SUSTAINABILTY REPORT 2024 CONTENTS 92 Serving our Communities 93 Responsible Supply Chain 93 Human Rights Due Diligence 94 Driving Sustainable Growth 95 Economic Sustainability 95 Governance Framework 97 Engaging Investors 98 Corporate Policies, Procedures and Frameworks 100 2024 ESG Data Summary 108 SASB Real Estate Sector Disclosure 110 TCFD Recommendations 66 About this Report 68 2024 Highlights 69 Message to Stakeholders 70 Sustainability Approach 70 Sustainability Framework and Materiality Review 71 Sustainability Governance 74 Stakeholder Engagement 76 Building Resilience 77 Climate Action 81 Environmental Stewardship 86 People First 87 Nurturing our Talent 90 Safeguarding Health and Well-being ANNUAL REPORT 2024 | 65
ABOUT MANULIFE US REIT Manulife US Real Estate Investment Trust (MUST or the REIT) is a Singapore listed REIT managed by Manulife US Real Estate Management Pte. Ltd. (the Manager). MUST was established with the investment strategy primarily focused on investing, either directly or indirectly, in a portfolio of income-producing office real estate in key U.S. markets, as well as in real estate-related assets. The Manager is a wholly-owned subsidiary of The Manufacturers Life Insurance Company (the Sponsor), which is part of the Manulife Group (the Group). John Hancock Life Insurance Company (U.S.) (JHUSA) is the appointed property manager1 (the Property Manager) for the properties, while Manulife Investment Management Private Market (US) LLC is the appointed asset manager (the Asset Manager) for the properties. Employee-related information provided in this report refers solely to the employees of the Manager located in Singapore and the U.S. REPORTING SCOPE AND PERIOD This is the eighth annual Sustainability Report for MUST. It showcases the REIT's sustainability approach, initiatives and performance for the financial period from 1 January to 31 December 2024 (Reporting Period), providing comparative data for the same period in 2022 and 2023. As at 31 December 2024, the REIT's portfolio comprises nine2 freehold office properties that are strategically situated in prime locations of key U.S. cities. MUST adopts the Operational Control Approach, as defined by the Greenhouse Gas (GHG) Protocol Corporate Standard, to determine organisational boundaries. REPORTING STANDARDS AND GUIDELINES This report is prepared in accordance with the revised Global Reporting Initiative (GRI) Universal Standards 2021. The GRI Standards have been selected as it is an internationally recognised standard for sustainability reporting and is relevant to the REIT's operations. ABOUT THIS REPORT This report takes into account GRI G4 Construction & Real Estate Sector Supplement (CRESS) guidelines and has incorporated elements from the United Nations Sustainable Development Goals (SDGs). The Manager understands that the GRI Sector Standard for the real estate industry is under phase development and will continue to monitor until it is released for companies’ disclosure. For details on the relevant references, please refer to the GRI Content Index on our Sustainability webpage (https://www.manulifeusreit. sg/sustainability-overview). This report complies with the Singapore Exchange Securities Trading Limited (SGX-ST) Listing Manual Rules 711A and 711B and also adheres to the Task Force for Climate-Related Financial Disclosures (TCFD) framework. This report is recommended to be read together with the Annual Report 2024 for a more comprehensive view of the Manager's sustainability efforts. In line with the announcement by Singapore Exchange Regulation (SGX RegCo) in September 2024, the Manager will be enhancing its climaterelated disclosures to incorporate the climate-related requirements in the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB). In this report, we have begun expanding our disclosures, where relevant, to transition towards alignment and with full compliance to the ISSB Standards. Other key gaps that require more time and effort will be addressed progressively in our future reports. The report is written with reference to the Sustainability Accounting Standards Board (SASB) Standards and the report contains disclosures recommended in the Real Estate sector standard. The SASB real estate disclosure index and TCFD recommendations table can be found after the ESG Performance Data Summary. INTERNAL REVIEW AND EXTERNAL ASSURANCE The Manager acknowledges that internal review and external assurance increase stakeholder confidence in the accuracy and reliability of the sustainability information disclosed. The Manager has relied on internal checks over sustainability disclosures, in line with existing internal review frameworks. Additionally, the Board and the Manager have 1 Since 2021, JHUSA has outsourced its property management services to third-party property managers. Reference to Property Managers in this report refers to the third-party property managers. 2 On 28 October 2024 (U.S. time), MUST completed the divestment of Capitol, over which the Manager had operational control of until the point of divestment. In alignment with MUST’s internal management procedures, ESG performance data related to Capitol has been excluded for 2024. 66 | MANULIFE US REIT
BOARD STATEMENT ON SUSTAINABILITY At MUST, we recognise the integral role that Environmental, Social and Governance (ESG) factors play in driving long-term value and sustainability within the property investment landscape. As a responsible organisation, we are committed to integrating ESG considerations into our business and strategy to deliver long-term economic value for our stakeholders and contribute to the environmental and social well-being of our communities. The Board of Directors (Board) provides oversight on the implementation, management and monitoring of MUST's sustainability matters, including material ESG topics. With support from the Sustainability Steering Committee (SSC), the Board and management regularly review material ESG topics and receive regular updates on the sustainability matters to ensure MUST achieves its sustainability targets and performance. 