ESG Report 2023 A member of Frasers Property Group
3 Board Statement 4 The Year at a Glance 5 Buidling a Resilient Future: Our Approach to ESG 10 Acting Progressively Risk-based Management Responsible Investment Resilient Properties 19 Consuming Responsibly Energy and Carbon Water Waste 23 Focusing on People Diversity, Equity and Inclusion Skills and Leadership Health and Well-being Community Connectedness 30 About This Report Independent Assurance Statement GRI Content Index A glossary of the abbreviations used in this report: ARCC : Audit, Risk, and Compliance Committee BCA : Building and Construction Authority Board : Board of Directors BREEAM : Building Research Establishment Environmental Assessment Method CEO : Chief Executive Officer DEI : Diversity, Equity and Inclusion ESG : Environmental, Social and Governance FHT : Frasers Hospitality Trust The Sponsor : Frasers Property Limited The Group : Frasers Property and its subsidiaries Framework : ESG Framework FY : Financial Year Ended 30 September GHG : Greenhouse Gas GRI : Global Reporting Initiative MAS : Monetary Authority of Singapore NABERS : National Australian Built Environment Rating System REITAS : REIT Association of Singapore SIAS : Securities Investors Association (Singapore) SSC : Sustainability Steering Committee TCFD : Task Force on Climate-related Financial Disclosures tCO2e : Tonnes of CO2 equivalent YoY : Year-on-year Sustainability Contents Glossary 2 Frasers Hospitality Trust
Board Statement Dear Stakeholders, Recognising the imperative to embrace sustainability and being rooted in our Group-wide Purpose of - Inspiring experiences, creating places for good. - we have committed to drive actions across our sustainability commitments while enhancing the resilience of our portfolio of quality assets. Frasers Hospitality Trust’s (FHT) FY2023 Environmental, Social and Governance (ESG) Report provides an overview of our sustainability performance and efforts throughout the year. This report signifies our accountability and transparency to our stakeholders as we strive to improve our operations and create longterm value through the three pillars of Frasers Property Limited (the Sponsor) Sustainability Framework – Acting Progressively, Consuming Responsibly and Focusing on People. In FY2023, all our properties in the UK completed their BREEAM (Building Research Establishment Environmental Assessment Method) assessment and are awaiting their certification awards. Our Australia and Malaysia properties will be undergoing their green certifications in FY2024. During the year, we continued with our decarbonisation efforts as well as undertook several initiatives to reduce the energy and water consumption and waste generation across our properties where possible. These initiatives were aligned with our Sponsor’s goal of being a net-zero carbon corporation by 2050. Testament to our continued efforts, we are proud to have achieved a score of 82 and a 4-Star Rating in the 2023 GRESB Real Estate Assessment, marking this the third consecutive year that we have attained improvements in our score and rating. We also maintained our third-place ranking in the ‘Asia Pacific Hotel - Listed’ category under the Assessment. This achievement is significant as stakeholders are able to benchmark FHT’s performance against its global real estate peers in the same sector. In line with our sustainability roadmap, we continue to align this year’s sustainability disclosures with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. As the global tourism and hospitality industry continues with its recovery from the pandemic, it is important that we continue to embrace innovation and forge deeper partnerships to deliver on our sustainability commitments. We are grateful for the invaluable support of our stakeholders, who have enabled us to chart the path ahead to a greener future. The Board of Directors will continue to fulfil its duties in determining, monitoring and managing our material ESG issues, providing strategic directions on sustainability as well as overseeing the standards and management processes needed to meet our sustainability objectives. We look forward to progressing on this journey together. Board of Directors Frasers Hospitality Asset Management Pte. Ltd. REIT Manager of Frasers Hospitality Real Estate Investment Trust Frasers Hospitality Trust Management Pte. Ltd. Trustee-Manager of Frasers Hospitality Business Trust ESG Report 2023 3
• FHT achieved a score and rating of 82 and 4-star respectively in the 2023 GRESB Real Estate Assessment, with an improved score and rating for the third consecutive year. We maintained a third-place ranking (out of 7) in the “Asia Pacific Hotel – Listed” category. • InterContinental Singapore retained the Building and Construction Authority (BCA) Green Mark GoldPLUS certification. • Our properties in Australia scored an average 3.5-Star Water rating (that is between average and good) and 3-Star Energy rating (average) in the National Australian Built Environment Rating System (NABERS) assessment. • In FY2023, we established our interim decarbonisation roadmap for 2030, in line with our goal of achieving net-zero carbon emissions by 2050. We also completed a climate risk assessment to identify FHT’s physical and transitional risks. ACTING PROGRESSIVELY • Fraser Suites Queens Gate London, Park International London, Fraser Place Canary Wharf London, Fraser Suites Edinburgh, Fraser Suites Glasgow are all powered by 100% renewable energy. • The Westin Kuala Lumpur has also subscribed to green energy in FY2023. • 2.6% year-to-year decrease in energy consumed per occupied room night. • Expanded Scope 3 disclosure to cover natural gas consumption at tenanted areas and employee commuting. • Collected 419 tonnes of waste for recycling, a 17.6% increase compared to FY2022. CONSUMING RESPONSIBLY FOCUSING ON PEOPLE • The REIT Manager’s senior management and employee base has 40% and 67% female representation, respectively. During FY2023, employees of the REIT Manager underwent an average of 23 learning hours per staff. • In FY2023, all properties managed by Frasers Hospitality, a strategic business unit of the Sponsor, achieved a positive guest review score of 63.9% (FY2022: 63.3%) and a performance score of 81.4% (FY2022: 80.8%). Sustainability The Year at A Glance 4 Frasers Hospitality Trust
