Climate Change Data

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Community Engagement
• Health and Safety
• Air Quality Management
• Human Capital Development

Environmental Achievements

• CO2 emission per cement production: 0.81 mt (2016: 0.79 mt). US Cement Industry Benchmark: 0.97
• Ambient Air Readings well within legal standard (150 μg/mᵌ)

Social Achievements

• Community assistance through welfare, partner programs, and community building funds.
• Job creation and prioritization of local community members for employment.
• Collaboration with Universiti Tunku Abdul Rahman (UTAR) for community education.
• Sponsorship of Book Prize Award for outstanding students.
• Plant visits for knowledge sharing with industry users, universities, and professional bodies.
• Festive season food donations to 25 poor families.
• Buka Puasa dinners with government agencies and local communities.
• Sponsorship of various sports activities and donation to Praise Emmanuel Children’s Home.
• Blood donation drive in collaboration with Malaysia Blood Donors Society.
• Beach cleaning event at Pantai Tanjung Lipat, Likas Kota Kinabalu.

Governance Achievements

• Compliance with the Malaysian Code on Corporate Governance 2012 (except where otherwise stated).
• Establishment of Board Committees (Board Audit & Risk Management Committee, Nominating Committee).
• Regular forums for Board members to impart knowledge.
• Adoption of Hong Leong Group Code of Conduct and regular updates.
• Procedures and rules for employees to raise concerns about misconduct.

Climate Goals & Targets

Environmental Challenges

• Slowdown in demand for cement and concrete due to completion of mega infrastructure projects and increased industry production capacity.
• Higher raw material costs and competitive pricing leading to reduced margins.
• Deferment of many mega infrastructure projects.
• Strengthening of the United States Dollar against the Ringgit Malaysia escalating production costs.
• Intense competition and raw material availability.
• Environmental concerns regarding quarry activities.

Mitigation Strategies

• Cost down initiatives to stay competitive.
• Exploration of alternative raw materials.
• Operational revamp of the concrete division for better efficiency (manpower reorganisation, process layout reorganisation, product innovations).
• Deployment of the ready mix arm to set up project plants to penetrate downstream opportunities.
• Focus on product quality and solutions for customers.
• Improving overall operational efficiency.
• Mitigation measures to reduce the impact of coal use in cement production.
• Research and development of alternative energy sources (waste to energy, biomass, biogas, solar energy).
• Improvement and replacement of equipment for greater energy efficiency.
• Raising awareness about energy usage among staff.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• HCMT Gopeng Plant obtained ISO 14001:2015 certification.
• Zero environmental fines and penalties recorded for all HCIB operating companies.
• Participated in International Biodiversity Day organized by DOE.
• Launched Panda Yellow (Portland Limestone Cement) reducing carbon footprint.

Social Achievements

• HCMT Gopeng Plant certified by OHSMS with ISO 45001:2018 Standard.
• Zero legal actions or fines related to Health & Safety breaches.
• Zero human rights issues reported.
• Various safety training programs conducted (HIRARC, Hearing Conservation, Electrical Safety, etc.).
• Various employee engagement programs (Year-end Festive Get-together, International Women’s Day Celebration, Parents’ Day Celebration).

Governance Achievements

• All operating plants and offices received ISO 37001:2016 Anti-Bribery Management System certification.
• Zero penalties or fines imposed due to corruption or bribery cases.
• Zero employee disciplinary or dismissal issues due to ABCMS non-compliance.

Climate Goals & Targets

Environmental Challenges

• Shortages of workers, logistics and supply chain issues.
• Rising input costs (especially energy, coal price increased from USD60/tonne to USD200/tonne).
• Geopolitical uncertainties.
• Weaker construction market due to government austerity measures and postponed projects.
• Nationwide labor shortage in the construction industry.

Mitigation Strategies

• Multi-year re-engineering and continuous improvement project to increase equipment reliability and reduce unscheduled maintenance.
• Digital transformation technologies to enhance work processes and equipment performance.
• Cost-saving initiatives.
• Launching of new products (Panda Yellow) to meet changing market needs.
• Optimization by using alternative raw materials (ground granulated blast furnace slag, pulverised fly ash) to reduce carbon footprint.
• Eliminating wastage and simplifying processes to improve yearly productivity.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct and Ethics

Climate-Related Risks & Opportunities

Physical Risks

• Intense droughts, water scarcity, severe fires, rising sea levels, flooding, melting polar ice, catastrophic storms and declining biodiversity

Opportunities

• Development of energy-efficient products; new technology/system developed for fuel system; reduce usage of domestic water; reduce water footprint

Reporting Standards

Frameworks Used: GRI, FTSE4Good Bursa Malaysia Index

Certifications: ISO 14001:2015, ISO 45001:2018, ISO 37001:2016

Third-party Assurance: SIRIM QAS International

UN Sustainable Development Goals

• Not disclosed

The Group’s business operations are contributing to and support five of the United Nations Sustainable Development Goals.

