Chemical Company of Malaysia Berhad Annual Report 2019

| Sustainability Statement | SUPPORTING LOCAL INDUSTRY & BUMIPUTERA VENDORS We have a preference for local suppliers when it comes to procurement matters due to their lower costs in logistics and warehousing, flexible and timely delivery, prompt response and assistance, plus better product control and monitoring. More than 50% of the vendors that our Chemicals and Polymers businesses work with on procurement matters are local vendors. As part of the CCM Bumiputera Vendor Development Programme (BVDP), we continue with our efforts to procure from local Bumiputera suppliers. Initiated in 2007, the CCM BVDP aims to create Bumiputera entrepreneurs who are reliable and competitive, have the ability to produce local products and services to replace imported ones that are currently used by CCM, as well as undertake research and development (R&D) for products and services. Following our demerger exercise, there are, to date, eight companies remaining under this programme. In FY 2019, we spent more than RM15 million procuring products and services from Bumiputera companies with 30% procured from suppliers under the BVDP programme. UPHOLDING BUSINESS INTEGRITY In our efforts to uphold sound and transparent business practices throughout our entire supply chain, we undertake communication and training on anti-corruption policies and procedures as well as cascade this down across the entire Group through our integrity initiatives. For FY 2019, we conducted three programmes for our employees across the Group on Anti-Bribery and Corruption matters. The Group Integrity Unit also had an Integrity Assessment done for the employees to benchmark the governance and integrity levels of the Group. The Integrity Assessment Tool (IAT) training - developed by Institut Integriti Malaysia covering twelve dimensions such as Leadership, Organisational Structure, Whistle Blowing and others - was conducted for more than 170 employees, OUR COMMITMENT TO SUSTAINABLE ENVIRONMENTAL PRACTICES We acknowledge the impact our business operations can have on the environment in terms of carbon emissions and climate change. As part of our commitment to safeguard the planet, we measure our environmental footprint across the value chain to pinpoint and prioritise areas for improvement. Our ambition is to accomplish optimum energy utilisation for the long-term whilst also reducing our energy costs. The energy saving endeavours within our operations entail creating robust energy-saving programmes which will produce a positive impact on the environment and create awareness among our employees, customers and communities. For more details of our environmental performance, please refer to CCM’s Sustainability Report 2019. REDUCING OUR CARBON FOOTPRINT Mitigating Additional Energy costs via COGEN Co-generation (COGEN) or Combined Heat and Power involves the simultaneous production of electricity and usable thermal energy from a single fuel source which is substantially more efficient and cost effective. The heat created from COGEN is captured and recycled to provide hot water or steam for heating or cooling a production facility. To mitigate additional energy costs, we initiated a COGEN project at our Pasir Gudang Work (PGW) chlor-alkali plant in Johor in FY 2019. Targeted for completion by end FY 2020, the project involves an investment of RM27.9 million and the integration of a 7.8 MW COGEN capability into our stable of assets. Aside from providing considerable energy savings to the Group, it aims to mitigate the Group’s exposure to any increase in electricity rate, strengthening our cost competitiveness, and simultaneously supporting the national agenda of achieving 8% savings from energy efficiency by 2025. The COGEN project also aims to lower greenhouse gas emissions such as carbon dioxide and other air pollutants like nitrogen oxides and sulphur dioxide, thus resulting in a cleaner environment. 38 CHEMICAL COMPANY OF MALAYSIA BERHAD