4 MANAGEMENT DISCUSSION AND ANALYSIS 63 THE TRANSITION TO A LOW-CARBON ECONOMY Overview Momentum around decarbonisation and climate action continued to build in 2025, driven by heightened stakeholder expectations and increased awareness following recent extreme weather events. Regulatory and stakeholder expectations accelerated as Malaysia strengthened its enabling framework for energy efficiency and sustainability disclosures. The Energy Efficiency and Conservation Act (“EECA”) 2024 came into force on 1 January 2025, expanding requirements across large energy consumers, specified buildings, and selected products. In parallel, Malaysia’s National Sustainability Reporting Framework (“NSRF”) introduced a phased adoption pathway aligned with ISSB standards (IFRS S1 and S2), with reporting periods beginning on or after 1 January 2025 and progressively scaling in scope over subsequent years. Risks • Heightened compliance complexity and delivery expectations, with customers increasingly requiring clear emissions baselines, credible transition plans and stronger assurance readiness as preconditions for appointment. • Potential loss of contracts or reduced competitiveness where assets fail to meet emissions, energy intensity or other environmentally related performance targets. • Increasing regulatory complexity may translate into higher compliance costs, placing downward pressure on Group-wide margins. Opportunities • Strengthening our market position as a provider of sustainable and low-carbon solutions across the sectors and verticals in which we operate. • Driving operational cost efficiencies through the adoption of sustainable solutions that reduce emissions and energy consumption while delivering cost savings. Our Response • Continuing to reduce our emissions and environmental impact through targeted, long-term initiatives across energy, waste and resource efficiency. • Partnering with our suppliers to support their transition towards low-carbon and environmentally responsible practices. • Supporting our clients in reducing emissions through our innovative Zero Capex Programme, which funds energy efficiency and emissions reduction projects without requiring upfront capital investment. • Expanding practical circular economy solutions within our operations and business, including our Recycled Asphalt Plant in Tapah. • Preparing for evolving regulatory requirements under the NSRF through a structured readiness programme that includes internal workshops, targeted training sessions and the establishment of a cross-functional taskforce to support compliance and implementation. Outlook The transition to a low-carbon economy is expected to intensify as disclosure expectations broaden and environmental performance requirements become more deeply embedded in asset operations. Against this backdrop, integrating sustainability and climate action into our solutions will remain a key differentiator, enabling us to grow alongside customers with similar priorities. This will be complemented by continued efforts to reduce our emissions in line with our commitment to achieving net zero carbon by 2050. At the same time, we will continue to engage with our supply chain partners to enhance the completeness and reliability of Scope 3 emissions data, enabling more informed decarbonisation planning and reporting. LINK TO Material Matters M5 M6 Stakeholders S5 S6 S2 S3 S4 Risks R7 R8 Capitals
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