SUSTAINABILITY REPORT
102 SUSTAINABILITY & GOVERNANCE SUSTAINABILITY REPORT CONTENTS 103 Board Statement 104 About this Report 105 Our Sustainability Approach 111 Responsible Investment and Sustainable Value 112 Good Governance and Ethical Business 115 Climate Resilience and Environmental Stewardship 117 Task Force on Climate-related Financial Disclosures (TCFD) Report 128 Enabling Inclusiveness, Safety, Growth and Diversity of Our People 133 Engaging Local Communities and Advocate for Positive Impact 135 GRI Content Index 139 SASB Index 140 TCFD Index 141 Independent Third Party Limited Assurance Statement SUSTAINABILITY REPORT
103 OVERVIEW AND FINANCIAL REVIEW MARKET REVIEW LEADERSHIP STRUCTURE PROPERTY PORTFOLIO SUSTAINABILITY & GOVERNANCE FINANCIAL STATEMENTS AND OTHER INFORMATION CDL HOSPITALITY TRUSTS Annual Report 2024 BOARD STATEMENT Dear Stakeholders, The Boards of Directors (the “Boards”) are pleased to issue CDL Hospitality Trusts’ (“CDLHT”) Sustainability Report (“Report”) for the financial year ended 31 December 2024 (“FY 2024”). This Report outlines CDLHT’s vision, strategies, and progress in key areas such as climate change, resource efficiency, and human capital development. It also details our performance against established targets, reflecting our commitment to continuous improvement and transparency in sustainability reporting. The Board believes sustainability is essential to CDLHT’s business and its long-term value creation. In April 2024, we established the Board Sustainability Committees (“BSCs”) to drive the advancement of our ESG commitments. The Committees are responsible for overseeing sustainability initiatives, ensuring compliance with environmental, social, and governance standards, and integrating sustainable practices into the company’s long-term strategies. As one of Asia’s leading hospitality trusts with approximately S$3.5 billion in assets under management as at 31 December 2024, we recognise that sustainability is integral to both long-term business resilience and global environmental stewardship. Our sustainability strategy is firmly aligned with evolving regulatory requirements and global sustainability standards, including the Singapore Exchange (“SGX”) sustainability reporting guidelines. Through proactive integration of ESG considerations into our business operations, we ensure compliance with regulations while upholding strong corporate governance, integrity, and responsible business practices. In 2024, CDLHT improved 22 places to place second in the Singapore Governance and Transparency Index (“SGTI”) (1) 2024 - REIT and Business Trust Category. Additionally, we were honoured to have received the prestigious Shareholder Communications Excellence Awards (REITs & Business Trusts Category) at the Securities Investors Association (Singapore) Investors’ Choice Awards 2024. Despite an increasingly complex and dynamic operating landscape, CDLHT remains steadfast in advancing our sustainability agenda. We continuously evaluate our performance against internationally recognized frameworks to ensure we meet and exceed expectations set by regulators and stakeholders. This year, we have further enhanced our sustainability disclosures, including expanding our greenhouse gas (“GHG”) emissions reporting to cover the full scope of CO2 emissions. We also continue to drive improvements in energy efficiency and environmental stewardship, setting clear reduction targets and implementing best practices across our portfolio. Beyond environmental considerations, our business is fundamentally people centric. We prioritize the health, safety, and well-being of all stakeholders while fostering positive societal impact. The Managers and the properties actively collaborate with local charitable and social organisations, demonstrating responsible corporate citizenship and reinforcing our commitment to community engagement. Looking ahead, CDLHT remains dedicated to strengthening our sustainability initiatives in alignment with global best practices and regulatory expectations. We will continue refining our strategies to enhance our environmental, economic, and social contributions while ensuring the long-term value creation for our stakeholders. Board of Directors REIT Manager Board Trustee-Manager Board (1) SGTI is the leading benchmark for assessing corporate governance practices among Singapore-listed companies. For the 2024 cycle, CDLHT ranked 2nd out of 43 REITs and Business Trusts, achieving an overall score of 102.8.
104 SUSTAINABILITY & GOVERNANCE SUSTAINABILITY REPORT ABOUT THIS REPORT CDLHT presents its eighth Sustainability Report for FY 2024. The Report is meant to be read alongside the CDLHT Annual Report and references various sections within it. For FY 2024, CDLHT continued to internally review its sustainability process, as part of a multi-year audit cycle with the assistance from an external ESG consultant. External assurance has been conducted on our GHG Scope 1 and 2 emissions for our Singapore portfolio. For a comprehensive understanding of the detailed assurance conducted, kindly refer to Emissions Reduction section. CDLHT has been listed on the Singapore Exchange Securities Trading Limited since 2006 and comprises CDL Hospitality Real Estate Investment Trust (“H-REIT”) and CDL Hospitality Business Trust (“HBT”). H-REIT’s principal investment strategy is to invest in a diversified portfolio of income-producing real estate, which is primarily used for hospitality, hospitality-related and other accommodation and/or lodging purposes globally. HBT’s principal investment strategy is to invest in a diversified portfolio of real estate or development projects, which is or will be primarily used for hospitality, hospitality-related and other accommodation and/or lodging purposes globally and may also include the operation and management of the real estate assets held by H-REIT and HBT. M&C REIT Management Limited is the manager of H-REIT (the “H-REIT Manager”), and M&C Business Trust Management Limited, is the trustee-manager of HBT (the “HBT Trustee-Manager”, and collectively the “Managers”). For more information on CDLHT’s business, please refer to page 2 of the Annual Report. Reporting Period And Scope CDLHT’s portfolio comprises 22 properties that span numerous geographies. The FY 2024 (2) scope covers 18 of these properties, along with the Managers’ office, to provide a comprehensive view of our sustainability strategies and performance. Portfolio Properties in Scope Location Orchard Hotel Singapore Grand Copthorne Waterfront Hotel M Hotel Copthorne King’s Hotel Studio M Hotel W Singapore - Sentosa Cove Claymore Connect Grand Millennium Auckland New Zealand Mercure Perth Australia Ibis Perth Raffles Maldives Meradhoo Maldives Angsana Velavaru Hotel MyStays Asakusabashi Japan Hotel MyStays Kamata The Lowry Hotel United Kingdom Hilton Cambridge City Centre Pullman Hotel Munich Germany Hotel Cerretani Firenze - MGallery Italy Reporting Standards And Guidelines This Report is compliant with the SGX Listing Rules 711A and 711B and has been prepared with reference to the Global Reporting Initiative (“GRI”) Sustainability