Sustainability Report 2021/22

ESG Finance SHKP seizes the ESG finance opportunities and keeps exploring its potential. During the reporting year, the Group signed two sustainability-linked loan (SLL) facilities with leading international and local banks. Both loans received overwhelming responses from banks with oversubscriptions, showing strong support from the banking community for the Group’s sustainability initiatives. The first SLL amounted to HK$8,650 million and the second SLL reached HK$20.7 billion, both breaking the record for the Hong Kong real estate sector at the respective time. The successful formation of an SLL facility in two consecutive years strongly demonstrates our continuing commitment to pursuing long-term growth and sustainable development. According to the loan agreement, SHKP needs to achieve a set of predetermined sustainability performance targets, including: • Achieving an annual reduction in electricity consumption intensity (ECI, measured in units of kWh/m 2 ) • Demonstrating continuous improvements in the S&P Global ESG Scores • Retaining as a constituent member of the Hang Seng Corporate Sustainability Index with a designated rating • Achieving a continuous increment in the proportion of green office buildings in our portfolio of core completed office buildings 1 The proceeds will be used for general working capital and to fund ongoing sustainability initiatives. We will continue to explore the potential on ESG finance that lies ahead to create sustainable value for our stakeholders. Our Approach to Stakeholder Engagement The Group understands the necessity of maintaining regular communication with our stakeholders. This process enables us to gain an insight into their expectations and priorities on sustainability strategy and to respond accordingly. For this reason, the Group engages with our internal and external stakeholders on a regular basis through a variety of communication channels. By facilitating in-depth discussions with our stakeholders, we hope to better understand their concerns and interests in sustainability. Please refer to Appendix II for more details about Stakeholder Engagement Process. We have adopted a three-year approach for regular engagement with an extensive group of stakeholders to review our material ESG topics. This year, we engaged our stakeholders by organizing focus-group discussions through the stakeholder review panel. Eight sustainability professionals from various backgrounds, including employees, tenants, representatives from academic and industry associations, business partners, investors and millennials, were invited to the discussion. Not only did they provide insights into the Group’s sustainability strategy, performance and progress, but also shed light on key sustainability trends that lie ahead, including responsible supply chain management. In order to facilitate a fair and open discussion, the focus group discussion was hosted by an independent third-party consultant to collect valuable feedback and insights from stakeholders. Materiality Analysis The materiality matrix shows the relative importance and significance of selected ESG topics respective to our stakeholders and business. In 2020/21, 26 ESG topics relevant to our business were considered during the materiality analysis process. Over 450 internal and external stakeholders were involved in the process to rank the importance of the ESG topics. In 2021/22, 20 material topics fell within the threshold of a ‘high’ materiality level, all of which were adopted from the list in 2020/21. Based on the results from last year, we further modified our materiality matrix with feedback from the stakeholder review panel and top management. This year, the importance to stakeholders and significance to business of Supply Chain Management and Water were moved higher to better align with industry expectations. Meanwhile, Customer Privacy, Anti-Corruption and Well-being, Health and Safety remained the top three material topics. 1 Definition of green office buildings: office buildings with LEED Gold or Platinum certification or pre-certification. Sun Hung Kai Properties Limited • Sustainability Report 2021/22 7 Our Approach to Sustainability