Climate change is an issue of concern that needs immediate attention and mitigation actions by all stakeholders. This issue is further exacerbated by industries that emit huge amounts of carbon dioxide into the atmosphere which includes steel manufacturing activities.

Our Policy and Commitment

The Group apprehends the importance of climate change and aspires to contribute to mitigate climate change by monitoring and reducing our GHG emissions to reduce our environmental footprint as stated in our Environmental Policy statement. 

The Group continues its effort to enhance and keep abreast the knowledge and skills of our employees in climate related matters by sending representatives to attend relevant seminars/webinars hosted by Federation of Malaysia Manufacturer (“FMM”), Malaysia Iron and Steel Industry Federation (“MISIF”), Bursa Malaysia, KPMG Malaysia, and etc. 

SSB as the biggest GHG emitter within the Group, also participated and become a part of the global effort to mitigate climate change by consistently contributing information for the preparation of Malaysia’s Biennial Update Report (“BUR”). BUR is a report which Malaysia has committed to prepare every 2 years to United Nations Framework Convention on Climate Change (“UNFCCC”) as an update report, which includes information such as the status of its GHG emissions and removals by sink.

SSB has signed up to be an official supporter for TCFD since year 2023. The Group continues its effort to adopt the recommendations of the TCFD, which comprises of the 4 pillars, namely Governance, Strategy, Risk Management and Metrics and Targets. The Group is committed to taking actions against climate change and considering the impact of climate change on its business in the transition to low carbon emission.

Climate Governance Framework and Structure

The Group has a well-established climate governance framework and structure as defined in 2.2 Sustainability Governance and 2.3 Governance Structure with the objective of building strategic resilience and agility in the Group.

The Board of Directors has oversight on the climate related initiatives of the Group in identifying, assessing and integrating the climate related risks and opportunities, the potential impact on the business, the proposed strategies to manage and mitigate the climate related risks as well as seizing the opportunities. This nurtures the awareness and understanding of the team, enables the setting of overall accountability across the Group, along with building stakeholders’ trust that the Group is working towards building strategic resilience and agility that enable the delivering of a sustainable future to the stakeholders.

The SSC is assisted by TCFD Working Committees (“TCFD WC”) comprising key staff from various departments of the operating companies nominated by the SSC. The TCFD WC’s duties include identifying, assessing and addressing climate-related risk and opportunities, proposing and driving strategies and initiatives approved by the SSC, providing information as well as collecting feedback from stakeholders.

Climate Related Risk and Opportunities Strategies

The Group focuses on mitigating significant and major climate-related risks as well as opportunities arising from the transition to a low-carbon economy. We evaluate our resilience to the impact of climate change and derive corresponding strategies to address them.

Our strategies to mitigate climate related risks with risk rating of significant (S3) and major (M4), as well as opportunities to be seized are listed as below:

Climate Related Risk and Opportunities Management

The Group conducted climate related risk and opportunity assessment by referring to the recommendations of TCFD. We identified a range of potential issues which may arise as a result of climate change, utilising the same Risk Management framework as described in section 5.1.1. 

The process for identifying material climate change risks and opportunities is as below:

a)      Scenario Analysis

The Group adopts Intergovernmental Panel on Climate Change’s (“IPCC”) guideline and International Energy Agency (“IEA”) to analyse the impact of climate-related risks and opportunities on our business strategy. Our scenario analysis has taken into consideration our operation characteristic and external factors such as market and political dynamic. 

b)      Climate Related Risk and Opportunities Identification

The Group adopts the recommendations of TCFD and refers to international reports on the steel industry to identify risks and opportunities that we might face due to a climate change. A total of 12 transition risks, 3 physical risks and 3 opportunities were identified.

 The Group classifies the identified climate related risks into transition risks, physical risks and opportunities over the period of short to medium term and long-term. Transition risks are further categorised into Policy and Legal, Technology, Market and Reputation while physical risks are categorised into Acute and Chronic types. Opportunities are assessed in terms of sustainable financing, environmental performance and products & services.

c)      Material Risks and Opportunities Identification

Based on the identified climate related risks and opportunities, the Group rates the risks according to a metric that consists of likelihood and consequences, and determine level of risks/opportunities before taking necessary measures to address and monitor the risks. Currently, we are focusing on addressing the identified significant and major risks.

d)      Risk Mitigation

The Group establishes mitigation for the identified significant and major climate related risks follow by implementation of mitigation as well as tracking the metrics and targets. The identified risk and opportunities are then included in the register of SSB’s Environmental Management System Manual.

