133 O N E R E P O R T 2 0 2 2 OVERVIEW BUSINESS OVERVIEW AND PERFORMANCE CORPORATE GOVERNANCE FINANCIAL INFORMATION SUSTAINABLE BUSINESS DEVELOPMENT Summary of Risk and Opportunity analysis based on Task Force on Climate-related Financial Disclosures (TCFD) Risk Type Risk Timeframe Climate-Related Risk Description Potential Financial Impact Mitigation Strategy Transition Policy and Legal Imposition of new climate change regulation such as carbon taxes, emissions quotas or biofuels mandates. Increase in operating costs and fares which could lead to a dampening effect on travel demand • Invest in newer aircraft and fuel efficiency measures that deliver emissions reductions • Negotiate SAF and carbon credit pricing as part of AAAGL group to benefit from scale economies New sustainability reporting requirements Increase in reporting costs, including manpower expenses, measuring tools and audit fees. • Leverage existing tech tools and programmes to meet new data reporting requirements • Use available internal resources to undertake internal assurance before progressing to external assurance Technology New technology that are developed to deliver low-carbon solutions such as zero emission aircraft may result in asset value loss of existing aircraft and equipment becoming obsolete New investments needed to upgrade fleet and equipment • Negotiate aircraft order contracts that allow for upgrades of unfulfilled deliveries • Enhance fleet management strategy to build in flexibilities in lease contracts Market Travellers and businesses respond to climate change by reducing travel demand Lower demand for air travel will impact revenue Implement a carbon offset programme that provides travellers with the option of offsetting their carbon emissions Reputation Negative brand impact of being seen as not responding sufficiently to climate crisis Guests may choose a competitor that they perceive as more sustainable and investors may divest. Financial institutions may also impose a premium on lending Invest in carbon reduction initiatives and communicate decarbonisation efforts actively as part of the Company’s communications strategy Risk Type Risk Timeframe Climate-Related Risk Description Potential Financial Impact Mitigation Strategy Physical Acute Aircraft becoming inoperable at extreme high or low temperatures Increase in cost of flight delays and cancellations • Operate seasonable schedules and expand coverage of weather forecasting services • Undertake pre-emptive cancellations to avoid passengers and aircraft being stranded Increased frequency and severity of climate events such as typhoons and floods Cost of asset damage, increase in insurance premiums and revenue loss due to travel disruption Maintain robust business continuity plans and dynamic schedule planning at affected hubs Chronic Longer-term changes in weather patterns that result in rising sea levels that render some airports inoperable Higher airport charges at new facilities built to replace at-risk airports. Travel demand will also be impacted if new airports are located far away from city centres. • Select hub airports that are shielded from extreme weather events • Ensure business continue plans are effective and up to date • Operate to airports that are adequately served by public transport to minimise potential increase to guests’ travel costs Short (S) term Medium (M) term Long (L) term
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