Our Approach

Greenhouse Gas (GHG) Emissions

We consistently enhance our measurement and quantification methods to effectively address GHG emissions from our operations, thereby reducing the impact on the environment. We also intensify collaboration with actors within the ecosystem to gain a deeper comprehension of energy utilisation within our company and across our value chain.

Climate Change Risks

We acknowledge the challenges posed due to climate change, both in terms of its physical impacts and the transition to a lower-carbon economy. We are actively exploring measures to adapt and strengthen resilience, while also implementing governance systems in line with the Task Force on Climate-related Financial Disclosures recommendations to effectively identify and manage climate-related risks and opportunities.

Environmental Management

Environmental management is essential in addressing our impact on the physical environment. The environmental effects of our operations, emphasising sustainable resource management, emissions reduction, responsible waste and water practices and responsible asset decommissioning.

Nature and Biodiversity

As climate and nature issues are intertwined, it is important that our GHG emissions abatement and growth of cleaner energy solutions are in unison with the conservation and protection of nature and biodiversity. The PETRONAS Nature and Biodiversity position guides our plans on Nature and Biodiversity Centre of Excellence (CoE) and plan to assess our readiness to align with TNFD recommendations

Safety Management

Prioritising safe operations, means providing a secure and productive working environment for our employees and contractors, free of incidents and accidents.

Human Rights

We are committed to respecting human rights in all our business activities and relationships. Issues such as forced labour, human trafficking, modern slavery, fair working conditions and non-discrimination are monitored to ensure that we are operating responsibly wherever we are. In April 2024, we launched our Human Rights Policy formalising and thereby, strengthening our commitment to human rights.

Employee Attraction, Retention and Development

Investing in skilled talent is vital for long-term business resilience in a rapidly changing energy landscape and ensuring a just transition. We aim to attract and retain top talent through flexible work arrangements, opportunities for growth and market-based compensation based on capability, experience and performance. We are committed to fostering an inclusive workplace where everyone is treated equally.

Health and Well-Being

Ensuring the safety and well-being of all employees and contractors is paramount to us, extending our commitment to fostering a culture of health and safety within our workforce and the broader community. Through comprehensive risk assessments, robust controls and a variety of health and wellness programmes, we proactively address overall well-being of our employees.

Corporate Governance

We uphold our commitment to maintaining the highest standards of corporate governance, recognising its crucial role in enhancing business resilience and fostering long-term growth. Ensuring the highest level of governance across structures, policies and strategies relating to sustainability remains one of our top priorities.

Ethics and Integrity

We stand resolute against any form of corruption or unethical conduct. This commitment extends throughout the entire value chain, encompassing employees, partners, suppliers, contractors and all intermediaries. We actively promote responsible business practices and strict adherence to established standards and guidelines. The PETRONAS Anti-Bribery and Corruption Policy and the PETRONAS Code of Conduct and Business Ethics (CoBE) serve as our guiding principles, and sets the bar for ethical business conduct.

Lower Carbon and Energy Transition Business

Our Net Zero Carbon Emissions pathway informs our lower carbon and energy transition activities and ventures. This includes prioritising natural gas and exploring opportunities in renewable energy, hydrogen, green mobility, specialty chemicals and biofuels. Our aim is to strike a balance between energy security, affordability and sustainability, leveraging on the latest policies, goals, measurement tools and technologies to facilitate this transition.

Economic Contribution

Our commitment lies in fostering both business growth and community prosperity. We achieve this by creating economic value through our offerings, paying taxes and wages and providing opportunities for society. During crises, we extend assistance through financial aid, volunteer work and efforts. Our tax practices adhere strictly to local regulations, ensuring transparency and responsibility.

Sustainable Supply Chain

We pay close attention to our overall supply chain management, product stewardship and procurement as these mitigate risks that impact the environment, society and economy. This ensures the sustainability and safety of our products throughout the entire life cycle. To improve supply chain resilience, we continuously strengthen our efforts to nurture and support local suppliers where possible and applicable. We also share global work practices with regional and local entities to enrich the local economy.

Innovation and Technology

We acknowledge the importance of innovation and technology in delivering our commitment. We promote an innovative culture that encourages creative thinking in both product design and operations. This boosts our competitive edge and enhances our brand reputation. Through advanced technologies and digital innovations, we develop new business processes that elevate customer and stakeholder experiences. Our approach integrates innovation and technology across all operations and services to fuel our business growth and expand our offerings.

Cybersecurity and Data Protection

Cybersecurity and data protection play pivotal roles in safeguarding organisations against a myriad of cyber threats and ensuring the integrity and confidentiality of sensitive information.

