5 ENHANCING VALUE THROUGH SUSTAINABILITY 115 SUSTAINABILITY RISK MANAGEMENT UEM Edgenta manages sustainability risks within its broader governance and risk management framework, ensuring climate and integrity considerations are treated as strategic business matters. Sustainability considerations are embedded within governance structures, decision-making processes and the risk management framework, with sustainability and climate-related risks and opportunities assessed alongside strategic and operational risks. Responsibility for regulatory compliance rests with respective business operations. Clear oversight and defined ESG accountabilities support a structured and forward-looking approach to managing climate-related risks and opportunities. The Risk, Integrity and Compliance Department (RICD) supports sustainability risk management by facilitating risk identification and monitoring, and by ensuring consistent application of the Risk Management Framework (RMF) across the Group. In February 2025, enhancements were introduced to formally integrate ESG risks — including corruption and climate-related risks — into the Group’s risk identification, assessment, treatment and monitoring processes. These enhancements strengthen the structured approach for identifying, analysing, evaluating, monitoring, reporting, and managing sustainability-related risks, ensuring sustainability considerations are incorporated into strategic planning, investment evaluation and day-to-day operations. Sustainability Policy and framework enhancements in FY2025 further strengthened this integration. For more information on the enhancements made to the Sustainability Policy, please refer to the Approach section of Climate Change on page 143. For further information on how climate considerations are integrated into the Risk Management Framework, refer to the Statement on Risk Management and Internal Control section on page 244. Execution is supported by continuous awareness-building and due diligence processes. Climate and ESG risk awareness is promoted across the organisation through training sessions, workshops and internal communications, strengthening understanding of emerging risks and reinforcing the role of sustainability in achieving corporate objectives. Climate-related risks are also considered within ongoing project risk assessments as part of due diligence for investment and operational decisions. For further information on overarching governance structures, oversight bodies and policy direction, please refer to the Governance section on pages 202 to 259. Climate Risk Management Procedure Climate-related risk is managed as part of UEM Edgenta’s risk management framework and is subject to oversight at the highest level of governance. The Board oversees sustainability and climate-related matters in view of their implications for business continuity and long-term resilience. Through the Board Governance and Risk Committee (BGRC), climate-related risks, mitigation actions and opportunity areas are reviewed on a quarterly basis. This process ensures climate considerations are incorporated into strategic direction with emerging risks assessed and refined on a regular basis. This oversight is reinforced through operational processes applied across the Group. Project Risk Assessments form part of the due diligence process for new ventures to ensure climaterelated factors are incorporated into investment and operational decisions. During FY2025, the Risk, Integrity and Compliance Department (RICD) continued to monitor climate-related risks across existing operations and new projects, supporting the consistent identification and management of climate exposures at both strategic and operational levels. Physical climate risks present distinct challenges to several operational assets. Events such as flooding, storms, landslides and soil erosion have the potential to disrupt facilities including the incinerator, laundry plant, research centre and Asphalt Premix Plant with Recycling Facility. Such disruptions may affect service reliability, increase operating costs and place pressure on margins, particularly within highway maintenance activities. Risk assessments for these assets incorporate physical climate considerations to enable mitigation measures and operational controls to be planned and implemented in advance. Further development of the risk management framework especially in climate-related areas will focus on strengthening forward-looking capability. The Group plans to develop climate scenario modelling and a Climate Adaptation Plan to improve understanding of asset vulnerability under different climate pathways and to support longer-term planning. This approach will enhance preparedness for future climate impacts while strengthening the integration of climate considerations into business strategy, investment evaluation and operational management.
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