Lendlease Group

Six climate-related risks and opportunities (CRROs) were identified as reasonably expected to occur and to affect the Group's prospects, based on evidence of emergence (p. 76). Information reasonably available at the relevant time was used (p. 72).

Time frames (p. 76): short term 1 to 5 years (strategic planning cycles); medium term 6 to 10 years (real estate planning and development cycles); long term 11 to 25 years (asset life cycle and longer dated development project delivery).

Where concentrated (pp. 77–84). Each climate-related risk and opportunity (CRRO) lists its concentration by business and geography: PR1 Investments, Development; PR2 Development, Construction; TR1 Investments, in Sydney, NSW and Melbourne, Vic; TR2 Development, Construction, in Australia; TR3 Investments, Development, Construction; TO1 Investments, Development.

Effects on the business and its value chain.

• Property assets (PR1, p. 77): physical risks have potential to influence asset integrity and operational continuity, which contribute to long-term asset value.
• Construction (PR2, p. 79): acute weather risks have potential to influence project delivery schedules.
• Investors and tenants (TR1, p. 80): expectations for all-electric assets will increase, and existing fossil fuel dependent commercial assets may be exposed to increased vacancy rates and lower investor demand.
• Supply chain (TR2, p. 81): decarbonization of carbon-intensive sectors is underway, and market dynamics are creating a two-tier pricing structure, with green premiums for low embodied carbon materials and rising compliance costs for traditional materials.
• Costs (TR3, p. 83): demand for low-carbon materials and investment in electrification and high-performance building systems could increase development and construction costs.
• Capital (TO1, p. 84): investors increasingly place a premium on assets that demonstrate physical resilience and ability to perform in a low-carbon economy.

Transition plan (pp. 83, 85). Regional climate transition plans (Mission Zero Roadmaps) aim to meet Net Zero by 2025 for Scopes 1 and 2 (market-based) and Absolute Zero by 2040, without carbon offsets, for Scopes 1, 2 and 3. Five key steps: a decarbonization investment strategy; phasing out diesel and gas in operations; 100 percent renewable electricity before 2030; collaboration with supply chain partners, tenants and residents.

Pathway to Absolute Zero (p. 83). The Australian Government's commitment to net zero is expected to underpin the pathway. Significant cross-sector collaboration and industry-wide investment are required. The rate of sector-wide decarbonization depends on how and when the Built Environment Sector Plan is translated into enforceable policy settings.

Responses (pp. 77–81). The Climate Related Risk Assessment (CRRA) process (p. 77); the Weather Scenario Planning Tool (p. 79); new commercial developments planned fossil fuel free and electrification of selected Australian office assets (p. 80); lower embodied carbon procurement (p. 81).

Budgeting (p. 85). Carbon price considerations are built into Development and Construction project emissions forecasting and budgeting.

Progress (p. 85). The first milestone, Net Zero for Scopes 1 and 2 by FY25, and the 100 percent renewable electricity by 2030 goal were achieved. Outside the Sustainability Report, the Annual Report says climate transition plans are being updated (pp. 6, 20).

The Paris Pledges scenario was used as the guide to assess current and anticipated financial effects (p. 76). Each CRRO page lists the Statement of Comprehensive Income, Statement of Financial Position and Statement of Cash Flows items potentially impacted (pp. 77–84).

Scenarios (p. 75). The Group updated its 3 climate scenarios in 2025 (initial analysis 2019–2022) using IPCC and IEA projections, selected in line with AASB S2 and the Corporations Act 2001 to capture transition and physical risks. Modeling is primarily qualitative, with quantitative analysis where appropriate. Impacts were assessed over the short, medium and long term.

Paris Pledges guided financial effects; Transformation and Polarisation were used to assess resilience (p. 76).

Resilience (pp. 78–84). Strategy and business model are likely to remain resilient for PR1 (Polarisation) and TR1, TR2 and TR3 (Transformation), and likely to reinforce resilience for TO1. For PR2 (Polarisation), the Weather Scenario Planning Tool and Delay Register Tracking data are said to improve resilience.

Uncertainty (pp. 76, 78). Scenarios are illustrative, not probabilities. SSP1-2.6 approximates a ≤1.5°C trajectory but is approximately a 1.8°C median outcome. Annual Expected Loss estimates are indicative, not precise forecasts.