MISC Annual Report 2019

Anchoring Sustainability@MISC YEE YANG CHIEN President/Group CEO To strengthen the practice and inculcation of sustainability across the Group, during the year, the Board decided that MISC’s sustainability strategy and performance will be incorporated into the Board agenda to ensure that the strategy involves the highest level of decision-making in the Group As we are creating value for our stakeholders, it is imperative for us to first identify the matters that are most important to our business and stakeholders. In 2019, we conducted a materiality assessment exercise to assess and understand the matters and concerns raised by our key stakeholders. The identified material matters will be discussed in detail throughout this report and shall form the basis in the development of our strategy moving forward. The process of deriving our material matters are described below: Conduct desktop research from key industry issues, peers and leaders to identify a broad list of issues relevant to MISC. Categorise the universe of issues into the six capitals: • Financial • Physical • Intellectual • Human • Social and relationship • Natural Engage internal and external stakeholders to better understand and prioritise the matters by selecting and scoring the top five material matters. • Conducted 15 interviews sessions with the management, Board members, customers, investors and banks • Conducted employee focus group sessions from various divisions, business segments and subsidiaries Mapping MISC materiality matrix based on inputs from internal and external stakeholder engagements. Validation by the Management Committee on the final materiality matrix. Material Matters MISC Materiality Matrix Sustainability Governance Structure Lowest Highest Importance to MISC Health and safety Employee engagement High Priority Matters Highest Priority Matters Importance to Stakeholders Business knowledge and expertise Natural resource use Risk management Skilled workforce Values and governance Customer satisfaction Climate change Project and financial performance Ocean health Diversity and Inclusion Digitalisation and innovation Benchmarking Materiality Validation Stakeholder Engagement • Chaired by the President/Group CEO • Quarterly management stewardship on sustainability performance • Review and approve strategic sustainability framework and initiatives in line with MISC sustainability commitment • Drive sustainability strategic agenda via 6 pillars working committees • Engages external and internal stakeholders on sustainability matters • Responsible for monitoring and benchmarking group-wide sustainability performance Secretariat • Championed by Management Committee members • Consists of cross functional divisions/ business segments and meets quarterly • Working committee - plan, coordinate, implements and track initiatives • Working groups - implements targeted material topics under relevant pillar Implementation Teams Strategy and Stewardship Board Management Committee Corporate Sustainability Team Sustainability Working Committees | Working Groups Endorser • Board oversight on MISC sustainability performance • Provide endorsement and direction on MISC sustainability commitment Further details on how we engage our stakeholders can be found in Stakeholder Engagement section on pages 72 to 75 Sustainability Governance The governance of sustainability matters remains a core element as we continue to incorporate the principles of sustainability into our strategy, decision-making processes and operations. We strive to commit and create value for our five stakeholders – Customers, Shareholders, Employees, Environment and Community – through progressive governance and sustainable management practices. To strengthen the practice and inculcation of sustainability across the Group, during the year, the Board decided that MISC’s sustainability strategy and performance will be incorporated into the Board agenda to ensure that the strategy involves the highest level of decision- making in the Group. This is supported by a multilevel approach through a Management Committee (MC), Sustainability Working Committees chaired by the MC members and Corporate Sustainability Team. Working committees have been set up for each of the six sustainability pillars – Customers, Shareholders, Environment, Governance & Business Ethics, Employees, and Community – to ensure successful delivery and implementation of strategies for the respective pillars. Highest 165 164 OUR SUSTAINABILITY MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019

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