About Swire Pacific

ESG Risk Management

Effective risk management is fundamental to safeguarding the long-term resilience and success of the Group. To achieve this, risk management practices are embedded across all operating companies, fostering a culture where every Swire Pacific employee plays a role in identifying and addressing significant risks that may impact the Group.

The Board retains ultimate accountability for risk management, overseeing its design, implementation, and effectiveness. This responsibility is supported by the Audit Committee. To strengthen governance and minimise conflicts of interest, the Board has adopted the widely recognised Three Lines of Defence model. This framework ensures clear accountability, robust risk controls, and independent assurance across all levels of the organisation.

The ESG risk management structure presented in this report was in place throughout 2025. Following the year end, the GRMC approved revisions to the Group’s risk governance to streamline coordination, remove duplication and strengthen integration with existing governance bodies. Several committees and risk forums were concluded as their responsibilities are now absorbed into established structures. These changes maintain strong oversight while supporting more effective risk management.

The First Line

In the first line, the Board is supported by the management of each division and functional committees. They are responsible for identifying, analysing, and managing the risks to us associated with achieving our business objectives, including those relating to sustainability. The Sustainable Development function, Group Risk Management, People Department, and the Philanthropy Department are the first line functions jointly responsible for our sustainability strategy. Each operating company has adopted an appropriate organisational structure to manage its key sustainability issues and to monitor and report on its performance.

The functional committees include representatives from our divisions. The SGSC, the Diversity and Inclusion Steering Committee (DISC), and the Health and Safety Committee are tasked with the management and oversight of sustainability risks relevant to our business, including climate and nature-related risks. The members of the functional committees and working groups include specialists in their respective areas. Each committee is chaired by an individual with relevant experience.

Collectively, the committees are responsible for identifying and managing specific areas of risk, proposing policies and reporting performance. Part of the role of the functional committees and working groups is to identify risks and opportunities which fall within their respective areas and to draw up policy recommendations for GRMC review and approval.

The policies approved by the GRMC apply to all companies in which Swire Pacific has a controlling interest. The boards of these operating companies are required to adopt these policies and to establish procedures to ensure compliance. Joint venture and associated companies are encouraged to adopt Group policies.

The Second Line

The role of the second line is to support the first line and provide assurance to the Board that risk is being effectively managed. The GRMC focuses on group-wide risks, and the Swire Pacific Risk Management Committee (SPACRMC) which oversees risks to the Company itself, served as oversight bodies throughout the year.

The GRMC includes divisional heads, is chaired by the Finance Director, and reports to the Board via the Audit Committee. It oversees the management of non-financial risks at both Group and operating company levels.

The GRMC:

Reviews the Group’s risk profile and Group and divisional risk registers
Oversees the management of major risks at Group and operating company levels
Identifies emerging risks and potential sources of future risk including ESG risks
Analyses risk events which materialise, with a view to their resolution and to learning from them

In relation to risks having a Group dimension, the GRMC was supported by four risk forums during the year covering, respectively: environmental, social, and governance risks; people, health and safety risks; technology risks; and risks pertaining to our Chinese Mainland Operations. In relation to those not having a Group dimension, the GRMC is supported by the second line infrastructure within each operating company.

The SPACRMC identified risks with a Group dimension and proposed approaches to the management of such risks to the GRMC. The GRMC and the SPACRMC were chaired by the Finance Director, who is supported by Group Risk Management.

The Third Line

The third line is supported by the Group Internal Audit Department which provides independent and objective assurance that the risk management processes are implemented properly and operating effectively and that the risks which could impact our ability to achieve our business objectives are being properly identified, assessed, and mitigated.

The boards and management of operating companies are responsible for the management of risk at those companies.

Enterprise Risk Management

Our Enterprise Risk Management (ERM) framework is aligned with internationally recognised standards and operates through both top‑down and bottom‑up processes. This approach ensures that risks identified by our Operating Companies are addressed alongside those that are material at the Group level.

