under various climate scenarios. The risks were categorised by the countries of operations i.e., Singapore, Australia, and Japan, and include physical risks (flooding, extreme weather and significant changes in average temperatures) and transition risks (increased carbon pricing, enhanced regulatory requirements i.e. energy efficiency requirements and green building certifications and changes in stakeholder expectations). Beyond climate proofing the assets, we also recognise the importance of building sustainability knowledge throughout our workforce. Therefore, we have been sending our staff to sustainability training for the past few years, to upskill them on sustainability matters. Core Elements of IFRS S2 Recommendations ESR-LOGOS REIT’s Approach and Progress Governance The Board is responsible for establishing the overall enterprise risk management approach and governance, which encompasses climate-related risks and opportunities. In addition, the Board approves and monitors the statements outlining the Manager’s risk appetite and tolerance, setting out the nature and extent of risks permissible to fulfill the Manager’s business objectives. The Board is supported by the ARCC (Audit, Risk Management and Compliance Committee) in the assessment of the adequacy and effectiveness of the internal controls and risk management systems, including internal control processes. Ongoing oversight of climate-related risks and opportunities comes under the purview of the Sustainability Committee. The Sustainability Committee is chaired by our CEO Mr Adrian Chui and comprises key members from different business functions. The Sustainability Committee periodically reviews the progress and effectiveness of sustainability objectives and strategies. Strategy ESR-LOGOS REIT has conducted an environmental risk scenario analysis to identify and assess the potential impacts of transition and physical risks, under a Net Zero (RCP 2.6, limit warming to within 1.5°C from pre-industrial levels by 2100) and Business-as-usual (RCP 8.5, about 4°C warming from pre-industrial levels by 2100) scenario across the short term (by 2025), medium term (by 2030) and long term (by 2050). Through scenario analysis, the following risks across our geographies and activities have been identified: • Physical: Flooding, extreme weather and significant changes in average temperatures • Transition: Increased carbon pricing, enhanced regulatory requirements (i.e. energy efficiency requirements and green building certifications) and changes in stakeholder expectations. Beyond climate proofing our assets, we also recognise the importance of building sustainability knowledge throughout our workforce. Therefore, we have been sending our staff to sustainability training for the past few years, to upskill them on sustainability matters.
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