Sustainability Reports 2022/23

By assessing the severity and likelihood of physical risks to the selected assets, we identify physical risks material to the Group The collected data is used to evaluate the exposure to climate- related risks of the selected assets in Hong Kong and Shanghai To evaluate physical risk exposure at asset level, we collect and consolidate climate data from various sources. This includes relevant information from the IPCC RCP 2.6 and 8.5 datasets as well as historical data and projected climate variables from dynamic climate models This science-based approach enhances the accuracy of our assessment. Reliable and precise data enables us to make informed decisions and develop effective mitigation plans. 10 physical climate variables were incorporated into the physical risk assessment: Risk Type Climate Variable Description Acute (short/medium term) Rainfall flood Flooding caused by excessive rainfall, which impacts infrastructure and poses a risk to life River flood Flooding caused by overflowing rivers, which disrupts communities and damages property Storm surge Typhoon-induced flooding, which poses substantial risks to coastal regions Typhoon Tropical cyclones with intense winds and heavy rainfall, which result in widespread devastation, including infrastructure damage and flooding Chronic (medium/long term) Drought Prolonged periods of low precipitation create water scarcity, impacting ecosystems and socioeconomic activities Extreme heat Excessively high temperatures that strain resources and pose health risks Landslide Movement of soil, rocks or debris, which can lead to infrastructure damage, property loss and loss of life Sea level rise Long-term global ocean level increase, which inundates low-lying areas and contributes to coastal flooding Snow melt Rising temperatures cause accumulated snow and ice to transition into water, increasing runoff and the risk of flooding Wildfire Uncontrolled fires spread rapidly, destroying landscapes and homes, and endangering lives Governance Strategy Risk management We evaluated physical risks by conducting an asset-level quantitative risk assessment on eight projects in our portfolio in Hong Kong and on the mainland. We considered our global portfolio before selecting the eight projects based on their strategic importance, financial materiality and geographical location. Two IPCC-adopted Representative Concentration Pathways (RCP 2.6 and 8.5) were used to assess impacts in two distinct climate futures; one with a global mean temperature rise of below 2°C; the other with a rise above 3°C. In addition to the climate data provided by the IPCC, we have collated historical data and projected climate variables from dynamic climate models to comprehensively assess the physical risks. Physical Risk Metrics and targets Based on data projections for 2030 and 2050, the analysis identified six negligible risks and four risks with an overall low to medium level for typhoons, rainfall floods, extreme heat and river floods. One project stands as an exception with a high exposure risk to rainfall floods in 2050 under the RCP 8.5 Brown Scenario (i.e., the worst case scenario). Nonetheless, given the Group’s proactive adoption of mitigation measures and an emergency support mechanism, the foreseeable impact stemming from these identified risks could be managed effectively. Step 1 Step 2 Step 3 Sun Hung Kai Properties Limited Sustainability Report 2022/23 26 Our Reporting Approach Message from the Sustainability Steering Committee Our Business Our Approach to Sustainability Value Created for the Environment Value Created for People Value Created for Customers Value Created for Supply Chain Value Created for Community Appendices