Sustainability Report

Basis for Transition Analysis

A summary of the risks and opportunities across these transition scenarios can be found in the table below. be found in the table below.

TCFD STRATEGY

The TCFD Strategy defines our approach to managing climate-related risks and their potential impact on Royal Selangor’s business and financial performance. We recognise the importance of addressing environmental challenges and are committed to embedding sustainability into our core strategy. Our focus is on strengthening business resilience, creating value for our stakeholders, and playing our part in global sustainability efforts.

Transition risks and opportunities for Royal Selangor

Transition Risks

Our transition analysis is based on the global shift towards a low-carbon economy. We rely on the International Energy Agency (IEA). The IEA’s comprehensive analysis, policy recommendations, and data on the global energy sector are detailed in their publication, the World Energy Outlook (WEO). For our transition assessment, two scenarios were chosen: the Sustainable Development Scenario (SDS) and the Stated Policies Scenario (STEPS).

The SDS is the most favourable outcome to limit climate change by transforming energy markets and tackling air pollution. The global temperatures are projected to rise by 1°C.

The STEPS scenario is a more conservative approach, analysing existing and developing policies across sectors, including regulatory, market, infrastructure, and financial factors. It provides a realistic benchmark, with global temperature increases to remain below 2°C.

Climate Risks and Opportunities

Time Horizons for Climate-Related Risks and Opportunities

Scenario analysis is a key tool in assessing how different climate-related risks may impact an organisation’s operations and financial performance. By testing our current strategies against various climate scenarios, we can better understand potential future risks and opportunities, enabling us to develop effective contingency plans. The ESG committee conducted a scenario analysis for climate risks and opportunities in FY 2023-2024. It highlighted physical risks such as storms, flooding, heatwaves, and transportation disruptions that could directly affect our business. Opportunities may also arise in the development of energy-efficient products. We anticipate potential challenges from transition risks such as stricter regulations or taxes on GHG emissions, along with increased transportation and material costs. These transitions also present opportunities, including the availability of grants and low-cost loans for electric vehicle (EV) initiatives, which could offset these risks and support future growth.

Risk/ opportunity

Risk description

TCFD category

Time horizon to occur

Affected business

Potential impact on business

Response / action to manage

RCP4.5 scenario 2030-40 Medium term

RCP4.5 scenario 2040-50 Long term

RCP8.5 scenario 2030-40 Medium term

RCP8.5 scenario 2040-50 Long term

The time horizons for assessing climate-related risks and opportunities are divided into three key segments: short-term, medium-term, and long-term, as outlined in table below. Therefore, our analysis primarily focuses on the medium-term and long-term periods to better prepare for potential challenges and opportunities that may arise in the future.

Increased regulations & pricing on GHG emissions

Stricter regulations causing high cost of complying or new carbon tax

Political & legal risks

Medium

All

Greater costs associated with emissions reduction. Reduced investment on other areas

Establishment of net zero committee to to reduce GHG emissions

Moderate risk Moderate impact to company

Moderate risk Moderate impact to company

Moderate risk Moderate impact to company

High risk High impact to company

Increased in transport costs

Greater fuel costs for staff & product transportation

Market risks

Medium

All

Greater fuel costs due to

Reduce packaging weight, usage of public transport & shuttle from MRT station

Moderate risk Moderate impact to company

Moderate risk Moderate impact to company

Moderate risk Moderate impact to company

High risk High impact to company

Time horizon for climate risks and oppurtunities

Period

regulations on GHG emissions

Short term : least significant impacts

2024 – 2030

Increased in cost of raw materials

Greater costs of tin, copper, antimony & bismuth

Market risks

Medium

All

Higher production costs

Reduce weight & wall thickness of products, innovative

Moderate risk Moderate impact to company

Moderate risk Moderate impact to company

Moderate risk Moderate impact to company

High risk High impact to company

2030 – 2040

Medium term : most significant impacts

2040 – 2050

Long term : most significant impacts

design of products

Transition Opportunities

Grants/ inexpensive loan for EV

Reduction in Scope 1 GHG emissions

Products & services

Medium

Warehouse distribution

Reduced GHG emissions & costs

Grab the opportunity when available

Moderate opportunity

Moderate opportunity

Medium opportunity

Moderate opportunity

Moderate impact to company

Moderate impact to company

Moderate impact to company

40

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