ESR is a signatory to the United Nations-supported Principles for Responsible Investment, which underscores the importance and emphasis on responsible investing and sustainable financing. ARA, a wholly-owned subsidiary of ESR, is a signatory to the World Green Building Council’s Net-Zero Carbon Buildings Commitment which aims to achieve net-zero operational carbon across its committed portfolio of assets by 2030. The Manager, as a subsidiary of ARA, strives to drive decarbonisation throughout the operations of Fortune REIT. In 2023, Fortune REIT was the first REIT in Hong Kong to commit to the SBTi by setting emissions reduction targets grounded in climate science to support the Paris Agreement to strive to achieve the global goal of limiting global warming to 1.5°C above preindustrial levels. For more information about our science-based targets, please visit: https://www.fortunereit.com/en/sustainability/sbti.php

Scope 1 and 2 Emissions

As part of our on-going decarbonisation and climate change efforts, Fortune REIT has identified several levers as the focus of its decarbonisation journey, including energy reduction and efficiency, smart building management, electrification, renewable energy generation and renewable energy procurement. Among the levers identified, energy reduction and efficiency, as well as smart building management remain the highest priority for Fortune REIT.

During the past years, Fortune REIT has been working on implementing these levers in reducing its emissions. For example, smart building management systems have been installed at major Fortune Malls, which covers 85% of the total GFA, including Ma On Shan Plaza, Fortune City One, Metro Town, Fortune Metropolis, Laguna Plaza, +WOO, Caribbean Square, Belvedere Square and Jubilee Square. The cloud-based automated building solution allows the centralised collection and monitoring of building data, serving to optimise energy efficiency and regulate air quality. As an automated system, it also allows for the accurate data collection for Fortune REIT and its tenants. For more information about the Building Management and Building Optimization System, please visit: https://www.fortunereit.com/en/sustainability/building_mgmt_optim_system.php

In addition, Fortune REIT has been actively improving our malls through the replacement of chillers with more efficient models and the installation of solar panels. Fortune Malls has installed solar panels at Fortune City One, Laguna Plaza, Fortune Metropolis, +WOO and Jubilee Square, which are expected to avoid GHG emissions by 154 tonnes annually under the Feed-in Tariff Scheme.

Scope 3 Emissions — Downstream Leased Assets

From the preparatory work done to set science-based targets, Fortune REIT has identified that its downstream leased assets account for a majority of its Scope 3 GHG emissions, which is consistent with landlords in the real estate industry. Armed with this knowledge, and leveraging off our solid relationships we have with our tenants, Fortune REIT has undertaken proactive steps to reduce its Scope 3 GHG emissions by promoting green practices and best practices in sustainability. A green lease clause has been added to our standard tenancy agreement. This clause fosters collaboration with tenants to raise awareness of sustainability through communication information sharing, and support for energy saving and waste management initiatives. The aim is to drive carbon reduction and sustainable practices throughout the value chain.

At the commencement of their lease, tenants are provided with a copy of the Fitting-out Guide which sets out Fortune REIT’s minimum expectations on the design and use of materials for renovation works. Over the term of the lease, the Property Manager remains in close contact with tenants and supports our tenants on their sustainability journey by offering tenants tailormade solutions to reduce their environmental footprint through the eco-tips and eco-taskforce. Adequate waste disposal and recycling facilities are available for tenants to utilise as well. Fortune REIT also extended its ESG training to its tenants, with a focus on waste reduction initiatives, recycling and GHG emissions to aid them to integrate sustainability practices into their operations.

Fortune REIT also cares about its tenants and invited all tenants to participate in the annual tenant satisfaction survey to collect opinions on various topics including Fortune REIT’s environmental performance, communication, condition of communal facilities health and safety. Based on the results of this survey, Fortune REIT has stepped up its social media presence on LinkedIn, Facebook and will continue to connect with its tenants via publications/notifications; a testament to Fortune REIT’s commitment to addressing its tenants’ feedback.

Building Resilience against Climate Change — Green Building Certifications

Fortune REIT has obtained green building certifications across all 16 Fortune Malls in Hong Kong certified by Building Environmental Assessment Method Plus (“BEAM Plus”) in terms of management. Fortune Metropolis and Ma On Shan Plaza have attained Platinum rating for the BEAM Plus Comprehensive Scheme, the highest accolade in BEAM Plus. The comprehensive scheme measures the combined performance of a building across multiple aspects, including property management, waste, water use, energy use, indoor air quality, etc.

Moreover, +WOO Phase 2, one of our flagship malls in Tin Shui Wai, has been awarded a gold rating for BEAM PLUS Interiors certification for renovation; the first mall in Hong Kong to attain this certification. The BEAM PLUS Interiors assessment is comprised for seven key performance aspects: materials, management, green building attributes, energy use, indoor environmental quality, innovation and water use.

100% of Hong Kong Portfolio has attained green building certifications

Green Building Certification	Mall(s)
BEAM Plus Comprehensive Scheme Platinum rating	Fortune Metropolis Ma On Shan Plaza
BEAM PLUS Interiors certification for renovation – Gold rating	+WOO
BEAM Plus Excellent certifications for Management aspect of the Selective Scheme	Fortune City One Ma On Shan Plaza Fortune Metropolis Metro Town Jubilee Square Laguna Plaza Caribbean Square +WOO Belvedere Square Smartland Hampton Loft Waldorf Avenue Tsing Yi Avenue Centre de Laguna Lido Avenue Rhine Avenue
BEAM Plus Excellent certifications for Energy Use aspect of the Selective Scheme	Ma On Shan Plaza
Outstanding grade in Energy Use and was awarded with the "Highest Advancement" in Energy Saving in 2021 (Selective Scheme)	Ma On Shan Plaza
BEAM Plus Excellent certifications for Water Use aspect of the Selective Scheme	Fortune Metropolis

Working with our Banking Partners — Sustainable Finance

Reinforcing the Manager’s on-going commitment to sustainable development and the advancement of its ESG goals, Fortune REIT has secured five sustainability-linked loans. Fortune REIT entered into its first sustainability-linked loan in 2020 and sustainability-linked loans comprise of approximately 62% of Fortune REIT’s total loans. Under the terms of the sustainability-linked loans, Fortune REIT will be entitled to annual interest rate savings if the pre-set ESG benchmarks are satisfied, subject to external verification by an independent assessor.

Moreover, Fortune REIT has entered into a sustainability-linked interest rate swap in 2021, which upon the satisfaction of pre-determined targets concerning community engagement, enabled Fortune REIT to receive a sponsorship, giving rise to Farm@Fortune.