Sustainability Report

Basis for Physical Analysis

The summary of the risks, opportunities, and mitigation actions is presented in the table below, allowing us to assess the potential impacts of climate-related risks and opportunities. Changes in rainfall patterns and seasonal temperature fluctuations will likely lead to more frequent flooding and droughts, directly impacting our Kuala Lumpur factory.

Physical risks and opportunities for Royal Selangor

Physical risks

Regulation on temperature requirement due to heat wave

Increasing average temperature in specific months

Environment Chronic physical

Medium

All

Health & safety risks from overheating & higher costs from increased air conditioning.

Consideration of extreme weather risks on future factory set up and business expansion

Low risk Low impact to company

Moderate risk Moderate impact to company

Moderate risk Moderate impact to company

Moderate risk Moderate impact to company

The physical analysis as outlined in the Intergovernmental Panel on Climate Change (IPCC) report. The scenarios are derived from the IPCC’s Representative Concentration Pathway (RCP) model. As of June 2024, atmospheric CO 2 levels stand at 427 ppm. For our analysis, we have selected two scenarios: RCP 4.5 and RCP 8.5.

RCP 4.5 represents an intermediate emissions scenario, with CO 2 level at 650 ppm by 2100. This predicts a global temperature rise of 2.0°C between 2046 and 2065, and 3.7°C between 2081 and 2100, with sea levels rising by 0.26 m and 0.47 m during the same periods.

Disruption to transportation and distribution from extreme weather events

Weather events affecting transportation

Environment acute physical

Medium

All

Revenue loss due to delays in shipment

Delayed to FY 2024-2025

Low risk Low impact to company

High risk High impact to company

Moderate risk Moderate impact to company

High risk High impact to company

RCP 8.5 reflects a high-emissions scenario with CO 2 levels exceeding 1000 ppm by 2100. This predicts a global temperature rise of 2.0°C between 2046 and 2065, and 3.7°C between 2081 and 2100, with sea levels rising by 0.30 m and 0.65 m during the same periods.

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

Physical opportunities

Growth in energy efficient products

Development of highly efficient green building / air conditioners

Products & services

Medium

Factory & show rooms

Reduced costs in energy expenditure

Replacements & renovations for cooling of buildings

Moderate opportunity

High opportunity significant impact to company

Moderate opportunity

High opportunity significant impact to company

Moderate impact to company

Moderate impact to company

Damage to group assets from

Extreme weather: tropical storms, flooding

Environment Acute Physical

Medium

Factory Show rooms Staff’s housing

Increased costs, revenue losses due to repair. Increase in insurance

Annual site specific risk assessment by operational risks committee

Low risk Low impact to company

Moderate risk Moderate impact to company

Low risk Low impact to company

High risk High impact to company

extreme weather

Reduced needs for expensive net zero emissions equipments

Low opportunity Low impact to company

Moderate opportunity

Low opportunity Low impact to company

Moderate opportunity

Carbon capture & storage technology

Development of an efficient technology

Products & services

Medium

All

Reduced costs in energy expenditure

Extreme weather:

Medium

Supply chain delivery

Disruption to business

Delayed to FY 2025-2026

Low risk Low impact to company

Moderate risk Moderate impact to company

Low risk Low impact to company

Moderate risk Moderate impact to company

Moderate impact to company

Moderate impact to company

sea level rise

Damage to key supply chain

Extreme weather: tropical storms, flooding

Medium

Supply chain delivery

Revenue loss due to disruption to MFG

Delayed to FY 2024-2025

Low risk Low impact to company

Moderate risk Moderate impact to company

Low risk Low impact to company

High risk High impact to company

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