Key Physical Risk Scenarios Key Transition Risk and Opportunities Scenarios Geographical Coverage Time Horizon NGFS1 | 1.5°C | Orderly NGFS | 2°C | Orderly NGFS | 3°C | Hot House World (NDC2) CRREM3 | 1.5°C CRREM | 2°C NGFS | 3°C | SSP24 | Hot HouseWorld All assets* within operating regions specific to CICT: - Australia (AUS) - Germany (DEU) - Singapore 2050, 2100 1 The Network of Central Banks and Supervisors for Greening the Financial System (NGFS) 2 Nationally Determined Contributions (NDC) 3 Carbon Risk Real Estate Monitor (CRREM) 4 Shared Socioeconomic Pathways (SSP) *As of 31 December 2022 The analysis includes both quantitative and qualitative assessments. The quantitative assessments of potential financial impacts are being conducted based on available climate-related projections and assumptions under the abovementioned scenarios. Six physical risks, including fluvial flooding, coastal flooding, extreme heat, tropical cyclones, wildfires and extreme cold and one transition risk, shifts in carbon price, were assessed during the process. For other risk areas which are identified to be material, but difficult to quantify, such as changes in consumer and investor preferences, a qualitative assessment is conducted based on internal stakeholder consultation within CLI and CICT. Potential impacts of climate-related risks and opportunities assessed across the portfolio are identified under different scenarios, as shown in Table 1 and 2. CICT faces more exposure to physical risks under the 3°C scenario in the long term, as minimal transition policies are expected to be in place while the development of low-carbon technology or related market changes may be slower. Under the 1.5°C and 2°C scenarios, the Trust faces higher levels of transition risks as more stringent climate-related policies are expected to be introduced and implemented. The insights on both quantitative and qualitative assessments of the risks identified provides a basis for the next steps in understanding the severityof risk impacts across time horizons. SCENARIOANALYSIS ON FUTURE CLIMATE-RELATED RISKS AND OPPORTUNITIES The climate scenario analysis for CLI's global portfolio considered the parameters listed below: Table 1: Material Physical Risks Assessed under the 3°C Scenario Risk Type Primary Risk Driver Geography Potential Impacts Extreme heat Hot days and extreme heat could become more common and/or severe • AUS • SG • Increase in cooling demand leading to higher electricity costs Tropical cyclones Properties may face more frequent and severe tropical cyclone • DEU • SG • Higher chance of damage to specific asset locations that are tropical cyclone-prone • Increase in operating costs (e.g. business interruption) Extreme cold Cold days and extreme cold could become more common and/or severe • AUS • Increase in warming demand leading to higher electricity costs Integrated Sustainability Report 2022 17
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