CLIMATE-RELATED FINANCIAL DISCLOSURES AUGUST 2022

Overview.

Overview.

As a business, Precinct is committed to creating a more sustainable environment. This means identifying and assessing the risks and opportunities presented by climate change.

We recognise our role as a long-term owner and developer of real estate and are taking an active approach to climate action, as well as best practice disclosure. Precinct is fully supportive of a low-carbon future for Aotearoa New Zealand.

The following document summarises Precinct's approach to our climate change risk management. It has been prepared on a voluntary basis and is based on the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations.

Precinct consider the TCFD recommendations to provide the appropriate framework to disclose our climate related risks and opportunities to our stakeholders.

photo credit: Simon Devitt

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Governance.

Governance.

TCFD Objective:

• Disclose the organisation's governance around climate-related risks and opportunities.

TCFD Recommended Disclosures:

  • Describe the board's oversight of climate-related risks and opportunities.
  • Describe management's role in assessing and managing climate-related risks and opportunities.

Precinct's Environmental, Social and Governance (ESG) issues are guided by its Sustainability policy. The Policy defines Sustainability at Precinct as enabling sustainable and successful business, improving our operational performance and incorporating sustainable design across our portfolio of properties. It defines our approach and what it means to support ESG issues material to Precinct and how we strive to embed sustainability throughout Precinct's business and day to day operations.

Since 2015 Precinct has reported on sustainability in accordance with the Global Reporting Initiative (GRI) Standards (core option). The GRI standards are the world's most widely used sustainability reporting standard and have provided the business with a clear direction helping us drive performance and achieve results.

Board of directors.

At a Board level, the Board of Precinct is responsible for the governance of Precinct. This includes determining the nature and extent of the risks it is willing to take to achieve the business strategy. In accordance with the requirements of NZX Corporate Governance Code

  • Principle 6, Risk Management, the Board has a sound understanding of the material risks (including climate related risks) faced by the business and how to manage them.

ESG Comittee

The Board has established an Environmental, Social and Governance (ESG) Committee to assist the Board in implementing and monitoring Precinct's strategic objectives in relation to ESG issues. This reinforces the high priority Precinct places on our responses to our material ESG risks and opportunities. The ESG Committee is guided by the ESG Committee Charter (available in Precinct's Corporate Goverance Manual on Precinct's website. A majority of Committee members are Independent Directors who have a range of skills and experience.

Audit and Risk Committee.

The Audit and Risk Committee assists the Board in overseeing Precinct's climate-related risks. The Committee oversees Precinct's risk register and reviews it regularly with management to track existing risks and the emergence of new risks. Precinct's climate related risks are included in the risk register.

Executive management.

At a Management level, Precinct's Management team has a clear role in assessing and managing its climate-related risks and opportunities, as well as its non-climate related risks. Precinct's CFO is the Chair of Precinct's Sustainability Committee and is responsible for Precinct's overall sustainability strategy and Emissions and Reduction Plan.

Sustainability Committee

Precinct's Sustainability Committee acts as custodian for Precinct's sustainability strategy and comprises representatives from various parts of our business including Operations, Development, Corporate, and Human Resources. The Committee meets frequently during the year, at least quarterly. It is responsible for assessing, actioning and driving ESG issues, reviewing performance and considering Precinct's long-term strategy on sustainable activities across the business and reporting on its progress. An update is included in the Board papers on an ongoing basis, supporting Precinct's Board and Senior Management Team's responsibility for the organisation's climate and non-climate change risk management.

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Risk Management.

Risk Management.

TCFD Objective:

• Disclose how the organisation identifies, assesses, and manages climate-related risks.

TCFD Recommended Disclosures:

  • Describe the organisation's processes for identifying and assessing climate-related risks.
  • Describe the organisation's processes for managing climate-related risks.
  • Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation's overall risk management.

