Integrated Annual Report 2021

GOVERNANCE DATIN NORAZAH MOHAMED RAZALI Chairman Board Governance & Risk Committee (ESG) is also reported quarterly to the BGRC and the Board. MISC’s approach to sustainability is from a practical lens where we adopt ESG considerations as part and parcel of how we operate at MISC. I am pleased to share that with the BGRC in place, the Board and Management have been able to work much more collaboratively on risk management and governance – both in terms of accepting the aspects of risk management and sustainability into our deliberations as well as in ensuring effective risk oversight across the Group. Governance and reporting on risk management and sustainability are made a lot more transparent at the Management, BGRC and at Board level. For example, with the COVID-19 pandemic persisting throughout 2021, MISC was prepared for the potential risks and its impact on the Group. Management and the Board had a clear view going into 2021 on aspects of the business that could be affected by the pandemic. Risk management at MISC also takes into account the recommendations provided in the Malaysian Code on Corporate Governance (MCCG) 2021 for companies especially with regards to addressing sustainability issues in an integrated and strategic manner. We have and will continue to ensure that our Board members receive both training and exposure to sustainability topics. We have also actively sought new directors who can contribute further in this area and thereby strengthen what we already have in place. Additionally, we work with external parties, such as our advisors on the implementation of the Task Force on Climate-related Financial Disclosures (TCFD) framework at MISC. Moving into 2022, we will continue to diligently monitor risks associated with our projects, as well as our overall financial and operational risks. Our objective is such that key decisions made are aligned with where we want to transition MISC to in the longer term, bearing in mind our five-year rolling business plan, our Sustainability Strategy 2021-2025, and MISC 2050. DATIN NORAZAH MOHAMED RAZALI Chairman Board Governance & Risk Committee 2021 marks the first full year since the inception of the Board Governance & Risk Committee (BGRC). We have continued to build on the strong risk management practices at MISC and taken it to the next level with independent board oversight through a holistic and structured approach. With the BGRC being separate from the Board Audit Committee (BAC), there has been greater focus on understanding and managing the range of risks faced by the Group. These include operational risks, risks on specific projects and CAPEX investments we undertake as well as the overall Group financial risks. Our approach at MISC is not to focus just on managing or mitigating risks but to also consider the risk-reward trade-offs for all opportunities and investments that we pursue. Health and safety as well as compliance matters also fall within the oversight of the BGRC. During the year, we looked at risk management across various time horizons, from the immediate which covers the current financial year to MISC’s five-year rolling business plan as well as the Group’s longer-range strategies. In 2021, the Board of Directors placed greater emphasis on the long-range strategies (MISC 2050) with the aim of leading the transition of the Group’s portfolio of businesses over the next decade and beyond. This is in response to increasing concerns on global climate change and on energy transition. The progress of MISC’s Sustainability Strategy 2021 – 2025 encompassing the pillars of Environmental, Social and Governance BOARD GOVERNANCE & RISK COMMITTEE REPORT Dear Shareholders, Pursuant to the Malaysian Code on Corporate Governance (MCCG), which recommends the formation of a dedicated company-wide risk oversight function at the Board Committee level to enhance scrutiny on risk management matters and thus enable more effective anticipation and reaction in managing events and trends that could lead to disruptive changes to the business model, the BGRC was established on 1 January 2021. In addition to matters pertaining to risk management, the scope of the BGRC also encompasses governance, compliance and ethics, sustainability and health, safety, security and environment (HSSE). Composition The BGRC comprises four members, all of whom are Independent Non-Executive Directors. The BGRC’s Terms of Reference requires a majority of the BGRC members to be Independent Directors, which complies with the requirements of the MCCG. At least one member of the BGRC must also be a member of the Board Audit Committee (BAC) to foster a common understanding of the risk management and internal control systems and ensure co-ordination between the two standing Board Committees of MISC in its risk, internal controls and governance oversight roles. As at the date of this report, the composition of the BGRC is as follows: Members Date of appointment as BGRC member DATIN NORAZAH MOHAMED RAZALI Chairman Independent Non-Executive Director 1 January 2021 DATO’ SEKHAR KRISHNAN Member Senior Independent Non-Executive Director 1 January 2021 DATO’ AB. HALIM MOHYIDDIN Member Independent Non-Executive Director 1 January 2021 MOHAMMAD SUHAIMI MOHD YASIN Member Independent Non-Executive Director 1 January 2021 Terms of Reference The BGRC is governed by its own Terms of Reference (TOR), which is consistent with the requirements of the Main Market Listing Requirements of Bursa Securities and best practices of the MCCG. The BGRC’s TOR was revised effective 1 January 2022 to incorporate the relevant practices from the latest MCCG 2021. For more information on the BGRC’s TOR, please refer to MISC’s corporate website at Meetings The BGRC met ten times in 2021. Details of each BGRC member’s attendance are as follows: Members Number of meetings attended in 2021 Datin Norazah Mohamed Razali 10 out of 10 Dato’ Sekhar Krishnan 10 out of 10 Dato’ Ab. Halim Mohyiddin 10 out of 10 Mohammad Suhaimi Mohd Yasin 10 out of 10 Overview of matters addressed at BGRC meetings Quarterly • Financial Risk Appetite Setting (FRAS) updates • Enterprise Risk Management Report • MISC Sustainability Dashboard • Compliance and Ethics updates • Group HSSE performance reports Half-yearly • MISC Group Sustainability Strategy progress report Annually • Review of MISC Risk Register • Emerging Risks update • Content for the Integrated Annual Report • Review of MISC’s Modern Slavery Statement Special • Review risk assessments for projects, tenders and transactions • MISC Task Force on Climate-related Financial Disclosures (TCFD) Roadmap • Adoption of policies • Revision of BGRC Terms of Reference • Reviewed GHG intensity reduction targets and Net-Zero GHG emission commitment CHAIRMAN’S REMARKS MISC Berhad 266 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 267