Alignment with Task Force on Climate-related Financial Disclosures (TCFD) TCFD recommendations have provided further direction for our climate strategy, especially the Group’s foresight when considering climate issues. This year, we have identified our business risks and opportunities, the potential financial impact of climate change, and our mitigation strategy. As we become more conversant with TCFD, we recognise the need to strengthen our disclosure in various areas of our reporting; and plan to do so in the next couple of years. Our governance around climate-related risks and opportunities (please refer page 99) The actual and potential impacts of climate-related risks an opportunities on our businesses, strategy and financial planning (please refer page 120-121; 133-136) The processes used to identify, assess and manage climaterelated risks (please refer page 106-108) The metrics and targets used to assess and manage relevant climate-related risks and opportunities (please refer page 123-124; 126-132) Metrics & Targets Risk Management Strategy Governance Risk Type Climate-related Risk Description Potential Financial Impact Mitigation Strategy Transition Risks Policy and Legal Risk from new regulations: New carbon taxes could increase the price of fuel, thereby raising operating costs and fares while dampening travel demand. We are developing a long-term strategy to reach the industry’s net zero aspiration ahead of the 2050 goal. In the immediate horizon, we will strengthen our fuel efficiency programme and work with regulators on improvements to air traffic management to cut flight distances and fuel consumption. (i) Imposition of carbon taxes, emissions quotas or renewable fuel mandates Carbon taxes will increase the company’s tax liability while emissions quotas or sustainable fuel mandates will lead to a significant increase in fuel and operating costs. An increased cost burden will reduce the company’s profitability or depress demand if passed on to travellers. We have commenced discussions with several fuel suppliers on making available SAF in Malaysian airports and on the development of SAF from locally available feedstock such as agricultural waste. A purchase commitment by AirAsia will strongly incentivise fuel suppliers to invest and lower the long-term cost of SAF. (ii) Emissions testing regulations Emissions testing regulations will add to the cost of aircraft maintenance and require increased downtime for aircraft, leading to rescheduling costs or loss of revenue due to flight cancellations. Emissions testing regulation will only impact a limited number of our older planes. All of our planned capacity expansion from 2024 onwards will be achieved with the new Airbus 321neo model, currently the most fuel- and emissionsefficient narrowbody commercial aircraft in the market. (iii) New emissions (eg NOx)/ waste reporting requirements New reporting requirements increase manpower/consultancy costs as well as audit or verification fees. Our carbon dashboard can be enhanced to track our NOx emissions while verification of these emissions can be tagged to our existing carbon emissions verification at minimal additional cost. S U S T A I N A B I L I T Y S T A T E M E N T A N N U A L R E P O R T 2 0 2 1 1 3 3
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