SHKP Sustainability Report 2024/25

106 Paragraph Description Our Approach Reference (Page number) and Remarks Governance a Describe the board’s oversight of nature-related dependencies, impacts, risks and opportunities Our Board of Directors (the Board), via the Executive Committee and the Sustainability Steering Committee (SSC), guides the overall direction of the Group’s strategies and development, including our sustainability, climate-related, and nature-related strategies and initiatives. The Board is accountable for effective ESG risk management and ensuring internal control systems are implemented and maintained. This includes the integration of identified ESG risk elements, including climate-related and nature-related risks, into all decision-making processes to ensure responsible and sustainable business practices. Environmental Policy; Value Created for the Environment (15-39) b Describe management’s role in assessing and managing nature- related dependencies, impacts, risks and opportunities Chaired by the Deputy Managing Director and comprised of senior managers from key divisions, the Sustainability Steering Committee (SSC) is responsible for monitoring, assessing, and coordinating nature-related risks and opportunities. The SSC reviews the Group’s ESG and environmental policies regularly and organizes periodic meetings to discuss relevant issues. The SSC also reviews the Group’s nature-related performance and progress against nature-related targets. The chairman of the SSC maintains close communication with the Board and the Executive Committee. Serious nature-related issues will be reported to the Board and Executive Committee immediately. Environmental Policy; Value Created for the Environment (15-39) c Describe the organization’s human rights policies and engagement activities, and oversight by the board and management, with respect to Indigenous Peoples, Local Communities, affected and other stakeholders, in the organization’s assessment of, and response to, nature-related dependencies, impacts, risks and opportunities The Board oversees the effectiveness of ESG risk management and internal control systems, which also covers relevant human rights policies and engagement activities. The SSC oversees the endorsement and implementation of our Stakeholder Engagement Policy. As detailed in our Stakeholder Engagement Policy, the Group identifies and prioritizes key stakeholders, including individuals or groups that have interests and are affected or could be affected by SHKP’s activities by referring to international best practice. All parties, including local communities, affected and other stakeholders, can communicate with us or raise grievances through designated channels specified in our Sustainability Report and the Stakeholder Engagement Policy. Our whistleblowing mechanism provides a safe and confidential channel for internal and external stakeholders, including customers, to report concerns regarding misconduct, malpractice, impropriety, and unethical or unfair treatment. We have a grievance procedure in place to address concerns related to our potential and actual impact on nature-related aspects. In line with our Code of Conduct and Human Rights and Equal Opportunities Policy, we are committed to protecting human rights throughout our operations. Our policies are informed by internationally acknowledged standards, including the International Labour Organization (ILO) Declaration. We align our business practices with global standards by adhering to the principles and guidance of the United Nations’ Universal Declaration of Human Rights (UDHR) and the Sustainable Development Goals. Since 2024, we have been a signatory of the United Nations Global Compact (UNGC), reinforcing our commitment to integrate universal principles on human rights, labour, environment, and anti- corruption into our strategies and operations. Across our supply chain, we conduct annual due diligence assessments of critical suppliers and contractors, evaluating their sustainability and ESG performance across environmental management, pollution control, human rights protection, code of conduct and whistleblowing mechanism. Code of Conduct; Stakeholder Engagement Policy; Our Approach to Sustainability (5-14); Value Created for the Environment (15-39) ; Value Created for Supply Chain (62-71); Appendix II – Stakeholder Engagement Process and Double Materiality Analysis Methodology (85) Strategy a Describe the nature-related dependencies, impacts, risks and opportunities the organization has identified over the short, medium and long term Dependencies SHKP‘s value chain is intrinsically linked to natural capital. Our ability to construct new developments and maintain our current portfolios relies on both ground and surface water, which are essential for our construction activities and property management, to meet the needs of our customers and tenants. Additionally, the ecosystem’s ability to mitigate climate change significantly influences our building designs, operations, and the well-being of our portfolio’s inhabitants. In instances where our new developments are situated near coastal regions and rivers, local ecosystems also serve as a form of defence against storms and flooding triggered by severe weather occurrences. Other nature-related dependencies that affect our operations include pest control, water quality, water flow regulation, etc. Impacts Our construction has an effect on the terrestrial ecosystem through the use of land and natural resources. Both concrete and steel supply chains are recognized for their impact on nature, affecting terrestrial ecosystems, water usage, and airborne emissions. The extraction of stone, sand, and iron ore alters terrestrial land use, while the substantial water consumption during extraction and production processes influences the nearby water ecosystems. Although our operations