Sustainable Products & Innovation

• Panda Yellow (Portland Limestone Cement)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2e emissions by 9% since 2019 (741kg CO2e per tonne of cement in FY2023)
• Planted 570 trees in Gopeng plant
• Achieved four-star rating in the Star Rating Ceremony for the Sustainability of the Mining and Quarrying Industry

Social Achievements

• Provided over 7,000 hours of safety training to employees
• Participated in the "Simen Rahmah" initiative, contributing construction materials worth up to RM120 million at below-market rates for affordable housing

Governance Achievements

• Increased FTSE Russell ESG rating to 3.8 from 2.3
• 100% of HCIB’s plants received ISO 37001 certification for anti-bribery and corruption

Climate Goals & Targets

Environmental Challenges

• Geopolitical issues (trade disputes, war in Ukraine), material shortages, supply chain disruptions, foreign exchange fluctuations, rising inflation, extreme climate events (heatwaves, El Niño)
• Rising commodity and input costs
• Weakening Malaysian currency
• Increased interest rates
• Occupational health & safety issues
• Negative public perception
• Violation of human rights
• Penalties from non-compliance with environmental regulations
• Risk of closure due to environmental non-compliance
• Community boycotts due to pollution
• Penalties from non-compliance with local laws and regulations
• Reputational damage from legal issues
• Unexpected costs from regulatory changes

Mitigation Strategies

• Expanding supplier pool
• Risk management & hedging strategies (currency forward contracts)
• Diversified purchasing strategies (fixed and index-linked pricing)
• Closely monitoring interest rates
• Expanding into new markets & diversifying customer base
• Financial planning & forecasting
• Safeguarding employee health & safety (training, assessments, protocols)
• Community engagement
• Simen Rahmah initiative
• Alternative fuel usage (SCMs, waste/by-products)
• Pollution monitoring
• Implementation of ISO 37001 Anti-bribery & Corruption Management System
• Regularly updating employee awareness of laws and regulations

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct and Ethics
• Due diligence on potential business partners

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather, heatwaves, El Niño

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: Bursa Malaysia’s Sustainability Reporting Guide Third Edition, United Nations Sustainable Development Goals, Global Reporting Initiative Standards, Task Force on Climate-Related Financial Disclosures, FTSE4Good Bursa Malaysia Index

Certifications: ISO 9001, ISO 14001, ISO 45001, ISO 37001

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 13 (Climate Action)
• Goal 15 (Life on Land)

Initiatives such as alternative fuel usage, energy efficiency improvements, tree planting, and waste reduction contribute to these goals.

Sustainable Products & Innovation

• Panda Yellow (Portland Limestone Cement)

Awards & Recognition

• Most Environmental & Sustainable Designated Premise for Scheduled Waste
• Most Committed and Conducive Environment Award
• Best Air Emissions Management Award
• Four-star rating in the Star Rating Ceremony for the Sustainability of the Mining and Quarrying Industry

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity
• Governance
• Health & Safety
• Community Engagement
• Supply Chain Management
• Anti-Bribery & Corruption

Environmental Achievements

• HCMT reduced CO2e emissions by approximately 10% since 2019.
• HCCT achieved a 10% reduction in CO2 emissions in concrete production by incorporating supplementary cementitious materials.
• HCMT planted 199 trees in its Gopeng plant.
• Panda Green and Panda Yellow cement products received Singapore Green Label certification and MyHIJAU recognition.

Social Achievements

• Over 7,000 hours of safety training provided to employees.
• RM60,554.75 contributed to local community development through CSR initiatives.
• Participation in the Simen Rahmah initiative to provide affordable housing.

Governance Achievements

• 100% of HCIB's plants received ISO 37001 certification for Anti-Bribery & Corruption Management System (ABCMS).
• FTSE Russell ESG rating of 3.4 for FY2023.

Climate Goals & Targets

Environmental Challenges

• Geopolitical tensions causing supply chain disruptions and increased operating costs.
• Weakening Malaysian Ringgit leading to higher import costs.
• Rising interest rates impacting investment decisions.
• Escalating inflation increasing operating costs.
• Labour shortages affecting operations.
• Climate change impacting weather patterns and operational resilience.
• Non-compliance with environmental regulations.
• Legal risks associated with evolving regulations and carbon credit mechanisms.

Mitigation Strategies

• Expanding supplier pool to mitigate supply chain disruptions.
• Utilizing currency forward contracts to manage forex risks.
• Adopting diversified purchasing strategies.
• Closely monitoring interest rates and exploring alternative funding sources.
• Diversifying customer base and expanding into new markets.
• Implementing robust safety protocols and comprehensive safety training.
• Actively engaging with local communities.
• Increasing the use of alternative fuels and incorporating SCMs.
• Continuously monitoring emissions and pollutant levels.
• Implementing ISO 37001 Anti-Bribery and Corruption Management System.
• Conducting regular updates for employees on relevant laws.

Supply Chain Management

Responsible Procurement

• Prioritising local procurement
• Implementing rigorous frameworks to oversee operations and ensure adherence to ethical standards and regulatory requirements
• Developing a Supplier Code of Conduct and Ethics

Climate-Related Risks & Opportunities

Physical Risks

• Acute Floods

Transition Risks

• Carbon Pricing
• Emissions-Reduction Technologies

Opportunities

• Improved Energy Efficiency in Operations
• Use of Alternative Fuels and Raw Materials
• Adoption of Renewable Energy Sources

Reporting Standards

Frameworks Used: Bursa Malaysia’s Sustainability Reporting Guide Third Edition, United Nations Sustainable Development Goals, Global Reporting Initiative Standards, Task Force on Climate-Related Financial Disclosures, FTSE4Good Bursa Malaysia Index

Certifications: ISO 9001, ISO 14001, ISO 45001, ISO/IEC 17025, ISO 37001

Sustainable Products & Innovation

• Panda Green and Panda Yellow cement

Awards & Recognition

• GOLD MiSHA Excellence Award in OSH Risk Management
• Four-star rating in Star Rating Ceremony for the Sustainability of the Mining and Quarrying Industry