New World Development : Annual Report 2021 – Corporate Sustainability

Corporate Sustainability

Major Achievements & ESG Highlights

International Recognition for Environmental, Social and Governance ("ESG") Integration

MSCI ESG Rating BBB in	Low ESG Risk rating in	Highest five-star rating	Rated B in Climate Change
2020	and global 1st in climate	Assessment, improved by
2021 (raised from BB in
	resilience in 2020	two grades from 2019 and
2020), and a constituent
		B in Supplier Engagement,
of the MSCI HK-Listed
		first rated in 2020
Southbound Country ESG
Leaders Index1

Top 15% of real estate	A constituent of Dow	A constituent of the	since 2014 - 2015
industry globally	Jones Sustainability Index	FTSE4Good Index Series
	("DJSI") Asia Pacific since
	2019

NWD is a signatory/member of

Raised >HK$19 Billion through Sustainable Finance since 2018

• World's First USD Sustainability-linked Bond ("SLB")

by a Real Estate Developer

• Hong Kong's First Interest Rate Swap Linked to the United Nations

Sustainable Development Goals ("UN SDGs")

Won >30 Sustainability Awards at Corporate and Building Levels in FY2021

1

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THE INCLUSION OF NEW WORLD DEVELOPMENT COMPANY LIMITED IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF NEW WORLD DEVELOPMENT COMPANY LIMITED BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

New World Development Company Limited

Corporate Sustainability

Driving Ambitious Sustainability Targets and Taking Climate Actions

Progress on New World Group-wide SV2030 now linked with remuneration of CEO and employees

Setting Science Based Targets ("SBT") by Q1 2023 to help limit global warming to 1.5°C

Targeting 100% renewable energy for all rental properties in Greater Bay Area ("GBA") by end of FY2025/26 and all rental properties in Greater China by end of FY2030/31 to reduce Scope 2 emissions

Climate risk scenario analysis completed on 14 major existing buildings in GBA and improvement measures implementation in progress

"No coal pledge" to refrain from making any new investments in companies engaged in the construction and operation of coal-fired power plants or coal mines, and confirm our intention to sell any remaining assets

Climate Resilience Design Guidelines established for all new buildings, major refurbishments and construction activities

Creating Shared Value with Local Communities

• The New World Group	• Extensive community
Job Fair "Create Jobs •	engagement in the
Spark Hope" offered	revitalisation of State
nearly 1,000 job	Theatre, a Grade I
vacancies across our	Historic Building in
ecosystem	Hong Kong

• COVID-19response: #LoveWithoutBorders initiative donated over 21 million
  face masks produced by NWD to low-income families since May 2020

Enhancing Governance for the Long-term		Improving Supply Chain Practices
• ESG trainings for the Board, management,	•	Encourage suppliers to adopt ISO certifications
employees and suppliers	•	Reinforce regular supplier performance appraisal

• 100% employees trained on ESG
• Enhancing Group - wide Enterprise Risk Management ("ERM") based on the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") framework and ESG factors to strengthen risk mitigation and response

Annual Report 2021

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Corporate Sustainability

Overview of SV2030

GREEN - Moving us towards a greener future

SDG 11.6 Reduce adverse environmental impact of cities

NewWorld Group - Halve our environmental	NewWorld Construction
impact in energy and carbon emissions intensity	(against baseline year FY20152)
(against baseline year FY20151)
FY2021:		FY2021:
	Energy intensity		Waste-to-landfill intensity
	(MWh/million HK$ revenue)1		(tonnes/million HK$ revenue)2
20%	SDG 11.6		59%	SDG 11.6
(FY2030 target:	50%)	(FY2030 target:	15%)
	Carbon emissions intensity		Water intensity
	(tCO2e/million HK$ revenue)1		(m3/million HK$ revenue)2
33%	SDG 11.6		30%	SDG 11.6
(FY2030 target:	50%)	(FY2030 target:	25%)

Green Buildings SDG 11.6

• 31 BEAM Plus building certificates3, with 25 of those achieved Very Good/Gold or above
• 32 LEED building certificates4 with 31 of those achieved Gold or above

• 3 China Green Building Evaluation Labels ("Two-Star" or above)5

• 2 SITES certificates at Gold level

WELLNESS - Promoting health in body and mind

SDG 3.4 Promote physical / mental health and well-being

SDG 3.9 Promote healthy built environments which reduce hazardous chemicals and pollution

