Climate Change - Strategy | ST Engineering

Climate Change Strategy

ST Engineering recognises the risks and opportunities presented by climate change to our business.We are committed to communicating our approach and strategy for climate mitigation, adaptation and resilience to our stakeholders.

Climate Scenarios Analysis

We have assessed physical and transition risks for the Group’s business to understand the climate-related risks and opportunities. We identify risks associated with physical hazards to our facilities and operations from climate events. We also consider evolving climate-related regulations, expectations from customers and investors, alongside technology and market shifts requiring the adoption of new technologies.

Scenarios and Methodology

Our analysis is based on the Shared Socioeconomic Pathways (SSP) climate scenarios taken from the IPCC’s Sixth Assessment Report. Our physical risk assessment includes the use of a third-party climate risk analytics platform while our transition risk assessment is informed by current available knowledge on policy, technology and market developments.

Physical Risks

Moderate Climate Change

SSP2-4.5

Business-as-usual scenario reflecting current emissions trajectory. Carbon emissions would remain high until 2050, before starting to decline post-2050 but no net-zero is achieved.

RISK ASSESSED
Extreme weather · Temperature rise · Sea level rise

TIME HORIZONS
Short (≤1 yr) · Medium (2–5 yrs) · Long (to 2050)

Transition Risks

Low Climate Change Scenario

SSP1-2.6

Global economy is oriented towards low material growth, resource and energy intensity. In line with the Paris Agreement’s aim of limiting the average global temperature rise to 1.5°C by 2100.

RISK ASSESSED
Policy · Technology · Market · Reputation

TIME HORIZONS
Short (≤1 yr) · Medium (2–5 yrs) · Long (to 2035)

Assessment of Physical Risks

We prioritised the Group’s sites for the physical risk assessment based on their asset value and financial materiality. We ran a desktop assessment using a third-party climate risk analytics platform to assess the exposure and potential impact of physical hazards to these sites, considering factors such as the site’s geolocation and asset value. We reviewed these desktop findings with facility owners to validate them against on-the-ground conditions.

Assessment of Transition Risks

Our assessment evaluated four key categories of transition risks to understand the potential impact on our operations and strategy. They include policy risk, technology risk, market risk and reputation risk. The long list of transition risks was assessed by our business areas and for their potential impact.

Residual Risk Level Assessment and Risk Management

After corroborating the desktop findings with the facility owners, our businesses categorised the identified physical hazards into Key, Tier 2 or Emerging Risks, in line with the Group’s ERM Framework. Our businesses then assessed the residual risk level, after taking into consideration mitigation measures, for Key and Emerging Risks.

Climate-related Risks

Physical Risks

Physical risk exposure for the Group’s assets in the short to medium term is low. The Group will continue to monitor long-term climate trends and adopt necessary measures if required.

Short-term

POTENTIAL IMPACTS
Property damage, resulting in business disruption and asset impairment, which may lead to higher expenditure and revenue loss.

MITIGATION MEASURES
Our facilities in hurricane-prone areas are reinforced and built in accordance with the local building regulations to withstand high wind speeds.

Short-term

POTENTIAL IMPACTS
Property damage, resulting in business disruption and asset impairment, which may lead to higher expenditure and revenue loss.

MITIGATION MEASURES
Our facilities have put in place emergency response plans to monitor and mitigate against extreme cold weather events.

Short · Medium · Long-term

POTENTIAL IMPACTS
Property damage or business disruption due to floods, which may result in higher expenditure and revenue loss.

MITIGATION MEASURES
Our sites are situated on elevated terrain, which lowers the risk of flood‑related damage. To strengthen our resilience against extreme rainfall and flooding, we implemented supplementary mitigation measures such as infrastructure upgrades and enhanced drainage systems.

Medium · Long-term

POTENTIAL IMPACTS
Increased cooling costs and lower workforce productivity will result in higher operational expenditure.

MITIGATION MEASURES
Our sites have in place extreme heat response plans, including the monitoring of temperatures, adherence to WSH heat mitigation guidelines, and increasing greenery at the sites to provide shade and cooling.

