ESR-REIT Annual Report 2024 147 Recommended Disclosures Response Strategy The climate-related risks and opportunities ESR-REIT has identified over the short-, medium-, and long-term that could affect the company’s prospects We conducted climate risk scenario analyses for our Singapore, Japan and Australia portfolios, modelling the Net-Zero3 and Business-as-Usual4 scenarios to assess transition and physical risks across the short- (up to FY2025), medium- (up to FY2030) and long-term (up to FY2050). The analyses identified the following key risks: • Physical risks such as flooding, extreme weather and temperature changes • Transition risks such as carbon pricing, stricter regulations and evolving stakeholder expectations Following an initial qualitative assessment conducted in FY2022, we have quantified impacts from the identified physical risks and transition risks in FY2024, disclosed below in the Metrics and Targets section. We will conduct further analysis on the impacts quantified to translate the findings and prioritise the identified risks for our financial planning process in FY2025. Refer to Appendix E from pages 186 to 187 for more information on the climate risks identified. The current and anticipated impact of climate-related risks and opportunities on ESR-REIT’s business model and value chain The identified climate risks and opportunities are expected to affect our capital expenditures, operational expenditures, income and asset and liabilities. For example, a key medium-term risk material to ESR-REIT’s business is the expected increase in operating costs from increased cost of utilities, as utility companies pass through the rising carbon tax costs to end users. To mitigate this, and to tap on the growing demand for sustainable real estate, we are investing in renewable energy initiatives to reduce our grid energy consumption and operational costs. Refer to Appendix E from pages 186 to 187 for the potential impacts and their estimated time horizons. The effects of the identified risks and opportunities on ESRREIT’s strategy and decision making, including information on its climate transition plan The findings of climate risk assessment and scenario analysis were incorporated into our portfolio and risk management strategy setting. As part of our adaptation strategy, we are exploring smart building technologies, flood control measures and are building ESG capabilities of our workforce. This commitment extends beyond asset resilience to encompass climate-proofing our operations. We have also developed and will continue to develop decarbonisation roadmaps for our portfolios to gain clarity on the reasonable actions that can be taken to meet our energy and emission targets. 3 RCP 2.6, limit warming to within 1.5°C from pre-industrial levels by 2100. 4 RCP 8.5, 4°C warming from pre-industrial levels by 2100.
RkJQdWJsaXNoZXIy NTM2MDQ5