These considerations are built into our five-year business plans. We identified sustainabilityrelated risks and opportunities as part of our annual five-year strategic plan review. This was discussed and endorsed by the Board’s Strategy and Finance Committee (SFC), and formed the foundation for initiatives relating to climate change in subsequent years. Moving forward, we will deepen our climate risk and opportunities study to cover relevant operations not reviewed in the initial phase. We are also in the process of reviewing climate risks in our broader supply chain and will address these risks through various sustainability initiatives. OUR RISK MANAGEMENT APPROACH: STRENGTHENING PREPAREDNESS We recognise that climate change poses different types of risks to our business. These include physical risks, such as flooding, extreme weather events and increasing temperatures, which can disrupt or negatively impact our employees, assets and supply chains. We also acknowledge the potential financial impacts that can result from transition risks, which include regulatory, market and reputational risks. The R&A function provides leadership in the implementation of a group-wide ERM framework that allows risks to be identified, assessed, monitored and managed by the business leaders. The Group deploys an ERM Framework to identify the key risks that may impede the achievement of its business goals in the short, medium and long-term. It sets out a consistent definition of risk and risk tolerance limits to ensure that business units have a common understanding when identifying and assessing risks. Besides business risks, this framework also analyses the financial and non-financial impact of risks arising from sustainability areas, including environmental, social and governance. In 2022, the R&A function reviewed the existing risk universe in the Group ERM manual and incorporated climate-related physical and transition risk events. This resulted in the addition of a new Climate Change risk category. OUR SUSTAINABILITY APPROACH RANGE OF KEY ASSUMPTIONS − “Status Quo” − “Nationally Determined Contributions” − “Net Zero” Carbon price across scenarios: SGD / ton General emissions across scenarios: MN tons SAF adoption across scenarios: % Power emissions across scenarios: MN tons 400 300 200 100 0 2,000 1,500 1,000 500 0 2020 2030 2040 2050 2020 2030 2040 2050 122 160 340 Scenarios from: 80% 60% 40% 20% 0 2020 2030 2040 2050 15,000 10,000 5,000 0 2020 2030 2040 2050 Assumptions: 3-6% efficiency improvements by 2050, hydrogen/ electric adoption Used for adjusting scope 2 emissions projections Sources: International Air Transport Association, International Energy Agency, external consultant's analysis 22 ST ENGINEERING SUSTAINABILITY REPORT 2022
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