Delivering Sustainable Value For Our Stakeholders Delivering Sustainable Value For Our Stakeholders Press Metal Aluminium Holdings Berhad 200 201 Integrated Annual Report 2023 Table Y. Implications of physical and transition risks identi ed by Press Metal Type of Risk Risk Implications 1.8oC Scenario 4.3oC Scenario Physical Extreme weather events (acute) • Medium risk in view of potential disruption on operations, leads to the development of internal climate mitigation strategy to address risks associated with extreme weather events • High risk attributed to the heightened frequency and severity of extreme weather events, which have significant impacts on infrastructure, supply chains, and factory operations • High risk related to the inability to renew insurance coverage Changes in climate patterns (chronic) • Medium risk considering the existing factories situated on higher ground remain unaffected, although operational delays are anticipated • Medium risk is present concerning environmental compliance and potential litigation issues • High risk emerges from the potential relocation of factories, leading to increased operating expenses (OPEX) and capital expenditures (CAPEX) Regulatory Environmental regulations • High risk associated with meeting expectations and commitments to adhere to stringent policies and regulations, which necessitating more investment in low-carbon technology and heightened monitoring and analysis of climate-related risks • Medium risk associated with climate change policy and legislation in view of a lenient approach by the regulators towards climate-related issues Carbon pricing • High risk is linked to the widespread adoption of carbon pricing mechanisms in the market, impacting the supply chain and increasing OPEX, such as rising raw material prices and excessive logistics costs • High risk associated with failure to comply with the Carbon Border Adjustment Mechanism potentially resulting in the inability to export to the EU • Medium risk associated with less pressure and urgency to develop internal carbon price leading to less competitive bidding and reduced interest in carbon pricing within the market Market Shift in customer preferences • High risk associated with evolving customer preferences towards low-carbon products, necessitating increased investment in low-carbon technology, thereby raising both CAPEX and OPEX • High risk arises from customer demands for cheaper products rather than low-carbon alternatives, resulting in lower profits and sales, which can potentially impact the business sustainability Overall changes in the market • High risk associated with rising demand for low-carbon products by major market players, requiring greater compliance efforts and resources for sourcing and production to meet market demands • High risk due to the low demand for low-carbon products in the market, reducing Press Metal’s competitiveness despite its commitment to decarbonisation efforts in producing such products TCFD Content Index Table Y. Implications of physical and transition risks identi ed by Press Metal (cont’d) Type of Risk Risk Implications 1.8oC Scenario 4.3oC Scenario Technology Low-carbon technologies • High risk associated with the deployment of technology at a premium cost due to limited in-house decarbonisation R&D capabilities • Low risk associated with limited motivation to deploy decarbonisation technology to achieve carbon neutrality targets and the underdevelopment of R&D in the market, resulting in minimal impact on CAPEX Product changes and effects • High risk associated with the growing demand for recycled aluminium from customers, driven by increasing regulatory requirements for climate action. This surge in demand is leading to a shortage of secondary or recycled aluminium in the scrap market • High risk arises from diverging fundamental criteria for low-carbon aluminium in the market. Different countries have varying requirements, and these criteria may change with shifts in market perspectives • Low risk associated with both the low demand for recycled aluminium by customers and the availability of lowcarbon aluminium in the market Reputation Litigations, fines and non- compliance • Low risk is evident as there are mitigation controls in place, including strategies, plans, and actions to ensure compliance with climate change regulatory requirements • Low risk due to the absence of comprehensive climate control measures, minimal compliance requirements, and the slow development of climate-related regulations Negative investor and public perception • Low risk as Press Metal continuously engages with stakeholders to provide updates on our climate-related strategies • Low risk due to limited public awareness and minimal pressure from stakeholders to implement climate change strategies Social Talent retention and attraction • Medium risk is attributed to the prioritisation of remuneration over climate change responsibilities and social concerns. Efforts have been made to retain and recruit talent, although the impacts remain modest • Low risk is observed since social concern and climate change awareness are not heavily emphasised in talent retention and attraction, aligning with normal operating procedures Social changes arising from climate change • Medium risk is associated with social changes driven by end-user product makers, who utilises marketing strategies and branding to promote public awareness of living a low carbon-footprint lifestyle. Meeting the market’s demand for low carbon products is essential • Medium risk associated with the gradual increase of public awareness of climate change risks in society TCFD Content Index
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