Integrated Annual Report 2021

STRATEGIC REVIEW OUR MATERIAL MATTERS Our ability to create short, medium and long-term value is dependent on the material issues that are most important to our business and stakeholders. We also recognise that environmental, social and governance issues, and value created for our external stakeholders, will directly or indirectly affect the value created for our organisation. Taking this perspective, we have identified and adopted a unified set of material matters for both our Integrated Annual Report and Sustainability Report. This is consistent with MISC’s overall business approach and strategy, reflecting our commitment to address sustainability risks and opportunities in an integrated manner to ensure our long-term business growth. We define material matters as: DEVELOPING OUR MATERIALITY MATRIX We conducted a robust evaluation to assess the matters that are most material to the business. The materiality assessment conformed to international frameworks, standards and other operating environment factors. In addition, the assessment featured detailed benchmarking of peer organisations and companies with strong sustainability programmes and research on current and emerging sustainability trends. The identified material matters are referred to throughout this Integrated Annual Report, demonstrating their interconnectedness to our value creation endeavours, and the important role they play in the formulation of our forward moving strategy. The following diagramme depicts the process we use to derive our material matters. Selecting Materiality Topics Following the study, we refined our materiality matters based on internal and external feedback received, developments in the industry and operating environment relevant to maritime industry, emerging ESG trends as well as stakeholder expectations. Three topics were introduced due to their high relevancy to our operations. They are health and safety, employee engagement and natural resource use. We also performed a detailed review of leading practices to ascertain the link between ESG risks, opportunities and corporate purpose; and benchmarking our performance against peers in balancing our ESG aspirations and best practice in setting our ESG targets and commitments. Our contributions to the United Nations Sustainable Development Goals (UNSDGs) were also refined according to the prioritised ESG topics. These material matters form the basis of MISC’s 2021-2025 Sustainability Strategy. The Group will continue to review our material matters annually to ensure their continued relevance. The results of this assessment are represented graphically on the following Materiality Matrix. The results were presented and reviewed by MISC’s executive leadership including the President/Group CEO and Board of Directors. 1. Project and financial performance 2. Values and governance 3. Customer satisfaction 4. - Skilled workforce - Climate change 5. Risk management 6. Diversity and inclusion 7. Ocean health 8. Digitalisation and innovation 9. Business knowledge and expertise 10.- Employee engagement - Health and safety 11. Natural resource use 1 HIGHEST PRIORITY MATTERS HIGH PRIORITY MATTERS HIGHEST LOWEST IMPORTANCE TO STAKEHOLDERS IMPORTANCE TO MISC HIGHEST LOWEST 2 3 4 5 6 7 8 9 10 11 A matter that could significantly affect Engage internal and external stakeholders to better understand and prioritise factors by selecting and scoring the top five material factors • Conduct 15 interviews with Management, Board members, customers, investors and finance providers • Conduct employee focus groups from various business and service units and subsidiaries Map MISC materiality matrix based on inputs from internal and external stakeholder engagements Validation by Management Committee on the final materiality matrix Conduct desktop research from key industry issues, peers and leaders to identify a broad list of factors relevant to MISC Categorise the universe of factors into the six capitals: • Financial • Physical • Intellectual • Human • Social and relationship • Natural STAKEHOLDER ENGAGEMENT MATERIALITY VALIDATION BENCHMARKING The delivery of MISC’s business strategy and future performance Individuals, groups, communities and other stakeholders Maritime industry and associated value chain MISC Group Materiality Matrix MISC Berhad 62 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 63