96 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 ENVIRONMENTAL CONSERVATION & PROTECTION Improving the quality of our disclosures Yinson continues to monitor the disclosure standards landscape and strives to align with the latest standards and reporting trends. As our climate action journey continues to progress and mature, so too do our reporting and disclosure practices as we endeavour to disclose our climate change efforts in a transparent and impactful way. Since FYE 2022, we have adjusted our GHG consolidation approach from equity share to operational control and reclassified the accounted emissions. This adjustment was done in alignment with industry best practices for complete and transparent GHG emissions accounting. We also moved emissions from FPSOs from Scope 1: Direct GHG emissions to Scope 3: Category 13 – Downstream Leased Assets. We are committed to reviewing and updating our Climate Goals Roadmap every two years to ensure we remain on the right track to achieve our goals. Yinson is currently reviewing and updating our Climate Roadmap to reflect and incorporate new developments including the evolving energy market landscape, progress in emissions-reduction technologies and best practice emissions accounting. However, this does not impact our climate ambitions and we remain firmly committed to achieving carbon neutrality by 2030 and net zero by 2050. Concurrently, we are updating our TCFD-related disclosures to reflect initiatives and progress made to optimise disclosures of climate-related financial information. Stakeholder advocacy & engagement The management of our climate risk and GHG emissions is a critical area of concern for many of our stakeholder groups. Our bankers and lenders rely on our ability to manage these risks to assess our long-term prospects and evaluate our resilience to potential crises. Meanwhile, meeting environmental performance standards is essential to maintaining our regulatory license to operate, making this issue vital to our government and regulatory bodies. Given the importance of climate performance to our stakeholders, we engage with them regularly on this topic, as detailed in our Approach to Stakeholder Engagement section within our Corporate Governance Overview Report, on pages 148 to 151. The FPSO market is currently strong with a limited pool of skilled contractors and a surge in project awards. This market positioning provides Yinson with ample opportunities to engage with potential clients on our shared climate concerns. As a company that prioritises sustainability and has set the reduction of emissions as a non-negotiable key performance indicator, we believe this is our unique advantage in executing FPSO projects in line with the energy transition. Therefore, we will continue to engage with potential clients on low-emission designs for new FPSOs while working with current clients to explore opportunities to incorporate low-emission technologies onto our existing assets. Yinson’s three-pronged approach to carbon emission reduction Our approach is three-pronged and focuses first on reducing emissions (carbon reduction), before endeavouring to remove carbon from the atmosphere (carbon removal) and lastly utilising carbon compensation mechanisms to offset GHG emissions. 1. Carbon reduction focuses on reducing Group-wide Scope 1, 2 and 3 emissions through changes in internal processes and operations. This includes adopting new emissions-reducing technologies, such as hydrocarbon blanketing, closed flaring and vapour recovery units to eliminate routine flaring to limit the carbon intensity of our FPSOs. Yinson aims to utilise renewable energy in our operations where feasible. 2. Carbon removal relies on carbon removal mechanisms to remove carbon emissions from the atmosphere. Yinson is looking into nature-based solutions such as afforestation and reforestation, as well as technology-based solutions such as CCS and DAC. As these solutions become more technologically and economically feasible, we will update and refine our carbon removal strategy. 3. The final step in our approach is carbon compensation, which relies on mechanisms such as carbon credits to offset GHG emissions. In this regard, Yinson’s focus is to purchase high-quality carbon credits, which are independently verified, to offset our operations’ emissions. As Yinson looks across our value chain, Scope 3 GHG emissions accounting is a key area of engagement with our stakeholders to ensure alignment in materiality and accounting approach and to identify opportunities to drive realistic reductions. Yinson has active engagements with our clients to reduce Scope 3 emissions, particularly those from downstream leased assets. Furthermore, we are expanding supplier engagement through our VRP to gain a better understanding of Scope 3 emissions accounting in our value chain.
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