Dynamic. Resilient. Synergistic. - MISC Groupmisc.com.my/media/2001/misc-sustainability-report-2016-website.pdf · 02 About Us 06 MISC Group Value Chain 08 About This Report 10 Foreword

Sustainability Report 2016

Dynamic. Resilient. Synergistic.

02About Us

06MISC Group Value Chain

08About This Report

10Foreword by President/Group CEO

14Sustainability@MISC

34Governance & Business Ethics

46Marketplace

56Employees

74Health & Safety

90Environment

108Community

118Performance Data

126GRI Content Index

131Glossary

THIS REPORTSUSTAINABILITY REPORT 2016

46MARKETPLACE

34GOVERNANCE & BUSINESS ETHICS

INSIDE

To maintain a sustainable governance and businessethics framework

To exceed the expectations of our customers and to drive sustainable value for our shareholders

56EMPLOYEES

90ENVIRONMENT

108COMMUNITY

To promote individualand team excellenceof our employees

To care for theenvironment andoperate responsibly

To create a positivedifference to the lives of communities

ABOUTUSMISC Berhad (MISC),A subsidiary of PETRONAS, was incorporated in

1968 and is one of the world’s leading providers of international energy related maritime solutionsand services.

MISC BERHAD / 2 SUSTAINABILITY REPORT 2016

LNG ShippiNG

petroLeum & product ShippiNG

offShore BuSiNeSS

mariNe & heavy eNGiNeeriNG

maritime educatioN & traiNiNG

port & termiNaL ServiceS

taNk termiNaL ServiceS

MISC AT A GLANCE

42 oil storage tankswith total 647,000 CBM for petroleum products

9.64 million safeman-hours with ZeroLTI since 1999

Largest oil & gas fabrication yard in Malaysia at860 acres

35,000 vessels of up to 350,000 DWT handled successfully

More than 13,000 graduates since its inceptionin 1977

Top 5 Floating Production System owner and operator with

14 assets

Market leaderfor lightering operationsin the US Gulf

400 million tonnes of LNG delivered in total

4,200 graduates receivedtotal sponsorship of

RM164 millionover 35 years

Annual fabrication capacity

of 129,700 MT

Owner and operator of the1st Semi-Submersible Floating Production System in Asia

Owns and operates

99 commercialvessels

The only yard in Malaysia that has constructed deepwater structures

High vessel availability rate of

99.8%

26 LNG vessels including 2 new MOSS-Type LNG carriers

and 2 floating storage units

Owns 50% of the total

floating facilities in Malaysia

2 drydock facilities for vessels up to 450,000 DWT

Provides marine assurance and compliance, port and terminal operations & management, consultancy, and related services.

Provides bulk liquid storage and handling services, and centralised tankage facilities for the oil, gas and petrochemical industries.

Supports the industry’s growing requirement for professionally trained seafarers by providing the full spectrum of maritime training and education as well as offshore and other courses.

Specialises in offshore and onshore construction, offshore conversion and marine repair.

Revenue contribution 9%

Delivers comprehensive and innovative solutions from design to operations, catering for marginal, conventional and deepwater field developments with excellent performance and safety track record.


Provides safe, high quality and comprehensive ocean transportation and specialist petroleum services to the world’s largest oil companies, trading houses and refiners.


Delivers Liquefied Natural Gas (LNG) across the globe with over three decades of proven experience, reliability and operational excellence.


Excellent asset performance with

uptime of 99.88%

30 years of proven experience

21.64 million tonnes of LNG delivered in 2016, approximately 8% of world LNG trade

High vessel availability rate of

99.8%

Top 3owners of crude tankersin the world

3

more than LNG, Petroleum and Product vessels includingfloating assets110

91%

GROUP REVENUE OF

RM9,597.2million

58 AET vessels recognised for theirEnvironmental Excellence by theChamber of Shipping of America (CSA)

S&P ratings of BBB+

of non-shipping scheduledwaste was recycled orrecovered

GROUP OPERATING PROFIT OF

RM2,228.8 million

recordable incidences of workplace fatalities in 2016

Zero

BBB+

A total of

266 school leaversselected for MISCCadet Sponsorshipprogramme withRM12 millionworth ofinvestment

Reduction of 18.7%

of freshwater consumptionper vessel in 201610%

Consistently rankedamongst the top

of the world’s MaritimeEducation and Training(MET) institutions

14 offshore floatingassets in operationwith asset performanceuptime of

99.88%

477development programmeswith total investments of

RM5.5 million

OUR LNG VESSELSmade more than

8,600voyages in 2016

TONNESof CO2 emissions avoided

and 12,765 tonnesof fuel saved through

the application of

GREENTECHNOLOGY

41,295

Average of

18traininghoursper employeefor developmentprogrammes

57AET vessels receivedthe Jones F.Devlin Award by the CSA

CO2

TALENTED WORKFORCEof approximately

9,000employees acrossthe globe

Reduction of 8 and 25in LTIF and TRCF respectivelyfrom last year

% %

The principal businesses of the MISC Group comprise energy shipping and its related activities, owning and operating offshore floating solutions, marine repair and conversion, engineering and construction works, as well as maritime education and training.

Aside from our shipping business, maritime education is also a priority for the company. Our Malaysian Maritime Academy (ALAM) is ranked amongst the top 10% of the world’s Maritime Education and Training (MET) institutions.

Operating a modern, well-diversified fleet and backed by a knowledgeable workforce made up of about 9,000 employees from all corners of the globe, MISC is committed to imparting quality services to our customers, creating value for our stakeholders and contributing to the sustainability of the industry.

KEY FACTS & FIGURES


more than LNG, Petroleum and Product vessels includingfloating assets110

91%

GROUP REVENUE OF

RM9,597.2million

58 AET vessels recognised for theirEnvironmental Excellence by theChamber of Shipping of America (CSA)

S&P ratings of BBB+

of non-shipping scheduledwaste was recycled orrecovered

GROUP OPERATING PROFIT OF

RM2,228.8 million

recordable incidences of workplace fatalities in 2016

Zero

BBB+

A total of

266 school leaversselected for MISCCadet Sponsorshipprogramme withRM12 millionworth ofinvestment

Reduction of 18.7%

of freshwater consumptionper vessel in 201610%

Consistently rankedamongst the top

of the world’s MaritimeEducation and Training(MET) institutions

14 offshore floatingassets in operationwith asset performanceuptime of

99.88%

477development programmeswith total investments of

RM5.5 million

OUR LNG VESSELSmade more than

8,600voyages in 2016

TONNESof CO2 emissions avoided

and 12,765 tonnesof fuel saved through

the application of

GREENTECHNOLOGY

41,295

Average of

18traininghoursper employeefor developmentprogrammes

57AET vessels receivedthe Jones F.Devlin Award by the CSA

CO2

TALENTED WORKFORCEof approximately

9,000employees acrossthe globe

Reduction of 8 and 25in LTIF and TRCF respectivelyfrom last year

% %

SUSTAINABILITY PERFORMANCE

5

LNG LIQUEFACTIONPLANT

Lightering Operation(Petroleum Tankers)

Dynamic PositioningShuttle Tankers

Other Product Tankers(Clean Product and Chemical Tankers)

VEG OILREFINERIES

DISTRIBUTION TO END USERS

EXPLORATION &DEVELOPMENT

TANK TERMINALS

FLOATING PRODUCTION SYSTEM/FIXED PLATFORM

Ship-to-Ship OperationsLiquefied Natural Gas (LNG)Carrier

Floating Liquefied Natural Gas(FLNG) Facility

Transportationof LNG

Transportation of Other Products

Floating Storage RegasificationUnit (FSRU)

Floating Storage Unit (FSU)

REGASIFICATIONTERMINAL

PETROLEUM/CHEMICALREFINERIES

DISTRIBUTIONTO END USERS

MARITIME EDUCATION& TRAINING Provides education and training to future seafarers and maritime professionals.

PORT & TERMINAL SERVICESProvides marine assurance and compliance, port and terminal operations & management, consultancy, and related services.

PETROLEUM TERMINAL

Transportationof Petroleum

MARINE & HEAVYENGINEERING

Fabrication of offshore andonshore structures

Offshore conversion andmarine repair

Petroleum Tankers

MISC GROUP VALUE CHAIN ENERGY RELATED MARITIME SOLUTIONS AND SERVICES


LNG LIQUEFACTIONPLANT

Lightering Operation(Petroleum Tankers)

Dynamic PositioningShuttle Tankers

Other Product Tankers(Clean Product and Chemical Tankers)

VEG OILREFINERIES

DISTRIBUTION TO END USERS

EXPLORATION &DEVELOPMENT

TANK TERMINALS

FLOATING PRODUCTION SYSTEM/FIXED PLATFORM

Ship-to-Ship OperationsLiquefied Natural Gas (LNG)Carrier

Floating Liquefied Natural Gas(FLNG) Facility

Transportationof LNG

Transportation of Other Products

Floating Storage RegasificationUnit (FSRU)

Floating Storage Unit (FSU)

REGASIFICATIONTERMINAL

PETROLEUM/CHEMICALREFINERIES

DISTRIBUTIONTO END USERS

MARITIME EDUCATION& TRAINING Provides education and training to future seafarers and maritime professionals.

PORT & TERMINAL SERVICESProvides marine assurance and compliance, port and terminal operations & management, consultancy, and related services.

PETROLEUM TERMINAL

Transportationof Petroleum

MARINE & HEAVYENGINEERING

Fabrication of offshore andonshore structures

Offshore conversion andmarine repair

Petroleum Tankers

MISC GROUP VALUE CHAIN

7

MISC’s Sustainability Report 2016 is an update of our sustainability performance, strategy and commitment and should be read in conjunction with MISC Berhad’s Annual Report 2016 which provides comprehensive information on our financial performance and overall business strategy.

ABOUTTHISREPORT


This report has been prepared in accordance with the Global Reporting Initiative (GRI) G4 Guidelines for sustainability reporting and hence,focuses on material issues for MISC and its business.

The content of this report is shaped by the recently endorsed MISC Sustainability Strategy, which represents our identified sustainability pillars of Customers,Shareholders, Governance & BusinessEthics, Employees, Environment andCommunity. The identified material issues relevant to our stakeholders and the Group have been encapsulated within the strategy. The strategy is our five-year sustainability roadmap aligned to the Group’s Vision, Mission and MISC2020 commitments. Progress updates on the strategy will be provided in future sustainability disclosures.

Further details of the MISC Sustainability Strategy can be found in the Sustainability@MISC section.

As we seek to continuously improve the quality, standards and consistency of our disclosure, we are currently working towards utilising our corporate website in a more comprehensive and systematic way for the provision of updates in a more timely and consistent manner.

SCOPE & COMPLETENESS

This report covers information on the MISC Group’s operations around the world, including Liquefied Natural Gas (LNG) Shipping, Petroleum & Product Shipping, Offshore Business, Marine & Heavy Engineering (MHB), Maritime Education & Training, Port & Terminal Services, and Tank Terminal Services. There were some changes to the MISC Group structure in 2016 with the divestment of the entire equity interest in our Logistics business under our wholly-owned subsidiary MISC Integrated Logistics Sdn. Bhd. (MILS). Due to the divestment of MILS, data for MILS is reported only where indicated and covers the period of January to October 2016.

The collective data disclosed in this report is for the calendar year 2014, 2015 and 2016 with some restatements of previous years’ data due to improved data calculation processes and calculation methodologies.

REPORTING PERIOD

This report, which is produced annually, covers the calendar period from 1 January 2016 to 31 December 2016 (FY2016). However, relevant content from FY2017 Quarter 1 has been included in the report where significant to our shareholders’ interests.

CONTEXT

In this report, MISC Berhad is referred to as MISC or the Group. The content of this report prioritises areas deemed material for a Malaysian-based energy related maritime solutions and services company with a global footprint. It also incorporates references to global development, industry challenges and outlook.

MATERIALITY

A more detailed description on how we identified and derived material issues for monitoring and reporting can be found in the Sustainability@MISC section.

STAKEHOLDER INCLUSIVENESS

A more detailed description of our key stakeholders and stakeholder engagement processes can be found in the Sustainability@MISC section.

ASSURANCE

We have not undertaken third party assurance for the data disclosed in this report with the exception of financial data. However, our internal team has been looking into our reporting processes and are taking the necessary action for improvement. We are working towards a form of third party assurance in the future.

DATA MEASUREMENT TECHNIQUES AND ASSUMPTIONS

All financial data disclosed in this report is identical to that of MISC Berhad’s Annual Report 2016 which has been audited by an independent third party. Other sustainability information presented in this report is based on internal data collection systems and widely accepted calculation methodologies such as the Greenhouse Gas (GHG) Protocol. The information in this report is presented on a best-effort basis and is subject to further improvement in future reporting cycles.

CONTACT US

We value your feedback. Please submit your comments or queries regarding MISC’s sustainability performance or sustainability reporting to:

Corporate SustainabilityMISC Berhad

Level 25 Menara DayabumiJalan Sultan Hishamuddin50050 Kuala Lumpur

[email protected]

+603 2264 0888

+603 2275 2500

9

FOREwORD BY PRESIDENT/GROUP CEO

In today’s environment, business sustainability issues have become increasingly challenging. From the introduction of a slew of legislation to curb environmental emissions, to the need to cultivate and optimise finite resources, to ensuring higher levels of transparency in business dealings amidst an increasingly competitive playing field, companies are having to implement new measures to future-proof themselves and ensure sustainable growth.

I am delighted to present MISC Berhad’s Sustainability Report 2016, which underlines the Group’s commitment to manage our business in a responsible and sustainable manner.

Therefore, we have embarked upon an extensive review of our sustainability agenda. We believe that by improving our understanding of sustainability and appreciating its importance to our business, we can embed sustainability even more deeply in our strategy and operations.


MAKING STEADFAST PROGRESS

The year 2016 was characterised by difficult market conditions and prevailing challenges in the energy shipping and offshore oil & gas segments. Recognising the fact that global energy volatility would linger for yet a while, the Group took the necessary measures to mitigate the full brunt of marketplace volatility by reshaping and future-proofing our key business segments.

As we proactively took steps to streamline and strengthen our businesses in line with our MISC2020 strategic blueprint, we began to emerge as a stronger, more resilient Group and turn in a steadfast financial and operational performance. Our efforts to bring about tangible value in our day-to-day operations proved successful and led to enhanced operational efficiencies, strengthened risk management and fair value creation for our stakeholders.

LAYING SOLID FOUNDATIONS

The year in review marked a significant milestone for us following Management’s endorsement of the new MISC Sustainability Strategy, which runs parallel with our Vision and Mission as well as our five-year Corporate Strategy, MISC2020. With a focus on enhancing MISC’s social integrity, improving our environmental stewardship and creating economic value for our stakeholders, the MISC Sustainability Strategy serves as a five-year sustainability roadmap to guide us further in conducting business as a responsible corporate citizen.

In addition to the other five sustainability pillars aligned to our Mission statements, namely the Customers, Shareholders, Employees, Environment and Community pillars, the year saw us spending a considerable amount of time developing a Governance & Business Ethics pillar. By adopting a more strategic approach towards managing material issues, our internal efforts are now being directed in a more effective manner.

This year, we will witness the formal rollout and implementation of the various strategic initiatives that are targeted to be completed by 2020. In place will be a structured and systematic process for the tracking and measuring of the initiatives under the strategy, where progress updates will be provided in future sustainability disclosures.

Sustainability Working Committees have been established for each of the six sustainability pillars to ensure the smooth implementation and monitoring of the initiatives. These committees comprise of key focal persons representing the various functions and businesses within the Group who are led by a member from the Management Committee. With a senior management representative leading the respective committees, this signifies the importance and commitment we have placed to ensure the successful implementation of the strategy.

All in all, our Sustainability Strategy aims to ensure that our material areas and the strategic initiatives we are embarking on align with our Vision, Mission and MISC2020 Corporate Strategy. Together, all these elements will serve as a guiding light for the Group and our employees to continue resolutely on our journey towards sustainable growth.

STRENGTHENING OUR SUSTAINABILITY STRATEGY

Now that our Sustainability Strategy has been formalised, we have a more cohesive, systematic and synergistic platform from which to manage our sustainability commitment and objectives. To strengthen our overall sustainability efforts, we undertook a variety of supporting initiatives in 2016.

In line with the Group’s commitment towards ensuring high standards of compliance and ethics under the Governance & Business Ethics Pillar, we implemented a number of initiatives to propel us forward. Today, we have in place the MISC Group Compliance and Ethics Programme which spells out the policy, action plans and deliverables we will leverage on to create a culture that embodies ethical conduct and integrity. Also in place are the Operational Guidelines on Third Party Due Diligence to bolster risk assessment.

Other initiatives include the adoption of the MISC Group Policy Statement on Anti-Bribery and Corruption, as well as the establishment of the Gift Register, the Whistle-Blowing Register and the Conflict of Interest Register for all employees. In the pipeline are plans to strengthen our Code of Conduct and Business Ethics. I am confident that as these initiatives gain momentum, the Group’s existing best practices in terms of corporate fairness, transparency and accountability, will be steadfastly strengthened.

On the People front, our Human Resource (HR) division unit is on course with its five-year masterplan to promote individual and team excellence within the Group. The plan encompasses two main focus areas, namely succession planning and employee competency development for both leadership and functional skills.

Moreover, we launched the MISC Cultural Beliefs which complements our existing Shared Values and is set to bring about the expected mindset and behavioural changes across the Group. I am confident that our Cultural Beliefs, which include nurturing trust, ownership of responsibility as well as shared success, will provide a common ground to further inculcate a positive work culture amongst our employees. More details on these and other initiatives are spelt out in the Employees section of this report.

11

Health, safety and environmental (HSE) matters remain a high priority throughout the Group and we continue to foster a culture of HSE excellence. Holistic measures are in place to improve the health of our offshore and onshore employees including initiatives that encourage employees to proactively manage their own health parameters for the long-term. Our businesses continue to chalk up good performance on the HSE front, with the Offshore Business segment in particular producing market leading results and surpassing industry benchmarks.

We recognise that we have a responsibility to manage the impact of our operations on the environment, particularly in the area of climate change, emissions, waste management and biodiversity. As such, we have implemented a combination of internal and external environmental management frameworks and systems to mitigate the impact of our operations.

As part of our approach, our operations are subjected to comprehensive standards such as the PETRONAS Mandatory Control Framework (MCF) and fleet environmental management system, while most of our businesses are ISO 14001:2004 certified. Additionally, platforms such as the MISC Group HSE Council and internal HSE review meetings help us to monitor our environmental performance and respond quickly to any instances of non-conformity.

Being part of an industry with strong governance oversight is certainly helping us identify the most viable ways to manage environmental matters. We operate in strict adherence to maritime and country regulations and are continuously reviewing the way we do business to ensure we remain ahead of the curve before it is mandated of us. Our active participation in global dialogue on environmental issues keeps us abreast of the latest trends and developments.

Apart from the mandatory requirements by the International Maritime Organisation (IMO), the Group has been focusing on independent initiatives to reduce greenhouse gas emissions and improve the energy efficiency of our fleet. With carbon and key emissions reduction being one of the focus areas under our Environment Strategy, we aim to embark on a more structured and strategic approach in the management of these aspects by setting specific targets and reduction plans.

Our primary focus on value creation for the wider community is through education, with an emphasis on maritime education. The Malaysian Maritime Academy (ALAM) is the primary means by which we invest in the education and training of future generations of seafarers. I am proud to highlight that ALAM has successfully maintained its position at the top 10% of the world’s Maritime Education and Training (MET) institutions, with the achievement of an excellent rating by DNV-GL. This attests to the quality of education and instruction its cadets receive.

As part of its efforts to establish various collaborations and strategic partnerships with regulatory authorities as well as industry partners regionally and internationally, the Academy inked collaborative agreements with Liverpool John Moores University and Kolej Yayasan Pelajaran Johor in 2016. The Academy is also now an approved training centre for Offshore Support Vessel (OSV) Training Programmes. ALAM’s ongoing efforts and commitment to achieving academic excellence gained recognition when it was shortlisted for the prestigious Lloyd’s List Asia Awards in the “Excellence in Training” category.


OUR SUSTAINABILITY ACHIEVEMENTS

We continue to gain recognition from various reputable organisation for our commitment to excellence. I am pleased to report that as a result of the Group’s strong performance across a variety of Environmental, Social and Governance (ESG) practices, we once again secured our position as a constituent of the FTSE4Good Bursa Malaysia Index in December 2016. We turned in an improved overall score which came on the back of an independent assessment of the MISC Sustainability Report 2015 by FTSE analysts. This recognition underpins our position as a role model for responsible corporate behaviour within the Malaysian market and reflects our commitment to managing our ESG risks.

On top of this, the MISC Sustainability Report 2015 was shortlisted for the second time for the prestigious ACCA MaSRA (Malaysian Sustainability Reporting Awards). This reflects the good progress we are making in embedding sustainability across the Group, specifically in relation to the standards set for disclosure of our non-financial performance.

MISC also won the “Operational Excellence Award” at the annual Tanker Shipping & Trade Conference & Awards held in London in recognition of our cadet sponsorship programme, in particular our innovative ship-berth training and crew competency management initiatives. MISC was also shortlisted for the Lloyd’s List Asia Awards 2016 in two award categories, namely “The ABS (American Bureau of Shipping) Tanker Operator of the Year” and “The HPH (Hutchison Port Holdings) Trust Safer Cleaner Seas Award”. The former award recognises a company that has demonstrated excellent operational and financial performance beyond the norm, while the latter honours maritime companies which have made a meaningful and positive difference in both safety and environmental performance.

MOVING FORWARD

Over the years, there has been a rising call for the maritime industry to embrace the future of sustainable shipping – a future where shipping companies strive to proactively prepare, adapt and embrace opportunities that emerge from the changes in our industry and the global environment. In support of this objective, MISC is proud to advocate the transformation of the global shipping industry. We believe that our efforts today will help lay the foundations for a stronger, flourishing industry in the future.

Being part of the larger maritime industry that is committed to actively supporting the global economy, operating responsibly, providing a rewarding and safe career at sea and at shore, as well as positively impacting communities, MISC too remains committed to our credo of consistently doing things better. We believe that the effective implementation of our Sustainability Strategy will see us moving forward in a more focused manner and will help us set new benchmarks of excellence.

As we venture forth on the next phase of our sustainability journey, I call upon all our stakeholders to continue lending us their unwavering support. I trust you will find this year’s edition of MISC’s Sustainability Report an inspiring read.

Yee Yang Chien President/Group CEO

13

SUSTAINABILITY@MISCSustainability is an integral component in MISC’s operations, from the way we conduct our business, manage our employees, reduce impact on the environment, deliver sustainable returns to our investors and shareholders, and strive to exceed the expectations of our customers, to the way we create positive impact for the local communities.

As our business expands, long-term sustainability issues will pose a challenge to our business in the energy related maritime solutions and services industry. With approximately 90% of goods traded internationally being transported by sea, the industry has a significant economic impact and an associated social and environment footprint, accounting for nearly 3% of global carbon dioxide emissions.

As a leader in our field, we recognise the importance of the role we play in the local and global industry. Industry stakeholders are increasingly concerned about sustainability practices and we will continue to respond to these expectations in parallel with our own ambitions towards sustainability. Focusing on sustainability will better position us to manage our non-financial risks, exploit opportunities for increasing efficiency, enter new markets, as well as enhance our reputation and position in our industry.

Apart from ever increasing expectations of our customers, investors, employees, regulators and society, sustainability issues remain a growing concern. Potential legislation to curb environmental emissions, the reduction in subsidies for resources, and increasing action against bribery and corruption practices, require us to future-proof our company.

