Read more about our Governance, Framework and Commitment for each material factor on our website OUR MATERIAL FACTORS ECONOMIC ENVIRONMENTAL Economic Performance & Productivity Technology & Innovation Responsible & Resilient Supply Chain Environmental Protection Sustainable Quality Products & Solutions Impacts, risks and opportunities (IROs)* All material factors’ IROs impact the business’s bottom line of “People, Planet, Profit”. Key risks include the tightening of ESG regulations and potentially limited capacity and/or resources to cater to an increase in demand for sustainable goods and services. On the other hand, there are corresponding opportunities in the development of products and services that will enable customers to achieve their ESG goals. Global trends in digitalisation, such as the democratisation of Artificial Intelligence (AI), tightening of regulations on AI, widening AI divide and secured AI, as well as sustainability, such as energy transition requiring innovation in new fuels, new manufacturing processes to lower carbon footprint and novel low-carbon materials, can potentially impact our business – in terms of business opportunities, market competitiveness, and compliance costs. With apt and innovative approaches to respond to the above trends, there is potential for market expansion, development of new capabilities, optimisation of manufacturing processes, creation of more valueadded products and services for customers, and increased revenue, and vice versa. Key value chain risks include supply chain disruption, material price volatility, suppliers’ ESG performance and compliance with evolving ESG standards. If the above risks are not managed well, they may may result in disruptions to production schedules, resulting in decreased operational efficiency, productivity losses and reputational damage. On the other hand, if we foster resilient and mutually beneficial relationships with our suppliers, we can manage these risks well, whilst accessing greater opportunities to enhance our collective ESG performance. The risk of climate-related hazards worldwide has driven greater demand for products and solutions in climate adaptation and climate monitoring and responses. Simultaneously, the risk of rising carbon prices in the jurisdictions we operate in has also increased demand for circular economy products and digital solutions to advance operations efficiency. Whilst the impacts of these risks have been identified to be limited, we will continue to monitor climaterelated developments and opportunities closely. Whilst we have stringent safety and quality checks in place to meet our customers’ needs, there will be ongoing risks of our products and solutions posing unintended risks to customers’ health and safety, and/or exhibiting poor quality, reliability or functionality. However, this inevitable risk incentivises us to continually enhance our quality culture. We will remain vigilant in ensuring the safety of our products and services to prevent potential negative impacts, such as a loss in consumer confidence, decline in revenue and reputation, regulatory or legal costs and liabilities associated with noncompliance or product failures, and concerns over national security implications. At the same time, as our customers’ demand for more resource-lite and carbon-lite products grow, we will continue to invest in the relevant research and development for value-added products and solutions. Why it is material We are committed to delivering a sustainable and balanced triple bottom line of “People, Planet, Profit”. Inclusive growth and productive value creation for our stakeholders are key to our long-term viability. We improve lives and make the world more secure and sustainable through technology and innovation. Our ability to harness disruptive technology and to direct our engineering expertise towards building innovative products and solutions allows new business growth and differentiates us from our competitors. We depend on a resilient and sustainable supply of goods and services to meet our business needs. We are committed to managing our suppliers ethically and working with them to ensure a responsible and resilient supply chain. Climate change is an issue of urgency and importance. A low carbon business strategy is not only good for the environment, but also enables us to better respond to climate change related regulations and price volatilities of hydrocarbon resources. Cities and organisations around the world are looking to minimise their carbon footprint while reducing operating costs. Customers rely on us to meet their operational needs. Our products must be compliant with all relevant regulations and be safe to produce, operate and maintain. It must also be reliable over the product’s lifecycle. In addition, our services must meet our customers’ requirements and be delivered with the promised quality and within the committed turnaround time. UN SDGs OUR SUSTAINABILITY APPROACH Materiality Assessment 12 ST ENGINEERING | SUSTAINABILITY REPORT 2024
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