MISC Annual Report 2018

HIGHLIGHTS OF THE YEAR OUR BUSINESS OUR LEADERSHIP OUR PERFORMANCE OUR COMMITMENT TO SUSTAINABILITY OUR GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 50 TH ANNUAL GENERAL MEETING 143 MISC BERHAD ANNUAL REPORT 2018 142 SUSTAINABILITY STATEMENT SUSTAINABILITY AT MISC Since 2012, MISC has been working towards formalising the concept of sustainability so that it clearly permeates our decisions on financial management and investment, human resources, knowledge-based intangibles, key relationships, our assets, and of course the health of our environment. This means we have a Sustainability Strategy running in parallel with our MISC 2020 aspirations as laid out in our 2016-2020 corporate strategic plan. Our Sustainability Strategy is a five-year roadmap guiding us to integrate our thinking and planning across six pillars, comprising customers, shareholders, governance & business ethics, employees, environment and community. Each one of our sustainability pillars is brought to life through a Sustainability Working Committee (SWC) that meets regularly and is championed by a member of our Management Committee. In 2018, both the customers and the community SWCs presented papers to the Management Committee, relating to customer surveys and community investment initiatives. Over the year, we also increased the strength of our Health, Safety, Security and Environment (HSSE) Council, to include all members of the Management Committee. The HSSE agenda is now more in depth, and enhanced with greater visibility over all segments of MISC Group. GLOBAL MARITIME FORUM We have taken MISC’s commitment to sustainability a step further by joining the Global Maritime Forum (GMF) as one of six strategic industry partners looking to play an active role in shaping the future of maritime trade. The GMF aspires to be the maritime equivalent of the World Economic Forum and is an international not-for- profit organisation committed to shaping the future of global seaborne trade in order to increase sustainable long-term economic development and human well-being. At the GMF’s inaugural annual summit in Hong Kong in October 2018, we discussed many of the big issues facing the maritime supply chain as we move towards the next century, including digitalisation, decarbonisation, geopolitical instabilities, rising fuel costs and skills shortages. We were one of 34 global businesses from across the maritime value chain to sign the GMF’s call to action in support of the decarbonisation strategy of the International Maritime Organisation (IMO). Dear Valued Stakeholders, Sustainability is at the heart of all that we do at MISC, and a cornerstone of our growth over the past five decades from a small shipping business into one of the top global players in the energy and maritime industry. We often hear the term sustainability in reference to the environment, and MISC acknowledges the urgency and importance of sustaining clean air and navigable seas to perpetuate our business going into the future. For MISC, the concept of sustainability goes well beyond our environment, and permeates our planning, finance and investment decisions, people development and business relationships. Sustainability also means investing in building a sustainable global maritime ecosystem and maritime value chain so that we can sustain our right to perpetuate our existence. In practical terms this means sustainable levels of meaningful dividends for our shareholders and putting our resources into projects with long-term income flow to drive sustainable profit growth. It also means investing into talent development for our future MISC leaders and in innovation development towards the decarbonisation of the maritime industry. YEE YANG CHIEN President/Group CEO ENVIRONMENT HIGHLIGHTS 2018 As the state of the world’s oceans is a key global issue at present, we have added a new section to our reporting this year that focuses on our work under the environment pillar. In 2018, we started to implement our carbon reduction targets for our fleet, and we have already made some progress. We achieved an 8% reduction in carbon dioxide intensity for our LNG fleet, an 11% reduction in our petroleum fleet and a 5% reduction in our product fleet from the baseline year 2016. Over 2018, we commissioned our two state-of-the-art Aframax petroleum tankers equipped with LNG dual- fuel systems, and took delivery of two Moss type Seri C Class LNG carriers with a strong green footprint. We also took delivery of four fuel efficient newbuild petroleum tankers, comprising two Aframax and two Suezmax vessels. Utilising retro-fitting and low sulphur fuel oil where necessary, we are proactively implementing measures for the MISC fleet to comply with new IMO regulations on ballast water and sulphur emissions. Closer to home, in 2018, we improved our rating to 3.5 on the FTSE4Good Bursa Malaysia Index, which illustrates our unwavering commitment in adhering to good corporate responsible practices in environmental, social and governance elements. As we move forward into 2019, we remain anchored by our reliance on the sea and reminded that sustainability rooted in agility, steadfastness and a mindset of continuous improvement, perpetuates our long-term success. YEE YANG CHIEN President/Group CEO More details on our initiatives and achievement towards our sustainability agenda can be found in the following sections • Management Discussion & Analysis: People Development page 128 • Investor Relations Report page 136 • Corporate Governance Overview Statement page 168