Improved the well- being of 13 million stakeholders6

SDG 3.4

(FY2030 target: 20 million)

Lost-time injury rate		WELL Buildings:
(LTIR)7 0.5 per		11 building certificates8,
100 employees		with 9 of those achieved
SDG 3.4		Gold or above
(FY2030 target: maintain		SDG 3.4, 3.9
at/below 3.0 annually)

CARING - Creating shared value for our communities and culture

SDG 4.4 Upskill individuals for employment, decent jobs and entrepreneurship

SDG 4.7 Promote education on sustainable development, sustainable lifestyles and global citizenship SDG 11.3 Enhance inclusive and sustainable urbanisation

SDG 11.4 Protect cultural and natural heritage

Enhanced the quality of life of 140 million stakeholders6

SDG 11.3, 11.4

(FY2030 target: 300 million)

Provided >235,000	Average 19.6 training hours
volunteering hours6	per employee
SDG 4.4	SDG 4.4
(FY2030 target:	Sustainability-related training
>340,000 hours)	13,749 hours
	SDG 4.7

SMART - Using innovation to unlock potential

SDG 17.16 Enhance global and multi-stakeholder partnerships to support the SDGs through knowledge, technology and resource sharing

178 active patents9

26 integrations via Impact Kommons10

• Covers the SV2030 Green Targets Scope which focuses primarily on key businesses with more mature performance data and over which we can exert operational influence for developing environmental impact reduction roadmaps. NWSH and NWDS also disclose their environmental targets in their annual sustainability report. Using revenue as

the intensity metrics was due to the diverse business nature of the Group's portfolio and that revenue is the common thread that can be adopted across sectors.

• Covers New World Construction Company Limited only.

• Counting the number of Provisional Assessment and Final Assessment certificates for both New Buildings and Existing Buildings as at 30 June 2021.

• Counting both pre-certified and certified projects as at 30 June 2021. This number excludes expired pre-certificates.

• This number excludes expired labels as at 30 June 2021.

• Cumulative number from baseline year FY2015 to FY2021 covering the Sustainability Reporting Scope.

• Lost-timeinjury rate represents the number of injuries per 100 employees per year.

• Counting both pre-certified and certified projects as at 30 June 2021.

• Counting the number of active patents granted since FY2015 and held by New World Group under the Sustainability Reporting Scope as at 30 June 2021, excluding design

registrations/patents.

10 Cumulative integrations from FY2020 to FY2021 between Impact Kommons startups and New World Group Ecosystem.

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Corporate Sustainability

Leadership and Governance

Message from Management

In FY2021, the global community continued to feel the effects of COVID-19 and unprecedented climate events, and we were not immune. Continuing our Group's 50th anniversary celebrations this year, I've had the opportunity to reflect on our Group's storied history and accomplishments, which were made possible only by our ability to quickly adapt and innovate, turning crisis into opportunity in every instance.

Creating Shared Value ("CSV") is at the heart of our corporate mission. Through ESG integration via SV2030, we are able to quantify our CSV contributions for all stakeholders and use the SV2030 pillars of Green, Wellness and Caring to ensure our Board, leadership team and employees are acting towards these common goals.

We understand that urgent climate action is required to avoid the worst climate impacts and ensure the long-term development of our business. As a first mover, we have adopted the recommendations on TCFD since FY2019. Earlier this year, we expanded our decarbonisation efforts by committing to the Business Ambition for 1.5°C to set SBT and formulating our Renewable Energy ("RE") Roadmap, which formed the basis of our oversubscribed sustainability- linked bond and is indicative of our commitment to decarbonise. Further to our SV2030 emissions reduction and renewable energy adoption targets in 2030/2031, we are exploring solutions to echo HKSAR's commitment to net zero carbon by 2050 and Mainland China's commitment to carbon neutrality by 2060. We look forward to playing a part in the global transition to a low carbon future.

We continue our efforts to foster a diverse and inclusive community. Last year, we appointed two female executives as board members to encourage a more gender-diverse and fair environment, and became a signatory of the UN Global Compact. We will continue to support the UNGC and pay close attention to the latest trends and regulations in corporate governance, and leverage global insights and partnerships to realise sustainable cities and communities and improve the overall well-being of our stakeholders. Demonstrating our commitment to creating shared value for our community, we are revitalising the historic State Theatre of Hong Kong, one of the city's last standing cultural icons, and hope to conserve and restore the iconic building to its original glamour and transform it into a landmark for culture and arts for the benefit of the next generation and the community at large.

