SHKP Sustainability Report 2024/25

107 Paragraph Description Our Approach Reference (Page number) and Remarks c Describe the resilience of the organization’s strategy to nature- related risks and opportunities, taking into consideration different scenarios Demonstrating our commitment to sustainable practices, nature-related risks and opportunities are considered in our ESG risk management process. The Environmental Policy and Sustainable Building Policy outline our plans to mitigate nature-related risks throughout the building cycle, covering aspects such as material sourcing, energy consumption, water consumption, waste management, biodiversity, and climate change and carbon management. We have implemented various initiatives addressing resource management during project development and operations. The Group also closely monitors its performance on established metrics and targets, including our 10-year targets for FY2029/30 on GHG emissions, electricity consumption, water consumption and waste diversion as well as our sustainable building targets. We engage with our partners to develop innovative solutions and collaborate with suppliers to build resilience of our business operations. Value Created for the Environment (15-39) d Disclose the locations of assets and/or activities in the organization’s direct operations and, where possible, upstream and downstream value chain(s) that meet the criteria for priority locations As stipulated in our Environmental Policy , we avoid any operational activities near sites containing globally or nationally important biodiversity throughout the entire value chain, including World Heritage areas or International Union for Conservation of Nature (IUCN) Category I-IV protected areas without government approval, if necessary, before developing projects. Biodiversity risk assessments are conducted on development sites to measure the impact on biodiversity where applicable. During the reporting year, no significant risks related to biodiversity across our operations were identified. Recognizing water risk as one of our key nature-related considerations, we have identified that our property management business consumes the highest volume of water, followed by construction and hotels. To systematically assess water risk in our portfolio and incorporate water risk management into our overall business strategy, we conducted a thorough water stress test and analysis, using the World Resources Institute’s Aqueduct Water Risk Atlas tool during the reporting year. The results indicate that none of our operations in Hong Kong have high or extremely high overall water risk. SHKP will explore the possibility for conducting location-specific impact assessments in the future to pinpoint priority locations, including areas crucial for biodiversity, possessing high ecosystem integrity, and locations with significant nature-related dependencies, impacts, risks and opportunities. Value Created for the Environment (15-39) Risk and Impact Management a(i) Describe the organization’s processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities in its direct operations To ensure that we evaluate the potential impacts of our construction activities, our Environmental Policy stipulates that we engage external consultants to conduct thorough environmental and biodiversity risk assessments where applicable. Specific projects, including Wetland Seasons Park, PARK YOHO, Sai Sha and Tung Shing Lei Development Projects, have engaged external consultants to conduct biodiversity risk assessments, in which management plans were developed to minimize any potential impacts made to the surroundings. To quantify our nature-related risks and opportunities, we have conducted a water risk assessment by utilizing the Aqueduct Water Risk Atlas, which informs the water stress levels in our portfolio. As a result, the assessment concludes that our operations in Hong Kong face low-medium baseline water stress levels (10-20%). We have engaged an independent third-party consultant to perform detailed climate risk assessments and scenario analysis, which inform our understanding of several nature-related dependencies, such as flood control, rainfall pattern and stormmitigation. Value Created for the Environment (15-39) a(ii) Describe the organization’s processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities in its upstream and downstream value chain(s) We recognize that our impacts to the environment also extends to our upstream and downstream value chains. We engage with our upstream and downstream value chain partners through various channels, including stakeholder engagement and materiality assessment, supplier due diligence questionnaire and partnerships with external organizations to identify, assess and prioritize nature-related issues. We review nature-related trends that could potentially affect our value chain, ensuring that we stay informed and proactive in monitoring and managing the identified nature-related risks effectively. For example, we advocate to our suppliers and partners to support no deforestation in our operations, which will allow us to manage and mitigate deforestation risk along our value chain. A due diligence questionnaire, covering environmental management and pollution, and other ESG aspects, is conducted at least annually, allowing us to assess the sustainability and ESG performance of our critical suppliers and contractors. Moving forward, we will continue to explore methods in expanding the scope of risk assessment to our upstream and downstream value chains partners, demonstrating our commitment to environmental stewardship and sustainability. Value Created for the Environment (15-39) ; Value Created for Supply Chain (62-71) b Describe the organization’s processes for managing