Circular Economy

Our goal is to minimise the environmental footprint of our product by minimising waste and cutting down material usage. We are committed to combating plastic pollution through recycling and reusing, fostering innovation and reducing waste. Embracing the circular economy model, we aim to establish a closed-loop system where waste serves as input for new processes. Our focus is on building a sustainable future, preserving natural resources and lowering our carbon footprint while generating value.

Process

2022 – Full Materiality Assessment

2023 – Revalidation of Materiality Assessment

Identification

Data-driven tool to include new sources:

• Existing and emerging regulations
• Media
• Sustainability Accounting Standards Board (SASB) Standards

We studied regulatory changes, media reports and the Sustainability Accounting Standards Board (SASB) to helped to identify material sustainability topic. SASB was particularly valuable as it aligns with upcoming International Sustainability Standards Board (ISSB).

Stakeholder Engagement

In-depth feedback from external stakeholders, including:

• Investors, banks, and rating agencies
• Reputation Strength Index survey

We obtained detailed feedback from a variety of external stakeholders, including investors, financial institutions and rating agencies to assess the impact of material topics on our business conducted throughout the year provided valuable insights, guiding our materiality assessment. Stakeholders’ concerns, queries and responses were documented as inputs for the assessment.

Prioritisation

Priorisation criteria include:

• Alignment with strategy and focus areas
• Discussions at Board and Executive Leadership Team meetings
• Alignment with risk elements in Corporate Risk Profile

Data-driven tool to assess and prioritise financial materiality and impact materiality.

We prioritised strategies and focus areas through initiatives, commitments and discussions at the Executive Leadership Team and Board levels. Material topics were ranked based on alignment with risk elements in PETRONAS Corporate Risk Profile

Endorsement and Approval

Greenhouse Gas (GHG) Emissions

Our approach to realising our Net Zero Carbon Emissions by 2050 Pathway is guided by our four main decarbonisation levers – zero routine flaring and venting, energy efficiency, electrification and carbon capture and storage. Additionally, we are continuously improving measurement quantification to mitigate methane emissions from our operations to limit the impact of Greenhouse Gas (GHG) emissions over a more immediate period. We are focusing on gaining a clearer understanding of energy consumption within the company and throughout our value chain to support our emissions mitigation efforts. We also pursue collaborative initiatives with industry peers.

Climate Change Risks

Our aim is to strengthen PETRONAS’ resilience to physical and transition climate change risks, while seizing the opportunities presented in the transition to a lower carbon economy. We are actively looking into adaptation and resilience measures, as well as the relevant governance systems to manage climate-related risks and opportunities, as per the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Environmental Management

Protecting and conserving the environment will minimise the impact of our operations on the environment. This will also ensure the long-term health of our business and the communities around us. We identify and assess the environmental impact of our operations and focus on managing our resources sustainably. This includes (but is not limited to) decreasing the impact of emissions, creating responsible waste and water management strategies, preventing spills, and decommissioning our assets in a safe and sustainable manner.

Nature and Biodiversity

We must conserve and protect nature and biodiversity in order to deliver on our business goals and Net Zero Carbon Emissions by 2050 Pathway. As climate change is significantly driving biodiversity loss and may cause irreversible damage, we aim to further understand our relationship and dependency on nature and biodiversity in order to improve our impact on them.

Safety Management

Managing the safety of our people continues to remain a top priority as this ensures we protect our employees and contractors from any harm or injuries. In striving towards operational excellence, we conduct proactive risk management practices across our business and operations to provide the safest possible work conditions while ensuring our assets are continuously well maintained.

Human Rights

We aim to respect human rights across our suppliers, contractors, partners and communities where we operate with the establishment and implementation of a Human Rights Policy and supporting practices. We periodically review our policies and practices to ensure we have a robust approach to addressing human rights issues on forced labour, human trafficking, modern slavery, fair working conditions and non-discrimination. We have also started to embed human rights due diligence practices in systems and functions across our value chain, including remediation actions.

Employee Attraction, Retention and Development

Given the dynamically evolving energy landscape, we require future-ready talent with the right knowledge and skills to realise our strategy and drive business resilience over the long term. Investment in high-performing talents is crucial, especially in an environment of increasing competition for skills. Our aim is to continuously attract and retain the best talent by providing flexible work arrangements, creating opportunities to foster individual potential and implementing fair and equitable compensation that is consistent with a rewards-based performance. We also strive to create a fair and inclusive workplace by supporting equal treatment of all employees regardless of gender, age, cultural background, skills, race and religion.

Health and Well-Being

We place great emphasis on protecting all employees and contractors from work-related hazards and promoting good health and well-being among our workforce and the wider community. It is imperative to create a safe and conducive work culture, as our employees’ health and well-being directly impact our long-term performance. We conduct risk assessments, introduce adequate controls and implement a wide range of health and wellness initiatives that help address the physical and mental health of our employees and their families.

