148 STRATEGICALLY ADVANCING SUSTAINABILITY REPORT Recommended Disclosures Response The effects of climaterelated risks and opportunities on ESR-REIT’s financial position, financial performance and cash flows over the short-, medium-, and longterm We modelled the impacts of transition and physical risks on our portfolio using FY2023 data: • Climate-related transition risks: Our portfolio’s CVaR is projected to be 18.3% by 2050 in a 1.5°C scenario at FY2023 consumption projections. This means 18.3% of the portfolio value is at risk if the portfolio continues its current operations without further decarbonisation measures to meet the 1.5°C trajectory. • Climate-related physical risks: 47.4% of our assets are exposed to high risks relating to river, surface, coastal flooding and storm surge under a 4°C scenario. This means that 47.4% of our assets face higher building recovery costs when affected by the physical risks of a warming world. • Climate-related opportunities: 43.1% of our portfolio have been installed/have plans to install solar panels as a move to reduce Scope 2 emissions and reliance on brown energy. • Capital deployment: Based on the decarbonisation roadmaps developed by our consultants for our portfolio, we intend to budget S$38.3 million towards AEIs to mitigate against climate-related risks. This includes expanding the use of renewable energy and upgrading equipment to more efficient ones. The climate resilience of ESR-REIT’s strategy and its business model to climate-related changes, developments and uncertainties We explored opportunities for green financing for projects focused on enhancing our environmental performance and value of our assets. These projects — focusing on green buildings, renewable energy, waste and water management and clean transportation — aim to enhance the long-term value and resilience of our assets while improving our environmental performance and strengthening our competitive position in a changing market. In FY2024, ESR-REIT further strengthened its financial position by securing its inaugural sustainability-linked and green loans. This included a S$200.0 million sustainability-linked unsecured revolving credit facility in March 2024 and a S$225.0 million sustainability-linked unsecured term loan in October 2024, as well as a S$341.5 million term loan which had a green loan component in November 2024 as part of the acquisition of 51.0% interest in 20 Tuas South Avenue 14. These financings are aligned with ESR-REIT’s commitment to integrate ESG considerations into its capital management strategy. These milestones underscore ESR-REIT’s ongoing dedication to sustainability and responsible financial stewardship. By proactively investing in climate resilience measures, we aim to mitigate the financial impacts of rising energy costs, increased regulatory requirements, and physical risks associated with extreme weather events.
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