During 2025, with the Board setting risk priorities and strategic guidance, our businesses assessed and managed their own risk profiles while the Swire Pacific Risk Management Committee (SPACRMC) oversaw Group-level risks. These inputs were reported to the GRMC and consolidated into the Group Risk Register, which were then presented to the Audit Committee and the Board for review and oversight.

Across the Group, our businesses follow a common ERM methodology centred on the development and management of risk registers. Each business is responsible for the identification, assessment, mitigation, and ongoing monitoring of risks within its business. Risks with a Group dimension are escalated for discussion by the GRMC and, where appropriate, the Audit Committee and the Board.

Consistent with SD 2050, our key risk focus areas include those related to the long-term impact of climate change on our businesses, as well as supply chain disruption. Further descriptions of these risks and our mitigation measures are provided in the Risk Management section of the Annual Report and in the climate‑related sections of this report.

Our ERM process is designed to ensure robust and effective risk management and to foster a risk‑aware culture throughout the Group. Implementation follows our Enterprise Risk Management Policy, under which each division and major business is required to operate the ERM process. As part of this policy, our businesses regularly submit corporate risk registers and updates on changes in risk profiles to Swire Pacific, using standardised methodologies, formats, and risk‑ranking criteria to ensure consistency and comparability across the Group.

In 2025, our key risk management focus areas included: geopolitical tensions, impact from a potentially significant economic slowdown, business environment risk associated with Hong Kong's adaption to evolving global dynamics, personal data privacy compliance, and our ability to avoid or minimise the impact from a potentially existential reputational risk event. More details of our ERM process and our risk mitigation measures can be found in our Annual Report.

ESG Due Diligence

Risk management is an integral part of business management and is included in due diligence on major investments. Our approach to incorporating sustainability considerations within investment due diligence focuses on compliance with laws and regulations related to ESG, and layering in geospatial physical climate risk assessments for the assets of potential new investments. As part of our internal carbon pricing pilot, our three largest operating companies are considering the operational emissions associated with key projects by applying a shadow carbon price which is then reviewed by the Operating Company or Group investment committee.

Cybersecurity

Swire Pacific has established a Group Information Security Policy (GISP), developed with reference to ISO 27001, the US National Institute of Standards and Technology - Cybersecurity Framework (NIST CSF), industry standards, and best practices. The Group proactively monitors compliance through regular GISP self-assessments, with ongoing oversight provided by the GRMC and the Audit Committee.

Swire Pacific's central Cybersecurity Centre of Excellence (CCoE) team, led by the Group Chief Information Security Officer (CISO) is dedicated to providing guidance, sharing best practices, conducting research, driving innovation, offering support, and delivering training to our operating companies. The central team is responsible for developing the Group cybersecurity strategy and creating and maintaining security policies and standards. The central team also manages cybersecurity programmes and establishes cybersecurity measures which include, but are not limited to, those highlighted in the adjacent table.

The Swire Pacific CISO chairs the Cybersecurity Working Group (CSWG), which is comprised of cybersecurity professionals across the Group. The CSWG members meet regularly to facilitate the exchange of best cybersecurity practices and to bolster cybersecurity awareness throughout the Group.

The CISO presents cybersecurity topics and reports significant cybersecurity risks to the GRMC and Audit Committee. Operating companies undertake an annual Control Self-Assessment on their cybersecurity maturity, which is reviewed by Group Internal Audit Department.

