STRATEGY FINANCIAL SOCIETAL ENVIRONMENT INDUSTRY TRENDS TECHNOLOGY REGULATORY POLITICAL 2022 has remained a challenging year, as geopolitical tensions arising from difficult relationships between USA, China and Russia caused global uncertainty and hampered global economic development and trade. The Russia-Ukraine war exacerbated supply chain disruptions that had continued throughout the two-year COVID-19 pandemic and increased energy market volatility. In this uncertain market landscape, MISC continued to generate value-driven outcomes by focusing on project delivery and execution, while strengthening Our Analysis of Our Operating Environment embedded into our five-year rolling business plan. Through our five-year rolling business plan, we are growing our secured income, strengthening our business fundamentals and diversifying the business portfolio by taking into consideration our risk appetite and affordability. Our five-year Sustainability Strategy ensures that we deliver on the ESG commitments we have made to our shareholders and other stakeholders. Our corporate and sustainability strategies complement each other in creating sustainable value now and into the future and provides the strong foundations for our business to continue generating valuable outcomes. In parallel with our five-year rolling business plan and sustainability strategy, we have developed our longer range MISC 2050 strategy to future proof our business. Our longterm strategic plan addresses current threats we face in the form of a fast-changing regulatory landscape that is MISC Group’s Corporate and Sustainability Strategies OUR STRATEGY Short to Medium Term (Within 5 years) Push for new areas of growth within our current portfolio while ensuring ability to generate predictable, secured and recurring cash flows: • Five-year rolling business plan; and • Sustainability Strategy 2021-2025 Medium to Long Term (Beyond 5 years) Two-pronged strategy to prosper in a circular and net-zero economy: • Decarbonise our operations to meet changing market demands and ensure sustainability of our existing business; and • MISC 2050 long-range strategy to build new businesses to be added to our present business portfolio our ESG proposition. The Group focused on building its internal strengths and capabilities towards ensuring a smooth transition to become a thriving business in a net-zero world. We are cognisant of the risks and opportunities that make up our operating environment for the short-, medium- and long-term future, and have used our insights to identify the best way forward for the Group. Our strategic value creation is driven by the sustainability considerations that have been accelerating the global decarbonisation agenda. At the same time, we are developing our organisational resilience and adaptability to ensure our future sustainability by identifying how MISC can remain a thriving business in a decarbonised and net-zero future. While LNG is a low-emission fuel that being used in the transition to a net-zero future and will remain on our horizon in the short to medium term, we also foresee the need to develop zero-emission vessels to remain a relevant business in the future net-zero world. Therefore, we are plotting our roadmap to capture opportunities arising from energy transition and the circular economy to become a key player in the Green Economy. MISC ships and operations consume fossil fuels that contribute to global GHG emissions. We are also subject to increasing regulatory and stakeholder pressure. MISC’s commitments: • Achieve net-zero GHG emissions by 2050 • Reduce shipping carbon intensity by 2030 The transport of fossil fuels will decline in the long term as the world moves towards a circular and net-zero economy, thus impacting our business. The MISC 2050 roadmap: • Reimagines MISC’s socio-economic role come 2050 • Identifies new green growth opportunities to diversify our business and asset portfolios that will be added to our current portfolio mix More details can be found in the Our Strategic Focus section. OUR BUSINESS CASE FOR MISC 2050 CLIMATE CONSIDERATIONS Having adopted the recommendations of the TCFD in the previous year, in 2022 MISC continued to progress with our TCFD journey. We expanded our climate risk and opportunity analysis to our key enabler business segments of Maritime Education & Training, Port Management & Maritime Services, and Integrated Marine Services, following from the analysis conducted on our core businesses of Gas Assets & Solutions, Petroleum & Product Shipping, Offshore Business and Marine & Heavy Engineering the previous year. Climate-related risk integration measures are now part of our risk management process and the climate scenario analysis process is included in the Group’s annual strategic planning exercise. STRATEGIC OVERVIEW Strategic Review Strategic Review 45 44 MISC Berhad Integrated Annual Report 2022
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