climate risks assessment Mitigation Measures • The Group’s conঞnued inclusion in the FTSE Russell index and good ESG raঞng augur well for Matrix. Increases in scoring through conঞnued and improved good sustainability reporঞng as well as undertaking of CRAs and biodiversity audits would augur well for the Group’s posiঞon going forward. Companies with low ESG scores or significant environmental footprints may encounter reduced financing margins or higher interest rates, posing financial risks. • The Group maintains acঞve communicaঞon with lenders to stay informed about evolving financing criteria and requirements for securing compeঞঞve rates. This includes exploring opportuniঞes to qualify for green financing opঞons, leveraging Matrix’s sustainability iniঞaঞves to improve creditworthiness. • Matrix acঞvely pursues green cerঞficaঞons that validate its sustainable product offerings, reinforcing its commitment to responsible manufacturing pracঞces while enhancing its ESG score. A Silver raঞng was achieved for Levia Residence. Matrix intends to secure GreenRE cerঞficaঞon for all upcoming high-rise developments. TRANSITION TO A LOW-CARBON BUSINESS MODEL The transiঞon to a low or lower carbon business model is highly challenging for the property development and construcঞon sector given the inherent dependence on fossil fuels. A wide range of business processes consume diesel and petrol such as for powering forkli[s, backhoes, excavators as well as for onsite generators. This is notably evident when upstream and downstream emissions are factored into the overall emissions profile (Scope 3 emissions). Requiring suppliers to adopt electrificaঞon such as increased use of electricity on sites instead of gensets or EV machinery would lead to a significant increase in upfront costs. This costs would then be passed through resulঞng in more expensive properঞes, with end buyers bearing the cost or Matrix having to absorb said cost and thus experience an erosion of margins per property unit. However, over the medium to long-term, transiঞoning towards low or lower carbon approaches is beneficial and even integral in avoiding exposure to rising energy costs due to subsidy raঞonalisaঞon and ঞghtening regulatory requirements. Considerable investments would be required to fund this and other transiঞons, which may incur opportunity cost. For example, the cost of expanding solar installaঞons against the cost of purchasing addiঞonal landbank or even launching new property projects. Or expenditure on solar installaঞons vs money invested into property development or new machinery. Timeframes Severity Rating (1-5) Likelihood Rating (1-5) Overall Risk Rating Short Term (2024-2026) 2 2 Moderate As decarbonisaঞon efforts are sঞll in the early stages, the primary risk stems from opportunity costs as well as sunken costs (CAPEX) associated with iniঞal investments in RE infrastructure and energy-efficient systems. These expenses may temporarily divert funds from other growth iniঞaঞves but would not disrupt the business model and business plans. Medium Term (2027-2035) 3 4 High As the Group advances its Scope 3 decarbonisaঞon efforts, supply chain disrupঞons may become more pronounced. Suppliers may face challenges in meeঞng stricter environmental criteria, such as securing cerঞficaঞons, adopঞng sustainable processes, or ensuring low-carbon product outputs. This could result in operaঞonal delays, higher costs, or the need to idenঞfy alternaঞve suppliers. Addiঞonally, greater pressure from regulatory bodies and financiers to demonstrate carbon reducঞon progress may elevate risk exposure. Long Term (2036-2050) 2 3 Moderate Over ঞme, as Matrix’s low-carbon iniঞaঞves mature and suppliers align with evolving sustainability requirements, cost pressures are expected to stabilise. The Group’s ability to diversify its supplier base by onboarding partners with verified sustainability pracঞces will miঞgate potenঞal supply chain bolenecks and reduce exposure to compliance risks. Enhanced operaঞonal efficiencies and improved supplier readiness will further reduce overall risk. 107 MATRIX CONCEPTS HOLDINGS BERHAD INTEGRATED ANNUAL REPORT 2025 05 VALUE CREATION STRATEGIC REVIEW
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