Driving the sustainability agenda with you PwC Malaysia S&CC Capability Statement

Transcription

1 Driving the sustainability agenda with you PwC Malaysia S&CC Capability Statement March 2013

2 Sustainability is evolving, from managing risks, to capturing opportunities Most organisations know sustainability is an area that can no longer be ignored, but many have different levels of awareness. Whether driven by corporate conscience, stakeholder pressure or regulation, all recognise that action has to be taken now. Sustainability considerations have moved way beyond philanthropy and ethics. They go to the heart of corporate strategy and competitive advantage. Leadership through innovation... Companies are increasingly seeking to embed sustainability in an innovative way linking remuneration to sustainability, publishing environmental profit and loss statements, or integrating financial and non-financial reporting. Opportunity Value Protection Risk Management Where many organisations start Operational risk Regulatory compliance Reputational risk Value Creation Operational efficiency Where some organisations are heading Operations cost savings Supply chain cost savings Implement reporting systems INCREASING VALUE Revenue growth Where leaders are heading Product innovation Increasing market share Brand enhancement Risk Compliance & risk management Operational effectiveness Strategic advantage There is a journey to sustainability, which gives us opportunities to work with you across a number of issues such as climate change, green growth, sustainable finance and resource scarcity. PwC Driving business value through sustainability

3 How can we help A. Strategic sustainability Generating, assessing or aligning your sustainability strategy to make the most of your sustainable initiatives What is becoming increasingly evident is that a sound sustainability strategy leads to long-term growth and profitability. We can help you: identify the sustainability issues and risks that matter most to your stakeholders assess which of these issues would bring the most value to your company, society and the environment identify your issues and goals to determine what needs to be done to make your business more sustainable define your sustainability vision to support your corporate strategy and develop a strategy roadmap and implementation plan B. Climate change and carbon management Helping you anticipate changes in markets and policy, manage climate change risks and respond to opportunities The world s economies increasingly realise that a more active and diverse approach is needed to address climate change through the low carbon agenda. Carbon measurement and reporting reveals how emerging risks can be opportunities rather than threats if they are managed for competitive advantage this is critical in a carbon-constrained world. We can help you perform an in-depth review of your current carbon position from measuring your carbon footprint to assessing the effectiveness of reporting and how it measures up to leading practice. C. Sustainability assurance and reporting Assisting you with non-financial information frameworks, reporting and assurance furthering efforts to influence stakeholder trust Bursa Malaysia mandates a disclosure on corporate social responsibility (CSR) by public listed companies in their annual reports. Stock exchanges such as Bursa Malaysia are launching more stringent sustainability reporting requirements and indices, which will encourage companies to improve their disclosure on environmental, social and corporate governance practices. We can help you verify and ensure credibility of data in your sustainability report through assurance and verification. PwC Driving business value through sustainability

4 D. Tax and the regulatory environment Assessing your exposure to environmental tax and regulation while advising on relevant incentives or subsidies to optimise your tax position Tax implications of all your business activities need to be considered, whether you are grappling with renewables investment or new business issues, such as carbon trading schemes and changing business models. Equally important is the need to understand and analyse the impact of taxes and regulations. E. Sustainability governance, risk and compliance Working with you to set up or realign your structure, policies, or procedures to reduce reputational risk and ensure compliance There is a growing need to establish governance around sustainability to manage risk and ensure compliance. We can help you: develop codes of conduct and policies and procedures to meet your stakeholders expectations manage risk and regulatory compliance outline the roles and responsibilities in the new governance structure conduct risk-based benchmarking F. Sustainable supply chain and operations Understanding and addressing sustainability impacts in the supply chain to improve your performance Understanding the impact of your operations on the environment and its impact on the communities in which you operate in can drive improvements to corporate strategy, day to day operations and ultimately financial performance. We can help you: assess the risks associated with sustainability in your supply chain define the characteristics you require from your suppliers monitor and manage environmental, social and governance risks measure the financial cost or potential impact of your carbon, water and energy usage on the environment, and local communities PwC Driving business value through sustainability

