Caring for the Planet Press Metal Aluminium Holdings Berhad SECTION 5 • DELIVERING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS 144 Physical Risk Physical risks refers to the direct and tangible impacts of climate change on organisations. Potential Risks Implications Potential Opportunities IPCC RCP 8.5 IPCC RCP 2.6 Acute (such as the increased severity of extreme weather events like cyclones and floods) Upstream • Delays and disruptions in material sourcing due to extreme weather. • Increased costs of bauxite due to reduced supply. Operations • Increased supply chain disruptions and operational delays. • Higher incidence of damage to facilities and increased insurance premiums. Downstream • Disruptions in transportation channels leading to additional costs. • Potential revenue loss due to delays in fulfilling customer orders. • Increased customer awareness of risks, potentially leading to changes in contract clauses. • 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. • 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. Upstream • Improved climate resiliency through sustainable mining practices. Operations • Business opportunities and partnerships through diversified supply chains. • Enhanced business resiliency and adaptability to climate change, maintaining customer trust. • Economic benefits from contributing to climate change mitigation and striving for net-zero emissions by 2050. Downstream • Steady supply and revenue as customers rely on Press Metal’s resilience in meeting contractual terms. Chronic (including rising temperatures and sea levels, changes in precipitation patterns and extreme variability in weather patterns) Upstream • Long-term increase in cost of bauxite due to reduced supply from climate changes affecting mining operations. Operations • Increased maintenance costs, manpower, and resources due to higher precipitation, humidity, and flooding. • Higher damages to physical assets and production disruptions from rising temperatures and sea levels. • Increased health-related issues due to climate-related factors. • Higher insurance premiums or reduced availability of insurance plans. Downstream • Decreased revenues from more frequent disruptions delaying customer contract fulfillment. • Loss of revenue as customers shift to alternative materials due to aluminium shortages. • High risk emerges from the potential relocation of factories, leading to increased OPEX and CAPEX. • 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. Upstream • Improved climate resiliency through sustainable mining practices. Operations • Business opportunities and partnerships through diversified supply chains. • Enhanced business resiliency and adaptability to climate change, maintaining customer trust. • Economic benefits from contributing to climate change mitigation and striving for net-zero emissions by 2050. Downstream • Steady supply and revenue as customers rely on Press Metal’s resilience in meeting contractual terms.
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