Sustainability Reports 2022/23

Governance Strategy Risk management Metrics and targets Step 1 Step 2 Step 3 By assessing the severity and likelihood of the transition risk exposures encountered by the value chain, we identify transition risks material to the Group The collected data and information is used to assess the exposure risks of the selected operations and their value chains (upstream and downstream activities) We extract and consolidate relevant data from reputable sources, such as the IPCC, IEA and NGFS. We conduct qualitative research, including analysis of policies and regulations, and gather key business functions’ opinions, to ensure the assessment results are relevant and align with our operations Risk Type Description Potential Impact Potential Financial Impact Example of Our Strategy Physical Risks Acute Physical Risks (short/medium term) Typhoon • Higher property damage losses • More typhoon-induced business interruptions • Greater threats to human health and safety, and to the environment • Increased operating costs for asset repairs, inventory replacement, supply chain disruption and suspended construction • Decreased asset value • Increased property insurance premiums • Decreased revenue owing to business disruption • Implement a Sustainable Supply Chain Management Guideline to assess environmental and social risks to our supply chain • Incorporate sustainable and climate-resilient features in new and existing buildings • Provide emergency support mechanisms and operational handbooks to guide staff in preparing for and responding to extreme weather events • Activate an emergency support centre during extreme weather to maintain business continuity Rainfall flood • More business interruptions due to flood damage to facilities and equipment • More supply chain disruption from flooding and transport issues River flood Chronic Physical Risks (medium/long term) Extreme Heat • More building and equipment damage from high temperatures and power outages • Reduced productivity owing to extended construction time • Increased occupational health risks (discomfort, exhaustion and heat- related illnesses) • Increased operating costs for increased cooling demands • Increased expenses owing to impacts on employees’ health We selected two strategically important sectors in Hong Kong and Shanghai – property (retail and office), and hotel and serviced apartments – to assess quantitative transition risks at value chain level. Transition risk In addition to the above quantitative and qualitative analysis, we organized workshops and surveys for our departments and business units. These aimed to gather perspectives, from across various segments of our value chain, on our resilience to climate change risks. The survey was designed to assess the relevance and actual climate risks to the Group’s operations. Based on the responses, we generated climate- related business impact scores. This year, 21 risk parameters – including political, economic and market indicators – were assessed for the property (retail and office) sector, as were 15 for the hotel and serviced apartments sector, for 2030 and 2050 timeframes, with survey responses received from the key stakeholders to identify the material transition risk at the value chain level. We have identified material physical and transition risks and opportunities, along with their corresponding business and financial impacts, as well as our resilience strategy. The results were: Sun Hung Kai Properties Limited Sustainability Report 2022/23 27 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