Integrated Annual Report 2021

ENVIRONMENT PILLAR MISC seeks to contribute to the global call for a sustainable future, and demonstrate our commitment to upholding the highest standards of environmental stewardship. Considering our role as global energy movers, we are mindful of minimising the environmental impacts of our business operations, whilst at the same time giving back to the environment by contributing to efforts to preserve the planet for future generations. Call to Action Pledge In 2021, we renewed our pledge for “The Call to Action”, developed by a multi-stakeholder task force and convened by the Getting to Zero Coalition, with members from the entire maritime ecosystem. As a signatory, we are committed to deploy commercially-viable zeroemission vessels by 2030 and achieving zero-carbon emission shipping by 2050. The Castor Initiative In 2020, we initiated the Castor Initiative by forming a coalition with three maritime industry players: Samsung Heavy Industries (SHI), Lloyd’s Register (LR) and MAN Energy Solution. Our Joint Development Project (JDP) to develop commercially viable deep-sea ZEV by 2030. In 2021, Lloyds Register awarded an Approval in Principle to SHI for its ammonia-fuelled tanker design for commercialising these developments by 2024. Yara International ASA (Yara), Maritime & Port Authority of Singapore (MPA) and Jurong Port joined the coalition in 2021. These additions complete the representation of all critical areas of the maritime industry ecosystem. The Castor Initiative was motivated by partners’ shared belief that the maritime industry needs leadership and greater collaboration if shipping is to meet the IMO’s GHG ambitions. Ultimately, our shared agenda is exploring multiple decarbonisation pathways. Task Force on Climate-Related Financial Disclosure (TCFD) In line with our identified future focus, the Group embarked on our Task Force on Climate-Related Financial Disclosure (TCFD) journey. The result of the journey is the issuance of our inaugural TCFD report which is disclosed in our Sustainability Report 2021. Gases include • Carbon Dioxide (CO2) • Methane (CH4) • Nitrous Oxide (N2O) • All GHGs • Unit: CO2e Scope of Gases • MISC operations (Scope 1 & 2) • Upstream and downstream of MISC’s operations (Scope 3 on material categories) • Scope 1 - 3 Scope of activities • Abatement and Removal Pathways to reduce own operations & value chain emissions • Nature-based removal pathways to offset residual GHG • Abatement and Removal • Removal Offset Mitigation Pathways • 2050 • Long-term Timeframe Total GHG Carbon Abatement Carbon Removal Residual Emissions Carbon Removal Offsets 2050 CO2 NETZERO EMI SSI ON Abatement Removal Removal Offset - Only for “Hard-to-Abate” (Residual) Emissions 1 2 3 Key Principles of MISC Net-Zero GHG Emissions by 2050: SHORT TO MEDIUM-TERM 50% GHG Intensity Reduction by 2030 for shipping operations compared to the 2008 base year LONG-TERM COMMITMENT Net-Zero GHG emissions by 2050 Key Highlights in 2021 Towards Decarbonisation Setting short, medium and long-term carbon emission targets was essential in 2021. Forming part of our Towards Decarbonisation strategic priority, these targets are integral to the 2021-2025 MISC Group Sustainability Strategy's Environment Pillar. Emphasis on Carbon Abatement and Removal Pathways within our Value Chain before Offsetting our Unabated Carbon Emissions Our Pathways that will get us to Net-Zero Promoting Circular Economy We have put in place a Group-wide waste reduction targets to be achieved by 2025 as follows: 1. 27% reduction in plastic waste generation per vessel 2. 40% reduction in paper consumption per vessel 3. 9% reduction in plastic waste generation per personnel on-board 4. To maintain an annual 3R rate of > 95% for hazardous wastes generated 5. To increase the annual 3R rate of nonhazardous wastes generated to 70% With regards to our end-of-life vessels, we have developed a Group-wide Ship Recycling Policy which states our commitment on ethical ship recycling. In 2021, we started to tap on renewable solar energy which was installed on our Marine & Heavy Engineering yard. Biodiversity Conservation Towards contributing to biodiversity conservation, we continued on with our Hearts of the Ocean Programme in conserving reef and sea turtles. During the year, we embarked on our Mangrove Conservation journey and developed a roadmap to support future carbon removal offset programme. Our HSE Policy also was revised in 2021 to reflect our commitment on biodiversity conservation efforts. ANCHORING SUSTAINABILITY @ MISC SUSTAINABILITY More details on our environment agenda can be read in TCFD and Environment pillar section of the Sustainability Report. • Progressive fleet renewal: GAS and AET will progressively renew the fleet to high efficiency LNG dual-fuel engine vessels • The Castor Initiative: We will work with strategic partners to develop commercially-viable ammoniafuelled zero-carbon emission vessels (ZEV) by 2030 • Continuous Operational Efficiency Improvements: With the aim of reducing the energy consumed on voyages, we will implement strategies to optimise the technical and operational efficiencies of our vessels • Progressively renew the fleet with ZEV • Continuous Operational Efficiency Improvements by adopting new technological innovations on existing and newbuilds to continuously improve energy efficiency and reduce carbon emissions • Carbon Removal Technology: Depending on its viability, we aim to adopt carbon capture retrofits in our existing newer vessels to remove excess carbon emissions • Value chain emission reductions (Scope 3 emissions) • Nature-based carbon removal offset programme for unabated residual GHG emissions Short to Medium-Term Goals Long-Term Goals Net-Zero GHG emissions MISC Berhad 102 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 103