Climate Change

New legislations related to environment or climate change may require us to implement a newer or an upgraded compliance solution.

May result to higher capital and operational costs associated with implementing the mandated compliance solutions.

HRC will continuously monitor and adopt any regulatory changes. In fact, HRC has been making progress towards a cleaner energy future through compliance to government environmental and fuel regulations. [Reference: Page 34, 2021 Annual Report]

Through ongoing and completed key investment projects, HRC continues to monitor and improve the quality of air emissions coming from our refinery operations and grow capabilities in producing cleaner fuel with reduced sulphur and carbon emissions. [Reference: Page 34, 2021 Annual Report]

Medium-term

HRC has heavily invested in several projects relating to air quality improvements and meeting new product specifications as mandated under the requirements issued by the Government of Malaysia since 2017. These projects aim to support HRC’s long-term sustainable commitments on climate change while ensuring HRC remains competitive in challenging times. [Reference: Page 20, 2021 Sustainability Report]

For example:

The implementation of Euro 5 Gasoil (E5G) improves air quality, as the fuel contains reduced sulphur content of 10 parts per million (ppm) from 500 ppm. HRC met the deadline and started rolling out supply of on-spec product from March 2021. The start-up of E5G production delivers HRC’s goal to assure a sustainable foundation for profitable future business, while ensuing the overriding sustainable goal of further improving air quality. [Reference: Page 38, 2021 Annual Report]

Other notable initiatives that have been rolled out:

• Managing GHG emissions and integrating GHG emissions management into our operations
• CAR (Clean Air Regulation) project
• Rollout of the Energy Masterplan since 2020

[Reference: Page 14, 2021 Sustainability Report]

Being perceived as a laggard in climate change action can affect our stakeholders’ perception towards our brand.

1. To begin with, HRC has a robust internal control framework, and HRC’s environmental stewardship is driven by our commitment to minimise any adverse impacts on the environment from our business operations through reduction of pollution, waste and resource use. [Reference: Page 42, 2021 Sustainability Report]

2. There are Initiatives in place. The opportunity here is to create content to tell a compelling story to stakeholders by showcasing the various initiatives undertaken, as highlighted in the column on the right.

3. To consider participating in business or trade associations that provide collaborative space, the right tools, and methodologies to help companies embed sustainability action into its business strategy and operations. It was disclosed in the 2021 Annual Report that HRC aspires to participate in one, after carefully reviewing options. [Reference: Page 47, 2021 Sustainability Report] Such association will enable HRC to foster stronger brand presence particularly in the space of climate change.

Short-term

1. The Environmental Policy enables HRC to fulfil its obligations and ensure compliance of the Environmental Quality Act (EQA) 1974 and all other applicable environmental laws and regulations. We set our targets annually through our HSSE Annual Plan to improve and measure, appraise, and assess our performance for continuous improvements on our environmental footprint in and around the areas we operate. [Reference: Page 42, 2021 Sustainability Report]

We have the Environmental Regulatory Compliance Management Committee (ERCMC) in place that reviews and assesses environmental issues for the organisation, where close monitoring and management of potential environmental-related risks were managed and addressed. [Reference: Page 6, 2021 Sustainability Report]. As part of our efforts to minimise climate change risk from our operations as well as compliance to the CAR 2014, HRC commissioned two air pollution control systems known as Wet Gas Scrubber and Chlorosorb. [Reference: Page 47, 2021 Sustainability Report]

As the world advances and the race against climate change intensifies, newer technologies for low-carbon solutions will be developed continuously. In addition to new technologies, new skills will be required to reflect the growing shift to greener energy solutions that involve harnessing technology and innovative approaches to reduce carbon footprint. [Source: Page 28, 2021 Annual Report]

New technologies will have significant impact to cost. However, since we are committed in maintaining our path in sustainability, options will have to be carefully evaluated to ensure the suitability of the solution.

HRC continues to actively explore new and matured technology to further optimise and reduce the energy consumption of the infrastructure and facilities at our non-processing areas. [Source: Page 43, 2021 Annual Report]

Medium-term

One of the on-going feasibility studies involves the viability of solar panel application to reduce the dependency from the power grid and advance towards a green building philosophy. [Source: Page 43, 2021 Annual Report]

Rapid shift in customer expectations may be resulted from changes in consumer behaviour, where climate-friendly products and services would be given preference.

This shift could potentially lead to loss of revenue.

1. In anticipating this shift, HRC recognises cleaner energy as an opportunity seeing that there is generally a higher demand for it, and potential slowing demand for hydrocarbon transport fuels. [Source: Page 42, 2021 Annual Report]

2. To capitalise on the annual customer satisfaction survey by expanding the survey to include climate change and green-solution related questions to help gauge customers’ expectations.

Medium-term

1. Strategic planning was formulated by looking into options for future investment into petrochemicals and renewable energy / alternative energy to add on to our strong presence in hydrocarbon products. [Source: Page 42, 2021 Annual Report]

2. To assess our performance, we seek customers’ feedback in an annual customer satisfaction survey that measures variety of items. [Source: Page 20, 2021 Sustainability Report]