Reporting Standards. We applied the GRI Standards as they provide internationally recognised, comprehensive guidance on the management strategy, performance tracking and target-setting processes pertaining to our material ESG topics. Additionally, this year, we have incorporated references to the Sustainability Accounting Standards Board (“SASB”) guidelines to enhance disclosure relevance for investors and stakeholders. This step strengthens our sustainability reporting framework as we prepare for alignment to the International Sustainability Standards Board (“ISSB”) reporting requirements next year. The Content Index is available on page 135 of the Report. This Report has been prepared in line with the Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations and has followed these recommendations since FY 2022. Our TCFD Report also serves as disclosure against the Guidelines on Environmental Risk Management for Asset Managers issued by the Monetary Authority of Singapore (“MAS”). Below is a table outlining a high-level summary of CDLHT’s short-, medium- and long-term sustainability targets. Time Horizon Description of Target Short-term: Year 2026 5% - 7% reduction in energy and 2% - 7% reduction in water consumption, with FY 2019 as the comparative baseline. Medium-term: Year 2035 Reduce portfolio’s CO2 emissions by 20% or more by 2035 with FY 2025 as the comparative baseline. Long-term: Year 2050 Decarbonisation aligned with Science Based Targets initiative (“SBTi”) to achieve Net Zero by 2050. Accessibility And Feedback We have made this Sustainability Report available online on our corporate website at www.cdlht.com. In line with our environmental objective to conserve resources and minimise impact on the environment, CDLHT will only print a limited number of the Annual Report (which includes the Sustainability Report). As we aim to continuously progress in our sustainability journey, we welcome any feedback and comments regarding our Sustainability Report. Please contact Mr. Paul Kitamura, Head of Asset Management at PaulKitamura@cdlht.com or Mr. Dominic Chen, Senior Manager, Asset Management at DominicChen@cdlht.com (2) voco Manchester - City Centre in the United Kingdom has been excluded from FY 2024’s reporting scope for GHG emissions and resource usage as it is under a fixed-rent lease arrangement, where the lessor has limited access to data. In particular, the occupational lessee and hotel manager are two separate third parties. The Castings, Hotel Indigo Exeter and Benson Yard were also excluded because The Castings has not reached stabilisation, while Hotel Indigo Exeter and Benson Yard were acquired only in November and December 2024 respectively.
105 OVERVIEW AND FINANCIAL REVIEW MARKET REVIEW LEADERSHIP STRUCTURE PROPERTY PORTFOLIO SUSTAINABILITY & GOVERNANCE FINANCIAL STATEMENTS AND OTHER INFORMATION CDL HOSPITALITY TRUSTS Annual Report 2024 VISION MISSION SUSTAINABILITY FRAMEWORK SUSTAINABILITY VISION AND MISSION Establishing CDLHT as the premier hospitality and lodging platform with sustainable, innovative, and quality accommodation spaces, generating long-term value for our stakeholders To enable sustainable profitability by acting as responsible stewards of our environmental and social landscapes VALUE Responsible investment and sustainable value ENVIRONMENT Climate resilience and environmental stewardship GOVERNANCE Good governance and ethical business PEOPLE Inclusiveness, safety, growth and diversity COMMUNITIES Engage local communities and advocate for positive impact OUR SUSTAINABILITY APPROACH In alignment with our sustainability vision and mission, CDLHT’s Sustainability Framework consists of five fundamental pillars. These pillars encapsulate the priorities of our stakeholders, influence our sustainability policies and initiatives, and enable us to generate significant impact across our material ESG factors. Delivering Value And Best Practices As part of a broader commitment to be a responsible investor and generate long-term value for the stakeholders, CDLHT champions ESG best practices across the portfolio through a diverse set of initiatives. By engaging in active asset management and incorporating various ESG initiatives within the portfolio, we establish a practice inventory that consolidates and shares these positive actions for implementation across the entire group. The environmental stewardship efforts span across building operations and include energy conservation, renewable energy sourcing, water conservation and waste reduction. These initiatives are being rolled out across all properties to meet and exceed ESG benchmarks for the portfolio and align with industry best practices. Action Across Properties CDLHT’s portfolio of hotels are committed to sustainability through a range of ESG initiatives aimed at optimising operations and reducing carbon footprint. Measures such as adjusting equipment operating hours, replacing singleThe five pillars are represented via 20 material ESG factors, each of which comprise a set of actions and initiatives, and where relevant, annual performance targets. The Managers regularly validate these material ESG factors through the sustainability governance structure and stakeholder engagement processes in order to ensure that CDLHT continuously maintains a robust, overall sustainability architecture for achieving the goals. The subsequent sections in this Report explain each of these items in depth. use bathroom amenities with recyclable pump dispensers, and offering guests the option to skip daily housekeeping have contributed to lower energy consumption and waste reduction. Some properties have improved equipment efficiency through upgrades, such as the completion of Studio M Hotel’s Variable Refrigerant Volume (“VRV”) system upgrade, which achieved an improvement of 24% in total system efficiency. Additionally, some properties have piloted Air Handling Unit (“AHU”) optimisers that dynamically adjust air operations, resulting in approximately 40% energy savings. In the Maldives, the implementation of Phase 2 solar expansion has increased total renewable energy generation to 731 MWh in 2024, further reducing reliance on diesel fuels. At our Sponsor group, Millennium & Copthorne branded hotels in Singapore have attained Global Sustainable Tourism Council (“GSTC”) certification, the first of its kind in Singapore, reinforcing their commitment to responsible hospitality. Meanwhile, Pullman Hotel Munich and Hotel Cerretani Firenze - MGallery have been awarded BREEAM certification for meeting high sustainability standards. These efforts reflect the continuous push for environmental responsibility, ensuring that the properties operate efficiently while minimising impact on the planet. Beyond environmental sustainability, we are equally committed to fostering a positive social impact. CDLHT’s properties enhanced its social performance by providing staff with regular training on workplace health and safety topics, along with skills upgrading through e-learning platforms. The properties contribute to the community by participating in volunteer activities and partnerships with local charities.
