Responsible Capital Allocation Community Contributions Good Governance & Shareholder Alignment Diversity, Inclusion & Well-Being Climate Action Transparency & Guiding Principles Appendices 71 Risk Management Our processes used to identify, assess, and manage climate-related risks Our company does not operate mines, develop For an in-depth discussion of our due diligence stakeholders to provide what transparency we aimed at defining our ESG and climate strategy projects or conduct exploration. Rather, our process, please refer to page 6 in this ESG Report. can of ESG and climate-related risks impacting going forward, particularly in respect of our business model is focused on growing and our assets and to respond to any significant capital allocation. Management, the Board and managing our portfolio of royalty and streams If ESG risks, including climate-related risks, concerns. This helps identify, assess and its Committees also apply a “look-back” in the with the view to holding onto these perpetual identified in our due diligence processes are mitigate reputational risks. event of an ESG or climate-related event or issue or long-life interests for extended time horizons. assessed and deemed to be material or adverse arising at an existing asset to determine if such Since our IPO in 2007, we have not made any to the prospects of the operator or project or to As discussed in Governance section above in issue was (or should have been) accurately material divestment of the assets in our portfolio. our royalty or stream interest, this may result in this Appendix C, the Board and its Committees identified and assessed in due diligence. This our decision not to proceed with an opportunity. frequently meet with senior management to approach is intended to identify any gaps in It follows that the crucial period for the We have passed on a number of otherwise discuss our company’s ESG and climate-related our due diligence and to strengthen our risk identification and assessment of ESG risks, prospective opportunities because the ESG risks risks and exposures. This collaborative effort is identification and management processes. including climate-related risks, is at the outset, were too substantial. If we elect to proceed with prior to acquiring royalty and stream assets. We an opportunity, we endeavour to include in our have adopted a comprehensive due diligence contractual arrangements provisions including process when selective opportunities and potential reporting obligations, audit and inspection rights, operating partners. This due diligence review operating covenants, transfer restrictions and involves utilizing the extensive experience of remedies, which help manage and mitigate Capital Allocation Asset Management our multi-disciplinary management team and climate-related risks. For an in-depth discussion Risk board of directors to evaluate ESG and climate of these contractual protections, please refer Management risks specific to a mining or energy operation and to page 7 in this ESG Report. Risk Pass on the plans adopted by the operator to manage such Identification, Due diligence process leveraging Opportunity Risk identification and assessment Assessment experience of: OR through: risks. In early 2022, we subscribed to McKinsey Once we have acquired an asset, the process & Management • Board of Directors • Monitoring assets and operators MineSpans, a data platform providing more of identifying and assessing ESG risks, including Provide for • Management Contractual • Engagement with operators than 1,000 cost and supply points per mine climate-related risks, involves regular engagement • External consultants Protections • Stakeholder engagement for over 3,800 mines globally. Access to this with our operators, leveraging the aforementioned service will facilitate the institutionalization contractual reporting obligations and our audit of the review of climate and other ESG data and inspection rights, in order receive regular Integration How did we do? What will we do? prior to making acquisitions. updates. If any ESG or climate-related event or into occurrence transpires at an operation, we offer Overall Retrospective look back Collaboration between management, We also routinely engage external experts to to provide assistance to the operator. We also Risk to strengthen risk identification the Board and its committees to Management and assessment processes define ESG and climate strategy assess risks, including climate-related physical, monitor the performance, including the carbon regulatory, market and reputational risks. The footprint and the climate-related commitments, climate-related considerations relating to a plans, targets and initiatives of certain of our specific opportunity will vary considerably producing assets. For further information depending on the commodity-type, jurisdiction, regarding the climate-related performance operator, operation, etc. but, by way of example, of our top revenue generating mining assets, these may include water scarcity, power supply please refer to page 10 of this ESG Report. and environmental permitting considerations. Finally, we also regularly engage with our own