Sustainability Material Matters - Sustainability

Sustainability Material Matters

Sustainability

At UEM Edgenta, we focus on meeting the needs of our stakeholders to ensure continuous value creation by identifying the material issues that matter most to our stakeholders and to our business. To obtain feedback and insights, we conduct a materiality assessment from time to time to align with our industry peers and keep up to date with the latest sustainability landscape. Our latest materiality assessment in 2021 resulted with 11 sustainability issues that are significant to our business and to our stakeholders.

Economic

Business Ethics

Upholding and incorporating the highest standards of good business conduct in business practices and governance structure

HIGHLIGHTS

Non-compliance with Anti-Bribery and Anti-Corruption policies

Innovation and Technology-based Operational Excellence

Leveraging innovation and technology to revolutionise daily business activities and meet customer needs

HIGHLIGHTS

Launched Edgenta NXT, the Company’s first digital focused subsidiary to transform UEM Edgenta into a technology powerhouse.

Other digital initiatives:

Edgenta Innovation Month 2021 & 2022

Edgenta Idea Bank

Edgenta Hackathon

Edgenta Tourney

Economic Development

Contributing to local economic development and expanding UEM Edgenta’s market presence globally

HIGHLIGHTS

International Market Extension

40%

Revenue

54%

New Contracts

Local senior management

85%

locals (UEMS Singapore)

Supply Chain Management

Supporting local suppliers and enforcing fair procurement practices

HIGHLIGHTS

RM617

million

worth of contracts for Bumiputera vendors (65% of total procurement contracts worth RM951 million)

Environment

Climate Change and Energy

UEM Edgenta recognizes climate change as a critical challenge that impacts our business ecosystem, posing risks such as supply chain disruptions, increased regulatory requirements, and other significant operational challenges. As a company operating across multiple business segments, we are committed to proactively managing these risks. We recognize and identify the relevant climate and environmental-related risks that UEM Edgenta is exposed to, alongside their potential impacts. To institutionalize climate-related considerations into our decision-making, we have integrated ESG and climate risks into our overall Risk Management Framework (RMF), ensuring a structured approach to identifying, assessing, and mitigating their potential impacts on our operations and long-term business sustainability.

Our RMF identifies 3 main climate related risks - Physical Risk, Transition Risk and Liability Risk.

Physical Risk

We own and manage one incinerator plant for clinical waste treatment, one Recycled Asphalt Pavement (RAP) Plant and two laundry plants to process soiled linen. These plants are exposed to various physical climate risks and disasters such as flooding, landslides or soil erosion. Such risks may also damage highways and state roads under our maintenance.

Transition Risk

For our business and for our clients, these include potential increases in energy prices, tightening of climate or environmental, increased stewardship policies by our key shareholders, financial risks from increased borrowing costs for green debt and carbon tax.

Liability Risk

Risk developing from potential claims by individuals or businesses due to the action and/or inaction by Edgenta in response to physical and / or transitional risk as well as regulatory enforcement.

Physical risks such as flooding, landslides, sea water rise or soil erosion at sites we manage or at our plants, can significantly impact our ability to deliver our services to our clients. As Malaysia’s leading infrastructure service provider, we manage around 9,000 km of expressways and state roads in Malaysia and Indonesia. Any form of natural or climate-related disasters that impact highways and state roads under our management can expose us to operational challenges to maintain these infrastructure. Recovery and restoration of damaged highways will translate into significant operational cost for us. Damaged or highway closures can impact toll revenue collection for our clients potentially impacting our ability to collect revenues for road maintenance work.

Any build-up of clinical waste at our incinerator plant can result in environmental issues such as pollution, exposing us to fines and reputational damage. These can lead to financial losses.

Transition and liability risks may be brought by factors, such as rising energy prices and tightened climate regulations. These could impact both our operational cash flows and those of our clients. Stricter climate regulations or stewardship policies by our investors may result in higher compliance costs, while increased borrowing costs for green financing—if targets are not met—could also affect our cash flows. Additionally, the imposition of carbon taxes may expose us to further tax liabilities. Failure to meet our net zero targets may also translate into reputational damage and loss of key business or clients.