2 April 2025 also engaged its internal auditors to incorporate a riskbased internal review of the Sustainability Report as part of the risk-based audit plan during the financial year. The internal audit review was conducted in accordance with the International Standards for the Professional Practice of Internal Auditing issued by The Institute of Internal Auditors, and builds on the Manager's existing governance structure, buttressed by adequate and effective internal controls and risk management systems. The Manager will work with the Internal Auditors, on reviewing other aspects of the Sustainability Report, over the course of the riskbased internal audit cycle, which may span one or a few years in accordance with risk-based planning, as approved by the Audit Risk Committee (ARC). The Manager has not solicited external independent assurance for this report but will review the need for external assurance in the future. CONTACT We constantly strive to improve our sustainability disclosures for the investment community. Should you have any questions or feedback, kindly contact our sustainability team at usreitinquiry@manulifeusreit.sg. You can also find our most recent sustainability initiatives and updates on our website at https://www.manulifeusreit.sg/sustainability-overview. ANNUAL REPORT 2024 | 67
2024 HIGHLIGHTS 21.5% Reduction in waste intensity compared to 2023 27.4% Reduction in energy intensity since 2018 base year 92.2% Green-certified portfolio by Net Lettable Area (NLA) 100.0% Board and employees received anti-corruption training ZERO CASES of noncompliance and corruption 36.3% Reduction in GHG emissions intensity since 2018 base year >850 Investors, analysts, media engaged 134.3 Corporate social responsibility hours ZERO CASES of work-related fatality or injury 44.5 Average training hours per employee 5.0 ESG SCORE; Negligible risk ~$S20,000 Donation in support of local community GRESB 5 STAR ‘A’ for Public Disclosure Assessment 3.8 ESG RATING vs subsector average of 2.8 11TH out of 43 REITs & Business Trusts Singapore Governance and Transparency Index 2024 (16th in 2023) BUILDING RESILIENCE PEOPLE FIRST DRIVING SUSTAINABLE GROWTH ESG ACCOLADES Negligible Low Medium High Severe 0 – 10 20 – 30 10 – 20 30 – 40 40+ 68 | MANULIFE US REIT
MESSAGE TO STAKEHOLDERS Dear Stakeholders, The past year has seen an acceleration of global sustainability efforts, with climate action taking centre stage. We have observed increased regulatory pressure, growing investor focus on ESG performance, and heightened market demand and awareness of sustainable practices. These trends have reinforced our belief that sustainability is not just a responsibility, but a critical driver of long-term business success. Additionally, staying informed and adaptable to political and regulatory changes is essential for navigating the evolving landscape. PROGRESSING ON CLIMATE ACTION IN OPERATIONS We are proud to report significant progress in our environmental sustainability initiatives. This year, we have reduced our energy intensity and GHG emissions intensity by 27.4% and 36.3% respectively, compared to our baseline year of 2018. We also achieved a 92.2% green-certified portfolio by NLA compared to the prior year. It is our seventh year receiving 5 Star for our GRESB Real Estate Assessment, underscoring our continuous achievement in maintaining the highest standards in environmental, social, and governance practices. These achievements are the result of our continued investment in energy-efficient technologies and sustainable resource management to ensure sustainable long-term operational savings. FOCUSING ON PEOPLE AND COMMUNITIES Our employees are the backbone of our organisation, and their development and well-being remain a top priority. In 2024, we continued our efforts in organising initiatives that aimed to enhance employee engagement, professional growth and overall welfare and continued with initiatives that have received positive feedback. These include comprehensive quarterly town halls, employee engagement surveys, training programmes, mental health support services and awareness, and flexible work arrangements. We remain committed to fostering a diverse and inclusive workplace where every employee feels valued and empowered. Building strong relationships with our communities, tenants, and partners is essential to our sustainability journey. As part of our ongoing commitment to fostering community wellbeing, we have continued to engage stakeholders in several meaningful activities. These include volunteering at a local aquaponics farm to harvest and donate vegetables to lowincome families, and hosting a caricature activity to engage with the elderly. We have also strengthened our partnerships with tenants and suppliers to promote sustainable practices across our value chain. Together, we are creating a more resilient and sustainable future. REINFORCING ROBUST CORPORATE GOVERNANCE Strong corporate governance is the foundation of our sustainability efforts. We continue to integrate sustainability metrics into executive compensation and enhance our reporting transparency. These measures ensure that sustainability considerations are embedded in our decisionmaking processes at the highest levels. Our Board of Directors has been actively overseeing our sustainability strategy, and we have implemented rigorous reporting mechanisms to track our progress and identify areas for improvement. I am proud to share that we were ranked 11th out of 43 REITs and Business Trusts for Singapore Governance and Transparency Index (SGTI), an improvement from 16th in the previous year. LOOKING AHEAD TO ENHANCE DISCLOSURES Looking ahead to 2025, we recognise that the sustainability landscape will continue to evolve rapidly. In response, we aim to re-examine our strategy and targets to address these emerging sustainability challenges. We remain committed to collaborating with our stakeholders, including investors, tenants, employees, regulators, industry associations, business partners, and the local community to drive positive change. Whilst we acknowledge that there is still much work to be done, we are confident that our sustained focus on sustainability will create enduring value for all our stakeholders and contribute to a more resilient, equitable and sustainable world. John Casasante Chief Executive Officer and Chief Investment Officer (CEO & CIO) We have observed increased regulatory pressure, growing investor focus on ESG performance, and heightened market demand and awareness of sustainable practices. These trends have reinforced our belief that sustainability is not just a responsibility, but a critical driver of long-term business success. ANNUAL REPORT 2024 | 69
