Consolidating Strengths ADVANCING SUSTAINABILITY Sustainability Report 2022
Cover Rationale Ranhill continues to set our sights on delivering sustainability through the three common pillars of People, Planet and Profit (“3P”). Ranhill’s three pillars aptly forms the three diamonds with the convergence of strategic thrusts, to deliver a solid, structured direction for the industry’s organic growth through increased resilience, to secure and deliver a myriad of advantages to our community under the roof of Ranhill. SUSTAINABILITY AND ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) As part of our commitment to protect the environment, this sustainability report is printed on FSC® certified mix paper. Read more on Ranhill’s global efforts on Sustainability by downloading our latest Sustainability Report here ENVIRONMENTAL AWARENESS & PRESERVATION CONTRIBUTION TOWARDS SOCIAL WELLBEING & CAPACITY BUILDING ENHANCING GOVERNANCE ACROSS THE GROUP INSPIRATIONAL WORKPLACE & CULTURE
BUSINESSES We are a responsible global business Ensuring a sustainable balance between environmental protection, social responsibility and profitability in all aspects of where we do business. Environment Sector Treated Water Supply Services Water, Wastewater Treatment & Reclaimed Water Treatment Engineering Services Sector Engineering, Procurement and Construction Management (“Epcm”), Engineering, Procurement, Construction and Commissioning (“Epcc”), Project Management Consultancy (“Pmc”), Operations and Maintenance (“O&M”) Energy Sector Energy and Renewable Energy (“RE”) Our Reports REPORTING SUITE ANNUAL REPORT 2022 (“AR2022”) The AR2022 provides a comprehensive account of Ranhill’s financial performance including audited financial accounts of the Group. It also provides information pertaining to the Group’s business and operational strategies, risks and opportunities, outlook and prospects, as well as information pertaining to the business model and industry value chain. SUSTAINABILITY REPORT 2022 (“SR2022”) The SR2022 provides a detailed account of the Group’s sustainability performance as per its identified material Economic, Environmental and Social (“EES”) topics. SR2022 is developed in accordance with the Global Reporting Initiative 2020 – Core Option (“GRI”), Bursa Malaysia FTSE4Good Index, Sustainability Accounting Standards Board (“SASB”) disclosures and (where relevant), the Task Force on ClimateRelated Financial Disclosures (“TCFD”). CORPORATE GOVERNANCE REPORT (“CG2022”) The CG2022 demonstrates how Ranhill has applied corporate governance practices of the Malaysian Code of Corporate Governance 2021 (“MCCG 2021”) including updates prescribed by the code in FY2022. Non-Revenue Water Management
Annual General Meeting Date 17 May 2023, Wednesday Time 2.30 p.m. Venue Taming Sari 1 & 2, Ground Floor, Royale Chulan Kuala Lumpur, No. 5 Jalan Conlay, 50450 Kuala Lumpur. 9th Contents Business Overview 02 Corporate Philosophy 03 Ranhill Fact Sheet 04 Our Presence Performance Review 06 Group Financial Highlights 08 Message from the Chairman and Chief Executive About This Report 10 Introduction 10 References 10 Reporting Period 10 Applied Frameworks 10 Reporting Scope and Boundary 11 Exclusions 11 Report Quality & Data Assurance 11 Statement of Use 11 Forward-Looking Statements Disclaimer 11 Report Availability and Feedback 11 Membership in Associations Sustainability At Ranhill 12 Measuring Progress 15 Management’s Approach to Sustainability 16 Sustainability Governance Structure 22 Stakeholder Engagement 28 Assessing and Prioritising Material Topics ECONOMIC PERFORMANCE 29 Direct Economic Values Created 30 Indirect Economic Values Created ENVIRONMENTAL Awareness & PRESERVATION 33 Circular Economy 35 Addressing Non-Revenue Water Challenges in Malaysia 36 Climate Change 37 Preserving Water Resources 42 Energy Consumption and Carbon Emissions 48 Waste Management 48 Biodiversity CONTRIBUTION TOWARDS SOCIAL WELLBEING & CAPACITY BUILDING 50 Contribution Towards Social Wellbeing & Capacity Building Inspirational Workplace & Culture 52 Talent Management and Development 54 Equal Opportunity Workplace (Diversity & Inclusivity) 55 Recruitment & Selection 55 Employee Competency and Career Development (Training) 59 Employee Training & Development 61 Succession Planning and Management 61 Work Life Balance Enhancing Governance Across The Group 62 Occupational Health and Safety 63 Worker Representation on Joint Health and Safety Committees 63 Continual Identification and Assessment of High Risk Locations & Mitigation Measures 64 Health and Safety Related Training 65 Health and Safety Performance 66 Public Health and Safety 66 Customer Satisfaction & Trust 68 Task Force on Climate-Related Financial Disclosures 72 GRI STANDARDS CONTENT INDEX 82 APPENDIX TWO: Ranhill SAJ COMPLIANCE TO SPAN KPIS 85 APPENDIX THREE: RWT COMPLIANCE TO REGULATORS’ KPIS 87 RANHILL (GROUP) LISt OF TRAINING COURSES 89 Ranhill SAJ TRAINING COURSES 96 RPI AND RPII OHS TRAINING COURSES