106 SUSTAINABILITY & GOVERNANCE SUSTAINABILITY REPORT Key Results And Targets CDLHT takes pride in the progress made across many of our material ESG factors. We have set a range of environmental targets relating to emissions, energy, water, and waste, as well as social targets relating to safety, corporate social responsibility, and training (3) for employees. ESG Factors Targets for FY 2024 Key results in FY 2024 Targets for FY 2025 Emissions Reduction • Aim to be Net Zero by 2050 • Disclose 4 more categories of Scope 3 emissions • Disclosed 7 categories of Scope 3 emissions Decarbonisation target validated with SBTi Energy Efficiency • CDLHT aims to achieve an aggregate 5% - 7% reduction in energy consumption across our portfolio by 2026, with FY 2019 as the baseline. The baseline is 0.22 MWh/m2 (4) • The energy intensity is 11.1% lower than FY 2019 baseline Maintain progress Water Stewardship • CDLHT aims to achieve an aggregate 2% - 7% reduction in water consumption across our portfolio by 2026, with FY 2019 as the baseline. The baseline is 2.5 m3/m2 (4) • The water intensity is 16.9% lower than FY 2019 baseline Maintain progress Waste Reduction • We target to remove or partly remove single-use plastic bathroom amenities from operations for 85% of our hotel portfolio by FY 2024 • 100% of our properties have replaced single-use bathroom products with reusable pumps We target to remove singleuse plastics in F&B operations for 100% of our hotel portfolio by FY 2025 Health and Safety Management • We aim to have zero incidents of fatality or permanent disability and strive to minimise any work-related injuries • Zero incidents of fatality or permanent disability in FY 2024 Maintain target Local Community Impact • The target for the portfolio is to conduct at least 15 community/social events or projects in FY 2024 • Our properties participated in over 80 corporate and social responsibility activities Maintain target (3) Training and Development targets has been revised to align with an evolving reporting approach, focusing on areas where CDLHT has greater influence and control. (4) Intensity comparison uses building GFA as the denominator to account for portfolio changes and is consistent with industry standard.
107 OVERVIEW AND FINANCIAL REVIEW MARKET REVIEW LEADERSHIP STRUCTURE PROPERTY PORTFOLIO SUSTAINABILITY & GOVERNANCE FINANCIAL STATEMENTS AND OTHER INFORMATION CDL HOSPITALITY TRUSTS Annual Report 2024 Green Awards and Certifications We view the accreditation of the portfolio’s green building initiatives as strong recognition of our efforts toward becoming a leader in sustainable hospitality. Our dedication to sustainable operations continues to be recognised through various awards and certifications, reinforcing our commitment to responsible business practices. Property Country Green Certification Grand Copthorne Waterfront Hotel Singapore BCA Green Mark Award - Platinum GSTC Certification Copthorne King’s Hotel Singapore BCA Green Mark Award - Platinum GSTC Certification Orchard Hotel Singapore BCA Green Mark Award - Gold Plus GSTC Certification M Hotel Singapore BCA Green Mark Award - Gold Plus GSTC Certification Studio M Hotel Singapore GSTC Certification The Lowry Hotel United Kingdom EPC - B Hilton Cambridge City Centre United Kingdom EPC - B Hotel Indigo Exeter United Kingdom EPC - B Benson Yard United Kingdom EPC - B voco Manchester - City Centre United Kingdom BREEAM - Very Good EPC - B Pullman Hotel Munich Germany BREEAM - Good Green Key Hotel Cerretani Firenze - MGallery Italy BREEAM - Good Green Key Ibis Perth Australia NABERS Energy - 4 stars NABERS Water - 3.5 stars Mercure Perth Australia Eco Tourism Australia - Sustainable Tourism Raffles Maldives Meradhoo Maldives Green Globe Angsana Velavaru Maldives EarthCheck Gold Excellence in Corporate Governance CDLHT continues to pursue excellence in corporate governance and has made great strides in the quality of engagement with shareholders, improving 22 places to place second in the Singapore Governance and Transparency Index 2024 – REIT and Business Trust Category. It was also the joint winner of the prestigious Shareholder Communications Excellence Award (REITs & Business Trusts Category) at the Securities Investors Association (Singapore) Investors’ Choice Awards 2024. Rating/ Award Achievement Singapore Governance and Transparency Index (SGTI) Second place in SGTI ranking in the REIT and Business Trust category (improved 22 places from a year ago) SIAS Investors’ Choice Awards 2024 Joint winner of the prestigious Shareholder Communications Excellence Award (REITs and Business Trusts Category) Schneider Electric Sustainability Impact Award 2024 Country Winner 2024 2024
108 SUSTAINABILITY & GOVERNANCE OPERATIONS/FUNCTIONS SUSTAINABILITY WORKING COMMITTEE (SWC) BOARDS SUSTAINABILITY OFFICER BOARD SUSTAINABILITY COMMITTEES (BSC) SUSTAINABILITY REPORT Sustainability Governance CDLHT ensures sustained progress towards our sustainability goals and ambitions through our governance structure, which ensures the Boards have due oversight of all our sustainability initiatives and strategic imperatives. At CDLHT, the Boards are responsible for overseeing all relevant sustainability considerations to ensure CDLHT’s business goals and strategies are progressing in accordance with the objectives set. The Boards also manage and monitor the material ESG factors and their performance, including those pertaining to climate-related issues such as emission reductions and climate action and resilience. In 2024, the BSCs of the Managers were formed to further enhance our sustainability governance and better dedicate management capacity toward sustainabilityrelated issues. The BSCs took over this role from the Audit & Risk Committees (“ARCs”) that previously governed our sustainability processes and strategies, including those pertaining to climate-related issues. The BSCs will continue working with the Sustainability Working Committee (“SWC”) and report directly to the Boards. Our Management reports to the BSCs and Boards on CDLHT’s sustainability efforts and performance progressively during the quarterly and end of financial year meetings. The SWC comprises key personnel from various business functions and is led by the CEO of the Managers, Mr. Vincent Yeo Wee Eng. The SWC, overseen by the BSCs, manages and monitors