Climate Change Resilience and Adaptation

Climate Change Resilience and Adaptation

Sustainability Our Approach and Performance Climate Change Resilience and Adaptation

The increase in both frequency and severity of extreme weather events makes it indispensable for corporate to formulate longer-term resilience and adaptation strategies to unexpected ecological events. For Link, reducing carbon footprint and reinforcing climate resilience remain our priority. 

Link regularly examines the resilience of our properties to weather and climate-related extreme events, in particular, floods and hot weather. To accommodate the emerging nature of climate risk, we define both near-term and medium-/long-term time horizons. In general, near-term climate-related risks are considered to be foreseeable and manageable by us, whereas medium-/long-term risks tend to be more uncertain and elevated within the market. We look into how improvements can be made strategically to build portfolio resilience against climate change at different time horizons. We conduct researches to improve the understanding of risks from current weather and to model future climate change impacts to provide relevant information for management and prevention.

We closely engage with our stakeholders and participate in various professional associations to address climate change issue. We strive to ensure that our Climate Change and Energy Management Policy aligns with the positions taken by the associations we participate, and is further committed to align with industry best-practices.

APPROACH

Risk / Opportunity Types

Time Horizon

Risk / Opportunity Descriptions

Key Mitigating Measures

Key Physical Risk

Rainstorm and Flooding
Near-term (Acute)
  • May lead to physical damages to Link’s properties as well as injuries and death of Link’s employees or shoppers which could harm overall shopper experience
  • In extreme circumstance, typhoon may cause business interruption affecting the continuity of operations of Link’s assets
  • Emergency Response Procedures with comprehensive rainstorm preparedness protocol (which includes but is not limited to clearing drains, setting up flood barriers) have been established with periodic training and drills for frontline staff
  • Link’s assets are protected by relevant insurances which are subject to periodic review on its adequacy

Typhoon
  • Emergency Response Procedures with comprehensive typhoon preparedness protocol (which includes but is not limited to securing signage, removing loose items, restricting access to high-risk areas) have been established with periodic training and drills for frontline staff
  • Link’s assets are protected by relevant insurances which are subject to periodic review on its adequacy

Rising Temperature
Medium-/ long -term (Chronic)
  • May consume additional energy and therefore bear additional operating costs with extra carbon emission amid rising temperature
  • A dedicated Energy Management Team has been set up for energy optimisation in Link’s assets with consideration of equipment life cycle and weather forecasting

Key Transition Risk and Opportunities

Stakeholder Expectation
Near-term
  • We are exposed to reputation risk due to the growing demand for decarbonisation efforts from our value chain
  • Link work closely with stakeholders especially government, tenants, and investors to understand and manage their expectation
  • We collaborate and assist our stakeholders, especially our tenants, in lowering their carbon footprint
  • We maintain membership in industry groups as well as participate in industry and government consultation to collaboratively enhance climate resiliency  

Policies and Regulations
Medium-/ long-term
  • As demand for carbon neutrality grows across the globe, tracking and reporting carbon emissions and credits will come under greater scrutiny
  • Increased CAPEx and OPEx to meet energy and carbon requirements
  • Additional capital investment from future carbon trading and taxes
  • Link is committed to Net Zero emissions target by 2035
  • We began to utilise blockchain technology to quantify carbon impact from installed solar PV Panels. In the future, we expect the development of digital Renewable Energy Certificates (dRECs) will offer transparent and credible data tracking of carbon credits including financial metrics, attributable ownership and the associated environmental impact
  • We recognise that ESG has become core considerations for capital allocation by investors and requirements for securing lower cost financing arrangements. To date, over 30% of our existing debt is tied to our ongoing sustainability performance

TARGETS
  • Align our sustainability strategy with TCFD recommendations and continue to engage closely with our investors and regional-level policymakers to develop comprehensive climate resilience strategies
  • Achieve Net Zero by 2035
  • In 2021, we set a target to reduce 25% scope 1&2 carbon intensity across the portfolio by 2025 (compared to 2018/2019 Group-level baseline: 0.033 Tonnes CO2e/m2 year).

HIGHLIGHTS
  • Played a leading role in the United Nations Environment Programme Finance Initiative’s (UNEP FI) effort to develop ground-breaking, comprehensive guidance on how to assess the impact of climate change on investment portfolios. Link continues the effort by participating in a pilot project for international investors and banks to test the adoption of Carbon Risk Real Estate Monitor (CRREM), as well as major climate risk metrics, to identify the best TCFD disclosure practices in the industry. 
  • Set up an intergenerational and interdepartmental Net Zero Task Force to identify and manage frontline challenges along our Net Zero journey. This helps integrate good practices in our operation and foster a sustainability culture by grooming future leaders across different business units.
  • In 2020/2021, we have invested over HK$155,000 in UNEP FI programmes to identify climate-related risks and research on related mitigation measures. 
  • In 2020/2021, we have invested over HK$5.5 million to implement energy management optimisation measures, such as upgrading LED lighting and optimising chiller plants. The estimated cost saving of these measures is around HK$1.45 million. 
  • We are members of various business associations and organisations to address climate change with stakeholders. We are a signatory of the UNEP FI, as well as a signatory of the Business Environment Council (BEC) Low Carbon Charter (Pathway 1).
  • We are committed to support the Hong Kong Government's 4T Partnership 2.0 to realise Hong Kong's Climate Action Plan 2050, as a means to accelerate the city's transition towards carbon neutrality.
  • In 2019, we explored, enhanced and adopted the TCFD recommendations by using Carbon Delta’s ‘Climate Value-at-Risk’ (CVaR) portfolio analysis to assess 1.5°C, 2°C and 3°C scenario-based physical and transition risks. Our portfolio implied an aggregated CVaR of -0.18%, accounting for an estimation of 56 million USD. These results have informed us the impact of climate-related risks on financial planning, and suggested that Link faced relatively minimal transition and physical risk. 
  • We identified assets that contributed to major physical and transition CVaR within our portfolio based on their exposure and sensitivity to long-term climate change scenarios. Accordingly, we investigated and implemented adaptation measures. For instance, 27 sets of flood gates have been installed in our Headquarter office The Quayside to alleviate flood risks from potential facilities damage.
  • We are a listed TCFD supporter, acknowledging that TCFD as a useful framework to increase transparency on climate-related risks and opportunities  
  • For more details, please refer to the TCFD pilot project report (pp. 53-56)

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