#### At CP Axtra, a robust governance structure is in place to facilitate the oversight of climate-related issues. The Board of Directors (the Board) is the ultimate decision-making body and is responsible for the overall oversight of the Company, including overseeing and approving business strategic plans and managing approaches, driving response measures related to environmental, social, and governance (ESG) issues, which also covers the management of climate-related risks and opportunities. The Board considers and reviews its sustainability-related issues and performance as well as mission and strategic plans at least once a year, and assigns relevant functions to develop respective action plans to address these issues.
Figure 2 Organizational Structure of Climate Governance
Under the Board's oversight, several committees are established to assist the Board in the Company's management of climate-related risks and opportunities, as well as oversee daily operations and report back to the Board in a timely manner (Figure 2).
These committees include the following:
▪ Corporate Governance and Sustainability Development (CG&SD) Committee
▪ Sustainability Development Committee
▪ Risk Management Committee, under the Audit Committee
In addition, the Climate Resilience Working Team was established in June 2022 under the Sustainability Development Committee to enhance the implementation of climate strategy. The roles and responsibilities of each committee are summarized in Table 1.
Table 1 Roles and Responsibilities of Key Functions
CP Axtra Composition Climate-related Roles and Responsibilities
Functions
Board level
|CP Axtra Functions|Composition|Climate-related Roles and Responsibilities|
|---|---|---|
|CG & SD Committee|Chaired by an independent director and|▪ Identify and monitor material climate-related risks and opportunities|
|---|---|---|
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|Col1|consists of non-executive directors knowledgeable and experienced in sustainability issues|▪ Endorse policy, framework and strategies to promote sustainability development and climate resilience in the company for the Board's approval ▪ Supervise, monitor and review the Company's operations against its climate strategy, action plan and goals through corporate-level oversight ▪ Report directly to the Board|
|---|---|---|
Executive management level
Sustainability
Development
Committee
environmental
performance
Risk
Management
Committee
12 executives with
Company.
Supervisory / Operative level
|Sustainability Development Committee|Chaired by one of the Board members, the committee consists of senior executives from all departments responsible for economic, social and environmental performance|▪ Oversee the efficiency and effectiveness of sustainability and climate performance throughout the Company ▪ Establish targets, develop strategies, management approaches, and performance indicators for climate- related issues ▪ Assign working groups to drive organizational performance to comply with the Company's objectives ▪ Monitor and review progress on climate actions on a quarterly basis, prepare annual action plans on materiality issues and ESG risks, for the CG & SD Committee's approval ▪ Communicate the progress and commitment of the climate dimension within sustainability strategies to internal and external stakeholders|
|---|---|---|
|Risk Management Committee|The committee consists of company executives and 12 executives with expertise and experience in risk management. It is structurally independent of the business lines and reports directly to the top management of the Company.|▪ Formulate a risk assessment framework and risk management policies covering environmental risks (including climate change) ▪ Oversee climate-related risk management ▪ Defines the direction of risk management of the Company according to its risk appetite and risk policy ▪ Review corporate strategies to ensure the adequacy and appropriateness of risk management for climate-related issues ▪ Report to the Audit Committee and the Board on its performance annually|
|Climate Resilience Working Team|Chaired by a member of the Sustainability Development Committee and consists of 17 representatives across departments including Sales and Operations, Supply Chain Management, Construction and Facilities, Risk Management and Compliance, Sustainability, Finance Planning and Analysis, Corporate General Affairs, Account|▪ Establish operational targets related to climate resilience, such as increasing the share of renewable energy and low-carbon energy, in line with the company's sustainability strategy ▪ Implement GHG emissions reduction and offset programs and provide quarterly updates to the Sustainability Development Committee ▪ Examine technology options and identify solutions for emissions reduction and climate change mitigation that are suitable for the Company ▪ Monitor and ensure compliance with internal environmental policy and guidelines, as well as laws and regulations on GHG emissions ▪ Engage with stakeholders to raise awareness on climate issues, and collaborate with relevant stakeholders on climate change management and climate resilience|
|---|---|---|
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|Col1|Col2|▪ Communicate environmental performance to the Sustainability Development Committee and to other stakeholders via reports and other disclosure channels at least once a year|
|---|---|---|
#### Additional information on the governance framework of CP Axtra is detailed in Section 2 Corporate Governance in our 2022 Annual Report.
As an enabler towards meeting its climate ambitions and driving climate action within the company, CP Axtra has also included climate-related metrics as part of its senior executives' key performance indicators and as part of the Company's long-term incentive plan. Contributions of performance indicators for energy efficiency and other carbon neutral initiatives ranges from 10-25% of total performance indicators.