54 Environmental, Social and Governance Report 2023 PILLAR 2: PROPERTY PORTFOLIO Core Elements of IFRS S2 Recommendations ESR-LOGOS REIT’s Approach and Progress Australia In 2019, Australia introduced a national plan “Trajectory for Low Energy Buildings” that aims to achieve zero energy and carbonready commercial (including offices and industrial premises) and residential buildings. This is also a key initiative to address Australia’s 40% energy productivity improvement target by 2030 under the National Energy Productivity Plan, as well as to reach net zero by 2050. Japan In 2021, Japan strengthened the Building Energy Efficiency Act of 2016, where energy saving standards will also become mandatory for mid-size buildings (those with a floor area exceeding 300 square metres). The Ministry of Environment, Trade and Industry (“METI”) is also in the process of revising targets for energy conservation, including for the buildings sector. In a preliminary document, it noted that energy conservation efforts in the residential and commercial sectors could be raised by about 10%. Physical Risk We have only considered the business-as-usual 4°C warming scenario as the physical risks are most significant under this scenario. Across our portfolio, the most significant physical risks are observed to be risk of flooding, extreme weather events such as water stress, and rising temperatures. Summary details of physical risks at country level: Country Elaboration of Risk Singapore Rising temperature: Increasing global temperatures may lead to extreme heat events and overheating in buildings, requiring higher cooling loads. These in turn lead to increased energy consumption and higher carbon emissions. ESR-LOGOS REIT will therefore face increased costs in retrofitting and/or operational costs of running air conditioning systems. Flooding: Climate change has led to greater and more intense rainfall in Singapore. In 2021, the United Nation’s Intergovernmental Panel on Climate Change (“IPCC”) report stated that Southeast Asia will see many more days with the temperature soaring above 35°C as well as the occurrences of wetter monsoons. Mean sea level around Singapore is projected to rise by up to 1m by 2100, and with 30% of our land less than 5m above mean sea level, there is significant risk of flooding in coastal areas and impact to essential services including transport networks. Water stress: Singapore is at high risk of water stress, being heavily dependent on rainfall due to the lack of alternate natural water resources, and exacerbated by limited area for water storage facilities. Climate Change Resilience
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