Metrics and Target  

In FY2023, the Group managed to expand its GHG emissions scope of reporting to cover 100% of its operating sites in Malaysia. For FY2024, we have taken another step forward by reporting our first Scope 3 emissions which is for Category 7, Employee Commuting. The Group’s continuous efforts in improving its GHG reporting is in alignment with the government's policy, such as the New Industrial Master Plan (NIMP) 2030.

The Group refers to ISO 14404 (Calculation method of carbon dioxide emissions intensity from iron and steel production) and World Business Council for Sustainable Development and World Resources Institute (“WBCSD/WRI”) GHG Protocol to calculate the GHG emissions. Both standards are internationally accepted standards with credible emission factors and are recognised (parts as applicable) by certification programs, such as ResponsibleSteel.

For upstream operation, the Group uses ISO 14404 to measure Scope 1 and Scope 2 emissions while for downstream operations, the Group uses GHG protocol to quantify Scope 1 and Scope 2 emissions. Scope 3 emissions are calculated by referring to the GHG Protocol for both upstream and downstream.

For the calculation of Scope 2 emissions, the Group utilises the Grid Electricity Emission Peninsular Malaysia which was provided by Suruhanjaya Tenaga (“ST”). The Group will not be revising previous year’s calculations by using the updated GEF but using the latest GEF to calculate the emission for the reporting year. The GEF used for our report is tabulated as below:

The GHG emissions of the Group were summarised in the tables below:

In FY2024, our upstream’s absolute emissions decreased by 60,157tCO2e due to lower production tonnage from our steelmaking plant and rolling mills. On the other hand, the increase in upstream emission intensity can be attributed to several factors such as unfavorable scrap quality and off-peak operational mode. There are no significant changes to the absolute emissions for downstream.

In FY2024, we started to calculate our Scope 3 emissions by calculating our employees’ commuting emission. Since we calculated the emissions using FY2023 data, we will be reporting the figure for both FY2023 and FY2024 this year.

The GHG emission intensity of the Group were as below:

SSB sets the target to reduce its GHG emissions intensity to 0.49 tCO2e/tsteel by FY2025 with FY2022 as the baseline. This translates to an intensity reduction of 12% in 3 years. We achieved the target in FY2023 but were unable to maintain such performance in FY2024 due to unfavourable scrap quality and off-peak operational mode.

We have decided to add a GHG emission target for our downstream operations whereby we aim to reduce one of our subsidiaries, SPC’s scope 1 emission intensity. FY2022 is set to be the baseline and the target is to reduce the emission intensity by 30% by FY2025. 

The Group recognises the need to be a sustainable steel manufacturer and has set multiple ESG targets which are disclosed in the table below:

Low Carbon Transition Plan

The Group has drafted its low carbon transition plan based on the current circumstances and currently available information as well as data and assumptions including but not limited to, EAF technology is the greener option among iron and steel making technologies with significantly lower carbon emissions and currently is the preferred option for decarbonisation drive and strategy of iron and steel industry around the globe.

The Group has planned 5 strategies to address its transition plan whereby a list of initiatives has been identified for each strategy.

a)      Process Optimisation

b)      Material

The Group has initiated the study and sourcing of potential replacement material which can reduce our emission intensity. We aim to have partial replacement in view of various case studies that has pointed out that full replacement is hindered by the availability of the replacement material.

c)     Renewable Energy

As renewable electricity is increasingly readily available in the market at reasonable prices and higher efficiencies, the Group is exploring the use of renewable energy.

d)     Green Energy and Energy Saving Technology

The Group keeps abreast of the development of various type of green energy and energy saving technology. The Group explores, adopts and implements progressively.

e)     Offsetting residual emissions

For residual emissions that remains hard to abate, the Group may consider offsetting via carbon credits.