EMBEDDING ESG WITHIN OUR CORE As a global hospitality REIT, FHT acknowledges its duty to operate in a responsible manner. Our goal is to contribute to the environmental and social well-being of the communities where we operate in, while creating long-term shared value for our stakeholders. ACTING PROGRESSIVELY CONSUMING RESPONSIBLY FOCUSING ON PEOPLE Innovation Fostering an innovation culture that creates value and strengthens our competitive edge Resilient Properties Strengthening the resilience and climate adaptive capacity Risk-based Management Comprehensive assessment to address environmental, health and safety risks Responsible Investment Incorporating social, environment and governance criteria in the evaluation process Materials & Supply Chain Achieving the sustainable management and efficient use of materials along the supply chain Biodiversity Enhancing the environment and ecosystem through our developments Energy & Carbon Increasing substantially energy efficiency and renewable energy used Waste Reducing substantially waste generation through prevention, reduction, recycling and reuse Water Increasing substantially water efficiency and the recycling and safe reuse of water discharged Community Connectedness Considering social value principles for communities Health & Well-being Ensuring healthy and balanced work and community environments Diversity, Equity & Inclusion Empowering and promoting the social inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status Skills & Leadership Developing skills and leadership programmes that support productive activities, creativity and innovation to deliver highvalue products and services FOCUS AREAS PILLARS Our ESG strategy aligns with our Sponsor’s ESG Framework (the Framework) which comprises three core pillars: Acting Progressively, Consuming Responsibly and Focusing on People. We prioritise ESG-related focus areas within these key pillars that are most relevant for our hospitality business and operations. Building A Resilient Future: Our Approach to ESG ESG Report 2023 5
OUR SUSTAINABILITY ROADMAP To implement our strategy, we have established a sustainability roadmap, with annual targets to guide our overall sustainability approach and key initiatives for the year. These targets contribute to the overarching longterm goals set out by our Sponsor. In FY2023, our Sponsor refreshed its Group ESG goals following a benchmark exercise and a review of the progress against targets announced in FY2021. The refresh took in a range of considerations including a market review of global sustainability trends, a FY2022 stakeholder survey exercise, and evolving regulatory requirements. The refreshed goals are as follows: • Achieve net-zero carbon emissions across Scopes 1, 2 and 3 by 2050. • Install 215 MW of renewable energy capacity on properties by 2030. • Deploy group-wide climate risk analytics platform to identify, assess and manage climate-related risks by FY2024. • Have 100% by gross floor area of new development projects, and 85% by gross floor area of owned and asset-managed properties, be either green-certified or pursuing green certification by 2030. • Engage 75% of suppliers by spend on Responsible Sourcing Policy by FY2025. • Develop a framework to assess and prioritise biodiversity risks and opportunities by FY2025. MANAGING SUSTAINABILITY GRI 2-9, 2-12, 2-13, 2-14 Ensuring transparency and accountability as part of our sustainability approach is a tenet of good governance and demonstrates our efforts to build trust with stakeholders. FHT has put in place a sustainability governance structure to align its sustainability goals with its business strategy and integrate ESG considerations into its long-term plans and operations. We collaborate closely with our Sponsor on a cohesive governance approach. This alignment extends to our shared sustainability agenda, guided by the Group Sustainability Steering Committee (SSC). This committee, consisting of Chief Executive Officers (CEOs) from business units in the Group as well as other senior management, convenes six times annually to steer Group-wide sustainability strategies, and monitor sustainability performance across key metrics and endorse action plans throughout the Group. The SSC is supported by the Group Sustainability Team, which fosters close collaboration with FHT in ensuring alignment between the Group and FHT, crafting ESG action plans and monitoring advancements. Within FHT, the Board provides strategic oversight and guidance on the identification, management and monitoring of material ESG factors, through the Audit, Risk, and Compliance Committee (ARCC). Focused on environmental risk oversight, the FHT Sustainability Steering Committee, led by the CEO and Head of Finance, ensures diligent monitoring. FHT also has a dedicated Sustainability Task Force, comprising department heads from Asset Management, Finance, Investment, and Investor Relations, to drive its sustainability strategy. The Sustainability Task Force assumes the responsibility of developing FHT’s sustainability framework and targets, along with formulating specific strategies, staff engagement plans, and resource allocation to execute these initiatives. The monitoring of property-level sustainability performance and indicators is entrusted to the Asset Management team and the General Managers of its hotels and serviced residences. PARTICIPATION IN ASSOCIATIONS AND ALIGNMENT WITH RECOGNISED STANDARDS GRI 2-28 FHT, whether independently or through its Sponsor, maintains active involvement in local and international efforts within the real estate sector. By collaborating with industry bodies, we leverage our insights and knowledge to drive meaningful change. We support and engage with various industry associations and global movements and these partnerships play a pivotal role in fulfilling our sustainability commitments. REIT ASSOCIATION OF SINGAPORE (REITAS) REITAS serves as the representative advocate for Singapore’s REIT sector, facilitating member engagement in policy consultations. REITAS supports the growth of the sector by improving transparency and governance for investor decision-making, and collaborating with regulators for industry-friendly policies. FHT plays an active role as a member of REITAS, participating in industry events organised by the association as well as relevant surveys initiated by the