Delivering Sustainable Value For Our Stakeholders Delivering Sustainable Value For Our Stakeholders Press Metal Aluminium Holdings Berhad 126 127 Integrated Annual Report 2023 In order to achieve our interim GHG reduction targets, we are also implementing R&D initiatives and improvement projects at both the strategic and operational levels of our entities. IPCC RCP 8.5 This climate scenario projects a significant rise in global temperatures (4.3°C by 2100) due to rapid GHG emissions growth, resulting in a broad spectrum of environmental impacts. IPCC RCP 2.6 This climate scenario projects a modest increase in the global mean temperature (1.8°C by 2100), with a subsequent decline in GHG emissions by mid-century and the eventual attainment of net negative GHG emissions in the latter half of the century. Forging Collaborative Efforts in Addressing Climate Change We are committed to collaborating with industry peers, governmental bodies, non-governmental organisations (“NGOs”) and local communities towards building a more sustainable value chain. In 2023, Press Metal has set sights on developing and maintaining partnerships with renowned institutions around the world. We have entered an MOU with XJTU on CCU research. On 16 March 2023, BCX successfully conducted the nation’s inaugural carbon credit auction, with 15 buyers from various industries purchasing a total of 150,000 Verra-registered carbon credits. The auction facilitated price discovery for carbon credits using two (2) new products offered by BCX: the Global Technology-Based Carbon Contract and the Global Nature-Based Plus Carbon Contract. We are proud to have participated as one of the bidders in this auction. In 2022, we participated as a working group member in a supplier-buyer initiative for the Voluntary Carbon Market (“VCM”) led by Bursa Malaysia, through which we contributed towards the establishment of the VCM in Malaysia. Through our participation, we provided insights into relevant issues and opportunities while recommending key design choices for the product specifications set to be offered on the Bursa Carbon Exchange (“BCX”). Assessing Climate-related Risks and Opportunities With the growing recognition of climate-related risks and opportunities in the business landscape, we are committed to embracing climate-friendly practices across our operations for long-term stability and resilience while also contributing to a more sustainable future for the community at large. In alignment with the Recommendations of the TCFD Framework, we conducted a thorough climate scenario analysis based on the IPCC RCP 8.5/ 4.3°C (business as usual) and 2.6/ 1.8°C (more stringent) scenarios. The analysis enabled us to identify opportunities to address emerging climate-related policies and regulations, facilitating the adoption of proactive measures to improve our risk stance. These global emissions scenarios are closely intertwined with the IPCC Shared Socioeconomic Pathways (“SSP”) 5 and SSP 1, respectively. R&D Focus Areas Energy Reduction Decarbonisation Industrial Revolution 4.0 Caring for the Planet Caring for the Planet Transition Risks Transition risks refer to the changes that an organisation is expected to encounter and navigate as society transitions to a lowcarbon economy. Type of Transition Risk Category Potential Risks Potential Opportunities Regulatory Environmental regulations • Increased costs and production halts when adapting production processes due to new climate regulations. • Greater scrutiny from regulatory and reporting requirements, impacting ease of business. • Suspension of operations, fines and penalties due to non-compliance. • Boosting the low-carbon economy and contributing to the viability of the circular economy. • Higher product premium due to cleaner production. Carbon pricing • Increased costs to procure raw materials. • Introduction of carbon pricing, including carbon tax impacts on business strategies. • Adopting internal carbon pricing and proactively managing our carbon costs to enhance our adaptability and readiness. • Benefiting from incentives resulting from low-carbon technology due to carbon pricing implementation. Market Shift in customer preferences • Shortage of resources that satisfy the criteria for producing products with lower carbon footprint. • Potential revenue loss due to lack of lower carbon products to meet customer demands. • Leveraging business opportunities based on customer preferences, including introducing low-carbon products through circular economy. Overall market change • Increased expenditure required to implement emissions reduction technology. • Heightened risk of equipment shutdowns or write-offs resulting from inability to meet the demand for low carbon requirements. • Reduced availability of recycled aluminium due to increased demand in the market for low-carbon aluminium. • Exploring sector-specific initiatives and developments pertaining to climaterelated initiatives to generate additional revenue streams. • Developing new products with potentially higher profit margin. Technological Low-carbon technologies • Increased cost of investment and research. • Disruptions to existing work processes during the transition to new technologies. • Reduced risk of non-compliance and fines from emerging climate regulations. • Greater ease of development of low-carbon end-products with the implementation of low-carbon technologies. • Increased long-term cost savings. • Reduced GHG emissions through improved technological capabilities. Product changes and effects • Increased competition between industry players to be the forerunner for low-carbon products. • Enhanced capabilities in developing low-carbon products by researching and investing in low-carbon technologies. • Tapping into emerging markets and meeting customer expectations. Read more on our energy reduction efforts and R&D initiatives in Energy Management and Sustainable Manufacturing sections of SR 2023.
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