Medium · Long-term

POTENTIAL IMPACTS
Potential water shortages and elevated temperatures may disrupt operations resulting higher operational expenditure and revenue loss.

MITIGATION MEASURES
For drought‑exposed sites, mitigation measures have been implemented, including rainwater harvesting and controlled rack shutdown procedures to prevent equipment overheating.

Transition Risks

No short-term transition risks have been identified for the Group. Transition risk is assessed to be medium in the medium-term and low in the long-term.

Medium · Long-term

POTENTIAL IMPACTS
Higher compliance and operating costs in regions with carbon pricing mechanisms.

MITIGATION MEASURES
Our Group has set a target to halve our absolute Scope 1 and 2 emissions by 2030. In this regard, we have taken proactive efforts to physically reduce our emissions, including upgrading to energy-efficient equipment, electrifying our vehicle fleet and transiting to renewable energy sources.

Medium-term

POTENTIAL IMPACTS
We observe more customers requiring the completion of ESG questionnaires as part of tender processes. While we have not yet experienced a loss of customers , there is a probability of potential customers not selecting our bid should our ESG performance be deemed as falling short of expectations.

MITIGATION MEASURES
We have taken steps to ensure that we are tracking ESG key performance indicators (KPIs) that are relevant to customers’ expectations.

Medium-term

POTENTIAL IMPACTS
Insufficient supply or increased costs of components as suppliers transition away from high‑carbon inputs

MITIGATION MEASURES
Our businesses have developed a product carbon footprint (PCF) roadmap to track the PCF of our key products and are taking steps to adopt lower-carbon components and energy-efficient designs in the manufacturing of our products.

Climate-related Opportunities

While climate change presents challenges, it also creates strategic opportunities for organisations to deliver innovative solutions. We identify opportunities where our capabilities align with growing demand for sustainable technologies, including clean energy solutions, climate change mitigation technologies and adaptation services.

Strategic Opportunity

MARKET DRIVERS
Increasing procurement requirements for clean energy in public and private sector tenders. Global surge in clean energy demand as organisations pursue carbon footprint reduction targets, supported by policy and incentives.

OUR STRATEGIC OPPORTUNITY

Opportunity to capitalise on the expanding clean energy market, particularly through hydrogen production technologies
Our HubGen 1-MW hydrogen electrolyser represents our entry into the rapidly growing hydrogen economy, enabling us to participate in clean energy production and distribution value chains as we build capabilities in this emerging sector. Please refer to Advancing Sustainability for more information

Strategic Opportunity

MARKET DRIVERS
Rising demand for low-carbon solutions driven by corporate net-zero commitments and regulatory requirements. Global transition toward smart analytics and electrification, with increasing investment in energy efficiency technologies.

OUR STRATEGIC OPPORTUNITY
Our Urban Solutions business is well-positioned to address this market through smart energy building solutions that optimise energy consumption and reduce carbon emissions. These technologies align with the growing emphasis on building efficiencies and smart energy management system.

Strategic Opportunity

MARKET DRIVERS
Growing recognition for adaptive infrastructure as climate impacts intensify. Increasing demand for resilience solutions and rising investment in monitoring and early warning systems.

OUR STRATEGIC OPPORTUNITY

Our Urban Solutions and Land Systems businesses offer innovative heat mitigation and cooling technologies that address the growing need for efficient thermal management in warmer climate conditions. These include the Airbitat’s range of sustainable cooling solutions and the ARC Cooler, a wearable air-conditioning device that helps reduce heat stress for workers in hot and humid environments.
Our satellite communications capabilities in remote sensing and advanced analytics provide critical infrastructure for climate monitoring, environmental assessment and early warning systems that support adaptation planning across sectors.

Limitations in Climate Scenario Analysis

The SSP climate scenarios referenced in this report are based on the IPCC’s Sixth Assessment Report. These scenarios are theoretical models and should not be interpreted as forecasts. Additionally, the third-party analytics tool used for physical risk screening may not fully capture all risk exposures, potentially leading to under- or overestimation. While the scenario modelling and assessments provide valuable insights into possible climate-related impacts on the Group’s business, they are subject to inherent uncertainties.

Feedback and Questions

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