Sustainability Report 2019/20

Case Study – Resilience Strategies to Adapt to Climate Change The Group recognizes the direct impacts of climate change on our business and the community at large, and associated risks and opportunities presented to our operations. To this end, we have been consolidating resources to strengthen governance, developing long-term resilient strategies, expanding our climate-risk management capabilities and improving the management of related performance. We are committed to effectively manage physical and transition risks related to climate change and have integrated such considerations into our risk assessment process and business strategy. During the reporting year, we also formulated an inter-departmental Crisis Operation Management Committee led by an executive director to coordinate, respond, manage and make key decisions on critical incidents occurring in our business units and subsidiaries, including extreme weather events. The Committee reviewed relevant risks on a half-yearly basis and discussed possible measures and technological applications to further enhance resilience against extreme weather. Additionally, our Audit and Risk Management Committee monitors and reviews risks associated with low-carbon transition, including the tightening of environmental rules and regulations. An internal review on climate change related impacts was conducted in the last reporting year. The study enabled us to review the existing risk assessment framework, precautionary measures and emergency responses in case of a crisis, in particular extreme weather conditions such as super typhoons and heavy rainfalls. With a better understanding of the key physical risks posed to our operations by climate change, we will continue to enhance our relevant systems, strategies and precautionary measures in anticipation of such challenges. Climate change also presents the Group with opportunities to develop and transform our portfolio to low-carbon and climate resilient. This includes building properties that are aligned with green building standards, introducing innovative solutions that encourage energy efficiency and setting relevant targets to promote continuous improvement. The Group strives to upgrade its existing buildings with various climate-resilient elements so as to be able to adjust to impacts resulting from physical climate change risks. An example of this is the development of a sophisticated system for coping with extreme weather conditions such as typhoons. When a typhoon is approaching, the system will automatically identify all possible contingencies of the affected buildings and suggest corresponding measures to be taken. The Group also utilizes technology, including water- leakage alarms and water gates for low-lying areas, to avoid any losses caused by flooding. In response to extreme weather events, Hong Yip developed operational handbooks and set up a Typhoon Command Centre to enhance monitoring and control during adverse weather conditions, and provided emergency support against damages during typhoons to over 300 buildings. For example, we developed a Typhoon Precaution Handbook for Sun Hung Kai Centre which provides detailed operational guidelines and actions to be taken under different levels of signals issued by the Observatory. Some examples of climate-related risk and opportunities to our business are identified below: Possible Impacts to Business Risks Acute physical risk: Extreme weather events, such as super typhoons Increased frequency of super typhoons may lead to physical damage to building structures and increase risk of electricity shortage, causing revenue loss due to business disruption. Chronic physical risk: Changes in rainfall patterns Heavy rains may lead to flooding, which may pose risk to the Group’s properties by damaging the structures and facilities, resulting in value impairment and increasing maintenance costs. Transition risk: Policy and legal risk More stringent existing and emerging requirements in policies and regulations related to climate change may lead to higher operating costs to ensure compliance. Opportunities Sustainable building Increasing market demand drives the Group to introduce climate-resilience elements into our new development projects and enhance environmental performance of existing buildings. This will also potentially reduce operating and maintenance costs. By establishing ISO 14001 certified Environmental Management Systems in our property managment and construction subsidaries, we can effectively manage risks regarding climate change, energy and carbon management of our day-to-day operations. At the same time, the Group has formulated environmental targets and kept track of performance to minimize its energy usage and carbon emissions. More information on our targets and performance can be found in the Enhancing Energy Efficiency and Minimizing Carbon Emissions section. Value Created for The Environment Sun Hung Kai Properties Limited • Sustainability Report 2019/20 13