FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2025 41 SUSTAINABILITY REPORT (CONT’D) 4. RISK MANAGEMENT 4.1 Identifying and Assessing Climate-Related Risks Frontken follows a four-stage Climate Risks and Opportunities Identification Process embedded within its ERM Programme. Internal reviews are conducted every six months. The Sustainability Development Committee reports annually to the Sustainability Steering Committee and Audit Committee on results, financial impact, and countermeasures. Stage Process Detail 1. Collect List related risks and opportunities Filter climate risks and opportunities relevant to Frontken based on external trends (regulatory developments, IPCC guidance, market shifts) and internal operational changes across Taiwan, Malaysia, and Singapore. 2. Identify Determine material risks and opportunities Cross-functional group discussions to identify risks and opportunities requiring attention, covering own operations and the supply chain. Climate scenario analysis outputs are used as primary inputs. 3. Assess Materiality Develop risk and opportunity matrix Apply the ERM impact evaluation framework to calculate probability and financial impact. Risks and opportunities are ranked in a Climate Risks and Opportunities Matrix across short-, medium-, and long-term horizons. 4. Respond and Monitor Formulate and implement responses List and implement responses; conduct financial impact analysis for material risks; monitor performance and outcomes; report results to the Sustainability Steering Committee and Audit Committee annually. 4.2 Integration into Overall Risk Management Climate-related risks are fully integrated into Frontken’s ERM Programme, which also covers operational, financial, and hazard risks including utility supply, earthquake, fire, and chemical spill. The Audit Committee, authorised by the Board, reviews the ERM framework and risk profile annually to ensure key risks remain within the Group’s risk appetite. Climate risks are identified across both own operations and the supply chain, assessed for financial impact, and countermeasures are reported to the Sustainability Steering Committee and Audit Committee. 4.3 Mitigation Management Responsible Innovation and Services Frontken’s core refurbishment and recycling technology generates Scope 4 avoided emissions. Compared to manufacturing a new precision metal component, refurbishing the same component over ten cycles reduces GHG emissions by approximately 58.5%. The R&D team continuously develops environmentally friendly methods for chemical management, coating, and cleaning processes, aligned with the Group’s sustainability targets. Responsible Green Production Rooftop solar photovoltaic systems generate an average monthly output of up to 124,897 kWh. Energy conservation upgrades include chiller system improvements, LED lighting, dust collection and exhaust system upgrades, frequency conversion technology, and flow monitoring systems. Ares Green Technology Corporation Plant 1 (Taiwan) holds ISO 50001:2018 Energy Management System certification, issued 18 November 2024 and valid until 18 November 2027.
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