Bus iness Overvi ew 01 Sect ion 2 Ranhi ll Ut i l i t i es Berhad Corporate Philosophy Our Mission TO BE A REGIONAL LEADER IN WATER, WASTEWATER AND ENERGY WITH EMPHASIS ON CIRCULAR ECONOMY Our Vision ENRICHING LIVES THROUGH SUSTAINABLE SOLUTIONS Our Values Respect for the environment, communities we serve and for our employees Focused on delivering growth and value to our stakeholders Determination in sourcing and adopting innovative solutions Resourceful Respect Result ENRICHING LIVES Ranhill aspires to lift the quality of life by being at the forefront of nation building through sustainable environment and energy solutions using innovative and clean technology SUSTAINABLE SOLUTIONS Ranhill aspires to meet the needs for an enhanced quality of life and a cleaner planet through innovation We subscribe to the triple-bottom-line approach, to the Environment (Planet) and Communities (People) whilst achieving our Financial Objective (Profit) We inspire our employees to be innovative in providing solutions beyond customers’ expectations Pontian Dam, Johor
Bus iness Overvi ew Sect ion 01 3 SUSTAINAB I L I TY Report 2022 Ranhill Fact Sheet Ranhill is a constituent of the FTSE4Good Bursa Malaysia Index since 2019 Participant of United Nation Global Compact (UNGC) since 2008 Recipient of The Edge Malaysia ESG Awards 2022 (Gold) Utilities sector Senai-Desaru Expressway Bridge, Johor 46 Water Treatment Plants 99.8% Treated Water Supply Coverage (Rural) 100% Treated Water Supply Coverage (Urban) 714 Active Treated Water Reservoirs Provides Clean Water to 4 Million Consumers in Johor, Malaysia 24,002 km Total Pipelines 3,631 km Mains Distribution 20,371 km Reticulation Total Capacity 2,133 MLD Treated Water Treatment in Johor, Malaysia Provide Electricity 1.2 Million People in Sabah, Malaysia Total Potable Water, Wastewater & Reclaimed Water Treatment Capacity: Thailand: 117 MLD (100 MLD for WTP & WWTP) (17 MLD for WRTP) China : 227 MLD Total Potable Water, Wastewater and Reclaimed Water Capacity Local: 86.0% International: 14.0% Employees 4,018 Ranhill had engineered: Over 800 MLD Water Treatment Plants Over 601 km of Highways Over 200 km of Railway Over 70,000 Acres of Landbank Over 4 million sq.m of Building Space Owns and operates Combined Cycle Gas Turbine (CCGT) power plants Rugading: 190 Megawatt Teluk Salut: 190 Megawatt 2,392 GWh of electricity generated for Sabah NRW Level 26.3% 20.9 m3 / KM of Pipe / Day You can find more details on our website on www.ranhill.com.my
Bus iness Overvi ew 01 Sect ion 4 Ranhi ll Ut i l i t i es Berhad OUR PRESENCE CHINA THAILAND MALAYSIA
Bus iness Overvi ew Sect ion 01 5 SUSTAINAB I L I TY Report 2022 OUR PRESENCE CHINA • Concession agreement with local authorities or industrial park management councils • 12 Wastewater treatment plants ranging from 25-30 years • Total treatment capacity of 227 MLD THAILAND • 9 water, wastewater treatment plant and reclaimed water treatment plant • 100 MLD of total water and wastewater treatment capacity • 17 MLD of reclaimed water OTHER COUNTRIES (Multi Disciplinary of Engineering Services) • Engineering works for Santos WHP EPCI with Sapura Engineering, Western Australia • Pre-FEED for HI Development Project, Nigeria • Engineering Support to Sembcorp Marine under an EPCI contract awarded by North Oil Company (“NOC”) for Gallaf Batch 2 project, located field, off Qatar • Block 15-1/05 Lac Da Vang Oil Development, Vietnam • Neptune Deep Project, a FEED for gas de-hydration fixed platform (NNM CPP) in 120m of water in the Black Sea off the coast of Romania • Zawtika M-9 Development Project, Offshore, Myanmar • Marina Doha Residential Doha Office Tower, Qatar • Built a 113.5 MLD potable water treatment plant for Haldia Development in West Bengal • Bangladesh-Engineering for Public Sanitation Facility for 26 districts funded by Islamic Development Bank • First designed for float over project and detailed design, procurement support in Offshore Bombay, India for the B193 Development Project • Detailed engineering and project management services of 10,800 residential in Tajura, Libya • Provide project management services to Saudi Aramco, King Abdullah University of Science and Technology (“KAUST”) • Provide management and construction services of King Saud University for Girls (“KSUG”) in Riyadh • P-82 Floating Production Storage and Offloading (“FPSO”) contract, which will incorporate carbon capture and closed flare technology features in Brazil MALAYSIA Water Supply Services in Johor, Malaysia • Exclusive licence to provide source to tap water supply services throughout the State of Johor • 46 Water treatment plants • The second largest water operations in the country with total design capacity of 2,133 MLD Engineering and Infrastructure Solutions Specialist • ExxonMobil Exploration and Production Malaysia Inc (“EMEPMI”) - Provision of Engineering, Procurement and Construction Management (“EPCM”) Services • Develop the Kasawari Gas Development Project as part of the overall block SK316 development strategy off the coast of Sarawak • Shell Rosmari & Marjoram Project Offshore Gas Plant • Senai-Pasir Gudang-Desaru Expressway (with 500m main span cable-stayed bridge) • Kuala Lumpur International Airport and KLCC • The world’s largest Carbon Capture Storage (“CCS”) project - the Malaysia Kasawari CCS in Sarawak Power Business in Sabah, Malaysia • The largest Independent Power Producers (“IPP”) in Sabah, Malaysia • Owns and operates two (2) 190 MW CCGT power plants in Kota Kinabalu Industrial Park • 21-year PPA with SESB for the sale of up to 380 MW of electricity generating capacity NRW Specialist: • Ranhill has achieved savings of 751 MLD • Developed 251 strategic and all mains models with over 1 million total number of connections • Designed and established over 1,200 District Metered Areas (“DMAs”) We aspire to lift the quality of life by being at the forefront of nation building through sustainable environment and power solutions using innovative and clean technology.
