Transitional Risk Transitional risks arise from the global shift toward a low-carbon economy as societies address the challenges of climate change. Type of Transitional Risk Potential Financial Impact Our Adaptation Plan Policy & Legal This pertains to the risks associated with adapting to changing laws, regulations, and policies related to sustainability and climate change compliance. Increased operational expenses due to: • Carbon tax on key materials, such as iron and steel, as outlined in the government’s FY2024 budget, though additional details remain undisclosed. • Higher operational expenses from complying with green building regulations. • Continuously monitor regulatory changes and stay informed about evolving climate regulations. • Engage in competitive sourcing to secure the best resources. • Early consideration of green building certification in the development process. Opportunities Posed by Climate Change We are integrating energy-e cient features and pursuing green building certifications (e.g. GBI/GreenRe certification) in our buildings and projects, positioning Tropicana as a brand and market leader in delivering value-added experiences through sustainable, green assets for our customers. This includes the integration of renewable energy sources and encouraging the adoption of electric vehicles by providing charging ports for our developments. The increased demand for green buildings is driven by the following factors: • Rising energy costs and concerns about energy security, given Malaysia’s reliance on imported non-renewable energy sources • Malaysia’s Net Zero Goals • Technological advancements in green technology and materials, making adoption more feasible due to lower costs. This extends beyond the installation of solar panels and includes prioritising green construction materials such as green cement in our buildings For updates on the progress of green building certifications for our properties, please refer to the “Sustainable & Green Design” section of this Sustainability Statement. Climate Scenario Analysis We understand the importance of climate scenario analysis to ensure proper identification of climate risk and its impact on our business over the short, medium and long-term horizon. In 2024, Tropicana piloted its first climate scenario analysis, leveraging third-party data and literature. In this pilot exercise, we focused on the physical climate risk given the physical nature of business – physical production sites and highly reliant on niche manpower. Our scenario analysis leveraged insights from sources such as the IPCC and the World Economic Forum’s Global Risk Report We considered a few scenarios and appropriate timelines. We acknowledge the following: • Increase in global surface temperature of 1.1 ℃ above 1850-1900 from 2011 to 2020. • WEF Global Risk Report for 2034, by way of a survey, predicts that a 3 ℃ by 2034 is likely. Therefore, based on our reading, the 1.5 ℃ world by 2050 is unlikely. Therefore, we explored a 2 ℃ scenario and beyond in more depth over a short, medium and long-term horizon. We then considered the scenario for 10 years, e.g. up until 2035. We limit the long-term time horizon to 10 years to perform a more meaningful assessment and allow us to consider our adaptation strategy in the next 10 years. 174 ANNUAL REPORT 2024
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