regulators which seek to gather feedback from the sector. FHT, through its Sponsor, is also represented on REITAS’ Sustainability Taskforce. As part of Frasers Property Group, we are aligned with sectoral, national, and international platforms to elevate standards and scale up best practices. These include: • GRESB Real Estate Assessment • Property Council of Australia • Science Based Targets initiative • TCFD • United Nations Global Compact • United Nations Women’s Empowerment Principles • Urban Land Institute Singapore • Tripartite Alliance on Fair Employment Practices • Net Zero Carbon Buildings Commitment of the World Green Building Council • Singapore Green Nation Pledge by Ministry of Sustainability and the Environment STAKEHOLDER ENGAGEMENT GRI 2-29 An important element of FHT’s approach to sustainability is engaging our stakeholders and addressing their concerns to the best of our abilities. We value our stakeholders’ views and work to integrate their feedback into our practices to improve our sustainability performance. Sustainability 6 Frasers Hospitality Trust
Key Stakeholders Key Topics of Concern Mode and Frequency of Engagement Customers and Guests • Customer satisfaction • Quality of facilities and services • Health and safety Throughout the year: • Bilateral communications • Guest satisfaction surveys • Events Investment Community and Stapled Securityholders • Financial and portfolio performance • Business strategy and outlook • Acquisitions and divestments • Asset enhancement initiatives • Capital and risk management • Corporate governance • Quarterly business updates, financial results briefings and earnings calls • Annual General Meeting Throughout the year: • Investor conferences and non-deal roadshows • Bilateral communications via emails, calls, company visits and site visits • Corporate website Hotel and Serviced Residence Operators • Asset management and enhancement initiatives • Business opportunities • Property maintenance programmes • ESG practices • Monthly ESG performance data collection and review Throughout the year: • Regular site meetings • Discussions via calls and emails Employees • Employee development and retention • Employee satisfaction • Occupational health and safety • Impact on the environment • Employee well-being • Organisation updates Annual • Performance appraisals • Employee culture or pulse survey • Group-wide Health and Safety Month and Environment Month Throughout the year: • Training, including courses and orientation programme for new staff • Team bonding activities as well as sports, volunteering and other events • Internal communications via emails, intranet, newsletters and townhall meetings Suppliers and Business Partners • Appropriate cost and budgeting • Adherence to terms and conditions of purchasing policies • Responsible sourcing practices As and when requested: • Quotations, proposals and tenders • Regular meetings • Discussions via calls and email Local Community • Social and community initiatives • Business impact on the environment and society Throughout the year: • Community engagement activities Media • Financial and operational performance • FHT’s latest developments, including acquisitions, equity fund raising, and divestments Throughout the year: • Media releases Regulators and Non-governmental Organisations • Regulatory compliance • Regulatory and industry updates and trends • Corporate governance Throughout the year: • Briefings, discussions and consultations • Participation in relevant industry associations • Participation in relevant industry surveys which seek to gather feedback from market participants Our stakeholders are identified and prioritised based on the impact that our operations have on them, their knowledge of the sector and FHT, and their importance to the success of our business. We typically engage our stakeholders throughout the year via a variety of communication channels. Our goal for all our stakeholder engagement initiatives is to better understand stakeholder needs while seeking collaborative ways to achieve shared objectives. ESG Report 2023 7
Sustainability Group Sustainability Framework Pillars Corresponding United Nations Sustainable Development Goals Material Topics ACTING PROGRESSIVELY Economic Performance Anti-corruption CONSUMING RESPONSIBLY Energy and Greenhouse Gas (GHG) Emissions Management Water Management Waste Management FOCUSING ON PEOPLE Customer Experience Talent Recruitment and Retention Employee Well-being and Empowerment MATERIALITY ASSESSMENT GRI 3-1, 3-2 We regularly review and assess how the changing landscape that we operate in affects our material ESG topics, our business and stakeholders. In FY2022, our Sponsor conducted a review of FHT’s material topics to determine if any new topics had emerged, or whether there had been a shift in the importance and impact of existing topics. The review process comprised a global market review of relevant key sustainability trends as well as surveys and interviews with internal and external stakeholders. These findings were analysed and shared with the REIT Manager. After consolidating all feedback, we finalised the list of material sustainability topics for FHT. 8 Frasers Hospitality Trust
Corresponding Group Focus Areas Rationale Material Factor Boundaries FHT/ REIT Manager Suppliers/ Contractors Properties Risk-based Management, Responsible Investment, Resilient Properties Our strategic objective is to manage and expand our portfolio, within our risk capacity and appetite, to deliver long-term growth in distribution and net asset value to our Stapled Securityholders. Risk-based Management The foundation of our reputation lies in ethical and fair dealings. We maintain high standards of governance and accountability to earn the trust and confidence of our stakeholders. Energy & Carbon Considering that energy consumption is one of the largest environmental impact that our operations generate, we continue to actively monitor and manage energy consumption at our properties. Water Water is a limited natural resource. It is essential for us to manage our consumption to reduce unnecessary usage. Waste As the operations of our properties generate various types of waste, proper waste management is key in preventing adverse impact on the local environment and public health. Community Connectedness Customer experience is a vital