Lendlease Annual Report 2022

Risk & climate-related resilience 53 Our strategic resilience to climate- related impacts The assessment of the second set of five CRIs indicates a greater financial resilience (higher residual positive sensitivity) in our business strategy to our Paris Aligned scenario, supported by our continued commitment to being a 1.5 degree aligned business. In particular, our Mission Zero business strategy played a significant role in both reducing the risks and increasing opportunities in the analysis associated with our Paris Aligned scenario. As with most companies, we have negative sensitivities to global labour and supply chain disruptions in our Polarisation scenario; however, strategies to mitigate these risks have been well established during COVID disruptions. The dramatic shift under a transformation scenario poses both positive and negative sensitivities, depending on the level of transformation. The integration of climate risk assessments with investment decision making, combined with continued progress in decarbonising our operations and supply chain, has reduced residual negative sensitivities to climate impacts. To help understand the level of mitigating action considered for each climate impact, we have expanded our CRI disclosure to include the level of action required to achieve the residual sensitivity. The level of action identified for the full set of CRIs will be available in the Climate-related Impacts section of our FY22 ESG Databook. Residual Sensitivity Scenario Climate-related Impact Investments Development Construction Polarisation Scenario (>3 o C) This scenario sees a world where climate action is delayed by the polarisation of climate action. This delay results in a world where physical climate changes are the greatest across our three scenarios. The integration of ‘Leadership in Sustainability’ as a strategic priority and our Net and Absolute Zero Carbon targets sees low levels of positive sensitivity from an increased market share from the public sector, as well as access and cost of capital. Having experienced similar impacts to international product and labour availability due to COVID, Lendlease recognises a transformation of global supply chains and labour sourcing is needed to reduce supply risks. Impact market share from public sector Adapt Adapt Absorb Access and cost of capital Transform Adapt Absorb Availability of international products Transform Transform Transform Availability and cost of labour Adapt Adapt Adapt Reduced availability of materials and resources Transform Transform Transform Paris Alignment Scenario (2-3 o C) This scenario sees a market led transition to a lower carbon future through global government commitments to the Paris Agreement. This would result in increased regulation of climate action and a reduction of the physical impacts of climate change compared with our Polarisation scenario. There are many ‘difficult to decarbonise’ products and materials in our supply chain, including cement, steel, and aluminium. However, our continued work to achieve this goal would result in a significant positive sensitivity. Our leadership in sustainability and carbon targets creates positive sensitivities to an increased market share from the public sector. It also provides an advantage whilst leadership in decarbonisation continues to be valued by investors. Misalignment between legislation/regulation and Lendlease strategy Adapt Absorb Absorb Demand for negative emissions and geoengineering solutions Adapt Adapt Adapt Changing preferences away from new build development Transform Transform Transform Demand for zero- carbon infrastructure Absorb Adapt Absorb Increase market share from public sector Adapt Adapt Adapt Transformation Scenario (<2 o C) This scenario sees a rapid decarbonisation pathway, where global emissions are close to zero in 2040, driven by society. The speed of change required to limit global warming to 1.5 degrees is likely to create negative sensitivities in our supply chain as suppliers try to keep pace with decarbonisation demands and shifting preferences towards localisation. Further, however unlikely, a major shift towards community ownership would disrupt most major corporations. Our leadership in sustainability and innovation creates positive sensitivities to an expectation of greater research and development in decarbonisation. Further, we see positive sensitivities through an increase in partnerships and collaboration in decarbonisation, such as our founding membership of the Materials and Embodied Carbon Leaders Alliance (MECLA), an industry led coalition to decarbonise Australia’s building and construction industry. Availability of international products Transform Adapt Adapt Changing preferences away from new build development Transform Transform Transform Shift towards community 'ownership' of companies Transform Transform Transform Expectation of R&D investment for decarbonisation Transform Adapt Adapt Greater need for partnerships and collaboration for decarbonisation Adapt Adapt Adapt Higher positive sensitivity Higher negative sensitivity Absorb: Current strategy absorbs the impact of the CRI Adapt: Changes required to current strategy to respond to the CRI Transform: New strategy or signi cantly altered strategy required to respond to the CRI

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