SUSTAINABILITY APPROACH Our business strategy continues to prioritise sustainability as a core element. By incorporating ESG factors into our strategic planning and daily operations, we aim to future-proof and prepare the REIT for enduring success, ultimately providing long-term value for our stakeholders. Our Sustainability Framework incorporates key ESG factors and are embedded into our sustainability framework, which aligns with the five Sustainability Real Estate Commitments outlined in our Asset Manager's Real Estate Sustainability Framework. Our sustainability framework guides our investment decisions, as well as our asset and property management practices. As part of our efforts to standardise sustainability practices, the sustainability-related policies and identified material ESG topics have been implemented and will be made available across MUST and its subsidiaries. SUSTAINABILITY FRAMEWORK AND MATERIALITY REVIEW MUST’s Sustainability Framework Our sustainability framework outlines our strategy through three key pillars: Building Resilience, People First and Driving Sustainable Growth. These pillars are underpinned by eight ESG focus areas, creating a comprehensive approach to identifying material ESG topics that align with MUST's sustainability objectives and Enterprise Risk Management (ERM) framework. We categorise each material ESG topic under its corresponding sustainability pillar. DRIVING SUSTAINABLE GROWTH Conducting our business responsibly to deliver long-term value to our Unitholders. This includes the sustainable allocation of capital, robust governance framework and proactive risk management practices. PEOPLE FIRST Ensuring the needs of our stakeholders are well-served is key to sustaining our business. This includes creating a safe and healthy environment, and safeguarding the wellbeing and interests of our employees, tenants, and local communities. BUILDING RESILIENCE Reducing the environmental impact of our properties and supporting the transition to a net zero economy. Nurturing our Talent Safeguarding Health and Well-Being Serving our Communities 8 Employee well-being, health and safety 9 Human rights and non-discrimination 10 Employment practices 11 Customer health and safety 12 Training and development 13 Diversity and inclusion 14 Community development 15 Marketing and labelling Economic Sustainability Governance Framework Engaging Investors 16 Corporate governance 17 Economic performance 18 Economic contribution to society 19 Supply chain management Climate Action Environmental Stewardship 1 Sustainable building 2 Energy 3 Water management 4 GHG emissions 5 Climate change mitigation and adaptation 6 Waste management 7 Biodiversity Material ESG topics and prioritisation levels Legend: Highly Critical Critical Moderate SUSTAINABILITY PILLARS APPROACH AND MATERIAL ESG TOPICS GUIDED BY MANULIFE INVESTMENT MANAGEMENT’S FIVE SUSTAINABLE REAL ESTATE COMMITMENTS IN OUR ACTIONS 1 Minimise our environmental footprint 2 Support health and wellness 3 Promote responsible business practices 4 Engage our stakeholders on sustainability 5 Be accountable for our performance MISSION Future-proofing our business to create long-term value for our stakeholders 70 | MANULIFE US REIT
Approach to Materiality Following the GRI Standards 2021, our material ESG topics reflect MUST's most significant economic, environmental, social and governance impacts, including those on human rights. Since our inaugural Sustainability Report in 2017, MUST has aligned its sustainability efforts with stakeholder expectations by prioritising material ESG topics. We refined our sustainability framework and thoroughly reviewed our material ESG topics in 2021, considering external factors that could impact our operations. This process was supported by an independent consultant who employed a four-step materiality determination assessment. This approach helped us identify ESG topics of relevance and materiality to both our internal and external stakeholders. MUST identified 19 material ESG topics relevant to its operations, with 14 of these designated as highly critical. In 2024, the Manager reassessed these material ESG topics and their priority levels, confirming that the 14 highly critical topics remained pertinent for the Reporting Period. As we prepare to incorporate the ISSB standards into our reporting framework, we will also consider the financial materiality of ESG topics. This qualitative double materiality approach will offer a more comprehensive perspective on both sustainability-related and climate-related risks and opportunities. The Manager plans to conduct a new materiality study to re-evaluate the REIT's material ESG topics, ranking them based on both impact and financial materiality. Analyse the survey data and calculate the weighted materiality scores for each material ESG topic Construct a scatter graph to determine which ESG topics should be considered as material and prioritised based on likelihood and impact FOUR-STEP MATERIALITY DETERMINATION Design the stakeholder engagement survey in accordance with GRI standards and the doublemateriality principles Conduct peer benchmarking to evaluate the common material ESG topics in the industry Once material ESG topics have been prioritised, it will be internally reviewed, validated, and approved by the SSC and the Board Research on the core ESG topics that currently concern the industry Define clearly all potential material ESG topics, scope, and types of stakeholders to be covered in the stakeholder engagement survey Conduct materiality determination assessment every 3 years In view of the announcement of MUST’s Recapitalisation Plan on 29 November 2023, the materiality determination assessment will be postponed until MUST’s portfolio and operations stabilise. STEP 1 STEP 4 STEP 2 STEP 3 SUSTAINABILITY GOVERNANCE MUST recognises that effective sustainability performance requires a well-structured, dedicated leadership team. The Board oversees material ESG topics management and incorporates them into the REIT's strategic direction and sustainable development policies. The Board is responsible for exercising due diligence in fulfilling its responsibilities and equipping itself with relevant knowledge to effectively perform its duties, including overseeing processes to identify and manage organisational impacts. PRIORITISE RATE VALIDATE IDENTIFY Distribute the stakeholder engagement surveys to relevant stakeholders to collect their opinions Upon identifying potential material ESG topics, and their positive and negative impacts on business activities, cluster similar topics together. A rating process can be done to assess which topics are most common across MUST and its subsidiaries ANNUAL REPORT 2024 | 71