Since we began taking a more focused approach towards managing our sustainability performance these last few years, we have made good progress. Our key sustainability milestones and achievements include:

2012

Sustainability Steering Committee (SC)

Representation of key individuals from across the Group, with the purpose of providing valuable inputs and direction to assist the Group in achieving its sustainability objectives.

2012

MISC Sustainability Framework

The development of MISC Sustainability Framework, which sets out the commitment/principles to sustainability that takes into account the most material issues for us.


2014

ACCA MaSRA 2014 – Best First-Time Reporting Award

Following MISC’s inaugural standalone Sustainability Report published in 2014, we were proud to have been named the Winner for Best First-Time Reporting at the ACCA Malaysian Sustainability Reporting Awards (MaSRA) 2014.

2015

Refreshed Vision & Mission Statements

The incorporation of sustainability elements into our revised Mission statements for the Group to demonstrate our commitment towards sustainable value creation for each stakeholder group. The Mission statements will underpin our efforts as we work towards achieving the Group’s Vision.

2016

MISC Sustainability Strategy

In December 2016, the Five-Year MISC Sustainability Strategy was officially endorsed and approved. The strategy will essentially act as our roadmap to guide us further in conducting business as a responsible corporate citizen.

2014

FTSE4Good Bursa Malaysia Environmental, Social & Governance (ESG) Index

Inclusion as an index constituent of the FTSE4Good Bursa Malaysia ESG Index since its launch in December 2014, with an improved overall score each year since the launch of the index. This is in recognition of our leading approach in addressing ESG issues amongst Malaysian public-listed companies.

2015

Bursa Malaysia CAP10 Sustainability Symposium

In October 2015, MISC’s President/Group CEO was invited to address regulators, the investor community and other public listed companies at the Bursa Malaysia CAP10 Sustainability Symposium on the subject of “The value of sustainability practices and reporting to stakeholders”.

2016

ACCA MaSRA 2016 Shortlist

2016 saw the MISC Sustainability Report 2015 being shortlisted for the prestigious ACCA MaSRA Awards under the ‘Best Standalone Report’ category.

15

We are continuing our endeavour in our sustainability commitments due to the fundamental belief that good sustainability practices will bring long term value to our organisation. With this in mind, we have embarked on a more strategic approach in the management of sustainability, since the formal endorsement of the MISC Sustainability Strategy (referred to as ‘the strategy’) at the end of 2016.

TOWARDS A STRATEGIC APPROACH

The MISC Sustainability Strategy constitutes our six identified sustainability pillars, namely the Customers, Shareholders, Governance & Business Ethics, Employees, Environment and Community pillars. This strategy will act as our five-year roadmap to guide us further in conducting business as a responsible corporate citizen in a way that will enhance our social integrity, improve our environmental stewardship and create economic value for our stakeholders.

Our ambition is to take sustainability leadership in our sector with it being embedded into our business philosophy, principles and value systems, organisational structures, and business operations. We are confident that these ambitions can be realised with MISC’s Sustainability Strategy, which will essentially be our guide towards achieving our sustainability ambitions and objectives.

This strategy will ensure our material areas and the initiatives we embark on are in line with our Vision and Mission as well as our Corporate Strategy ‘MISC2020’, and aligned to the requirements of impending regulations/legislations and the expectations of our stakeholder community, adapting to the volatile shipping industry and strengthening our market position. Together, MISC’s Vision and Mission, the MISC2020 Corporate Strategy and our Sustainability Strategy, will act as our compass for the Group as we steer towards a successful journey.

SUSTAINABILITY IS EMBEDDED IN ALLASPECTS OFBUSINESS

MISC SUSTAINABILITY STRATEGY IS ALIGNED wITH OUR VISION, MISSION AND MISC2020


OUR VISION & MISSION

In 2016, we strengthened our commitment to sustainability by refreshing our Vision and Mission to ensure sustainability is central to the way we conduct our business. Guided by our Vision which calls for MISC to “consistently provide better energy related maritime solutions and services”, our revitalised Mission directs us “to be consistently better” towards the five key stakeholders in our business. These are our Customers, Employees, Communities, Environment and Shareholders.

We will endeavour to conduct our business operations in a responsible and sustainable manner, define and enhance relationships with our key stakeholders, as well as ensuring holistic value creation over time. Therefore, our refreshed Mission reflects our pledge to our stakeholders, where to be consistently better, we strive:

The MISC Sustainability Strategy was essentially developed with specific relevance to our revised mission statements, with the addition of Governance & Business Ethics.

The Governance & Business Ethics pillar was included as an additional pillar in the strategy, as it is a significant area that is consistently being assessed and valued as an indicator of an organisation’s sustainability progress and position.These statements ultimately address the generally recognised pillars of sustainability.

Our Sustainability Strategy will render the Vision and Mission into tangible action plans. Tied to the wider organisational and business goals, sustainability will be even more of an intrinsic component in achieving our Vision and Mission commitments.

To exceed the expectations of our customers

To drive sustainable value for our shareholders

To promote individual and team excellence of our employees

To care for the environment and operate responsibly

GOVERNANCE

ENVIRONMENT

MARKETPLACE

Customers Shareholders Governance & Business Ethics

Environment

PILLARS

PILLARS

MISSION AND STRATEGY COMMITMENT

MISSION AND STRATEGY COMMITMENT

Community

WORKPLACE

Employees

COMMUNITY

To create a positive difference to the lives of communities

17

MATERIALITY AND PROCESS FOR DERIVING THE MISC SUSTAINABILITY STRATEGY

The identification of material issues is very much aligned with the development of the MISC Sustainability Strategy. In deriving the strategy including action plans, several steps, assessments and engagement sessions had to take place, for the purpose of discovering and identifying issues that were most material to the organisation across the six identified sustainability pillars. This is based on the understanding of gaps and issues that are most pressing to the organisation from a sustainability perspective and the understanding of best practices based on sustainability leadership.

The process took place for the most part of 2016, with the final endorsement and approval achieved in December 2016. It is recognised as the initiative for the first year of the five-year Sustainability Strategy roadmap, which included the planning and development of strategic initiatives for each of the six sustainability pillars. 2017 onwards will be the years of the formal roll-out and implementation of the various initiatives, with targets to be achieved by 2020.

The process of deriving the material areas upon which the strategy was based on is as follows:

THE SUSTAINABILITY STRATEGY wAS ENDORSED AND APPROVED IN DECEMBER 2016

IDENTIFICATION OF MATERIAL AREAS

Benchmarking with peers from

the shipping industry

Benchmarking with internationally

recognised sustainability

best-practicing organisations

internal assessment with

key personnel

Stakeholder engagement

Workshops with key focal persons

across various functions within

the Group

To provide a comparison of

MISC’s sustainability performance to that

of our peers

To provide a comparison of

MISC’s sustainability performance to that

of other multinational, sustainability

best-practicing organisations

Internal stakeholder engagement with

key senior personnel across the Group

Engagement exercise with selected

personnel from across the Group

and external parties

To assess and agree collectively on the identified material

areas and prioritise key issues to be

addressed for each sustainability pillar

1 2 3 4 5

APPROVED


This multi-layered, multi-stakeholder approach provided a thorough and substantial review and understanding of material aspects relevant to the Group, which ultimately formed the foundation upon which MISC’s Sustainability Strategy was developed.

The assessments and engagement sessions were carried out on the basis of inclusivity, ensuring that the MISC Group was represented as a whole. This was to safeguard the relevance of the MISC Sustainability Strategy for the Group, incorporating inputs from the various Business Units (BUs), Service Units (SUs) and Subsidiaries.

It was through these assessments that a universe of material issues was uncovered. Subsequent to the completion of these assessments, a thorough review and analysis was conducted for the purpose of identifying the themes/aspects/issues that were most common across all the assessments. The common themes/aspects/issues identified represent the areas that are most material to the organisation, which were then separated according to the six sustainability pillars:

SUSTAINABILITYSTRATEGY wAS DEVELOPED BASEDON A MULTI-LAYERED, MULTI-STAKEHOLDER APPROACH

CUSTOMERS�•��Branding/reputation/perception•��Innovation•��Business�outlook�and�approach•�Asset�quality•�Competition

EMPLOYEES•��Employee�training/

development/competency•��Employee�remuneration�and�

mobility•��Employee�benefits•��Working�relationships•�Bureaucracy•��Employee�retention�and�

knowledge retention•��Employee�engagement•��Health�&�Safety

ENVIRONMENT•��Environmental�consciousness•��Beyond�compliance•��Corporate�approach�to�

environment•��Energy�and�emissions�

management•��Material/resource�efficiency

COMMUNITY•��Strategic�community�

initiatives/engagement•��Maritime�industry�

development/research and education

SHAREHOLDERS•��Business�outlook/approach/

diversification•�Innovation•��Direction�of�MISC�Group•��Stakeholder�engagement

GOVERNANCE & BUSINESS ETHICS•��Transparency�and�disclosure•�Bureaucracy•��Stakeholder�engagement•��Board�oversight�on�sustainability

SuStaiNaBiLitymateriaL

iSSueS

19

Following on from the identification of the material issues, workshops were conducted for each of the sustainability pillars, for the purpose of agreeing on and prioritising the material issues. The workshops served as a platform to formalise and prioritise material areas for MISC, as well as to derive action plans in order to address these material areas. The outcome of these workshops was consolidated and culminated into MISC’s Sustainability Strategy.

There were a total of three workshops for each of the six pillars, with representation from identified key focal persons across the BUs, SUs and Subsidiaries within the Group. Representation from across the Group was encouraged to ensure all thoughts, views and concerns were represented and are consistent.

SUSTAINABILITY STRATEGY IS RELEVANT AND APPLICABLE ACROSS THE GROUP

STAGES STEPS DETAILS

Identification of Material Issues and Engaging Internal Stakeholders

1. Identifying material issues based on strategic elements

•��Consolidating�findings�from�internal assessment and stakeholder engagement

•��Categorising�material�issues

2. Engaging internal stakeholders within the Group (First Workshop)

•��Workshop�on�sustainability•��Sharing�of�material�issues�and�findings�derived�

from Step 1•��Sharing�of�best�practices�and�examples�

from other organisations

Developing Action Plans

3. Agreement and prioritisation of material issues with internal stakeholders (Second Workshop)

•��Discussion�with�internal�stakeholders�to�identify�material issues based on sharing of findings

•��Stakeholders�to�brainstorm�and�identify�potential solutions to address material issues

4. Development of Action Plans (Third Workshop)

•��Internal�stakeholders�to�present�proposed�solutions and actions plans (short, medium, long term) to address material issues, forming MISC’s Sustainability Strategy

5. Approval of MISC’s Sustainability Strategy

•��Presentation�of�MISC’s�Sustainability�Strategy�to President/Group CEO & MC for approval and endorsement

Implementation of Sustainability Strategy

6. Implementation of MISC’s Sustainability Strategy

•��Derivation�of�measurable�KPIs�from�MISC’s�Sustainability Strategy – channelled back to relevant stakeholders/departments

•��Inclusion�of�these�KPI�into�Scorecards

7. Reporting & Monitoring Strategy Implementation

•��Public�reporting�on�the�development�of�MISC’s�Sustainability Strategy in MISC’s Sustainability Report

•��Monitoring�of�strategy�implementation�and�performance

1.

2.

3.

This ensures that the strategy is not just unique to a specific unit or individual part of the organisation but is indeed relevant and applicable across the Group, and safeguards against any misrepresentation upon completion of the strategy. There were a total of 18 workshops conducted across all sustainability pillars.

In deriving MISC’s Sustainability Strategy, the work and processes conducted were indeed thorough, comprehensive and voluminous, to ensure an effective and efficient plan that is considerate of materiality, meaningful, substantial and relevant to the Group. The following table presents a summary of the overall process, from beginning until the final derivation and implementation of MISC’s Sustainability Strategy:


MISC SUSTAINABILITY STRATEGY

The strategy is essentially a five-year roadmap with specific targets to be achieved by the year 2020, in parallel with our five-year business plan MISC2020. The strategy addresses 11 key aspects which are grouped according to the relevance with our six sustainability pillars of Customers, Shareholders, Governance & Business Ethics, Employees, Environment and Community into clear targets. For each of the targets, key milestones, objectives and action plans were derived for each year leading up to the year 2020.

Despite the variation in the functions and operations of the different BUs, SUs and Subsidiaries, and in having their own set of issues and expectations, the strategy was developed in consideration of this to ensure its relevance in applicability and implementation for the Group as a whole.

18 SUSTAINABILITY STRATEGY wORKSHOPS CONDUCTED ACROSS 6 SUSTAINABILITY PILLARS

11 KEY ASPECTS IDENTIFIED ACROSSTHE 6 SUSTAINABILITY PILLARS

Sustainablelevel ofsecured profitby FY2020

SustainableROACE ofmore than 10%by FY2020

MISC2020Targets

Mobilisedby ourBusinesses

Supported by our Vision & Mission and Sustainability Strategy Pillars

SUSTAINABILITY STRATEGY ROADMAP

MaritimeEducation& Training

LNGShipping

Marine & HeavyEngineering

TankTerminalServices

OffshoreBusiness

Port & Terminal Services

Petroleum & Product Shipping

Consistently provide better energy related maritime solutions and services

EnvironmentGovernance & Business Ethics

Customers CommunityShareholders Employees

21

The MISC Sustainability Strategy demonstrates in a clear way how we will address our impact on the environment, our employees, our marketplace (including shareholders and customers), our governance and in the wider communities that we have influence on.

MISC’s Sustainability Strategy has been designed to:

•��Assist�the�organisation�to�embed�sustainability as an integral part of its business.

•��Develop�short,�medium�and�long�term�strategies as well as KPIs relevant to sustainability.

•��Improve�ability�to�respond�to�stakeholders on matters related to sustainability.

•��Promote�the�integrity�and�quality�of�responsible products and services.

•��Promote�internal�understanding�of�sustainability and accountability among Heads of Departments and staff.

STRATEGIC FOCUS AREAS

The strategy presented here represents the overarching goals to be achieved by 2020 for each sustainability pillar, and the rationale behind them.

The formal roll-out and implementation of the various initiatives under each pillar will begin in 2017, with targets to be achieved by 2020. Progress will be tracked and measured, with regular updates to be provided in upcoming disclosures.

PILLARS MISSION OBjECTIVES OUR 2020 TARGETS RATIONALE SECTION

CUSTOMERSTo exceed the expectations of our customers

•�Experience•�Recognition

1. Customer elements improvement: Increased standard of customer experience through efforts to exceed customers’ expectations

In view of the challenging economic and market conditions, our focus is on providing the best service and experience to all our customers through operational responsiveness and tailored solutions in order to exceed customer expectations. Our strategy for our customers is developed with the aspiration to increase the standard of customer experience and consequently affirm our status as a recognised global energy related maritime solutions and services provider.

Marketplace

2. Customer perception and interaction: To be a recognised global energy related maritime solutions and service provider

SHAREHOLDERS

To drive

sustainablevaluefor our shareholders

•�Engagement•�Education•�Communication

3. Shareholders’ engagement: Greater visibility to shareholders through broader engagement activities

In line with our mission ‘to drive sustainable value for our shareholders’, weunderstand the importance of engaging with our shareholders as a meansto enhance the visibility of our organisation. Our strategy for shareholders isfocused on the delivery of broader, structured and consistent engagementactivities for our shareholders.

Marketplace

GOVERNANCE &BUSINESS ETHICS

To maintain a

sustainable governance and business

ethics framework

•��Transparency�&�trust 4. Business conduct & ethics: Business ethics and ethical conduct embedded as a cultural component within the organisation

As a company with a vast global outreach that operates across markets and cultures, conducting ourselves with the highest standards of integrity is a key priority of MISC. With this in mind, our strategic approach is focused on the continuation of embedding business ethics and ethical conduct as a cultural component within the organisation, as we aspire to achieve excellent financial and operating results whilst adhering to the highest standards.

Governance& BusinessEthics

5. Board oversight on sustainability: Formal inclusion of sustainability on the Board agenda

Further details on the management approach of the strategy can be found in the Sustainability Governance section.





1. Customer elements improvement: Increased standard of customer experience through efforts to exceed customers’ expectations

In view of the challenging economic and market conditions, our focus is on providing the best service and experience to all our customers through operational responsiveness and tailored solutions in order to exceed customer expectations. Our strategy for our customers is developed with the aspiration to increase the standard of customer experience and consequently affirm our status as a recognised global energy related maritime solutions and services provider.

Marketplace

2. Customer perception and interaction: To be a recognised global energy related maritime solutions and service provider

SHAREHOLDERS

To drive

sustainablevaluefor our shareholders


3. Shareholders’ engagement: Greater visibility to shareholders through broader engagement activities

In line with our mission ‘to drive sustainable value for our shareholders’, weunderstand the importance of engaging with our shareholders as a meansto enhance the visibility of our organisation. Our strategy for shareholders isfocused on the delivery of broader, structured and consistent engagementactivities for our shareholders.

Marketplace

GOVERNANCE &BUSINESS ETHICS

To maintain a

sustainable governance and business

ethics framework

•��Transparency�&�trust 4. Business conduct & ethics: Business ethics and ethical conduct embedded as a cultural component within the organisation

As a company with a vast global outreach that operates across markets and cultures, conducting ourselves with the highest standards of integrity is a key priority of MISC. With this in mind, our strategic approach is focused on the continuation of embedding business ethics and ethical conduct as a cultural component within the organisation, as we aspire to achieve excellent financial and operating results whilst adhering to the highest standards.

Governance& BusinessEthics

5. Board oversight on sustainability: Formal inclusion of sustainability on the Board agenda

23


EMPLOYEESTo promote

individual and team excellence of our employees

•��Training�&�development•��Engagement•��Safe�&�healthy�working�

environment

6. Succession planning: To have in place a sustainable talent pipeline across the job levels in the organisation

In line with our mission of promoting individual and team excellence of our employees, one of our strategic objectives is to have in place a sustainable talent pipeline across job levels to ensure seamless leadership and talent pipeline in the organisation. The plan is to extend the ambit of succession planning exercise to include more positions and talents across the Group. It is aimed at equipping and developing our workforce with the necessary skills and competencies to realise our MISC2020 targets.

Marketplace

7. Employee competency development: To have a competent and capable workforce through a structured and holistic developmental process

Increased employee competency can improve overall performance at the workplace. Employees who are well versed in their jobs are then able to perform tasks effectively which results in improved efficiencies. With this in mind, we are enhancing our competency development process and programmes through a more structured and holistic approach.

Employees

8. Focus on Health: To have a healthy workforce with a focus on improvement in BMI levels and effective management of Health Risks at the workplace

In complementing the robust and strategic management of safety aspects throughout the organisation, the sustainability strategy was developed with an emphasis on ensuring a robust and structured approach to the management of health aspects. The objective is to ensure a healthy workforce with a focus on improving BMI levels and effective management of Health Risks at the workplace.

Health & Safety

ENVIRONMENT

To care for the environment

and operate responsibly

•��Carbon•��Biodiversity•��Waste

9. Environmental performance targets for Carbon/Key Emissions & Waste and established Biodiversity programmes: - To achieve reduction in our carbon

footprint/key emissions and waste against set targets

- A sustainable and long-term biodiversity conservation programme run successfully and sustained as part of the company’s agenda

Operating in a responsible manner and minimising impact on the environment where possible, is key to the way business is managed in MISC. The strategy will ensure our diligence in taking a proactive approach in the management of our environmental footprint with specific focus on carbon/key emissions, waste (hazardous and non-hazardous) and biodiversity.

Environment

10. Environmental consciousness: Well-informed and empowered staff on environmental awareness and consciousness

In our commitment to the environment, one of our key objectives is to ensure the importance of inculcating environmental awareness and consciousness amongst our staff. We believe this can be achieved through a structured, consistent and holistic approach with a focus on specific topics/campaigns over a time period. For 2017, the campaign will be focused on paper, plastics and polystyrene reduction.

Environment

COMMUNITY

To createa positive differenceto the lives of communities

•��Investing�in�the�next�generation

11. Investing in the next generation via education: Well-established and fully functioning programmes that promote education and awareness amongst the youth towards becoming the next leaders in the industry and in contributing towards their future development

In line with our mission to ‘create a positive difference to the lives of communities’, our primary focus of value creation for the wider community is through education, with an emphasis on maritime education. Our strategic objectives are aligned to our mission where we will focus our investment on the next generation through education. In support of our mission and strategic objectives, the initiatives include the promotion of upskilling and expansion of career opportunities for the youth, and raising knowledge and awareness of our industry, in line with our commitment to nation-building.

Community



EMPLOYEESTo promote

individual and team excellence of our employees

•��Training�&�development•��Engagement•��Safe�&�healthy�working�

environment

6. Succession planning: To have in place a sustainable talent pipeline across the job levels in the organisation

In line with our mission of promoting individual and team excellence of our employees, one of our strategic objectives is to have in place a sustainable talent pipeline across job levels to ensure seamless leadership and talent pipeline in the organisation. The plan is to extend the ambit of succession planning exercise to include more positions and talents across the Group. It is aimed at equipping and developing our workforce with the necessary skills and competencies to realise our MISC2020 targets.

Marketplace

7. Employee competency development: To have a competent and capable workforce through a structured and holistic developmental process

Increased employee competency can improve overall performance at the workplace. Employees who are well versed in their jobs are then able to perform tasks effectively which results in improved efficiencies. With this in mind, we are enhancing our competency development process and programmes through a more structured and holistic approach.

Employees

8. Focus on Health: To have a healthy workforce with a focus on improvement in BMI levels and effective management of Health Risks at the workplace

In complementing the robust and strategic management of safety aspects throughout the organisation, the sustainability strategy was developed with an emphasis on ensuring a robust and structured approach to the management of health aspects. The objective is to ensure a healthy workforce with a focus on improving BMI levels and effective management of Health Risks at the workplace.

Health & Safety

ENVIRONMENT

To care for the environment

and operate responsibly

•��Carbon•��Biodiversity•��Waste

9. Environmental performance targets for Carbon/Key Emissions & Waste and established Biodiversity programmes: - To achieve reduction in our carbon

footprint/key emissions and waste against set targets

- A sustainable and long-term biodiversity conservation programme run successfully and sustained as part of the company’s agenda

Operating in a responsible manner and minimising impact on the environment where possible, is key to the way business is managed in MISC. The strategy will ensure our diligence in taking a proactive approach in the management of our environmental footprint with specific focus on carbon/key emissions, waste (hazardous and non-hazardous) and biodiversity.

Environment

10. Environmental consciousness: Well-informed and empowered staff on environmental awareness and consciousness

In our commitment to the environment, one of our key objectives is to ensure the importance of inculcating environmental awareness and consciousness amongst our staff. We believe this can be achieved through a structured, consistent and holistic approach with a focus on specific topics/campaigns over a time period. For 2017, the campaign will be focused on paper, plastics and polystyrene reduction.

Environment

COMMUNITY

To createa positive differenceto the lives of communities

•��Investing�in�the�next�generation

11. Investing in the next generation via education: Well-established and fully functioning programmes that promote education and awareness amongst the youth towards becoming the next leaders in the industry and in contributing towards their future development

In line with our mission to ‘create a positive difference to the lives of communities’, our primary focus of value creation for the wider community is through education, with an emphasis on maritime education. Our strategic objectives are aligned to our mission where we will focus our investment on the next generation through education. In support of our mission and strategic objectives, the initiatives include the promotion of upskilling and expansion of career opportunities for the youth, and raising knowledge and awareness of our industry, in line with our commitment to nation-building.

Community

25

STAKEHOLDER ENGAGEMENT

An important part of sustainability is the stakeholder engagement process to facilitate open dialogue and constant communication between all parties involved. At MISC, we engage with various stakeholder groups, from industry regulators to members of the local communities, in both formal and informal settings. Hence, various methods of engagement are required to handle

specific areas of interest. MISC engages with its stakeholders on a regular basis and as and when required, meeting each stakeholder group at least once a year.

