42 YINSON HOLDINGS BERHAD STRATEGY & OUTLOOK GROUP CEO REVIEW 1.1°C since pre-industrial times. Yinson is aligned with experts all over the world who believe that energy must be at the heart of the solution to climate change. We have made climate change one of the central decisionmaking considerations at Yinson. We believe that taking a leadership position within our industry in the fight against climate change not only allows us to effectively play our part in lowering global emissions but also a core business strategy that is critical to the sustainability of our business. Our 2021 materiality assessment, in which we engaged with representatives from all our key stakeholder groups, confirms that Climate Change and GHG emissions should sit at the very top of our action list. It is our most material matter, as well as the topic where we have the strongest opportunity and ability to lead. Materiality matters, pg 129; Climate change & the energy transition, pg 132; Climate change & greenhouse gas emissions, pg 161 From the aspect of governance, GHG emissions will be increasingly scrutinised and regulated. The development and adherence to climate policies and action plans are now part and parcel of stakeholder expectations for businesses. ESG performance screenings, ESG ratings and inclusion into sustainability indexes are becoming stricter, cutting off business opportunities for companies that don’t meet their increasingly stringent standards. These ESG performance metrics are commonly now pre-requisites for all companies to gain access to funding and secure business partnerships. From a fiscal point of view, carbon emissions are costly, and not only because of the potential exposure to carbon tax. Failure to assess and reduce our vulnerability to climaterelated factors can lead to a slew of potential losses, including penalties for environmental violations, inability to secure funding due to a drop in investor confidence, getting left out of major global supply chains and losing out on project awards in an environment where ESG performance becomes more central to bid evaluations. Since announcing our Climate Goals to be carbon neutral by 2030 and net zero by 2050 mid last year, we followed up with the launch of our SLF Framework in September 2021 and Climate Goals Roadmap in October 2021. The Roadmap provides a forward-looking trajectory of Yinson’s carbon profile up to 2050, highlighting specific action plans that are aligned to international standards and frameworks, while the SLF Framework sets the Sustainability Performance Targets (“SPT”) which our SLFs will be structured against. Two months later, we released our inaugural Climate Report, aligned to TCFD, which discloses our management of climaterelated issues, risks and opportunities. This sustainability journey is one where we are committed towards continuous improvement. Every department at Yinson is involved in the realisation of our Climate Goals, with our business divisions spearheading the operationalisation of the various climate initiatives according to their respective emissions profile. I encourage you to read the Business Reviews from my colleagues Flemming, David, Eirik and CW within this Report, where they highlight how our divisions aim to contribute towards the achievement of the Climate Goals, as well as their progress towards said goals. The Zero Emissions FPSO concept, which Flemming explains in the Offshore Production Review, is one of the key ways we plan to lower the emissions of our operating fleet. We will continuously invest in such concepts by starting to maximise energy efficiency on the FPSOs immediately, with a view of developing a zero emission FPSO in future. Business Review - Offshore Production, pg 96; Business Review - Renewables, pg 105; Business Review - Green Technologies, pg 111; Business Review - Offshore Marine & Malaysia Operations, pg 116 Collectively as a Group, we are tracking our progress against our SPTs, using our 2021 performance as a baseline. It is early days yet, but we are working hard to meet these targets. As global and industry standards on climate disclosures evolve, we are committed to updating our climate action plans accordingly in order to best reflect our responsible management of this important issue. Our leadership position on climate action has brought exciting new opportunities, one of which is in the area of green financing. Financial institutions and investors may intuitively feel hesitant to invest in the oil & gas industry due to the perception of our environmental risk. However, there is also a realisation that there are growing opportunities that could arise from supporting emissions-intensive companies who are committed to lowering their emissions, and who are well-positioned to deliver on those commitments. Sustainability-linked financial instruments, such as green bonds and sustainability-linked loans, are becoming increasingly widespread. Our consistent demonstration of our industry-leading climate efforts puts us as a forerunner amongst our peers when we are evaluated against the instruments’ eligibility criteria. In 2021, we issued a RM1.0 billion Sustainability-Linked Sukuk Wakalah – a first for Malaysia and a fantastic achievement for us. Further details on this issuance can be found in my colleague Daniel’s commentary on our capital strategy. I also encourage you to read our Sustainability Statement section in this Report for further details on the actions and achievements on this front. Sustainable financing highlight, pg 55; Climate change & the energy transition, pg 132; Financial Capital, pg 137; Climate change & greenhouse gas emissions, pg 161 Scan this QR code to find out more about our Climate Goals, Climate Goals Roadmap and Climate Report
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