Precinct's Risk Management and reporting framework identifies and manages risks that may impact the business and complies with the NZX Governance Code recommendations in all respects. It includes the following:

  • Risk Register
  • Financial Risk Management Policy
  • Insurance
  • Audit
  • Health and Safety

Precinct's approach to Risk Management includes a robust risk assessment process. Precinct is committed to providing a clear risk management and reporting framework for the business to operate under to achieve its objectives, whilst ensuring all risks are understood and identified, and consequently assessed and managed.

Climate-related risks are included in Precinct's Risk Register which forms part of the Audit & Risk Comittee papers, ensuring that Precinct's climate risks are appropriately reviewed and assessed.

As part of the overall process of identifying Precinct's climate risks, Precinct engages with the Global Real Estate Sustainability Benchmark (GRESB) to provide Precinct with a Climate Risk & Resilience Scorecard. The independent scorecard provides location- specific intelligence on climate change and environmental exposure. It combines data reported in Precinct's annual GRESB assessment to provide a clear picture of how well Precinct are managing location specific climate risks in our real estate portfolio.

At an operational level, various teams across the business are also responsible for the active management and monitoring of our climate-related risks, and ensuring the appropriate processes and procedures are in place for accurate reporting. Our Facilities Management team maintain and upgrade our buildings' plant and building management systems on an ongoing basis and constantly being tested to achieve their optimum environmental performance levels.

Recognising the potential key climate related risks to Precinct, we are focussed on ensuring all our assets are resilient to climate change. This means that in the event of physical climate risks occurring, as a business we are able to minimise damage to our assets, minimise any associated financial costs, and make sure our buildings continue to operate safely. To achieve this, we strive to enable sustainable and successful business through improving our operational performance and incorporating sustainable design across our properties.

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Strategy.

Strategy.

TCFD Objective:

  • Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning where such information is material.

TCFD Recommended Disclosures:

  • Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.
  • Describe the impact of climate related risks and opportunities on the organisation's businesses, strategy, and financial planning.
  • Describe the resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

We have a well-defined strategy, integrating sustainability across all areas of the business with a focus on ESG factors material to our business. This provides clear direction for both the Precinct team and our investors. Having targets across our business is helping us drive performance and achieve results.

Our material issues (see website for more information) provide a comprehensive response to all ESG factors material to the business. The growing awareness of buildings' environmental impacts, developing carbon legislation, and clients' increased expectations, make the environmental performance of our buildings a significant material issue. The risks and opportunities related to climate impacts resulting from the transition to a low carbon economy can be divided into two major categories:

  • Transition risks - risks related to the transition to a lower-carbon economy
  • Physical risks - risks related to the physical impacts of climate change

Risk categories.

Transition risks

Transitioning to a lower-carbon economy may entail extensive policy, legal, technology, and market changes to address mitigation and adaptation requirements related to climate change. Depending on the nature, speed, and focus of these changes, transition risks may pose varying levels of financial and reputational risk to organisations.

Source: Based on Recommendations of the Taskforce on Climate-related Financial Disclosures

Physical risks

Physical risks resulting from climate change can be event driven (acute) or longer-term shifts (chronic) in climate patterns. Physical risks may have financial implications for organisations, such as direct damage to assets and indirect impacts from supply chain disruption. Organisations' financial performance may also be affected by changes in water availability, sourcing, and quality; food security; and extreme temperature changes affecting organisations' premises, operations, supply chain, transport needs, and employee safety.

Precinct has identified both physical and transition climate related risks. Risks have been identified through Precinct's climate-related risk register as part of its overall Risk Management Plan. We have evaluated risk based on the short term (< 2 years), medium term (2-10 years) and long term (10+ years).

All of Precinct's climate-related risks have been recorded in Precinct's Climate Risk Register. Risks are categorised by the risk type, risk driver, time horizon and potential financial impact. This register is reviewed at least annually.

While the key transition and physical risks identified by Precinct are not currently impacting business growth, they must be monitored, evaluated, and mitigated. Precinct have identified 13 specific climate change risks. An overview of our highest rated physical and transition climate related risks are shown in following tables.

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Precinct Properties New Zealand Ltd. published this content on 18 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 September 2022 23:19:04 UTC.