CDLHT’s overall sustainability performance and leads the development of strategies that incorporate material ESG factors into daily operations. A dedicated Sustainability Officer holds the full-time responsibility of driving green initiatives and tracking the sustainabilityrelated metrics and reports frequently to the SWC. To strengthen its sustainability and climate-related governance capabilities, CDLHT’s Directors and senior management are all required to attend ESG workshops to expand their knowledge and awareness of environmental issues impacting the portfolio. In FY 2024, members from the BSCs and senior management attended workshops focused on understanding the requirements of the ISSB. The monitoring of our sustainability performance continues to be supported by the portfolio-wide data capture and analysis software which is continuously enhanced to enable the collection of data from each property across an array of metrics. This allows CDLHT to better monitor, track and target individual property opportunities and enhance portfolio sustainability performance.
109 OVERVIEW AND FINANCIAL REVIEW MARKET REVIEW LEADERSHIP STRUCTURE PROPERTY PORTFOLIO SUSTAINABILITY & GOVERNANCE FINANCIAL STATEMENTS AND OTHER INFORMATION CDL HOSPITALITY TRUSTS Annual Report 2024 Material ESG Factors CDLHT’s material ESG factors were determined in consultation with external ESG consultants, internal stakeholders, and approved by our Boards. CDLHT considers these material topics to be directly relevant for the continuity of the business. We conducted a materiality refresh in FY 2021 as part of a revision of the ESG framework, and we continue to review identified material topics yearly to ensure they remain relevant to business continuity. Since FY 2021, we have added five more topics to our reporting, and this year we continue to report the 20 material ESG factors across our five Core ESG Pillars. Our sustainability framework aligns the core ESG pillars, material ESG factors, and our commitments to the United Nations Sustainable Development Goals (“SDGs”). The following table details how each pillar and its material ESG factors demonstrate our respective efforts in making contributions towards the SDGs. Core ESG Pillar Our Material ESG Factors SDGs Overarching Ambitions Responsible Investment and Sustainable Value • Economic Performance • Responsible Investment • Implement responsible investment practices • Create economic value for stakeholders and ensuring continual business growth Good Governance and Ethical Business • Board Diversity • Ethical and Transparent Business • Whistleblowing Policy • Anti-bribery and Code of Conduct • Compliance with Social and Environmental Regulations • Data Privacy and Protection • Safe and Liveable Buildings • Ensure fair, responsible, compliant, and transparent business conduct • Educate and raise awareness on issues of modern slavery and human trafficking • Facilitate supply chain stewardship with vendors, partners, managers, and tenants Climate Resilience and Environmental Stewardship • Climate Action and Resilience • Emissions Reduction • Energy Efficiency • Water Stewardship • Waste Management • Understand and manage climate opportunities and risks • Manage and minimise carbon footprint and reduce impact on the environment • Advocate, enable and enhance resource efficiencies in portfolio Enabling Inclusiveness, Safety, Growth and Diversity of Our People • Employment and Employee Engagement • Health and Safety • Diversity, Inclusion and Equal Opportunity • Training and Development • Fair Labour and Human Rights • Advocate, enable and enhance fair labour practices and employee wellbeing • Promote safe and healthy workplaces for people and customers • Engage with employees and support their growth and development Engaging Local Communities and Advocate for Positive Impact • Local Community Impact • Advocate strategic partnerships to enhance sustainability • Promote positive community engagement
110 SUSTAINABILITY & GOVERNANCE SUSTAINABILITY REPORT Stakeholder Engagement CDLHT maintains proactive, regular communication and engagement with various stakeholder groups. We address their key areas of concern and keep them abreast of our initiatives and progress through proactive, regular communication and engagement. In FY 2024, we continued our dialogue with our internal stakeholders through various channels throughout the year. Feedback from internal stakeholders is gathered at quarterly board meetings, as well as consistent dialogue with the operating and management teams of hotels across our portfolio. We maintain continuous engagement with external stakeholders and target periodic engagement with hotel suppliers and business partners through symposiums and tradeshows, periodic meetings, and vendor assessments. The table below summarises our engagement efforts in FY 2024. Stakeholder Group Engagement Approach Key Topics Board of Directors • Board meetings (including ad-hoc briefings with external ESG consultants) • Email communication • Economic performance • ESG performance and trends • Sustainability-linked financing opportunities • Risk management • Responsible Investment Government and Regulators • Ad-hoc briefings and consultations • Participation in surveys and focus groups • Risk management • Social and environmental related legislation Hotel Employees Led by hotel operators: • Training and transition assistance programmes • Annual employment survey • Performance and career development reviews • Career development opportunities • Training and development • Workplace safety and well-being, including pandemic readiness Hotel Guests • Customer satisfaction surveys • Social media • Feedback via General Manager • Customer health and safety • Environmental responsibility Master Lessees and Hotel Managers • Regular management meetings and communication • Bilateral communication, one-on-one meetings, and site visits • Workplace safety and well-being • Customer health and safety • Eco-efficiency of buildings • Sustainable operating standards & practices Investors, Analysts and Media • Release of financial results and announcements, press releases and other disclosures through SGXNet and CDLHT’s website • Meetings and calls with analysts and media • Investor meetings, conferences and roadshows • Annual General Meetings • Annual reports and sustainability reports • Media releases and interviews • Responses to investors’ sustainability surveys • Business strategy and outlook • Corporate governance • Progress on ESG initiatives • Distribution and earnings • Market and operational performance • Regulatory compliance Hotel Suppliers and Business Partners Led by hotel operators: • Assessment of suppliers and vendors • Meetings with business partners • Economic performance • Environmental factors • Due diligence process during selection
