SUSTAINABILITY REPORT Cont’d TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES cont’d Table Y. Implications of physical and transition risks identified by Press Metal cont’d Type of Risk Risk Implications 2oC Scenario 4oC Scenario Regulatory Environmental regulations High risk arising from the expectations and commitments to comply the stringent policies and regulations – more investment in low-carbon technology, more monitoring and analysis of climate related risks Medium risk associated with climate change policy and legislation in view of a lenient approach by the regulators towards the climaterelated issues Regulatory Carbon pricing High risk associated with wide adoption of carbon pricing mechanism in the market as it impacted the supply chain and increased the OPEX e.g. increasing raw material price, extreme logistics cost etc High risk of unable to export to EU due to non-compliance of the Carbon Border Adjustment Mechanism (CBAM) Medium risk associated with less pressure and urgency to develop internal carbon price, less competitive bidding and interest towards carbon pricing in the market Market Shift in customer preferences High risk associated with changing customer’s demands for low carbon products which requires the company to invest in low-carbon technology thus increased in CAPEX and OPEX High risk due to customer’s demand for cheaper products than lowcarbon products, it gives lower profit/sales thus affect the business sustainability Market Overall changes in the market High risk associated with rising demand of selling or buying lowcarbon products by bigger players in the market, therefore, more compliance and resources required to source and produce low-carbon products to meet the market’s demand High risk due to low demand of low-carbon products in the market and this has reduced Press Metal’s market competitiveness given that they have embarked the decarbonisation journey to produce low-carbon products Technology Low-carbon technologies High risk associated with deploying technology at premium due to limited in-house decarbonisation R&D technology. Press Metal focuses more on process optimisation e.g. replacement of machinery to increase efficiency. Press Metal placed more emphasis on the economic viability and technology maturity hence taking a wait-and-see approach but actively searching of new decarbonisation technology in the market such as carbon capture and inert anode Low risk associated with low motivation in deploying decarbonisation technology to achieve carbon neutrality targets and underdevelopment of R&D in the market thus low impact to the CAPEX ANNUAL REPORT 2022 186
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