SUSTAINABILITY STATEMENT FYE 2025 (CONT’D) CLIMATE ACTION INITIATIVES (CONT’D) Climate-related Disclosures (Cont’d) Transitional Risks Based on the scenario analysis and an internal assessment of operational exposure, the Group identified potential climaterelated risks and opportunities across transition and physical risk categories. Transition risks were primarily informed by the NGFS carbon pricing and interest rate pathways, while physical risks were identified qualitatively based on the Group’s offshore and marine operating environment. The Group assesses climate-related risks and opportunities across defined time horizons to better understand their potential impact on its operations, strategy and financial planning. The time horizons adopted for this assessment are outlined below and are aligned with the Group’s business. Transition Risk Impact Opportunities Policy and Legal • Short-term: Malaysia has signalled the introduction of a carbon tax from 2026, and NRES has stated that ETS implementation is set out under the 13th Malaysia Plan period from 2026 to 2030, together with facility-level GHG reporting to support carbonpricing mechanisms. While the Group has not currently identified in the initial carbon-tax focus sectors, these developments may still affect the Group indirectly through fuel, supplier and customer pass-through costs, as well as tighter climate-related expectations in contracts and disclosures. • Long-term: Under a more ambitious transition pathway, broader carbonpricing mechanisms, stricter emissions-related regulation and more comprehensive reporting requirements may increase the cost of operating carbon-intensive assets and raise the compliance burden across the value chain. • Short-term: The clearest near-term financial implication for the Group is higher operating-cost sensitivity linked to emissions. Based on FYE 2025 Scope 1 emissions, the indicative carbon-cost sensitivity is approximately USD0.19 million in 2025 and USD0.79 million in 2030 under the Below 2°C pathway, compared with approximately USD2.49 million in 2025 and USD6.51 million in 2030 under the Net Zero 2050 pathway. • Long-term: If carbon costs increase materially over time, the Group may face sustained pressure on fuelrelated operating expenditure, margin compression, and rising compliance, monitoring and reporting costs, particularly for higher-emitting operations. • Short-term: The policy environment creates an incentive for the Group to strengthen fuel monitoring, energyefficiency measures and emissions management. • Long-term: Lower-emission operations could help reduce long-term carboncost exposure and improve resilience as the policy environment tightens. Technology • Short-term: Marine decarbonisation technologies remain at varying stages of maturity. The International Maritime Organization (“IMO”)’s 2023 GHG Strategy targets at least a 40% reduction in carbon intensity by 2030 and at least 5%, striving for 10%, uptake of zero- or near-zero-GHG emission technologies, fuels and/or energy sources by 2030, while Ministry of Energy Transition and Water Transformation (“PETRA”) has noted that hydrogen and electric propulsion technologies are still in early development with uncertain timelines for widespread adoption. • Long-term: As customer expectations and sector standards rise, vessels or support assets that are not progressively improved may face increasing competitiveness and retrofit risk. • Short-term: The Group may incur upfront costs to evaluate, pilot and deploy technologies that can improve fuel efficiency and emissions performance. There may also be execution risk if new technologies are not yet commercially mature or operationally suitable for the Group’s fleet profile. • Long-term: Technology transition could require additional capital expenditure for retrofits, equipment upgrades, digital monitoring systems, and asset replacement, while delayed adoption may increase the risk of asset obsolescence. • Short-term: The Group has already begun to build practical transition capability through the hybrid dieselelectric engine installed on Keyfield Falcon and the 121.2 kWp solar hybrid system with a battery energy storage system, which reduces Keyfield Wisdom’s reliance on onboard generators, cutting fuel consumption and carbon emissions. • Long-term: Malaysia is also advancing transition technologies through PETRONAS-led Carbon Capture and Storage (“CCS”) in Sarawak and the Hydrogen Economy and Technology Roadmap, which targets RM12.1 billion in hydrogen-related revenue and three green hydrogen production plants by 2027. These developments could create adjacent service opportunities for offshore and marine support players over time. 50 KEYFIELD INTERNATIONAL BERHAD 202001038989 (1395310-M)
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