ENHANC ING GOVERNANCE ACROSS THE GROUP 09 Sect ion 70 Ranhi ll Ut i l i t i es Berhad SPECIFIC RECOMMENDATIONS ORGANISATION’S ADOPTION OF RECOMMENDATIONS Describe the climaterelated risks and opportunities the organisation has identified over the short, medium, and long term. (Con’t) CLIMATE CHANGE: TRANSITIONAL RISKS • Ranhill has established a tangible target of Net Zero Carbon by 2050. This requires a tangible transitional roadmap with clear interim goals or milestones as well as a comprehensive decarbonisation strategy comprising energy efficiency initiatives, waste reduction and recycling as well as increased use of RE sources to power operations. • However, these decarbonisation measures would require careful planning as well budgeting with sufficient financial resources allocated over the short, medium and long term to drive the necessary changes required. Allocation of resources to decarbonisation may necessitate a trade-off with more immediate business strategies’ requirements that would deliver a faster return on investment. • Decarbonisation is likely to require some level of external financing i.e. borrowings through bank loans of via green bonds. Such financing is typically tied to the achievement of specific ESG criteria, i.e. reduction in interest rates for the achievement of time-based emissions reduction targets. Non-achievement of these targets within the stipulated time period may lead to penalties that increase the cost of borrowings. CLIMATE CHANGE LEGAL RISKS: • As investors, regulators and reporting frameworks increase their scrutiny on companies’ climate change disclosures and performance, lack of transparency as well as non-achievement of targets could lead to reduced ESG ratings or even being excluded in specific ESG indices. This would impact brand credibility and awareness, especially on the international stage. It may also impact ability to tender for contracts. • Increasing requirements by regulators, investors and financiers may affect market access and ability to participate in tenders. CLIMATE CHANGE OPPORTUNITIES: • Climate change promotes greater acceptance among regulators and industry players to accept reclaimed water as a suitable alternative to potable water for non-potable, commercial and industrial applications. Ranhill, through RWT is well positioned to tap this still nascent but growing niche segment. • Aside from reclaimed water, the increased pressure by regulators and governments have compelled companies, especially in the oil and gas sector to adopt carbon capture solutions as opposed to conventional flaring of gas. RW is well positioned to offer such solutions as well as other services including end of life solutions i.e. capping and decommissioning for legacy and ageing assets. • Climate change has contributed to an increased impetus by all stakeholders to address NRW loss. This provides opportunities for Ranhill SAJ and RWS to bid for tenders as well as propose NRW management solutions to private and public sector clients locally and abroad. • There is also a shift in the momentum towards adopting sustainable solutions that ensure water security over the long-term. These include ORS, raw water transfer and others. • The establishment of the Voluntary Carbon Market (“VCM”) in Malaysia in FY2022, provides opportunities for Ranhill to participate which will enable the Group to effectively reduce any fugitive carbon emissions or emissions that it cannot completely reduce. The purchase of carbon credits will be useful in reducing any outstanding emissions towards achieving its Net Zero Carbon by 2050 goal. • The increased focus on RE, especially through the CGPP programme enables Ranhill to not just increase the nation’s installed RE capacity, but also expand the business of its energy sector and subsequently revenue. Locally as well as abroad, there is an increasing momentum for RE adoption and Ranhill’s Energy sector is well positioned to capitalise on this development. • RBSB is also well positioned to bid and propose “green” based infrastructure development i.e. thermal energy storage, district cooling system and others. ENHANC ING GOVERNANCE ACROSS THE GROUP
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