aspect in determining the success of our business. It is our utmost priority to meet and exceed the expectations of our customers and guests. Skills & Leadership It is important that the REIT Manager has the capacity to manage and expand FHT’s portfolio to create value for our stakeholders. We seek to attract, develop and retain the right people who are the cornerstone of our success. Diversity, Equity & Inclusion (DEI) Employees are at the heart of hospitality operations. It is vital to ensure our hotel and serviced residence operators value staff well- being by providing a conducive and safe working environment. In turn, a motivated workforce can better deliver positive, memorable experiences to our customers and guests. This continual updating of our sustainability management and accompanying policies ensures that our strategy remains relevant, as we seek to address evolving risks and opportunities. The following table elaborates the significance of our material topics, the relevant United Nations Sustainable Development Goals and areas where we have made an impact through our business relationships. ESG Report 2023 9
Sustainability Acting Progressively FHT is dedicated to integrating ESG factors into its business choices, maintaining utmost integrity through established governance systems to address risks and opportunities. This is accomplished through robust policies that underpin our sustainability strategy and strengthen our business resilience. We actively strive to uphold responsible practices throughout our operations, continually evaluating our performance by benchmarking our properties against reputable green building certification schemes. OUR PROGRESS Focus Area Our Goals Our Progress in FY2023 Risk-Based Management • To establish holistic overarching internal policies to govern and guide the senior management on the focus areas. • Continued to roll out our Responsible Sourcing Policy, with 50% of the REIT Manager’s suppliers acknowledging the policy. Responsible Investment • To kickstart the process for green building certifications in FY2021 and achieve green certifications for at least 85% of the portfolio by 2024. • Our properties in Australia scored an average 3.5-Star for Water rating (between Average and Good) and 3-Star for Energy rating (Average) for their NABERS assessment. • InterContinental Singapore holds BCA Green Mark GoldPLUS certification. • Five out of six of our UK properties are accredited under the Green Tourism Scheme. • Notable improvement at the 2023 GRESB Real Estate Assessment with a 4-Star rating and a higher score of 82 which led FHT to maintain its third-place ranking in the ‘Asia Pacific Hotel - Listed’ category. Resilient Properties • To carry out climate risk assessment and implement asset-level adaptation and mitigation plans in alignment with the TCFD framework by 2024. • Our climate risk and climate ‘value at-risk’ portfolio-level assessment is still ongoing. We are also developing an action plan to address and mitigate key physical and transition risks. • Aligned our climate reporting more closely to the TCFD framework. RISK-BASED MANAGEMENT OUR APPROACH GRI 3-3 In view of our global portfolio, we are keenly aware of the various ESG and economic risks that our operations are exposed to. We recognise the importance of upholding the highest standards of integrity and have established a robust governance framework to ensure regulatory compliance. Our Code of Business Conduct, which applies to all employees and leadership, sets out our stand on ethics and compliance with ESG factors and is made available to other stakeholders. We work with our Board and the Sponsor to implement effective internal controls across our business. Our Board ARCC supervises the audit procedures, supporting the Board in evaluating the quality and reliability of the accounting, auditing, internal controls and the REIT Manager’s corporate governance practices. This includes an audit conducted by the Sponsor’s internal audit team, which focuses on the REIT Manager’s adequacy of internal controls, risk management and corporate governance practices. Audit findings and recommendations are then used to guide the Board and future management decisions. 10 Frasers Hospitality Trust
The ARCC is responsible for actively integrating control measures aimed at anticipating and handling the potential business consequences of identified ESG risks. This integration is achieved through close collaboration with our Sponsor's Group Risk and Group Sustainability teams. In FY2023, FHT remained a signatory of the annual Corporate Governance Statement of Support initiated by the Securities Investors Association (Singapore) (SIAS) to foster a culture of good corporate governance with a focus on ESG among Singapore listed companies. OUR ACTIONS AND PROGRESS GRI 2-23, 2-24, 2-25, 2-26, 2-27, 205-1, 205-2, 205-3, 206-1 We have implemented a comprehensive set of corporate policies which are aligned with those of our Sponsor, to guide our operations and safeguard integrity and accountability in our business conduct. These policies are periodically reviewed to ensure that they remain relevant to our changing operating landscape: • Anti-Bribery Policy • Board Diversity Policy • Code of Business Conduct • Competition Act Compliance Manual • Complaints/Feedback Handling Policy • Continuing Education of Capital Markets Services Representatives • Continuing Education Policy • Corporate Social Responsibility Policy • Diversity and Inclusion Policy • Documents Management and Retention Policy • Investment Manual and Guidelines - Acquisitions and Disposals • Investor Relations Policy • Personal Data Breach Incident Management Policy • Personal Data Protection Policy • Policy on Dealings in Units of FHT and Reporting Procedures • Policy on Outsourcing • Prevention of Money Laundering and Countering the Financing of Terrorism • Procurement Policy • Responsible Sourcing Policy • Whistle-blowing Policy To ensure the reliability of our data disclosure and processes in the publication of this year’s ESG Report, we have sought independent external assurance for the report. Our assurance was carried out by Ere-S, with the engagement conducted under a limited level of assurance according to the International Standard on Assurance Engagements 3000 guidelines. Please refer to pages 107 to 109 for assurance