PERFORMANCE REVI EW 02 Sect ion 6 Ranhi ll Ut i l i t i es Berhad GROUP FINANCIAL HIGHLIGHTS Dividend Pay Out (RM’Million) FY2017 44.4 61% FY2018 53.3 82% FY2019 53.3 98% FY2020 29.8 79% FY2021 12.7 42% FY2022 32.2 33.8% • Dividend Pay-Out • Dividend Pay-Out Ratio (%) Dividend per Share and Dividend Yield FY2017 5.0 7.8% FY2018 6.0 5.0% FY2019 5.0 4.7% FY2020 2.8 3.1% FY2021 1.0 1.8% FY2022 2.5 5.49% • Dividend • Dividend Yield*(%) * Dividend yields are based on financial year end closing price FY2020 FY2021 FY2022 Revenue (RM’Million) 1,468.5 1,530.9 1,726.3 YOY 12.8% FY2020 FY2021 FY2022 Gross Profit (RM’Million) 315.9 339.0 333.2 21.5% 22.1% 19.3% • GP • Margin (%) YOY 1.7% FY2020 FY2021 FY2022 Profit After Tax Minority Interest (RM’Million) 37.6 30.6 95.3 2.6% 2.0% 5.5% • PATAMI • PATAMI Margin (%) YOY >100% Segmental Profit and Margin By Business Sector • Environment • Energy • Engineering Services • (%) Note * : Includes recognition of Deffered Tax Assets of RM32.5 million 20’ 119.7 21’ 112.9 22’ 217.9 22’ (8.2) 21’ 9.3 20’ 1.9 22’ 26.7 21’ *43.2 20’ 13.3 10.2% 0.8% 23.8% 9.7% 4.2% 28.6% 18.6% (3.1%) 9.2% Revenue By Business Sector (RM’Million) • Environment • Energy • Engineering Services 1,179.3 1,159.0 1,173.7 20’ 21’ 22’ 263.9 220.9 233.4 20’ 21’ 22’ 288.7 151.0 55.9 20’ 21’ 22’ FY2020 FY2021 FY2022 Profit Before Tax (RM’Million) 95.5 93.3 203.4 6.5% 6.1% 11.8% YOY >100% • PBT • PBT Margin (%)
PERFORMANCE REVI EW Sect ion 02 7 SUSTAINAB I L I TY Report 2022 Gunung Ledang Dam, Johor
PERFORMANCE REVI EW 02 Sect ion 8 Ranhi ll Ut i l i t i es Berhad MESSAGE FROM the Chairman and Chief Executive Tan Sri Hamdan Mohamad Cha i rman and Chi ef Execut i ve Dear Stakeholders, FY2022 has been a recovery year for the world as the global economy continued to recover post the COVID-19 pandemic. But beyond just the recovery of businesses and industries, the year in review marks a notable positive shift among all stakeholders.
PERFORMANCE REVI EW Sect ion 02 9 SUSTAINAB I L I TY Report 2022 MESSAGE FROM the Cha i rman and Chi ef Execut i ve The Conference of Parties (“COP”) 27 summit held last year in Sharm elSheikh, Egypt, continues from COP 26 in laying the necessary pathways for the world to expedite necessary change towards ensuring a liveable tomorrow. Even as the clock ticks closer to the point of irreversible changes, there remains plenty of hope and optimism as governments, corporations and other stakeholders, globally as well as domestically unite towards a common cause of pursuing economic, environmental and social sustainability. This is both an exciting and daunting period in the history of mankind. Yet, it is also a period that sparks hope, innovation, new possibilities and opportunities for both businesses and society alike. As governments continue to provide the necessary regulatory frameworks and enforcement action to drive change, the onus is on corporations to go beyond compliance and embrace the responsibility to lead and champion sustainability. At Ranhill, sustainability, as we have mentioned before has always been an intrinsic aspect of our business model. The application of circular economy approaches within our business operations, and also reflected in our solutions to clients has been a fundamental part of our approach. Operating in the environment sector, we are fully cognisant of the need to preserve finite natural resources and ensuring sustainable consumption. We continue to address the challenges of increasing consumption demand against a finite supply of river water that continues to come under pressure from climate change and other impacts. At the same time, the world remains energy-hungry, more so post pandemic as it pivots towards hydrocarbons once again to fuel economic recovery. Yet, while fossil-fuel sources such as crude oil gas remain relevant in the overall energy mix, the impetus has shifted towards Renewable Energy (“RE”) based alternatives. In this regard, I am happy to share our RE initiatives, which include the development of a 50 MW Large Scale Solar (“LSS”) farm which will be achieving its Scheduled Commercial Operational Data (“SCOD”) within FY2023. Ranhill is also participating in the Malaysian Government’s Corporate Green Power Programme (“CGPP”) in which solar power producers can construct a maximum 30 MW solar farm and energy generated sold directly to corporate clients via a Virtual Power Purchase Agreement (“VPPA”). In line with the CGPP, Ranhill has submitted a Request For Proposal (“RFP”) to the Energy Commission (“EC”) to construct two 29.9 MWac solar farms to supply clean energy to Ranhill SAJ. If the proposal is successful, the plants are expected to achieve Commercial Operation Date (“COD”) by the end of 2025. Another area worthy of mention is our involvement in carbon capture and storage related projects, namely for the oil and gas sector. Group subsidiary, Ranhill Worley, will be contributing its technical expertise in the design and build in carbon capture and storage facilities for the Malaysia Kasawari project, the world’s largest CCS project. Ranhill Worley will also be lending its expertise for carbon capture and storage for the Brazil P82 Floating Production Storage and Offloading (“FPSO”) facility and the SK410B field in Lang Lebah, off the Sarawak coast. We aim to capitalise increasingly on the opportunities emerging from more sustainable infrastructure development projects. Other notable projects include flood mitigation works in Kota Belud, Sabah. Within our operations, we continue to take stock of our environmental and social impacts. In FY2022, Ranhill inked a Memorandum of Understanding (“MoU”) with the Malaysia Green Technology and Climate Change Corporation (“MGTC”) towards developing a comprehensive Greenhouse Gas (“GHG”) baseline and roadmap for the Group’s operations. This effort is aligned with our Net Zero Carbon 2050 goal. Establishing a clear baseline of carbon emission across all Scopes One, Two and Three will enable the Group to then develop a clear pathway, comprising interim targets and comprehensive strategies to realise the 2050 goal. As in the previous year, we have continued to seek solutions towards addressing energy consumption, carbon emissions, waste, heat produced from operations, as well as looking to address the same impacts from clients. The specific highlights and achievements registered are provided in this report. Certainly, in FY2022, we have made significant strides in terms of sustainability – with improvements achieved across the triple bottom line of Environmental, Social and Governance (“ESG”) performance. We shall continue to press forward with initiatives to decarbonise our operations and to help other corporations do the same. At the same time, we are focused on restoring a downward trend for NRW in Johor and will continue to assist other states in Malaysia in doing the same. I thank you for your interest in Ranhill’s sustainability journey for FY2022. Our achievements serve as the stepping stone towards delivering greater, positive impacts for the country, corporations and society. TAN SRI HAMDAN MOHAMAD Chairman and Chief Executive
