MISC Annual Report 2019

63 62 OUR VALUE CREATION STORY MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019 Risks and Opportunities Health and safety Developing and retaining talent Digitalisation and innovation Regulation and policy Peak oil Climate change and environment • Health and safety • Customer satisfaction • Employee engagement • Diversity and inclusion • Project and financial performance • Customer satisfaction • Values and governance • Project and financial performance • Climate change • Climate change • Ocean health • Natural resource use • The GHSSE council monitors all HSSE related risks and events. The Council places high priority on ensuring that relevant regulations are complied with and best practice safety standards are applied across the Group • Our reputation and track record on strong HSSE practices has allowed us to be among the preferred global ship operators • Implemented various succession planning and competency development initiatives to ensure a sustainable pipeline of talent is available to meet the Groups’ requirements • Strong brand and employee value proposition • Group wide platform for talent development and deployment • Increased diversity of workforce with vast experience, nationality and age group • We are looking into adopting digital solutions focusing on vessel safety and risk management, inventory solution management and maintenance • MISC adheres to the NIST Cybersecurity Framework where we completed the Identify phase in 2019 and increased our capabilities in Protect, Detect, Response and Recover considerably. • Clear and tested business continuity plan • Regular simulation of scenarios conducted across the Group • The Group has demonstrated its continuing commitment to adhering to the required standards of conduct. In some areas, we are going beyond the minimum compliance requirements, in applying responsible business practices and ESG best practices • Continuing to monitor the peak oil demand projections and assessing its potential impact on our business direction and strategy • In the short and medium term, we have proactively embarked on low-carbon products by adopting green technology (e.g. LNG dual-fuel, eco-friendly and energy efficient shipping solutions) to meet internal and our customer’s GHG reduction and other environmental targets • MISC has publicly declared its stand on climate change by joining the global Getting to Zero Coalition. As part of our long term commitment, we have also embarked on development of a zero-carbon emission vessel in collaboration with other strategic partners, aligned with the IMO 2030 and ultimately IMO 2050 targets for the shipping industry • Capitalising on the increasing demand for natural gas globally – and hence, LNG shipping requirements – to grow the secured income base under our LNG Asset Solutions segment • Adding more LNG dual-fuel vessels into our fleet and continuing to pursue opportunities to own and operate LNG bunkering vessels • The Group is taking the initiatives as stated above to play our role towards curbing carbon emissions MATERIAL MATTERS DESCRIPTION/IMPACT TREND RESPONSE Risk: Any major HSSE incidents involving any one of our assets may result in injury or loss of life, asset or environmental damage, financial or reputational impact Risk: Not having the right people and next generation leaders to effectively implement our business strategies could affect our competitiveness Opportunity: Leverage on digital technologies for greater operational efficiencies and competitive advantage Risk: A significant cybersecurity incident or prolonged disruption to our ICT systems could lead to loss of confidential or sensitive information or adversely affect business operations Risk: Regulators for listed companies and the maritime and energy industries may impose heavier governance and compliance burdens. There is also an emerging trend for investors and financial institutions to implement ESG-based policies in their investments and lending decisions, which would impact the ease of raising capital Emerging risk: Peak oil is the hypothetical point at which global crude oil production will hit its maximum rate and begins to decline. Peak oil might may also happen due to declining demand, which would result from more efficient technologies and alternative energy sources. Based on various published projections, peak oil demand is forecasted to occur somewhere between 2035-2050 Risk: Policymakers and lawmakers have been enacting stricter rules and targets on various sectors relating to carbon emissions and other environmental issues, including the maritime industry Opportunity: The strong demand for a cleaner-burning energy source continues to drive the future growth in natural gas usage globally; natural gas is well-positioned as the transition fuel to renewables LNG is also gaining traction as an environmentally friendly, reliable and cost-effective fuel for the maritime industry, which opens up a new market Emerging risk: If global climate change mitigation actions are insufficient, the increase in temperatures could have knock-on effects on global maritime trade which possibly include risk of trade route changes, port infrastructure damage, and higher operating costs DRIVERS Upward Neutral Neutral Upward Upward Upward Upward Upward Upward