	CYBERSECURITY MEASURES AND POLICIES
GISP Control Self Assessment (GISP-CSA)		Group Information Security Policy (GISP)
Threat and Vulnerability Management (TVM)		Threat and Vulnerability Management Policy (TVMP)
Managed Security Operation Centre (MSOC)		Cyber and Technology Risk Management Policy (CTRMP)
Incident Response Retainer (IRR)		Cybersecurity Incident Management Policy (CIMP)
Attack Surface Management (ASM)		Group Cloud Security Policy (GCSP)
Red Team Attack Simulation (RTAS)		Security Awareness Programme

Artificial Intelligence Governance and Risk Management

We design and deploy artificial intelligence (AI) systems in a way that prioritises human values and mitigates potential harms. Our AI systems are governed by guidelines for their responsible, compliant and ethical use across Swire Pacific and its operating companies. The guidelines outline risk areas including confidentiality and data privacy, ownership of generated content, impact on people, bias and fairness in training data, traceability of outputs among other risks. They provide a set of actionable principles that promote human centricity, privacy and security, transparency, responsibility with human agency included, and testing and training.

Climate and Nature Risk Approach

We recognise that sustainability-related challenges, including climate change, create both risks and opportunities for our businesses. We complete regular assessments of the implications of different sustainability risks and opportunities at the Group and operating company level. Due to the diversified nature of our group of companies, potentially material risks identified by an operating company may not be considered material for Swire Pacific.

Climate-related risks are identified and managed as part of our ERM system at both a Group and operating company level. Climate change has been identified as one of our key risks in our Group risk register in 2025. Climate risk, along with all other key risks, are reviewed by the Risk Forums and the GRMC on a quarterly basis.

To assess sustainability-related risks to our businesses we consider plausible but worst case scenarios, the outputs of climate-related scenario analysis, and nature risk assessments for our principal operating companies. We consider the operational, regulatory, reputational, human, strategic, and financial impact of climate change on our businesses. Potential sustainability-related opportunities are identified as part of our standard business planning activities.

Our climate change assessment conducted in 2024 and reviewed in 2025, covers scenarios over the short-to-medium term (until 2030) and over the long-term (up to 2050) and considers current and future exposures to physical and transition risks and opportunities in both low carbon and high carbon scenarios. The time horizons differ from those used to consider the onset velocity of risks under our ERM process, which focuses on a more immediate timescale.

For nature risk our businesses conducted industry risk assessments across our Property, Beverages, and Aviation divisions using tools such as Natural Capital Finance Alliance’s ENCORE, WWF Biodiversity Risk Filter, and the World Resources Institute’s (WRI) Aqueduct Water Risk Atlas. Where potential risks were identified, our businesses conducted further assessments to understand their exposure. Further information is available in Nature.

Our businesses' assessment of sustainability-related risks and mitigations is reviewed annually to incorporate any new material updates. The current conclusion is that the analysis remains appropriate, indicating an overall moderate to low assessed risk of physical and transition climate effects, adverse nature impacts, and other sustainability-related challenges over the short- to medium-term.

An analysis of our climate-related risks and opportunities follows in these subsections:

Due to the high levels of associated emissions from our investment in the Cathay group, we have included a summary of its potential climate-related risks. Refer also to the Swire Properties, Swire Coca-Cola, and Cathay Pacific sustainability reports for more information on their climate risks assessments.

Climate-related Scenarios

Our businesses have assessed the physical climate-related risks and opportunities for over 850 of the Group’s most valuable assets (by insured value), under four climate change scenarios (RCP 2.6, 4.5, 6.0 and 8.5). This data has allowed us to accurately evaluate the exposure of specific assets and operations in selected timeframes, from the short- to medium-term (2030) to the long-term (2050). Due to the nature of climate risks, these time horizons used differ from those used to consider the onset velocity of other risks under our ERM process, which focuses on a more immediate timescale. We have considered the impact of carbon pricing transition risks based on the carbon pricing models included in Intergovernmental Panel on Climate Change (IPCC) Shared Socioeconomic Pathways SSP3-60 and SSP3-45.