are located mainly in built-up urban areas, they also generate greenhouse gas (GHG) emissions, solid waste, air pollutants and water pollutants, which may also lead to direct and indirect impact on natural environment. Value Created for the Environment (15-39) Paragraph Description Our Approach Reference (Page number) and Remarks a Risks We face acute physical risks due to climatic and geologic events, including typhoon, rainfall flood and river flood, as identified in our climate-risk assessment. These climate events will likely bring business interruptions and disruptions on supplies of essential natural resources, including water and timber as well as other water-dependent supplies, such as concrete and steel. Chronic risk may be imposed by rising temperatures, causing building and equipment damage from extreme heat and power outages, increased occupational health risks, and reduced productivity. Meanwhile, we face transition risks related to nature across several categories. Policy and legal risks include more stringent nature-related legislation and reporting obligations. We also face reputation and market risks related to increasing rawmaterial costs and changing consumer preferences. Fluctuations in natural systems, changing population, and land use may also contribute to risks to water supply, leading to increased water cost. Opportunities We see opportunities in several key areas related to nature. The Group builds reputational capital through stakeholder engagement and conservation initiatives in our portfolio. Through stakeholder engagements and environmental awareness programmes, we strive to restore biodiversity and ecosystems affected by our business activities and offset adverse impacts. Market opportunities may also arise from shifting customer preferences towards buildings that are climate resilient, flood-proof, energy-efficient and biophilic . Moving forward, the Group will explore the feasibility to conduct a comprehensive analysis on nature- related dependencies, impact, risks and opportunities in our operations and value chain, covering our various operating locations over the short, medium and long term. b Describe the effect nature-related dependencies, impacts, risks and opportunities have had on the organization’s business model, value chain, strategy and financial planning, as well as any transition plans or analysis in place Dependencies The Group’s dependencies on natural resources and ecosystem services significantly impact our business model—from upstreammaterial sourcing to operational resilience against nature-related risks. These dependencies inform our risk management strategies. Impacts The disturbances caused by the Group’s operational activities could have an impact on natural capital. Consequently, depleted natural resources may impact the Group’s business activities throughout the value chain. Risks If left unmitigated, our identified risks could disrupt operations, raise rawmaterial costs along the Group’s upstream value chain, increase water consumption and associated costs, and decrease our revenue. These risks may expose us to reputational harm, legal liabilities, and higher capital costs, potentially limiting performance in property sales and rentals. Opportunities Proactive measures to address potential risks can enhance resource efficiency and build resilience towards supply instability of natural resources, strengthen the Group’s reputation among stakeholders. By implementing energy-efficient systems, smart technologies, and utilizing renewable energy, we may also enhance our resources efficiency and reduce operational costs. Transition Plan The Group is dedicated to reducing its potential disturbance on the natural environment and depletion of natural resources. As prescribed in our Environmental Policy, we support no net deforestation in our operations within the project boundary, and advocate to suppliers and relevant partners along our value chain. We avoid deforestation or logging in own operations and the supply chain where possible and set up monitoring system to ensure Group-wide compliance. Our Sustainable Building Policy and green procurement policy are integrated into our operations, with sustainable considerations taken into account when selecting suppliers and sourcing of building materials, equipment and office products. Across our business units, we prioritize eco-friendly supplies from sustainable sources, such as Forest Stewardship Council (FSC)-certified timber and paper. In our hotels, we prefer seafood certified by Marine Stewardship Council. In addition, the Group engages stakeholders on biodiversity protection and work with conservation non- governmental organizations (NGOs) or external experts and partners in biodiversity assessment and management. We collaborate with third-party professionals, seek government approval and engage with business partners throughout planning and construction. We use our property management resources to raise environmental awareness in the community and inspire the public to adopt sustainable lifestyles. We set up education centres at our managed properties and offer workshops and seminars to promote environmental protection and raise awareness of resource circularity. Moving forward, we will continue to collaborate with stakeholders to enhance the nature-resilience of our business model. We will explore to develop a comprehensive transition plan with targeted measures to address nature-related risks faced across the Group’s value chain. Value Created for the Environment (15-39); Value Created for Supply Chain (62-71) Appendix IX – TNFD Content Index Starting this year, SHKP will disclose with reference to the TNFD recommendations for its property-related businesses in Hong Kong. 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 Appendix IX Sun Hung Kai Properties Limited | Sustainability Report 2024/25