findings and observations. Anti-Bribery, Anti-Corruption and Anti-Competitive Behaviour We strive to maintain the highest standards of ethical business conduct and our commitment towards good faith business activities and regulatory compliance are outlined in our policies, namely the Anti-Bribery Policy, the Competition Act Compliance Manual and the Prevention of Money Laundering and Countering the Financing of Terrorism. Training and communications build the awareness needed to tackle corruption and bribery. In FY2023, 91% of the REIT Manager’s Singapore-based employees, and 75% of the REIT Manager’s employees based outside of Singapore, received training on anti-corruption. We also take a proactive approach to ensure compliance with all applicable laws and regulations within the markets where we have presence in. In FY2023, there was no confirmed incident of bribery and corruption within FHT’s operations, and no significant breach of laws and regulations in relation to the environment, health and safety regulations or industry codes around marketing communications. Whistle-blowing and raising concerns In upholding our Whistle-blowing Policy, we ensure that our employees and third parties have access to independent feedback channels. These provide safe avenues to report any improprieties, grievances or misconduct without fear of reprisal. Matters of concern can be reported by mail, electronic mail or by calling a hotline. Employees and third parties are encouraged to raise their concerns on any of the following issues relating to FHT and its staff: • Financial fraud or professional misconduct, including concerns about accounting, internal controls or auditing matters; • Improper conduct, dishonest, fraudulent or unethical behaviour; • Any criminal or regulatory offence, breach, irregularity or non-compliance with laws/regulations or the Company’s policies and procedures, and/or internal controls; • Violence at the workplace, or any workplace hazards/violations which may threaten health and safety; • Corruption or bribery; • Conflicts of interest without proper disclosure; • Any deliberate attempt to cover up and/or conceal misconduct; and any other improprieties or matters that may adversely affect shareholders’ interest in, and assets of, the Company, and its reputation. ESG Report 2023 11
Sustainability Individuals who wish to file a whistleblowing report may refer to the details on our website. Any report submitted through these channels are received by the Sponsor’s Head of Group Internal Audit, who has been designated as an independent function to investigate all whistle-blowing reports. FHT will respond appropriately to individuals who engage in reprisal actions against whistle-blowers. In FY2023, we did not receive any case via our whistleblowing channels. We will continue to foster close collaboration with our stakeholders and ensure that we pre-empt and mitigate any risks throughout our value chain. Supply chain management FHT seeks to establish a sustainable supply chain by forging close partnerships with suppliers that embrace our sustainability vision and values. This ensures that they are aligned with our commitment to high quality environmental, health and safety standards. As conveyed in our Responsible Sourcing Policy, this commitment includes expectations around the following key areas: • Environmental management – to manage the environmental impact of their products and services, and continually seek to improve their environmental efforts. • Human rights and labour management – to eliminate human rights violations and oppose human trafficking in their operations and supply chains, and provide fair and transparent employment conditions to their employees. • Health, safety and well-being – to manage health and safety risks and ensure that their staff are safe and protected. • Business ethics and integrity – to uphold strong business ethics and ensure that their business is conducted lawfully and with integrity. In FY2023, the REIT Manager continued to engage its key suppliers on its Responsible Sourcing Policy. As at 30 September 2023, half of these key suppliers have acknowledged the policy. Our next step is to align with our Sponsor’s new goal by raising our engagement level to 75% of suppliers by spend. This will be done through a Group-wide e-learning programme by the end of FY2025. We will be onboarding our suppliers onto this programme, which aims to encourage and equip them to implement sustainable business practices. This will serve as a springboard towards reducing environmental and social impacts in our value chain. Data privacy At FHT, our Personal Data Protection Policy has been implemented to protect our information assets and establish responsibilities that employees must undertake to ensure maximum data confidentiality and security. In the case of information security incidents, FHT’s Personal Data Breach Incident Management Policy sets out procedures for employees to manage and mitigate any negative impacts. During the year, some of the staff at our properties attended cybersecurity training which equipped them with knowledge on basic cyber safety and the handling of personal data. For instance, 88 staff at Fraser Suites Singapore participated in the Stay Safe & Smart Online course between October 2022 to July 2023 and clocked a total of 2,211 training hours. There was no recorded information security breach in FY2023. Aligning with Monetary Authority of Singapore (MAS) Guidelines on Environmental Risk Management for Asset Managers Pursuant to MAS guidelines aimed at enhancing the resilience of funds, asset managers have been tasked to implement the guidelines on environmental risk management across six key areas. We have put in place processes and practices to meet these requirements and will continue to strive for further alignment. 12 Frasers Hospitality Trust
