Simon Sustainability Report 2020-2021

CLIMATECHANGE IMPACT SCENARIOANALYSIS

We have evaluated the resilience of our strategy in a qualitative scenario analysis exercise, taking into consideration two different climate-related scenarios. We leveraged two of IEA’s scenarios that are published in their 2019 World Energy Outlook Report: Sustainable Development Scenario (SDS) and Stated Policies Scenario (STEPS). The time horizons associated with these scenarios are long-term and extend through the year 2040. The policy intensive SDS and STEPS scenarios have presented opportunities for strategic considerations in response to the related risks and opportunities below:

Scenario(s)

Climate-related Risk

Business Impact

Strategy Response Considerations

SDS

Establishment of a carbon price of $140/tonne by 2040, mandatory cap-and-trade schemes in some states and a California economy- wide cap-and-trade scheme. Expectation of universal access to electricity along with a phase out of fossil fuel subsides.

May increase operating expenditures.

Implement an internal carbon price to prepare for a possible externally imposed future carbon price.

SDS

May encourage more online retail businesses thereby increasing the difficulty to attract new physical tenants and reduce lease income.

Set renewable energy procurement thresholds to optimize use of incentive programs, as well as mitigate future carbon prices and associated regulations while also helping track toward our Science-Based Target.

SDS

Expectation of roll out of more net-zero building standards and adherence to such standards from tenants or other stakeholders.

May require engagement of new construction vendors and increase operating expenditures and capital allocation.

Continue to actively engage our tenants on climate-related risks and opportunities.

SDS & STEPS

Implementation of existing (STEPS) and new (SDS) policies that support renewable, lower-carbon technologies, and energy efficiency programs. Expectation of increased severity and likelihood of physical climate- related risks in the short and medium (STEPS) to long term (SDS). Availability and implementation of a transparent and detailed deep decarbonization strategy, consistent with the 2°C – or below – with GHG emission targets for 2020, 2030, and 2050.

May increase capital allocation and funding for projects.

Implement more rigorous vendor selection guidelines to enable new construction and renovation projects to meet net zero emissions building standards and any other current or future building codes. Continue to actively engage our utility companies, local governments, and construction vendors in order to best prepare them and our portfolio for a smooth low- carbon transition. Conduct a physical climate screening to assess which climate-related hazards pose elevated risks to specific facilities in order to better guide capital planning initiatives for mitigation and adaptation measures.

SDS & STEPS

May damage physical infrastructure and increase operating expenditures and capital allocation.

GOVERNMENT & INDUSTRY RELATIONS

May cause store closures and loss of tenants due to more frequent business interruption and reduce lease income.

The Sustainable Development Scenario employes ambitious policy roll-outs, inclusive of 3 SDG outcomes (i.e. universal access to energy, to reduce the severe health impacts of air pollution, and to tackle climate change), and implementation of wide-scale renew- able technologies that together are expected to mitigate emissions and limit global temperature rise to 1.65 °C with a 50% probability.

The Stated Policies Scenario assumes the support and deployment only of policies that have been already announced or implemented and is projected to allow emissions to rise to 4°C under a more business-as-usual context.

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