WE ENDEAVOUR TO PROGRESS OUR SUSTAINABILITY JOURNEY IN BROADER PERSPECTIVES WITH THE AIM OF MAINTAINING A ROBUST BUSINESS MODEL WHICH EMBODIES OUR COMMITMENT AND FOCUS ON THE SUSTAINABILITY PRIORITY AREAS BY BALANCING THE ECONOMIC, ENVIRONMENT AND SOCIAL NEEDS OF OUR STAKEHOLDERS IN DELIVERING LONG-TERM VALUE AND CONTRIBUTING TO THE WELL-BEING OF OUR COMMUNITY

KLCCP Stapled Group champions sustainability development through the creation of sustainable values economically, environmentally and socially, embedding sustainable strategies across all our business operations, maintaining high standards of conduct and maximising long-term value creation for the benefit of our stakeholders.

Our business strategy takes into perspective the risks and opportunities affecting the industry and organisation, while keeping abreast of evolving stakeholder expectations in the discipline of sustainability, such as climate change and social risks including human rights. We are focused in our efforts to address the material sustainable matters of KLCCP Stapled Group across our five priority areas Corporate Governance, Environmental Stewardship, Security, Safety & Health, Our People and Reliable Partner.

OUR APPROACH

Our business is centered on real estate development, investment and management. We focus on how we manage our operations, mitigate our risks and grow our business to create competitive advantage whilst leveraging on the changes in the external environment, creating long term growth and stakeholder value. This entails maximizing performance of our assets and investments, and managing expectations of our stakeholders, namely our employees, tenants, shoppers, guests, suppliers and contractors.

Our sustainability approach focuses on the five sustainability pillars, reflecting the FTSE4Good themes and indicators for the Real Estate Holding and Development sector where KLCCP Stapled Group is categorised and taking into consideration our unique business requirements, the global and domestic industry landscape and also the needs of our stakeholders.

We embed sustainability in all our business operations and believe participation by top management and employees is vital to the successful implementation of the strategies for sustainable development. We aim todeliver financial value and societal benefits by balancing the commercial objectives with the environment and social needs of our stakeholders, underpinned by solid governance and ethical business practices.

OUR SUSTAINABILITY FRAMEWORK

In managing the risks and opportunities which supports the business strategies, goals and aspirations, we developed a Sustainability Framework which encapsulates our principles on sustainability and aligns to our five priority areas. We took into perspective our strategic and operational risk profile and opportunities presented by the changing business environment, particularly in the real estate and construction industry.  Premised on the PETRONAS’ Corporate Sustainability Framework, we adapted it to our context and framed the KLCCP Stapled Group Corporate Sustainability Framework which embodies 8 focused areas, comprising Shareholder Value, Corporate Social Investment, Climate Change, Natural Resource Use, Health, Security, Safety & Environment, Workforce Development, Human Rights and Governance & Business Ethics.

KLCCP Stapled Group’s Sustainability Governance Structure was established to ensure Board’s oversight on the formulation and execution of sustainable strategies for the organisation. This involved the formation of KLCCP Stapled Group’s Sustainability Steering Committee (SSC) to ensure accountability, oversight and review in the identification and management of sustainability matters within the organization. The SSC has joint chairmanship comprising the Chief Financial Officer and Head of Health, Safety & Environment whilst members of the SSC comprise leaders of diverse areas of expertise covering all facets of KLCCP Stapled Group’s business operations. The SSC is supported by a working committee to ensure sustainability is considered and integrated throughout our business operations.

The Chief Executive Officer (CEO) is responsible for driving the implementation of sustainability strategy for KLCCP Stapled Group and reports the progress to the Boards of KLCCP and KLCC REIT. The Boards represent the highest authority and is ultimately accountable for managing sustainability matters in KLCCP Stapled Group. The governance structure facilitates regular reporting on sustainability matters to CEO with updates to the Boards.

MATERIAL SUSTAINABLE MATTERS

We identify our material sustainable matters by taking into account the potential risks in our business activities in light of the social and environment needs and the economic factors impacting the real estate industry.   Our material areas are also identified based on inputs from both our internal and external stakeholders through observation and enquiries received. An internal materiality assessment is carried out annually to map out our sustainability matters.

