ESG RISK 07 Description In recent years, investors have increasingly prioritised Environmental, Social and Governance (“ESG”) factors to evaluate the sustainability and risk profile of companies. ESG considerations play a critical role in shaping an organisation’s financial performance and long-term shareholder value. Research has shown a positive correlation between robust ESG policies and strong financial outcomes. ESG risks refer to the uncertainties and potential threats that could hinder the continuous improvement of business strategies, operations, and the long-term availability of resources across our value chain, particularly in relation to ESG issues. UEM Edgenta’s failure to comply with ESG-related standards could result in significant consequences, including revenue loss, market share erosion due to shifting customer preferences, diminished confidence from investors and rating agencies, financial penalties from regulatory bodies, and reputational damage that may lead to negative publicity. ESG programmes and disclosures have become increasingly crucial, with stakeholders demanding greater transparency on a range of issues, including environmental responsibility, fair labour practices, occupational health and safety, diversity, responsible sourcing of materials, community protection, and strong corporate governance. In response, the Group is firmly dedicated to addressing these ESG matters, continuously upholding and championing these principles as part of its commitment to being a responsible corporate citizen. Context • The Group has developed a comprehensive Sustainability Policy, Governance Structure, and Roadmap, which together form a solid foundation for an effective Sustainability Governance framework. This framework actively involves the Board of Directors and senior leadership, ensuring ESG principles and a sustainability-focused ethos are embedded across UEM Edgenta’s operations and services. • Continuous compliance with existing ESG requirements, coupled with proactive monitoring and adherence to any updates or changes in these policies and regulations. • Regular review assessments are conducted to ensure ongoing ESG compliance, with continuous updates to policies and procedures to maintain their adequacy, effectiveness, and relevance. • Engage regularly with stakeholders across our value chain to identify and understand key material matters, risks, and threats, enabling us to develop and implement targeted initiatives to mitigate them effectively. • Ongoing communication and awareness initiatives that promote conscientious and responsible ESG behaviour among employees, clients, and vendors at every level. Mitigation 71 MANAGEMENT DISCUSSION AND ANALYSIS
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