Frontken Berhad Annual Report 2023

Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2023 49 Frontken’s compliance with the Task Force on Climate-related Financial Disclosures (“TCFD”) framework underscores its commitment to understanding, assessing, and mitigating climate change risks and leveraging climate opportunities across its operations. The corporation has systematically categorised potential financial impacts associated with climate change into distinct categories: (a) Transition Risks: Transition risks encompass the financial impacts arising from Frontken’s initiatives to reduce carbon emissions and transition towards achieving Net Zero Emissions by 2050. These risks may include significant costs associated with the development and implementation of energy-saving and carbon reduction technologies, expenses related to application projects, investments in green energy sources, and the procurement of carbon credits to offset emissions. Understanding and mitigating these transition risks are crucial for Frontken to navigate the evolving regulatory landscape and transition towards a low-carbon economy effectively. (b) Physical Risks: Physical risks refer to the financial impacts stemming from the direct consequences of climate change on Frontken’s operations and infrastructure. These risks may manifest as increased electricity costs due to higher energy consumption for air conditioning as global temperatures rise gradually. Additionally, Frontken may incur expenses related to adapting to climate-related changes and mitigating the impacts of climate-related disasters. Assessing and addressing physical risks are imperative for Frontken to enhance its resilience and adaptability in the face of changing climate patterns and extreme weather events. (c) Regulatory Risks: Regulatory risks pertain to the financial implications associated with compliance with evolving climate-related regulations and policies imposed by local governments. These risks may include estimating potential future carbon fees or taxes imposed by regulatory authorities as part of efforts to mitigate climate change. Frontken must stay abreast of regulatory developments and proactively engage with policymakers to navigate regulatory risks effectively and ensure compliance with emerging climate-related mandates. (d) Climate Opportunities: Climate opportunities represent potential financial benefits arising from Frontken’s proactive engagement in climate-related initiatives and the transition to a low-carbon economy. These opportunities may include investments in renewable energy sources, the development of innovative climate solutions, and the expansion of environmentally sustainable products and services. Embracing climate opportunities allows Frontken to unlock new revenue streams, enhance its competitive position, and contribute positively to environmental sustainability. By systematically identifying and assessing climate change risks and opportunities in alignment with the TCFD framework, Frontken demonstrates its commitment to proactively managing climate-related financial impacts, fostering resilience, and capitalising on emerging opportunities in a rapidly evolving global landscape shaped by climate change. SUSTAINABILITY REPORT (CONT’D)

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