ABOUT THI S REPORT 03 Sect ion 10 Ranhi ll Ut i l i t i es Berhad ABOUT THIS REPORT INTRODUCTION Ranhill Utilities Berhad (“Ranhill” or “the Group”) is pleased to present its 7th standalone Sustainability Report (“SR2022”). SR2022 provides a comprehensive account of the Group’s ongoing efforts in managing its Economic, Environmental and Social (“EES”) performance. This includes managing related risks, impacts, the various highlights and achievements realised across a triple bottom line. Among the identified material topics are as climate change, water scarcity, water pollution, talent, labour and others. Performance is measured against Key Performance Indicators (“KPIs”) and targets, as well as positive outcomes created in reference to selected United Nations Sustainability Development Goals (“UNSDGs”). SR2022 also demonstrates how sustainability comes under the oversight of the Board of Directors and Senior Management, which is achieved through a robust sustainability governance structure. SR2022 provides the management approach for material Environmental, Social and Governance (“ESG”) topics, statistical data that discloses Group performance against, and as well as future plans. REFERENCES All references to “Ranhill”, “the Company”, “the Organisation”, “the Group”, “us”, “our” and “we” shall refer to Ranhill Utilities Berhad. REPORTING PERIOD SR2022 covers the reporting period from 1 January 2022 to 31 December 2022 (“FY2022”). Ranhill is committed to publishing a sustainability report, providing detailed disclosures on its ESG performance annually. Most statistics presented in this report are given based on a 3-year timeframe. This enables the development of trend lines and allows readers to better assess the Group’s performance over time. APPLIED FRAMEWORKS SR2022 has been prepared in accordance with the Global Reporting Initiative (“GRI”) Sustainability Reporting Standards: Core Option. The GRI content index is provided at the end of this report. The following frameworks have also been referenced either partially or fully in the development of SR2022: • Bursa Malaysia Sustainability Reporting Guide Second Edition • FTSE4Good Bursa Malaysia Index • Sustainability Accounting Standards Board (“SASB”) Sector Specific Disclosures • Task Force on Climate-Related Financial Disclosures (“TCFD”) • United Nations Sustainable Development Goals (“UNSDGs”) REPORTING SCOPE AND BOUNDARY SR2022 covers Ranhill’s business operations and activities of the holding Company, Ranhill Utilities Berhad, and all business divisions and major subsidiary companies. These are: • Ranhill SAJ Sdn Bhd (“Ranhill SAJ”) • Ranhill Water Services Sdn Bhd (“RWS”) • Ranhill Water Technologies Sdn Bhd (“RWT”) • Ranhill Powertron Sdn Bhd (“RPI”) • Ranhill Powertron II Sdn Bhd (“RPII”) • Ranhill Bersekutu Sdn Bhd (“RBSB”) • Ranhill Worley Sdn Bhd (“RW”) Excluded are outsourced activities, activities and operations of joint venture companies that the Group does not have management control. Where meaningful and accurate data is available, Ranhill has endeavoured to provide disclosures on its value chain. We exercise a “local-where-we-operate” practice.
ABOUT THI S REPORT Sect ion 03 11 SUSTAINAB I L I TY Report 2022 ABOUT THI S REPORT Ranhill has used the GRI principle of materiality to determine the content for SR2022. Materiality is determined based on the following criteria: • Topics that impact the Group’s value creation capabilities, including financial values • Topics that impact stakeholders • Topics that have high environmental and social impacts A Materiality Assessment Exercise (“MAE”) was conducted in FY2022 to determine Ranhill’s most material topics. Further details of the MAE process and its findings are provided on page 28. EXCLUSIONS Ranhill is cognisant that data-gathering challenges still exist for certain GRI, FTSE, SASB and TCFD indicators. We are in the process of implementing more robust data tracking and gathering mechanisms to close these reporting gaps. This includes data from the Group’s supply chain. REPORT QUALITY & DATA ASSURANCE Report quality is achieved based by the GRI principles of accuracy, balance, clarity, comparability, reliability and timeliness. All data contained within SR2022 has been sourced internally and has been verified by the respective business units or information owners. Where possible, data has been internally assured by Ranhill’s Group Corporate Assurance Division (“GCAD”). GCAD is Ranhill’s in-house internal audit function whose role is to audit and verify data. STATEMENT OF USE The Head of Group Corporate Communications (“GCC”) acknowledges responsibility for the following statement of use: The information reported by the Group for the financial year ended 31 December 2022 (“FY2022”) has been prepared in accordance with the GRI Standards. FORWARD-LOOKING STATEMENTS DISCLAIMER Any forward-looking statements such as targets, future plans, operations and forecast figures is based on reasonable current assumptions. Readers are advised not to place undue reliance on such statements as our business is subject to risks and uncertainties beyond Ranhill’s control. Actual results may differ. REPORT AVAILABILITY AND FEEDBACK SR2022 is available for download at: www.ranhill.com.my Only a limited number of printed copies are available to reduce paper consumption and environmental footprint. To request a printed copy or to submit feedback or questions on this report, please contact: Group Corporate Communications, Ranhill Utilities Berhad, Bangunan Ranhill SAJ, Jalan Garuda, Larkin, 80350 Johor Bahru, Johor, Malaysia Tel: +607 2255 300 Fax: +607 2255 310 Email: sustainability@ranhill.com.my MEMBERSHIP IN ASSOCIATIONS Ranhill is a member of the following industry bodies and associations: ENERGY INDUSTRY • Akaun Amanah Industri Bekalan Elektrik (“AAIBE”) • Sabah and Labuan Grid Code (“SLGC”) • Industrial Advisory Panel for Universiti Tenaga Nasional ENGINEERING INDUSTRY • Malaysian Oil and Gas Engineering Council (“MOGEC”) • Malaysian Oil, Gas, Energy, Services Council (“MOGSC”) • Malaysian Institute of Management (“MIM”) • Malaysian Employers Federation (“MEF”) • Board of Engineers Malaysia (“BEM”) WATER INDUSTRY • Malaysian Water Association (“MWA”) • Construction Industry Development Board (“CIDB”) • National Institute of Occupational Safety and Health (“NIOSH”) • The Institution of Engineers, Malaysia (“IEM”)