Inputs from engagement with our stakeholders were collated with the initial assessments conducted in deriving and prioritising on the material issues, towards the development of the MISC Sustainability Strategy.

As part of the initial assessments, further engagement sessions were conducted specifically with all levels of employees across the Group and with selected external stakeholders. The engagement sessions came in the form of internal assessments with key personnel, and broader engagement sessions with all levels of employees from across the BUs, SUs and Subsidiaries and external parties through focus groups.

The following table provides further details on the stakeholder groups that are important to the company and our methods of engagement.

Total of 17 assessmentsrepresented by

36 key personnel

INTERNALASSESSMENT

Business UnitsService UnitsSubsidiaries

Total of 20 sessions carried out with separate groups

FOCUS GROUP ENGAGEMENT

Business UnitsService UnitsSubsidiaries

SeafarersExternal

•��MISC�Cadet�Sponsorship�Programme

•�Outreach�Programmes

•�Customer�Feedback�Exercises•�Formal�Meetings•��Informal�Customer�Relationship�

Programmes

•�Formal�meetings•�Briefings

•�Formal�meetings•�Briefings

•�Annual�General�Meetings�(AGM)•��Extraordinary�General�Meetings�

(EGM)•��Quarterly�Announcements�of�

Financial Results•�Investor�Briefings•��Investor�Information�on�the�MISC�

Website

•�Forums•�Vendor�Engagement�Programmes•��Quarterly�Delivery�Assessment�

Exercises•�Vendor�Performance�Assessments

•�Media�relations�activities•�Media�releases

•��Employee�engagement�sessions�(i.e. workshops, townhalls, festive celebrations, annual dinner)

•�Sea�Officers’/Ratings�Forums•�Management�Walkabouts•�Long�Service�Awards•�Educational�Excellence�Awards•�MISC�Portal�Communication

MEDIA AND THE PUBLIC

EMPLOYEES

COMMUNITIES

CUSTOMERS

GOVERNMENT

INDUSTRY REGULATORS

SHAREHOLDERS AND INVESTORS

SUPPLIERS AND CONTRACTORS


SUSTAINABILITY TRENDS AND CHALLENGES

In addition to the identified material areas as highlighted earlier, there are also broader sustainability related trends and challenges relevant to the shipping

industry, that could have a direct or indirect impact on the industry and must be paid attention to. The following is a summary of the key highlights of trends and challenges facing the shipping industry, and our position with respect to these.


SUMMARY OUR POSITION SECTION

Support for Seafarers

•��Shipping�and�related�activities�are�important in providing opportunities for employment in developing countries.

•��ILO�estimates,�over�1.5�million�people�around the world are employed as seafarers.

•��It�is�important�to�protect�their�welfare�by establishing internationally agreed standards, including on their working conditions and necessary training that will enable the global shipping industry to operate ships safely and in an environmentally responsible manner.

•��Several�programmes�and�initiatives�have�been put in place to cater for the continuous developmental needs of our seafarers such as:

− Senior Officers Leadership Assessment Programme (SOLAP)

− Senior Engineers Leadership Assessment Programme (SELAP)

•��Our�commitment�to�facilitate�a�conducive�work environment for our seafarers is aligned to the International Labour Organisation (ILO) Maritime Labour Convention (MLC) 2006, which encourages provisions for the minimum standards required for seafarers to work on a ship, including:

Employment terms and conditions Wages and benefits Welfare Social security − Health protection Medical care

•�Employees�•��MISC�Annual�

Report 2016

Energy Efficiency

•��Shipping�is�by�far�the�most�energy�efficient�means of mass cargo transport.

•��The�shipping�industry�is�continuously�exploring ways to further reduce fuel consumption, improve ships’ energy efficiency management and reduce their carbon footprint.

•��The�Group�continues�to�undertake�efforts�to�improve efficiency through various energy saving initiatives, apart from adhering to IMO regulations. This includes the:

Development of five new MOSS-Type LNG carriers incorporating “Green” technologies

‘ISAVEFUEL’ programme for our LNG & Chemical vessels

International Organisation for Standardisation (ISO) 50001 certification for the Group’s floating assets

•�Environment

27

$



Energy and Transport Costs

•��The�heavy�reliance�of�maritime�transportation on heavy fuels for propulsion exposes freight rates and transport costs to oil price volatility.

•��The�current�drop�in�oil�and�bunker�fuel�prices may be a welcome development, though the effect is likely to be short-lived.

•��The�negative�implications�of�volatile�oil�and fuel costs will impact the transport costs, affordability of services and trade competitiveness.

•��Concerns�over�energy�security�and�climate�change may drive major changes in fuel types and efficiency.

•��We�have�carried�out�strategic�optimisation�programmes for our fleet operations while staying competitive, in consideration of cost savings and also our impact on the environment (in addition to our energy efficiency measures that we have in place).

•��We�are�cognisant�of�the�development�of�alternative fuel option, in consideration of efficiency measures and environmental footprint.

•��We�have�taken�steps�towards�the�use�of�LNG�as a fuel option with the announcement that four of our new Aframax tankers will be equipped with LNG dual fuel option (they will not only be compliant to the ballast water management system requirements through eco-innovative features, but will also be able to maximise fuel efficiency whilst minimising their emissions impact on the natural environment). We will be expecting delivery of these vessels from 2018 onwards.

•��Marketplace•��Environment

Climate Change

•��The�impact�of�climate�change�to�the�maritime sector will require industry-wide attention beyond climate mitigation efforts, which are currently focused on reducing carbon emissions.

•��The�contribution�of�international�shipping�to�global carbon emissions may be low, but these emissions are likely to grow if remain unchecked.

•��There�is�a�compelling�case�to�take�action�to prepare for the possible impacts of climate change, as well as mitigating measures, in line with global commitments and expectations such as COP 21 Paris Agreement on climate change.

•��Climate�change�mitigation�and�adaptation�continues to be one of our priority areas, with emphasis on our shipping business as a significant portion of carbon emissions are derived here.

•��We�have�adopted�several�energy�efficiency�measures as our continued commitment towards mitigating our GHG footprint.

•��Climate�change�mitigation�is�one�of�our�commitment under the environment pillar of the MISC Sustainability Strategy, where we are committed towards the reduction of carbon emissions and in the setting of targets.

•��Environment

Regulations and Legislations

•��The�shipping�industry�will�continue�to�face new regulatory requirements due to public expectations (as expressed by Governments through the regulatory process at IMO).

•��Increasing�pressure�on�global�resources�will�lead to demands for higher sustainability standards.

•��Regulations�that�protect�the�environment,�and labour or community rights, will continue to be a significant reality for the shipping industry.

•��Growing�public�awareness�and�demand�for�tougher laws meant that regulatory bodies are under pressure to be stricter with enforcement.

•��We�proactively�keep�abreast�of�maritime�legislations and unilateral decisions of maritime nations.

•��As�the�main�shipping�operator�in�Malaysia,�we�participate in numerous government initiatives including representation during IMO sessions.

•��We�also�subscribe�to�classification�societies,�who in turn provide advice on legislative requirements and proposed measures to meet these requirements.

•�Marketplace•�Employees•��Health�&�

Safety•�Environment

$




Demand for Transparency

•��Shipping�is�ever�more�subject�to�scrutiny�considering the rise of social media, data availability and real-time monitoring.

•��Businesses�will�have�opportunities�to demonstrate leadership by giving customers, regulators and non-governmental organisations (NGOs) the opportunity to monitor their performance.

•��This�could�lead�to�extremes�of�transparency in the not so distant future.

•��At�MISC,�we�utilise�various�communication�platforms (including digital and print) guided by relevant internal policies and guidelines.

•��We�consistently�provide�regular�updates�and�reports on our business operation, financial performance, strategies and future prospects to our shareholders in a timely manner.

•��We�are�continuously�evolving�our�communication efforts to ensure that we meet the expectations of our stakeholders and are aligned with our commitment to uphold best practices in Corporate Governance.

•��MISC�Annual�Report 2016

Maritime Security

•��Maritime�piracy�is�an�issue�that�directly�affects ships, ports, terminals, cargo and seafarers.

•��The�problem�becomes�a�multifaceted�and�complex transnational security challenge that threatens lives, livelihoods and global welfare as piracy activities evolve and become more sophisticated.

•��The�resulting�adverse�and�potentially�destabilising effects entail far-reaching implications for all countries, whether they are coastal or landlocked, developed or developing.

•��MISC�has�been�working�closely�with�the�Royal�Malaysian Navy (RMN) to ensure the safety of our crew and vessels, especially in the Gulf of Aden and the Indian Ocean.

•��There�are�emergency�preparedness�procedures�and practices in place, such as the Group Crisis Management Plan which will activate upon any incidences of crisis, including piracy.

•�Marketplace�

Advancing Technology

•��New�ships�will�be�increasingly�sophisticated�in all aspects while existing ships will be expected to meet ever more stringent efficiency as well as environmental demands.

•��Existing�vessels�and�their�crew�will�be�required to adopt operational practices or retrofit new equipment in order to adhere to regulatory requirements.

•��We�maintain�our�commitment�to�comply�with regulatory requirements by adopting technological and efficiency measures as the need arises.

•��This�is�evidenced�in�some�of�the�initiatives�we�have taken for our newbuilds and the retrofitting of our existing vessels with green technologies as follows:

Energy efficiency measures Emissions reduction Ballast water treatment systems, amongst

others•��In�order�to�maintain�competitiveness�and�in�

exceeding the expectation of our customers, we are diligent in our efforts to be innovative in our service offerings.

•�Marketplace�• Environment

29

Incorporated SUStaInaBILItY eLeMentSInto the MISc Board charter

SUStaInaBILItY Governance BeGInS

at the hIGheSt LeveL In MISc


SUSTAINABILITY GOVERNANCE

The governance of sustainability issues and matters is a fundamental consideration, as we continue our efforts in embedding sustainability principles into our decision-making process and operations as a whole. We seek to fulfil our responsibilities and commitments to our five key stakeholders – Customers, Shareholders, Employees, Environment and Community – via progressive governance and management practices, and guided by our Mission and the MISC Sustainability Strategy.

With the aim to fortify sustainability governance across the Group, sustainability elements have been

incorporated into the MISC Board Charter to ensure that the management of matters relating to sustainability is begins at the highest level within the Group.

This is supported by a multi-pronged approach through the Management Committee (MC), the MISC Group Health, Safety & Environment (HSE) Council and the Sustainability Working Committees (SWCs). Working committees have been set up for each of the six sustainability pillars (Customers, Shareholders, Governance & Business Ethics, Employees, Environment and Community), with specific focus on ensuring the successful delivery and implementation of the respective strategies and initiatives for each pillar.

This cross-functional approach is required to coherently address and manage sustainability matters and identified material issues arising across all our businesses and location of operations. Collaboratively, these committees are involved in decision making processes and in setting the tone for our sustainability direction and initiatives, as well as addressing risks, communication and stakeholder management.

SUSTAINABILITY GOVERNANCE FRAMEWORK

Management Committee (MC)

Focused on ensuring the successful delivery and implementation of the respective strategies and initiatives for each pillar

Shareholders Working

Committee

Customers Working

Committee

Governance & Business Ethics

Working Committee

Employees Working

Committee

Environment Working

Committee

Community Working

Committee

Health, Safety and Environment

(HSE) Council

Sustainability Working

Committees

31

MANAGEMENTCOMMITTEE (MC)

MISC GROUPHSE COUNCIL

SUSTAINABILITY WORKING

COMMITTEES (SWCs)

The MISC MC is the highest decision-making authority in the Sustainability Governance Framework and is led by our President/Group CEO, Mr. Yee Yang Chien. The MC also comprises all Vice Presidents (VPs) and Senior General Managers (SGMs) of the respective BUs and SUs, as well as the CEOs of selected subsidiaries.

The MISC Group HSE Council was formed to provide greater stewardship towards HSE excellence. The Council is chaired by the President/Group CEO and oversees HSE related matters within the Group.

Further details on the MISC Group HSE Council can be found in the Health & Safety section in this report.

Following the endorsement of the MISC Sustainability Strategy, Sustainability Working Committees (SWCs) were established for each of the six sustainability pillars. These SWCs are led by a champion – a member of MISC Management Committee (MC) – and is comprised of key focal persons/placeholders representing the various BUs, SUs and Subsidiaries within the Group. Senior management representation at the respective working committees signifies the Group’s commitment towards ensuring the successful implementation of the strategy.

The purpose of the Sustainability Champion and the respective SWC members is to have active participation from the various BUs, SUs and Subsidiaries in the planning, coordination and implementation of the programmes and initiatives relevant to the MISC Sustainability Strategy, which will be relevant to the Group as whole. Together, the Sustainability Champion and SWC members will act in unison to ensure the effective and efficient implementation of the strategy.

All initiatives and programmes under the strategy will be monitored and measured periodically, for the purpose of tracking progress and addressing any concerns/issues that may arise. Progress updates will be provided to the MC (led by our President/Group CEO) to ascertain their inputs and guidance, ensuring a successful process of implementation and achievement of objectives set out under the MISC Sustainability Strategy.

Additionally, in support of the overarching sustainability governance process, the Group, and also the various businesses within, have various internal and external mechanisms and systems in place for the management of specific sustainability related matters (including environmental and safety management). We are continuing our ambition to streamline these practices into a more cohesive and holistic approach. Further information and examples of these various systems and mechanisms are explained within the relevant sections of this report.

SwCs ARE LED BY THE RESPECTIVE MC MEMBERS

ALL INITIATIVES AND PROGRAMMES MONITORED AND MEASURED PERIODICALLY


The following table highlights some of the policies and systems in place that supports the sustainability governance process and the management of specific sustainability related matters.

For more detailed information on some of our policies and systems, please refer to our website, www.misc.com.my

RELEVANT POLICIES AND SYSTEMSCATEGORY

GOVERNANCE •��Code�of�Conduct�and�Business�Ethics�(CoBE)•��MISC�Anti-Bribery�and�Corruption�(ABC)�Manual•��Whistleblowing�Policy•��Gift�and�Entertainment�Policy•��Conflict�of�Interest•��Due�Diligence•��Personal�Data�Protection�Act�(PDPA)

ENVIRONMENTAL

SOCIAL

•��MISC�Policy�of�Health,�Safety�and�Environment�(HSE)•��Healthy,�Safety�and�Environment�Requirements�for�Contractors•��ISO�14001:2004�Certified�Environmental�Management�Systems•��ISO�50001:2011�Energy�Management�Certification

•��MISC�Policy�on�Drug�and�Alcohol•��MISC�Policy�on�HSE•��MISC�Safety�Rules•��Health,�Safety�and�Environment�Requirements�for�Contractors•��ISO�9001:2008�Certified�Quality�Management�Systems•��OHSAS�18001:2007�Certified�Occupational�Health�&�Safety�Management�

Systems•��Performance�Management�System•��International�Labour�Organisation�(ILO)�Maritime�Labour�Convention�2006•��MISC�Employee�Handbook

33

GOVERNANCE& BUSINESSETHICSIn a continuously ever-changing global business environment, it is very important that we operate our business in a consistent manner and are cognisant of the international developments that apply to us today regarding good governance, business ethics and conduct. We believe a strong Corporate Governance framework and process is paramount and the principles and codes in place help us achieve our business objectives while adhering to best practices. Matters concerning governance and ethics are taken very seriously at MISC, where we are committed to ensure they form the foundation of which we operate our business

MISSION

To maintain a sustainable governance and business ethics framework

OBjECTIVES

•�Transparency�&�trust

OUR 2020 TARGETS

Business conduct & ethics:Business ethics and ethical conduct embedded as a cultural component within the organisation

BuSiNeSS ethicS StrateGy AREAS DISCUSSEDCORPORATE GOVERNANCE FRAMEWORK

BOARD COMPOSITION, ROLES & RESPONSIBILITIES

RISK MANAGEMENT

CODE OF CONDUCT & BUSINESS ETHICS (CoBE)

ANTI-BRIBERY AND CORRUPTION

WHISTLEBLOWING


KEY HIGHLIGHTS FOR 2016

MISC Board composition is in compliance with the

MMLR

CoBEis applicable to the Company, Directors, employees andthird parties

The Board endorsed theMISC Group Complianceand Ethics Programme

4 differentwhistleblowingchannels available

zerotolerance policyagainst all forms of briberyand corruption

Board endorsedthe ABC Policy Statement

35

CORPORATE GOVERNANCE

MISC is committed to ensuring that a high standard of corporate governance is applied throughout the Group. Our approach to corporate governance takes into consideration the principles of corporate governance and best practices recommendations as laid out in the Malaysian Code of Corporate Governance 2012 (the Code), and the requirements of the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Securities), besides being guided by the Corporate Governance Guide issued by Bursa Securities.

With the launch of the new Malaysian Code of Corporate Governance (the New Code) in April 2017, MISC is committed to observing the principles and recommendations of the New Code in ensuring the application of corporate governance is at par with international best practices. We believe that sound corporate governance practices are fundamental towards not only winning the confidence of investors, but are also prerequisites to achieving the Company’s objectives of enhancing long-term shareholder value and protecting shareholders’ interest.

CORPORATE GOVERNANCE FRAMEWORK

The Company’s corporate governance framework is reviewed from time to time by the Board to ensure its relevance and ability to support operational requirements. The flowchart below illustrates the structure of the MISC Corporate Governance Framework in terms of responsibility and accountability.

Each layer of responsibility, i.e. Board of Directors, Board Committees, Management Committee, Business Units and Service Units, is distinctly different but compliments each other in attaining the Group’s objectives.

OUR CORPORATEGOVERNANCE IS GUIDED BY THE CODE ANDMMLR

STAKEHOLDERS

BOARD OF DIRECTORS OFMISC BERHAD

PRESIDENT/GROUP CEO

MANAGEMENT COMMITTEE

LNGBUSINESS

PETROLEUM & CHEMICAL BUSINESSES

OFFSHORE BUSINESS

MARITIME EDUCATION & TRAINING

SUPPORT SERVICES

PORT &MARINE

SERVICES

FLEET MANAGEMENT

SERVICES

AuditCommittee

Nomination & Remuneration Committee

The Group’s Marine & Heavy Engineering Business resides in a separate listedentity within the Group. It has a separate corporate governance framework that is modelled along the lines of MISC’sCorporate Governance Framework.

Further details on Corporate Governance including Board Composition, Board Committees, Directors’ Training and Development, shareholdersand investors can be found in the MISC Annual Report 2016.


FULLY COMMITTED TO THE CODE RELATING TO GENDER DIVERSITY

THE BOARD

The Board members are drawn from various professional backgrounds, bringing depth and diversity in experience, expertise and perspectives that are necessary to provide sound leadership to the Group. The Board plays a vital role in the stewardship of the Group’s direction and operations, and ultimately the enhancement of long-term shareholder value. The Board is responsible for the overall Group strategies and direction, acquisition and divestment policies, approval of major capital expenditures, projects, plans, budgets and significant financial matters, as well as major human resource policies and oversight over risk management. Apart from these, the Board also monitors the overall performance of the Group.

COMPOSITION OF THE BOARD

The composition of the Board is in compliance with the MMLR, which stipulates that at least two (2) or one-third (1/3) of the Board members shall be Independent Directors, whichever is higher. At present, MISC has seven (7) Directors comprising the following:

The Board is assisted by two (2) Board Committees, namely the Board Audit Committee (BAC) and the Nomination and Remuneration Committee (NRC).

The Board composition is reviewed from time to time in accordance with the requirements of the Company and to ensure compliance with the MMLR.

BOARD DIVERSITY

The Board believes that a diverse mixof skills, experience and backgroundis essential for good governance and aproductive Board. It is also of the view thateach Director should be evaluated and/orappointed based on his or her merits anddue consideration to diversity in generalshould be accorded when conductingsuch evaluation. With respect to gender diversity, MISC is fully committed to the recommendation of the Code relating to gender diversity, where MISC was represented by two (2) women Directors until their retirement at the conclusion of MISC’s 48th Annual General Meeting (48th AGM) held on 20th April 2017. They have opted not to be reappointed at the 48th AGM since their tenure as Independent Directors in MISC has exceeded the cumulative term of more than nine (9) years under recommendation 3.3 of the Code. MISC is currently in the process of sourcing for suitable candidates to replace them.

The emphasis on diversity of the Board is taken seriously, as evidenced by the Terms of Reference of the NRC which expressly requires the NRC to take into account diversity in addressing Board composition. Furthermore, the diversity component is also embedded in the annual Board KPIs as a measurable objective that affects the Board’s performance and effectiveness. In addition to Board diversity, there is emphasis on diversity, including gender diversity, at the MISC senior management level.

ROLE OF BOARD

The Board is responsible for providing oversight and stewardship through the following:

•��Establishing�a�strategic�plan�and�setting�of targets in line with the Company’s vision, mission and objectives.

•��Overseeing�the�conduct�and�performance of the Company and of the President/Group CEO against agreed goals and objectives.

•��Identifying�principal�risks�and�ensuring�the implementation of appropriate systems to manage the risks.

•��Ensuring�a�sound�succession�plan�and�continuous development of human capital.

•��Developing�and�implementing�an�investor relations programme.

•��Reviewing�the�adequacy�and�integrity�of�the Company’s internal control systems.

•��Reviewing�the�strategic,�capital�or�funding transactions and monitoring execution of these transactions.

The Board Committees operate under clearly defined Terms of Reference. This is to facilitate the Board’s effectiveness and to efficiently discharge its duties and responsibilities. Ultimately, the Board is accountable and responsible for the affairs and business of the Company.

Information about the individual roles of the Chairman, President/Group CEO, Board of Directors and Board Committees can be found in the MISC Annual Report 2016.

THE BOARD RESPONSIBLE FORTHE OVERALL GROUP STRATEGY AND DIRECTION

1Independent

Non-ExecutiveDirector(Chairman)

2Non-Independent

Non-ExecutiveDirectors

3Independent

Non-ExecutiveDirectors

1Non-IndependentExecutive Director(President/Group CEO)

37

BOARD PROCESS

The Board meets every quarter and additional meetings are held as and when required. A minimum of three (3) Directors is required to achieve a quorum at all Board Meetings. Apart from the Board, the BAC also meets every quarter and the NRC is required to meet at least twice a year.

A balanced and meaningful assessment of the Company’s financial and non-financial performance is presented by the Board, primarily through the annual financial statements, quarterly announcement of financial results and non-financial disclosures.

BOARD RESPONSIBILITIES

Policy & Strategy

The Board is responsible for reviewing and approving the Company’s strategic plans and policies proposed by the Management, as well as monitoring and overseeing the effective implementation of the policies and plans.

Ethics & Compliance

The Board is governed by the requirements of the Companies Act, the MMLR, the Code, Capital Markets and Services Act 2007 and other applicable laws. The Board has endorsed the MISC Compliance and Ethics Programme, which covers distinct measures to combat bribery and corruption with emphasis on Leadership, Ethical Communication, Risk Assessment, Training & Education, Whistleblowing and Investigation, and Ethical Resources.

The Company observes its own Code of Conduct and Business Ethics (CoBE) including the Whistleblowing Policy and the No Gift Policy. The CoBE is applicable to the Company, Directors, employees and third parties performing works or services for and on behalf of the Company. It governs the desired standard of behaviour and ethical conduct expected from each individual to whom the CoBE applies. The MISC Anti-Bribery and Corruption (ABC) Manual also serves to guide the Company in relation to such matters.

More detailed information on CoBE can be found in the section on Business Ethics in this report and also MISC Annual Report 2016.

Risk Management & Internal Control

The Board acknowledges its overall responsibility for continuous maintenance of a sound risk management framework and internal control systems to safeguard shareholders’ investment and the Group’s assets.