Key area Status Governance and strategy: The Board and senior management to oversee integration of environmental risk considerations into asset managers’ strategies, business plans and product offerings. The ARCC assists the Board in carrying out its responsibility in determining ESG factors that are material to our business, monitoring and managing ESG factors, and overseeing standards, management processes and strategies to achieve sustainability practices. The FHT Sustainability Steering Committee, comprising the CEO and Head of Finance, has been designated to oversee and review environmental risk. Research and portfolio construction: Asset managers to evaluate the potential impact of environmental risk on the return potential of our investments. We consider operational indicators (such as GHG emissions, energy, waste and water) that may affect tenant demand as well as operational efficiencies and costs. Please refer to the Energy and Carbon section of this Report for further details. Portfolio risk management: Asset managers to put in place appropriate processes and systems to assess, manage and monitor the impact of any risk. We have put in place processes to manage environmental risk. Please refer to the Risk-Based Management section of this Report for further information. Scenario analysis: Asset managers to develop capabilities in assessing environmental risk impact on their portfolios and their alignment with climate goals set under a range of scenario pathways. We are on track to complete climate risk assessments, which include scenario analysis from temperature rises (below 2°C scenario: RCP 2.6 and below 4°C scenario: RCP 8.5) by FY2024. Stewardship: Asset managers to engage investee companies to improve risk profile and support their efforts to transition towards more sustainable policies and practices. We have progressively implemented asset enhancement initiatives with measures to improve energy and water efficiency and waste management. Disclosures: Clear and meaningful disclosures, referencing well-regarded international reporting frameworks. This Report discloses our approach to environmental risk management and the potential impacts of risk. We strive to enhance disclosures to further align to the TCFD recommendations. RESPONSIBLE INVESTMENT OUR APPROACH GRI 3-3 FHT has a geographically diversified portfolio of 14 quality assets, mostly located in key gateway cities in Asia, Australia and Europe. We recognise that we can make an impact across our value chain through how we invest. We actively integrate ESG considerations into our business and investment decisions by driving our properties to attain green building certifications from Green Star, BCA Green Mark and more. Currently, 12% of FHT’s portfolio1 by gross floor area has been greencertified. In FY2023, all our UK properties completed their BREEAM assessment and are awaiting their certification award. Furthermore, we have been benchmarking our sustainability performance through the GRESB Real Estate Assessment since 2019. Notably, our higher rating and better score in the 2023 Assessment underscore our commitment to drive improvement on our ESG efforts. OUR ACTIONS AND PROGRESS Advancing Green Practices in our Portfolio In Australia, all our properties have been assessed using NABERS, which measures energy efficiency, water usage, waste management and indoor environment quality of a building and its environmental performance. Averaging 3.5 Stars for Water and 3 Stars for Energy in NABERS ratings, our properties exemplify our dedication to sustainable operations. Our next target is to have these properties certified under the Green Star scheme by the Green Building Council of Australia in FY2024. In Singapore, InterContinental Singapore maintains its Green Mark GoldPLUS certification under the BCA Green Mark programme. 1 Includes all properties in FHT’s portfolio ESG Report 2023 13
Sustainability Our commitment also extends to the Green Tourism certification in the UK, which recognises our efforts to integrate sustainability into our UK properties’ operations. Five of our properties have been certified under this scheme, symbolising our dedication to caring for local communities, preserving the environment, and fostering eco-friendly practices. Benchmarking FHT’s Performance with the GRESB Real Estate Assessment The GRESB Real Estate Assessment captures ESG performance by assessing what investors and the industry consider to be material issues in the sustainability performance of real asset investments. FHT’s performance in the 2023 GRESB Real Estate Assessment improved from a 3-Star to a 4-Star rating. With a score of 82, we maintained our third-place ranking in the ‘Asia Pacific Hotel - Listed’ category. Our improvements spanned all ESG aspects, particularly in expanding data monitoring and reporting disclosures. We strive to continue building on this momentum by enacting positive changes across our operations and investment decisions to propel our sustainability agenda. RESILIENT PROPERTIES OUR APPROACH GRI 3-3 Climate change has been proven to present substantial risks to businesses, encompassing supply chain disruptions and rising operational vulnerabilities. Compounded by evolving regulatory landscapes and shifting consumer preferences, these threats necessitate adaptive measures. FHT is acutely aware that these risks have salient and direct financial implications. Decarbonising the real estate sector has become an urgent imperative, underscored by COP27. We are focused on addressing climate-related risks by collaborating closely with our customers and guests, suppliers as well as communities that may be potentially impacted by our operations. Through this approach, we believe that we can forge a more sustainable future. Enhancing the resilience of our properties against these impending threats ranks high on our agenda. In response, we are actively working to integrate these risks into our financial risk management processes. This entails harnessing climate risk data to identify, understand and manage our portfolio’s exposure to climate-related hazards. Such an approach will enable us to effectively measure and manage our climate risks and opportunities. We have set forth a series of climate objectives for FHT’s business moving forward. These goals include our commitment to achieving net-zero throughout our operations and value chain by 2050. In tandem with these strategic initiatives, we continue to further align our disclosures with the recommendations put forth by the TCFD. This is aimed at fostering greater transparency to promote more informed investment, credit and insurance underwriting decisions and meet growing investor demand. Notably, our Sponsor has embarked on greater alignment with TCFD recommendations since 2019 and we have publicly affirmed our support for the TCFD disclosures through our Sponsor. OUR ACTIONS AND PROGRESS The tables in the next few pages outline our approach and progress towards managing climate-related risks and opportunities. 14 Frasers Hospitality Trust