SUSTAINABI L I TY AT RANHI LL 04 Sect ion 12 Ranhi ll Ut i l i t i es Berhad MEASURING PROGRESS Ranhill measures its EES progress against the four pillars of its sustainability framework and selected UNSDGs. RANHILL SUSTAINABILITY PILLARS ACHIEVEMENTS AND HIGHLIGHTS FUTURE PLANS UNSDGs Environmental Awareness & Preservation Group: • Signed MoU with Malaysian Green Technology and Climate Change Corporation (“MGTC”) to develop a comprehensive GHG baseline and roadmap for the Group towards the realisation of Ranhill’s Net Zero Carbon 2050 aspiration. • Exploration of Corporate Green Power Programme (“CGPP”) to partially power Ranhill SAJ’s operations via solar energy towards reducing electricity costs. • On track for completion of Ranhill’s first solar farm, the 50 MW Bidor photovoltaic facility by November 2023. Environment Sector: • Detected and rectified 70,929 leaks in Johor state providing an additional NRW harvest of 24.7 MLD. • Compliance to all SPAN KPIs save for NRW reduction in three districts. NRW level of 26.3%, marginally above the SPAN KPI of 26.0%. Full regulatory compliance achieved for Thailand operations. • Ranhill SAJ: 671,311,627 m3 of treated water produced for Johor (0.6% year-on-year increase), effectively meeting the state’s 1,065,000 registered domestic population as well as the growing consumption demand of nondomestic customers. In FY2022, non-domestic consumption grew by 6.3%. • Ranhill SAJ: Additional 26 District Metering Areas (“DMA”) established (FY2021: 14 additional), bringing total number of DMAs to 1,184 and with that, near total connection coverage (95%) for Johor. • Ranhill SAJ: 20.1% year-on-year reduction in direct energy consumption (petrol and diesel) to 1,059.2 million GJ (FY2021: 1,326.3 million GJ), which is consistent with ongoing aspirations to reduce overall carbon footprint. • RWTT and AnuRak: 10% increase in wastewater treatment capacity in Thailand to 54 MLD (FY2021: 48.6 MLD). In total, 4.4 million m3 of wastewater recycled. • 18.3% year-on-year increase in RE based energy generation from the Sultan Iskandar mini solar WTP (25,605 kWh) and the Gunung Ledang mini hydro WTP (109,206 kWh) installations. 78,759.2 kg of CO2eq avoided (18.9% year-on-year increase in volume of carbon emissions avoided). • 50% reduction in number of major river pollution cases through the implementation of the Pollutant Removal System (“PRS”) at the Simpang Renggam WTP. 85% reduction in financial losses incurred to RM0.006 million (FY2021: RM0.04 million). Energy Sector: • Continued compliance with all Sabah Electricity Sdn Bhd (“SESB”) KPIs. • Generated: 2,393 GWh of energy in FY2022 (FY2021: 2,319 GWh) as Sabahʼs largest IPP, producing up to 40% of the stateʼs installed energy generation capacity. RBSB • Secured a flood mitigation project in Kota Belud, Sabah. RW: • Secured several Carbon Capture Storage (“CCS”) projects including the worldʼs largest: Malaysia Kasawari project. • 3,000 MLD water, wastewater and reclaimed water treatment capacity by FY2024. • 1,000 MW Energy Capacity target. • Increased clean energy generation through CGPP, thermal and other power opportunities. • Increased use of solar and mini hydro at more WTPs. • 20.9% Stretch NRW level target for Johor by 2025 (higher than the National NRW level target of 25%). • 10% NRW reduction target by FY2028. • Net Zero Carbon by 2050. • Increase efficiency of GHG Scope 1, 2 and 3 Emissions as measured against revenues. • Continued pursuit of ESG oriented business opportunities i.e. CCS, flood mitigation and other projects.
SUSTAINABI L I TY AT RANHI LL Sect ion 04 13 SUSTAINAB I L I TY Report 2022 MEASUR ING PROGRESS RANHILL SUSTAINABILITY PILLARS ACHIEVEMENTS AND HIGHLIGHTS FUTURE PLANS UNSDGs Contribution Towards Social Wellbeing & Capacity Building Group: • 100% local procurement for all operating entities, which supports local job creation, local entrepreneurs, local vendor development, and reduces environmental impacts. • 1,189 kg of cloth waste diverted from landfills and over 2,187 kg of CO2eq in carbon emissions avoided via the Ranhill Re-Bin initiative. Environment Sector: • RM0.84 million in water rebates provided to 3,216 poor and hardcore poor households in Johor. • Financial and non-financial contributions amounting RM133,000 to underprivileged households during FY2022. • 99.7% customer complaints resolution rate with continued track record of exceeding SPAN’s KPI (99.3%). 100% of customer complaints responded to within 24 hours, exceeding SPAN’s KPI of 99.5%. • 100.7% bill collection rate based on actual billed amount and payments received, indicating high customer satisfaction and high compliance to SPAN KPIs. Energy Sector: • 100% (RPI) and 94% (RPII) customer satisfaction scores. Continued track record of compliance with SESB’s KPIs. • Donated 0.4 kWp solar-powered lighting to Sekolah Kebangsaan Termunong, Tuaran, Sabah. Also built a 160 sqft building with a solar spotlight for Tabika Kemas Kg. Ulu Sipitang in Sabah. Both initiatives are aimed at improving infrastructure to enable school children to have a more conducive learning environment, which supports improved attendance rates as well as help students study and perform better in schools. Services Sector: • RWT: Continued promotion of awareness and stakeholder education of the water industry in Thailand through the Amata Learning Centre which saw visitor numbers increase to 371 post-pandemic (FY2021: 35). Visitors comprised industry delegations, government officials, school students and the general public. • Continued emphasis on local procurement, but with greater emphasis on the development of a sustainable (“green”) supply chain. • To increase the number of registered local vendors who are green certified. • Continued focus on stakeholder engagement towards promoting key business and operational objectives. • Capacity building - Collaboration with the Ministry of Higher Education and universities to develop talents for both the water and power industry. • Continued support in developing local community infrastructure and services.
