As a steel manufacturing company, it is vital to closely monitor air emissions because they are a primary pollutant resulting from the operations. Since 2021, we have installed an internal Continous Emissions Monitoring System (“CEMS”) at the Bukit Raja plant to track our ambient air emissions by installing analysers. This CEMS enable us to track and record our emission to ensure that we comply with the emissions limit that is allowable by DOE in accordance with the Malaysian Environmental Quality (Clean Air) Regulation 2014. Moreover, this system is more accurate in data collection, provides robust assurance, and permits early detection of any technical failure.
The different types of air emissions generated across three (3) reporting years are shown below, with all complying to the regulation limits.
In FY2022, Masteel took the lead in disclosing our GHG emissions for Scope 1, 2, and 3, covering 5 of the 15 categories stated under Scope 3. This shows our strong commitment to addressing climate change, which aligns with the Paris Climate Agreement 2015 and the United Nations initiatives. Our Scope 1 emissions include the emissions generated from our combustion of carbon fuel sources such as natural gas from our operations. In contrast, Scope 2 emissions include indirect emissions from purchased grid electricity. As for Scope 3 emissions, we include categories 6 – Business Travel, 7 – Employee Commuting, 8- Upstream Leased Assets, 11 – Use of Sold Products, and 13 – Downstream Leased Assets. Our total GHG emissions from our Bukit Raja plant are illustrated below. The details breakdown and explanation of each Scope GHG emission are included in our TCFD report on pages 91-92.
It is our goal to maintain this momentum with emissions reduction, and we have established a target to reduce overall GHG emissions by 10% within the next five years (by 2026), with a long-term target of reducing emissions by 15% by 2031.
Climate Change and Our Commitment to the TCFD
Masteel recognises climate change as a real and present risk, not only for our business, but for the globe. The steel industry in carbon-intensive, and we feel it is our responsibility to reduce and mitigate our climate impacts wherever possible. This also aligns Masteel with global movements towards emission reduction, with Climate Change being recognised as a topic of concern by the United Nations, the World Health Organization (“WHO”) and the Organization for Economic Co-operations and Development (“OECD”). Nationally, our efforts support Malaysia’s participation in the Paris Climate Agreement, and the Twelfth Malaysia Plan’s commitment to reduce GHG emissions by up to 45% of GDP by 2030. Masteel is also a member of several Steel Associations (including the Federation of Malaysia Manufacturers and the Malaysia Steel Association). Membership with these associations provides us input on sustainable development and serves as a platform within the industry to promote the best ways to enable steel manufacturers to adapt to climate change.
In 2020, Masteel took steps to begin following the Task Force for Climate-Related Financial Disclosures (“TCFD”), including conducting a climate scenario analysis for three different temperature scenarios (1.5°, 2.0°, and 4.5°C by 2100). The climate scenario evaluates two Representative Concentration Pathways (“RCP”) used by the Intergovernmental Panel on Climate Change (“IPCC”). These scenarios were selected due to their level of detail and the wide application for risk assessment. The RCP climate models referred to as RCP2.6 and RCP4.5, identify the following global requirements.
|RCP2.6||RCP2.6 requires that CO2 emissions begin declining in 2020 and are reduced to zero by 2100. It also requires a reduction in CH4 and SO2 emissions. The scenario also relies on the overall absorption of CO2 by the environment (such as trees) amounting to 2 gigatons per year. Under this scenario the global temperature rise is likely to remain below 2°C by 2100.|
|RCP4.5||RCP4.5 is described by the IPCC as an intermediate scenario. Under RCP4.5, CO2 emissions peak in 2040 before beginning to decline. CH4 and SO2 emissions also decline, but not as rapidly as under RCP2.6. RCP4.5 is likely to result in global temperature rise between 2°C and 3°C by 2100, with mean sea level rise 35% higher than that of PCP2.6. Additionally, it is predicted that many plant and animal species will be unable to adapt to the effects of RCP4.5|
As part of our risk assessment process, we have also identified a series of climate-related risks specific to our operations. These fall under four general categories:
- Weather-related risks: The risks related to extreme weather are considered to be low. The company’s operations are not likely to be exposed to weather-related risks except under exceptional circumstances such as gale-force weather and lighting strikes that might damage the plant’s structures and/or interrupt its power supplies. Due to the location of the plants, the risks of flooding are deemed to be non-existent. Tropical storms could affect the delivery times of supplies arriving internationally, but these instances are extremely infrequent.
- Regulatory risks: The possibility of temporary and/or permanent legislation coming into force to combat climate change factors could result in business disruptions. These could include restrictions on transportation infrastructure, restrictions on power and water supply, or the introduction of a carbon tax, all of which would have financial implications for the business.
- Supply chain disruption risk: The possibility of supply chain disruption due to climate is a possibility but the extent and frequency of disruptions are difficult to quantify based on historical data.
- Reputational risks: As customers and investors place greater emphasis on climaterelated risks, businesses, including Masteel, will be required to adapt accordingly to meet the market’s expectations.
All matters related to climate change, including governance, strategy, risk management and environmental targets are within the purview of the Sustainability Committee. The Board meets quarterly to discuss climate change efforts, oversees the process of managing climaterelated risks and opportunities, and approves the risk appetite of Masteel. Currently, approximately RM60.66 million is being invested in our various carbon-reduction initiatives, which aim to reduce total CO2 emissions by approximately 7,300 tonnes by FY2022.