The Board reviews the status of risk management activities and the updated Risk Register, over and above the quarterly review by the BAC on risk events and mitigation measures at the enterprise level. The Board also ensures that all relevant project and investment risks, including the mitigation measures, are deliberated when making such decisions. Such Project Risk Assessments encompass, amongst others, project execution risk, contract management risk, counter-party risk, operations risk, geopolitical risk, and asset integrity risk.

In relation to reviewing the adequacy and the integrity of the Company’s internal control systems (conducted via the BAC), the Board reviewed the reports on Related Party Transactions, Conflict of Interest oversight and certain improvement to internal controls as highlighted by the Group Internal Audit.

Further details on Board Processes, Business Conduct & Ethics, and Risk Management Framework, which includes Risk Management Process and Other Key Internal Control Processes, can be found in the MISC Annual Report 2016.

THE CoBE APPLIES TO THE COMPANY, DIRECTORS, EMPLOYEES AND THIRD PARTIES

A SOUNDRISK MANAGEMENTAND INTERNALCONTROL SYSTEM


INVESTOR RELATIONS

The Board values its dialogue with the investment community including both the institutional shareholders and private investors, and upholds the importance of providing timely and equal dissemination of relevant information to them. The Annual General Meeting (AGM) is the principal forum of dialogue with the shareholders and also an avenue for the Chairman and Board members to respond personally to all relevant questions and provide sufficient clarification on issues and concerns raised by the shareholders.

Other forums for communication between the Company and shareholders are as follows:

•��The�Company’s�other�general�meetings�(if any)

•��Quarterly�financial�statement�and�annual�reports

•��Announcements�on�major�developments to Bursa Securities

•��The�Company’s�website�at www.misc.com.my

•��Quarterly�briefing�sessions�between�the�Company’s Management and analysts/investors

Further details on the Company’s investor relations activities are provided in MISC Annual Report 2016.

HEALTH, SAFETY AND ENVIRONMENT (HSE)

The Board is committed to strategies relating to HSE, as well as compliance with the relevant laws, rules and regulations. The Board also places an emphasis on the formulation of strategies to promote sustainable development with respect to the sustainability pillars of economic, environment and social development.

Further details of our approach, commitment and performance on HSE can be found in the relevant sections of this report.

BOARD DEVELOPMENT

The Board considers and deliberates on the succession plan of the Directors to ensure continuity, on an annual basis. Apart from succession planning, an assessment of the Board and individual Directors’ performance and effectiveness is also conducted annually. Directors’ compensation is guided by market and industry practices.

Capacity Building for Directors

All Board members of the Company are encouraged to attend continuous education programmes in order to ensure they keep abreast with new developments in the business and economic environment, to enhance their skills, as well as ensuring that they possess the necessary knowledge to enable them to discharge their duties and responsibilities more effectively.

Further details on board development are provided in MISC Annual Report 2016.

SUSTAINABILITY GOVERNANCE

The incorporation of sustainability elements into governance processes, specifically, the Board Charter, aims to fortify sustainability governance across the Group. This is supported by a cross-functional approach through the Management Committee (MC), the MISC Group Health, Safety and Environment (HSE) Council, and the respective Sustainability Working Committees (SWCs) representing the six pillars of sustainability relevant to our sustainability strategy.

Further details on sustainability governance can be found in the section on Sustainability Governance in this report.

SUSTAINABILITY GOVERNANCE IS SUPPORTED BY THE MC, GROUP HSE COUNCIL, AND THE SwCs

BOARD MEMBERS ARE ENCOURAGED TO ATTEND CONTINUOUS EDUCATION PROGRAMMES

39

BUSINESS CONDUCT & ETHICS

Operating our business in a consistent and reliable manner is paramount to us, especially in a constantly changing business environment. The values and principles we uphold while we conduct our business is the foundation upon which we build our brand equity and will continue to drive our business progression and development.

We have put in place principles and codes that help us to achieve our business objectives while adhering to best practices, in line with the Mission to maintain a sustainable governance and business ethics framework, and aligned to the endorsed Governance and Business Ethics Strategy under the MISC Sustainability Strategy. We take these values seriously and enforce them both internally within our organisation and with all whom we conduct business with.

BuSiNeSS ethicS StrateGy

MISC continues to reinforce our commitment of ensuring high standards of compliance and ethics practices throughout the Group. During the year under review, the Board endorsed the MISC Group Compliance and Ethics Programme, which consequently became a part of the MISC Sustainability Strategy under the Governance & Business Ethics pillar. The programme outlines the policy, action plans and deliverables to ultimately create a culture within the Company that embodies ethical conduct and commitment to integrity in all business dealings.

Under this programme, the Company has rolled out Operational Guidelines on Third Party Due Diligence as part of risk assessment enhancement and improved its Compliance Unit resources. A comprehensive training programme on anti-bribery and corruption for all employees, Management and the Board is in the works.

The MISC Group Policy Statement on Anti-Bribery and Corruption, which is made as a part of the MISC Board Charter, was also adopted in 2016. Compliance monitoring measures have also been enhanced with the establishment of the Gift Register, the Whistle-Blowing Register and the Conflict of Interest register for all employees.

Further details on the implementation, monitoring and measuring process including management approach can be found in the Sustainability@MISC and Sustainability Governance sections.


MISC GROUP COMPLIANCE AND ETHICS PROGRAMME wAS APPROVED AND ROLLED OUT IN 2016

the coBe ServeS aS a coMpaSS to aLIGn BehavIoUr wIth MISc Shared vaLUeS

DUTIES OFGOOD FAITH, FIDELITY, DILIGENCEAND

INTEGRITYWORKPLACE

CULTURE AND ENVIRONMENT2

4CORE

VALUES AND

CULTURE

1 3

DISCIPLINE,

DISCIPLINARY

PROCESS AND

SANCTIONS

The objectives of the MISC Group Compliance and Ethics Programme is to ensure ethics and integrity is embedded in the day to day business operations such that it becomes our culture, forming an integral part of the MISC Sustainability Strategy. All employees are highly encouraged to clearly understand, take ownership of and participate in ensuring adherence to business ethics and integrity.

Our high expectations of work ethics are also embodied in the MISC Shared Values of Loyalty, Integrity, Professionalism and Cohesiveness. Upholding these shared values facilitates collaboration with our stakeholders based on trust and mutual respect and creates powerful teams who have the right values to respond to challenges that arise in the ever changing global environment in which we operate.

The MISC CoBE was adopted to cater for developments in local and international laws and practices. The CoBE will not only promote procedural compliance, but it will also serve as a compass to ensure that our individual behaviour is in line with the MISC Shared Values.

CODE OF CONDUCT AND BUSINESSETHICS

The Company observes its own CoBE which includes policy on conflict of interest, fighting corruption and unethical practices, financial integrity, confidentiality, whistleblowing and no gifts. The CoBE is applicable to the Company, its Directors, employees and third parties performing works or services for and on behalf of the Company. It governs the desired standard of behaviour and ethical conduct expected from each individual to whom the CoBE applies.

The CoBE emphasises and advances the principles of discipline, good conduct, professionalism, loyalty, integrity and cohesiveness that are critical to the success and well-being of the Group. We believe the CoBE reflects our commitment to effective corporate governance compliance measures in the conduct of the Group’s business both domestically and worldwide.

The CoBE covers four key areas, namely:

41

ANTI-BRIBERY AND CORRUPTION

The MISC Group has a zero tolerance policy against all forms of bribery and corruption. To support the general policy statement in the CoBE, MISC also observes the principles set out in the Anti-Corruption and Bribery (ABC) manual which provides further guidelines on dealing with improper solicitation, bribery and other corrupt activities as well as issues that may arise in the course of doing business.

There are strict provisions within the ABC manual that specifically addresses MISC’s anti-corruption practices, amongst others, with regards to entertainment and corporate hospitality, dealings with public officials, political contributions and the No Gift Policy. All Directors, employees or third parties that work with or on behalf of the company, are subject to the relevant parts of the ABC manual.

Joint venture companies in which MISC is a non-controlling co-venture and associated companies are encouraged to adopt similar principles and standards.The promotion and inculcation of CoBE and the anti-corruption policy to all employees are carried out through these channels:

ZERO TOLERANCE POLICY AGAINST ALL FORMS OF BRIBERY AND CORRUPTION

MISC CoBEIS APPLICABLE FOR DEVELOPMENTS IN LOCAL AND INTERNATIONALLAwS AND PRACTICES

NO INCIDENCES OF NON-COMPLIANCE TO MISC CoBE AND ABC POLICIES IN 2016

All employees are provided with a copy of CoBE and ABC manual. They are required to confirm and acknowledge that they have read and understood the CoBE and to comply with the CoBE as part of the terms of their employment.

To date, senior management and Board members have completed a refresher training whilst a complete training programme for all employees will be rolled out in 2017.

These policies are disseminated through training and awareness sessions, MISC portal, HR Policy Handbook and mandatory declarations.

CoBE and ABC are part of the new joiners’ induction training programme. A comprehensive compliance training programme is in place where employees undergo refresher trainings on a periodic basis.

There is a dedicated site on the Company portal on matters relating to anti-bribery and corruption.

Key messages to be relayed by all senior management to employees have been rolled out under the MISC Group Compliance and Ethics Programme.


We are also pleased to report that during the year under review, there has been no incidences of staff disciplinary or dismissal actions due to non-compliance to MISC CoBE and ABC policies.

Compliance Due Diligence is conducted with the MISC Due Diligence Guidelines on third parties and/or counterparties who are entering into or have existing contractual relationship with MISC. The guidelines cover anti-corruption provisions and requirements to complete anti-corruption Due Diligence Questionnaires (DDQs) or Enhanced DDQs (for High Risk counter-parties) imposed on all counter-parties. Where ‘red flags’ are identified, the appropriate mitigation plans are then initiated and executed.

To further strengthen the process of due diligence and as part of the refreshed MISC Group Compliance and Ethics Programme adopted in 2016, formal risk assessments related to corruption will be rolled-out and conducted in 2017. The specific anti-bribery and corruption risk assessment will be conducted to identify ‘high risk’ areas and operations where mitigation plans and procedures will be put in place to address the identified risks.

WHISTLEBLOWING

The MISC Whistleblowing Policy provides an avenue for all employees to disclose and report any suspected unethical and/or unlawful conduct involving MISC and/or any of our employees. The Whistleblowing Policy provides clarity of oversight and responsibilities of the whistleblowing process, the reporting process, protection to whistleblowers and confidentiality afforded to the whistleblower.

The primary aim of the Whistleblowing Policy and its reporting mechanism is to enable individuals to raise genuine concerns without fear of retaliation. The policy outlines the systems and processes, including the support of a secretariat and a dedicated CoBE hotline, for employees to utilise for purposes of making reports of non-compliance with the CoBE on a strictly confidential basis. The whistleblowing system includes four different whistleblowing channels for employees to make reports in a confidential manner. The policy outlines the systems and processes, including the support of a secretariat and a dedicated CoBE hotline, for employees to make reports of non-compliance with the CoBE on a strictly confidential basis.

The Whistleblowing Secretariat (WBS) and Whistleblowing Committee (WBC) are jointly operationalised by the Compliance Unit of Legal, Corporate Secretarial & Compliance Department and Human Resource Department of MISC. The WBC conducts an independent and unbiased review as part of the deliberation process. Whistleblowing reports which have been deliberated and investigated are escalated to the Board.

4 wHISTLEBLOwING CHANNELS AVAILABLE FOR EMPLOYEES TO MAKE CONFIDENTIAL REPORTS EMAIL

SNAIL MAIL

FAx

HOTLINE

43

PUBLIC POLICY POSITIONS/POLITICAL DONATIONS

MISC does not allow for any political contributions, or the use of MISC’s facilities, resources and equipment for any politically related activities, campaigns or functions so as not to compromise its interest, nor do we receive any form of financial assistance from the government. Employees are also prohibited from using their position in MISC to influence political contributions and support.

ANTI-COMPETITION & ANTI-TRUST

MISC’s policy is to conduct business activities in accordance with competition laws and to be independent at all times. Employees are required to act fairly towards business partners, competitors and enforcement authorities in accordance with proper business practices and in compliance with competition laws.

WHISTLEBLOWING POLICYProcess of making disclosure for Employees

WHISTLEBLOWER

Making the disclosure via one of the reporting channels

Notified on the outcome of the disclosure

WHISTLEBLOWING SECRETARIAT (WBS)

Administers, classifies and evaluates disclosures registered under WB Register

HRM

Invokes disciplinary action process & procedures

WISTLEBLOWING COMMITTEE (WBC)

Deliberates on the disclosure and decides on the next course of action

INVESTIGATION TEAM

Conducts investigation and issues report

NO POLITICAL CONTRIBUTIONSOF ANY FORM ALLOwED

Deliberates on the investigation reportand decides on thenext course of action

MISc’S poLIcIeS

SUpport a FaIr and ethIcaL MarKetpLace


CLAUSE ON ETHICAL PRACTICES IN CONTRACTS

There is a provision on the compliance of CoBE incorporated in all contracts and Invitation to Bid documents. Third parties who intend to conduct business with MISC will have to abide by the provisions of the CoBE which include the practice of good faith, fidelity, diligence and integrity.

DRIVING COMPLIANCE AND RAISING AWARENESS

A dedicated Compliance Unit is established with the responsibility to drive CoBE compliance and to ensure the adequacy of MISC’s systems and processes. This unit also looks into employee training on ethics and integrity which is necessary for an effective compliance and ethics programme. Further emphasis and plans are put in place for the provision of periodic communication, awareness and training programmes throughout the Group, in tandem with the implementation of the

various initiatives and programmes to support the objectives of the MISC Group Compliance and Ethics Programme and MISC Sustainability Strategy. From the business angle, the Compliance Unit supports all necessary ethical due diligence inquiries to ensure integrity standards are upheld by MISC’s joint venture partners, vendors and/or persons conducting work on MISC’s behalf.

More detailed information on ethics & compliance can be found in MISC Annual Report 2016 and on our website (www.misc.com.my)

MOVING FORWARD

In our commitment towards good governance, embedding of ethical conduct and practices under the Governance & Business Ethics pillar, we will strive towards ensuring the effective and efficient implementation of the various initiatives under the MISC Group Compliance and Ethics Programme. This will be in addition to the various programmes that are already in place which reinforces our position and recognition as a transparent and ethical company. We will continue on this path progressively, with additional initiatives to be introduced annually, in ensuring the embedding of business ethics and ethical conduct as a cultural component within the organisation.

coBeIncorporated

In aLL contractS and InvItatIonto BId

oUr coMpLIance UnIt

condUctS dUe dILIGence to enSUre InteGrItY StandardS are UpheLd BY MISc’S partnerS and vendorS

45

MISSION

SHAREHOLDERSTo drive sustainable value for our shareholders


OBjECTIVES



OUR 2020 TARGETS

Shareholders’ engagement: Greater visibility to shareholders through broader engagement activities

Customer elements improvement: Increased standard of customer experience through efforts to exceed customers’ expectations

Customer perception and interaction:To be a recognised global energy related maritime solutions and service provider

marketpLace StrateGy


MARKETPLACEThe maritime and energy sector is largely cyclical in nature, sensitive to the fluctuations of the prevailing economic conditions and market sentiments, which can affect our businesses undesirably. In 2016, despite the difficult market conditions, MISC once again proved its resilience as evidenced by the commendable financial and operational performance. We are proactively taking steps to streamline and bolster our businesses in line with our MISC2020 strategy, enabling us to adapt quickly to flagging market conditions in the energy shipping and offshore oil & gas segments. In support of the overarching MISC2020 Corporate Strategy, the Shareholders and Customers Strategies under the Marketplace pillar, were developed as part of the MISC Sustainability Strategy, to further support our commitment of driving value for our shareholders and to exceed the expectations of our customers.

KEY HIGHLIGHTS FOR 2016AREAS DISCUSSEDCREATING VALUE FOR OUR SHAREHOLDERS

FOCUS ON CUSTOMERS

INNOVATING VALUE ADDED SOLUTIONS & SERVICES AND ASSET RELIABILITY

TAX POLICY

MARITIME SECURITY

INDUSTRY ASSOCIATIONS

Carried out a collaborativerescue drill exercisebetween the RMN, MISC and AET

The only tankercompany globally to possess MCV capabilities and experience

ContributedRM31.5 millionin Malaysian incometaxes and RM8.8 millionin foreign taxes

Maintained vesselavailability rateof above 99%,surpassing industry benchmarks

Customers Shareholders

47

SharehoLderS StrateGy

Being one of the largest shipping and maritime companies based on market capitalisation, we aim to consistently deliver sustainable returns to investors and shareholders. This is achieved through the strengthening of the Group’s core businesses and capitalising on growth opportunities in the near future.

In support of this commitment and in line with our mission ‘to drive sustainable value for our shareholders’ and in our understanding of the importance of engaging and keeping our shareholders well-informed, our Shareholders Strategy was developed to ensure the delivery of a broader, structured and more consistent engagement activities with our shareholders. This will be further supported through proactive engagement activities and in the provision of insights on the Group’s business performance, strategies and corporate development, which takes place on a regular basis.

cuStomerS StrateGy

Despite the volatile trends and forces of the oil & gas market over the past few years, the Group aims ‘to exceed the expectations of our customers’ through the highest standard operating procedures, stringent safety and health practices and excellent customer relationship management.

In our continued commitment towards providing value added solution, our Customers Strategy was developed with the aspiration of increasing the standard of customer experiences and in parallel to affirming our status as a recognised global energy related maritime solutions and services provider. The Customers Strategy will focus specifically on improving customer experience through the identification of areas for improvement and developing strategies to address the issues, and also through the provision of a more structured, cohesive and regular customer interaction initiatives



Our success in 2016 was the result of taking the necessary steps to reshape our business, in consideration of the fact that global energy volatility will continue to linger for a while yet. Through measures taken to strengthen our position and service offering to our customers, our key business segments were able to mitigate the full brunt of marketplace volatility.

The year in review also saw us divesting the entire equity interest in our Logistics business under our wholly-owned subsidiary MISC Integrated Logistics Sdn. Bhd. (MILS), as we continue to focus our efforts on our core-business of energy and petroleum-related shipping. As we take steps to ensure the long term viability of our business, sustainability is a concept that we value immensely and resonates with us.

We continue to internalise our commitment towards sustainability which has been encapsulated in the Mission for the Group, underpinning our efforts as we work towards achieving the Group’s Vision and MISC2020. Two of our mission commitments are specific to our shareholders and customers – ‘to drive sustainable value for our shareholders’ and ‘to exceed the expectations of our customers’. These commitments are further emphasised through the strategies developed for shareholders and customers, as part of the overarching MISC Sustainability Strategy, which was endorsed at the end of 2016.

Our aim is to constantly create value for our shareholders through prudent management of our businesses; as well as to ensure fair and favourable outcomes for our investors. Additionally, in support of this commitment, our Shareholders Strategy will focus our efforts to ensure greater visibility to our shareholders via broader and consistent engagement activities.

The service that we provide our customers is also paramount to us, as we aim to operate at the highest standards possible when it comes to providing tailored solutions, asset availability, health and safety performance and delivery times, amongst others. By going the extra mile to ensure customer expectations are not only met, but exceeded, our aim is to continuously add value to the existing service we provide. In view of this, our Customers Strategy was developed to support the commitment of exceeding customer expectations through continuously improving our service commitment and addressing any pertinent areas to be improved, and also through the provision of structured and regular interaction programmes that are more cohesive that showcase the strength of the Group as a whole.

This section will identify our view and approach towards specific business, economic and sustainability challenges in the marketplace, and our current position and approach in addressing some of these aspects and concerns.

49

CREATING VALUE FOR OUR SHAREHOLDERS

We aim to consistently deliver sustainable returns to shareholders through stable financial performance growth and consistent dividend payout to shareholders.

This commitment is evidenced through our established corporate strategy, which integrates good shareholder value creation into our Group’s five-year business plan, well-known as MISC2020. MISC2020 comprises two main objectives stretching over a period of five years from 2016 to 2020:

GOOD SHAREHOLDER VALUE CREATION IS INTEGRATED INTO MISC2020

FOCUSED ON OUR 4 CORE BUSINESSESIN THE NExT 5 YEARS

OUR NExT GROwTH REGION, THE ATLANTIC BASIN

A 5-YEAR MASTERPLAN TO ACHIEVE SUSTAINABLE PERFORMANCE

Sustainable securedprofit by 2020

Sustainable ROACE(Return on Average Capital

Employed) of more than10% by 2020Absorb all fixed costs

and overheads

Absorb all losses from cyclical business segments during

the worst cyclesMake the RIGHT investment

decisions

Instil DISCIPLINE to spend wisely

Further details of our Corporate Strategy, MISC2020, can be found in MISC Annual Report 2016.

OUR PRIORITIES OVER THE NEXT 5 YEARS

LNG OffshorePetroleum MHB

•��Pursue�more�third�party�long-term charters

•��Develop�concepts�for�non-conventional LNG solutions

•��Explore�acquisition�opportunities�arising from asset divestments by oil & gas players globally

•��Pursue�organic�growth�when�oil�price recovers

•��Pursue�more�time�charters�for�conventional fleet

•��Develop�more�niche�market�assets such as shuttle tankers with time charter

•��Develop�larger�recurring�income�base e.g. marine repair business

•��Manage�cost�and�process�efficiency

The plan is central to the long term success of our business, the long-term outcome of which is value creation and stable returns for our shareholders and investors.

In line with these overarching objectives, our core LNG Shipping, Petroleum & Product Shipping, Offshore Business,

as well as Marine & Heavy Engineering business segments will prioritise specific initiatives over the five-year timeframe.

Apart from our shareholders and investors, this approach will also benefit our immediate and wider stakeholders due to the direct and indirect economic impacts generated as we continue to strengthen

our businesses and explore opportunities for growth and expansion. As MISC ventures forth, we will continue to focus on shipping and maritime related oil & gas activities and not stray from our four core business segments. Plans are underway for the Group to tap opportunities in our next growth region, namely the Atlantic Basin, over the next five years.

ATLANTICOCEAN


FOCUS ON CUSTOMERS

With our customers being one of the key stakeholders of the Group and in line with our Mission’s commitment ‘to exceed the expectations of our customers’, our approach for our Customers Strategy is simply to focus on providing the best service and experience to all customers. This is done through several of our commitments including stringent health and safety standards, operational responsiveness and tailored solutions in order to exceed customer expectations.

We have an extensive customer engagement process in place to not only successfully address customer requirements, but also for the purpose

of developing and fostering trust, and encouraging communication. Customer centricity is regularly promoted and discussed through our internal communication channels, ensuring a progressive and sustainable focus on delivering the best services to our customers.

Many customer engagement events were organised throughout the year which served as platforms to build and foster relationships. These encompass various appreciation events carried out at the business unit and corporate levels, including sporting events, customer appreciation lunch/dinner, as well as the MISC Hari Raya Open House. Additionally, MISC’s President/Group CEO

and our business heads made several visits throughout the year, in an effort to further enhance business relationships with existing and potential customers, shipbuilders and business partners in key countries.

Aside from our commitment to customer engagement programmes and initiatives, we also ensure the effective and efficient management of information on customers Group-wide, across BUs and Subsidiaries. The collation and analysis of customer information provides leverage to MISC’s Management, assisting them in decision-making processes and in the formation of appropriate strategies, to enable and ensure an effective and efficient service delivery.

CustomerEngagement

Events

Sportingevents

Managementvisits to

customers and partners

Customerappreciationlunch/dinner

MISCHari Raya

Open House

51

INNOVATING VALUE ADDED SOLUTIONS & SERVICES AND ASSET RELIABILITY

Incorporated in 1968, MISC has almost 50 years of proven experience in delivering energy related maritime solutions and services. With over 110 LNG, Petroleum and Product vessels as well as 14 floating facilities, we strive to provide reliable, safe

and high quality services, with our core businesses catering to the demands of the oil & gas sector. This commitment is crucial in view of the current challenging economic and market conditions, necessitating constant vigilance in preparing for the potential challenges that lie ahead.