The Swire Pacific Sustainable Development function developed two distinct and plausible climate change scenarios to stress test the resilience of our businesses and strategy to varying future operating environments. The scenarios used by Swire Pacific are based on several publicly available climate scenarios from recognised authorities including the International Energy Agency (IEA), the Network for Greening the Financial System (NGFS), and the Intergovernmental Panel on Climate Change (IPCC), the leading UN body assessing the science of climate change. The scenarios incorporate global and local government policies, environmental, economic, social, and technology indicators and market trends. The scenarios are not intended to be predictions of the future; rather, they seek to stress-test our businesses against several plausible future states.

Our scenarios include assumptions on jurisdictional climate-related policies and commitments in our businesses’ locations of operation, expected grid decarbonisation, technological developments, for example on SAF availability, and forecast changes to local weather patterns to the extent they are available. These scenarios help us to consider the physical and transition risks and the opportunities posed by climate change that could potentially impact our business operations and our value chain. Due to uncertainties in climate projections, technological advances and policy implementation, we review the scenarios to consider new developments and regularly use them in workshops to identify and assess climate risk.

Swire Properties has conducted detailed asset-level assessments to evaluate the degree of sensitivity and adaptive capacity of individual developments under the potential impacts of climate change. These assessments consider system robustness such as existing flood prevention systems and façade conditions; system redundancy, such as the capacity of chillers and water supply; and susceptibility to past extreme weather events.

The Cathay group has carried out scenario analysis using four different scenarios building upon key insights and global, local and sector-specific drivers and trends. Within each scenario, key drivers of change were identified, ranging from climate impacts on flight operations to political will, to the emergence of transformative technologies. Please refer to Cathay Pacific's sustainability report.

Climate-related Physical and Transition risks

The key ‘moderate’ sustainability-related risks identified by our current assessment are described below. Climate-related risks identified by our assessment are outlined in the tables that follow.

Long term acute physical coastal and fluvial flooding risk for certain properties in Swire Properties' portfolio or operated by Swire Coca-Cola, leading to potential asset damage and requiring more spending on adaptive protection. Short to medium term mitigation measures for individual buildings have been identified and introduced to building design such as upgrading flood protection measures and implementing smart monitoring systems. Refer to Climate for details of our mitigations.

Long term chronic physical water stress and drought risk for Swire Coca-Cola's beverage operations, which could potentially affect production due to reduced water availability. Water stress could affect our suppliers, the communities in which we operate and the biodiversity of the areas in which we operate. This may require increased investment in water efficiency of assets. Swire Coca-Cola conducts Source Vulnerability Assessments (SVAs) and prepares and implements Water Management Plans for all bottling plants. Refer to Water for details of our water risk assessment.

In relation to the Group’s associate interest in the Cathay group, physical risk stems from acute weather events that may lead to higher operating costs, risks to flight safety (e.g. from turbulence), reduced payloads and/or lost revenue. As it operates nearly all its flights to or from Hong Kong International Airport, it is working closely on climate resilience with the Airport Authority of Hong Kong.

Long term policy regulation transition risk relating to carbon pricing, more ambitious national decarbonisation plans, increasing focus on Scope 3 emissions and reputational damage. These could affect all our core operating companies and their supply chains, requiring new ways of working and investment in more efficient capacity. This is particularly pertinent to sustainable property development design regarding sourcing of concrete, steel and lumber, and to the broader beverages supply chain. We have implemented internal carbon pricing for our three largest operating companies. Swire Properties includes low carbon requirements for building materials and has set embodied carbon targets for new developments. Swire Coca-Cola is engaging key packaging suppliers on the use of recycled materials for packaging, and more energy efficient cold drink equipment. Refer to Climate and Waste for further information.

In relation to the Group’s associate interest in the Cathay group, regulatory risk stems from availability and affordability of sustainable aviation fuel, and potential exposure to emissions compliance regulations. Other identified transition risks include changing customer expectations on climate performance, and exposure to climate-related greenwashing claims. The Cathay group’s commitment to use sustainable aviation fuel as well as fuel efficiency improvements through fleet renewal and other measures are seen as key mitigating strategies. Refer to Climate and Cathay Pacific's sustainability reports for further information.

