Sustainability Governance

Governance Framework

Message From Our Sustainability Committee

We firmly believe that green and low-carbon transition and resilience capacity building are essential paths for real estate enterprises to weather market cycles and deliver long-term value, as well as the bounden duty of state-owned enterprises to fulfill their missions and serve national overall interests. As an integrated urban operator based in the Guangdong-Hong Kong-Macao Greater Bay Area, Yuexiu Property has consistently embedded sustainable development into its core strategy and full business chain, pursued green transformation with long-term vision, and fulfilled social responsibilities with solid efforts. The year 2025 marks a milestone in our sustainability journey. The company has comprehensively upgraded its sustainability governance structure, renaming the “Environment, Social, and Governance Committee” to the “Sustainability Committee” and establishing a four-tier management system comprising the “Board of Directors—Committee—Leadership Group—Executive Group,” thereby achieving a simultaneous leap in both decision-making capabilities and operational efficiency. This year, our efforts have garnered international recognition: we successfully achieved the highest “Five-Star” rating in the Global Real Estate Sustainability Benchmark(GRESB), were selected as a constituent of the Hang Seng Corporate Sustainability Benchmark Index for two consecutive years, and received the ESG Leading Enterprise Award from Bloomberg Businessweek. These honors represent the market’s strong endorsement of our deep commitment to green practices and our dedication to creating shared value. In terms of low-carbon transition, we are committed to the national “dual carbon” goals and have established a carbon reduction system covering the entire lifecycle of buildings. By 2025, we will be the first to complete Scope 3 emissions accounting across the entire value chain, launch the nation’s first building carbon credit product for specialized market, and increase the proportion of green financing to 35%. Multiple commercial projects under our portfolio have obtained WELL certifications, and 100% of new construction projects meet green building standards, driving the industry’s low-carbon upgrading through technological innovation. In the field of social responsibility, we remain committed to our mission of “Where Good Living Starts”, deepening our engagement in community integration, public welfare initiatives, and talent development to enhance public welfare through our role as a state-owned enterprise. In terms of compliance and governance, we have strengthened our business ethics and data security frameworks to solidify the foundation for sound operations, and achieved coordinated progress in value creation and social responsibility fulfillment. Looking ahead to the 15th Five-Year Plan, green and low-carbon development will become the fundamental trend of the industry. Yuexiu Property Sustainability Committee will continue to lead the company, focusing on key priorities such as accelerating the low-carbon transition, achieving breakthroughs in sustainable finance, enhancing governance effectiveness, and co-creating ecological value. We will drive sustainable development toward industry leadership and collaborative ecological development, contributing Yuexiu’s strength to the high-quality development of the real estate sector and the achievement of the “dual carbon” goals!

Yuexiu Property’s Sustainability Governance Framework

The Board of Directors

Remuneration
Committee

Nomination
Committee

Audit
Committee

Sustainability
Committee

Sustainability
Leadership Group

Sustainability
Executive Group

Climate Change
Response Working Group

Green Office
Working Group

Dual Carbon
Working Group

Sustainable Supply
Chain Working Group

Sustainability Philosophy

Under the overall guidance of the Board and the Sustainability Committee, Yuexiu Property places long-term value creation at its core and deeply integrates sustainability into the Company’s development strategy and day-to-day operations. The Company systematically adopts the P-D-C-A (Plan-Do-Check-Act) cycle management model as the core management philosophy and methodology for advancing its sustainability efforts. Through a systematic, closed-loop management mechanism, the Company continuously optimizes its sustainability management system, driving coordinated development between the enterprise, society, and the environment through ongoing improvement, thereby achieving long-term, stable, and sustainable value growth.

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Plan

Yuexiu Property closely monitors national and global sustainable development policy trends, using them as an important basis for formulating the Company’s sustainable development strategy and management system.