Corporate Governance

It is important that we practice and uphold the highest standards in corporate governance, a key factor in determining business resilience and long-term growth. This also covers our strategies and roadmap in delivering our Net Zero Carbon Emissions by 2050 Pathway.

Anti-Bribery and Corruption

We believe that creating a strong foundation based on ethics and integrity will drive shared and equitable values among stakeholders. We need to protect our operations and business from any form of corruption and unethical behaviour. Throughout the value chain, we strongly encourage ethical and responsible business practices and compliance with standards and guidelines among employees, business partners, suppliers, contractors and other intermediaries. We do this by upholding PETRONAS’ Anti-Bribery and Corruption Policy and the PETRONAS Code of Conduct and Business Ethics.

Lower Carbon and Energy Transition Business

In combatting the climate challenge, we continue to strengthen our efforts in lower carbon and energy transition business as this allows us to step out beyond our core and develop new businesses to realise our Net Zero Carbon Emissions by 2050 Pathway. This includes our focus on natural gas as a fuel with lower carbon intensity than other more polluting fossil fuels; and other business growth opportunities such as renewable energy, hydrogen, green mobility, specialty chemicals and biofuels. Our efforts are channelled towards achieving a balance of energy security, affordability and sustainability, taking into consideration the latest policies, goals, accounting instruments and technologies that facilitate the energy transition.

Economic Contribution

Our ability to drive long-term business growth goes hand-in-hand with the prosperity of the markets and communities in which we operate. Our goal is to contribute to economic development that benefits all segments of society by generating economic value through our products and services, servicing capital payouts, and paying wages and taxes while generating social, commercial and working opportunities for citizens. We also provide assistance especially in times of crisis through funds, volunteering efforts and in-kind products or services. We strive to ensure that PETRONAS is responsible and transparent in tax practices in our obligation to comply with applicable tax regulations.

Sustainable Supply Chain

We pay close attention to our overall supply chain management, product stewardship and procurement as this mitigates risks that impact the environment, society and economy. To improve supply chain resilience, we continuously strengthen our efforts to nurture and support local suppliers where possible and applicable. We also share global work practices with regional and local entities to support the local economy.

Innovation and Technology

We embrace innovation through the implementation of internal frameworks and measures that promote the practice of challenging the status quo in product design and operations to generate new solutions that enhance our competitive advantage and brand reputation. This includes developing and using advanced technologies and digital innovations to generate new business processes, including improving customer and other stakeholders' experiences. In terms of approach, we leverage innovation and technology across all operations and services to accelerate our business growth and offerings.

Circular Economy

Our long-term ambition is to minimise or eliminate the negative environmental impact of a product by addressing waste and reducing materials consumption. We also aim to decrease plastic pollution by engaging in recycling and reusing, as this also creates opportunities for innovation and lower waste generation. The circular economy model encourages the creation of closed-loop systems where waste from one process becomes an input for another. Our aspiration is to work towards a low-waste future, steward natural resources and minimise our carbon footprint while creating value.

Process

2021 – Full Materiality Assessment

2022 – Revalidation of Materiality Assessment

Identification

In-house desktop analysis that includes a range of internal and external sources:

• Reporting frameworks and standards
• Internal strategies, policies, processes and documentation
• Relevant legislations in the countries we operate
• National industry-specific trends and survey outcomes
• ESG ratings and benchmarks
• Peer benchmarking

Data-driven tool to include new sources:

• Existing and emerging regulations
• Media
• Sustainability Accounting Standards Board (SASB) Standards

Stakeholder Engagement

Validation process via interviews and surveys with stakeholders:

• Employee representatives including union leaders
• Government and regulatory bodies
• Embassies, high commissions and foreign representatives
• Communities and customers
• Media
• Investors, credit rating agencies and financial institutions
• Industry partners, alliances and business councils
• Non-government organisations (NGOs) and special interest groups
• Learning institutions

In-depth feedback from external stakeholders, including:

• Investors, banks, and rating agencies
• Reputation Strength Index survey

Prioritisation

We prioritised the identified topics based on two key areas – their importance to stakeholders and their impact on our business. Prioritisation criteria include:

• Occurrence in grievances
• Topics highlighted by investors and rating agencies’ assessments
• Discussions at Board and Executive Leadership Team meetings
• Alignment with risk elements in Corporate Risk Profile

Priorisation criteria include:

• Alignment with strategy and focus areas
• Discussions at Board and Executive Leadership Team meetings
• Alignment with risk elements in Corporate Risk Profile

Data-driven tool to assess and prioritise financial materiality and impact materiality.

Endorsement and Approval

Endorsed by Sustainability Committee and approved by Vice President and Chief Sustainability Officer