MISC Integrated Annual Report 2020

ANCHORING SUSTAINABILITY @ MISC OUR GOVERNANCE STRUCTURE MISC’s sustainability governance is key to ensuring that we continuously embed sustainability principles into our business strategy, decision making processes and operations. Our sustainability agenda is built on our commitment to create value for our stakeholders. We ensure that we follow through our commitment by practising progressive governance and sustainable management. MISC’s Board of Directors (Board) sits at the apex of our sustainability governance structure and maintains strict oversight of the Group’s sustainability strategy and performance. The Board is supported by multiple levels of working committees and teams, with clear lines of reporting and accountability in place. These comprise of the Management Committee (MC), Sustainability Working Committees chaired by the MC members and Corporate Sustainability Team. Our 2016-2020 sustainability agenda comprises six sustainability pillars, namely customers, shareholders, environment, governance and business ethics, employees, and community. Each pillar is overseen by its respective working committees, who have been tasked with ensuring that sustainability strategy for each respective pillar is effectively implemented, and the goals and outcomes identified are achieved. In 2020, the Board formed the Board Governance and Risk Committee (BGRC) to provide focused oversight on the effective implementation of the sustainability strategy. More information on the BGRC can be found in the Chairman of the BGRC’s Message on page 290 of this Integrated Annual Report. As we forge ahead, we are moving away from committee based structure to a custodian based structure, where each custodian ie. service unit, business unit and subsidiaries will be tasked with the responsibility to ensure that the approved initiatives are implemented, and will be held accountable for meeting their respective targets. Where required, the custodian is expected to form working groups to solicit views and inputs from cross-functional units. HOW WE USE OUR MATERIALITY ASSESSMENT In 2019, we reviewed our Materiality Matrix to take a fresh look at matters that may impact the MISC’s businesses, both at present and in the future. This includes matters that could impact the Group’s value drivers and competitive position, and long-term shareholder value creation. In conducting the review exercise, we obtained the views of both our internal and external stakeholders. For more details on how we conducted our materiality assessment and matrix, please refer to Our Material Matters on page 66 of this Integrated Annual Report. The materiality assessment helped to prioritise factors that matter most to our business and our stakeholders. By using this approach to develop our strategy, we are able to perpetuate our business into the longer-term future. We are also able to tailor our reporting disclosures to meet the expectations of our stakeholders. These prioritised material matters form the basis for the next phase of MISC’s 2021-2025 Sustainability Strategy. Material matters Why is this material? Capitals affected Project and financial performance The maritime and energy sector is subject to the fluctuations of prevailing economic conditions and market sentiment which affects our business. Therefore, it is key for MISC to have a robust business strategy to maximise our asset utilisation, secure larger project revenues and provide a sustainable financial return for shareholders. Read more on pages 126 to 128 of the Financial Review section Financial and Physical Values and governance MISC has a vast global outreach that operates across markets and cultures, hence, conducting ourselves with the highest standards of integrity is a key priority. With this in mind, we have focused our strategic approach on continuing to embed good corporate governance and business ethics. Ethical conduct is part of the cultural DNA of our organisation, even as we aspire to achieve excellent financial and operating results. Read more on pages 228 to 237 of the Operating Responsibly section Human Skilled workforce In line with our mission of promoting individual and team excellence amongst our employees, one of our strategic priorities is to have in place a sustainable talent pipeline across all job levels to ensure a seamless leadership and talent flow throughout the organisation. It is vital that our talent management programme is robust and able to equip and develop our workforce with the necessary skills and competencies to realise our business objectives. Read more on pages 190 to 205 of the People Development section Human and Intellectual Climate change The International Maritime Organisation (IMO) has set the IMO GHG initial reduction strategy (IMO 2030 and IMO 2050) for the shipping sector and is calling for shipowners to take action against climate change. Considering that a majority of our energy consumption is coming from the combustion of fuels for our vessels, MISC has implemented energy reduction initiatives with targets to reduce our carbon emissions. MISC has also signed up for the Getting to Zero Coalition, committed to developing zero-carbon emission vessels by 2030, which is closely aligned with IMO’s GHG strategy. Read more on pages 214 to 219 of the Operating Safely and Sustainably section Natural Customer satisfaction In view of challenging economic and market conditions, our focus is on providing the best service and experience to all our customers through operational responsiveness and tailored solutions in order to exceed customer expectations. A high standard of customer satisfaction experience will reaffirm our status as a recognised global energy maritime solutions and service provider. Read more on page 113 of the Customer Engagement Survey section Social and Relationship Risk management Our emphasis to effectively reduce the impact of financial and ESG risks, respond to immediate risk events and recover from prolonged business disruption will ensure the continuity and sustainability of key business activities as well as delivery of business objectives. MISC’s risk policies and procedures guide the overall best practice of identifying, evaluating, managing, reporting and monitoring the ever- changing risks faced by the Group and specific measures to mitigate these risks. Read more on pages 84 to 89 of Our Risks and Mitigation Strategies section Financial Digitalisation and innovation Digitalisation is rapidly changing the availability of information and will allow MISC to respond to changes more rapidly based on data-driven decisions and increase efficiency of processes. Digitalisation and innovation of digital services for our sea and shore operations will enhance customer satisfaction as MISC would be able to provide integrated and innovative solutions that can serve our customers better. Read more on page 107 of the Digitalisation and Innovation section Intellectual Sustainability is integral to MISC, as it strengthens our core values and enables us to deliver long-term value and positive impact to the environment, our employees and society. Our sustainability agenda reinforces our commitment towards decarbonisation, promoting the circular economy, health and safety, talent excellence, and last but not least, our values and business ethics. Our sustainability actions today will chart the pathway for a better tomorrow. YEE YANG CHIEN President/ Group Chief Executive Officer //// Highlights / Strategic Review / Sustainability / Financial Review / Business Review ///// MISC Berhad / Integrated Annual Report 2020 5 104 MISC Berhad / Integrated Annual Report 2020 5 105 ///// Business Review / Financial Review / Sustainability / Strategic Review / Highlights //// Section Section