ESR ESG 2020 - EN

Building for the New Economy 22 Environmental, Social and Governance Report 2020 RESPONDING TO CLIMATE CHANGE ESR supports the Paris Agreement ratified by 187 nations with the objective of keeping global warming to within 1.5 degrees Celsius of pre-industrial levels. To meet the Paris target, greenhouse gas emissions should decline to net zero around mid-century. This transition presents both significant opportunities for low-carbon solutions as well as risks for businesses and communities who are slow to adapt. As part of our ESG Framework, we have established a target to fully align climate risk assessments and disclosures for our business with the Recommendations from the Taskforce for Climate-related Financial Disclosures (TCFD) by 2025. The G20’s Financial Stability Board established the TCFD to promote informed capital allocation based on meaningful information about the financial system’s exposure to climate-related risks. The TCFD released climate-related financial disclosure recommendations in 2017. RISK MANAGEMENT We are in the process of conducting scenario analysis for our daily operations and portfolio of investments in order to better understand our exposure to physical and transitional risks from climate change. In 2021, we will embark on a climate impact study to shape the Group’s strategic approach to climate adaptation. We have engaged MSCI, an investment research firm that provides stock indexes, portfolio risk and performance analytics, to conduct a forward-looking and return-based valuation assessment that will measure climate related risks and opportunities in our portfolio. This assessment will help us to evaluate transition risks associated with ongoing regulatory and technological developments as well as physical risks from extreme weather impacts across a range of scenarios at the portfolio and asset level. The outcomes of this assessment will inform our next steps to develop a comprehensive risk management framework tailored to the specific needs of our business. ESR’s Board and senior management is committed to addressing climate risks by gaining a better understanding of potential impacts to our business and delivering effective responses. We will hold ourselves accountable to these objectives through our ESG Governance structure and mechanisms in accordance with our ESG Policy. ESR’s response to climate change is reflected in our ESG Policy and all three pillars of our ESG Framework: • Human Centric — engaging with key stakeholder groups to understand and respond to their concerns • Property Portfolio — improving eco-efficiency, investing in renewable energy sources and building resilience to physical risks associated with the changing climate • Corporate Performance — ESG governance, responsible investing and disclosure in accordance with international best practices. Governance Strategy