5 Our services Developing regions will be the fastest growing economies, creating opportunities for private sector investment and poverty reduction. Are you prepared to improve the standard of living for employees, suppliers, distributors and consumers? The effects of climate change are becoming more evident every day. From changing weather patterns to melting ice caps the examples can be seen all around us. So what are you doing to address the impact of climate change? Air and water pollution, climate change, energy use, natural resource depletion and others affect economic development. Are you adopting green growth approaches that support economic growth while minimising your negative impacts? A PwC Malaysia sustainability services D Global markets are competing for resources like oil, water, land and agricultural commodities. Businesses must build resilience into their supply chains to manage the effects of resource scarcity. How are you innovating products and collaborating with your suppliers to ensure more efficient use of resources? Financial services have evolved. Planning for the changes ahead creates opportunities for those who understand the trends and value natural capital to build organisational resilience and drive sustainable returns. Is your business model still relevant in the new global economy? PwC Sustainability Services Issues PwC Driving business value through sustainability

6 About PwC Malaysia s sustainability team Integrated services that link sustainability to business value PwC helps organisations and individuals create the value they re looking for. We re a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at Consultancy of the year BusinessGreen Leaders Awards 2012 Our sustainability network of over 700 people in over 60 countries provides expert assistance and advice to governments and the private sector around the world. Our global alliances We believe that collaborating on solutions and converging around standards can only help to drive the sustainability agenda further. This is why we ve established relationships with partners such as: Our thought leadership on sustainability Here s a selected list of relevant publications. You can download these and more at To learn more about our services: Jack Cunningham Strategic sustainability services PwC Advisory T: +60(3) M: +60(12) E: jack.cunningham@my.pwc.com Rashyid Anwarudin Climate change, reporting & assurance PwC Advisory T: +60(3) M: +60(12) E: rashyid.anwarudin@my.pwc.com PricewaterhouseCoopers Advisory Level 10, 1 Sentral Jalan Travers Kuala Lumpur Sentral Kuala Lumpur T: +60(3) F: +60(3) All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see for further details. CS05391

7 Strategic Sustainability PwC Malaysia sustainability services Sustainability is evolving from managing risks to capturing market opportunities What is Strategic Sustainability? Finding the right sustainability drivers to create or enhance value through risk management, revenue growth, and cost reduction Defining sustainability vision to support corporate strategy and developing a roadmap and implementation plans to enable value creation As sustainability moves up the boardroom agenda, it is increasingly being integrated into strategic level planning. Management now needs to balance various pressures, increased regulation, brand protection and supply chain resilience with the need to enhance performance, using the sustainability agenda for strategic advantage. Developing and integrating a detailed sustainability vision, goal and values into your long-term strategic plan so that it creates lasting value, is a common challenge for all types of organisations. Doing this by also building public trust is an additional challenge. What is evident is that a sound sustainability strategy protects a company s reputation, drives innovation and market differentiation and enhances employee engagement. It also satisfies consumers and attract talent, demonstrates compliance, and communicates progress to stakeholders - all key ingredients for long-term growth and profitability. Sustainability strategy should be a competitive advantage Current environment Companies across industries face material business risks and opportunities from regulatory and market trends on environment and social issues. Potential impact on companies While sustainability leaders are reaping the rewards and positioning themselves for the future, others are leaving value on the table. Customers, consumers, employees, regulators and other stakeholders expect companies to have a clear sustainability strategy and voice. Companies without a sustainability strategy fail to realise their full business value and risk appearing out of touch. Some companies recognise that their existing sustainability strategies are not creating value or lack alignment with their business strategies. When sustainability is viewed as a cost center or lacks alignment with corporate strategy, the business underperforms and material risks go unaddressed.

