86 YINSON HOLDINGS BERHAD Under the Stated Policies Scenario (STEPS), demand for oil & gas is expected to remain broadly sustained through 2050, with gas growing faster than oil, while investment in the sector peaks around 2030. Increasing policy and market pressures, including moderate carbon pricing and stronger environmental criteria in financing decisions, may gradually raise costs for emissions‑intensive activities and slow new oil & gas investments. In this context, Yinson Production is expected to continue FPSO operations in key regions requiring flexible and cost‑effective offshore energy infrastructure, although contract decisions may increasingly depend on emissions performance. Yinson Renewables and Yinson GreenTech support the Group’s transition by expanding access to cleaner energy solutions as market demands evolve. Under the NZE Scenario, oil & gas demand peaks this decade and declines thereafter, alongside significantly higher carbon prices and stronger financial policy shifts towards low-carbon activities. This may increase transition risks for FPSO-related activities, including tighter financing conditions, higher costs, lower margins and potential risks to contract renewals, alongside greater likelihood of industry consolidation. At the same time, the accelerated transition creates stronger growth opportunities for Yinson Renewables and Yinson Greentech as clean and renewable energy becomes mainstream and the Group increasingly pivots towards low-carbon businesses as our engines of growth. Metrics & targets Yinson has set long-term climate targets, including achieving carbon neutrality for Scope 1 and Scope 2 emissions by 2030, and net zero emissions across Scope 1, Scope 2 and Scope 3 by 2050. These targets guide our approach to reducing emissions across our operations and value chain over time. We include climate-related targets in the Group’s 30 by 30 initiative, which includes reducing the carbon intensity of FPSO and Group operations and compensation for residual Scope 1 and 2 emissions by 2030. Progress against these targets is reviewed annually, with performance trends and variances informing management actions on climate matters. control framework administering the internal Sustainable Investment Fund. Under the ICP Framework, carbon charges are applied for emissions exceeding a defined threshold, based on a price per tonne of CO2e ranging from USD 15 to USD 43, increasing incrementally over time. When triggered, these charges are channelled into the Sustainable Investment Fund to fund emissions-reduction initiatives, reinforcing financial accountability and incentivising emissions reduction. The mechanism also allows carbon costs to be factored into strategic and investment decisions. The carbon price reflects current and anticipated carbon regulatory developments and may be updated as conditions evolve. Following a pilot with Yinson Production in 2024, the ICP continued to be applied within Yinson Production for FY2026, with plans to assess its applicability for other Yinson businesses. The ICP Framework has received approval from the MSC. Carbon credits Yinson remains dedicated to environmental conservation through strategic nature-focused investments that support ecosystem preservation, biodiversity enhancement and sustainable development. Our approach includes exploring Nature-based Solutions (“NbS”) that generate high-quality, nature-based carbon credits through impactful climate action partnerships and investments. As of FY2026, Yinson has purchased 3,000 high-quality nature-based credits from three projects through the Bursa Carbon Exchange (BCX). As we progress towards 2030, Yinson intends to adopt a disciplined approach to the use and retirement of carbon credits to offset residual emissions, while ensuring the ongoing replenishment of credits through market purchases and the development of NbS projects with strategic partners. This approach supports the long-term availability and integrity of our carbon credit portfolio as we advance toward our carbon neutral aspiration. In parallel, we are strengthening our carbon market strategy through collaboration with the Malaysia Forest Fund (“MFF”) to identify and develop domestic forest-based NbS projects under the Forest Carbon Offset (FCO) programme. These initiatives support national climate objectives, contribute to the preservation of Malaysia’s natural ecosystems, and provide optionality to voluntarily offset residual emissions through the retirement of high-integrity credits. This aligns with Yinson’s 30 by 30 target of addressing residual Scope 1 and 2 emissions through a combination of carbon removals and high-quality carbon credits. Yinson’s plan for transition and adaptation Capital allocation is a key driver as the global energy system evolves to balance the need for lower-carbon solutions with ongoing requirements for security, affordability and reliability. We aim to allocate 30% of our total equity investment to non-oil-based FPSO activities by 2030 and are committed to strategically directing capital towards low-carbon and transition-enabling solutions. At the same time, we pace our Scan for more details on 30 by 30. Internal Carbon Pricing Yinson established an Internal Carbon Pricing (“ICP”) Framework in 2023 to help manage climate-related transition risks and identify value creation opportunities. The ICP supports the allocation of capital towards emissions reduction initiatives, such as the Zero Emissions FPSO Concept, and contributes to the Group’s broader transition strategy. The framework sets clear principles and processes for applying carbon pricing, and includes a governance and 30 by 30 scorecard, pg 43 SUSTAINABILITY REVIEW
RkJQdWJsaXNoZXIy NDgzMzc=