The following table presents an overview of challenges facing our business during the year in review, broken down according to our core business segments, the challenges, how we are positioned to address these challenges through the provision of innovative value added solutions and the reliability of our assets and services, and our preparations in view of the outlook ahead.

Core Business Challenges Position & Approach Looking ahead

LNGShipping

•��Oversupply�of�LNG•��Plunging�gas�prices•��Low�demand�for�LNG�

shipping•��Charterers�reluctant��

to charter on a long-term basis, pressuring lower rates

•��Successfully�maintained�a�high vessel availability rate to our charterers at above 99%, surpassing industry benchmarks.

•��Strengthened�our�position�by�taking�delivery�of�two�newbuild�LNG carriers in 2016 and 2017 – Seri Camelia and Seri Cenderawasih (first two in a series of five MOSS-Type vessels). Part of the new generation Seri C Class LNG fleet, these vessels will reap long-term benefits for the Group, as well as to our charters in terms of savings and risk management due to their innovative features and design. They offer a more robust and superior cargo containment system, and ensure a higher degree of operational flexibility in harsh meteorological conditions.

•��These�new�LNG�carriers�are�chartered�to�PETRONAS�for�the�next 15 years, strengthening our position in the global LNG transportation business.

•��In�2016,�we�delivered 21.64 million tonnes of LNG, representing 8% of total world LNG trade. In over 30 years, we have safely delivered more than 400 million tonnes of LNG. We are committed to maintain our position as one the world’s most preferred LNG carriers.

•��FSU�Tenaga�Satu�and�FSU�Tenaga�Empat�have�been�retrofitted�with smaller deck boilers, which will result in significant cost savings in terms of fuel consumption and improved operational efficiencies.

•��Explore�the�possibility�of�non-conventional LNG shipping and alternative LNG floating solutions in key LNG demand centres and emerging economies.

Petroleum & ProductShipping

•��Market�suppressed�due to growing tonnage oversupply

•��Lacklustre�demand•��Low�oil�prices�

curtailed exploration and production investment, capping any new demand for shuttle tankers

•��AET is one of the market leaders in the US Gulf (USG) lightering market with the ability to provide end-to-end marine logistics services.

•��The�only tanker company globally to possess Modular Capture Vessel (MCV) capabilities and experience.

•��Acquired�the�remaining�50%�stake�in�the�Paramount�Tankers�JV,�strengthening AET’s core fleet age profile and capacity.

•��Chemical�and�CPP�fleets�were�merged�to�provide�greater flexibility and capacity to customers, while allowing spot fixtures to be secured and generate earnings from both front and back haul traders.

•� 55 AET vessels and two workboats presented with the jones F. Devlin Awards for accident-free operations at the Chamber of Shipping of American (CSA) Annual Safety Awards.

•��58 AET vessels awarded the Environmental Achievement Awards by the CSA.

•��Expansion of presence and operations in Latin America.

•��Continue�to�consolidate�position as a leading provider of lightering support services in the USG.

•��Focus�on�operationalising new Panamanian subsidiary by establishing ship-to-ship (STS) operations in the west coast of the Americas.

•��Continue�to�grow�our�footprint in the shuttle tanker business to provide long-term quality income.


Core Business Challenges Position & Approach Looking ahead

OffshoreBusiness

•��FPSO�awards�at�record low

•��Cost�cutting�efforts•��Many�oil�majors�

reducing capital expenditure by as much as 30%

•��Many�contracts�renegotiated and some terminated

•��The�Offshore�Business�continued�to�show�excellent asset performance, registering 99.88% asset uptime.

•��Excellent�safety�performance,�achieving�0.24�recordable�accidents with zero Lost Time Injury Frequency (LTIF).

•��Expanded�technical�abilities�in�demobilisation�with�completion�of�demobilising of FSO Abu, MOPU SATU and MOPU DUA, whilst achieving zero LTI.

•��Expansion of international footprint regionally with the contract win of FSO Benchamas 2 project with Chevron Offshore Thailand Ltd.

•��MaMPU1�deployed�to�the�Anjung�Kecil�oil�field�offshore�Sarawak. It is already contributing secured income to the Group by way of a long-term charter.

•��MISC,�in�collaboration�with�MHB,�is�the�first in the region to introduce new technologies on a floating asset, strengthening our position as one of the leading marginal field solutions providers.

•��Successfully acquired the remaining 50% equity interest in the Gumusut-Kakap Semi-Floating Production System (L), enabling us to consolidate future earnings of this long-term charter asset.

•��Focus�on�strategic�acquisitions, particularly in the areas of assets in distress and equity participation.

•��Expand�international�footprint and seek new market opportunities.

•��Adopt�more�green�technology.

•��Focus�efforts�on�optimising cost efficiencies and operational excellence.

Marine & HeavyEngineering (MHB)

•��Lower�investments�in�offshore construction by oil & gas majors due to low oil price environment

•��Safe�and�successful�sail�away�of�the�Malikai�Tension�Leg�Platform for Shell and PETRONAS, the first of its kind in Malaysia.

•��Saw�the�successful�sail�away�of�MaMPU1�in�collaboration�with�MISC’s Offshore Business

•��MaMPU1 technology frontier incorporates the Condensate Recovery System (CRS), a process that recovers condensation from unwanted gases (usually flared gas) and increases the hydrocarbon yield from the field, whilst contributing to lowering CO2 emissions by 25% to 30% on daily flaring rates.

•��Formed�MMHE�EPIC�Marine�Services�Sdn.�Bhd.,�a�joint�venture�company to undertake repair services at the Kemaman ship repair facilities primarily for the East Coast-based offshore vessels market.

•��Completion of the Goliath Crane (GC1), a massive structure with a 600-tonne lifting capacity and 100-metre hooking height, contributing to lower costs and increased productivity. (Second crane (GC2), expected for completion in 2017.)

•��Key�focus�on�securing�recurring revenue.

•��Intensify�efforts�by�developing onshore and offshore segments – RAPID project, hook-up & commissioning (HUC) facilities, platform improvement and maintenance works.

•��Expand�MHB’s�market�with EPIC (joint venture partner).

•��Focus�on�cost�and�asset utilisation programmes to ensure cost reductions, productivity and optimisation of processes.

Further details of MISC’s business position, outlook and approach can be found inMISC Annual Report 2016.

53

TAX POLICY

The MISC Group adopted tax policies as practiced by its holding company, PETRONAS. PETRONAS, through its Group Tax, regularly provides direction on taxation matters to all its subsidiaries including the MISC Group. The three main objectives of the Tax Policy adopted are as follows:

MISC GROUP’S TAX POLICY

Ensure compliance with the applicable tax laws and regulations in the jurisdiction applicable to the entities. This is to mitigate any potential exposures to the entities as a result of non-compliance.

Adopt an approach of attaining a tax optimum position. Tax optimum position means to achieve the best tax position for the MISC Group of Companies whilst complying with the applicable tax laws and regulations.

Good tax citizen can be defined as a taxpayer who complies with the applicable tax laws and regulations.

As part of the PETRONAS Group of Companies, the MISC Group must be seen as good tax citizens in supporting the resident country’s initiatives in promoting international competitiveness, such as being proactively involved in government initiatives on tax matters.

To preserve the PETRONAS/MISC name and reputation, compliance with tax laws and regulations in the jurisdiction they operate in must be adhered to.

In 2016, MISC contributed approximately RM31.5 million in Malaysian income taxes and RM8.8 million in foreign taxes. The domestic current income tax is calculated at the statutory tax rate of 24% of the estimated assessable profit for the financial year.

MARITIME SECURITY

As part of our greater commitment to our business and in providing sustained value to our customers, we take matters concerning the security of our vessels seriously.

Tax Compliance

Tax Planning

Good Tax Citizen

CONTRIBUTED RM31.5 MILLION IN MALAYSIAN INCOME TAxESAND RM8.8 MILLION IN FOREIGN TAxES

Case Study

RESCUE DRILL EXERCISE WITH THE ROYAL MALAYSIAN NAVY (RMN)

On 29 September 2016, a collaborative rescue drill exercise between the RMN, MISC and AET was carried out, in preparation for any potential acts of piracy on the high seas. The operation, codenamed Eksesais Naga Emas (ENE), saw the Naval Special Warfare Forces (also known as PASKAL) testing their bravery in combating a mock tanker hijacking off the Pangkor Island, Perak. One of AET’s vessel, Bunga Kelana 8, was deployed for this exercise.

The objective of the drill, which was organised to rehearse anticipated emergency scenarios, was to boost collaboration, enhance coordination and bolster mutual understanding among RMN, MISC and AET in combating maritime violence in the event of ship hijackings. The ENE was also organised to test the capabilities of PASKAL in combating maritime violence towards vessels owned by MISC or AET.

Additionally, the drill also provided the opportunity to assess the efficiency levels of the Rescue Operations Plan aligned with the Directive Number 18 of the National Directive Council. The drill was executed via Force Integration Training (FIT) and Fields Training Exercise (FTX) which involved attacking activities carried out by the PASKAL team and infiltrating the target through both surface and air methods.

MISC’S EMERGENCY RESPONSE TEAMIS ALwAYS ON24 HOURS STANDBY

Partnership with RMNIn view of the continuing threat of piracy, for several years to date, MISC has been working in partnership with the Royal Malaysian Navy (RMN) to ensure the safety of our crew and vessels, especially in the Gulf of Aden and the Indian Ocean.

Best Management Practice MISC conforms to the industry’s BestManagement Practice against Somalia based Piracy (BMP4) to ensure the safety of ships transiting the Indian Ocean and West Africa. We are committed to ensuring the safety of our people as stated in the company’s Security Policy Statement.

24-hours Emergency Response We also have in place an establishedemergency response team who areon 24-hours standby and consists ofexperienced and well-trained employees.

Crisis Management TeamOn a higher level, the company’s Crisis Management Team is headed by our President/Group CEO and consists of selected members of the senior management team. This team will be able to provide the required assistance and guide decision making for our vessels in any emergency situation in line with the company’s policy and values.


INDUSTRY ASSOCIATIONS

Our involvement in industry associations provide an avenue for us to contribute towards the development of the shipping industry not only from a local but also an international standpoint.

MISC is a key member of the Malaysia Shipowners’ Association (MASA), where industry participants hold regular dialogues to safeguard the development and interests of the Malaysian maritime industry, as well as our interest at the international level, namely at the International Maritime Organisation (IMO). In 2016, MISC led the negotiation with the Ministry of Finance (MOF) on the continued support through tax incentive for the maritime industry in Malaysia. The tax incentive has been crucial in promoting the maritime industry in the country and providing employment to many.

MISC is also a member of the Society of International Gas Tanker and Terminal Operators (SIGTTO) that provides exchange of technical information and experience between members of the industry. MISC’s Vice President of LNG Business Unit is one of the Directors of SIGTTO. Since its formation, SIGTTO has been continually promoting best practice in the liquefied gas shipping and terminal industries.

MISC’s President/Group CEO is an Executive Committee member of the International Association of Independent Tanker Owners (INTERTANKO) while AET President & CEO sits on the Gas Tanker Committee as its Chairman. INTERTANKO provides a platform for industry debate, dialogue and policy discussion, while also championing safe ocean transport, cleaner seas and free competition in the petroleum shipping sector.

MISC also proactively contributes towards enhancing maritime safety through our support of various initiatives within the industry, most recently being the Project SEAHORSE. Project SEAHORSE, an industry oriented and EU-funded project, promotes maritime safety by applying well-proven practices from air transport to marine transport with effective collaboration and innovation. It is the first project in the world seeking to enhance safety by transferring best practices in one mode of transport to another mode of transport. As a member of the Industrial Advisory Board, MISC provides feedback during workshops and implemented several SEAHORSE methodologies and tools on MISC’s fleet, which contributed to a significant step for validation.

MOVING FORWARD

Amidst the expected low-key environment with the current challenging market conditions, we will continue to focus our efforts on leveraging our resources and financial strength in creating opportunities for growth. Our businesses will continue to commit towards achieving the goals as prescribed under MISC2020 Corporate Strategy. These commitments will further be supported by the specific Shareholders and Customers Strategies, under the MISC Sustainability Strategy, as we continue to drive sustainable value for our shareholders and exceed the expectations of our customers.

MASA

PROjECT SEAHORSE

INTERTANKO

SIGTTO

55

EMPLOYEESAmidst the energy shipping segment’s highly competitive landscape, MISC’s workforce of close to 9,000 employees remains the Group’s most important asset – a message that has been emphasised by our President/Group CEO.

Our Mission is ‘to promote individual and team excellence of our employees’ and we strive to achieve this by developing internal capabilities through various developmental programmes. This commitment is further encapsulated through a strategic approach of ensuring employee growth and development, in the form of our Employees Strategy, which is a part of the MISC Sustainability Strategy, aligned to our HR Five-Year Masterplan. We believe that equipping our employees with the right functional and leadership skills are important to help them excel at the workplace and also develop their ability to be able to successfully tackle business challenges head on.

Mission


objectives

• Training & development

• Engagement• Safe & healthy working

environment

our 2020 targets

succession planning:To have in place a sustainable talent pipeline across the job levels in the organisation

employee competency development:To have a competent and capable workforce through a structured and holistic developmental process

EMployEEs stratEgy

ArEAS DiScuSSEDHuMan resource (Hr)Five-Year strategY

Misc cultural belieFs

eMploYee DiversitY

labour policies

people DevelopMent & talent ManageMent

eMploYee engageMent

MiSc BErHAD / 56 SUSTAINABILITY REPORT 2016

Approximately

9,000employees with morethan 15 nationalitiesfrom across the globe

Recipient of“tHe best eMploYer”award by theEMPLOYEEPROVIDENT FUND

The Group invested some

rM5.55 millionin training programmesand approximately 18 hours of trainingper employee

Launched MISCcultural

belieFswith

11 workshopsorganised for all

employeesattrition rate

at approximately

10%below the nationalaverage of 14%

KEY HigHLigHtS fOr 2016

57

EMployEEs stratEgy

Our Human Resource (HR) division is on course with its five-year masterplan which also forms part of the Employees Strategy under the MISC Sustainability Strategy – to promote individual and team excellence within the Group in line with the goals set under MISC2020 Corporate Strategy.

The plan encompasses two main focus areas, namely succession planning and employee competency development for both leadership and functional skills.

Since the formalisation and initiation of the plan, several initiatives are underway to extend the ambit of the succession planning exercise to include more positions and talents across the Group – with the objective of ensuring seamless leadership transition and sustainable talent pipeline across all job levels.

On the employee competency development front, we are rolling out various initiatives to ensure a more structured and holistic developmental process including intra-Group job postings for development exposure and the introduction of individual career maps for employees to plan their career progression within the Group.

The Human Resource (HR) division units at corporate and subsidiary levels are responsible for recruitment, training and policy setting for the Group. Taking into account international standards where appropriate, our workplace policies and practices are tailored to suit regional and industry needs. All our shore employees are governed by the Employee Handbook which contains applicable workplace policies where each employee receives a copy on their first day on the job. For our seafarers, workplace policies are further enhanced by international regulations, such as the International Labour Organisation (ILO) Maritime Labour Convention (MLC) 2006, which sets minimum requirements for working and living conditions for seafarers, amongst other provisions. This is captured in the Terms and Conditions of Service for Sea Staff where we aim to meet or exceed industry standards in order to remain competitive.

While many international and local companies were involved in manpower rationalisation exercises in 2016 to ensure survival amidst a highly challenging market environment, the same did not apply to MISC. However, the Group’s overall headcount now stands at approximately 9,000 employees as compared to more than 10,000 employees in 2015, due to the divestment of MILS. Despite our favourable position considering current market conditions, we ensured prudent utilisation of manpower budget, by focusing efforts on monitoring manpower costs. In line with our HR five-year masterplan and MISC2020 Corporate Strategy, we are confident that this further strengthens MISC’s Employee Value Proposition (EVP) in not only enticing the top talents from the bigger supply in the labour market, but also retaining the talented workforce currently in our organisation.



SEAfArErS wOrKPLAcE POLiciES guiDEDBY tHE iLO MLc 2006

As we look into expanding globally as part of our five-year business plan and in line with our HR five-year masterplan and MISC Sustainability Strategy, we aim to equip our workforce with the necessary skills and develop their resilience to adapt to the constantly evolving global market. Over the next five years, we will primarily be focusing on refining existing processes specifically on succession planning (to include all job levels) and employee competency development being both leadership and functional skills, aside from employee recruitment, the employee performance management system and training programmes across all job levels. By recruiting, growing and retaining the right talent, we foresee the value brought about in helping us achieve our ambitions and targets through a high performance workplace culture.

Our strategic approach, which is a progression of our commitment to our loyal employees who we are exceptionally proud of, was developed in consideration of enhancing their careers with MISC, and in the provision of suitable opportunities that is considerate of their skills and interests. As part of our strategic initiative, employees are encouraged to transfer between various functions within the

organisation, further shaping their skills and enhancing their workplace experience. This can include prospects for sea employees to transition to shore, or for internal transfers between units or subsidiaries with an added emphasis on reskilling and upskilling. This broader exposure to the business will prepare our employees to not only support organisational interest but also to achieve individual career goals.

Our efforts in promoting a common set of values, individually and collectively, to form the Group’s value system for our employees, were also strengthened through the launch of MISC Cultural Beliefs. The Cultural Beliefs will be the foundation for employees in guiding them towards a positive working culture that will support MISC in delivering our Vision and Mission to be consistently better every day, as well as in accomplishing the objectives of MISC2020.

trAnSfEr BEtwEEn vAriOuS functiOnS, unitS AnD SuBSiDiAriES

59

HuMan resource (Hr) Five-Year strategY

As described earlier, our HR five-year masterplan was developed based on the objective of promoting individual and team excellence of MISC’s workforce in realising the MISC2020 targets. The strategy aims to drive superior performance and enhance productivity while providing opportunities for growth within our organisation and ultimately unlocking the maximum value of the company through our employees.

In principle, the strategy will focus on two main areas – succession planning to include all job levels, where previously it was only applicable to the leadership pipeline; and development of employee competencies, both leadership and functional.

We believe that a sustainable talent pipeline across all job levels is the key for business, ensuring the growth and development of all employees in line with our organisational ambitions and aspirations. In parallel to this, on the employee competency development plan, to ensure a more structured and holistic developmental process, we are rolling out various initiatives which includes intra-Group job postings for development exposure and the introduction of individual career maps for employees to plan their career progression within the Group.

In order to achieve the HR five-year masterplan targets, we will drive the succession planning process and employee competency development programmes with support from the respective BUs, SUs and Subsidiaries to ensure involvement, alignment and relevancy across the organisation.

inDiviDuAL cArEEr MAPS tO PLAn fOr tHE cArEEr PrOgrESSiOn Of Our EMPLOYEES

SuStAinABLE tALEnt PiPELinE AcrOSS ALL jOB LEvELS iS PrOMOtED

Focus

Succession Planning.

objective

To have in place a sustainable talent pipeline across the job levels, to ensure seamless leadership and talent pipeline in the organisation.

Key initiatives

• Extension to all critical job levels; Senior General Manager right down to Executive level.

• Inclusion of talent pool from subsidiaries.

• Introduction of mid-year succession planning review, on top of the year-end review.

• Introduction of potential assessment tool to support succession planning process.

Focus

Employee Competencies Development.

objective

To have a competent and capable workforce through a structured and holistic developmental process.

Key initiatives

• Promote developmental opportunities across the Group for employees to be moved across the organisation.

• Development and implementation of career mapping for Executives and above.

• Consolidate and review the Skill Group (SKG) programmes under PETRONAS learning curriculum to be customised to MISC learning needs for both technical and non-technical disciplines.

• Periodical review of the intervention programmes so as to gauge the effectiveness of the programmes in addressing the competency gap among the employees.


Misc cultural belieFs

MISC HR five-year strategy and objectives is encapsulated by the MISC Cultural Beliefs, which was launched in 2016. The Cultural Beliefs was developed with the objective of promoting cohesiveness, empowerment and unity amongst our employees through a common set of values, individually and collectively, with respect to embedding the organisation’s value system and to carry through these beliefs in our day-to-day function and operations.

The Cultural Beliefs were first introduced by PETRONAS in 2015. Being part of PETRONAS family, MISC too has embraced these beliefs and anchored them on our Shared Values of Loyalty, Integrity, Professionalism and Cohesiveness.

Together with our Shared Values, the Cultural Beliefs will support MISC in delivering our Vision and Mission to be consistently better every day, as well as to help drive the MISC2020 Corporate Strategy.

A total of 11 Cultural Beliefs workshops were organised throughout 2016, which were attended by 621 employees across all job levels from senior management to non-executives. The objective of the workshop is to create awareness and institutionalise the Cultural Beliefs to all MISC employees.

The Cultural Beliefs constitutes the following six elements:

I stretch my limits to deliver superior results

I always keep my promise and build mutual trust

I own the results and don’t blame others

I seek, give and act positively on feedback

I plan, commit and deliver with discipline

I collaborate for the greater good of MISC Group

11 wOrKSHOPSOrgAniSED fOrALL EMPLOYEES

PrOMOtES cOHESivEnESS, EMPOwErMEnt AnD unitY AMOngSt EMPLOYEES

AttEnDED BY621 EMPLOYEESfrOM SEniOr MAnAgEMEnttO nOn-ExEcutivES

RESULTSMATTER

OWN IT!

FOCUSEDEXECUTION

NURTURETRUST

TELL ME

SHAREDSUCCESS

61

eMploYee DiversitY

Employee diversity is of significant importance to MISC, as we believe a diverse workforce promotes a culture that is open-minded, and encourages new ways of thinking and thriving, that is especially significant for a global-minded corporation. The diversity of our employees is evidenced by the profile of our approximately 9,000 employees working for the Group, from over fifteen nationalities across regions. This number encompasses permanent, contract, and project-based employees, as well as executives and non-executives from

our shore and sea operations. There is a reduction in the Group’s total manpower strength by approximately 16% as compared to the previous year, which is largely due to the divestment of MILS.

We practice a non-discriminatory hiring policy and all our employees are hired based on capability and expertise. As we are headquartered in Malaysia, 61% of our employees are Malaysians and our intention is to provide competitive local employment opportunities wherever we operate.

What’s new? • New look and feel to

incorporating the Misc corporate identity and Cultural Beliefs element in the design philosophy.

• More conducive work stations with an emphasis on Health and safety elements with the provision of ergonomic office furniture, energy efficient lighting i.e. LED, ample natural daylight, and sanitised air conditioning system.

• Introduction of Health, safety and environment (Hse) corners on every floor which includes a first aid kit, emergency response station, fire extinguisher and recycle bins.

• Mother’s room for breastfeeding female employees.

• info tv and filtered drinking water in the pantry.

Menara DaYabuMi oFFice upgraDe project

overview Aligned with the launch of MISC’s refreshed Vision and Mission, corporate logo and Cultural Beliefs, MISC also embarked on an office upgrading project in 2016 to give the office environment a fresh new look while promoting a more open office concept which will encourage better teamwork and higher productivity among our employees.

the plan• refurbishment of all

12 floors occupied by MISC in Menara Dayabumi, including the corporate reception lobby at level 17.

• Carried out in four phases beginning in July 2016, with the completion expected in May 2017.

Case Study

NEW

wE PrActicE AnOn-DiScriMinAtOrY Hiring POLicY

wE PrOviDELOcAL EMPLOYMEntOPPOrtunitiESwHErEvEr wE OPErAtE


During the year under review, female employees constitute approximately 23% of the total shore based workforce, while over 90% of our seafarers are males. We strive to enhance gender diversity among our officers by encouraging the hiring of female officers as well as sponsorship of female cadets through the MISC Cadet Sponsorship Programme. As at 31 December 2016, there were 91 female seafarers within our ranks at both MISC and AET and we have sponsored a total of 129 female cadets under the MISC Cadet

Sponsorship Programme since 2006. Our commitment towards diversity is also reflected in the composition at Board and senior management levels, where female members make up 22% and 33% of the composition respectively.