111 OVERVIEW AND FINANCIAL REVIEW MARKET REVIEW LEADERSHIP STRUCTURE PROPERTY PORTFOLIO SUSTAINABILITY & GOVERNANCE FINANCIAL STATEMENTS AND OTHER INFORMATION CDL HOSPITALITY TRUSTS Annual Report 2024 RESPONSIBLE INVESTMENT AND SUSTAINABLE VALUE At CDLHT, we drive the shift towards responsible investing by ensuring transparent, sustainable, and ethical investments. As the properties operate across numerous geographies, we track, as far as possible, the portfolio’s environmental and social impacts, risks and opportunities across our business value chain and operations. We create sustainable value by incorporating our ESG material topics within our economic performance, investment decisions, and business efforts, and strategically adopting a holistic business approach that contributes to the betterment of the communities in which we have a presence. We aim to deploy our capital to make a positive contribution to the environment and society towards building a sustainable future. Economic Performance As one of the leading hospitality trusts, ensuring economic growth is paramount to the sustainability of our business. Our primary economic objectives are to maximise the rate of return of Stapled Security Holders whilst ensuring regular distributions. The financial summary of FY 2024’s operations, revenues and costs are highlighted on pages 190 to 192, in our Annual Report. Our management aims to achieve these economic objectives through the following means: Asset Management Acquisition Capital Recycling Capital and Risk Management 1 2 3 4 Acquisition Growth Strategy • Pursue quality assets with stable long-term growth potential • Pursue asset class diversification within the lodging space to promote income stability • Adopt a medium to long-term perspective to ride through market cycles • Partner with or tap on potential pipeline from M&C/CDL Asset Management Strategy • Work closely with master lessees, hotel/property managers and/or operators to implement active revenue and cost management • Implement asset enhancement initiatives to optimise asset potential • Operate and invest in alignment with relevant ESG standards Capital Recycling Strategy • Evaluate divestment opportunities periodically to recycle capital for better returns, rebalance portfolio and/or unlock underlying asset values • Continually improve quality of portfolio Capital and Risk Management Strategy • Maintain a healthy balance sheet • Enhance financial flexibility by maintaining diversified sources of funding • Manage exposure arising from interest rates and foreign exchange through appropriate hedging strategies 1 2 3 4
112 SUSTAINABILITY & GOVERNANCE SUSTAINABILITY REPORT Responsible Investment Increasingly, businesses continue to broaden their corporate objectives, including notions of profit-with-purpose. This is also evident from the rapidly increasing value of global assets under management with an ESG mandate, and asset managers that have committed themselves to sustainable or net-zero portfolio investments. As we progress towards a more sustainable world, CDLHT has built ESG considerations into investment decisions as part of its responsible investment approach. Approach As part of the investment due diligence process, we continue to assess the sustainability performance and risks of potential acquisitions by conducting ESG due diligence. This due diligence process allows us to identify potential ESG risks and opportunities for improving the energy efficiency of the assets. Various risks are evaluated across ESG, including: • Climate and environmental risks: Energy efficiency, renewable energies, water utilisation, waste and pollution. • Social risks: Accessibility, health and well-being of stakeholders. • Governance risks: Sustainability labelling of ESG strategy. Additionally, as part of the ESG due diligence process to address environmental risks, carbon due diligence will also be conducted to identify the asset’s carbon footprint, energy consumption and GHG emissions. Our responsible investment approach also includes managing ESG-related practices in all the properties we manage. Under each material topic, it is detailed how sustainable infrastructure is incorporated into the hotels, some of which includes the installation of solar photovoltaic (“PV”) systems, electric vehicle (“EV”) charging stations, eco-digesters to reduce food waste, and water-saving showerheads. Additionally, CDLHT actively pursues capital expenditure investment opportunities to enhance the buildings’ sustainability performance, particularly focusing on improving the operational and energy efficiency. Performance In FY 2024, the implementation of Phase 2 solar expansion at Raffles Maldives Meradhoo and Angsana Velavaru has increased total renewable energy generation to 731 MWh, further reducing reliance on diesel fuels. Studio M Hotel has also undergone asset enhancement works with an upgrade to the air conditioning system, improving efficiency by 24%. We are also pleased to share that W Singapore - Sentosa Cove has signed a partnership with CityOG for the installation of solar PV systems on its roofs. Through this partnership, CityOG will build, own and operate the solar PV systems, potentially generating 500 MWh annually for the property. Further information can be found under our material topic on Energy Efficiency, Water Stewardship and Waste. Lastly, the new acquisitions in the last quarter of the year - Hotel Indigo Exeter, a hotel in Exeter, and Benson Yard, a purpose-built student accommodation in Liverpool, have both achieved an EPC ‘B’ rating. GOOD GOVERNANCE AND ETHICAL BUSINESS Ensuring fair, responsible, compliant, and transparent business conduct stands as a cornerstone in cultivating trust and fostering loyalty amongst all stakeholders. CDLHT steadfastly upholds its dedication to corporate governance, ethical business practices