Climate-related Risks Management and Disclosure
Regal Portfolio Management Limited (the “REIT Manager”) strives to provide stable distributions and achieve long-term capital growth for the investors of Regal REIT. To better achieve this objective, the REIT Manager has taken an extra step, among others, to make appropriate efforts on improving its management of climate-related risks throughout its investment strategies, risk management procedures and portfolio management processes.
Markets and regulatory bodies have increasing concerns over the governance and management of climate-related issues. The “Circular to licensed corporations, management, and disclosure of climate-related risks by fund managers” was issued by the Securities and Futures Commission in August 2021, requiring fund managers managing collective investment schemes to comply with the “Baseline requirements” and the “Enhanced standards” (for Large Fund manager) on managing climate-related risks. The REIT Manager has formulated a Climate-related Risk Governance Policy (the “Policy”) and a Climate-related Investment and Risks Management Memorandum (the “Memorandum”) to ensure compliance with the regulatory requirements. The REIT Manager will formalise procedures by taking climate-related risks into consideration during the process of acquisition, management and disposal of assets.
Factoring Climate-related Risks into Portfolio Management
Climate-related risks are overseen by the Board and the REIT Manager will ensure climate-related considerations are incorporated into its investment strategies, risk management procedures and portfolio management processes. The progress made against climate-related goals and targets at the property portfolio level will be reviewed on an annual basis. The REIT Manager will work in collaboration with senior management of the hotel manager for all hotel properties held by Regal REIT (the “Hotel Manager”) to identity, assess and prioritise the climate-related matters and their importance to Regal REIT and its stakeholders. The development and implementation of climate-related initiatives and measures in meeting goals and targets to minimise the impact of material climate-related risks identified will be delegated to the Hotel Manager, and the REIT Manager will receive updates from the Hotel Manager via regular meetings.
Guided by the Memorandum, the REIT Manager will integrate climate change considerations into its investment management process, including acquisitions, asset management and disposals of Regal REIT’s assets. Material climate-related risks, both physical and transitional, will be reviewed and monitored regularly. Any properties subject to high climate-related risks may be excluded as possible targets for acquisition during screening and due diligence processes. The REIT Manager acknowledges that managing climate-related issues and ensuring their alignment with its climate-related targets can reduce risks and thus enhance values of properties in the long-term. For all properties in the portfolio of Regal REIT, the Hotel Manager will develop and implement measures to alleviate such risks.
Both the Policy and the Memorandum have been approved by the Board. These documents help to clarify the REIT Manager’s responsibilities in integrating climate-related considerations into its investment strategies, risk management procedures and portfolio management processes.
The Policy and the Memorandum set guidance for the REIT Manager to continuously improve its climate-related risks management and mitigate adverse climate-related impacts on the performance of Regal REIT’s properties.
The REIT Manager will continue to conduct climate change assessments to understand the impact of climate-related risks on its investment strategies, risk management procedures and portfolio management processes, including utilising scenario analyses to map the impacts of climate change on its business.
The implementation of climate-related risk management approaches has been delegated to the Hotel Manager. The REIT Manager acts as an asset manager to monitor the Hotel Manager’s performance and receives updates on the subject matter on an on-going basis. The REIT Manager may, at its discretion and having regard to its engagement policy, take any appropriate action on the relevant climate-related matters which may adversely affect the risk profile and financial performance of the properties portfolio of Regal REIT. The REIT Manager may collaborate with other stakeholders in the hotel properties (e.g. employees, suppliers, etc.) for climate-related risks management.
For more information on our climate-related governance and investment and risk management approaches, you can refer to our Environmental, Social and Governance Report or feel free to contact us via info@RegalREIT.com.