Given the mitigations in place, no sustainability-related risks, including physical or transition climate risks, have been identified for Swire Pacific or its subsidiaries which have a material effect on the Group's financial position, cash flows, or access to capital for the financial year ended 31st December 2025 or over the short- to medium-term. As data is less reliable for the long-term, any quantitative estimate would not constitute relevant information. Risks identified at an operating company level, or by associate or joint venture investments, may be potentially material for that individual entity, but not at the Group level. Climate change has been identified as the only financially material risk to the Cathay group in the medium- to long-term, prior to the implementation of planned mitigation measures.

Climate-related physical and transition risks

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Low

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Moderate

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High

			Potential impact rating¹
Risk category	Risk	Financial implications	Short-medium term (2030)		Long-term (2050)		Mitigating strategies
Risk category	Risk	Financial implications	Low Carbon	High Carbon	Low Carbon	High Carbon	Mitigating strategies
Physical risks
Acute	Coastal and fluvial flooding	Asset loss or damage Increased spending to improve the adaptive capacity of our assets and to mitigate adverse effects	●	●	●	●	We have identified short and medium-term mitigation measures for individual buildings, which include: Upgrade of flood protection measures and alert systems Glass façade inspections Smart Monitoring Systems
Acute	Typhoons		●	●	●	●
Chronic	Extreme temperatures and heat stress	Lower productivity due to extreme heat Increased spending on cooling	●	●	●	●	Chiller efficiency improvements Climate Change Policy implementation Health & Safety Policy implementation
	Water stress and drought	Decreased production volume due to reduced water supply. Approximately 33% of the freshwater we use is drawn from sources that are classified as high or extremely high water stress Increased spending to improve water efficiency of our assets	●	●	●	●	Conduct water risk assessments (Source Vulnerability Assessments (SVAs)) for all bottling plants Prepare and implement Water Management Plans for all bottling plants
Transition risks
Policy / Regulatory	Carbon pricing for manufacturing and construction	Incurrence of carbon taxes and increased spending on offsets	●	●	●	●	Implement internal carbon pricing Develop Group Carbon Removal Strategy
	More ambitious national decarbonisation plans and tighter building energy codes	Increased spending to improve energy efficiency and to meet compliance	●	●	●	●	Reduce our scopes 1 and 2 emissions by 50% by 2030 and achieve net zero emissions by 2050 in-line with the NDCs from Hong Kong and the Chinese Mainland Sustainable Building Design Policy implementation In 2025, 100% of wholly owned new projects under development achieved the highest green building rating and 95% of wholly owned existing buildings were certified green buildings. Energy Efficiency Policy implementation: commit our businesses to adopt industry best practices to improve energy efficiency in their operations
	Increasing focus on scope 3 emissions	Increased supply chain costs Increased reporting and compliance costs	●	●	●	●	Calculated scope 3 emissions across all scope 3 categories for all our businesses Pilot the use of a supply chain assessment platform to improve visibility of scope 3 emissions Engage with key packaging suppliers on use of recycled materials Set embodied carbon targets for new developments
Reputational	Increasing reputation and litigation exposure Accusations of greenwashing	Revenue reduction due to changes in consumer preferences Litigation costs	●	●	●	●	Set short- and medium-term targets and make longer-term net zero commitment Develop Climate Transition Plan to outline our net zero roadmap Regularly report on our performance against targets Swire Coca-Cola and Swire Properties set decarbonisation targets that have been approved by SBTi

^{1. Potential financial impact rating (low, moderate, high) is based on inherent climate risk scores which does not consider climate risk mitigation strategies. On the basis of this assessment and our current mitigation strategies, we have not identified any financially material climate risk. We align the modelled financial impacts of physical climate risks with the financial impact dimension of our enterprise risk management process to determine what we consider a high, medium or low financial impact.}

Climate-related Risks (Cathay group)

