The accelerated adoption of technology in the maritime sector, with commercial and environmental needs as key enablers, is driving the future evolution of the sector. The integration of advanced technologies such as blockchain applications, cargo and vessel tracking, autonomous ships and artificial intelligence into the shipping sector will enable industry players to better cater to customer needs and demands. Alongside this, R&D focusing on new fuels and propulsion systems, as well as technology for reducing emissions are beginning to take centre stage. Similarly, the energy sector is also undergoing a rapid pace of digitalisation, as reflected in increasingly more investments made in digital technologies over the last few years. O&G companies are seeking out synergistic non-traditional partnerships with companies in the fields of technology, transportation and commerce, as they focus on developing cost-effective solutions across their value chain. Outlook and Opportunities Investments in the emerging technology space is expected to increase further, especially those which provide access to green energy sources and alternative fuel options. In the coming years, technological and digital transformation will accelerate along with cross-sectoral collaborations and technology-based partnerships. Digitalisation will play a major role in enabling the maritime transport sector to cater to increased demand by enhancing safety and efficiency, while green technology will bring about cost effective and environmentally sustainable operations. Our Response • Through AET, MISC has strategically invested with other partners in climate tech start-up, Daphne Technology, which focuses on developing solutions that converts toxic and GHG pollutants into non-hazardous byproducts which are either released into the environment or transformed into valuable products. The venture is on track with scaling up and commercialising its solutions in the near future. • MISC’s investment in three digital ventures aim to drive the transformation of the maritime industry by improving safety and digitalising decarbonisation and inventory management systems. These disruptor technologies will form the basis for the smart ship by leveraging on automation and assistive technologies to ensure safety, efficiency, and environmental sustainability. • MISC’s digital strategy also focuses on becoming a data-driven organisation by integrating digital ways of doing things into our corporate DNA. This is being effected by the transformation of our finance, procurement and document control systems which will enable us to access data and information to make more informed and precise business decisions. MEDIUM TO LONG TERM (> 5 YEARS) ADVANCEMENT IN TECHNOLOGY AND DIGITALISATION IN THE MARITIME SECTOR Material Matters Digitalisation Business Knowledge Cybersecurity Technology Developments OUR RISKS AND MITIGATION STRATEGIES With a constantly evolving business landscape, there is a need for MISC to continuously scan the environment to monitor our exposures and turn risk into opportunities in order to protect and grow our business. While we remain focused on our journey ahead, we also take cognisance of the degrees of uncertainty that may impact our business decisions and operational activities. In 2022, we continued to monitor climate risk, the development of technology on low carbon solutions as well as relevant laws and regulations along with other business risks. 1 Material Matters Capitals Affected INCREASING CLIMATE RELATED REGULATIONS AND REQUIREMENTS Description • Inability to meet increasing number of climate related policies and legislations such as the IMO GHG standard, EEXI, CII, and EU ETS • Demands from various stakeholders; capital providers, clients, and regulators to showcase our commitment to the global sustainability agenda Implications • Increasing cost of compliance due to higher capital expenditures to retrofit existing assets to meet new requirements and potential carbon pricing • Losing competitive edge to other players due to high carbon emission and non-compliant to laws Mitigation/Response • Continuous assessment of climate-related risks and opportunities in line with the Task Force on ClimateRelated Financial Disclosures framework • Execution of short to medium term strategic initiatives to achieve the mid-term target of 50% reduction in GHG intensity from shipping operations by 2030 (with 2008 as baseline year) and Net-Zero GHG emissions by 2050: • Development of ammonia-fuelled ZEVs through partnership in The Castor Initiative • Deploy commercially viable low-carbon technologies into our newbuild fields • Establishing long-term decarbonisation pathway plan in line with increasing environment standards and international decarbonisation goals Trend Upward Details of the Group’s risk management framework and processes can be found in the Statement on Risk Management and Internal Control of this report. The following are the key risks that the Group is currently facing and our responses to those risks. OUR OPERATING ENVIRONMENT Human Natural Climate Change Ocean Health Values, Governance and Business Ethics Risks Natural Resource Use Energy Management Talent Development and Retention Strategic Review Strategic Review 71 70 MISC Berhad Integrated Annual Report 2022
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