The year 2016 also saw good talent retention within the Group, posting an attrition rate at approximately 10% which is below the national general market average of 14%. If involuntary attritions such as contract expiry, retirement, and separation package are being excluded from the calculations, the voluntary attrition in MISC in 2016 would stand at only 3%. This bodes well for us in our efforts to retain good and capable talent and is especially important as we continue our momentum towards improving performance and achieving MISC2020.

91 fEMALE SEAfArErS witHin Our rAnKS

129 fEMALE cADEtS SPOnSOrED SincE 2006

gOOD tALEnt rEtEntiOn witH AttritiOn rAtE AtAPPrOxiMAtELY 10%wHicH iS BELOw tHEnAtiOnAL gEnErAL MArKEt

Misc group total nuMber oF eMploYees

Misc group eMploYee proFile For 2016

2014 2015 2016

77% 23%

98% 2%

0

0

2,000

4,000

6,000

4,000

8,000

12,00010,444

5,2764,861

3,4013,816

shore (3,872)

Malaysian Executive/ Officers

NonMalaysian

Non-executive/

Ratings sea (4,805)

10,380

8,677

No.

of e

mpl

oyee

s

No.

of e

mpl

oyee

s

0

2,000

4,000

6,000

No.

of e

mpl

oyee

s

63

APPrOxiMAtELY 36% Of Our EMPLOYEES BELOng tO inDuStrY-rELAtED uniOnS

nO griEvAncE rAiSED Or fiLED witH rESPEct tO LABOur PrActicES

Case Study

“tHe best eMploYer” aWarD bY tHe eMploYees proviDent FunD (epF)

In September 2016, MISC was among the recipients of “The Best Employer” award by the EPF in recognition of our continuous compliance with the statutory contribution regulated by Malaysian Labour Law. This award underscores our commitment to looking after the interests of our employees in accordance with local laws.

labour policies

All our hiring policies are compliant with local and international labour regulations, where applicable. The Group does not condone the hiring of child labour or forced labour, and all third-parties who conduct work for or on behalf of the Group are subject to applicable regulations.

Minimum wage policies employee unions

child labour Forced labour

Our employees are also compensated fairly based on the remuneration structures which are also in compliance with the Minimum Wage Order 2016, as set by the Government. To ensure the Group’s competitiveness in attracting external talents, whilst at the same time retaining internal talents, a benchmarking study on the Group’s remuneration package is conducted on an annual basis.

Protecting employees’ rights is a fundamental Human Resource practice. Approximately 36% of our employees throughout the Group belong to industry-related unions. Regular engagements are held between Management and these unions to ensure productive outcomes for both the organisation and employees.

The Collective Agreement between Management and unionised employees are also subject to periodic review and renegotiation.

grievance procedure

At MISC, we recognise the value and importance of having a formal grievance procedure in place within the Company to address issues. Therefore, the Company makes every reasonable effort to address any complaints or grievances (relating to matters affecting the Terms and Conditions of service) from employees and provide an orderly and effective means of conducting and resolving any misunderstanding or grievance. In the year under review, there were no grievance issues that were raised or filed with respect to labour practices.

Furthermore, there is also a well-established Whistleblowing Policy in place, which provides a formal avenue for issues to be raised in a strictly confidential manner.

Further details of the MISC Whistleblowing Policy can be found in the Governance & Business Ethics section in this report.


people DevelopMent & talent ManageMent

For MISC to sustain our business in the long run, we believe that a conducive environment for career growth and personal development are essential ingredients to achieve this. As such, we continue in our commitment to develop our workforce and in seeking ways to enhance employee learning, ensuring that they are equipped with the right skills and capabilities to move forward with MISC.

In the year under review, concurrent with the development and finalisation of the HR five-year masterplan, we continued with our focus on several initiatives comprising succession development, talent development which includes leadership and functional competencies development, as well as leadership development, as part of MISC employees’ capability development plan.

For 2016, the Group invested some RM5.55 million in training programmes amounting to an average of approximately 18 hours of training per employee. Of the 477 programmes conducted, 403 of these related to functional training while the remainder focused on leadership and succession management programmes.

All of our sea and shore employees are given the opportunity to attend training at least once a year. Additionally, all employees are subject to a yearly performance assessment with their superiors to identify individual strengths and areas for further improvement.

succession Development

Our robust Succession Planning ensures the sustainability of our talent pool by continuously attracting, developing, and retaining the right talent. We believe it is fundamental to fill the right position with the right capabilities, which will determine the quality and success of the leaders that we place within the organisation.

At MISC, the Succession Planning Review is performed annually in order to assess and identify potential future leaders for positions deemed critical to the organisation. The review process is not limited to looking into their achievements but also takes into account their ability to apply the relevant skills in completing tasks, ability in responding to changes, career aspirations, passion and commitment to the role and towards organisational goals. Subsequent to the review, a dialogue session with the Management Committee will be conducted to discuss further on each individual development plans.

The Succession Planning process also caters for the need to fast-track talent progression and intensify development efforts to ensure the individual’s readiness to support the talent pipeline and strengthen the leadership bench strength. Hence, the development programme moving forward will focus on experiential learning which covers learning modules, coaching session, business simulation, projects and assignments, and leaders sharing sessions.

Case Study

Misc recogniseD as tHe autHoriseDtraining eMploYer (ate) For icaeW anD acca

In September 2016, MISC was recognised as one of the training employers for two professional papers, namely the Institute of Chartered Accountants in England and Wales (ICAEW) and Association of Chartered Certified Accountants (ACCA). The approval as the ATE will provide a structured learning platform for the MISC Finance fraternity, in line with MISC’s aspirations of supporting the growth of its people. Being an Authorised Training Employer, MISC’s Finance personnel can now pursue ICAEW’s professional qualification while being employed in MISC.

To promote qualification and participation in these programmes, we offer MISC Finance Professional Assistance programme (MFPA) that provides assistance in the form of study leave for exam preparation, as well as financial support such as tuition fees and examination fees.

rM5.55 MiLLiOninvEStED in trAining PrOgrAMMES

APPrOxiMAtELY 18 HOurS Of trAiningPEr EMPLOYEE

SuccESSiOn PLAnning rEviEwiS PErfOrMED AnnuALLY

65

leadership and Functional competencies

Following on from the refreshing of MISC’s Vision, Mission and Tagline in the previous year, the next natural step was to identify the capabilities required of our people, to ensure alignment with the Group’s refreshed objectives and to ensure the realisation of these organisational goals and aspirations.

A review and simplification of the Leadership Competencies was embarked on, which was also developed in consideration of the mindset and values outlined by the MISC Cultural Beliefs. This process also took into consideration our subsidiaries, where their inclusion was important to ensure alignment across the board and their inputs provided for a more wholesome set of leadership competencies that is relevant for the Group as a whole. Four key competencies were identified – Entrepreneurship, Strategic Agility, Inspirational Leadership and Build Relationships – which will form the basis of development for all our employees. The refreshed competencies framework will be applicable to all job levels including non-executives, not just limited to the top and middle management.

In parallel with the revision of Leadership Competencies, the Functional Competencies Framework is also being reviewed and refreshed, ensuring that all employees are well equipped with the relevant and necessary skills that will be useful for them in assuming their respective roles and function. This initiative is currently underway and will continue to be rolled-out in 2017.

leadership Development programme

Our talent development programme stretches from entry-level talent development programmes up to top-tier executive programmes. In the year under review, the Group has tailored a training programme for senior management positions. The Senior Leadership Development Programme will enable them to hone their leadership capabilities so they can be the catalyst for culture change to improve and raise business performance.

The Group is in the midst of coming up with a Development Roadmap for all employees which will outline all core training programmes, its objectives and the dates of each programme. It is tailored towards a self-initiated approach where all employees will have the opportunity to sign-up for the programme that suits their needs and timing.

accelerated and enhanced talent Management programme (aetMp)

The primary objective of the AETMP is to identify the high achievers amongst AET employees and provide a clear pathway for their rapid career progression to ultimately take up senior leadership positions within AET and the wider MISC Group.

nEw KEY LEADErSHiP cOMPEtEnciES: -EntrEPrEnEurSHiP-StrAtEgic AgiLitY- inSPirAtiOnAL LEADErSHiP-BuiLD rELAtiOnSHiPS

LEADErSHiP AnD functiOnAL cOMPEtEnciES ArE APPLicABLE fOr ALL jOB LEvELS


Strict eligibility criteria have been developed, which will be supported by a rigorous selection process, to ensure only the most talented, and those who properly demonstrate our MISC Cultural Beliefs, are selected for the programme.

Selected high achievers will be given sea- and shore-based training assignments as part of the programme, allowing them the opportunity to sail on an expanded variety of vessels and gain significant shore-based exposure of the wider business.

enhanced performance Management process

As part of the continuous process improvement to promote a high performing culture in MISC, HR had rolled out the enhanced Performance Management process in 2016. The proposal for implementation was approved by the Management in July 2016 and was subsequently adopted during the Mid-Year Performance Review cycle and FY2016 Year-End Performance Appraisal.

The purpose of rolling out the enhanced Performance Management process is to encourage a more meaningful and objective performance appraisal discussion between supervisor and subordinate, whilst observing the behaviours demonstrated by employees in performing their job functions. This is to encourage employees to perform above and beyond their job roles, aligned with the MISC Cultural Beliefs. Following the enhancement process last year, 100% of our employees were subjected to the Performance Appraisal Process, twice in the year under review.

A system that can support the enhanced Performance Management is expected to be introduced in the near future to further simplify the process.

seafarers Development

The focus on leadership is also extended to our seafarers through various programmes to equip our officers with the necessary skills and capabilities.

Leadership Skills at Sea

The Senior Officers Leadership Assessment Programme (SOLAP) & Senior Engineers Leadership Assessment Programme (SELAP) provide a continuous method to help address the developmental needs of our officers. Upon completion of the programmes, the employees will have a better understanding of the leadership competencies that are deemed to be important for the officers’ role. The results also provide the basis for selecting and conducting leadership programmes to address any competency gaps. These programmes equip our officers with the necessary skills to perform their duties and roles effectively on board.

Based on the SOLAP & SELAP results, the team has conducted the following three leadership programmes which bridged crucial gaps amongst officers in preparation for them to assume higher positions:

i. Coaching and mentoring, ii. Crucial communication, and iii. Planning and execution skills.

In 2016, a total of 93 officers and engineers partook in the programmes. Upon completion of the programmes, the employees attained a better understanding of the leadership competencies that are required in assuming the role as an effective Master or Chief Engineer.

100% Of Our EMPLOYEES ArE SuBjEctED tO PErfOrMAncE APPrAiSAL PrOcESS

93 OfficErS AnD EnginEErS PArticiPAtED in tHE LEADErSHiP ASSESSMEnt PrOgrAMMES

67

Watch Keeping Officer (WKO) Programme

The continuous development and provision of opportunities for our experienced seafarers to enhance their job skills, career prospects and career goals within the organisation, is an area we pay close attention to and constantly explore ways to improve.

The WKO programme which was introduced in 2015 is one such developmental programme.

The WKO Programme allows for highly competent deck ratings within the Group to further their skill sets by transitioning to an officer position once they obtain the appropriate certifications required for the job. Ratings who successfully upskill to become officers will have experience and skills in the operational and navigational aspects of vessel operations, and will serve as valuable assets to the Group. As at 2016, eight ratings were selected for this programme, with two completing the programme and are now awaiting to undertake the oral examination, whilst six are still in the process of completion.

AS At 2016, 8 rAtingS SELEctED fOr wKO PrOgrAMME

tHE wKO PrOgrAMME ALLOwS fOr tHE trAnSitiOn Of HigHLY cOMPEtEnt DEcK rAtingS tO An OfficEr POSitiOn

9 months of classroom courses

Oral Examination by the Marine Department

Certification of Competency Class 3 Deck Officer

Begin sailing as 4th Officer

2nd Officer

Programme approach:

complete pass all exams

a+

Progress as

3rd Officer


iMPrOvEMEnt in SEAfArEr PErfOrMAncE, SAfEtY PErfOrMAncE AnD vESSEL AvAiLABiLitY DuE tO tHE cOMPutEriSED crEw cOMPEtEncE MAnAgEMEnt PrOgrAMME

224 OfficErS AnD 90 rAtingS HAvE unDErgOnE tHE EngLiSH LAnguAgE ASSESSMEnt

Excelling in English

With the English language being the working language on board vessels, with respect to verbal and written communication, the English language programme (incorporating Maritime English to meet IMO standard) was designed to ensure improvement in the command of English amongst our seafarers. It is imperative for our seafarers to have a good command of English to ensure effective communication on board and with shore-side authorities for flawless operations that ensure the safe delivery of our customers’ energy cargoes. It also affects our ability to deal with emergency situations involving different nationalities in very challenging circumstances, should they arise. A total of 224 officers and 90 ratings have undergone the assessment to determine the proficiency level of each staff and enable their placement in the appropriate level course.

Computerised Crew Competence Management Programme

Since the introduction of a computerised crew management programme in 2014 and other initiatives on our LNG carriers and chemical tankers, MISC has seen a reduction in vessel cost of almost 10%. The implementation of this system has resulted in the improvement of seafarer performance as well as safety performance and vessel availability.

Vessel availability has risen to 99.8% partially due to the system, which includes an online training and competence management programme that enables seafarers and managers to track training, competence and career profiles.

The online recording system also supports simulator training, computer-based training, on board mentoring and assessments. Seafarers can use the online portal to update their own competence management, which their superiors are able to view and manage crew training requirements. This is a further example of our efforts and commitment to continuously strive for improvements, in line with our commitment to ‘be consistently better’.

Pre-Sea Cadet On-Boarding Induction Programme

Following the completion of their one year of pre-sea training in ALAM, deck and engine cadets will be assigned to a vessel for their on board training. These cadets will be supervised and trained by a dedicated training officer on board, namely the Chief Officer and 2nd Engineer.

The programme is essentially a six-week intensive and structured programme exposing the cadets to basic safety, discipline, attitude, hygiene, manners, culture and leadership. Such programmes are in place to ensure the efficient transition of our cadets from the classroom to performing their duties and function effectively on board the vessels.

69

eMploYee engageMent

With our existing talent being the most important asset of the organisation, and as emphasised by our President/Group CEO, it is important for our employees to feel valued and connected at the workplace, especially as we are moving towards achieving the aspirations and objectives that we have set out. Engagement is a critical aspect in our cogwheel of progression and development, and there has been an increased emphasis on and encouragement of employee engagement which will continue in the subsequent

years. Through open communication with employees, Management is able to foster strategic discourse, convey organisational focus and broadcast key messages effectively.

Various employee engagement events were organised throughout 2016 to create an informal environment for employees to interact outside of an office setting. These events served as a platform for the Group to communicate on latest messages and also provided networking opportunities amongst our employees across the various functions and businesses.

eMploYee engageMent activities in 2016

Townhalls Festive CelebrationsAnnual Dinner

Family Day

Officer Seminars Cultural Beliefs Workshops

Long Service Awards

In addition to the ongoing engagement platforms, a series of workshops was organised throughout the year in conjunction with the launch of the MISC Cultural Beliefs as discussed earlier. The workshops were attended by the President/Group CEO and essentially provided a further engagement platform between employees and the President/Group CEO.


Open Communication Channel

To ensure all employees are kept in touch and updated on marketplace and company developments, quarterly townhall sessions chaired by the President/Group CEO is organised. These sessions are also broadcasted to the Group’s other regional and global offices. Additionally, employees are also able to

communicate directly with thePresident/Group CEO via email where concerns and queries are personally responded to. This active approach towards maintaining open communication channels helps build trust and fosters stronger management-employee relationships, reflecting our commitment to the MISC Cultural Beliefs principles of “nurture trust” and “tell Me”.

Long Service Awards and Annual Dinner

Held in conjunction with the Company’s Annual Dinner, the annual MISC Retirement and Long Service Awards is a celebration and recognition of the contributions of the retirees and long serving employees of MISC, in line with our commitment to our Shared Values of Loyalty. A total of 216 employees from MISC Berhad (shore and sea employees),

MILS and ALAM received their award for the categories of 15 years, 20 years, 25 years, 30 years and 35 years, and a separate category for retirees. The event continued with the inaugural MISC’s Annual Dinner which was attended by all employees. Similarly MHB and AET celebrated a total of 89 and 66 long serving employees respectively in 2016.

Facebook at Work

In view of the current digital era and the ease of communication at the touch of our fingertips, it was thought imperative for the Group to move with the times and to adopt new innovative approaches to communicate effectively with our employees. In October 2016, the Group launched our own social media platform, “Workplace” (also known as Facebook@Work), to be used internally within the organisation. The platform, which replicates the common features available on normal Facebook, encourages interaction amongst our employees where they are able to communicate on work related matters as well as share and post news and upcoming events.

19 February 2016

Plenary TheaTre, Kuala lumPurConvenTion CenTre, malaysia

71

Educational Excellence Awards

MISC does not only acknowledge the success and achievements of our employees, but also recognises employees’ children for their outstanding academic achievements in the Ujian Penilaian Sekolah Rendah (UPSR), Pentaksiran Tingkatan 3 (PT3) and Sijil Pelajaran Malaysia (SPM) national examinations. MISC Berhad presented the MISC Educational Excellence Awards 2015 to 55 of our employees’ children at the ceremony. Additionally, seven students from Sekolah Menengah Pendidikan Khas Setapak (SMPKS) under our ‘Project Mata Hati’ Corporate Social Responsibility (CSR) initiative were also honoured at the event.

Project Mata Hati is a CSR project by MISC Berhad with the objective of helping SMPKS achieve its aspiration of being a world class institution for blind and visually impaired students, through programmes that identifies and enhances the hidden potential of the students. This programme was a CSR initiative that began in 2011 and ended in 2016, as we move towards a more sustainable and long term community investment initiatives in line with the MISC Sustainability Strategy for the Community.

We take pride in organising such award events to promote the importance of education and long term social investment. We will continue to seek ways to carry out education-centric initiatives that will contribute to the growth of the nation by nurturing our future generations.

MISC’s Family Day

A total of over 1,000 employees from across the Group (including shore and sea employees) and their family members attended MISC Family Day 2016. Officiated by the President/Group CEO, the event included several games and activities for the young and young-at-heart, such as Zumba, Treasure Hunt, tele-matches, booth games, colouring contests, and face painting to name a few, which created a carnival-like atmosphere for the event.

We believe such events help foster a spirit of unity and togetherness amongst our employees, providing various opportunities to interact with one another outside the workplace, between sea and shore employees, as well as Group and subsidiary employees. By creating a great workplace, we aim to attract and retain the best talent in order to achieve our Mission of promoting individual and team excellence.

24 sePTember 2016

buKiT Kiara equesTrian Club, Kuala lumPur

Further details of our education initiatives in relation to community investment as part of the MISC Sustainability Strategy can be found in the Community section in this report.

uPsr(5as)

24recipients

sPm(9as)

17recipients

PT3(8as)

14recipients

ProjeCT maTa haTi

7recipients

29 aPril 2016

le meridien hoTel,Kuala lumPur


engaging our seaFarers

Conferences and Seminars

In line with our aspirations to create stronger synergy and cultivate better working relationships, MISC’s Fleet Management Services (FMS) and AET collaborated to organise a total of six conferences/seminars. These included two senior officer management forums, two junior officer seminars and two ratings seminars.

With the theme of “Moving energy: consistently performing better”, the conferences saw the participation of:

These conferences and seminars serve as excellent platforms for engagement. The events also allow for the sharing of expectations and best practices, inculcating high standards of safety culture through various case studies, the reflective learning approach and the internalisation of organisational strategic values and direction to drive operational excellence across the MISC Group. Such platform also provides a further avenue for our seafarers to connect and interact with the Management and other shore-based colleagues.

total seafarers

708

212senior officers

274junior officers

222 ratings

“Emergency Calling Card” Initiative

Being on board a vessel for long periods of time is never easy for both our seafarers and their family members. We are cognisant of this, and continue to find ways to improve the level of comfort, assurance and security of both our seafarers and their family members, as part of our commitment to show our appreciation to our valued seafarers, who are essentially the heart of our business.

In view of this, in 2016, we developed the “Emergency Calling Card” initiative, as an additional way of enhancing the assurance, comfort and security of our seafarers and their family, whilst they are on board. The initiative was created to ensure that there is a support mechanism in place in the event of emergency situations such as admissions to hospital,

accidents or death to either the seafarers or any of their family members. A contact number is provided on the call card, which is a designated line to be used by our seafarers and their family members. The contact numbers for two designated lines are provided on the call card, one each for during and after office hours, allowing seafarers and their family members to reach us 24/7 in case of emergency. The Emergency Calling Card initiative is currently underway and will be distributed in the first quarter of 2017.

As an additional form of support, MISC sends a representative to visit seafarers who are hospitalised or afflicted with serious illness, either at the hospital or at their homes, to ensure that all their needs are met and to provide advisory on their medical coverage and any social security assistance required.

Moving ForWarD

Our priority for the years ahead is to ensure the effective and successful implementation of our HR five-year strategy in support of achieving our MISC2020 Corporate Strategy and MISC Sustainability Strategy targets for the Employees pillar. The focus of the strategy as earlier discussed will be to ensure a

sustainable talent pipeline across all job levels through the revamped succession planning process and a more structured and holistic development process for both leadership and functional competencies through the employee competency development programme. Additionally, the Group will continue to invest in the upskilling of our employees through various other development programmes in

the pipeline, whilst continuously promoting and ensuring an environment and culture of trust through open engagement and communication. We will continue to strive in embedding the values and principles as set out by our Cultural Beliefs and Shared Values that will be essential in support of achieving our overarching ambitions, objectives and milestones.

During OfficE HOur xx xxxx xxxxAftEr OfficE HOur xxx xxx xxxx

EMErgEncY cALLing cArD

73

Mission


objectives

• Safe & healthy working environment

our 2020 targets

Focus on Health:To have a healthy workforce with a focus on improvement in BMI levels and effective management of Health Risks at the workplace

HEaltH stratEgy ArEAS DiScuSSEDHse governance

2016 saFetY perForMance

targeteD approacH in Managing saFetY risKs

operating at international stanDarDs

iMproving saFetY perForMance

eMploYee HealtH & Wellbeing


HEALtH & SAfEtYThe continued safety of our people, our ships and their cargoes together with the protection of the natural environment in which we operate remain our top priority, and this is evident in the way it is prioritised within the Group. We believe it is necessary for a strong safety culture to prevail both at sea and ashore. We strive to continually minimise health and safety risks at the workplace. This is realised through operational best practice, monitoring and tracking performance as well as implementation of value-adding initiatives, including our HSE Culture Enhancement Campaign and Health Strategy, under the MISC Sustainability Strategy.

57 aet vesselsreceived thejones F. Devlin awardby CSA

Zerorecordable incidences of workplace fatalitiesin 2016LTIF at 0.11

and TRCF at 0.36. reduction of8% and 25% respectively from last year

aet offshore recorded Zerolti and trcFfor the first time

OBU maintained zero ltiF in 2016

KEY HigHLigHtS fOr 2016

75

HEaltH stratEgy

In complementing the robust and strategic management of safety and in our continued commitment to ensuring a healthy workforce, this strategy was developed with a specific focus on the aspect of health.