Risk category	Risk	Financial implications¹	Time horizon	Mitigation strategies
Physical risks
Acute	Resilience to acute weather events	Increased operating costs, risks to flight safety (e.g. from turbulence), reduced payloads and/or lost revenue	Medium - Long-term	Majority of Cathay Pacific flights are to or from the Hong Kong International Airport (HKIA). The Cathay group works closely with the Airport Authority Hong Kong (AAHK) in assessing medium to long-term climate resilience at HKIA
Transition risks
Policy / regulatory	Lack of supporting SAF policy and infrastructure	Increased operating costs associated with climate adaptation or mitigation	Medium - Long-term	Fuel efficiency improvements Fleet renewal Commit to using sustainable aviation fuel (SAF) for 10% of Cathay Pacific jet fuel consumption by 2030 Invest in SAF manufacturer Fulcrum BioEnergy SAF offtake agreements in place with several suppliers Corporate Sustainable Aviation Fuel Programme Introduce shadow carbon pricing for investments that impact jet fuel consumption Establish 2030 fuel efficiency target
Policy / regulatory	Resilience to changes in carbon cost	Exposure to current and potential emissions compliance obligations resulting in potential increase on operational costs from carbon credits	Medium - Long-term
Market	Changing customer expectations on climate performance	Loss of revenue to other airlines, travel modes or experiences due to negative customer perceptions of the Cathay group’s or the aviation sector’s progress on climate action	Medium - Long-term
Legal	Exposure to climate-related greenwashing risks	Litigation, fines or reputational damage due to perceived mis-statements regarding climate-related actions or progress	Medium - Long-term

^{1. Climate change has been identified as the only financially material risk to the Cathay group in the medium to long term, prior to the implementation of planned mitigation measures.}

Climate-related Opportunities

Category	Opportunity	Financial implications	Time horizon	Strategies
Businesses where we have operational control
Resource efficiency	Use of more efficient production and distribution processes	Lower operating costs due to higher energy efficiency	Short - Medium-term	Swire Properties has an Electricity Use Intensity target for its operations and provides free energy audits for tenants Swire Coca-Cola has both Water and Energy Intensity targets to drive operational efficiencies
Products and services	Increased market demand for climate-resilient, green energy efficient buildings	Increased revenue due to potentially higher demand of green buildings Increased revenue due to shifts in market preferences	Medium - Long-term	Sustainable Building Design Policy implementation In 2025, 100% of wholly owned new projects under development achieved green building certification ratings In 2025, approximately 98% of Swire Properties' gross rental income is contributed by certified green buildings
Market	Sustainable financing (Sustainable Linked Loans and Bonds, Green Bonds) Linked insurance premium rebate to climate resilience	Diversified financing sources Attract green investment Lower costs of capital Reduced insurance premiums	Short - Medium-term	Sustainable finance, which represented more than 58% of total financing across the Group at the end of 2025 Swire Properties targets for at least 80% of its bond and loan facilities to come from green financing by 2030 Approximately 70% of Swire Properties’ current financing is from green bonds, green loans, and sustainability-linked loans Engage insurers for sustainability alignment and secure their agreement to link premium rebates to climate resilience
Cathay group
Resource efficiency	Use of more efficient modes of transport	Lower operating costs due to higher energy efficiency	Medium-term	Fleet Renewal – adding more fuel-efficient aircraft Commit to improving carbon intensity by 12% from the 2019 level by 2030. At the end of 2025 a 2% improvement in carbon intensity has been achieved
Energy source	Use of lower-emission sources of energy	Increased revenues from increased demand for products and services	Long-term	Commit to using sustainable aviation fuel (SAF) for 10% of Cathay Pacific jet fuel consumption by 2030
Products and services	Development and/or expansion of low emission goods and services	Increased revenues resulting from increased demand for products and services	Short-term	Corporate Sustainable Aviation Fuel Programme

Our Approach Swire Pacific SD 2050