Sustainability Governance Structure Sustainability Steering Committee Supported by key management personnel and respective Asset and Property Managers SUSTAINABILITY APPROACH The Board maintains strong sustainability foundations through mandatory SGX training for all directors, ensuring they are equipped with essential knowledge of sustainability matters. They receive regular updates on material ESG topics, including ESG performance and sustainability targets, during during quarterly ARC meetings or Board meetings. By the end of the Reporting Period, our Chairman and all directors had completed the SGX-ST-prescribed sustainability training, further enhancing their expertise on the sustainability front. In 2017, MUST established a SSC to execute the REIT's sustainability agenda. The SSC is responsible for overseeing the execution of the ESG strategy implementation, tracking performance and setting development goals. It is supported by key business units, including MUST's sustainability team, to stay current with developments, ensure ESG strategy alignment and support the execution of ESG strategies. Guided by our corporate policies, procedures and frameworks, the SSC plays a key role in identifying and addressing the risks and opportunities related to sustainability and climate through collaboration with key business units, the Board, and the Sponsor to ensure sustainability is embedded within the Manager's processes. This includes evaluating financial implications of environmental investments, and ensuring compliance with evolving regulations related to ESG. Biannually, the SSC discusses and reports to the CEO, Sponsor and Board on sustainability matters such as the REIT's sustainability performance, climate-related metrics, stakeholder expectations and regulatory requirements. For sustainable finance, our finance department oversees sustainability and green finance issuances. For more information on our corporate policies, procedures and frameworks, please refer to pages 98 to 99 of this report. MUST prioritises sustainability competency and ensures that the SSC members receives regular sustainability materials designed to enhance their ability to navigate sustainability and climate-related risks and opportunities. These capacitybuilding programmes are subject to ongoing review, ensuring that the content remains relevant and up-to-date. This approach allows for the timely incorporation of current and emerging sustainability issues, keeping our leadership wellequipped to address evolving sustainability challenges. For a detailed overview of MUST’s governance approach employed to address its climate-related risks and opportunities, please refer to pages 77 to 81 of this report. MUST collaborates closely with our Sponsor and Asset Manager to align our sustainability strategy with the sustainability commitment of our Sponsor's real estate team. In 2024, regular meetings were held together with Asset Managers, Property Managers and the Asset Manager's sustainability team to ensure MUST's sustainability actions align with the Sponsor's goals. Recognising management's crucial role in driving ESG initiatives and achieving sustainability goals, we have incorporated collective ESG targets into our management team's performance metrics and compensation structures. This strategic approach ensures our leadership team is personally invested in advancing our sustainability agenda. By directly linking ESG performance against key performance indicators (KPIs) and incentive plans, we foster a culture of accountability and ownership for sustainability outcomes across the organisation. For more information on remuneration matters, please refer to pages 124 to 129 of the Annual Report 2024. Board of Directors Sponsor Management Team Compliance Finance Investment Investor Relations Sustainability 72 | MANULIFE US REIT
Addressing Sustainability at Our Properties To ensure that our leadership drives sustainability and our properties consistently meet industry standards, we place a high priority on enhancing performance in key sustainability areas. Our Asset Manager revised the Sustainable Building Standards (SBS) in 2022 to consider developments in the sector and promote ongoing enhancements throughout our global portfolio. Our property management agreements incorporate the SBS, which mandates yearly progress reports to uphold sustainable practices. The SBS outline requirements and best practices for property teams, encouraging improvement in areas such as environmental and climate risks, water and waste management, nature and biodiversity, and social impacts. In addition to supporting certification requirements, enabling performance benchmarking, promoting leadership in our sustainable property commitments, and offering resources for Asset Managers and Property Managers, SBS assist us in meeting stakeholder expectations and industry standards. This strategy establishes a strong foundation for each property to support MUST's overarching sustainability objectives. At MUST, we ensure that both the Asset Manager and Property Manager teams comply with ESG standards. Meetings are held to align understanding and expectations between MUST, the Asset Managers and the Property Managers. Our Asset Manager organises sustainability training programmes and awareness initiatives for the Property Managers to enhance the implementation of our Real Estate Sustainability Framework. They also maintain a comprehensive property management playbook as a reference for expectations. Our property management agreements serve as a strategic framework for implementing sustainability initiatives. Our Asset Managers oversee the Property Managers, requiring compliance with our sustainability policies, timely updates aligned with the SBS, and monthly utility bill submissions where available. We also mandate annual sustainability reporting on ESG performance metrics to inform decisionmaking. Additionally, our Asset Managers maintain an annual scorecard to evaluate the Property Managers' adherence to agreements, including a qualitative assessment of their performance against our expectations. ANNUAL REPORT 2024 | 73