Important point to note:

This Low Carbon Transition Plan is intended to align the Group’s business model in regards to the Group’s climate commitment to reduce its carbon footprint. This Low Carbon Transition Plan contains forward looking statements which may include but not limited to future events, trends, plans or expectations relating to the Group’s business, results of operations, performance and strategies. Such forward looking statements are based on current circumstances and currently available information, data and assumptions, and are not a representation or guarantee of future performance or developments. This Low Carbon Transition Plan and its forward-looking statements are subject to continuous review according to evolving policies, acts and regulations and is not intended to have any legal binding effect although the Group has every intention to use reasonable efforts to abide by the same in good faith. As such, the Group shall not be responsible or liable in any manner, whether at law or in equity, for any loss or damage whatsoever, howsoever arising (whether for breach of contract, tort (including negligence), misrepresentation, warranties, indemnity, statutory or strict liability) arising from or in connection with this Low Carbon Transition Plan and its forwarding looking statements, or for any loss or damage (whether direct or indirect, consequential, incidental, special or exemplary damages), howsoever incurred or suffered by any person (whether direct or indirect), arising from or in connection with this Low Carbon Transition Plan and its forward looking statements.

ESG KPI-Linked Remuneration for GMD and Senior Management

The Group recognises the importance of ESG factors in shaping our long-term success. We believe that aligning our ESG targets with executives’ remuneration especially for the senior management will not only keep us on track for sustainable growth, but also as a demonstration of our commitment to sustainable business practices.

Our ESG-linked remuneration aligns the remuneration of selected senior management, including the GMD with our ESG targets. The ESG targets will be adopted as part of their KPIs for the reporting year and will be included in their performance evaluation.

Malaysia’s historical abundant water resources have served as the foundation for the country’s socioeconomic development. However, over time, the water quality and ecosystem have degraded. Concerted effort is required to address and enhance water security and to achieve environmental sustainability.

Water stress is a condition where an imbalance occurs between water demand and water availability. Malaysia is classified as one of the countries with low to medium water stress by year 2040 (Source: World Resource Institute via The Economic Intelligent Unit). The projection done by National Water Research Institute Malaysia shows that coastal area along the west coast of Peninsular Malaysia will have water stress by year 2030.

Our Approach

The Group believes that communication can change people’s behaviour in consuming water, from the position of unaware of water security issue to that of consuming water more efficiently.

The Group is located at the coastal area along the west coast of Peninsular Malaysia, where water stress is projected. 100% of the operating companies of the Group are expected to be affected by high water stress in year 2030. The greatest impacts will be on SSB and SPIM due to their nature of operations that require vast water usage.

The Group engages and communicates the commitment on conservation and usage of water efficiently along with reclaim, recycle and retreat approach to secure water supply and minimise the impact of water stress in the future in our Environmental Policy statement to the employees and public through intranet, website, internal trainings and meetings.

The Group analysed the water withdrawal data of the Group and noted that more than 90% of the water was consumed by SSB and SPIM. In our long-term water management plan, the key focus is on SSB, which consumes more than 70% of the water used by the Group.

Our Initiatives

The Group has investigated its water withdrawal, consumption and discharge by location, sources and destination.

Water Withdrawal

 Water Consumption

Water Discharge

Water Management Plan

In SSB, water is used mainly for the cooling of products, processes and equipment. Water is also used for other purposes, such as rinsing of products and cleaning.

The long-term water management plan of SSB is to progressively set up closed loop RWTP. SSB collaborated with the water treatment specialist to design and build closed loop RWTP to treat, recycle and reuse the processed water in steel making plant and hot rolling mills.

In FY2023, SSB invested RM3 million to build the third closed loop RWTP for wire rod hot rolling operation. This enables SSB to further conserve precious water resources and at the same time, reduce operational costs. The said RWTP is in operation since Q1 FY2024.

SSB also collaborates and works with water treatment contractor to treat the processed water for continuous circulation for its beneficial purposes.

The Group has set the target for SSB to reduce water use by 70 megaliters from FY2020 to FY2025. The cumulative reduction in water use at the end of FY2024 is 85 megaliters.

The target of 70 megaliters from FY2020 to FY2025 is worked out to be an average reduction of approximately 2.0% per year of SSB’s total water consumption.

