CapitaLand Integrated Commercial Trust - Annual Report 2021

Upon completion of the scenario assessment study, targeted in 2022, the Group and the Trust will review and update, if appropriate, the processes associated with risk management in order to account for environmental and climate- related risks. Climate-related risks and opportunities are identified and mitigated through CLI’s ERM Framework. The Trust prioritises material ESG issues based on the likelihood and potential impact of the issues affecting business continuity and development. Notably, CICT is cognizant of the risk posed by existing and emerging regulatory requirements with relation to climate change as it is outlined in CapitaLand’s RM Framework as a transitional climate change risk. Some of these risks include: • Regulatory or compliance risk, prompted by certain regulations in the countries of operation. These include but not limited to the Environmental Risk Management Guidelines introduced by the Monetary Authority of Singapore (MAS) in 2020 requiring financial institutions and asset managers to place greater emphasis on both physical and transitional environmental risks and the Singapore Stock Exchange mandate from December 2021 that all issuers must provide climate reporting that is aligned to the recommendations of the Task Force on Climate-related Financial Disclosures on a ‘comply or explain’ basis in their sustainability reports from the financial year (FY) commencing 2022. Climate reporting will be mandatory for the materials and buildings industry from FY 2024. • Market risks , including shifts in carbon and electricity prices, or customer expectations, prompted by the conclusions of COP26 in November 2021, where it was recognised that urgent action is needed to combat global warming and this can only be done through global actionfromgovernments andbusinesses. Other developments, such as Singapore’s Green Plan 2030 that charts ambitious and concrete targets that will strengthen Singapore’s commitments under the United Nation’s 2030 Sustainable Development Agenda and Paris Agreement, and position Singapore to achieve her long-term net zero emissions aspiration as soon as viable, are also monitored by CICT as they affect the day-to-day operations and practices of the Trust. Physical risks are observed through the regular monitoring of incidents across the portfolio, for example the cases of floods. In 2020, CLI had conducted a global portfolio baseline study to better understand its portfolio’s physical climate risk in relation to floods. This included insights into whether the properties were located in low lying plains, encountered flooding in previous years, had equipment located in the basement, etc. Globally, most of CLI’s properties already have flood control features/measures in place, such as flood barriers, sensors, water level pumps and flood emergency response plans. Climate-related physical risks occurring as extreme weather events, for example cases of floods, and changing climate patterns are regularlymonitored across the portfolio. In addition, through CLI’s ERM Framework and the implementation of the EHS IA for all new investments, it identifies and prioritises certain physical risks, e.g. floods are highlighted in the due diligence reports and plans to integrate climate change resilience and adaptation considerations into the design, development and management of its properties. To further strengthen climate resilience to flood risk, CLI will regularly engage its operation teams to ensure flood emergency response plans are implemented across its portfolio. CapitaLand Integrated Commercial Trust 54 TCFD