TCFD core element Our activities to support TCFD Alignment Governance Describe the organisation’s governance around climate-related risks and opportunities. The Board provides oversight on broader sustainability trends, risks and opportunities to connect sustainability with corporate purpose and strategy. The Board is supported by the Sponsor’s SSC and Group Sustainability team. The ARCC continue to assist the Board in carrying out its responsibility, which includes responsibility in determining ESG factors that are material to our business, monitoring and managing ESG factors, and overseeing standards, management processes and strategies to achieve sustainability practices. Describe management’s role in assessing and managing climate-related risks and opportunities. The senior management manages climate risk and identifies potential opportunities through accountability linked to remuneration. We established sustainability metrics, including climate-related objectives, within `Key Responsibility Areas’ and linked them to executive remuneration via the balanced-scorecard methodology. Two of our senior leaders underwent training on assessing and managing climate risks and opportunities, which included a deep-dive into TCFD recommendations and steps to be taken to better align with them and incorporate robust risk management processes into our strategy. Strategy Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term. We have completed the first stage of the climate risk and climate ‘value-at-risk’ assessment of our portfolio and are on track towards asset-level climate risk assessments in FY2024. We are also in the process of conducting climate risk assessments that involve identifying potential risks to our assets and estimating financial impact to the business using scenario analysis. Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning. These climate risk assessments include an analysis of both the financial impacts to our major operating revenue and costs items in the absence of any mitigation actions and the potential value of damages to our assets in the face of extreme weather events. During FY2023, we established our interim decarbonisation roadmap for 2030, which will lead to us achieving net-zero carbon emissions by 2050. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. Our Sponsor has initiated a group-wide readiness assessment of our practices as they relate to managing climate-related risk. Insights from the readiness assessment done on FHT have been used to develop a roadmap to align more closely with TCFD recommendations. Examples of actions within the roadmap include: • Integrating climate change risks and opportunities into strategic decision making • Providing annual training for business leaders • Undertaking climate risk assessments on the asset level, including an assessment against different and longer-term time horizons, both low-emissions and high emissions scenarios, and an assessment of financial impacts and materiality of climate related risks and opportunities • Improving the quality of climate-related financial disclosures This roadmap, approved by the Board, enables us to methodically address and mitigate physical and transition risks that are key to our business. ESG Report 2023 15
Sustainability TCFD core element Our activities to support TCFD Alignment Risk Management Describe the organisation’s processes for identifying and assessing climate-related risks. Our Sponsor has started a global process of identifying climate related risks and opportunities for our businesses at the asset-level, including identifying climate ‘value at risk’ for our activities and their locations. We have completed the first stage of the climate risk and climate ‘value-at-risk’ portfolio-level assessment of our properties. Describe the organisation’s processes for managing climate-related risks. We identify key risks, assess their likelihood and materiality to our business and document corresponding mitigating controls in a risk register. The risk register is reviewed and updated regularly. Sustainability-related risks have been included in the FHT Risk Register for monitoring. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management. We have implemented our Environmental, Health & Safety Policy and Environmental, Health & Safety Management System aligned to the ISO 14001 and ISO 45001 standards in key operating regions. For example, Fraser Suites Singapore has been certified bizSAFE Level 3 by the Singapore Workplace Safety and Health Council. We are on track towards integrating our climate-related risk identification activities within our Enterprise Risk Management processes and associated risk register practices. Metrics and Targets Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. Describe the organisation’s processes for managing climate-related risks. To ensure that we are on track to meet our target of net-zero carbon emissions by 2050, we measure and report our energy consumption and Scope 3 GHG emissions. Please refer to the Energy and Carbon section for detailed information on our metrics and targets. We measure and disclose our performance using metrics including: • energy consumption (GJ) • energy intensity (GJ/Occupied night) • Scope 3 GHG emissions (tonnes of CO2e) • Scope 3 GHG intensity (kgCO2e/Occupied night) This ESG Report is aligned with the recommended TCFD disclosures. Across asset classes and regions, we certify our properties in accordance to third-party green building standards, and continue to take steps to meet our goal of achieving green certification for 85% (by gross floor area) of owned properties by FY2030. Please refer to the Responsible Investment section for details of our green building certifications. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. We measure and report our Scope 3 GHG emissions across our assets. Please refer to the Energy and Carbon section for full details of our metrics relating to GHG emissions. Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. Through our Sponsor, we have introduced goals to inspire climate actions, such as attaining netzero carbon emissions across our business and value chain by 2050. For further details on energy efficiency measures implemented in FY2023, please refer to the Energy and Carbon section. 16 Frasers Hospitality Trust
