ABOUT USSustainability

At CLCT, sustainability is at the core of everything we do. We are committed to growing in a responsible manner, delivering long-term economic value, and contributing to the environmental and social well-being of our communities. The material environmental, social and governance (ESG) factors have been identified and encapsulated in the CapitaLand Investment 2030 Sustainability Master Plan (SMP), which was refreshed in 2023 as part of the review by the CapitaLand Investment Board of Directors together with Management.

The CapitaLand Investment 2030 Sustainability Master Plan steers our efforts on a common course to maximise impact through building portfolio resilience and resource efficiency, enabling thriving and futureadaptive communities, and stewarding responsible business conduct and governance. Ambitious ESG targets have been set which include carbon emissions reduction targets validated by the Science Based Targets initiative (SBTi). In 2023, CapitaLand Investment revised its SMP targets to elevate its SBTi-approved targets in line with a 1.5˚C scenario, incorporate its Net Zero commitment, and enhance its focus on social indicators.

The CLCT Board is responsible for overseeing the REIT’s sustainability efforts, and takes ESG factors into consideration in determining its strategic direction and priorities. The CLCT Board also approves the executive compensation framework based on the principle of linking pay to performance. CLCT’s business plans are translated to both quantitative and qualitative performance targets, including sustainable corporate practices and are cascaded throughout the REIT.

Role of CLI Board, Management and Employees

The Sponsor's (CLI) Board recognises the importance of sustainability as a business imperative and ensures that sustainability considerations are factored into CLI’s strategy development. This enables CLI to remain competitive and resilient in an increasingly challenging business environment.

The CLI Board is kept informed on a regular basis through the Strategy and Sustainability Committee (SSC) on the Group’s sustainability management performance, key material issues identified by stakeholders, and the planned follow-up measures. Additionally, the CLI Board is typically updated by the Risk Committee and Audit Committee at least once a year and at ad hoc Board meetings. The CLI Board discusses matters relating to sustainability risks and relevant performance metrics, which include carbon emissions and our progress on achieving the reduction targets, green certification, human capital development, stakeholders’ expectations on climate change, social impact and/or other matters. The CLI Board is also informed of any incidents relating to workplace safety, business malpractice and environmental impact, which may include climaterelated damage or disruptions.

Lead Independent Director of CLI, Mr Anthony Lim chairs the SSC which is a CLI Board Committee. The SSC is responsible for overseeing CLI’s sustainability strategies and goals, including providing guidance to management and monitoring progress against achieving the goals of sustainability initiatives. The SSC typically meets twice a year, with additional meetings convened as necessary.

The CLI Leadership Council makes strategic resource allocation decisions and meets on a regular basis. The CLI Leadership Council comprises the Group Chief Executive Officer (CEO), CEOs of the business units and key management officers of the corporate office.

The sustainability work teams comprise representatives from CLI’s business units and corporate functions. Each business unit has its own Environmental, Health and Safety (EHS) Committee to drive initiatives in countries where it operates with support from various departments.

Role of CLCT Board, Management and Employees

At CLCT, a Sustainability Management Committee (SMC) was established to ensure greater focus on sustainability and climate-related matters of CLCT’s assets. The SMC is chaired by the CEO of the REIT Manager of CLCT and comprises senior management team members to oversee CLCT’s sustainability objectives and strategies directly. The SMC is responsible for providing timely and regular updates on the REIT’s sustainability matters to CLCT’s Board of Directors and its Chairman. Regular updates to the CLCT Board of Directors include value and mission statements, goals, strategies overviews, policies and progress related to sustainable development.

The SMC is supported by CLCT’s Sustainability Working Committee (SWC), which comprises key members from various business functions, to implement sustainabilityrelated activities and initiatives across CLCT’s operations as per CLI’s sustainability framework and policies.

CLCT’s sustainability governance is inter-linked with the Sponsor’s sustainability management. The overall governance comes under the purview of the CLI Senior Leadership Council. CLCT is represented at the CLI Senior Leadership Council by the CEO of the REIT Manager of CLCT who provides guidance on sustainability strategies and goals for CLCT.

This report's content, including the material ESG topics, are reviewed and approved by the CLCT’s Board of Directors. During board meetings, sustainability policies and strategies are discussed and reviewed as well.

STRATEGIC SUSTAINABILITY MANAGEMENT STRUCTURE

ESG INTEGRATION ACROSS CLCT’S BUSINESS FUNCTIONS

CLCT is guided by CLI’s materiality assessment process, which identifies and prioritises the management of material ESG issues that are most relevant and significant to CLCT and its stakeholders, taking into consideration their relevance or impact to the business, strategy, financial planning, business model and key stakeholders. A double materiality approach is adopted, considering issues which are material from either the impact or financial perspectives¹⁶, or both.

Potentially material ESG issues arising from activities across CLI and CLCT’s value chain (including potential risks and opportunities in the immediate and longer term) are primarily identified via ongoing engagement with CLI’s business units and external stakeholders, and reviews of sources including investor questionnaires, as well as ESG surveys, sustainability benchmarks and frameworks such as Dow Jones Sustainability Indices, GRESB and SASB.

In addition, CLI and CLCT have a regular review, assessment and feedback process in relation to ESG topics. Identified material issues are reported in its corporate risk register through the annual Group-wide Risk and Control Self-Assessment (RCSA) exercise, which identifies, assesses and documents material risks and the corresponding internal controls to manage those risks. These material risks include fraud and corruption, environmental (e.g. climate change), health and safety, and human capital risks which are ESG-relevant. Identified material ESG issues are then prioritised based on the likelihood and potential impact of issues affecting the business continuity of CLI and CLCT. For external stakeholders, priority is given to issues important to the community and applicable to CLI and CLCT. In FY 2023, the material ESG topics that were identified were approved by the CLI SSC.

¹⁶ To identify ESG issues which are potentially financially material, CLI takes reference from the SASB Standards for Real Estate and Real Estate Services, which identify sustainability factors that are material to short, medium, and long-term enterprise value for the industry.

PRIORITISATION OF MATERIAL ESG ISSUES

CLCT proactively engages its stakeholders to better address their needs, build social and relationship capital, and create shared values for the long-term. CLCT identifies its stakeholders as individuals, organisations, and communities that are directly or indirectly impacted by its operations. Its stakeholders include employees, investors, tenants, shoppers, contractors, vendors, governments and NGOs. Through the various engagement channels, CLCT seeks to understand its stakeholders’ views, to effectively communicate with them and respond to their concerns.

CLCT’s material ESG issues and the value created, aligned to CLI 2030 SMP focus areas and commitments, are mapped to the six integrated reporting Capitals of the Value Reporting Foundation’s IR Framework – Environmental, Manufactured, Human, Social and Relationship, Organisational and Financial. This is further mapped against eight UN SDGs that are most aligned with CLI 2030 SMP focus areas, and where CLI and CLCT can achieve the greatest positive impact.