TCFD DISCLOSURE

CAPITAL & REGIONAL

JUNE 2022

,

CONTENTS

  • Governance - Page 2
  • Strategy - Page 5
  • Risk Management - Page 8
  • Metrics and Targets - Page 10

GOVERNANCE

Recommendation

The Board's oversight of climate-relatedrisksand opportunities

Commentary

Responsibility for climate-related risk management and robust internal control processes ultimately lies with the Board, including the consideration of climate-related risks and setting the Group's riskappetite. The Board has ultimate oversight of the Environmental, Social and Governance (ESG) principal risk and newly identified Climate-relatedprincipal risk in the Group's Risk Matrix. Integrating Climate-relatedrisks as a new principal risk highlights the Group's recognition of the material impact climate risks have on the business and the Group's ambition to actively monitor and manage these risks. The Climate-relatedand ESG principal risks consider a number of transition and physical climate-relatedrisks, including management and compliance with increasingly stringent environmental policy, minimum energy efficiency requirements, carbon reduction commitments, reputational damage from inaction, and impacts of extreme weather events and climate change on our assets and their supply chain. The full list of climate-relatedrisks considered can be seen below.

The Audit Committee supports the Board in the management of climate-related risks. The Audit Committee meets twice a year to review the effectiveness of the overall risk management strategyand internal control processes supporting our agile risk management approach. This includes reviewing the principal risks across the Risk Matrix, including the Climate-related and ESG principal risks and ensuring that climate-related risks are integrated into the risk management strategy.

The ESG Committee meets at least four times a year and has more specific responsibility for developing and monitoring climate-related risks and wider sustainability matters. The ESG Committee has direct responsibility over developing and reviewing the Group's ESG strategy across the three underpinning pillars of Environmental Sustainability, People & Community and Governance, and assessing and monitoring the Climate-relatedand ESG principal risks. The ESGCommittee reports updates to the Group's ESG strategy and the Climate-related and ESG principal risks on a quarterly basis, ensuring that the Board and Audit Committee are informed of any climate-related changes in the macroeconomic, financial, and regulatory environment. To better assess and monitor climate-related risks, the Group has created a new separate Climate- related risk matrix for the Climate-related principal risk which includes a broad range of physical and transition climate-related risks. The Climate-related risk matrix feeds into Group risk review and ESG Committee reporting to the Board.

Climate-related risk matrix:

2

The description and business impact of the full range of the climate-related risks that have been

assessed using scenario analysis and integrated into the Climate-related principal risk and ESG

strategy via the new Climate-related risk matrix are detailed in the Strategy section. The process

for identifying and assessing the top climate-related risks to Capital & Regional can be seen in the

Risk Management section.

Management's role in

The Senior Leadership Team (SLT) is responsible for the day-to-day operational application of the

assessing and

risk management strategy, including climate-related risks, and ensures that all employees are

managing climate-

aware of their responsibilities and align with the Group's strategy. The SLT supports the Board,

related risks and

Audit Committee and ESG Committee in identifying and evaluating climate-related risks under the

opportunities

Climate-related principal risk and incorporates employee feedback into these assessments.

Additionally, Sara Jennings, Director of Operations and Guest Experience, and Nick Philips,

Managing Director Snozone sit on both the ESG Committee and SLT. This ensures that climate-

related risks are assessed and managed throughout all levels of the organisation. The SLT is also responsible for reviewing on a deal-by-deal basis whether acquisitions and divestments align withour ESG Strategy, ensuring that climate-relatedrisks are considered throughout the property life cycle.

Operational Management is responsible for the implementation and maintenance of climate- related risk management procedures, as well as the identification of climate-related risks and the mitigating controls and actions required at the asset level. The Operational Management team escalate climate-relatedrisks that are identified at the asset level to the SLT. These are assessedand integrated into the Climate-related risk matrix and escalated to the ESG Committee, Board and Audit committee as necessary.

3

As part of the climate risk assessment undertaken in late 2021, we conducted a detailed climate risk governance gap analysis, aligned with TCFD recommendations to understand how to best oversee and manage climate-related risks throughout our governance structures. We are still in the process of updating our governance structures according to the TCFD-aligned best practice recommendations and are aiming to further integrate climate risk management by the next reporting period.

A detailed overview of our Governance structure can be found in the Corporate Governance section on pages 67-75 of our 2021 Annual Report.

4

STRATEGY

Recommendation

Commentary

Climate-related risks

Through conducting a rigorous climate risk assessment (see Risk Management), we have

and opportunities

accurately identified the potential climate risks and opportunities facing our business. The table

identified over the

below outlines the key physical and transition risks we have identified over the short term (2020-

short, medium, and

2029), medium term (2030-2039) and long term (>2040). Our heightened understanding of climate

long-term

risks to the Group has enabled us to employ a robust risk management process via our new

Climate-related risk matrix to address possible impacts and we will be working to improve this

process further over the next year.

Physical and Transition Climate-related risks

Time

Risk

numbe

Risk

Risk description

Risk impacts

horizon

r

Energy

The decarbonisation pathway demands an

decarbonisation

energy shift from fossil fuels to renewables.

and technology

This will stimulate low carbon technological

1.

solutions. Existing buildings must adapt with

these technologies in order to meet energy

efficiency targets and reduce rising

operational costs caused by changing

seasonal patterns and carbon taxes

•

Reduced asset value,

Financial

Sustained damage from climate-related

'green premium' vs 'brown

Short

market

physical impacts or persistent transition-

discount'

2.

uncertainty

related market movements impact

•

Increased cost of financial

term:

macroeconomic

capital

2020-

conditions and threaten the ability of firms to

•

Tenant default risk causing

2029

produce goods and services

loss of income

Increased

Policy mandates existing building stock and

•

Capex and retrofit costs

3.

regulation

developments improve efficiencies and

•

Increased operational

operational practices, and embed climate

costs, including impacts

resilience on-site

from increased cost of

Shifting market

Markets shift to meet a growing demand for

carbon

and occupier

low or net zero carbon assets with on-site

4.

expectation

climate resilience embedded. Demand may

also shift away from certain geographies or

sectors, while changing consumer

preferences could create tenant risk.

Insurance

The physical impacts of climate change are

5.

challenges

extensive and cause the insurance industry

to reassess premiums or withdraw cover

Supply chain

Physical climate impacts can cause

•

Physical damage causing

Mediu

6.

and resources

widespread disruption to production within

costly repairs and clean-up

m term:

supply chains and cause resource prices to

•

Cost of mitigation measures

2030-

rise.

•

Migration away from

2039

Flooding

Increased duration and intensity of

vulnerable areas

precipitation, snow melt, and rising sea

•

Decline in asset value or

7.

levels will exacerbate fluvial (river), pluvial

stranded asset risk

(surface water) and

•

Litigation or reputational

coastal flooding

risks if perceived to

5

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Capital & Regional plc published this content on 09 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2022 13:24:06 UTC.