The Health Strategy will contribute towards a more structured, cohesive and robust approach in the management of health aspects. There are two focus areas. The first is to ensure an improvement in BMI levels, where we have set a target of achieving 60% of our employee population to be within the “Normal” range of BMI by 2020, through the implementation of various programmes and campaigns. Secondly, we will be focusing on the management of health risks through a more structured and strategic approach, which includes conducting health risk assessments and the effective management of identified issues.

MISC’s commitment towards health and safety are reflected in the MISC Policy Statement on Health, Safety and Environment (HSE) as endorsed by the President/Group CEO that is applicable to all employees of the MISC Group. The emphasis on health and safety is also extended to all third parties who conduct business with us through the MISC Health, Safety and Environment Requirements for Contractors which automatically applies when these parties enter into contractual agreements with us.

Corporate Health, Safety and Environment (CHSE) sets the tone, focus and policies for the entire MISC Group. Each major service unit, business unit and subsidiary within the MISC Group has their own HSE function that oversees and manages HSE matters relating to their operations, and reports their performance back to CHSE at Group level.

PETRONAS Group HSE Mandatory Control Framework (MCF) which consists of HSE standards, requirements and governance are applied across the entire PETRONAS Group including MISC. This is to ensure homogenous and high standards are applied in a structured and consistent manner with the appropriate check and balance in addressing key HSE risks with regards to individual subsidiary operations.

The HSE Culture Enhancement Programme, a five-year programme that is an expansion of the Group Behavioural Safety (BhS) Campaign launched in 2015, was developed with the aim to promote a healthy workforce, cultivate positive attitude towards safety and instil care for the environment. This programme is supported by the Health Strategy as part of the wider MISC Sustainability Strategy, which focuses on the aspect of health to inculcate the benefits of a healthy lifestyle amongst our valued employees.

Further details on the implementation, monitoring and measuring process including the management approach, can be found in the Sustainability@MISC and Sustainability Governance sections in this report.


The overarching management framework and standards are supported by the policies and guidelines in place. This includes the MISC Safety Rules, first launched in 2011 and relaunched in 2016 following a revision, developed to emphasise the central role of HSE best practices in our day-to-day operations, and is applicable to all employees across the Group. With the Safety Rules in place, we are focused on reducing and eliminating the number of major accidents and fatalities at our worksites.

As evidenced by our efforts, the safety and health of our employees is paramount to the Group. As such, a strong knowledge sharing through regular communication and promotions are conducted throughout the Group over the course of the year. All employees are trained on HSE elements at all levels, in addition to the various sharing sessions conducted through internal communication platforms. For those based at our operational facilities including our shipyard, it is compulsory for all employees to go through the site safety induction before each entry and start of work.

In 2016, in alignment with the office upgrade project at Menara Dayabumi, HSE elements were incorporated into the upgrade project, where a specific area (‘corner’) of each floor was dedicated to HSE matters. The introduction of the HSE corner is a reflection of the Management’s commitment towards HSE that consequently enhances the level of awareness on the importance of HSE amongst employees. Each corner, painted in bright red is equipped with HSE policies and guidelines, an automated external defibrillator (AED), a fire extinguisher, recycle bins and the necessary personal protective equipment (PPE) for floor warden’s usage in the event of an emergency.

Employees throughout the organisation also receive regular communication through HSE Alerts and Lessons Learnt issued by CHSE or the respective HSE units at Subsidiary level.

MiSc POLicYStAtEMEnt On HSEAPPLiES tO ALL EMPLOYEES AnD tHirD PArtiES

MiSc SAfEtYruLESrEviSEDAnDrELAuncHEDin 2016

intrODuctiOn Of HSE cOrnEr On EvErY fLOOr Of MEnArA DAYABuMi

MiScSAfEtY ruLES

77

Case Study

Misc saFetY rules

The Safety Rules are MISC’sfirst set of mandatory rules that addresses high-risk activities to ensure that they are carried out as safely as possible. It was designed to protect and prevent harm to all staff and contractors by equipping them with sufficient awareness of potential hazards around them and how to best handle emergencies.

With the Safety Rules in place, we are focused on reducing and eliminating the number of major accidents and fatalities at our worksites.

chronology

The Safety Rules pocket booklet is also available to all visitors attending meetings.

this booklet can be found at the meeting rooms, and outlines the following:

the safety rules are also visible and easily accessible throughout the group via dedicated Hse areas such as

HSE Corner

MISC SafetyRules

Employee portal

Menara Dayabumi Evacuation Route

Meeting rooms

Emergency Contact Details

First launched in 2011 with seven rules outlined.

Revised in 2015to include three additional rules.

Rolled out in 2016 for adoption at all subsidiaries and business units

Work with a valid Permit ToWork (PTW) when required.

Obtain authorisation beforeentering an enclosed space.

Conduct a gas test whererequired.

Obtain authorisation beforeoverriding or disabling safetycritical equipment.

Verify energy isolationsbefore starting work.

Do not position yourselfunder a suspended load.

Protect yourself againsta fall when working at heightor overside.

Do not use mobile phonewhile driving or workingonboard ship and offshoreasset. Wear seat belt andfollow speed limit.

Wear the correct PersonalProtective Equipment (PPE)as required for the job atall times.

No drugs or alcohol whileworking, driving or onboardship and offshore asset.Do not smoke outsidedesignated smoking areas.


Hse governance & eMploYee representation

The focus on HSE is driven from both top down and bottom up through the various safety committees existing within the Group. The MISC Group HSE Council is chaired by our President/Group CEO and whose members consists of VPs and MD/CEOs of the various Business and Support Units and Subsidiaries. The MISC Group HSE Council oversees all HSE matters related to the Group and meets every quarter to review HSE performance as well as ongoing efforts to improve performance.

Apart from the MISC Group HSE Council, some of the larger business and service units have set up their own HSE committees to manage HSE performance at their own level. This is also the case for each of our subsidiaries where overall performance is reported back to the Group

level. Additionally, HSE matters at Menara Dayabumi is discussed and managed through the Dayabumi HSE Committee, which comprises MISC representatives from both the employer (i.e. MISC) and employees.

HSE practitioners within the Group meet every quarter during the MISC HSE Managers meeting where HSE performance is shared and pertinent HSE matters discussed. This forums acts as another avenue for enhancing professional knowledge for the core HSE practitioners and through engagement and governance within the Group to ensure effective practice and implementation of HSE culture.

All employees are represented on HSE matters through these committees throughout the MISC Group. Additionally, on an individual level, employees are also given the opportunity to participate in various HSE events organised throughout the year, as well as through Unsafe Condition Unsafe Act (UCUX) reporting on safety matters.

In addition to the communication of HSE matters at the respective Council and Committee levels, disclosure of HSE matters and performance including HSE Alerts and Lessons Learnt are also communicated regularly throughout the Group via various portals (i.e. MISC intranet portal, email blasts).

Health, safety& environment(Hse) council

Business andService Units

HSE Committee

SubsidiariesHSE Committee

Other HSE Committees

business units, subsidiaries and other committees

group level

chaired byrespectiveHead/vPs

chaired byPresident/group cEO

reportprogressto HSE council

Meets everyquarter

representation ofHSE practitioners fromacross the group

Supported by vPs and MD/cEOs of each business units and subsidiaries

79

2016 saFetY perForMance

We are extremely pleased to report that in 2016, the Group’s Lost Time Injury Frequency (LTIF) and Total Recordable Case Frequency (TRCF) remained low at 0.11 and 0.36 respectively and that there were zero recordable incidences of workplace fatalities. Both the LTIF and TRCF reflect a reduction of 8% and 25% respectively as compared to the previous year. These results are a testament of our continued commitment towards ensuring the health and safety of our employees.

2016 also saw a reduction of 35% in the total number of injuries (TRC) as compared to 2015 performance data. The overall improvement in our HSE performance is evidence of the effective HSE management systems that we have in place, and the outcome of the increasing level of understanding and awareness on matters relating to HSE through the various awareness programmes and campaigns promoted across the Group.

For MISC’s shipping business units, both LTIF and TRCF have also decreased significantly and for the first time in its history, our AET Offshore operations achieved a landmark zero LTIF and TRCF performance. This is a significant result based on the various campaigns and programmes which included the implementation of safety initiatives such as Quarterly Vessel Inspection by the Management Team, Monthly Safety Inspections, and senior management deck plate visits with all the Lightering Service Vessels (LSC) and Ship-to-Ship (STS) Operation’s crew.

Misc group saFetY perForMance

0

0.20

0.40

0.60

0.80

0

20,000,000

40,000,000

60,000,000

80,000,000

2014 2015 2016

Freq

uenc

y

Wor

king

hou

rs

0.07 0.12 0.11

0.36

0.48

0.72

64,991,917 55,776,643

Workinghours

Lost TimeInjury Frequency

Total RecordableCase Frequency

Misc group (sHipping) saFetY perForMance

Workinghours



0

0.25

0.50

0.75

0

10,000,000

20,000,000

30,000,000

2014 2015 2016

Freq

uenc

y

Wor

king

hou

rs 0.00

0.11 0.04

0.27

0.60

0.72

25,884,632

26,784,764 27,602,229

57,240,744


At our non-shipping business units, the total number of TRC in 2016 decreased by 13% as compared to 2015. However, due to the significant reduction in total working hours accumulated in FY2016, the LTIF and TRCF showed a slight increase. Our Offshore Business continued to show excellent safety performance, where they had recorded zero LTIF for the past three years.

Misc group (non-sHipping) saFetY perForMance

0

0.20

0.40

0.60

0.80

0

10,000,000

20,000,000

30,000,000

40,000,000

2014 2015 2016

Freq

uenc

y

Wor

king

hou

rs

0.39

0.130.13

0.43

0.17

0.71 38,207,153

29,892,011

ZErOrEcOrDABLEinciDEncES Of wOrKPLAcE fAtALitiES

AEt OffSHOrE rEcOrDED ZErO Ltif AnD trcf

OBu MAintAinEDZErO Ltif

Ltif 0.11 8%trcf 0.36 25%

Workinghours



29,638,515

81

targeteD approacH in Managing saFetY risKs

As part of our efforts to further improve the Group’s safety performance, safety statistics and data was analysed to identify the most common injuries faced by our employees, as well as the most common basic risk factors. This in-depth analysis allows the Group to focus on areas of concerns and formulate action plans to mitigate the risks identified.

The analysis shows that hand and finger injuries are still the most common types of injuries sustained by employees, especially at our operational facilities including our shipyard, due to the nature of work carried out. There is however a 21% reduction on the actual number of hand and finger injuries as compared to the previous year, due to the various initiatives and campaigns carried out to ensure the mitigation of such injuries. Face/head and leg/foot injuries are the second most common type of injuries following the analysis.

We will continue our commitment to ensure the mitigation of these injuries, through continued targeted programmes and campaigns.

Training and procedures were identified as areas to focus on, with respect to common basic risk factors. This was due to a variety of reasons, including instances where procedures are readily available but were not adequately communicated, or the lack of available procedures for tasks.

There will be further efforts in establishing Standard Operating Procedures (SOPs) for all high risk or potentially hazardous activities as well as communicating these SOPs to all employees working at operational sites, as part of our commitment in mitigating these identified risk factors. Additionally, further emphasis will continue to be placed on training to ensure employees are well aware of the correct techniques in operating equipment, utilising the appropriate PPE and identifying potential hazards posed by work activities.

HAnD AnDfingEr injuriES

21%

Although we continue to perform well in our overall health and safety performance, we will ensure that we continue to set higher standards and targets to achieve, year after year, in line with our Group Mission which directs us “to be consistently better”. The Group will continue to consistently implement improvement initiatives to the current HSE management system to further enhance the overall HSE performance, which will

include targeted programmes to enhance HSE awareness among employees, increase employee participation in such programmes, and manage our contractors’ HSE performance, as part of the broader implementation of the HSE Culture Enhancement Programme.

The following are some of the main activities and initiatives carried out during the year:

PrOviDE PrOPEr PPE AnD trAining in OPErAting tOOLS AnD EquiPMEnt

EStABLiSH AnD cOMMunicAtE SOPsAnD guiDELinES


Misc Hse culture enHanceMent

Our workplace culture places a strong emphasis on safety, as evidenced by the Group’s safety statistics and performance. However, we have identified opportunities to further promote and embed health and environmental awareness across the Group. Hence, the Group Behavioural Safety (BhS) Campaign which was launched in 2015 has now been expanded to include the elements of Health and Environment and is now known as the HSE Culture Enhancement programme, with specific targets to be achieved by 2020.

Various activities have been planned under this programme that aims to promote a healthy workforce, cultivate a positive attitude towards safety and instil care for the environment. This programme and initiatives under this programme will be supported by various communication

and promotions to ensure the uptake and awareness amongst employees, as our aim is not only for them to practice a safe, healthy and environmentally conscious mindset at work, but also to take the lessons home with them.

Promote ahealthy workforce

Cultivate positive attitudes towards safety

Hse culture

enhancement objectives

Instil care for the

environment

2020 target Monitoring initiatives

• 60% of MISC population to be within “Normal” range of BMI Classification

• BMI reading to be taken initially and subsequently once a year

• Exercise/Fitness Activities• Campaign – 7,000 Steps Daily through

pedometer monitoring• Health Day, Health Talks, Health Alerts &

Tips• Personal Health Management Intervention

Programme

• Cultivate positive attitude towards safety

• Eliminate unsafe behaviour

• Safety Perception Survey

• Sharing – Safety Awareness/Tips/Alerts/Lessons Learnt

• Campaigns – Promote Road Safety• Peer-to-peer observation• Emphasising on existing UCUX initiative

• Reduce paper usage by 30% • Eliminate use of plastic &

polystyrene

• Paper reduction monitoring

• Plastic & polystyrene monitoring

• Sharing – Factsheets • Campaigns – Recycle and tree planting• Provision of reusable bags, food and

water container • Recyclables collection bins at every floor

(HSE Corner)

Healthy

safety

environment

83

sustaining HealtH & saFetY aWareness

Following on from the successes and increasing interest garnered from the MISC HSE Day since its inception in 2014, a similar event was held on 7 and 8 November 2016 for all MISC employees and occupants of Menara Dayabumi, Kuala Lumpur. In addition to the various talks specifically relating to health, safety and environment, there were also several activities and programmes organised such as the Fitness Team Challenge and awareness talks on Breast Cancer that was followed by the Breast Health Screening session which received an overwhelming positive response. There were also booths that showcased and promoted health and safety practices and products, especially in terms of personal wellness, and included a free health screening.

In conjunction with the MISC HSE Day, the MISC Blood Donation Campaign was also carried out where a total of 145 donors contributed to the University Malaya Medical Centre blood bank. The continued increase in the number of participants as compared to the previous years, speaks to the importance of this initiative which is strongly valued by the employees of MISC.

Similar HSE Day events were also held at the subsidiary level, also with the intention of increasing employees’ awareness on HSE matters. Additionally, various training sessions and talks focusing on first aid, fire safety and prevention, as well as nutrition and health, were held for the benefit of our employees at all office locations.

New hires at MISC also receive a health and safety briefing by a representative from CHSE during the Corporate Orientation for New Employees (CONE) Programme.

unsaFe conDition unsaFe act (ucuX) caMpaign

We subscribe to the belief that awareness on safety is nurtured through education on unsafe behaviours and conditions. Research shows that incidents can be reduced and avoided if the root cause is recognised and tackled. Eliminating the root cause will subsequently eliminate the occurrence of unsafe incidents and potential near misses.

Unsafe Condition Unsafe Act reporting is part of the HSE Culture Enhancement initiative, and continues to be the platform that is promoted to encourage our employees to report on unsafe behaviours or conditions across the Group. Once submissions have been made, the relevant HSE function will conduct a review and implement the appropriate corrective action. In 2016, a total of 100,220 cards were submitted and resolved across the Group.

unsaFe conDition unsaFe act reporting process

Employee observes unsafe acts and

conditions at workplace

Employee reportsto HSE team

HSE teaminvestigates and

implementscorrective action

145 DOnOrS cOntriButED tO MiSc BLOOD DOnAtiOncAMPAign On MiScHSE DAY

100,220 cArDSHAvE BEEn SuBMittED AnD rESOLvED


operating at international stanDarDs

It is imperative that our operations reflect the high levels of internal safety standards and meet or exceed our employees’ and customers’ expectations. In demonstrating this, several of our BUs, SUs and Subsidiaries have formalised their commitment to safety by obtaining OHSAS 18001 certification. These operations include AET Shipmanagement, MHB and OBU.

Compliance to safety standards are subject to internal and external audits by various parties. Regular safety audits are carried out yearly by CHSE on both internal and external parties to ensure compliance to organisational HSE standards. In 2016, a total of 18 audits were carried out and all auditees comprising contractors and shipyards met the expected safety standards. In addition, our operations are also subject to audits by customers, including PETRONAS. In 2016, a Tier 3 assurance of the MISC Group’s HSE management systems was successfully conducted at CHSE and OBU and concluded by PETRONAS.

In 2016, AET once again received recognition from the Chamber of Shipping America (CSA), when 57 AET vessels comprising two workboats and 55 vessels received the Jones F. Devlin Award for maintaining and promoting the safety of life and property at sea while onboard. Of the 57 vessels, there were 30 achieving five or more accident-free years and 12 achieving 10 or more accident-free years.

AET was also awarded and recognised as a safety champion by Maritime and Port Authority (MPA) of Singapore during the International Safety@Sea Conference that took place from 30 to 31 August 2016. This is in recognition of AET’s contribution to safety efforts and in their contribution towards the filming of “Safe Passage in the Singapore Strait” safety video. Affirming AET’s enduring commitment to promoting safety at sea, the organisation’s overall approach to safety – including the importance of safety personnel, training, processes, systems, culture and philosophy – was also shared at the event.

iMproving saFetY perForMance on boarD our vessels

One of the key factors in our license to operate is due to the high safety standards practiced on board our vessels, which continues to be a source of pride for our seafaring personnel. Our aim is to continuously provide a safe working environment on board all our vessels globally. In further improving safety performance and as part of our risk mitigation efforts, FMS and AET Shipmanagement continue to implement safety and health centric initiatives on board our LNG, Petroleum and Product vessels. Some of the efforts carried out in 2016 include:

tHE StOP cArD initiAtivE HAS rAiSED tHE iDEntificAtiOn Of nEAr MiSSES AnD iMPrOvED tHE SAfEtY cuLturE

Championing Safe Behaviour

Due to the high-risk working conditions on board our vessels, the implementation of a strong safety culture is further necessitated and emphasised. The Stop Work Policy was one of the several initiatives developed to further promote the practice of safe behaviours amongst seafarers on board vessels.

As part of the Stop Work Policy, AET offshore implemented the Stop Card initiative which has been adopted and implemented on board all workboats and AET vessels. The Stop Card is aimed at breaking down interpersonal barriers in terms of safety communication, which is especially prevalent in hierarchical structures such as the shipboard community.

The person who perceives a safety concern with the actions of a fellow co-worker while on the job, needs only to raise the Stop Card to indicate that something is wrong, without fearing bias or retribution. The person whom the Stop Card was raised against then need to immediately take the necessary steps to correct his or her actions or ask what is being done incorrectly.

This event would subsequently be recorded as a near miss incident. The use of Stop Card has also been rolled out to AET shore personnel. Since implementation, the Stop Card initiative has raised the identification of near misses and improved the safety culture among both sea and shore employees.

Similarly in the case of FMS, the Peer to Peer Support Programme as part of the Stop Work Policy was initiated to further encourage and educate seafarers to intervene in the event of unsafe behaviours by their colleagues. By encouraging our seafarers to intervene when they see a co-worker engage in unsafe behaviour, the risk of injury can be mitigated. This programme was rolled out during the various engagement sessions with seafarers ashore and on board the vessels through presentations, posters and videos.

85

Integrated Management System

As part of our continued effort to increase efficiency and effectiveness of our systems in line with our commitment towards ensuring synergy in our function and operations, in 2016, we have taken a further step in this direction with the integration of all STS Operations under the AET Offshore Safety Management System (SMS). This integrated system will provide further enhancement to the monitoring and measuring of safety performance and in the sharing and distribution of information, under a singular process. The full scope of work includes:

i. Conducting gap analysis for current Offshore and Shipmanagement SMS, to bring both systems closer in line with each other.

ii. Restructuring of the SMS to include all operations under one integrated Quality Management System.

iii. Reviewing of STS Operations Manual to be fitted with all required updates and industry and AET best practices.

iv. Migration of complete SMS onto the same Integrated Document Management System

Additionally, in order for documents to be easily accessed regardless of location and across systems and devices, AET has also introduced a cloud-based document storage application for its sea and shore employees. The application serves as a platform for one-stop access for the management and delivery of the Integrated Management System (IMS) and other supporting information documents, thus driving operational excellence.

Equipping our Employees and Vessels

With the proper and correct usage of PPE, chances of injuries can be further reduced. On this note, AET has provided safety-enhanced helmets as well as eyewear with anti-fog features, that can be used either during the day or at night. Additionally,

all AET vessels are also equipped with Intrinsically Safe (IS) cameras that are also safe to be used in hazardous areas, where other types of cameras will not be allowed. No camera permit is required for using this camera.

All AET vessels are also provided with at least one fully enclosed gas tight ullaging instrument and sampling device to eliminate the risk of exposure to toxic gasses during cargo gauging or sampling operations.

Zero Incidents & Zero Accidents (ZIZA) Campaign and Awards

In 2016, FMS continued in their implementation of the Zero Incidents & Zero Accidents (ZIZA) Campaign through the conduct of various programmes and initiatives which included the Safety at Work on Deck and Inert Gas Generator awareness campaign. Analysis showed that working at deck activities recorded the highest number of safety incidents during the year under review. Following the findings, several targeted programmes were developed and introduced to promote and ensure the awareness of seafarers on working safely on deck, which included sharing sessions, learning through collective approach and practical training.

As in the previous years, ZIZA Awards are conferred to the best operating vessels to recognise outstanding safety performance for the year. To be eligible for the award, the vessel’s Shipboard Management Team are to meet and exceed the required criteria in the Safety Performance Target. The awards are divided into various categories, namely HSE Award, Marine Assurance Award and Best Practices – Innovative & Functional Design Award. The 2016 winners were presented with their awards during the Senior Officer Management Conference held at Putrajaya, Malaysia in February 2017.

AEt StS OPErAtiOnS cOMPLEtED tHE iSO 9001 rEnEwAL AuDitwitH ZErOnOn cOnfOrMAncES

SAfEtY-EnHAncEDHELMEtS AnD EYEwEAr PrOviDEDtO AEt EMPLOYEES

tArgEtED PrOgrAMMES tO PrOMOtE SAfE wOrKing On DEcK


iMproving saFetY perForMance at sHore

Similar to our targeted programmes tailored for our sea employees, there were specific initiatives taken at our various shore offices, especially at subsidiary level, to improve safety performance. These initiatives were carried out for the understanding and benefit of both employees as well as third parties. Advanced Safety Audit (ASA)

Originally developed in the UK coal-mining industry, the ASA was introduced to our OBU in December 2016. ASA is intended as a tool that provides managers and supervisors with a systematic approach to changing and shaping safety behaviour at the workplace. It also serves as a vehicle for a short, structured one-on-one

conversation between site management and the employee on safety, recognising safe behaviour, and identifying and gaining commitment to behavioural change towards an Incident and Injury Free workplace.

The campaign has been rolled-out for the Floating Storage and Offloading (FSO) vessel, Benchamas 2 project in MHB, that commenced in February 2017.

change from a culture that:

to a culture that:

Condonesunsafe practices

Observes, identifies and eradicates

unsafe acts

Treats safety as an extra, or add on part

of the business

Integrates safetyinto greaterbusinessculture

Reacts to accidents and concentrates

on statistics

Is concernedabout people

and is proactivein safety

Sees safety as “someone else’s”

responsibility

Accepts that safety is a personal

responsibility for everyone within the

organisation

asa objectives:

SAFETYFIRST

87

MHB Safety Campaign

With over 488 acres of area to be covered, bicycles are an important mode of transport for the employees and contractors at our MHB yard. The commitment to the safe usage and proper maintenance of the bicycles is imperative to the yard and users in ensuring safe travels between destinations within the yard compound. Hence, a two-month “Registered Bicycle is a Safe Bicycle” campaign was launched, with the main objective of ensuring all bicycles used are in a safe condition and every bicycle is designated to a rightful owner.