Our Group continued to demonstrate resilience, love and innovation in our ongoing efforts to battle COVID-19 this year. In additional to our existing relief funds and initiative of manufacturing and distributing Made-in-Hong-Kong masks through non-governmental organisations ("NGO") to stakeholders in need, we have been accelerating the city's COVID-19 recovery through offering grants to vaccinated low-income individuals and paid vaccination leave to our employees. These initiatives were made possible by our dedicated teams and growing network of ecosystem partners, including through Impact Kommons, our UN SDGs- focused startup accelerator nurturing the next generation of sustainability changemakers. We look forward to further collaborations demonstrating our culture of partnership and innovation.

As we expand our business ecosystem and footprint in the GBA and other parts of Mainland China, we understand that ESG integration and standardisation will become even more important. ESG principles are being considered in business and investment decisions as well as supply chain relationships, and we will continue to develop more robust frameworks. We are strengthening our Group-wide risk management framework to keep up with the rising importance of managing ESG risks and capturing relevant opportunities. I would like to take this opportunity to thank my team for their unwavering dedication, adaptability and resilience during these challenging times.

Stepping into a new year with unknown challenges, our team remains hopeful - when others see crisis, we see opportunity. I look forward to leading the team to reach new heights by connecting with all stakeholders and aligning our businesses to our long-term sustainability vision and trends in innovation. By adopting a growth mindset, we are confident that our commitment to CSV, together with striving for best practice in ESG, will allow our Group to stay ahead and thrive for many more decades.

Dr. Cheng Chi-Kong, Adrian

Executive Vice-chairman and Chief Executive Officer

Chairperson, Sustainability Committee and

Group Sustainability Steering Committee

Annual Report 2021

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Corporate Sustainability | Leadership and Governance

Governance Structure

To ensure action on NWD's commitment to sustainability, we integrate the management of ESG issues throughout the Group's corporate governance structure - from board-level committees to management-level group functions and business units ("BUs"). The Board of Directors fulfils its responsibilities by delegating to five board-level committees, including the Sustainability Committee which oversees the Group's management of ESG and sustainability endeavours. Details on the board-level committees are available in the "Risk Management and Internal Control" Section.

We pay close attention to the latest trends and regulations in corporate governance and acknowledge HKEX's consultation paper "Review of Corporate Governance Code and Related Listing Rules" issued in April 2021, which emphasises the importance of board independence, diversity and succession planning.

BOARD OF DIRECTORS

Audit Committee	Sustainability Committee
Risk Management &	Sustainability Governance
Internal Control	& ESG Risk Management
Group Risk Management	Group Sustainability
Committee	Steering Committee
Group Audit and Management	Group Sustainability
Services Department	Department
NWD Departments &	Group Sustainability
Heads of Business Units	Task Force

We ensure all employees are motivated to take concerted efforts towards our SV2030 targets by integrating these targets into KPIs for our CEOs of BUs as well as NWD departments and their teams. We link sustainability performance to the remuneration of our CEO and employees. We also provide regular training to all employees and support across the Group to pursue action plans to budget, empowered by our Sustainability Committee and Group Sustainability Steering Committee.

The Sustainability Committee is appointed by the Board of Directors from among the directors of NWD, and its Chairperson is the Executive Vice-chairman and CEO of NWD. The Committee's mandate is to make any appropriate recommendations to the Board, as well as to report any improvement areas in its sustainability and ESG reporting strategy and management, any instances of non-compliance with sustainability and ESG policies and procedures, and any infringement of sustainability laws and regulations. Its own performance is reviewed on an annual basis.

Given the climate imperative and our Group's responsibilities to mitigate climate impacts in our operations, the Board of Directors has endorsed our ongoing assessment and disclosure of climate risks as per Task Force on Climate- Related Financial Disclosures ("TCFD") recommendations. The Board is updated regularly on the latest climate risks and opportunities, so as to reshape the ESG strategies.

In order to create an innovative ecosystem, we have implemented specific mechanisms within NWD's management structure. One of these is the Customer Committee, which offers the opportunity for all departments to pitch and invite feedback on innovative new ideas. Proponents of shortlisted feasible ideas have the opportunity to present to senior management and explore application of the ideas.

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