Global Policy and Initiative Alignment

Proactively aligns with the United Nations Sustainable Development Goals (SDGs)
Continuously tracks the development of international sustainability disclosure standards such as ISSB IFRS S1 and IFRS S2
Responds to the Paris Agreement and global climate governance initiatives, promoting corporate low-carbon transformation and climate action
Fully adheres to the Ten Principles of the United Nations Global Compact (UNGC), integrating the four pillars of human rights, labour, environment, and anti-corruption into strategy and operations

National Strategy Response

Firmly serves the national “carbon peaking and carbon neutrality” goals
Strictly follows the Action Plan for Carbon Peaking by 2030
Pays close attention to the strategic direction for green, low-carbon development and high-quality development outlined in the national “15th Five-Year Plan”
Implements the Guiding Opinions on Accelerating the Establishment of a Sound Economic System with Green, Low-carbon, and Circular Development
Executes the Measures for the Administration of the Law-based Disclosure of Environmental Information by Enterprises
Complies with the Measures for the Supervision and Administration of Energy Conservation and Ecological and Environmental Protection of Central State-Owned Enterprises

Based on the above policy context, the Company has established a comprehensive ESG management system, covering the following specific policies:

Policies relating to environmental issues:

Climate Change Policy, Meteorological Disaster Emergency Response Plan, Sustainable Water Resource Policy, Circular Economy Promotion Policy, Biodiversity Policy, Green Finance Policy, Environmental Policy, Energy Policy, Sustainable Building Policy

Policies relating to social issues:

Health and Safety Policy, Occupational Health Management Rules, Production Safety Management Approach, Employee Rights Protection Policy, Diversity and Inclusion Policy, Human Rights Policy, Board Diversity Policy, Respect in the Workplace Policy, Customer Relationship Management Approach, Management Rules for Safety of Related Parties

Policies relating to governance issues:

Code of Business Ethics, Anti-corruption and Anti-bribery Policy, Supplier Code of Conduct, Sustainable Procurement Policy, Whistleblowing Policy, Comprehensive Risk Management Approach, Compliance Management Approach, Tax Compliance Policy, Information Security Policy

Based on international, national, and regional policies as well as regulatory requirements, Yuexiu Property regularly formulates specific plans for ESG management during the Company’s development to ensure the implementation of such policies within the organisation.

Do

Under the guidance of established management systems and action plans, Yuexiu Property continues to steadily advance the implementation of its sustainability efforts:

1. Management Implementation

Systematically advance daily management work in accordance with the established sustainability management plan and special measures

2. Data Platform

Use a digital ESG performance management system to collect and aggregate key performance data in real time
Conduct regular in-depth analyses and produce performance reports for submission to the Board, the Sustainability Committee, and management

3. Capacity Building

Continuously organise sustainability-themed training for internal staff and management to enhance sustainability awareness across the organisation and foster a sound ESG management culture

Act

Based on this continuous review and evaluation, Yuexiu Property consistently refines its sustainability vision, strategy, and management actions:

1. Conceptual Level

Continuously benchmark against international sustainability concepts and industry best practices to dynamically optimise the Company’s sustainability management philosophy

2. Strategic Level

Continuously improve the Company’s medium-to-long-term sustainability strategy in light of national requirements for high-quality development and green and low-carbon transition
Based on a summary of sustainability achievements during the “14th Five-Year Plan” period, actively integrate the direction of the “15th Five-Year Plan” to steadily enhance the Company’s sustainability capabilities
Continuously benchmark against the United Nations 17 Sustainable Development Goals and industry good practices, and review and optimise strategic targets on an annual basis

3. Policy and Management Level

Continuously improve sustainability policies and management systems to enhance institutional and systematic management capabilities
In response to areas for improvement identified during reviews, continuously refine management measures and action plans to steadily raise the Company’s standards in sustainability management and disclosure

Check

The Company regularly reviews and evaluates its sustainability strategy, policies, and performance to ensure alignment with the external policy environment and its stage of development:

1. Strategic Alignment Assessment

Regularly assess the alignment of the sustainability strategy with external circumstances

2. Periodic Policy Review

Conduct a comprehensive review of sustainability-related management policies at least once every three years, and update them promptly when necessary

3. Dynamic Policy Optimisation

Carry out regular inspections of internal sustainability management policies and the effectiveness of special initiatives, and make dynamic improvements based on the findings

4. Performance Tracking and Control

Regularly review progress against targets and performance to ensure it remains on track

5. Comprehensive Risk Management

Fully integrate sustainability risks into the Company’s overall risk management system
Systematically identify and assess sustainability risks across all value chain links using tools such as risk matrices, scenario analysis, and stress testing

Focus Areas

Anti-commercial bribery and anti-corruption

Establish and effectively implement internal control mechanisms to prevent commercial bribery and corruption, including conducting training and supervision for employees and business partners and imposing accountability for violations, so as to safeguard a fair competition environment and uphold the corporate image of integrity.

