Yinson Annual Report 2021

18 YINSON HOLDINGS BERHAD SECTION 01 : OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS The International Energy Agency (“IEA”) believes that the Covid-19 pandemic has caused more disruption to the energy sector than any other event in recent history, leaving impacts that will be felt for years to come. The IEA further reports that the situation has accelerated the pace of change towards a more secure and sustainable energy system, pushing companies in the energy space to expedite their plans to future proof their businesses. IEA forecasted a 5% drop in global energy demand in 2020, a 7% rise in energy- related carbon dioxide emissions, and an 18% increase in energy investment, with impacts varying by energy source. Oil demand and coal use were anticipated to fall by 8% and 7%, in contrast to a slight rise in renewables contribution. The report also estimated a 3% drop in natural gas demand and 2% drop in global electricity demand. (Source: IEA World Energy Outlook 2020) . Looking back over the year, it is clear that our business model has remained resilient despite the drop in energy demand. We continued to see growth in our Offshore Production and Renewables Divisions, and were able to start up our Green Technologies business. Overall, despite the setbacks, we echo IEA’s belief that energy demand will recover and continue to trend upwards when viewed with a longer-term horizon. Due to our strong fundamentals and disciplined adherence to our business strategy, we are confident that Yinson is well positioned to capitalise on the organic growth of energy demand and the energy transition. We at Yinson will work proactively to make sure energy transition is a core part of the Group’s strategy and investment decisions. SUSTAINABILITY AND CLIMATE CHANGE Combatting climate change is entrenched more than ever as a global agenda, with governments, corporations and individuals joining arms to reduce carbon emissions, improve climate resilience and conserve our environment. The UN Intergovernmental Panel on Climate Change's ("IPCC") ambitious 2030 target to limit global warming to 1.5°C above pre-industrial levels requires a concerted global effort if it is to be achieved. ESG considerations are also causing shifts across the finance ecosystem, as asset managers and institutional investors increasingly recognise that non-financial ESG risks can have a material impact on returns and long-term value. We’re seeing financial consumers become more attuned into how their savings are invested, with a growing group not wanting to support activities that don’t align with their values. More widely, the social license to operate is also shifting, with governments and citizens urging corporations to help meet global sustainability challenges. With this in view, Yinson is determined to do our part to strengthen our collective global foundations for a durable, equitable and sustainable economy – this includes participating actively to lower carbon emissions, and investing to develop lower carbon energy sources. A sustainability mindset governs all our decision-making, business activities and strategies; from the highest level of management flowing down to every employee, extending outwards to our sphere of external influence. Our new strategic framework firmly places sustainability at our core. 1. As one of our five Core Values, a sustainability mindset guides Yinsonites when making decisions. 2. ‘Sustainability commitment’ is the first ‘Yinson Edge’. We believe that we’ve already set ourselves apart amongst our competitors with our strong commitment to sustainability and our proven ability to meet those commitments. Undoubtedly, we will continue levelling up on our sustainability commitments in time to come. 3. ‘Operationalise ESG’ is the first pillar of our Group strategy, which translates to specific ESG initiatives within the Divisions and business units which contribute to our Group- wide sustainability commitments. In March 2021, we established targets to be carbon neutral by 2030, and net zero by 2050. This is on the back of increasingly urgent climate issues, as well as our commitment towards being a part of the global solution towards mitigating climate change. Further, as part of our commitment towards sustainability, we expanded our commitments to align with a further three UN SDGs: Gender Equality (SDG 5); Industry, Innovation and Infrastructure (SDG 9); and Climate Action (SDG 13) – adding these to our existing commitments to four SDGs for Quality Education (SDG 4); Affordable and Clean Energy (SDG 7), Decent Work and Economic Growth (SDG 8) and Life Below Water (SDG 14). These seven Sustainable Development Goals ("SDGs") were selected as they are the most material to our business, where we can have the largest positive impact. We are eager to share our progress on these commitments moving forward as we develop our strategic roadmap. Yinson's Climate Goals, pg 72; Approach to sustainability, pg 73; Natural Capital, pg 143 NEW UN SDG ALIGNMENTS IN FYE 2021