8 How we can help What this means for you: Whether sustainability is driven by corporate conscience, pressure from stakeholders or regulation and taxes, there are huge opportunities. Companies are slowly beginning to recognise the strategic importance of sustainability in managing risks. Jack Cunningham, Sustainability & Climate Change, PwC Malaysia We can help you to: Identify your issues and goals to determine where the pressures are likely to be and raise awareness of what needs to be done to make your business more sustainable Prioritise these issues from both a sustainability and commercial point of view. This will help you recognise and better manage risks; and improve efficiency, revenue potential, growth, and other opportunities Map the short and long-term ambitions for your sustainability vision, goals and values, assess the risks, and address any gaps in delivery Support the alignment and integration of your sustainability vision, goals and values into your overall corporate strategy Develop and deliver a robust sustainability programme that includes prioritised initiatives, enablers, milestones, key performance indicators, and measurable targets Selected case studies in strategic sustainability Client project Leading Malaysian telecommunications company Corporate responsibility (CR) strategy and management framework Regional airline operator Sustainability strategy development Challenge, solution and results Challenge: Following a Board governance review, a leading Malaysian telecommunications company sought to develop a CR strategy and framework. Solution: Our first step was to benchmark local and international companies to identify the material focus areas for the telecommunications industry as well as local needs. We followed this up with stakeholder discussions to gather feedback on material sustainability focus areas and to understand the industry s direction. We also trained the client on sustainability and good reporting practices. Results: The client s new sustainability initiatives were well coordinated so that it improved the impact of the company s CR investments. The client developed its first standalone CR report, committed to a stakeholder management programme and provided corporate responsibility key performance indicators updates to the Board. Challenge: The client needed help in developing their sustainability strategy and framework. Solution: We started by prioritising the client s key sustainability focus areas by taking into account internal and external stakeholder inputs through stakeholder engagement activities, key aviation industry sustainability risks and issues, and identifying key sustainability value drivers. Results: We assisted the client in setting annual targets and goals, and developing a roadmap to implement the key sustainability initiatives identified. Contact us for more information Jack Cunningham T: +60(3) M: +60(12) jack.cunningham@my.pwc.com Rashyid Anwarudin T: +60(3) M: +60(12) rashyid.anwarudin@my.pwc.com PricewaterhouseCoopers Advisory Level 10, 1 Sentral, Jalan Travers Kuala Lumpur Sentral Kuala Lumpur T: +60(3) F: +60(3) All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see for further details.cs05391

9 Climate change & carbon management PwC Malaysia sustainability services Climate change has emerged as one of the most important political and business issues of our time* Climate change and carbon management involves: Measuring and reporting carbon emissions throughout the entire value chain Identifying climate change risks and opportunities Developing and implementing policies, strategies and programmes on climate change, economics and green growth * In our 2013 Going beyond philanthropy? Pulse-check on sustainability report, 38% of companies in the region said that energy and carbon-related costs was their top strategic priority over the next 5 years. Yang Amat Berhormat Datuk Seri Najib Tun Razak, Prime Minister of Malaysia has committed up to 40% reduction in carbon intensity by 2020 from 2005 levels. Carbon is often the de facto environmental sustainability issue that countries seek to regulate and it is evident that the regulatory landscape is placing greater demands on companies. A practical first step towards carbon management is measuring carbon emissions followed by identifying operational improvement and carbon reduction opportunities. Whether it s defining policies, understanding the opportunities, preparing and protecting a business or leading by example, we can help you: understand the impact of carbon emissions by your business; form a strategy to address emissions reduction; and support you through the complex organisational changes needed to put the strategies in place. Why should tackling your carbon emissions be important to you? Enables identification of cost saving opportunities through energy efficiency of operations and technological innovations. Enables reporting and dialogue around emissions and risks with key stakeholders. Improves your brand reputation and addresses customer awareness of issues related to climate change. To ensure competitive advantage in the marketplace and future-proof your business against new risks such as increased regulation.