IDENTIFYING MATERIALITY

Step 1 : Issue Identification

The materiality process began by identifying which of the sustainability issues are important to our external and internal stakeholders from a combination of internal and external source documents and analysis of megatrends relevant to the industry. We benchmarked against our real estate and REIT players, both globally and locally to identify the sustainability matters that are common to the real estate and construction sector. As a constituent of FTSE4Good Bursa Malaysia Index, our identification of material areas were also based on the FTSE4Good themes and indicators for the real estate and construction sector which we fall under. The identification step was also aligned to the boundaries in which we operate in and determined if the issues were within or outside our direct operational control. The stakeholders considered for the development of the list of sustainability issues were:

Internal: Employees

External: Suppliers and Service Providers, Customers and Consumers, Shareholders/Investors/Business Partners, Government/Local Authorities, Regulators, Community and Media

Step 2 : Prioritisation

Prioritisation is the process of determining how important the identified topics are to our stakeholders and to us. We translated the issues into sustainability risks and opportunities to determine which are material. Based on the identification process, we then engaged with the SSC and narrowed down the list of relevant sustainability issues for KLCCP Stapled Group based on the significant Economic, Environmental and Social (EES) impact to the organisation and the matters that substantively influence the decisions of stakeholders. With that, we identified 12 material sustainable matters for KLCCP Stapled Group.

Step 3: Materiality Assessment

To begin the Materiality Assessment process, the SSC identified the internal departments to solicit feedback on material issues from an internal business and external stakeholder perspective. The participants included representatives from the areas of Development and Leasing, Facilities Management, HSE, Procurement, Legal, Corporate Communications, Investor Relations and Business Development and our retail and hotel operations. The participants were requested to rank the importance of these 12 shorlisted material issues based on the five priority areas and in accordance to the impact on the external and internal stakeholders. Based on the degree of impact of either high, medium or low, the scores were given a weighting factor and were plotted on a materiality matrix using the average internal and external score.

Step 4: Review and Feedback

The final materiality matrix was presented to the SSC for review and feedback, and subsequently presented to CEO and the Boards. It was agreed that KLCCP Stapled Group would proceed with this list of sustainable matters for the Sustainability Report.

IDENTIFIED MATERIAL SUSTAINABLE MATTERS

SEGMENT	MATERIAL SUSTAINABLE MATTERS	PRIORITY AREAS	KEY INDICATORS
Governance	Corporate Governance and Business Ethics	Corporate Governance & Compliance Business Ethics, Integrity & Corruption Management	Compliance of regulatory requirements Promote transparency and disclosure Committed to ethical practices guided by the corporate governance principle
	Risk Management	Risk & Crisis Management	Reference made to external standards to inform the risk management system and reporting transparency Describes the risk management framework Prepares for major Environmental, Social and Governance (ESG) catastrophic events and incidents
Economic	Financial Sustainability	Sustained Returns & Profitable Growth	Commitment in delivering stable and sustainable returns to holders of Stapled Securities and endeavour to stay competitive and resilient
	Economic, Social & Industry Growth	Promoting Economic, Social & Industry Growth	Current or expected impact on communities and local economies
Environment	Climate Change	GHG Emissions Reduction Efficient Energy Management Renewable Energy	To reduce GHG emissions To promote and support energy saving initiatives To reduce energy consumption and to seek new technologies/innovation with low carbon footprint for our business operations Amount of energy reduction consumption achieved as a result of conservation and efficiency initiatives Cost saved from renewable energy
	Environmental Management	Water Management Waste Management Green Buildings Responsible Material Use Biodiversity	Total water consumed and amount of water reduction achieved as a result of efficiency initiatives Total volume of hazardous waste generated and disposed Total waste intensity and waste diversion Total waste recycled To achieve full GBI Certification for PETRONAS Twin Towers and Menara 3 PETRONAS To promote the use of eco-friendly materials in our business operations Conservation of the ecosystem
Environment	Security, Safety & Health	Safety & Health Management Security Management	Awareness programme for employees and contractors Ensuring safety work culture at workplace Amount of workers undergoing safety and health training per annum Rate of work-related injuries per annum, number of work-related fatalities To ensure safe environment within and surrounding our premises for our guests, tenants, customers and visitors
	Our People	Equality, Diversity & Inclusion Skills & Capability Development Talent Management Workforce Engagement	Number of employees by gender, age group, ethnicity and position Leadership training conducted and succession ratio Number of training per annum for employees & amount invested on learning & development programmes
	Human Rights & Labour Practices	Responsible Employment Practices Non-Discrimination	Equality in employment Compliance to Malaysian Labour Laws and Minimum Wage regulation Number of discrimination incidents, number of child/forced labour incidents Measures taken to support freedom of association Addressing and monitoring grievance and complaints
	Supply Chain Management	Local Procurement Management Responsible Product Sourcing	Assessment of new and existing suppliers to identify potential negative social impact, results of supplier monitoring/ audit, action on supplier's non-compliance to social impacts assessment To encourage procurement from responsible and reputable suppliers
	Corporate Social Investment	Societal Well-being	Amount of contribution towards the well-being of the society
	Customer & Tenant Management	Tenant Engagement Customer Satisfaction	Improvement in customer service Meeting the needs of guests, tenants and customers Committed to provide the highest standard of product and services to our guests, tenants and customers