SUSTAINABILITY APPROACH STAKEHOLDER ENGAGEMENT Our business success relies on regular stakeholder engagement and effective communication. Key stakeholders are identified based on their potential to influence or be affected by our operations and sustainability performance. Our Board engages with stakeholders during Annual General Meetings (AGMs) and takes our stakeholders’ perspectives into account when determining MUST's impacts, as described in our materiality approach. Legend for engagement frequency: As required Throughout the year Semi-annual Annual Stakeholder Groups Investment Community (Investors, analysts, media) Tenants Employees Objectives of Engagement Ensuring timely and accurate disclosure of information Understanding workspace needs and concerns Upskilling, retaining skilled talent and building teamwork Key Concerns/ Interests • Transparent and timely updates about MUST’s financial and operational performance • Strategy for sustainable growth • Access to senior management • Investor education on U.S. economy and office sector • ESG performance including global sustainability rankings and indices • Clean and safe environment • On-site and modernised amenities • Tenant engagement activities • Energy-efficient space • Career development and training opportunities • Diversity and equal opportunities • Remuneration and benefits • Employee welfare • Health and safety • Labour and human rights MUST’s Response • Ensuring timely and transparent disclosures • Hosting regular investor webinars and engagements • Ensuring proactive portfolio and capital management • Formalising sustainability framework to guide MUST’s sustainability strategies across all investments, and asset and property management operations • Retrofitting and renovating of properties • Hosting networking events and engagement activities for tenants • Organising activities to educate tenants about environmental sustainability and encouraging them to give back to the community e.g. blood donation, eyeglasses and food donation drives • Providing regular training and skills upgrading programmes • Ensuring proactive communication with employees to gather feedback and ideas to improve the workplace e.g. employee townhall • Providing fair and equal opportunities for all • Maintaining a safe and healthy working environment • Offering flexible work arrangements Engagement Methods and Frequency SGX announcements Briefings, investor roadshows, conferences and meetings Website with email alerts, hotline, dedicated investor relations contact Regular LinkedIn updates Live and archived audio webcasts and briefing transcripts Annual and Sustainability Reports AGM/Extraordinary General Meeting (EGM) with minutes published on website Tenant feedback meetings Tenant appreciation events Tenant satisfaction survey Training programmes Dialogues with senior management Employee grievance handling procedures Performance review Employee engagement surveys 74 | MANULIFE US REIT
Regulators and Industry Associations Business Partners (Suppliers, service providers) Local Community Working together to achieve mutual interests Building strong partnerships Supporting community needs • Compliance with policies, rules, regulations including environmental, labour standards and SGX-ST listing requirements • Good corporate governance and transparency • Sharing of industry/sector trends • Health and safety of workers • Human rights • Ethical business practices including antimoney laundering, anti-corruption • Engaging and meaningful relationships with vulnerable community groups • Financial support • Business impact on the environment, economy, and people • Participating in industry associations such as the REIT Association of Singapore (REITAS) • Participating in consultations with regulators such as SGX and Monetary Authority of Singapore (MAS) • Reviewing disclosures against best practices • Ensuring Manulife Code of Business Conduct and Ethics are in place to affirm MUST’s commitment to ethical conduct and compliance with all applicable laws • Encouraging business partners to adhere to SBS and Manulife Vendor Code of Conduct • Encouraging employee participation in community engagement events by granting two days of volunteer leave annually • Helping vulnerable and elderly communities through corporate donations and employee volunteering • Sourcing corporate gifts from social enterprises • Advocating best practices in sustainability SGX announcements, circulars and other regulatory filings Website Panels and associations Annual and Sustainability Reports AGM/EGM Dialogues/feedback SBS Manulife Code of Business Conduct and Ethics Manulife Vendor Code of Conduct Donation drives, Corporate Social Responsibility (CSR) events Social enterprise procurement Collaborations with charities and NonGovernmental Organisation (NGOs) for community development Cash donations ANNUAL REPORT 2024 | 75
Objectives: Reducing the environmental impact of our properties and supporting the transition to a net zero economy Material ESG Topics: 2025 AND LONG-TERM TARGETS 2024 PERFORMANCE By 2035: Achieve 33.0% reduction in energy intensity from 2018 base year By 2050: Achieve 49.0% reduction in energy intensity from 2018 base year 27.4% reduction in energy intensity from 2018 base year By 2035: Achieve 38.0% reduction in Scope 1 and 2 GHG emissions intensity from 2018 base year By 2050: Achieve 80.0% reduction in Scope 1 and 2 GHG emissions intensity from 2018 base year 36.3% reduction in Scope 1 and 2 GHG emissions intensity from 2018 base year By 2025: Maintain ~90.0% green-certified portfolio by NLA By 2030: Achieve 100.0% green-certified portfolio by NLA 92.2% green-certified portfolio by NLA Maintain ‘A’ rating for GRESB Public Disclosure Assessment and 5 Star for Real Estate Assessment ’A’ for GRESB Public Disclosure Assessment 5 Star for GRESB Real Estate Assessment Improve water conservation and waste reduction efforts Water usage intensity decreased by 3.1% (on a like-for-like basis); waste intensity reduced by 21.5% (vs 2023) CLIMATE ACTION Building the resilience of our assets to climate change by reducing carbon footprint and managing climate-related risks ENVIRONMENTAL STEWARDSHIP Reducing the environmental impact of our properties through energy efficiency and resource conservation BUILDING RESILIENCE OBJECTIVES AND MATERIAL ESG TOPICS TARGETS AND PERFORMANCE APPROACH SUPPORTING UNITED NATIONS SDG Sustainable building Energy Water management GHG emissions Climate change mitigation and adaptation Waste management Biodiversity 76 | MANULIFE US REIT