10 How we can help What this means for you: Organisations need to start measuring their carbon emissions before they can take steps to reduce them. Carbon management does not have to be tedious or difficult, provided that the right steps are taken and continuously improved on. Rashyid Anwarudin Associate Director, Sustainability & Climate Change, PwC Malaysia We can help you to: Understand the data that needs to be collected, the management information systems and processes that need to be in place Manage climate change risks and respond to opportunities Develop high-level climate change strategies and their practical implementation on the ground Respond to the Carbon Disclosure Project (CDP) through collaborative engagement. PwC has been the global sponsor and advisor of the CDP since 2008, giving us the insights to: - provide guidance in responding to the CDP and review of the CDP questionnaire - provide confidence through verification of your climate or sustainability data before submission to the CDP Selected case studies in climate change & carbon management Client project Diversified multinational Carbon inventory and reduction strategy Major oleochemical manufacturer Carbon Disclosure Project (CDP) support Challenge, solution and results Challenge: The client recognised that operations in high impact industries were especially risky as they were not in a position to estimate potential financial risks under future climate change policies and regulations. Solution: Firstly, we developed a baseline greenhouse gas (GHG) inventory for the client s global operations. Following the completion of the carbon baseline inventory, we identified opportunities for carbon reduction. The team developed the business case and implementation roadmaps for various carbon reduction initiatives related to green technologies, energy efficiency, renewable energy and operational improvement. Results: We were instrumental in the development of carbon reduction strategy roadmaps and performed the calculations to a set carbon reduction target moving forward through initiatives that not only cut carbon emissions but also costs. Challenge: The client s buyers had requested it to respond to the CDP supply chain questionnaire. But the client was unsure how to respond as well as the potential implications that responding to the CDP might have on their business. Solution: Several workshops were conducted to understand CDP's requirements and to support the client in developing a carbon inventory. This was followed by reviews of the CDP questionnaire. A strategic evaluation was also conducted to look at how the client copes with threats arising from climate change and the potential business implications for responding to the CDP. Results: The client obtained a detailed understanding of the CDP, the positive implications for disclosure and tools required to provide a meaningful response to the CDP. Contact us for more information Rashyid Anwarudin T: +60(3) M: +60(12) rashyid.anwarudin@my.pwc.com Elaine Chan Manager T: +60(3) M: +60(12) elaine.yl.chan@my.pwc.com PricewaterhouseCoopers Advisory Level 10, 1 Sentral, Jalan Travers Kuala Lumpur Sentral Kuala Lumpur T: +60(3) F: +60(3) All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see for further details.

11 Sustainability assurance & reporting PwC Malaysia sustainability services Sustainability reporting is voluntary, but there is an increasing move by governments to make it mandatory. They recognise that a resilient economic system is one that accounts for long-term risks, including environmental, social and economic impacts What is sustainability assurance & reporting? Reporting and verifying your company s environmental, social and governance performance in a standalone sustainability report, within the annual report or integrated reporting. Global reporting standards and guidelines: Alongside the increasing number of sustainability reports and the reporting of carbon emissions by companies, is a growing tendency to obtain independent assurance, either for regulatory or voluntary purposes. The assurance can be public - designed to underline credibility to external audiences - or private and intended to give confidence to management and the board that they are doing the right thing. However, unlike financial accounting, the collection of sustainability related information and the production of reports and integrated reporting is relatively new. This creates the opportunity or challenge for businesses to report consistent, reliable and complete data on a routine basis. Assurance for the sustainability report ensures credibility of data. Assurance & reporting brings significant benefits to an organisation Give different views of an organisation s strengths & weaknesses Better manage stakeholder relationships Demonstrate commitment & transparency Encourage further sharing of ideas and feedback Key benefits Increase trust & support from key stakeholders Increase external & internal acceptance of material issues Manage social expectations Form strategic partnerships

12 How we can help What this means for you: As more companies commit to responding to global and national climate change challenges and start to understand the business value of it, we expect Malaysia s participation in global reporting initiatives to increase. Many Malaysian companies are already taking steps to report on their climate change efforts, but undeniably there s still much to be done. Rashyid Anwarudin Associate Director, Sustainability & Climate Change, PwC Malaysia Our experienced team can help you to: Undertake internal audits to gauge the effectiveness of your internal controls and measures Provide independent assurance of the data in your sustainability report against ISAE 3000 as well as assurance for regulatory performance purposes, such as the Carbon Disclosure Project (CDP), Greenhouse Gas (GHG) emissions; we ll also verify and certify your data against social and environmental benchmarks in line with market standards like the Global Reporting Initiative (GRI), GHG Protocol, and AA1000 Support your submissions to sustainability indices by helping you to interpret the questionnaire before submission; we'll also identify any gaps to improve your position in the rankings Review your current reporting against best practices, identify operational improvements and move it beyond compliance to include future-looking analysis and strategies Align measurable sustainability objectives with your corporate strategy based on financial, operational and regulatory performance measures Assess how the life cycle of your products and services might impact your sustainability goals Selected case studies in assurance & reporting Client project Food and beverage company Sustainability assurance Malaysian telecommunications operator Sustainability assurance Challenge, solution and results Challenge: We were engaged to provide assurance services for the client for their 2010 Creating Shared Value (CSV) Report according to ISAE 3000 against the GRI-G3 guidelines and the company s internal sustainability reporting guidelines. Solution: We engaged local communities, societies and NGOs to verify data reported in the areas of rural and social development, biodiversity and the environment. Results: As well as providing assurance, our team reviewed the 2010 CSV Report to verify its GRI application level. Challenge: We were engaged to provide assurance services for the company s 2011 Sustainability Report according to ISAE 3000 against the GRI-G3.1 guidelines and the company s internal sustainability reporting guidelines. Solution: We conducted interviews with key personnel involved in the sustainability reporting and data collection process. We also conducted sample checks of source documents to verify 6 key performance indicators related to Health & Safety, Training & Development, Environment, Community and Suppliers. Results: As well as providing assurance, our team reviewed the 2011 Sustainability Report to verify its GRI application level. Contact us for more information Jack Cunningham T: +60(3) M: +60(12) jack.cunningham@my.pwc.com Rashyid Anwarudin T: +60(3) M: +60(12) rashyid.anwarudin@my.pwc.com PricewaterhouseCoopers Advisory Level 10, 1 Sentral, Jalan Travers Kuala Lumpur Sentral Kuala Lumpur T: +60(3) F: +60(3) All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see for further details.