Anti-unfair competition

Establish and implement systematic internal control mechanisms to adhere to the principles of integrity-based operation and fair competition in the market, and put an end to improper competitive practices such as false publicity, commercial defamation and theft of trade secrets.

Communications with stakeholders

Establish a systematic stakeholder engagement mechanism to build long-term relationships of mutual trust by regularly identifying and addressing the expectations and concerns of investors, customers, the community, and regulatory authorities, thereby supporting the company’s sustainable development.

Due diligence

Establish a systematic due diligence mechanism to continuously identify, assess, and manage potential environmental, social, and governance (ESG) risks in business decision-making and day-to-day operations, thereby effectively preventing adverse impacts.

ESG Risk Management

Sustainability Risk Management

Yuexiu Property has incorporated sustainability-related risks into its comprehensive risk management system, with the Board (and the Sustainability Committee under the Board) bears ultimate leadership and oversight responsibility for the Company’s sustainability-related risk management. To further strengthen the Board’s forward-looking understanding of emerging risks and long-term trends, a Board-level ESG-focused training was organised during the year which centred on the theme of “Integrating ESG into Comprehensive Risk Management”, with the aim of enhancing strategic decision-making and holistic risk management capabilities in a complex environment. The training systematically explained relevant macro trends, regulatory contexts, and implementation pathways, and provided in-depth analysis of the mechanisms through which ESG risks affect operational stability and long-term corporate value. Drawing on the Group’s actual circumstances, the training conducted a comprehensive review of key ESG risk landscapes, their positioning within the risk management framework, and their transmission logic.

Upstream

Construction Materials Storage and Supply

Midstream

Project Development and Construction

Downstream

Downstream Property Operation, Management, and Services

End-of-life

Demolition, Recycling, and Redevelopment

ESG Risks: Ecological damage(e.g. water and soil loss, high carbon emissions), Site encroachment and land-use conflicts, Bidding irregularities

Risk Transmission: Low-end or highly polluting materials flow downstream, Land-use disputes disrupt construction progress, Unauthentic environmental impact assessment creates compliance risks

ESG Risks: Construction-related dust/wastewater pollution, Workplace injuries, Dual contracts/quality fraud

Risk Transmission: Construction delays/cost overruns squeezing downstream cash flow, Low-quality constructions triggering subsequent operational risk, Negative public sentiment damaging developer reputation

ESG Risks: Poor building energy efficiency performance, Disputes related to property services, Misleading marketing/rental pressure

Risk Transmission: Declining rental income coupled with accelerated asset ageing, Homeowners' rights activism triggers brand crisis, Tight funding chain forces premature demolition of the end-phase project

ESG Risks: Construction waste pollution, Occupational health risks to workers, Non-compliant recycling/planning deficiencies

Risk Transmission: Soil contamination increases upstream redevelopment costs, Resource waste intensifies pressure on supply security, Policy tightening constrains access to financing across the supply chain

Sustainability Finance

Yuexiu Property has deeply integrated sustainable development concepts into its corporate financing strategy by developing diversified financial instruments, including green bonds, green loans, and sustainability-linked loans. Funds raised through these specialized financing tools are allocated entirely to projects that meet national and international green finance standards. By establishing a rigorous Sustainable Financing Framework and introducing third-party certification, the Company ensures transparency and traceability in the use of funds, thereby transforming environmental commitments into verifiable green actions.

Sustainable Financing Framework

To fully integrate the concept of sustainable development into corporate operations, Yuexiu Property established its Sustainable Financing Framework for the first time in 2024, and systematically updated it in 2025 in response to market developments and its own strategic evolution. The framework is designed to provide capital support for projects and assets aligned with the Company’s long-term ESG vision through compliant sustainable financing transactions.

Green Loans and Bonds

Under the Sustainable Financing Framework, Yuexiu Property commits to allocating the funds raised specifically to finance or refinance eligible green projects and social projects. This encompasses activities including acquisition, construction, development, and renovation, ensuring that the projects deliver significant environmental or social benefits.

Sustainability-Linked Loan

To further promote the Company's sustainable development through sustainable finance, Yuexiu Property successfully signed a HK$1.56 billion sustainability-linked loan (SLL) with a maturity term of three years on 12 June 2025.

Full Lifecycle Management of Yuexiu Property

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