BUILDING RESILIENCE CLIMATE ACTION Task Force on Climate-Related Financial Disclosure (TCFD) Climate-related risks have become crucial for all businesses due to their extensive and potentially severe impacts on operations, financial performance and long-term viability. These risks, including physical risks (such as extreme weather events) and transition risks (such as policy changes and shifts towards a low-carbon economy), can significantly affect a company's assets, supply and value chain, and overall business model. By integrating climate risk management into our sustainability strategy, we can improve our resilience, seize opportunities in the transition to a low-carbon economy, and contribute to global climate change mitigation efforts. MUST is aligned with both the Sponsor’s Climate Action Implementation Plan, as well as the Asset Manager’s Climate Change Statement, Nature Statement, Water Statement, and Real Estate Climate Disclosure report. This alignment provides guidance for our climate mitigation and adaptation efforts to reduce the impact on and vulnerability of our asset operations. Our Sponsor has supported TCFD since 2017 and published its first TCFD-aligned disclosure in 2019. Our business strategy emphasises transparency in disclosures and the development of climate risk resilience in accordance with TCFD recommendations. In preparation for the transition to ISSB standards, we have provided a summary with enhanced responses to TCFD recommendations. Please refer to pages 110 to 111 of this report for consolidated disclosure to TCFD recommendations. 1 UN Environment Programme Finance Initiative, Climate Risks in the Real Estate Sector, 7 March 2023. Climate Strategy In 2021, MUST updated its materiality assessment, identifying 'Climate change mitigation and adaptation' as a new material ESG topic impacting the business. In 2024, the Manager reviewed and confirmed that this topic remains material for the REIT. We integrate ESG considerations throughout our acquisition and portfolio management processes, guided by our Asset Manager's Sustainable Investing and Sustainable Risk Statement, Climate Change Statement, Nature Statement, and Water Statement. Our due diligence process evaluates factors like climate-related exposure, energy performance, and tenant engagement programmes. During final acquisition stages, we record a summary of ESG risks and strengths to maintain MUST's sustainability performance consistency. New properties are then incorporated into our existing ESG programmes. A crucial part of our environmental sustainability strategy focuses on reducing our carbon footprint and improving energy consumption efficiency. We pursue these goals through measures such as optimising building operations, considering potential energy retrofit options. We also remain dedicated to incorporating sustainability considerations into our financing mechanisms and expanding our green funding sources. As at 31 December 2024, MUST’s total green and sustainability-linked loans amounted to US$550.8 million, accounting for 73.9% of the total loans. The increase in loan proportion as compared to the prior year is due to the debt repayment of non-green and non-sustainability-linked loans. Strategy for Decarbonisation of Operations Overview Description Sustainability Issue With the world’s real estate sector contributing about 40.0% of global carbon emissions1, decarbonisation of the built environment is imperative in tackling climate change. Our Approach Due to MUST’s high gearing, we had to limit our capital expenditure and hence only approximately 0.1% of our 2024 revenue (vs ~0.3% of 2023 revenue) was allocated towards green building initiatives. This includes retro-commissioning of Heating, Ventilation, and Air-Conditioning (HVAC) equipment and modifying space temperature setpoints for both Figueroa and Michelson. This commitment aligns with our broader approach, which focuses on improving the operational efficiency of our buildings. Additionally, we are exploring other energy retrofit options and the purchase of Renewable Energy Credits (RECs). When considering acquisitions, MUST considers the purchase of energy-efficient buildings, incorporating eco-friendly designs, and adhering to green certifications standards. Our Progress • Reduced energy intensity and GHG emissions intensity by 27.4% and 36.3% respectively from 2018 base year • Achieved green certifications such as LEEDTM, ENERGY STAR, WiredScore, SmartScore, Fitwel® and Fitwel® Viral Response, and BOMA 360 for 92.2% of our portfolio by NLA Moving Forward We are committed to reducing our Scope 1 and 2 GHG emissions by 38.0% by 2035, and 80.0% by 2050, in line with our Asset Manager’s target. These targets were developed in line with the Carbon Risk Real Estate Monitor (CRREM) science-based decarbonisation pathways, which are aligned with the Paris Climate Goals of limiting global temperature rise to 2.0°C, with the ambition towards 1.5°C. ANNUAL REPORT 2024 | 77
BUILDING RESILIENCE Climate-Related Risk Management MUST's ERM framework identifies, prioritises, and mitigates environmental risks, including climate-related risks and opportunities. This framework is designed to identify the climate-related risks that could significantly impact our operations. To better understand physical climate-related risks and opportunities, we conducted a climate scenario analysis on our portfolio in 2023. The Board oversees risk governance across the REIT, ensuring robust risk management and internal control systems. This includes developing an overall risk strategy based on risk appetite, identification, measurement, assessment, monitoring, reporting, control, and mitigation. The ARC supports the Board in risk management oversight, including climate risks, delegating through a governance framework centered on the three lines of defence model. For more details on the defence model, refer to page 61 of the Annual Report 2024. Our acquisition process evaluates environmental and social risks during due diligence, presenting findings to MUST's management team for investment approval. After property onboarding, we incorporate mitigation strategies into asset plans. We work closely with Asset Managers and Property