13 Tax & the regulatory environment PwC Malaysia sustainability services Green taxation is used by governments to encourage more sustainable use of resources, presenting businesses with both new opportunities and new risks What is the current regulatory environment? Green Building Index (GBI) A green rating tool developed for Malaysian buildings, with tax incentives applicable to certified buildings Carbon and tax Tax implications connected with its acquisition, holding, disposal and utilisation Environmental incentives A series of tax incentives has been introduced to encourage a low-carbon economy Tax and incentives are integral to the sustainability and climate change debate. Environmental taxes and regulations are constantly increasing in number and scope, and evolving as more countries introduce them. Add into the mix the implications of changing policy, such as the rapid increase in the prevalence of new carbon trading schemes and other environmental regulations around the world, and the importance of understanding and analysing the impact of taxes and regulations in this area becomes clear. It is important that you clearly understand their impact on your existing and planned business operations so that you can make informed strategic decisions and take advantage of emerging opportunities to reduce costs. Local governments are continuing to implement measures to deal with the issues of sustainability and climate change. The opportunity exists for environmental taxes to play a significant role in shaping both business strategies and operational decisions aimed at encouraging sustainable business activities. Failure to understand these taxes and their impact on businesses could lead to mismanagement of environmental costs and realisation of financial, operational and reputational risks.

14 How we can help What this means for you: The Malaysian government has actively introduced initiatives to promote the adoption of green technology, and this gives rise to many business opportunities which should be grasped to maximise the financial benefits. Rashyid Anwarudin Associate Director, Sustainability & Climate Change, PwC Malaysia Our global network of sustainability and climate change tax specialists can help you to: Assess your current global exposure to environmental taxes and regulations; help you to manage risks and optimise your tax position from a sustainability perspective; and proactively engage with regional policy makers Understand your sustainability compliance obligations and take advantage of subsidies, grants, taxes and other incentives; develop strategies that optimise the impact of carbon, climate change and resource scarcity on your tax position; and prepare for future policy developments Understand your tax department s role in supporting your sustainability strategy and making sure your sustainability investments are evaluated on an after-tax basis, with available incentives factored into your financial returns Enhance your corporate reputation directly through sustainabilityfocused initiatives, and indirectly through your Total Tax Contribution Selected case studies in tax & the regulatory environment Client project Local financial industry association and local regulator Green Technology Financing Conference report Challenge, solution and results Challenge: Develop a Green Technology Financing Report for a closed door conference that was jointly organised with the local financial regulator and attended by green industry players, bankers and green technology specialists. Solution: Our team prepared a comprehensive report documenting the overview of green technology sectors in Malaysia and four other countries. We did thorough research on the size of the green technology market, trend analysis, key players, growth simulation programmes and high-level analysis of financial institutions supporting the green industry. Results: The final report incorporated our research on other countries, PwC s notes and observations from the conference, as well as feedback from the client and its appointed green technology specialist. Government ministry Study on green technology investments in the Malaysian manufacturing sector Challenge: Develop a study to help the client understand the landscape of current incentives for the uptake of green technology in the manufacturing sector as well as what more can be done to attract green technology investments in the sector. Solution: Our team engaged key stakeholders from various private and public organisations for interviews and focus group discussions. An electronic survey that targeted up to one thousand companies within the manufacturing sector was deployed. The findings were consolidated and used as an input in developing the recommendations for the final report. Results: The final report consists of immediate and long-term recommendations that comprise of enablers, policies, incentives and frameworks that can be used by the client to promote green technology investments in Malaysia's manufacturing sector. Contact us for more information Jack Cunningham T: +60(3) M: +60(12) jack.cunningham@my.pwc.com Rashyid Anwarudin T: +60(3) M: +60(12) rashyid.anwarudin@my.pwc.com PricewaterhouseCoopers Advisory Level 10, 1 Sentral, Jalan Travers Kuala Lumpur Sentral Kuala Lumpur T: +60(3) F: +60(3) All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see for further details.