FHT’s Climate-related Physical Assets PHYSICAL CLIMATE RISK Risk Description Description of Potential Business Impact Business Response Extreme water levels More frequent and intense levels of rainfall can lead to flooding Exposure of assets to river floods damaging both the built and surrounding infrastructure and natural environment could impair accessibility and damage functionality of buildings. This could lead to increased expenditure due to increased frequency of repair and maintenance. In addition, revenue could be affected due to the closure of operations. For acquisition of assets, green build certifications are sought as they factor in stronger structures, better insulation of buildings, more efficient roof drainage to cope with rain loads, energy efficient cooling systems, possibility of onsite renewable energy and so on which will contribute to addressing physical climate risks in the long run. Technical building assessments will also be conducted prior to acquisition. Rising temperatures Higher mean temperatures, heatwaves Higher temperatures reduce durability of building materials and affect the indoor climate. This could lead to higher expenses arising from more frequent maintenance checks and higher energy consumption required for cooling. Extreme temperatures also pose health and safety risks to property staff. Restricting/ shifting working hours could affect business productivity. Extreme weather More frequent and intense storms and droughts More frequent and intense storms can cause damage to building infrastructure. Thus, higher expenses from more frequent repairs and maintenance of building infrastructure and replacement of fixtures. Fire risk Increased potential and frequency of fire-related events linked to the warm and dry conditions due to climate change Destruction of assets and the surrounding environment would lead to costs incurred to rebuild and/or replace assets that are damaged. ESG Report 2023 17
Sustainability FHT’s Climate-related Transition Risks and Opportunities TRANSITION RISKS Risk Description Description of Potential Business Impact Business Response Carbon pricing Increasing carbon prices across countries would lead to increased operating costs due to direct and indirect carbon taxes on energy consumption and from within the value chain. In FY2023, our Sponsor trialled shadow pricing to support investment decisions, with a plan to further expand shadow pricing within investment activities to manage carbon related risks. Policy requirements for low carbon buildings With evolving building sector standards and regulations and national policies, businesses may need to upgrade existing assets or ensure new builds or assets comply. This could lead to increased expenditure to retrofit existing assets and ensure new builds comply. Failure to meet these policy requirements can lead to reputational risks. Carbon neutral or low carbon designs are pursued for all new builds, while decarbonisation strategies are being implemented for existing properties to reduce its annual carbon emissions. TRANSITION OPPORTUNITIES Opportunity Opportunity Description Description of Potential Business Impact Improving the resilience and energy efficiency of our portfolio Improving energy efficiency would help to reduce operating costs. New technologies are becoming increasingly available to increase the energy efficiency of buildings. On an ongoing basis, investments on more efficient technology and innovations are being reviewed and budgeted for, while energy audits are being implemented across the portfolio. Deepening partnerships As a landlord, collective efforts with our customers and guests are a crucial part for the decarbonisation of our operations. These partnerships enable us to drive sustainable practices within our shared spaces. We work closely with our operators to measure our properties’ emissions and support investments and collaborations towards energy efficiency and waste reduction. 18 Frasers Hospitality Trust
Consuming Responsibly We are committed to advancing responsible tourism and environmental stewardship within our hotels and serviced residences. Recognising our role in minimising our environmental impact, we ensure that sustainability is deeply embedded in our operations and value chain. We strive to streamline our resource consumption by reducing waste generation, conserving energy and water, enhancing energy efficiency and using renewable energy where possible. This commitment is reinforced through the formulation of policies promoting positive environmental and social outcomes. Beyond that, we also pursue a collaborative approach in reducing our collective environmental footprint, actively encouraging sustainable practices among our employees, customers and guests, and property operators. We have set interim targets to be achieved by FY2024, using the baseline year of FY2018, which is the first year we began monitoring our environmental data. OUR PROGRESS Focus Area Our Goals Our Progress in FY2023 Energy & Carbon • To develop a net-zero carbon roadmap and establish carbon targets in line with a science-based approach to achieve net- zero carbon emissions by 2050. • To reduce the energy intensity of the portfolio by 3% per annum for the portfolio by 2024 against a 2018 baseline. • During FY2023, we established our interim decarbonisation roadmap for 2030, which contributes to our goal of achieving net-zero carbon by 2050. • Energy intensity decreased by 2.6% year-on-year (YoY) to 0.3 GJ per occupied room night. • Expanded Scope 3 Categories 7 and 13 disclosure. Water • To reduce the water intensity reduction of the portfolio by 1.5% per annum by 2024 against a 2018 baseline. • Water intensity increased by 18% per room night due to higher occupancy recorded across all properties in FY2023 compared to FY2022. Waste • To establish a waste recycling target and expand waste data coverage from current 10 properties to 14. • Waste data coverage increased to cover 11 properties. • Waste recycled increased by 17.5% YoY to 419 tonnes. • Waste intensity increased by 15% YoY to 3.8 kg per occupied night. ESG Report 2023 19
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