36 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 CLIMATE ACTION AT THE FORE We believe that energy must be at the heart of the solution to climate change. News of extreme weather events, rising sea levels, biodiversity loss, human health impacts and soaring economic costs inundate our newsfeeds daily, highlighting the urgent need for action. Climate change and greenhouse gas (“GHG”) emissions continue to be Yinson’s most material matter, and where we believe we have the greatest potential to lead. This is why we have placed ESG considerations at the heart of everything we do. ESG is front and centre in all our business decisions, influencing how we finance our projects, the risks we are willing to take and even the new business opportunities we are pursuing. From a governance and financial perspective, ESG performance is vital for business growth, opening doors for funding, partnerships and new opportunities. Conversely, poor ESG performance is costly because of the potential exposure to penalties, environmental violations, erosion of stakeholder confidence and loss of business opportunities. We recently performed a TCFD Climate Risk Assessment involving transition risk exposures such as policy, market, reputation and technology. Following the assessment, we have decided to develop an Internal Carbon Pricing Framework with a revised incremental carbon price, which we will pilot for carbon-intensive business units. When the framework is in place, we intend to establish a Sustainable Investment Fund to invest in low-carbon projects that support and accelerate the energy transition. This is one of the initiatives we are working on to manage climate-related transition risks and accelerate the implementation of solutions that contribute to the decarbonisation agenda. Furthermore, Yinson is formalising a commitment to have at least 30% of equity in non-oil-based FPSO activities by 2030, solidly demonstrating our commitment to purposefully directing capital to support the energy transition agenda. These are bold commitments for us, requiring deliberate action and a unified approach across all our business units. To this end, we have shaped our key business units to contribute materially to the fight against climate change, as outlined in the next section. EXPANDING OUR RENEWABLES FOOTPRINT YR has experienced exponential growth since its inception in 2019. We now have a healthy project pipeline across wind and solar in our three core geographical regions of Latin America, the Asia Pacific and Europe, a strong in-house team and local partners in the regions where we have a presence. We have invested time and resources to lay a good foundation for our renewables business, building a pipeline across the entire value chain and assembling a strong project management team. Investing in earlystage renewables projects exposes us to some risks – but we have the expertise to manage these. Moreover, the capital at risk is limited at this point in the development process. We believe that getting involved early enables us to deliver higher returns in the longer run, plus improved opportunities for capital recycling. We also take a conservative approach when valuing our renewables assets as this results in a strong balance sheet over the long term. GROUP CEO REVIEW
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