TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES ANCHORING SUSTAINABILITY @ MISC SCENARIO ANALYSIS ASSUMPTIONS UNDER MISC’S SCENARIO ANALYSIS CO2 emissions remain constant until early this century, then decline, becoming negative by the end of the century. This scenario assumes a sharp decline in the use of fossil fuel, increased use of cropland for biofuel production, and reduction of methane emissions by 40%. By the end of the century, CO2 emissions will be three times higher than present. There is a large increase in methane emissions. Energy use will futher increase, mostly using fuels. Uptake of renewables is very limited, and there is hardly any implementation of climate policies. MISC Scenario Analysis assumes Very low future emissions (1.5°C) RCP 2.6 RCP 8.5 Very high future emissions (4.0°C) Since 2021, MISC has been a supporter of the TCFD Recommendations to embed the core elements of climate management into our business. The outcomes of our TCFD analysis conducted in 2021 has been translated into MISC’s Climate Framework which encompasses the core elements of climate governance, climate strategy, risks, and metrics and targets. This report in the Integrated Annual Report is a summary of our second TCFD Report that can be found within our Sustainability Report. In 2022, we expanded the scope of our TCFD initiatives from our core business segments of Gas Assets & Solutions, Petroleum & Product Shipping, Ofshore Business and Marine & Heavy Engineering to our key enablers’ business segments of Maritime Education & Training, Port Management & Maritime Services, and Integrated Marine Services. Our climate scenario analysis is conducted in line with the Intergovernmental Panel on Climate Change’s (IPCC) sixth assessment report. We review and assess our business resilience under two global warming scenarios, a low emissions pathway (1.5 °C) and a high emissions pathway (4 °C). Driving Forces Low Emissions Scenario (In line with a 1.5 °C world) High Emissions Scenario (In line with a 4.0 °C world) ENVIRONMENTAL • Sea level rise already occurring • Changes in sea wave patterns • Extreme weather efects on infrastructure and communities • Sea level rise worsening • Greater risks in absence of mitigation measures • Unpredictable sea wave patterns • Greater frequency and impacts of extreme weather POLITICAL & LEGAL • International collaboration • Policies to support ‘Net-Zero’ transition • Government incentives and collaboration on: -- Carbon pricing -- GHG legal frameworks and acts -- Industry environmental standards • Carbon pricing not broadly adopted or at a lower price • Large diferences across regions and countries on environmental standards and requirements TECHNOLOGICAL • Renewable and carbon-neutral fuel developments • Collaborations and investments increasing on CCUS technologies and cross-sector CCUS adoption • Process efficiency focus and slower shift towards best performing technologies • Lack of collaboration • Increased costs of energy transition • Lack of funding to deploy CCUS on a large scale ECONOMIC • GDP growth: between 1.5%-2.5% annually • Rapid transformation towards renewables and as a large part of energy systems • National energy transition plans in place • GDP growth: between 1.3% - 2.3% annually • Slower transformation towards renewables REPUTATION & SOCIAL • Stakeholder pressure for climate risk management • Trends in working age populations and customers concerned on company ESG performance • Increased pressure and urgency placed on companies for action • Heightened working age populations and customers concerned on company ESG performance Sustainability Sustainability 91 90 MISC Berhad Integrated Annual Report 2022
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