ENVIRONMENTAL AWARENESS & PRESERVAT ION 06 Sect ion 36 Ranhi ll Ut i l i t i es Berhad CLIMATE CHANGE Climate change directly impacts the water supply system in Johor. Adverse weather conditions caused or exacerbated by climate change can result in droughts, reduced rainfall or even flash floods, all of which can seriously impact on the water supply system. Drought and reduced rainfall may cascade to diminished water levels in rivers and dams which would affect the ability to supply potable water. The situation is particularly challenging at areas deemed to have a lower water reserve margin. With reduced water volume in rivers, river contamination issue becomes more pronounced as reduced water volume would translate to higher concentration of pollutants. Measures to address such conditions comprise sourcing for alternative water sources such as groundwater, cloud seeding to encourage rain, undertaking raw water transfer and Off River Storage (“ORS”) facilities and other measures. In extreme situations, water rationing may be necessary. Climate change can also affect non-water related operations such as infrastructure and construction related development. The full details on the impacts of climate change on Ranhill’s operations are provided in the TCFD Index Disclosure at the end of this report. FINANCIAL COSTS ASSOCIATED WITH CLIMATE CHANGE RISKS AND IMPACTS AS WELL AS OPPORTUNITIES Ranhill acknowledges that climate change impacts can lead to financial impacts. Ranhill’s costs would be costs attributed to the physical, transitional and reputational risks arising from climate change. Kindly refer to the TCFD index provided at the end of this report for risks, identified financial, business and operational impacts as well as opportunities brought on by climate change. BOARD AND MANAGEMENT OVERSIGHT ON CLIMATE CHANGE Given the severity of climate change impacts as well as the increasing frequency of climate change events, such as droughts, heavy rainfall and flash floods, climate change has been identified as a topic material to value creation and to environmental and social impacts. Together with energy consumption, climate change comes under the purview of the Board of Directors and specifically, under the oversight of Independent, Non-Executive Director, Mr. Lim Hun Soon @ David Lim who is the designated Board champion for all ESG related matters. The oversight includes identifying physical, transitional and reputational risks arising from climate change as well as mitigation strategies. The Board and Management have also pledged their support to progressively adopt the TCFD recommendations. FY2022 has seen Ranhill commence reporting based on the TCFD framework. The Memorandum of Understanding signing between Ranhill and Malaysian Green Technology and Climate Change Corporation (MGTC) to drive Ranhill towards Net Zero Carbon 2050 CLIMATE CHANGE RELATED STIPULATIONS FOR THE SUPPLY CHAIN Vendors are required to either comply with or supply equipment that follows the specifications and criteria of the Energy Management System (EnMS ISO 50001:2018). Setting such criteria may lead to higher procurement costs but this promotes the continuous “greening” of the Ranhill supply chain. ESTABLISHING CARBON REDUCTION TARGETS Ranhill has established its long-term target of net zero carbon by 2050. The journey to net zero carbon is to be driven based on the following: • Increased use of renewable energy to power water and energy operations • Greater use of low-carbon technologies to produce lower carbon water and power • Performing Lifecycle Analysis on existing business processes • Development of a clear climate change roadmap • Development of an internal carbon price for the Group In FY2022, Ranhill commenced collaboration with the MGTC towards undertaking preliminary assessments of Ranhill GHG emissions. The Group has inked a commercial agreement in which MGTC will be undertaking comprehensive GHG assessment and the development of a complete GHG baseline as well as roadmap for all Ranhill and its subsidiaries’ operations. ENV I RONMENTAL Awareness & PRESERVAT ION
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