INTEGRATING CLIMATE-RELATED CONSIDERATIONS Providing a consistent approach to climate-related reporting, the TCFD framework allows us to provide insights into climaterelated risks and opportunities for stakeholders. Al-‘Aqar REIT is dedicated to integrating TCFD’s four core elements into our sustainability strategy, enhancing our risk disclosures and improving how we address climate-related risks. GOVERNANCE STRATEGY Acknowledging the influence of climate change on REIT operations, the Manager has integrated climate considerations into our decision-making processes. These efforts are guided by initiatives overseen by both the Board and endorsed by the BSC and SMC. Al-‘Aqar’s climate-related risks fall under transition risks and physical risks. Transition risks pertain to challenges associated with the transition towards a sustainable, low-carbon economy while physical risks emanate from the direct consequences of climate change. Transition Risks Board of Directors • The Board provides strategic oversight concerning the sustainability strategies, policies, and performance of the REIT, which includes considerations related to climate issues. • The Board approves ESG Key Performance Indicators (KPIs), encompassing climate-related metrics. Management • The SMC proposes sustainability strategies and initiatives to the Board, including those related to climate concerns. • The SMC evaluates and supervises the implementation of sustainability initiatives and performance, which encompasses climate-related considerations. Transition Risks Potential Impact Opportunities Policy and Legal • Potential expenses resulting from penalties and fines. Conforming to or surpassing anticipated environmental regulations enables us to seamlessly access new markets and preemptively address potential legal issues. Technology • The adoption of new technologies in healthcare facilities for energy efficiency or renewable energy sources may require investments and pose risks associated with technology changes. Investing in energy-efficient technologies and practices can lead to cost savings and contribute to a lower carbon footprint. Market • Reduced revenue due to increased costs. • Economic shifts, such as recessions, can impact property valuations and rental revenues. A less robust economic climate may result in elevated vacancy rates, diminished demand, and financial difficulties for the REIT. Through effectively communicating and promoting our dedication to sustainability, we can set ourselves apart and draw in clients who prioritise environmental consciousness. Reputation • Investors and tenants are placing growing emphasis on sustainable and climate-resilient properties. Failing to meet these expectations can result in discontent and harm to the reputation of the entity. Opportunity exists to elevate Al-‘Aqar’s reputation by pioneering climate-conscious operations. 54 SUSTAINABILLITY STATEMENTS 1 2 4 5 6 AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2023
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