FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2025 38 Risk / Opportunity Category Time Horizon Potential Financial Impact Impact on company reputation Transition Risk Short–Long Revenue and profit impact if stakeholder expectations not met; loss of FTSE4Good inclusion; estimated 1-3% of annual revenue Renewable energy regulations and procurement Transition Risk Short–Medium Compliance costs; potential sourcing constraints in Taiwan under net-zero legislation; estimated 1-3% of annual revenue Drought — Own Operations Physical Risk Medium–Long Operational disruption; estimated <2% of average annual revenue per event Drought — Supply Chain Physical Risk Medium–Long Supplier disruptions affecting component availability; estimated <2% of average annual revenue per event Flood — Own Operations Physical Risk Medium–Long Facility damage and production downtime; estimated <2% of average annual revenue per event Rising temperatures Physical Risk Long Increased energy consumption and production run costs; estimated <2% of average annual revenue per event Develop low-carbon products and services Opportunity Short–Long Revenue and profitability growth from accelerating demand for refurbished, energy-efficient components Improve company reputation Opportunity Short–Long Attract ESG-focused investors, customers, and talent Drive low-carbon green operations Opportunity Short–Medium Energy efficiency gains reduce utility costs Participate in carbon trading markets Opportunity Medium–Long Generate revenue or offsets from carbon credits 3.3 Strategy Adjustments and Financial Planning The identified climate risks and opportunities have directly influenced Frontken's strategy and capital allocation. Key investments in FY2025 directly attributable to climate-related strategy include the expansion of waste treatment and sustainable production facilities, energy efficiency upgrades across Taiwan and Malaysia operations, and supply chain engagement programmes. Financial Effect FY2025 FY2026–2030 Anticipated Basis of Estimate Net Zero compliance capex (transition risk) Expansion of waste treatment and sustainable production facilities. Included in existing energy and facilities capex budget. ~1% of annual revenue per year from 2030, rising cumulatively to 2050 IEA Sustainable Development Scenario cost trajectory; management estimate Physical risk (drought) — revenue impact Zero (no drought event in FY2025). <2% of annual revenue if a drought event occurs ERM assessment; water supply contingency cost modelling Physical risk (flood) — revenue impact Zero (no flood event in FY2025). <2% of annual revenue if a flood event occurs ERM assessment Renewable energy cost savings (opportunity) Solar PV generation cumulative offset 6,226,682 kWh since 2018; FY2025 incremental savings estimated RM0.3 million. Increasing as further solar installations proceed Electricity tariff avoided × kWh generated SUSTAINABILITY REPORT (CONT’D)
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