In SPIM Nibong Tebal, the Auto Galvanising Line has a quenching tank to rapidly cool down the hot galvanised pipes using water. An integrated, closed-loop water recycling system is specifically designed in such that the hot water from the quenching tank is returned back to recycle quenching water pool after cooling down the hot galvanised pipe. The returned water will be mixed with concentrated water from the Reversed Osmosis System and circulated back to quenching tank. The effective use of reversed osmosis concentrated water has reduced the needs of fresh water from Municipal Potable Water. The system is expected to be in full operation and able to capture the savings of water by FY2025. 

This water recycling system supports the Group’s commitment to innovate and use environmentally friendly industrial processes, ensuring high-quality production while conserving water resources and reducing operational costs.

Compliance

There was no incident of non-compliance with water quality/quantity permits, standards and regulations in FY2024.

The iron and steel industry is one of the most energy intensive industrial sectors. According to a study by the International Energy Agency (“IEA”), the steel industry alone accounted for 7% of global energy consumption in 2019. Steel production is also responsible for 2.6 gigatons of CO2 emissions, or about 7% of man-made greenhouse gas emissions.

Our Approach

As a diligent corporation, it is imperative for the Group to pragmatically manage energy utilisation and improve energy efficiency. The Group has an Energy Policy statement which demonstrates the commitment of the Group to improving energy efficiency, performance and consumption while complying with the applicable legal, regulatory and other requirements.

Electricity, natural gas, diesel and coke are the key non-renewable energy resources of the Group. Reducing energy consumption reduces the demand for fossil fuel. This in turn, lowers the carbon emission to the atmosphere. In view of this, the Group recognises the importance of dedicated energy management to abate GHG emissions and reduce our energy costs. 

The Group has an established Energy Management Committee to focus on energy efficiency. The objective of the committee is to conserve resources by improving efficiency in energy consumption through utilisation of technology, which then contributes to abatement of GHG emissions and as well as reduction in utility costs. The Energy Management Committee is tasked to plan, monitor, execute and review the energy management activities in accordance with the Group’s Energy Policy.

The Group refers to 2006 IPCC Guidelines for National Greenhouse Gas Inventories (net calorific value of diesel oil) to calculate the diesel consumption in steel production, and ISO 14404 Calculation Method of Carbon Dioxide Emission Intensity from Iron and Steel Production (energy consumption factor of EAF coal) to calculate coke consumption in steel production. Both references are internationally recognised with credible net calorific value and energy consumption factors.

The total energy consumption (electricity, natural gas, diesel and coke) of the Group is as shown below:

The total energy consumption of the Group is mainly attributed to upstream operations, SSB. EAF steel making and hot rolling are the key processes that consume large amount of energy. The total energy consumption in downstream operations is significantly lesser, about 7% out of total energy consumption for FY2024.

Our Initiatives

Energy management system (“EMS”) is a computer added system that enables visualisation and monitoring of electrical power consumption of key equipment and machinery used for production.  The Group has invested in EMS over the years, starting with steel making plant and hot rolling mills at SSB, followed by SPC. EMS facilitates steel making plant and hot rolling mills to optimise electrical energy consumption, avoidance of high maximum demand and identification of energy improvement opportunities thus reduce environment impact.

The EMS in the Group is listed as below:

As illustrated in the topic of Response to Climate Change, the Group has set specific target in FY2023 for SPC to reduce natural gas consumption so that its Scope 1 GHG emission intensity can be reduced by 30% from FY2022 to FY2025. 

The Group’s effort in energy management for both upstream (SSB) and downstream (SSM, SPC, SPIM & SSP) operations are as below:

The Group has actively executed 17 energy projects in FY2024. The list of projects and respective energy savings achieved in are as below:

The Iron and Steel is a heavy industry in which air pollution is an important environmental concern. The Group, as an environmentally responsible corporation has expressed our commitment to fulfill environment compliance obligations and pursue continual improvement to enhance environment performance in our Environmental Policy Statement.

Our Approach

SSB complies to the Malaysian Environmental Quality (Clean Air) Regulation 2014. In respect of the Third Schedule (Regulation 13), Table B – Production and Processing of Ferrous Metals (Iron and Steel Mills), the sources of air pollutants emission and the key monitoring pollutants are listed as below:

The approach of the Group is to engage accredited laboratories to perform isokinetic stack and air emission measurement with the target to ensure that the emissions are independently monitored for compliance with the regulation. The isokinetic stack and air emission measurement is performed at predetermined intervals and the results are being monitored.

