68 CSE Global Limited RISK GOVERNANCE AND INTERNAL CONTROL CLIMATE-RELATED CSE recognizes the importance of managing climate-related risks which have an impact on business operations and business assets. We are committed to doing our part in reducing our carbon emissions and protecting our people and assets from the impacts of extreme weather. Climate risks for businesses can include physical and transition risks, and it is essential to anticipate and prepare for these risks, as it can help to reduce company’s exposure to potential financial losses, secure supply chains, comply with increasing regulations, and prepare for changing market demands. To remain competitive, businesses must prioritize climate risk management not just for present-day operations but also for future revenue streams and managing the cost of capital. Businesses that embrace climate risk management will likely have a greater opportunity to achieve long-term success and resilience. We have aligned our sustainability framework to global standards, including adopting recommendations from Task Force on Climate-related Financial Disclosures and Global Reporting Initiative. We constantly leverage technologies and digital solutions to monitor our sustainability performance across our business operations in the Group and work closely with our partners, suppliers and contractors throughout the value chain. We will continue to invest and demonstrate our commitment to being a responsible corporation. B. OPERATIONAL RISK PROJECT MANAGEMENT As a contractor and system integrator, CSE is subject to the risks of increased project costs, disputes and unexpected implementation delays, any of which can result in an inability to meet projected completion dates. We face potential project execution risks when projects are not accurately scoped or the quality of service performance is not up to customers’ specifications, resulting in overcommitments to customers, as well as inadequate resource allocation and scheduling. These can lead to cost overruns, project delays and losses. The Group has a project risk management framework in place with processes for regular risk assessment, performance monitoring and reporting of key projects. Particular attention is given to technically challenging and high value projects, including greenfield developments, as well as those that involve new technology or operations in a new country. Projects are managed in accordance to the respective country’s environmental laws and labour practices. HEALTH, SAFETY & ENVIRONMENT Maintaining a high level of health, safety and environmental (HSE) standards is of paramount importance to the Group. As such, we are constantly raising awareness and building a HSE culture at the ground level. Key initiatives include driving a zero fatality strategy across our global operations, enhancing competency of employees performing safety-critical tasks, strengthening operational controls, as well as developing more proactive and leading metrics to monitor HSE performance. Environmental management practices in key operating sites are also closely monitored. As a Group, we continue to embrace and leverage technology to improve HSE processes and systems. SUPPLY CHAIN MANAGEMENT We rely on vendors and service providers and their extended supply chain in many aspects of our businesses. Accordingly, our operations and reputation may be affected by vendors or their supply chains failing to perform their obligations or failing to operate in line with increased expectations of key stakeholders such as government, regulators and customers on a broadening set of ESG issues. In addition, the industry is dominated by a few key vendors for such services and equipment. Any severe delays, failure or refusal by a key vendor to provide such services or equipment arising from disruptions caused by global pandemics, component shortages, government-imposed bans on vendors and/or sanctions due to security and other concerns, or any consolidation of the industry, may significantly affect our business and operations. We monitor new legislation introduced as well as the developments and restrictions by governments and regulators on various vendors to ensure our key vendors comply with the relevant laws and regulations. We also monitor our relationships with key vendors closely and develop new relationships to mitigate supply risks. We have in place a supply chain management process, including supplier selection and supplier review processes, which is regularly updated to manage risks that may exist in our supply chain (Refer to the CSE Group Sustainability Report for more details).
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