Office (GSSO) and ST Engineering Ventures. Externally, the GTO is plugged into the R&D ecosystem, particularly in the geographies we operate in. A Green Technology Task Force (GTT) was established in 2022 to synergise and dovetail the Group’s efforts in technology development for sustainability, including the objectives of CCWC. The GTT will develop a green technology roadmap for the near, medium and long-term to identify technology areas relevant for the Group based on the projected climate scenarios, potential risk and growth opportunities. It will also develop strategies for the deep technology areas identified for the Group in the five to ten-year horizon, contributing to business growth and new sustainability-linked revenue. Minimising Risks In assessing our physical and transition risks, the scenarios help us to quantify the potential direct damages and operational risks to the Group's assets and key suppliers. Consistent with the scope of our study, we selected scenarios relevant to our business, with a specific focus on commercial aerospace. We modelled the climate impact on assets utilising the Representative Concentration Pathway 8.5 scenario taken from the Intergovernmental Panel on Climate Change (IPCC), with a timeline of up to 2100. We also referred to Nationally Determined Contributions (NDC) scenarios and utilised sector specific decarbonisation scenarios including International Air Transport Association Fly Net Zero for aviation for transition risks up to 2050. For our other businesses, we conducted an initial highlevel analysis based on general decarbonisation scenarios such as the International Energy Agency (IEA) Net Zero Emissions by 2050 scenario and the IEA Sustainable Development scenario. Going through the scenarios and outcomes, we concluded that the business impact of climate change to the Group is low. However, in assessing the business impact of the energy transition, we identified three watchpoints: 1) We are cognisant that carbon tax and costs are likely to be passed to the Group through suppliers, for goods and services with embodied carbon. Accordingly, the carbon price and sector specific regulations is a crucial space to monitor. 2) Shifts in demand and innovation calls within our industries will need increased attention and action. These include tracking sectoral structural shifts such as competitors’ efforts to launch greener products, and investing into climate-related business and technology opportunities. 3) The impact on our supply chain from climate change needs to be examined in more detail. This is an addition to the challenges caused by other macro trends, such as China-U.S. trade relations, the Russian-Ukraine conflict and the rising inflation and energy costs. We have started the process of looking at our key suppliers and remain committed to strengthening our supply chain resilience. Note: Temperature rise compared to pre-industrial levels; International Air Transport Association, International Energy Agency, consultant analysis OVERVIEW OF SCENARIOS Scenario Description “Status Quo” 2ºc rise by 2050, 2.6ºc by 2100 Status Quo: • Emissions continue to grow at business-as-usual rates • Carbon price increases by committed rates • SAF adoption remains at today’s rate “Nationally Determined Contributions” 1.8ºc rise by 2050, 2.1ºc by 2100 Nationally Determined Contributions Aligned: • Some decarbonisation action taken • Based on published climate action plans “Net Zero” 1.5ºc rise by 2050, 1.4ºc by 2100 Net-zero Aligned: • Emissions, carbon price, sustainable aviation fuel adoption changes in line with International Air Transport Association Fly Net Zero scenario OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL SOCIAL GOVERNANCE INDEX 21
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