SSB performs the measurement and monitoring of isokinetic stack and air emission in accordance to the Environmental Quality (Clean Air) Regulations 2014, Third Schedule (Regulation 13), Table B – Production and Processing of Ferrous Metals (Iron and Steel Mills). Volatile organic compounds (“VOC”) are not listed in Table B – Production and Processing of Ferrous Metals (Iron and Steel Mills), as one of the required pollutants to be monitored for iron and steel mills.

Our Initiatives

SSB Prai or 11% of the sites in the Group are obliged to comply to Malaysian Environmental Quality (Clean Air) Regulation 2014. The total significant air emissions of SSB are illustrated below:

As part of the move to further protect the environment, the Group has set the following targets:

SSB has taken various proactive steps throughout our many years of operations to control the emissions of pollutants as much as possible. The measures taken enabled SSB to comply to regulatory requirements as well.

The reheating furnaces in hot rolling mills in SSB emit pollutants from fuel burning. The reheating furnaces are equipped with recuperator system to recycle part of the heat energy from the hot waste gas prior to releasing the gas to ambient via chimney. The conversion of the fuel from medium fuel oil to the cleaner fuel of natural gas enables SSB to consistently emit pollutants lower than the emission limit as stated in the regulation.

The Continuous Emission Monitoring System (“CEMS”) in steel making plant samples, analyses and records the pollutant at the interval of 3minutes. The concentration of the pollutant can be visualised at both steel making plant and the Department of Environment, enabling continuous monitoring against requirement of the regulation. The trend of pollutant concentration also enables the certified competent person of our steel making plant to analyse, predict and plan the maintenance of the bag house dust removal and collection system.

The rate of key pollutant emission as illustrated shows that from FY2021 to FY2024, SSB is able to control the pollutants emissions rate to 50% or lower than the emission limit as stated in the regulation. SSB will retain the same target until FY2025.

Waste management is one of the most important environmental protection strategies. The goal of waste management is to reduce the total amount of waste that goes direct to disposal and minimise the environmental burden through value creation, hence supporting sustainable development and the transition towards circular economy.

Our Approach

The manufacturing processes in the Group generate co-products or wastes. The Group’s approach on co-product or waste is to recycle, reuse and recover the co-product or waste as much as possible.

Our Initiatives

The Group compiles and monitors the waste generation of the Group, as shown below:

Waste Classification

In Malaysia, hazardous waste is defined as any waste falling within the categories of waste listed in the First Schedule of the Environment Quality (Scheduled Wastes) Regulations 2005.

The Group identifies the waste or co-product generated based on their characteristic and potential to adversely affect public’s health and environment and categorises them into: 

The scheduled waste is then classified according to the First Schedule (Regulation 2) (Environment Quality (Scheduled Wastes) Regulations; 2005).

The type of scheduled waste generated by the Group is listed according to the scheduled waste code, as below:

Scheduled Waste Generation

The Group’s scheduled waste generation is as listed below:

Scheduled Waste Disposal

The Group is always mindful of compliance to the Environment Quality (Scheduled Waste) Regulations, 2005 followed by, where possible, accomplishing beyond regulatory requirements. The Group also endeavours to maximise the resource value of co-product or waste through research and development in tandem with collaboration with external parties, as well as promotion in the recycle and reuse of both scheduled and non-hazardous waste and co-product. The efforts of the Group thus far are as elaborated below:

a)   The steel making plant of SSB generates EAF dust, a co-product under the classification of Scheduled Wastes Code, SW104. EAF dust has a high zinc compound which can be recovered. SSB has collaborated and developed a local licensed recycler, which is nearby to us to recycle the EAF dust and extract valuable zinc compound which is then processed into zinc ingot for industrial application.

SSB seeks to accomplish beyond regulatory requirements in terms of storage duration and quantity of scheduled waste. SSB collaborated with a long-term local licensed recycler and spent approximately RM1.2 million to modify the EAF dust collection facility in the 4th quarter of FY2019. The modification enabled the loading of generated EAF dust directly onto the trucks for the licensed recycler to collect for subsequent recycling in their plant. The collaboration and investment enabled SSB to set the target for closing inventory of EAF dust at a maximum of 15Mt.

b)     Zinc ash and zinc dross generated by SPIM is another co-product classified under the Scheduled Wastes Code, SW104. SPIM disposes zinc ash and zinc dross to licensed collectors and recyclers monthly for recycling into products, such as zinc ingot.

