Table 2: Material Transition Risks and Opportunities under 1.5°C Scenario Risk Type Primary Risk / Opportunity Driver Potential Impacts Shifts in carbon prices Carbon emissions are being priced through taxation or emissions trading schemes • Increase in operational costs associated with carbon pricing Changes in regulator expectations Regulators with more stringent polices and regulations around climate change for the buildings industry • More comprehensive disclosures expected on climate change actions and metrics Changes in customer expectations Consumer preferences could change and shift towards greener buildings • Increase in number of tenants seeking for assets with high-performing green credentials Shifts in electricity prices Growing adoption of renewable energy could drive changes in electricity costs • Increase in capital investment in renewable energy • Fluctuations in operating costs from electricity price variability Use of new technologies Investment in technologies for improving energy and water • Reduced exposure to increases in carbon price, electricity price and water price • Reduction in operating costs Increased demand for green products and services Shift in consumer preferences and development of low emissions goods and services • Increase in revenue by tapping on the green rental premium created by increased demand for sustainable buildings • Increase in asset value for low carbon buildings As an ongoing process, CLI and CICT will review and update, if appropriate, the processes associated with risk management in order to account for the material environmental and climate-related risks identified. Table 1: Material Physical Risks Assessed under the 3°C Scenario (cont'd) Risk Type Primary Risk Driver Geography Potential Impacts Fluvial flooding Water level rise of the river could occur due to excessive rain or snowmelt, leading to losses from assets located in high flood risk zones • DEU • SG • Increase in assets exposed to growing severity of river floods • Increase in operating costs (e.g. repair costs, business interruption) Wildfires Risk of wildfires could increase in extremely dry conditions, such as drought, and during high winds • AUS • SG • Increase in assets exposed to wildfires • Increase in operating costs (e.g. filtration demand, business interruption) Coastal flooding Properties in coastal areas may be exposed to steady and continuous sea level rise • SG • Increase in assets exposed to coastal flooding • Increase in capital expenditures to construct coastal defense and flood control infrastructure CapitaLand Integrated Commercial Trust 18 Environment Managing Climate Change
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