nature- related dependencies, impacts, risks and opportunities To effectively manage our nature-related dependencies, impacts, risks and opportunities, we ensure that environmental considerations are integrated in our operations through our environmental management systems. During the reporting year, around 60% of our managed properties and construction sites in the reporting scope, and Wilson Parking were certified with ISO 14001 or ISO 50001management systems, underscoring our commitment to manage the environmental impact arising from our operations. Where necessary, we will also aim to restore biodiversity and ecosystems affected by our business activities, such as relocation of aquatic plants for restoration and ecological enhancement in Sai Sha Development Project and implementing a wetland restoration project with ecologists in PARK YOHO. In terms of our supply chain, our procurement takes environmental aspects into account. Priority is given to suppliers and contractors who follow ISO 14001 environmental management standards, adopt green procurement policy and practices and incorporate sustainable measures. Sustainability considerations, including nature-related elements, are incorporated into our procurement and engagement with suppliers and contractors in different businesses. Environmental Policy; Sustainable Building Policy; Value Created for the Environment (15-39) Paragraph Description Our Approach Reference (Page number) and Remarks c Describe how processes for identifying, assessing, prioritising and monitoring nature-related risks are integrated into and inform the organization’s overall risk management processes We have integrated ESG risks into our multidisciplinary Enterprise Risk Management, in which relevant risks are reviewed in our risk register. Our Audit and Risk Management Committee supports the Board in overseeing the effectiveness of the Group’s risk management and internal systems. This ensures that ESG-related risks, are evaluated and integrated into our decision-making process. The SSC also conducts regular prioritization and assessment of material topics, including potential nature-related risks and opportunities, and implement relevant ESG strategies. We organize meetings regularly and the chairman of the SSC maintains clear communication with the Board and the Executive Committee to report relevant ESG issues where necessary. Although the Locate, Evaluate, Assess and Prepare (LEAP) methodology is not formally adopted across all projects, we apply a mitigation hierarchy focused on the four pillars: avoid, minimize, restore and offset, to reduce any adverse effects to the environment and the ecosystem in our operations. Prioritizing sites with minimal environmental, biodiversity and ecosystem impact, we collaborate with external consultants to conduct site assessments and establish baseline environmental performance standards. Additionally, the Group closely monitors its performance in terms of GHG emissions, material and water usage, waste generation, and biodiversity to ensure sustainable practices and environmental responsibility. / Metrics and Targets a Disclose the metrics used by the organization to assess and manage material nature-related risks and opportunities in line with its strategy and risk management process We track and monitor our environmental performance and resource consumption to manage relevant nature-related risks and opportunities , in which the SSC tracks and monitors our progress towards the Group’s ESG performance. We utilize key nature-related metrics to evaluate the material risks and opportunities, including water and natural resource utilization, changing costs for water and natural resource as well as other capital expenditure directed towards nature-related opportunities. During the reporting year, the Group did not receive any significant fines or penalties, or received any litigation actions due to negative nature-related impacts. Value Created for the Environment (15-39); Value Created for Supply Chain (62-71) b Disclose the metrics used by the organization to assess and manage dependencies and impacts on nature To ensure transparency and progress monitoring, we disclose environmental metrics, including Scope 1, 2 and 3 GHG emissions, water consumption, material use and waste annually. Please refer to Appendix III for more information on our environmental performance. In the future, we strive to enhance the scope of data collection to report more relevant metrics, which will allow us to identify areas with high nature-related dependencies and impacts to further improve our performance. / c Describe the targets and goals used by the organization to manage nature-related dependencies, impacts, risks and opportunities and its performance against these As outlined in our Environmental Policy , we strive to establish biodiversity-related targets for developments in priority areas, where applicable. We have established qualitative target for our biodiversity management, including the support for no net deforestation and avoid deforestation or logging in own operations and the supply chain where possible and set up monitoring system to ensure Group-wide compliance. To guide our approach in managing nature-related risks and opportunities, we have established 10-year environment targets for FY2029/30 against FY2019/20 baseline, covering GHG emissions, electricity consumption, water consumption and waste diversion, in which progress is reviewed and disclosed annually in our sustainability reports. We will continue to develop targets that monitors our approach in managing relevant nature-related dependencies, impacts, risks and opportunities. Environmental Policy; Value Created for the Environment (15-39) 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