At Prosperity REIT, we believe that corporate responsibility is as equally important as maximizing financial returns for our shareholders. Therefore, we have established a three-layer ESG governance structure to ensure effective ESG governance and management of Prosperity REIT.

Effective risk management is of utmost importance to mitigate business risks along the way to achieve our strategic goals. We have adopted a systematic and standardized method — Enterprise Risk Management (ERM) system, which consists of three main parts, including risk governance, risk infrastructure and supervision of risk ownership, to provide clear responsibility and accountability structures for risk management.

Our Alignment with ARA Enterprise Risk Management system

Prosperity REIT’s ERM Framework is approved by the Board and is administered by the Risk Management Committee (the “RMC”) of the ARA Group, which identifies, evaluates and reports the risks to the Audit Committee. The RMC comprises the Group CEO, Senior Director of Group Finance, Legal & Compliance Director and Head of Group Risk Management & Internal Audit Department as an independent advisory role. It identifies the strategic, operational, financial and compliance risks faced by the various business units and set out the appropriate mitigating actions and monitoring mechanisms to respond to these risks and changes within the Group and the external business environment.

Regular Risk Management Reporting and Controls at Prosperity REIT

Prosperity REIT’s Risk Profiles are reported to the Audit Committee and the Board of the REIT Manager every half year, to highlight the changes in risk assessment, quantitative and qualitative factors affecting the inherent risk levels and effectiveness of mitigating controls supporting the residual risks, as within the risk appetite approved by the Board. Key ESG risks on asset level are identified, including but not limited to the following topics:

Our ESG commitments are not limited to our own business operations, but are extended throughout our supply chain. The Prosperity REIT Operation Manual serves as an internal guide in factoring social responsibility in the procurement and supplier selection process. Regular on-site inspections are conducted to assess the performance of contracted parties against our standards. To ensure quality services are provided to our customers, the project delivery capability of suppliers is also taken into account.

In compliance with the Prevention of Bribery Ordinance (Cap. 201), any misconduct including bribery, anti-competition, money laundering, fraud and corruption, are strictly forbidden. Integrated into the Code of Conduct, our anti-corruption policy is a practical guide for employees in dealing with situations of handling gifts and hospitality in a law-abiding manner. It is mandatory for our employees to sign a declaration of compliance every year. Utilizing the online training materials from Hong Kong ICAC, we also provide training on anti-corruption and ethics to maintain employees’ awareness of business ethics.