and compliance to all pertinent, applicable regulations, thereby fortifying the foundation of CDLHT’s enduring sustainability while safeguarding the diverse interests of valued stakeholders, as well as reinforcing our position as a trusted partner and steward of value creation. In FY 2024, the Managers have complied with the principles of corporate governance laid down by the MAS Code of Corporate Governance 2018 (“Code”), and also complied, substantially, with the provisions underlying the principles of the Code. In addition, the REIT Manager is a member of the Financial Industry Disputes Resolution Centre Ltd (“FIDReC”) and a member of the REIT Association of Singapore (“REITAS”). Ethical and Transparent Business Zero cases of corruption, bribery and misconduct in FY 2024 Social and Environmental Compliance Zero cases of non-compliance with social, environmental laws in FY 2024 Data Privacy and Protection Zero data privacy and protection breaches in FY 2024
113 OVERVIEW AND FINANCIAL REVIEW MARKET REVIEW LEADERSHIP STRUCTURE PROPERTY PORTFOLIO SUSTAINABILITY & GOVERNANCE FINANCIAL STATEMENTS AND OTHER INFORMATION CDL HOSPITALITY TRUSTS Annual Report 2024 Board Diversity Approach In accordance with CDLHT’s commitment to sustainable development, the Boards of the Managers recognise the importance of a diverse Board of Directors to enhance the decision-making process of the Boards through a range of perspectives derived from the various skills, business experience, industry discipline, gender, age, ethnicity and culture, geographical background and nationalities, tenure of service and other distinguishing qualities of the Directors. Directors are selected based on merit against an objective criteria that complements and expands the collective skills and experience of the Board. Careful consideration will be given to maintain the diversity, balance and effectiveness of the Boards. The Nominating and Remuneration Committees of the Managers will periodically assess the relevance and effectiveness of the Board Diversity Policy. Based on the findings, adjustments will be recommended to ensure the continued effectiveness of diverse Boards. Performance The Managers strive to maintain a board size of six members and have consistently maintained independence with at least two out of three or more members being independent over a 4-year period. The Directors are selected with the relevant expertise and experience that would complement those already on the Boards and for succession planning. A new independent director was appointed in February 2025 in anticipation of one of the current independent directors stepping down due to expiration of his 9-year term. Four out of the six of the Boards’ members are independent, and one out of the six is below 50 years old in FY 2024. The Managers target to improve age diversity over a 4-year period by appointing younger directors aged 50 or below to further complement the Board’s diversity. CDLHT currently has two female members in the Boards and has achieved its target to increase its female representation to at least 25% by FY 2025. Ethical and Transparent Business At CDLHT, we are committed to uphold the highest level of integrity and ethical standards across all our business functions and operations. We commit to this through our robust corporate governance, responsible business practices, accountability, and transparent management systems that are key towards preventing incidents of misconduct, corruption, and non-compliance throughout our organisational processes. By upholding these principles, we earn the trust of not only our stakeholders, but also within the wider community. This stands as the foundation of our success, ensuring that all our actions are guided by ethical and transparent principles. Approach To uphold good corporate governance, we prioritise mandatory compliance training tailored to the specific business functions of all our employees. This ensures that every member of our team is equipped with the knowledge and skills necessary to navigate their roles with integrity and adherence to our principles. Additionally, our hotel employees are required to practise and uphold the highest level of integrity across all our operations. We have adopted numerous policies to promote a robust risk management culture. This includes addressing various concerns that uphold ethical business practices, such as our Anti-bribery Policy, Anti-corruption Compliance Guide, Business Hospitality and Gifts Policy and Whistleblowing Policy. Additionally, we have established policies on Corporate Communications, Global Data Protection and Related Party Transactions to further enhance our dedication to ethical business practices and accountability. Across the portfolio, the implementation of these policies is managed through the following processes: • Regularly screening the policies to ensure alignment with evolving laws and regulations, and implementing any updates. • Reporting of any suspected violations to the established line manager. • Maintaining oversight and monitoring of noncompliance issues. • Documenting incidents through incident reports that will be filed with the Security department. Performance In FY 2024, we had zero cases of misconduct and noncompliance across the portfolio. Additionally, we did not observe any anti-competitive behaviours or violations of anti-trust or monopoly legislation. As a result, CDLHT did not incur any related fines or sanctions. Whistleblowing Policy Approach The Managers have in place a comprehensive whistleblowing policy that sets out the procedure for employees, directors as well as third parties to raise any concerns on possible improprieties in confidence and good faith without any fear of reprisals. The whistleblowing policy is incorporated into all new employees’ orientation training and is publicly accessible on CDLHT’s website. Any concerns raised will be independently investigated, and appropriate actions will be taken as necessary. Moreover, all our hotels maintain an open-door policy through their human resource departments, providing employees with a safe and open channel to report any incidences of non-compliance or violations. The Managers’ ARCs maintain oversight and review of whistleblowing incidents during their scheduled meetings to ensure continuous monitoring and accountability.