SUSTAINABI L I TY AT RANHI LL 04 Sect ion 14 Ranhi ll Ut i l i t i es Berhad MEASUR ING PROGRESS RANHILL SUSTAINABILITY PILLARS ACHIEVEMENTS AND HIGHLIGHTS FUTURE PLANS UNSDGs Inspirational Workplace & Culture Group: • 121 participants in the Young Water Professionals (“YWP”) programme, 8.0% increase year-on-year, which goes towards addressing the present talent scarcity issue in the local water industry. • 7.7% increase in women workforce composition, in line with promoting gender equality in Ranhill. • 14.5% increase in local (Malaysian) workforce composition in line with providing Malaysians with higher-paying jobs and skills based employment. • 699 new hires, 172 women, 363 below 30 years old, and one new hire with a permanent physical disability. Continued promotion of a diverse and inclusive workforce based on the principle of merit. • 361 internships and 30 management trainee stints provided in FY2022, of which 23 high-potential interns and 6 management trainees were absorbed into the Group. • 100% and 95% return to work rates post parental leave for male and female employees respectively, indicating a supportive working environment for parents. • RM358.0 million paid in salaries and benefits to employees in FY2022. 23.5% year-on-year increase. • RM30.1 million paid in retirement funds to employees. • RM2.0 million spent on employee training. Total training hours: 129,718.8, 87.9% increase year-on-year (FY2021: 69,035.15 total training hours). 32.3 average training hours per employee, RM0.0005 million average training spend per employee. • RM0.7 million spent on employee social, recreational and festive activities. 417.9% increase year-on-year towards promoting employee rapport and relationships and celebrating diversity. • Encourage greater employee diversity and inclusivity across the Group. • Provide opportunities for Person With Disability (“PWD”). • Drive succession planning. • Achieve high employee satisfaction rates for all operating entities. Enhancing Governance Across the Group Group: • Zero fatalities including zero contractor fatalities, indicating the continued practice of exemplary high occupational safety and health standards. • Zero public health and safety incidents reported, indicating a continued focus on being a responsible community that focuses on reducing impacts to society. • Zero whistleblowing cases reported in FY2022. Environment Sector: • 63.8% of employees are covered under Collective Bargaining Agreements, indicating a strong focus on upholding the labour rights of non-executive employees. • Ranhill SAJ: 8.0 million manhours without a loss time injury (“LTI”), 1487 *Unsafe Acts and Unsafe Conditions (“UAUC”) identified and resolved, thus significantly reducing the risks of LTIs. 20% reduction in lost days (from 20 to 16 days, year-on-year). Energy Sector: • 273,296 manhours without an LTI, 354 UAUC identified and resolved. • Implementation of ISO Certifications group wide (ISO 45001 Occupational Health and Safety). • External assurance on our Sustainability practices for SR reporting. • Continued zero corruption cases, zero whistleblowing and employee grievances reported annually. • Continued zero fatality and zero LTI OHS performance. Note: * Unsafe act refers to human behaviour which is not in compliant with standard operating procedures (“SOP”) that may lead to an Occupational Health and Safety (“OHS”) incident or increases the risk of an OHS incident at the workplace. Unsafe condition refers to occurring conditions or situations within the workplace which could lead to increased OHS incident risks or to an actual OHS incident.
SUSTAINABI L I TY AT RANHI LL Sect ion 04 15 SUSTAINAB I L I TY Report 2022 MANAGEMENT ’S APPROACH TO SUSTAINABILITY Ranhill’s approach to sustainability is centred on the common three pillars of Planet, Profit and People (“3P”). In essence, ensuring the business model of the Group and its operations create financial and non-financial values that provide equitable progress and development across all three pillars. This over-arching perspective is given greater form and clarity through the identification of four objectives that serve as the value drivers for the realisation of the 3Ps. These are Environmental Awareness & Preservation, Contribution Towards Social Wellbeing, Inspirational Workplace & Culture and Enhancing Governance Across the Group. In essence, as the three 3Ps can be generic, the quartet of drivers provide specific focus areas or strategic thrusts that are unique to Ranhill. These are the pathways or strategic priorities that will enable positive outcomes and outputs whilst providing specific strategic directions for sustainability. The successful pursuit of its quartet of strategic objectives requires a thorough understanding of the inherent material issues and risks that would determine the effectiveness of tactical plans and the realisation of outcomes across all four objectives. Materiality is assessed on a regular basis and such assessments involve internal and external stakeholder inputs towards ensuring a more inclusive and accurate perspective. Having gained clear visibility and clarity on its material matters, management approaches as well as tactical plans are developed and implemented to address these material topics. Performance is monitored through set KPIs and targets. The realisation of the KPIs and targets progressively creates a wide range of financial and non-financial outcomes that are consistent with the targets set across a wide range UNSDGs. Hence, effectively, Ranhill, through its sustainability framework continues to be a force for good – playing a lead role in catalysing positive transformation in the industries in which the Group operates in. OUR MATERIAL MATTERS RANHILL SUSTAINABILITY STRATEGIES VALUE WE CREATE OUR IMPACT ON THE SDGS RANHILL SUSTAINABILITY FRAMEWORK Environmental Awareness & Preservation Contribution Towards Social Wellbeing & Capacity Building Enhancing Governance Across the Group Anti-Bribery and Anti-Corruption Community Engagement Biodiversity Corporate Governance and Regulatory Compliance Data and Cyber Security Economic Performance Ethics and Integrity Innovation Customer Experience and Satisfaction Employee Engagement Human Rights, Diversity, Equity and Inclusion Safety, Health and Wellbeing (Employee and Public) Supply Chain Management and Responsible Sourcing Climate Change and Greenhouse Gas Emissions Energy Usage and Energy Efficiency Material Management Waste (Solid) and Wastewater Management Water Security, Accessibility and Tariff Operational Excellence Talent Acquisition, Retention and Development Risk Management Technology and Digitalisation Environmental E Social S Governance G Planet Responsible Living and Preservation Profit Business Sustenance People Social Responsibility Inspirational Workplace & Culture