UEM Edgenta recognizes climate change as both a risk and an opportunity, reinforcing our commitment to achieving net zero emissions. Since announcing our Net Zero Targets in 2021—aiming for a 26% emissions reduction by 2030 and Net Zero by 2050—we have integrated climate risk and opportunity management into our strategy and RMF. Guided by six levers of decarbonization, we seek innovative ways to adapt while minimizing our environmental footprint across our operations and clients’ assets. Through OPUS Consulting, we support sustainability with solutions like green retrofitting and energy efficiency upgrades to optimize energy use.

Environmental Management

Managing UEM Edgenta’s environmental impacts responsibly

HIGHLIGHTS

612.5

tonnes

of milling asphalt waste generated, and the waste was collected by downstream vendor for disposal to either landfill or re sell as reuse material. Planning to embark on Recycled Asphalt Pavement in 2023

Rainwater harvesting project

3R programme at PLUS laybys

Social

Occupational Health and Safety

Prioritising the safety, health and well-being of employees and workers

HIGHLIGHTS

fatality

in 2020 and 2021

Conducted

2,346

safety audits; achieved 98% compliance rate

First company in Malaysia to attain

ISO 45005:2020

(Occupational Health and Safety Management – General Guidelines for Safe Working During the COVID-19 Pandemic)

Employment Culture

Inculcating fair employee treatment, and supporting talent growth and succession planning

HIGHLIGHTS

Equal opportunity to internal and external candidates for employment and through selection process based on job requirement

Invested

RM4.1

million

in employee training and education

Achieved

95,216

hours

of training

Customer Satisfaction

Ensuring customer satisfaction through quality products and services

HIGHLIGHTS

Scored

87%

in Customer Satisfaction Survey

Human Rights Assessment

Monitoring and managing human rights matter across the value chain. Edgenta complies with local and international laws on children and young persons in countries it operates* whereby it prohibits the employment of children and young persons in its operations. It also prohibits the use of forced labour in its operations in line with Malaysia’s ratification of the Protocol of 2014 to the Forced Labour Convention, 1930

Children and Young Persons (Employment) Act 1966 (Act 350) – Malaysia

Children and Young Persons Act 1993 – Singapore

The Protection of Children and Youths Welfare and Rights Act – Taiwan

UAE’S Labour Law – The UAE

Local Community

Investing in local communities to create long-term positive impact

HIGHLIGHTS

Benefitted

7,688

individuals

through CSR programmes

Focus Groups on Priority Material Matters championed by C-Suite/ Senior Management

Consist of persons in charge from Business Units and Corporate Support Functions to roll out initiatives
Shape and implement initiatives for each Focus Material Matter

Climate Change and Energy

Champion: Head of Environmental, Social and Governance (ESG)

Climate Change and Energy remain our priority. With Net Zero Targets set and a sustainability roadmap in motion, we’re dedicated to accelerating the transition to a low-carbon future for our business, clients, and communities.

Understanding the Group’s GHG emission footprint and setting reduction targets to align with the national agenda of achieving carbon neutrality by 2050

Environmental Management

Champion: Head, OE & Health, Safety, Security and Environment (HSSE)

We have set out strategic initiatives to manage our environmental impacts and conserve natural resources for our future generations

Delivering positive impacts along its value chain by disposing waste responsibly such as adopting waste to energy, or circular economy practices

Human Rights Assessment

Champion: Chief People Officer

We believe that Human Rights should be protected, and we are committed to increasing Human Rights awareness and practices across all our operations

Increasing awareness on Human Rights management within UEM Edgenta’s workforce and supply chain to enhance human rights management across the Group

Supply Chain Management

Champion: Head of Group Procurement and Contract Management (GPCM)

We will continue to embed sustainability practices into our Supply Chain Management, which is integral to our journey of value creation

Understanding supply chain ESG risks and mitigating value chain impact by advocating ESG risk and performance management among suppliers

CLICK HERE TO VIEW SUSTAINABILITY INITIATIVES AT UEM EDGENTA