Note: Key indicators are with reference to Bursa & FTSE4Good reporting guidelines as well as benchmarked against industry's best practices.

Materiality Matrix

STAKEHOLDER MANAGEMENT

KLCCP Stapled Group recognizes stakeholder management as an important aspect to ensure transparency and accountability. Communication with stakeholders is imperative in understanding and managing their expectations and provide new perspectives in generating positive impact to the organisation. With expectations changing rapidly in the real estate industry, investors, community, regulators and other stakeholders are continuously seeking for greater levels of transparency with respect to the economic, environment and social issues. We continue to engage and manage our stakeholders’ needs and expectations, taking into consideration their viewpoints towards more tangible business value creation.

KLCCP Stapled Group has a diverse group of stakeholders comprising both internal and external stakeholders whom we have been engaging with through the various communication channels to identify and understand the issues that are most important to them.

STAKEHOLDER GROUP	ENGAGEMENT METHOD	FREQUENCY OF ENGAGEMENT	LEADING AREAS OF INTEREST
Suppliers and Service Providers	Face-to-face meetings Evaluation/Performance Review Corporate presentations Supplier training programmes Signing ceremonies	Ad-hoc Annually Ad-hoc Regular Ad-hoc	Fair practices Transparent tender processes Compliance with laws and regulations
Customers and Consumers	Customer Feedback Management – hotline, surveys, email queries Loyalty programmes Events Dialogue and engagement Social Media	Daily Ad-hoc Ad-hoc Ad-hoc Daily	Customer relationship management Safety and Security KLCCP Stapled Group’s competitive edge and differentiating factor in the marketplace Innovative and trend setting practices
Employees	Townhall sessions Dialogue and Engagement Intranet portal Employee satisfaction survey Annual dinner Recreational and sports club events	Annually Regular Regular Annually Annually Regular	KLCCP Stapled Group’s long term growth, strategies and performance Staff safety and wellbeing Employee benefits Training and career development Employee performance
Stapled Securities Holders/Investors/ Business Partners	Annual General Meeting One-on-one/small group meetings Website Investor relations events Quarterly reports Annual report	Annually Regular Regular Regular Quarterly Annually	Distribution per Stapled Security Annual Total Return Efficient operations leading to sustainable profitability Long term growth and stability Board and governance Sustainable development and practices
Government/Local Authorities/Regulators	Emails/letters Discussions on government initiatives Formal meetings Inspections Event Workshops/Seminars	Regular Ad-hoc Ad-hoc Ad-hoc Ad-hoc Ad-hoc	Governance compliance Construction and Building By-Laws compliance Industrial and workplace relations Environmental management and compliance Security and Safety management
Community	Community Engagement activities Annual reports Website/Information leaflet/kiosks	Regular Annually Daily	Health and safety impact Environmental impact Social contribution
Media	Press release/media invites Press conferences, question and answer sessions Media coverage Media luncheon	Quarterly Annually Ad-hoc Annually	Financial performance Growth strategies, new projects and prospects Operational issues and financial impact Board and governance Corporate responsibility

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