SUSTAINABI L I TY AT RANHI LL 04 Sect ion 16 Ranhi ll Ut i l i t i es Berhad SUSTAINABILITY GOVERNANCE STRUCTURE The Board and Senior Management of the Group provide oversight of the Ranhill sustainability framework. They in turn helm a robust sustainability governance structure, which provides the necessary resources, capabilities, knowledge and reporting mechanism to drive effective oversight and strategic action of the sustainability agenda (refer to the Sustainability Framework on page 15). Ranhill’s sustainability governance structure enables all sustainability matters to be brought to the Board and Senior Management for deliberation and decision-making. In addition, the operational levels can also bring information, matters and issues to the attention of the Board. This enables the Board and Senior Management to have a coherent grasp of on-ground realities, which supports more informed and effective decision making. The inclusion of the Governance and Risk Management Committee (“GRMC”) enables more comprehensive coverage of risks arising from material EES topics. The involvement of the GRMC reflects Ranhill’s high commitment to prioritise EES matters and to integrate these into Group business and operational strategies and decision making. The GRMC is supported by the Management Assurance Risk Compliance Committee (“MARCC”). The MARCC is in turn, supported by Senior Management and Department Heads across the Group’s organisational structure. The Group’s working committee, the Sustainability Working Group (“SWG”) is tasked to develop sustainability programmes and action plans. The SWG is a cross functional working team whose members come from all business divisions and operating companies. SWG members comprise personnel from Ranhill SAJ, RWS, RWT, RPI and RPII, RBSB and RW. In addition, starting from the Q4 of FY2022, the Group’s Sustainability Agenda is to be shared on a regular basis with Audit Committee Members. Board of Directors Governance and Risk Management Committee Management Assurance Risk Compliance Committee MARCC Members Group Areas of Monitoring & Reporting • Group Chief Operating Officer (Chairman) • Group Chief Financial Officer • Group Chief Merger & Acquisition Officer • Group Chief Commercial Officer • Head of Group Corporate Assurance (Secretariat) • Head of Group Corporate Communications • Head of Group Human Resources • Head of Group Corporate Secretarial • Head of Group Legal & Compliance • Head of Group Information Technology Health and Safety Risk Management & Compliance Sustainability Governance Oversight
SUSTAINABI L I TY AT RANHI LL Sect ion 04 17 SUSTAINAB I L I TY Report 2022 SUSTA INAB I L I TY GOVERNANCE STRUCTURE KEY ASPECTS OF THE RANHILL SUSTAINABILITY GOVERNANCE STRUCTURE BOARD REMUNERATION AND SUSTAINABILITY TARGETS Ranhill is cognisant of Bursa Malaysia’s recommendation for listed companies to link Board and Senior Management remuneration to the realisation of ESG goals and targets. The Group continues to explore mechanisms to establish such linkages to ensure a fair and equitable approach that will also enable the effective realisation of the Group’s ESG goals. At several of the Group’s subsidiaries, remuneration of Senior Management has been linked to the level of regulatory compliance achieved against the industry regulators’ KPI which include environmental and social performance considerations. These include RPI and RPII where the CEO, Head Of Plant and the Safety and Health Officer have their personal KPIs linked to Occupational Health and Safety (“OHS”) performance at the respective plants. Similarly for Ranhill SAJ, the CEO’s remuneration is linked to the achievement of the KPIs set for Suruhanjaya Perkhidmatan Air Negara (“SPAN”) which includes water quality as well as customer satisfaction, both of which are material ESG topics. PROMOTING GOOD GOVERNANCE THROUGH INTERNAL POLICIES In addition to its sustainability governance structure, Ranhill also cultivates good governance via the implementation of the following guidelines and policies. All new staff are informed of the Company’s policies as part of their induction process. Ranhill has also established other policies as follows: POLICIES AND PROCESSES FOR GOOD GOVERNANCE When policies are updated with new clauses and provisions, such updates are communicated to all relevant stakeholders including staff and Management. Ranhill also aligns itself to the recommended corporate governance practices of the regulator, Bursa Malaysia and the MCCG 2021. The Corporate Governance report also showcases how Ranhill has applied the stipulated practices of the MCCG 2022. Comprehensive Board oversight on material EES topics and well positioned to drive strategic focus on the sustainability agenda. Governance structure facilitates Group wide participation and the development of a cross functional approach to managing sustainability. Board and Senior Management receive timely reports on EES matters, thereby enabling them to feel the pulse of sustainability initiatives and programmes. Progressive inclusion of EES matters within Group risk management via the linking sustainability to mid-long term value creation. 1 3 2 4 Board Charter Ranhill Authority Manual (“RAM”) Code of Conduct & Business Ethics (“CCBE”) Whistleblowing Policy Business Continuity Management Policy and Procedures Ranhill’s Rules of Life (“ROL”) for Health and Safety Sexual Harassment Policy and Procedures Anti-Corruption Stance Succession Planning Management Policy and Procedures Third Party Dealings Policy & Procedures