Managers to monitor environmental performance and address climate risks, aligning with our portfolio ESG targets. Climate-Related Risk, Mitigation, and Opportunity1 In 2020, a portfolio risk study was conducted by a thirdparty tool using both current and forward-looking risk scenarios to assess asset-level exposure to climate-related risks. Resilience measures associated with flood risk management, property features, the property team’s resilience management practices, and emergency and business continuity plans were also assessed as part of the mitigation plan for climate-related physical risks. In 2023, our Asset Manager completed a climate scenario analysis for its global portfolio, which included MUST's properties. The forward-looking climate scenario analysis was conducted by a third-party climate risk provider, to further understand how the identified physical risks could impact future operations. In line with the Asset Manager’s Real Estate Climate-related Financial Disclosure 2023 report, the analysis was conducted based on science and historical data and considers the climate scenarios of IEA NZE, RCP 2.6, RCP 6.0, and RCP 8.5 projected between 2030 and 2100. MUST aligns with the Asset Manager’s definition of short-, medium- and long-term horizons for climate-related issues with short-term referring to 1 to 5 years, medium-term referring to 5 to 10 years and long-term referring to 10+ years. This year, we further streamlined the physical risks that are relevant to MUST. • Scenario 1: failure to act (>4°C) (RCP 6.0 and RCP 8.52) Participants believe that physical climate risks will increase costs and reduce value; supply chain disruptions and market variability from changing climate conditions will also affect our business. • Scenario 2: Paris-aligned (<2°C) (IEA NZE and RCP 2.63) Participants expect sizeable investments to overcome transition risks; despite these costs, participants identified significant opportunities in being an early mover in transitioning to net zero. For each effect of climate change, a climate hazard score was determined. The study found that none of the assets in the portfolio are located in 100-year flood zones currently, and in both scenarios between 2030 and 2100. 1 Represents a non-exhaustive list of the main risks and opportunities currently identified across our real estate portfolio. Risks and opportunities are subject to change over time and are ultimately addressed on a case-by-case basis depending on the individual characteristics of each property. 2 According to Intergovernmental Panel on Climate Change (IPCC), Representative Concentration Pathway (RCP) 8.5 represents a high greenhouse gas emissions scenario in the absence of policies to combat climate change, leading to continued and sustained growth in atmospheric greenhouse gas concentrations. RCP 6.0 represents the intermediate levels of greenhouse gas emissions and result in intermediate levels of warming. 3 According to International Energy Agency (IEA), Net Zero Emissions (NZE) by 2050 Scenario is a normative scenario that shows a pathway for the global energy sector to achieve net zero CO2 emissions by 2050, with advanced economies reaching net zero emissions in advance of others. According to IPCC, RCP 2.6 represents low greenhouse gas emissions and high mitigation future to limit global warming to below 2°C by 2100. 78 | MANULIFE US REIT
Physical Risk Type Primary Risk Driver Potential Impacts Timeline Potential Mitigation Measures Acute Risks Tropical Cyclone More frequent and severe tropical cyclones • Increase in asset structural damage • Increase in insurance premiums and deductibles • Increase in operation (e.g. business interruptions) and repair costs (e.g. structural repairs) Short- to long- term • Regular site assessments checks for building condition assessment River Flood Property damage in areas with a high risk of flooding • Increase in asset structural damage • Increase in insurance premiums and deductibles • Potential for reduced availability of insurance for assets in river flood-prone areas • Increase in operation (e.g. business interruptions) and repair costs (e.g. structural repairs) Short- to long- term • Properties are expected to have regular site assessments completed by our insurer, and/or building condition assessment, and where applicable recommendations for protection measures Storm Surge More frequent and extreme storms • Increase in asset structural damage • Increase in insurance premiums and deductibles • Increase in operation (e.g. business interruptions) and repair costs (e.g. structural repairs) Short- to long- term • Regular site assessments for building condition assessment • Emergency management planning • Minimise downtime by using on-site backup power generators Chronic Risks Heat Stress Extreme heat conditions • Reduce employee and tenant productivity (e.g. heat illness, worsened health risks from chronic conditions) • Increase in operational costs (e.g. increase in cooling demand leading to higher electricity costs) Short- to long- term • Identify opportunities to improve cooling efficiency and/or costs through capital upgrades, building commissioning, and operating procedures Precipitation Stress More evaporation and transpiration due to warmer temperatures resulting in more moisture in the air • Increase in asset structural damage (e.g. mould growth) • Increase in insurance premiums • Increase in operation and repair costs Short- to long- term • Regular checks to ensure that roof structures are able to withstand heavy rain and snow loads • Emergency management planning Subsidence Prolonged water exposure due to flooding and/or sea level rise • Increase in asset structural damage • Increase in insurance premiums and deductibles • Increase in operation (e.g. business interruptions) and repair costs (e.g. structural repairs) Short- to long- term • Regular site assessment for signs of subsidence • Ensure proper grading around buildings' foundation ANNUAL REPORT 2024 | 79