114 SUSTAINABILITY & GOVERNANCE SUSTAINABILITY REPORT Performance There were zero incidences of whistleblowing complaints received via CDLHT’s whistleblowing channels in FY 2024. Anti-bribery and Code of Conduct Approach CDLHT upholds a zero-tolerance stance against bribery, corruption, or fraud. The Managers are committed to conduct business with integrity and adherence to all relevant laws and regulations. To further strengthen this commitment, CDLHT has implemented comprehensive policies and guidelines to provide direction to all employees of the Managers, maintaining the highest standards of integrity in their work and business dealings. There is also an Internal Code of Business and Ethical Conduct, alongside a Business Hospitality and Gifts Policy, that outlines the proper protocols for handling gifts (monetary or in-kind), entertainment or concessionary offerings. Furthermore, all employees of the Managers undergo refresher training sessions periodically to re-acquaint themselves with anti-corruption policies and procedures. Performance The Managers strive to maintain zero incidences of corruption, bribery and misconduct. In FY 2024, there were no such incidences reported. We continuously conduct training sessions on relevant policies as part of the orientation for new hires, and keep our employees informed of any development to applicable policies and regulations. Compliance With Social and Environmental Regulations As an organisation with a global portfolio, CDLHT is conscious of complying with all social and environmental regulations of the countries we operate in. Approach We closely monitor changes to requirements through our monthly discussions with hotel operating partners in each country. This process allows us to ensure that each hotel is compliant with local and national regulations, and promotes responsible and lawful operations. Performance In FY 2024, CDLHT had zero incidences of non-compliance with social and environmental laws, and no significant fines and sanctions. CDLHT aims to maintain zero incidences of non-compliance with social and environmental laws and regulations, mitigating the risk of substantial fines and sanctions. Data Privacy and Protection Approach The Managers have implemented a Data Protection Handbook in place to safeguard personal data processed, adhering to relevant legal requirements outlined in the Personal Data Protection Act (“PDPA”). Furthermore, all lessees and hotel managers diligently comply with local data and privacy laws within their respective jurisdictions. Performance In FY 2024, there were no complaints received by the Data Protection Officer on data privacy breaches. The portfolio properties will continue to maintain its best practices in data protection measures, both within our operations in Singapore and overseas. Safe and Liveable Buildings At CDLHT, we understand that developing infrastructure that positively influences our occupants is a crucial step towards creating a liveable city. We are committed to delivering high standards of building safety and ensuring the comfort of our guests, visitors and tenants. Liveable buildings also directly contribute to the quality and service reputation of our hotel assets, and the quality of spaces and tenant satisfaction at our commercial assets. Our buildings are equipped with amenities that provide universal and family-friendly accessibility to our building facilities. Approach The Managers ensure that all buildings comply with their respective regulations and best practices on building safety, accessibility, and liveability. In Singapore, the Managers ensure that all buildings comply with the Building and Construction Authority’s (“BCA”) Code on Accessibility in the Built Environment and where requirements are not met, to retrofit the buildings as expediently as practical. Building inspections are also periodically carried out to ensure our properties meet safety standards and provide a safe living environment for our occupants. Guest satisfaction surveys are carried out to understand how we can improve our buildings to better serve the guests’ and tenants’ needs, continuously seeking improvement with respect to the feedback. Performance There were zero incidences of non-compliance or statutory lapses recorded in FY 2024. CDLHT pledges to maintain these stringent standards, guaranteeing that all development and asset enhancement efforts prioritise safety and comfort for guests and tenants.
115 OVERVIEW AND FINANCIAL REVIEW MARKET REVIEW LEADERSHIP STRUCTURE PROPERTY PORTFOLIO SUSTAINABILITY & GOVERNANCE FINANCIAL STATEMENTS AND OTHER INFORMATION CDL HOSPITALITY TRUSTS Annual Report 2024 CLIMATE RESILIENCE AND ENVIRONMENTAL STEWARDSHIP CDLHT recognises the importance of addressing climate change and mitigating affiliated risks to ensure alignment with best practices within the industry. As a key player in the hospitality industry, we actively engage in activities and initiatives aimed at reducing environmental impact. We do so through efforts to conserve natural resources by reducing energy and water consumption, lowering direct and indirect carbon emissions, and minimising waste generation across the portfolio of properties. We strive to lead by example and aim to create positive change within the hospitality industry and contribute to a more sustainable future. Climate Action And Resilience Third year of TCFD disclosure, ahead of SGX requirements. Emissions Reduction Complete inventory for Scope 1, 2 and 3 GHG emissions. Water Water intensity is 16.9% lower compared to FY 2019 Waste Achieved target to replace 100% of single-use bathroom products with reusable pumps in 2024. Energy Energy intensity is 11.1% lower compared to FY 2019 Climate Action and Resilience Climate change poses both physical and transition risks to CDLHT’s global assets and operations, underscoring the importance of our commitment to climate action and its respective impact on business strategies and engagement with stakeholders. As CDLHT’s operations traverse multiple continents, it is critical for us to take stock of regional factors including climate risks at each asset’s geography. These include changing energy costs in the world’s transition to a low-carbon economy, and physical risks of flooding and other natural disasters. By proactively identifying and addressing these challenges, we enhance the sustainability and resilience of our business, ensuring that they remain aligned with evolving climate realities. Approach Since FY 2022, CDLHT has adopted the recommendations of the TCFD as a guiding framework in presenting climaterelated risks and opportunities and how we approach climate resilience, with a global presence. Scenario Analysis In FY 2022, we conducted our first climate scenario analysis against the Intergovernmental Panel on Climate Change (“IPCC”) scenarios. This exercise helped us better understand the implications of climate-related risks and opportunities on our business activities and gained valuable insights into the effectiveness of our