WASCO BERHAD 76 SUSTAINABILITY REPORT Risk Management Within Wasco, climate risk evaluation is seamlessly woven into its strategic planning and business processes, aligning with the risk management process. For more details on the risk management process, please refer to our Sustainability Risk Management section from pages 58 to 59. Wasco is committed to incorporating climate risk considerations into our decision-making processes, strengthening adaptability, and ensuring the long-term sustainability of our business and the communities we serve. These considerations include: Time Horizon and Effects Climate-related risks and their associated impacts may emerge as a result of evolving drivers behind both physical and transition risks. These shifts can manifest over the short, medium, and long term, influencing business operations, market dynamics, and Wasco’s overall sustainability. Geography and Activity Differences The effects of climate change and associated risks will vary across regions, depending on geographical and operational factors. These variations can significantly influence business operations, market dynamics, and strategic priorities. Complex Relationships and Systemic Effects Climate change risks are intricately linked with socioeconomic structures, financial systems, and global supply chains. These complex interdependencies can amplify the overall impact, creating cascading effects that reverberate across industries and economies. As part of our climate risk assessment, we undertook the following steps to assess the materiality of Wasco’s climate risks and opportunities for the shortlisted BUs which represent Wasco’s key business segments. Macro Factors: Country-and Industry-Level View In assessing climate-related risks and opportunities, we take into account country- and industry-specific perspectives relevant to the shortlisted BUs. Key factors for consideration include: • The likelihood of natural disasters occurring or recurring in the region; • Existing or upcoming climate-related regulations and policies; and • Market dynamics and shifts in customer behaviour. Micro Factors: Operation-Level View We evaluated how each shortlisted BUs responds to climate risks and its exposure to climate-related opportunities. The assessment of vulnerability to climate risks was based on: • The availability of control measures to manage and mitigate the impact of climate risks; • Access to alternative resources or infrastructure to reduce dependency; and • The level of preparedness, response, and recovery capabilities in managing natural disasters. On the other hand, our exposure to climate opportunities was assessed based on: • The potential for new revenue streams or cost savings; • Opportunities for job creation, as well as upskilling and reskilling of the workforce; and • The capital investment required to capitalise on these opportunities. Moving forward, we will implement strategic measures to enhance the integration of climaterelated risks into Wasco’s risk management framework. This includes refining policy, procedures, risk appetite, risk tolerance, and overall risk management strategies. As part of this effort, we will adjust our risk appetite and tolerance levels to incorporate climate considerations and embed climate-related factors into Wasco’s existing risk assessment processes, such as the materiality assessment of climate risks and impact pathways. We may enhance our current risk taxonomy and risk profile by incorporating relevant physical and transition climate risks. When necessary, we will evaluate emerging climate risks and opportunities based on business segments and geography. Additionally, we are dedicated to standardising our global climate risk assessment process to maintain consistency and transparency. We will actively communicate the process to all BUs, equipping them with a standardised approach to assess climate risks and opportunities. This will allow us to proactively manage climate risks and capitalise on potential opportunities. Future enhancements will include developing monitoring mechanisms to integrate climate risk into overall risk management practices, ensuring regular review by the Board.
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