15 Sustainability governance, risk & compliance PwC Malaysia sustainability services Setting up or realigning your structure, policies or procedures will help to minimise reputational risk and to ensure compliance What is sustainability governance? Governance describes the management of sustainability across all aspects of an organisation, including employee capability, policies and procedures, organisational structure and technology As businesses face more restrictions on the materials they use, there is a growing need to establish governance around sustainability to manage risk and to ensure compliance. National and international companies trying to meet these standards or regulations can find themselves in a minefield as they navigate the areas of governance, risk, and compliance. Good governance builds transparent practices and establishes trusting relationships between managers, shareholders, and stakeholders. It also allows an organisation to forecast and monitor potential risks better. Businesses are also able to manage the risks of operating within global supply chains more effectively, in an effort to protect brand reputation and to comply with the various national environment policies. Identifying the sustainability issues and risks that matter most to your stakeholders is vital in the heat of climate change, to determine the issues that bring the most value to your company, society and/or the environment. Sustainability governance in Malaysia The Malaysian Code of Corporate Governance (MCCG) 2012 now requires the Board to formalise ethical standards through a code of conduct and to ensure that company strategies promote sustainability. The Board is also expected to formalise a Board charter. Bursa Malaysia s sustainability guide for directors guidelines was published to provide guidance for public listed companies in implementing and reporting sustainability practices.

16 How we can help What this means for you: Many companies have existing sustainability initiatives, comply with regulatory requirements, and provide support during disasters. However, a large portion of these companies do not have defined focus areas and have not aligned the positive impact from their sustainability efforts to corporate strategy, brand and value creation, thus leading to value leakage. Jack Cunningham, Sustainability & Climate Change, PwC Malaysia Drawing from our knowledge of recent developments globally, our experience advising other organisations and our best practices, we'll help you to: Develop codes of conduct and policies and procedures that meet your stakeholders' expectations, and ensure your organisation's values are respected and reinforced Win employee buy-in to your sustainability strategy with effective frameworks and approaches that outline risks and opportunities. This will help everyone understand and support your strategy, so that you have clear and coherent communications and optimal employee engagement Manage risk and regulatory compliance so you'll understand its impact on your company s strategy and operations. We'll examine all sustainable development legal requirements, company policies, and industry/voluntary codes to assess your compliance levels, and where you can improve. Selected case studies in governance, risk & compliance Client project Challenge, solution and results Multinational conglomerate Sustainability risk assessment Leading Malaysian telecommunications company Corporate responsibility (CR) strategy and governance framework Challenge: PwC was engaged to conduct a sustainability risk assessment for a leading conglomerate involved in plantations, automotive, energy & utilities, industrial, property development and healthcare industry sectors. Solution: We identified and prioritised key sustainability risks at both group and divisional level, and were aided by a comparable analysis of sustainability risks faced by selected global companies. Results: We were able to pinpoint key priority areas that were not given adequate attention by the company. The overall assessment enabled the company to develop strategies and mitigations that address key sustainability risks. Challenge: Following a Board governance review, a leading Malaysian telecommunications company sought to develop a CR strategy and governance framework. Solution: Our first step was to benchmark local and international companies to identify the material focus areas for the telecommunications industry as well as local needs. We then engaged the Senior Management and Board Members to obtain their input on our proposed CR framework, reporting improvement and roadmap. We also delivered an awareness session on sustainability and good reporting practices to the relevant personnel in the organisation. Results: The final report consists of key findings and a roadmap which indicates immediate and long term recommendations that can be used by the client to produce a sustainability pull-out section in their upcoming Annual Report. Contact us for more information Jack Cunningham T: +60(3) M: +60(12) jack.cunningham@my.pwc.com Rashyid Anwarudin T: +60(3) M: +60(12) rashyid.anwarudin@my.pwc.com PricewaterhouseCoopers Advisory Level 10, 1 Sentral, Jalan Travers Kuala Lumpur Sentral Kuala Lumpur T: +60(3) F: +60(3) All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see for further details.