actions in enhancing CDLHT’s climate resilience. Climate-related Risk Management Additionally, we have identified several climate-related risks that may be financially material to operations and provided the mitigation and adaptation measures. Notably, some of these risks may also present themselves as opportunities for CDLHT to capitalise on and gain a competitive edge through an effective climate strategy. We continue to refine our climate risk management policies and systems, recognising the value they provide in business decision-making. Our commitment is to minimise exposure to material climate risks by integrating climate-related factors into our investment policy and conducting relevant analysis as part of our investment and divestment strategy. We will continue to strengthen our capabilities and experience in this area and remain dedicated to reporting on the progress in future years. ESG Corporate Metrics and Targets The Managers track sustainability-related performance and seek to improve sustainability and climate-related metrics and targets via tracking and disclosure. In addition, the Managers maintain an internal corporate scorecard that includes ESG-related targets. The corporate scorecard performance is a material component of the Managers’ executives’ remuneration, aligning financial incentives partially to sustainability-linked initiatives. Performance Also provided are the ESG metrics on other resource usage data, including the forms of energy consumption, water consumption and waste generated, which are used to track, assess, and monitor climate-related risks and opportunities, as follows:
116 SUSTAINABILITY & GOVERNANCE FY 2023 FY 2024 Total Electricity Consumption (MWh) 60,000 40,000 20,000 0 72,709 80,000 Electrical Consumption Intensity (MWh/m2) FY 2023 FY 2024 0.20 0.15 0.10 0.05 0 0.20 Total Fuel Consumption (MWh) FY 2023 FY 2024 44,382 35,000 25,000 15,000 0 45,000 Waste (7) (metric tonnes) FY 2024 Total waste: 4,969 Recycling: 504 Landfill: 1,533 Others: 2,931 71,463 0.19 42,847 SUSTAINABILITY REPORT FY 2023 FY 2024 Total Water Consumption (m3) 600,000 400,000 200,000 0 765,824 800,000 FY 2023 FY 2024 Water Consumption Intensity (m3/m2) 2.0 1.5 1.0 0.5 0 2.08 Water Consumption (6) Energy Consumption (5) Targets The individual targets set out for each category of resource usage are detailed in their respective sections within our ESG material topics below. As CDLHT continues to make progress on tracking and reporting its full GHG emissions footprint, we will also align the attainable and ambitious short-, medium- and long-term resource usage targets with those for decarbonisation, including being SBTi aligned in the future, with the view to achieve Net Zero by 2050. (5) Further information can be found under our material topic on Energy Efficiency. (6) Further information can be found under our material topic on Water Stewardship. (7) Further information can be found under our material topic on Waste. 732,756 1.99
117 OVERVIEW AND FINANCIAL REVIEW MARKET REVIEW LEADERSHIP STRUCTURE PROPERTY PORTFOLIO SUSTAINABILITY & GOVERNANCE FINANCIAL STATEMENTS AND OTHER INFORMATION CDL HOSPITALITY TRUSTS Annual Report 2024 TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”) REPORT CDLHT presents its FY 2024 TCFD recommendationsaligned report in the following section. The disclosures here are also made in accordance with MAS’ Guidelines on Environmental Risk Management for Asset Managers, which have been in effect since June 2022 and aim to enhance the policies and actions of asset owners, as well as the disclosures surrounding them. We express support for MAS’ initiative and expect to apply the guidelines to improve the direction and clarity of our climate resilience, mitigation and adaptation measures. We seek to continuously improve the management of climate-related issues and the quality of our TCFD-aligned disclosures in future Reports. Governance The Boards maintain overall responsibility for overseeing the integration of sustainability into CDLHT’s business goals and strategies and approve the environment-related (including climate) policies and frameworks. The Boards monitor CDLHT’s material ESG factors and respective performance, which includes climate-related risks and opportunities pertaining to CDLHT’s emissions reductions and climate action. The Boards are updated on all relevant ESG issues and their progress on a quarterly basis. Within the Boards, the BSCs oversee CDLHT’s sustainability processes and related strategies, ensuring they are in line with CDLHT’s overall strategy and risk management. Management has developed and implemented an environmental risk management framework and policy, as well as tools and metrics to monitor exposures to environmental risk. Management reports to the BSCs and the Boards on CDLHT’s sustainability efforts and performance progressively throughout the year at the quarterly and end of financial year meetings. Management updates the Boards on specific environmental or climaterelated issues at least once a quarter. CDLHT’s SWC, which comprises key personnel from various business functions, is led by the CEO and overseen by the BSCs. At the operational level, the SWC manages and monitors CDLHT’s overall sustainability performance and formulates strategies, including those at the individual function level that incorporate material ESG factors into daily operations. Further details of our climate and overall sustainability governance structure and processes may be found in the Sustainability Governance section under Our Sustainability Approach. Strategy CDLHT identifies its material ESG topics, including those that pertain to our climate-related risks and opportunities, through a materiality assessment. Climate-related issues are addressed under the topics of Climate Action and Resilience, as well as Emissions Reduction, within our Climate Resilience and Environmental Stewardship pillar. We aim to further strengthen this identification process as we undertake our annual material topic assessment and review, including for those on climate-related topics, which are reported with reference to the GRI standards. The Managers conducted a scenario analysis exercise in FY 2022 to determine the climate-related risks and opportunities that would be material to our operations. The risks were explored across the eight geographical markets in the portfolio using the following parameters: Scenario Parameters Assets and country coverage 18 properties in eight countries (8) Baseline year 2019 Scenarios explored 1.5°C warming (IPCC RCP 2.6) > 3°C warming (IPCC RCP 8.5) Timeframes explored Short-term: 2030 Medium-term: 2050 (8) The scenario analysis boundary was established in early FY 2022, prior to the acquisition of voco Manchester - City Centre. The Castings was excluded from the scenario analysis as development was only completed in mid-2024, while Hotel Indigo Exeter and Benson Yard were acquired later, in November and December 2024 respectively.
investor.cdlht.comRkJQdWJsaXNoZXIy NTkwNzg=