Annual Report 2023

88 8 China Merchants China Direct Investments Limited Annual Report 2023 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (CONTINUED) ENVIRONMENTAL PROTECTION (CONTINUED) Climate Change Mitigation and Adaptation Climate change has gradually become a global concerning issue in recent years. The Company recognises that these risks may have impacts on the Company’s investment returns. Such risks should be timely identified, and measures should be established in order to mitigate these climate-related risks caused by extremely weather conditions. The Company has established its climate change policy to provide guidelines for the Company and the Investment Manager to identify and mitigate these risks and potential impacts to the Company and its shareholders. Moreover, the climate change policy also provides guidance to climate risks identification, mitigation and adaptation to help build resilience to these potential climate events, which can help the management to prevent and cope with the impacts from extreme weather. During the Reporting Period, we identified different climate-related risks. For physical risks, occurrence of extreme weather events, such as extreme wind and heavy rainfall, can potentially disrupt transportation system, which turns out to disturb our normal daily operations. Additionally, these circumstances pose threats to the safety of our offices and employees of the Investment Manager. As for transition risks, both legal risks and reputation risks may affect the Company. Climate-related issues such as risks in regulatory change may negatively affect our climate resilience and, potentially resulting in the devaluation of the assets held by the Company. Furthermore, the change in customer preference under the carbon reduction trend may also bring uncertainty on our investment portfolio and returns. To mitigate the climate-related risks, we believe that it is critical for us to consider climate-related issues in both our operations and investments. It would be important to adopt green office practises, such as enhancing energy efficiency, to lower our impact on the climates. On the other hand, we would consider climate-related issues and trend when making important business and investment decisions, after studying its costs and benefits. For example, we would consider climate-related risks before making new investment choice to the Company’s portfolio. Our climate change policy also contains guidance to climate risks identification, mitigation and adaptation to help build resilience to these potential climate events.