17 Sustainable supply chain & operations PwC Malaysia sustainability services Companies with sustainable supply chains will look beyond short-term financial gain and instead seek to create long-term value for the organisation What are sustainable supply chains & operations? Ensuring that environmental and social sustainability are embedded in all stages along the supply chain in the production of goods What s the business case? Better management of risks Social license to operate Increased employee satisfaction Product innovation Reduced operational risks Reduced operational costs Enhanced efficiency Greater customer loyalty Globalisation has led to an increasingly complex web of supply chains that cross national borders. Understanding the impact of your operations on the environment as well as the positive or negative impact on the communities in which you operate in can drive improvements to corporate strategy, day to day operations and ultimately financial performance. Developing robust supply chains with conducive working environments is a continuing challenge for many organisations. The demand for more transparent operations has created a greater need for businesses to embed sustainability in all their sourcing decisions and processes. Businesses are accountable not only for their own supply chain, but also for that of their suppliers and subcontractors. While obvious improvements such as reducing waste and excess packaging will be important, the true competitive advantage will come from innovative thinking about new products, processes, sourcing models and services. Securing sustainable sources of key raw materials will also be critical to business continuity, cost and reputation management. Telecommunications Technology Retail & Consumer Goods Pharmaceuticals & Life Sciences Industrial Products Chemicals & Process Industry Automotive Industries are increasingly seeing the importance of embedding sustainability in their supply chains 0% 50% 100% % of respondents indicating 'sustainability' as very important or important as a supply chain value driver Source: PwC Global Supply Chain Survey 2013

18 How we can help What this means for you: When companies do not manage sustainability in their supply chain, they miss out on a great opportunity to create a sustainability-enabled value chain that focuses on revenue, creates productivity and builds resilience. Jack Cunningham Associate Director, Sustainability & Climate Change, PwC Malaysia We'll put our experience to work by helping you: Assess the risks associated with your supply chain and the steps necessary to protect your brand Consider best practices from across a range of industry sectors Define the characteristics that you require from your suppliers in order to make sure they are sustainable Monitor and manage environmental, social and governance risks associated with your supply chain Measure the financial cost or potential impact of your carbon, water and energy usage on the environment, and local communities Redesign global supply chains to be cost-efficient, minimising their impact on the environment and delivering products and services on time Selected case studies in sustainable supply chain & operations Client project Malaysian telecommunications operator Green purchasing criteria European frozen food company Sustainable fish sourcing Challenge, solution and results Challenge: PwC was engaged to develop an approach to cascade environmental criteria into purchasing decisions across the organisation. Solution: We worked with the client s sustainability team to design and facilitate a crossfunctional workshop to educate buyers from the client s various divisions, including Marketing, Finance, Facilities and Operations, on the benefits and scope of green procurement. Results: A clearer understanding of green procurement concepts enabled the team to develop green criteria for their respective purchasing decisions. Challenge: PwC was asked to review the client s processes for sourcing fish- a key raw material for them and one where prices were rising and fishing quotas were reducing supplies. Solution: We undertook a full analysis of every stage of the supply chain, including market, value chain and competitive cost analysis. Results: We proposed improvements that would not only save money for the clients, but maintain the company s competitive position, as well as its ethical and environmental standards. Contact us for more information Jack Cunningham T: +60(3) M: +60(12) jack.cunningham@my.pwc.com Rashyid Anwarudin T: +60(3) M: +60(12) rashyid.anwarudin@my.pwc.com PricewaterhouseCoopers Advisory Level 10, 1 Sentral, Jalan Travers Kuala Lumpur Sentral Kuala Lumpur T: +60(3) F: +60(3) All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see for further details.