climate risks assessment CARBON TAXES The scope of business acঞviঞes and processes within the property development and construcঞon operaঞons are typically energy and carbon intensive, thus providing Matrix with relaঞvely high exposure to any carbon taxes imposed. However, while exposure is high, simulaঞons run on several carbon tax prices based on a per tonne of carbon allude to low severity or impact: Carbon Tax Projections RM35/tCO2e RM50/tCO2e RM75/tCO2e Based on 5,674.8 tonnes CO2e from Scope One and Scope Two emissions (FY2024) RM198,618 RM283,740 RM425,610 Even at the highest scenario of RM75/tCO2e, the cost of RM0.43 million is 0.17% of the Group’s FY2024 PAT. Sঞll the Group conঞnues to adopt measures towards reducing its exposure to carbon taxes as well as transiঞon risks as a whole. These include increased leveraging of solar, implementaঞon of energy saving measures and other strategies. Matrix aims to encourage responsible sourcing pracঞces, improve emissions tracking, and promote sustainable innovaঞons. This approach miঞgates exposure to non-compliance risks and strengthens Matrix’s preparedness for evolving Scope Three regulaঞons. MARKET AND REPUTATIONAL RISKS By 2026, Bank Negara Malaysia would require financial insঞtuঞons to align at least 50% of new financing with green and climate-related policies6. This includes reducing exposure to energy intensive and high carbon emiমng sectors, such as property development and construcঞon. Presently, 100% of the Group’s borrowings comprise convenঞonal loans. Given Matrix posiঞon in an energy-intensive industry, the Group could face heightened credit risk as lenders adopt stricter lending criteria to miঞgate climate-related exposures7. Timeframes Severity Rating (1-5) Likelihood Rating (1-5) Overall Risk Rating Short Term (2024-2026) 2 3 Very Low While financiers are increasingly factoring ESG scores into their evaluaঞons, the immediate impact on Matrix’s regular financing opঞons remains limited. This is due to the already preferenঞal rates that the Group has secured for its borrowings. However in strengthening its profile with bankers and investors, Matrix should conঞnue to prioriঞse sustainability reporঞng, importantly, its climate disclosures and at the same ঞme, undertake necessary acঞon such as Group wide CRAs, site-specific CRAs, biodiversity audits, materiality assessments and strive for full NSRF and IFRS alignment. Medium Term (2027-2035) 2 2 Low As banks look to decarbonise their lending porolios, ESG based financing or greater scruঞny on sustainability disclosures and performance will loom larger as a consideraঞon for sourcing compeঞঞve financing. Exisঞng sustainability disclosures should be maintained and enhanced, supporঞve by tangible acঞon steps. These include reviewing and reseমng KPIs and targets and establishing a clear net zero emissions roadmap by 2050. Long Term (2036-2050) 3 3 Moderate In the long-term, the focus is expected to be on producing lower carbon products across the product lifecycle and to conঞnue registering progress on the decarbonisaঞon journey. Sustained investment in carbon management strategies, transparent reporঞng, and innovaঞon in sustainable product offerings will be essenঞal to safeguard Matrix’s market posiঞoning and financing prospects. CRAs- Climate Risk Assessment NSRF- National Sustainability Reporting Framework 6 Costa, M. (2023). Malaysia expects half of financing to support green policies by 2026. Green Central Banking. https://greencentralbanking.com/2023/10/31/ malaysia-expects-half-of-financing-to-support-green-policies-by-2026/ 7 Capasso, G., Gianfrate, G., & Spinelli, M. (2020). Climate change and credit risk. Journal of Cleaner Production, 266, 121634. 106 MATRIX CONCEPTS HOLDINGS BERHAD INTEGRATED ANNUAL REPORT 2025 05 VALUE CREATION STRATEGIC REVIEW
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