Manulife US REIT - Annual Report 2021

MANULIFE US REIT 90 Climate Action Climate change carries risks for our business. Flooding, extreme weather events and increasing temperatures can adversely affect our assets, operations, employees and community. There are also regulatory, market and reputational risks that can increase our costs and affect our license to operate. Identifying these risks and managing these impacts are thus integral to our sustainability strategy. MUST is aligned with both the Sponsor’s Climate Action Plan 1 , as well as the Asset Manager’s Climate Change Statement which guide our climate mitigation and adaptation efforts to reduce the impact and vulnerability of our asset operations. In line with its net zero goal, our Sponsor has been a supporter of the TCFD since 2017 and published its first disclosure aligned with the TCFD framework in 2019. As MUST transits to a low-carbon economy, we support the TCFD framework and are working towards incorporating its recommendations in our reporting framework. Recommended Disclosure Approach Governance The Board has oversight of the material ESG factors of the REIT, and takes them into consideration in the determination of the REIT’s strategic direction and policies. The SSC leads the sustainability agenda in MUST. Led by CSO, Caroline Fong, and comprising representatives from key business units, the SSC drives the implementation of MUST’s ESG strategies and initiatives, monitoring of sustainability performance, as well as the setting of targets for continuous improvement. The SSC reports regularly to the CEO, Sponsor and the Board on the REIT’s sustainability performance. As a sponsored REIT, MUST works closely with our Sponsor and Asset Manager, communicating our sustainability performance regularly with our Sponsor’s real estate team to ensure that the sustainability strategy remains aligned and rooted. Sustainability is woven into the incentive pay policies of all employees, with performance indicators linked to the achievement of ESG initiatives. Strategy In 2021, MUST conducted a materiality review to refresh the ESG issues that are most relevant and significant to the REIT, and Climate Change Adaptation and Mitigation was added as one of the material issues impacting the business. Guided by our Asset Manager’s Sustainable Investing and Sustainable Risk Statement and Climate Change Statement, ESG considerations are incorporated across our entire acquisition and portfolio management processes. As part of our due diligence process, factors such as climate-related exposure, energy performance and tenant engagement programmes are assessed. In the final stages of the acquisition, a summary of ESG risks and strengths will be recorded to ensure MUST’s consistent sustainability performance. Once acquired, the new properties will be onboarded to our existing ESG programme. As part of our environmental sustainability strategy, we will continue to reduce our carbon footprint and improve energy efficiency. This includes optimising our building operations to enhance efficiency, fuel switching, and exploring the use of onsite renewables. To build a low-carbon portfolio, we invested approximately 1.0% of our 2021 revenue on green building expenditure. This includes Light Emitting Diode (LED) light replacements, chiller improvements, and the incorporation of smart building equipment controls. We will also continue to integrate sustainability considerations into our financing mechanisms and strengthen our green funding sources. As at 31 December 2021, MUST has obtained US$440.0 million of green and sustainability-linked loans. Building Resilience 1 Please refer to Manulife’s Sustainability Report and Public Accountability Statement 2020 for details on Manulife’s Climate Action Plan.