BUILDING RESILIENCE Physical Risk Type Primary Risk Driver Potential Impacts Timeline Potential Mitigation Measures Chronic Risks Water Scarcity Changes in precipitation patterns such as longer dry spells, more intense but less frequent rainfalls • Increase in operation costs (e.g. higher water utility bills, increased costs for waterefficient retrofits) Short- to long- term • Maximise operational efficiencies while minimising consumption through practices such as water audits and installing low-flow appliances and faucets, and minimising landscaping water requirements, where applicable Fire Weather Stress Atmospheric conditions (e.g. temperature, wind, precipitation, and relative humidity) may worsen the effects of wildfires • Increase in asset structural damage • Reduce air quality, affecting occupants' health • Increase in operation costs (e.g. business interruptions) Short- to long- term • Fire-resistant building materials • On-site emergency water supply • High-efficiency air filters to protect indoor air quality Drought Stress Long periods of no to low rainfall • Increase in operation costs (e.g. increased costs due to reduced water supply) Short- to long- term • Maximise operational efficiencies while minimising consumption through practices such as water audits and installing low-flow appliances and faucets, and minimising landscaping water requirements, where applicable Cold Stress Extreme cold weather • Reduce employee and tenant productivity (e.g. cold-related health illnesses) • Increase in operation costs (e.g. business interruptions) Short- to long- term • Regular risk assessments focused on cold weather vulnerabilities • On-site backup power generators • Emergency management planning Sea Level Rise Melting ice and the expansion of seawater as it warms • Increase in asset structural damage • Increase in insurance premiums and deductibles • Increase in operation (e.g. business interruption) and repair costs (e.g. saltwater intrusion) • Increase in the risk of failed development approvals and “stranded” assets in vulnerable areas Long- term • Invest in preventative infrastructure and consider underwriting, where applicable • Regular site assessments completed by our insurer, and/or building condition assessment • Where applicable, recommendations for protection measures are implemented The portfolio risk study in 2020 also used a third-party tool to evaluate and determine our portfolio’s exposure to climate-related transition risks. The study identified risks and associated business implications from future climate impacts and assessed current and potential preparedness strategies to address climate risks. The results of the study were presented to senior leadership which were used to inform internal processes. We regularly assess and analyse our portfolio’s exposure to climate-related risks, which allows us to identify the risk of future climate change using projections of future risk and IPCC and IEA NZE scenarios. In addition to identifying climate-related risks, the studies also enabled us to identify climate-related opportunities, thereby assisting us in planning strategies to strengthen the climate resilience of our properties. The Manager is exploring the application of a scenario-based financial approach for assessing climaterelated risks and opportunities. 80 | MANULIFE US REIT
Transition Risk Description Timeline Mitigation and Opportunity Regulation • Increasing climate-related regulations, including jurisdictional carbon pricing, regional efficiency, or emissions standards, and increasing disclosure requirements. Regulation changes could lead to increasing operation and compliance costs. Short- to long-term We continue to monitor emerging regulations and incorporate assessment of building performance and efficiency in our due diligence to stay ahead of carbon pricing and minimum efficiency requirements. Market • Shift in capital away from high-emitting products and services, potentially affecting tenant demand, asset value, and fundraising. Short- to long-term Improving portfolio efficiency could create new avenues for financing and increase investor and tenant demand. We continue to certify our properties to building standards such as LEEDTM, ENERGY STAR, WiredScore, SmartScore, Fitwel® and Fitwel® Viral Response, and BOMA 360, implement energy and emission reduction programmes, and collaborate with tenants and clients on shared climate goals. Technology • Cost to move to a low-carbon economy, including capital upgrades to retrofit assets, advanced technologies for buildings, demand for high-quality transactable ESG data, real-time metering, and shifting to renewable energy sources. Short- to long-term Short-term capital costs are expected to be offset from paybacks on lower operating costs and meeting tenant demand. Our ongoing energy, water, GHG and waste programmes support our team in allocating capital towards low-carbon technology and improving property performance. Reputation • Failure to act or the perception of not acting on climate change could affect our reputation and risk our relationship with tenants, employees, communities, and investors. Short- to medium- term To communicate our climate change action and impact, we disclose our objectives and performance annually through GRESB and our Sustainability Report. ENVIRONMENTAL STEWARDSHIP Our key priorities remain reducing our properties' environmental impact and supporting the transition to a net zero economy. As such, we are dedicated to optimising resource efficiency and integrating conservation practices into our operations. We are committed to reducing our Scope 1 and 2 GHG emissions intensity by 38.0% by 2035, and 80.0% by 2050, from 2018 base year. We recognise the importance of tracking our progress towards our goal as it allows us to understand the impacts of our strategies. Improving energy efficiency in our operations is a crucial strategy for reaching our targets. We have implemented various efficiency measures, such as optimising operations and exploring renewable energy sources. These efforts align with our target of securing green certifications for our entire portfolio by 2030. We continue to incorporate green lease provisions into our new lease agreements to minimise environmental impact such as recommendations for tenants to reduce energy and water consumption. For some new leases, cost recovery clauses are included where tenants are responsible for the cost involved in the sourcing or offsetting of electricity from renewable energy sources. As part of our environmental risk management strategy, we insure our properties against various risks including fire, property damage, terrorism, earthquakes, business interruptions, and public liabilities, adhering to U.S. industry practices. ANNUAL REPORT 2024 | 81
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