According to the First Schedule of the Environment Quality (Scheduled Waste) Regulations, 2005, the maximum scheduled waste quantity that can be stored at premises is 20Mt and the storage duration should not exceed 180 days.

SPIM has set the target to control its maximum quantity of zinc dross and zinc ash to 20Mt with storage duration of not exceeding 100 days. By doing so, SPIM is able to comply with the regulatory requirements as well as achieving a shorter storage time than the regulated 180 days in FY2023. In the next 3 financial years, SPIM will work on further reducing the storage time to below 60 days with a maximum storage quantity of 20Mt.

c)    The Group engages external licensed contractors to collect the waste as our obligation to comply with the regulatory requirement. The licensed contractors will treat the scheduled wastes in the following manner:

Non-Hazardous Waste Disposal

The Group believes that effective management of waste helps to reduce waste that goes to the general waste stream and hence, reduces the potential impact to the environment. The Group puts in concerted effort in reducing waste through reuse, recycling and recovery as far as possible through research and development, as well as collaboration with external parties. The venture of the Group in waste management until now is as set out below:

a)    The steel making plant in SSB generates EAF slag in its steel scrap melting process. EAF slag is a non-metallic co-product, which is classified as a non-scheduled waste. EAF slag is used as an alternative to rock fragments, which is commonly used as an aggregate for landfill and replacement of granite aggregate. The strategy of SSB is to treat EAF slag in-house to recover the metallic waste before further processing the slag for intended applications. The metallic waste recovered will then be reused in EAF as an input material for steel making. The in-house treatment and processing process reduces the need for external transportation and hence, reduces carbon emissions. Currently, 100% of the treated EAF slag is used as alternative rock fragments.

b)   The steel making plant in SSB also generates ladle furnace slag and used refractory material, a non-metallic co-product that forms during steel refining process at ladle furnace. Ladle furnace slag is used for soil conditioning while used refractory material is crushed for reuse in EAF to improve the refractory wall lining protection of the EAF. The mixture of ladle furnace slag with used refractory materials can be disposed to bricks maker to produce cement bricks.

c)    The general waste in the Group is further segregated according to 3R (Reduce, Recycle and Reuse) prior to final disposal. Old newspapers, shredded paper, magazines, malfunctioning computers, and electrical appliances are amongst the items that are being segregated before disposal as general waste. 

Our Performance

The Group’s dedication and effort in avoiding direct disposal of both scheduled waste and non-hazardous waste have contributed the distinctive outcome as below:

a)      The total wastes that were diverted from disposal and directed to disposal:

b)      The breakdown of scheduled waste diverted from disposal:

c)      The breakdown of scheduled waste directed to disposal:

d)      The breakdown of non-hazardous waste diverted from disposal:

e)      The breakdown of non-hazardous waste directed to disposal:

In support of the Group’s approach to recycle, reuse and recover the waste as much as possible, the Group has set a target to avoid waste that is directed to disposal at maximum of 3%. For FY2024, the total waste diverted from disposal is 0.6%.

Steel Scrap

Steel scrap generated by the Group is sent to SSB as a resource for recycling in the EAF as described in section 5.3.6. Though steel scrap is a key resource for SSB’s EAF, the Group puts in effort to reduce the generation of steel scrap through our subsidiary, SSM. SSM provides service to the construction industry by cutting the steel bar into required length or forming into the required shape prior to delivery to the construction site. With such service, steel wastage at construction sites is reduced.

Life cycle analysis (“LCA”) provides a holistic view of environment performance of a product. An LCA of steel covers the procurement of raw materials and supporting materials, steel production, distribution, use and recycling after the end-of-life stage.

The Group strives to reduce the environmental impact of its steel products in all phases of the life cycle, from raw material extraction to end-of-life recycling. The entire life cycle is taken into consideration in our product and system design.

The life cycle analysis provides information on how the Group controls or influences the way the products in the Group are manufactured, distributed, used and recycled to manage the environmental impacts within the life cycle, which is essential to long term sustainable development.