SUSTAINABI L I TY AT RANHI LL 04 Sect ion 18 Ranhi ll Ut i l i t i es Berhad SUSTA INAB I L I TY GOVERNANCE STRUCTURE GOVERNANCE THROUGH STRINGENT REGULATORY COMPLIANCE The water and energy operations are highly regulated sectors and Ranhill continues to ensure stringent adherence to the laws and requirements of all regulatory bodies. ENERGY INDUSTRY • Power Purchase Agreement with the Sabah Electricity Board • Malaysian Ambient Air Quality Standard • Schedule 3 of the Planning Guidelines for Environment Noise Limits and Control • Standard B of the Fifth Schedule and Eight Schedule as stated in the Environment Quality (Industrial Effluents) Regulations, 2008 • Malaysia Marine Water Quality Standard, Class E for waste water disposal ENGINEERING INDUSTRY • CIDB Licence WATER REGULATORY • Water Services Industry Act (WSIA) 2006 and subsidiary laws (Malaysia) • Industrial Estate Authority of Thailand – Thailand and all other related laws and regulations • SPAN Permit IPA Jenis C1 (Bekalan Air) – Semenanjung Malaysia, Wilayah-Wilayah Persekutuan Putrajaya dan Labuan • SPAN Permit IPA Jenis C1 (Pembentungan) – Semenanjung Malaysia, Wilayah-Wilayah Persekutuan Putrajaya dan Labuan • SPAN Permit IPA Jenis D (Pembetungan) – Johor • SPAN Permit IPA Jenis D (Bekalan Air) – Johor • Lembaga Pembangunan Industri Pembinaan Malaysia (LPIPM) – Perakuan Pendaftaran • Kementerian Kewangan Malaysia • ISO 9001:2015 Quality Management Systems • CIDB SCORE Certificate OPERATIONAL SITE CERTIFICATION Ranhill continues to ensure that all subsidiary companies obtain necessary or recommended quality certifications and maintain their active status. Where necessary, the Group advocates upgrading certification to the latest industry benchmarks. In particular, Ranhill SAJ continues to reflect the quality of its operations through its certifications: SITE CERTIFICATION – Ranhill SAJ • ISO9001: Quality Management System (for HQ, 8 WTPs and company-wide practices) To integrate customers’ needs, compliance obligations, and other applicable requirements into its business process, company’s goals, and strategic direction. Customer satisfaction is enhanced and compliance obligations are fulfilled through proactive monitoring and evaluation • ISO45001: Occupational Health & Safety Management System (for HQ, 8 WTPs and company-wide practices) To provide a healthy and safe workplace, to protect the well-being of all persons in the workplace, to eliminate hazards, and to reduce occupational health and safety risks • ISO/IEC 17025: Laboratory Accreditation Scheme of Malaysia (Central & Mini Laboratory) To ensure reliable and accurate monitoring of water quality supplied to consumers • ISO/IEC 27001: Information Security Management System (Billing Information System) To protect business information assets from all threats and maintain customers’ information security • ISO50001: Energy Management System (HQ & 5 WTPs) To procure energy-efficient products and services that impact energy performance and design for energy performance improvement • MS1480: Hazard Analysis Critical Control Point (44 WTPs) To produce safe treated water for customers by implementing HACCP principles
SUSTAINABI L I TY AT RANHI LL Sect ion 04 19 SUSTAINAB I L I TY Report 2022 OTHERS • Ranhill Power • ISO 9001:2015 • RWS • ISO 9001:2015 • ISO 45001:2018 • RWT • ISO 9001:2015 SUSTA INAB I L I TY GOVERNANCE STRUCTURE • RBSB • ISO 9001:2015 • ISO 14001:2015 • ISO 45001:2018 • ISO 37001:2016 • RW • ISO 14001:2015 • ISO 9001:2015 • ISO 45001:2018 REGULATORY COMPLIANCE For FY2022, Ranhill SAJ had zero major incidents of non-regulatory compliance. The Group has not incurred any monetary fines, a shutdown of operational sites or any non-monetary censures or warnings. SPAN Related Complaints Received and Resolved FY2020 FY2021 FY2022 No. of complaints received 81 55 77 No. of complaints resolved 81 55 77 CODE OF CONDUCT AND BUSINESS ETHICS Good governance within Ranhill is further reinforced through the Group’s CCBE. The CCBE was developed in accordance to local legislation to ensure consistency with the laws of the country. This includes Section 17A of the MACC Amendment Act 2018. The CCBE can be viewed here: https://ranhill.com.my/sustainability/sustainability-policies/. Ethical business conduct and corporate integrity supports the cultivation of good work performance, the development of proper relationships and conduct across the Group and with the supply chain and enables the development of structure, systems and processes that facilitate meritorious performance. Good conduct enhances corporate morale, provides a clear understanding of expected and permissible norms of behaviour and sets the tone for good governance. The CCBE stipulates what is deemed as acceptable behaviours and professional conduct for the Board, Senior Management and employees. It also has provisions that define conflict of interest, sexual harassment, discrimination, acts of corruption and other forms of unethical conduct. The CCBE also covers anti-corruption and money laundering. The Code of Conduct and Business Ethics is to be complied with by all levels of the organisation; from the Board of Directors to all employee levels. The Code is also extended to the Group’s supply chain comprising contractors, suppliers of goods and services, business partners and anyone who has a business dealing with Ranhill. Annually, a briefing on the CCBE is held by for all Board members, senior management and staff. In addition, all new employees are briefed on the Code by Group Human Resources (“GHR”) during their induction session. Likewise, all incoming directors are also briefed on the Code. The CCBE is published in the employee handbook that is distributed to all staff during their induction session. STRONG ANTI-CORRUPTION STANCE Ranhill enforces a no-compromise, zero-tolerance approach towards any form of corruption. This includes bribery, favouritism, kickbacks, the receiving and giving of gifts, favours, hospitality and more. Ranhill’s CCBE defines what constitutes as corrupt acts. The CCBE states that both the beneficiary and the giver of the corrupt act will be censured by the company and if necessary, reported to the relevant authorities for further enforcement action. Beyond the Board, Senior Management and employee, Ranhill’s no compromise stance on anticorruption also covers any individual and organisation that has a dealing with the Group. This includes consultants, advisors, suppliers, community leaders, politicians and others. The Group’s approach to anti-corruption has been conveyed Group wide to all governance bodies as follows: Board of Directors, the GRMC, MARC and the Integrity Working Committee (“IWC”). In FY2022, all managerial and operational staff have received information on anti-corruption and bribery. This includes a mandatory 2-hour briefing on the Ranhill anti-corruption policy and procedures. The same materials are made available to staff at all times via the Intranet. Ranhill SAJ requires all employees to sign an anti-corruption declaration as a pre-requisite for recruitment. All operating companies under Ranhill comply with Section 17A and have developed procedures and controls to ensure compliance. In FY2022, there were zero cases of non-compliance with the CCBE. The CCBE is periodically reviewed to ensure congruence with changes in the law and present marketplace norms and guidelines. RBSB, has implemented the ISO37001 Anti-Bribery Management System (“ABMS”).
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