As forklifts are one of the main modes of transportation of goods and materials from one point to another at MHB, in July 2016, a four-day Forklift Safety Awareness Campaign was held, with the intention of enforcing HSE Minimum Requirement of Forklift Safety amongst all forklift operators. The event was attended by all forklift operators including subcontractors, where awareness on the proper usage and

handling of forklifts – including carrying out fork-lift pre-inspection checks, ensuring fire extinguishers are fitted on each forklift and safe operations of the forklift – was promoted to reduce the occurrence of incidents during the handling of goods and materials.

Aedes prevention and control is one of the key concerns under the Malaysian Ministry of Health (MMOH) and regular inspections are conducted at various locations including workplace and construction sites to identify and mitigate the population of aedes mosquito. MHB provides its full support towards MMOH and relevant regulatory bodies in this initiative. During the year under review, in addition to preventive measures, proactive efforts were also taken by MHB to mitigate the recurrence of incidents including regular site walkabouts, workplace inspections, awareness programmes with MMOH on the impacts of dengue as well as the continuation of vector control exercises (fogging).

MHB LAuncHED tHE “rEgiStErED BicYcLE iS A SAfE BicYcLE” cAMPAign

fOrKLift SAfEtY AwArEnESS cAMPAign HELD At MHB


eMploYee HealtH anD Wellbeing

As earlier discussed, the Group has developed and implemented several initiatives to support the commitment of ensuring a healthy workforce following the expansion of the HSE Culture Enhancement Programme. Various activities were carried out during the course of the year focusing on promoting a health conscious mindset, and this includes health and fitness programmes, and healthy eating campaigns such “Fruits Day” and “No Junk Food Day” amongst others. Additionally, all employees were also provided with a pedometer, following the launch of the “7,000 Steps a Day” campaign, where employees are encouraged to conduct regular walks as part of the objective of reducing BMI levels. Employees are encouraged to monitor their number of steps taken on a daily basis and for submissions to be made to the respective focal persons of each department on a monthly basis. These records are then provided to CHSE for their review, with respect to ensuring the achievement of objectives set. Additionally, aerobic activities with the intention of promoting fitness levels, such as gym training and outdoor hiking programmes, were also organised throughout the year. To increase the

participation of employees across the Group, these programmes and initiatives were also promoted to our respective BUs and Subsidiaries to supplement their own health programmes and initiatives.

In April 2016, AET launched “Our Health in Our Hands” campaign to promote a healthy lifestyle and encourage employees to take responsibility of their own health by providing them with fitness trackers. Various other activities were also planned in support of this initiative including health screening and awareness sessions such as “Yoga for Health”, “Treating Stress with Nutrition”, and “Understanding Diabetes”.

Aligned to the Group commitment of encouraging a healthy workforce, OBU also organised an event for their shore employees entitled the BodyCore Challenge. The objective of the programme was to provide awareness on the practicability of basic fitness workout and their benefits including sit-ups, plank, ab wheels, squats, and push-ups amongst others. Additionally, OBU employees also participated in the “Stairs Day” event, which encourages them to use stairs where possible, as part of the broader Group agenda of promoting a healthy lifestyle.

Moving ForWarD

The Group will continue to lay down strong HSE foundations, inculcate effective behaviour amongst staff and contractors, enhance their capabilities, and make key personnel more accountable through the various strategic processes, systems and programmes that we currently have in place. This commitment of continuing in our successful HSE performance and journey will be further enhanced by ensuring the effective and efficient implementation of our HSE Culture Enhancement Programme, in parallel with encouraging a healthy workforce as emphasised by the objectives of our Health Strategy.

“7000 StEPS A DAY” cAMPAign LAuncHED tO EncOurAgE A HEALtHY LifEStYLE

89

Mission

To care for the environment andoperate responsibly

objectives

• Carbon• Biodiversity• Waste

our 2020 targets

environmental performance targets for carbon/Key emissions & Waste and established biodiversity programmes:• To achieve reduction in our carbon footprint/key emissions and waste against set

targets• A sustainable and long-term biodiversity conservation programme run

successfully and sustained as part of the company’s agenda

environmental consciousness:Well-informed and empowered staff on environmental awareness and consciousness

ENVIRONMENT STRATEGY


EnvIRonMEntShipping operations that maintain a healthy environment are of benefit to the greater human good and the shipping industry as a whole, particularly as awareness grows with respect to climate change and the need for ‘green credentials’. Changing global trends coupled with increasing scrutiny on climate change and environmental issues from stakeholders is impacting the way shipping is currently being operated. In view of this and our own commitment to the environment, operating in a responsible manner and minimising impact on the environment where possible, is key to the way business is managed at MISC. Our approach towards mitigating our environmental impact is captured in the Group’s Mission, one of which is ‘to care for the environment and operate responsibly’. This is further emphasised through a strategic approach that we are embarking on in the management of our environmental footprint, through our Environment Strategy, as part of the MISC Sustainability Strategy. These commitments are further enhanced through the Group’s Policy Statement on Health, Safety & Environment which applies to all entities operating under the MISC Group.

18.7%reduction of total freshwater consumption by LNG and Chemical vessels

91% ofhazardous wastesfrom MISC non-shippingoperations wererecycled or recovered

18%reduction offreshwater withdrawalfrom MISC non-shippingoperations.

KEy HIgHlIgHtS foR 2016AREAS DISCuSSEDcliMate change andair eMissions

energy efficiency

Water use

Waste ManageMent

biodiversity

operating at internationalstandards

41,295tonnes of co

emissions avoided through application ofgreen technology

2

91

ENVIRONMENT STRATEGY

MISC has historically taken a proactive approach towards the management of our environmental impact. In view of rising stakeholder expectations on environmental performance and growing regulatory demands both locally and internationally, we have adopted a more structured approach to environmental stewardship in the form of our Environment Strategy, which forms a part of the MISC Sustainability Strategy. We believe that by taking a more strategic approach formalised through the Environment Strategy, will assist us to further improve our environmental performance, address increasing expectations and provide MISC a more sustainable and competitive edge in the current volatile market.

The Environment Strategy focuses on our identified material areas of carbon/key emissions, waste (hazardous and non-hazardous) and biodiversity. Although there are various initiatives and systems currently in place to ensure the effective and efficient management of these aspects aside from our other environmental commitments, we will be reinforcing our management approach through the setting of Group targets and development of reduction plans to ensure a more robust governance process towards the sustainable and successful achievement of the set objectives.

Additionally, as part of the Environment Strategy, we will be embarking on various initiatives that are focused on promoting and enhancing environmental consciousness amongst our employees throughout the Group. This will be achieved through a structured, consistent and holistic awareness initiatives/programmes which will focus on specific topics/campaigns over a time period.

Further details on the implementation, monitoring and measuring process as well as our environmental management approach can be found in the Sustainability@MISC and Sustainability Governance sections of this report.

Although the shipping industry accounts for 90% of global trade transportation, it only emits about nearly 3% of the total Greenhouse Gas (GHG) emissions. However, research estimates that the industry will be doubled in 2050, as will the GHG emissions. In view of such scenarios and as a responsible member of the energy related maritime solutions and services industry, we continue in our commitment to take proactive measures towards mitigating environmental impacts from our business operations.

In deriving our Environment Strategy, the areas that have been identified as material to us in terms of managing our impact include climate change and emissions to air, waste management and biodiversity. As there are several core businesses

within the Group, some of these areas may be more material than others. In this respect, the approach taken by the Group, is for each entity to be responsible for managing impact from their businesses in line with Group policies as well as with direction and governance from Group level. Environmental performance is captured and reported through various channels including the MISC Group HSE Council and internal HSE review meetings.

In support of the overarching governance approach and framework of environmental management and in compliance with national and international regulations that are mandatory such as the IMO MARPOL we manage the impact of our operations on the environment via a combination of internal and external management


frameworks and systems. As part of our approach, our operations are subjected to comprehensive standards such as the PETRONAS MCF and fleet environmental management system. Most of our businesses are also ISO 14001:2004 certified.

The requirement of operating responsibly is also extended to third parties who work with us, as captured in our HSE Requirements for our contractors. Any

party that is interested in working with us, is subjected to these conditions which include periodic audits to ensure compliance. We recognise that as a global energy related maritime solutions and services provider, there is potential for significant environmental impact if risks are not adequately managed. Hence, we are constantly taking proactive measures to ensure these impacts are managed adequately and efficiently.

3RD pARty ContRACtoRSSuBjECtED toouR HSEREquIREMEntS

cliMate change and air eMissions

CO2 emissions from international shipping is predicted to increase by 50% to 250% by 2050, and could rise up to 17% of the total carbon output globally if left unregulated. Today, the industry emits approximately 3% of carbon emissions which is equivalent to Germany’s total carbon emissions. Although the shipping industry contributes a significant amount to global GHG emissions, it is still the most energy efficient sector of the transportation industry on a ‘per tonne basis’.

However, regulatory bodies and frameworks including the IMO, United Nations Framework Convention on Climate Change (UNFCCC) are continuously seeking ways for a unilateral agreement on climate change mitigations, as a priority under the overarching umbrella of environmental protection commitments which will essentially have a direct or indirect impact to the shipping and maritime industry.

In 2010, the IMO had taken measures to implement mandatory technical and operational requirements to improve energy efficiency and reduce emissions for ships over 400 gross tonnage. The Energy Efficiency Design Index (EEDI) for new ships and Ship Energy Efficiency Management Plan (SEEMP) for existing vessels entered into force on 1 January 2013. All of the Group’s vessels are in compliance with the EEDI and SEEMP requirements.

From a global context, following the Paris Agreement (UNFCCC) in 2015, the European Union (EU) had introduced the GHG Monitoring, Reporting, and Verification (MRV) regulations, applicable to all vessels travelling to, from and between EU ports. This regulation was developed in support of the Paris Agreement efforts to limit global temperature rise to 1.5 degree Celsius above pre-industrial levels. In view of these developments and requirements, we are taking the necessary measures to ensure our compliance to the expectations. Additionally, the Group has taken a proactive stance towards this requirement, by developing and rolling out the MISC Group GHG MRV Procedures for all relevant business units. The main objective of this procedure is to identify the source of GHG and to provide a systematic approach for monitoring, reporting and verification of GHG emissions within the Group.

As evidenced by our efforts, climate change is an area that we take cognisance of and are actively taking measures to mitigate our GHG emissions and other emissions to air such as nitrogen oxides (NO

x) and sulphur oxides (SOx). Apart from the mandatory requirements by the IMO, the Group has implemented independent initiatives to reduce GHG emissions and improve energy efficiency of our fleet. Additionally, with carbon and key emissions reduction being one of the focus areas of our Environment Strategy, we will be embarking on a more structured and strategic approach in the management of these aspects, through the setting of Group targets and reduction plans.

MISC gRoup gHg MRv pRoCEDuRES DEvElopED AnD RollED out At All RElEvAnt Bus

All vESSElS ARE CoMplIAnt to tHE EEDI AnD SEEMp REquIREMEntS

93

2016 performance

MISC continues to monitor its Scope 1 (direct) and Scope 2 (indirect) emissions in 2016. With a fleet size of over 110 vessels comprising LNG, Petroleum and Product vessels, MISC’s shipping operations accounts for over 98% of the Group’s total carbon dioxide equivalent (CO2-e) emissions.

Due to MISC’s reliance on fossil fuel as a primary source of energy for shipping and non-shipping operations, most of our carbon emissions are categorised into Scope 1 emissions. This is evident as 99% of total emissions in 2016 were Scope 1 emissions and the remaining 1% derived from indirect emissions under Scope 2 from purchased electricity. Thus, any of our current and future energy efficiency efforts is mainly focused on reducing our Scope 1 emissions through fuel efficiency measures.

In 2016, the MISC Group GHG emissions had recorded 4.6 million metric tonnes of CO2-e, an increase of 2% from the year

before. The increment was contributed by an overall increase in transport work done (tonne-nm) by our LNG and Product fleet. Additionally, in 2016, as part of MISC’s continued improvement of our GHG MRV processes, two additional GHGs were included in our reporting, namely methane (CH4) and nitrous oxide (N2O). Furthermore, to improve the completeness of our reporting, additional sources of emissions, mainly from our non-shipping operations, were also included in our GHG emissions inventory.

Currently, our GHG emissions data are internally reviewed and validated before consolidation at Group level. MISC Corporate Procedure on GHG MRV has been established to provide a standardised and structured process to ensure completeness, consistency and accuracy in our monitoring and reporting. Additionally, with enforcement of the EU MRV Regulations, GHG emissions for our vessels travelling to and from EU ports are also subjected to third party verification by an independent accredited verifier.

ovER 98% Co -e EMISSIonS ARE fRoM ouR SHIppIng opERAtIonS foCuS In REDuCIng SCopE 1 EMISSIonS tHRougH fuEl EffICIEnCy MEASuRES

Note:* Scope 1 emissions are direct GHG emissions from sources that are owned or controlled by the Group* Scope 2 emissions are indirect GHG emissions resulting from the generation of electricity, heating and cooling or

steam purchased by the Group

Misc group ghg eMissions

2014 2015 20164,300,000

4,400,000

4,500,000

4,600,000

tonn

es C

O2-

e

4,541,271

4,402,602

4,513,767

47,896

48,236

35,465

4,576,736

4,450,839

4,561,663

Scope 1 Scope 2

2


north sea (sox) baltic sea (sox)

united statescaribbeansea area

(nox, sox and pM)

north aMericansea area(nox, soxand pM)

emission control areas

The requirement for NOx and SOx emissions from ships are established through Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL). When it comes to sulphur content, more stringent sulphur limits are applicable at Emission Control Areas (ECAs) where the maximum sulphur content has been reduced to 0.1%m/m since January 2015. All our vessels are in compliance with applicable sulphur limits when navigating these ECAs by switching to low sulphur fuel.

As for NOx emission limits, all our newbuilds scheduled for delivery from 2016 onwards will be equipped with Tier III compliant engine when navigating the ECAs. All our other existing diesel engine vessels are also in compliant with Tier I and Tier II emission limits in line with MARPOL requirements.

0.10%Baltic Sea, North Sea,North America, US Caribbean

0.10%European Union Ports

0.50%Hong Kong

0.10%Turkish Ports

0.50%China (Pearl River Delta,Yangtze River Deltaand Bohai-Rim Waters)

All MISCvESSElS AREIn CoMplIAnCE wItH tHE ECAs REquIREMEnt

Misc group total nox, sox and pM10 eMissions

0

20,000

40,000

60,000

2014 2015 2016

Met

ric T

onne

s

51,059

38,924

5,724

51,227

40,076

49,685

40,296

5,9085,911

NOx emissions SOx emissions PM10

ECAs

Sulphur Limits

95

nECESSARy ACtIonS tAKEn to EnSuRE All opERAtIonS ARE CoMplIAnt wItH tHE nEw MAlAySIAn EnvIRonMEntAl quAlIty (ClEAn AIR) REgulAtIonS

REDuCtIon of 14% In totAl vESSElS REfRIgERAntS ConSuMptIon

ozone depleting substances

In line with our commitment of phasing out Ozone Depleting Substances (ODS), under the provisions of the Montreal Protocol, approximately 80% of the refrigerants used on our vessels are of non-ozone-depleting type with zero ozone depleting potential. Refrigerant Management Procedures are also implemented on all our vessels to minimise releases and leakages of refrigerants from on-board installations. The consumption of refrigerants is closely monitored and in 2016, a reduction of 14% in total consumption was seen from our vessels as compared to 2015.

clean air regulations

The Group has taken necessary actions to ensure that all our operations are in compliance with the new Malaysian Environmental Quality (Clean Air) Regulations which was gazetted in 2014 and the new emission standards which will come into force in 2019. A thorough assessment has since been carried out to identify areas for improvement and the establishment of action plans to address the gaps identified. In order to ensure full compliance with the regulations, regular reviews are conducted with the relevant parties to ensure effective implementation of the plan and to address any concerns to prevent compliance delays.

energy efficiency

Energy use and climate change is a significant material issue for our business in energy transportation and offshore solutions and as such, the Group will continue to largely focus its efforts on energy efficiency measures as the primary method of reducing environmental impact. We recognise that optimising energy consumption across the Group will not just result in cost savings in the long run but will also reduce our GHG emissions as part of our commitment in mitigating our carbon footprint as a Group. As most of MISC’s fuel utilisation is due to its shipping business, more of the energy efficiency measures adopted are focused on the shipping operations.

2016 performance

The Group’s energy consumption recorded a slight increment of less than 1% in 2016. The increment is contributed by an overall increase in transport work by the LNG and Product fleet, as well as the inclusion of additional activities which consume energy as part of our continued improvement to ensure the completeness of our monitoring and reporting.

Misc group total energy consuMption

2014 2015 2016

Ene

rgy

Con

sum

ptio

n, G

J

6,000,000

26,000,000

46,000,000

66,000,000 64,052,82761,985,023 62,553,237


2014

• New Energy Efficiency and Performance Management System is in progress.

• First introduced.• Improved data accuracy.• Simplified reporting and

monitoring process.

• Revised Fuel Savings calculation methodologies with new baseline data.

• Incorporated new LNG Charter Party Baseline.

• Set new limits for Specific Fuel Oil Consumption (SFOC) for Chemical vessels and auxiliary engine.

ISAvEfuEl SoftwARE SyStEM IS An ADDItIonAl InItIAtIvE towARDS ouR CoMMItMEnt of MInIMISIng vESSEl fuEl ConSuMptIon

The Energy Efficiency Unit at MISC continues to find ways to minimise vessel fuel consumption and this has been further enhanced through the use of the ISAVEFUEL Software System, following the successful initiation of Phase II of the programme on board all MISC-owned vessels in 2014. The software system serves as a platform to systematically capture and monitor the Energy Efficiency Operational Indicator of each ship. This customised software has improved our data accuracy and simplified the reporting and monitoring process for both the vessel and the Energy Efficiency Unit on shore.

Moving forward, in our continued effort to further optimise vessel fuel consumption, FMS and AET are collaborating on the installation of the Energy Efficiency and Performance Management System. The new system will act as a one-stop solution for internal reporting and facilitate external reporting requirements such as EU MRV and IMO Department of Merchant Shipping (DMS) and is targeted for implementation in 2018.

2015 2016

isavefuel prograMMe

97

Application of Fuel-saving Technology

Several of our existing fleet of vessels have been retrofitted with green technology to help improve fuel efficiency, in addition to the inbuilt energy saving features on our newbuilds. Currently, two types of technology have been applied to selected vessels, which are Advanced Low Friction

Anti-Fouling Paint on three LNG vessels and Propeller Boss Cap Fins (PBCF) on a total of six vessels, in 2016.

Due to the application of these green technology features, reductions in fuel consumption and carbon emissions on our vessels were recorded as follows:

41,295 tonnES of Co EMISSIonS AvoIDED tHRougH ApplICAtIon ofgREEn tECHnology

Energy Awareness Campaign

We are committed to ensure energy is not wasted and that our fuel consumption is at its optimum level on board all our vessels. In support of this commitment, the Energy Efficiency Unit had launched the Energy Awareness Campaign in October 2015. This campaign is an effort focused on instilling behavioural change in our seafarers for all our LNG and Chemical vessels with respect to the management and utilisation of energy. Since electricity and freshwater is generated on board to meet the requirements of the vessel and its crew, a reduction in electricity use and freshwater on board will result in net fuel savings. We are pleased to report that we had exceeded the target to reduce freshwater consumption of 10% in 2016 (further information can be found in the ‘Water Use’ section).

thePOWER

of ou

1. Turn o� the lights when NOT in use.

2. Turn o� the taps when NOT in use.

3. Always adjust the AIR COND

(HVAC) to a more suitable

temperature.

4. When using Washing Machine,

always ensure it is a full load

or 3/4 load.

5. Turn o� the Computers/Printers/

Scanners/Photocopy Machines

at the end of EACH day.

ENERGY AWARENESSCAMPAIGN

6. Turn o� the TV/DVD/Speakers

when NOT in use.

7. Turn o� the Galley Appliances

when NOT in use.

LEARN HOWTO REDUCEUNNECESSARY

ENERGYUSAGE !!!

ACTION REQUIRED :

“ “YOUR CHILD needs abetter planet to live in.

SAVE ENERGY for abetter tomorrow.

Source : http://maznahmoktar.blogspot.com/2010/06/pantai-batu-buruk-part-2.html.Source : http://maznahmoktar.blogspot.com/2010/06/pantai-batu-buruk-part-2.html.

green technology benefits total fuel saved, metric tonnes

co2 emissions avoided in 2016, tonnes of co2

advanced low frictionanti-fouling paint

3 LNG vessels

• Slow and inhibit the growth of marine organism• Improve hydrodynamic footprint of the hull• Reduce hull resistance through water• Lower fuel consumption

4,035 12,105

propeller boss capfins (pbcf)

3 LNG Vessels& 3 Chemical Vessels

• Eliminate vortex induced in centre of the stream flow

• Increase ship speeds• Lower fuel consumption

8,730 29,190

total 12,765 41,295

2


toWards sustainable lng shipping

MISC has embarked on a journey towards sustainable LNG shipping with thorough considerations and studies for its newbuilding projects. Due to the dynamic LNG business with the Floating LNG and potential marginal field operation, a more robust cargo containment system, the MOSS-Type, is adopted. The MOSS-Type LNG Carrier (MOSS-Type LNGC) is more flexible in cargo operation with the option of partial loading with a high reliability in harsh seas, making the vessel more versatile in the LNG business.

Currently, two out of five MOSS-Type LNGCs have been successfully delivered, namely the Seri Camellia on 30 September 2016 and Seri Cenderawasih on 20 January 2017, which marked a significant milestone for MISC in its journey towards sustainable LNG shipping. Three more sister vessels will be delivered on a staggered basis subsequently. These five LNG carriers are under time charter with PETRONAS.

Furthermore, the investment in these newbuilds presents our commitment to environmental responsibility, where consideration to environmental impact was integrated into the planning process prior to the start of business.

These five newbuilds will have “Green” technologies and features designed for energy efficiency, emissions reduction, biodiversity management and end-of-life disposal. Inclusion of these elements into the vessel design will reap long-term benefits for the Group as well as the charterer, in terms of cost savings and risk management.

By burning low sulphur fuel of no more than 0.1% sulphur content, these LNG carriers have been designed to meet the requirement of the ECAs. Installation of Selective Catalytic Reduction (SCR) systems has enabled the LNG carriers to meet the latest IMO NOx Emission Tier III requirement. In addition, the newbuild LNG carriers are also able to operate in 100% gas burning mode during manoeuvring and stop condition. The energy savings derived from the propulsion system is 13% as compared with the Conventional Steam Turbine (CST), through the installation of Ultra Steam Turbine (UST) on the carriers.

These LNG carriers are also fitted with Ballast Water Treatment System (BWTS), hence meeting the requirements of the International Convention for the Control and Management of Ships’ Ballast Water and Sediments (BWM Convention). The BWTS utilises ozone technology to treat ballast water on every voyage to avoid the spread of invasive species into the marine environment. Installation of energy saving device such as Mewis duct and PBCF contributes to an average energy saving of about 4% at design draft.

2 out of 5 MoSS-typElngCs wERE SuCCESSfully DElIvERED

All nEwBuIlDS wIll HAvE “gREEn” tECHnologyfEAtuRES

13% EnERgy SAvIngSfRoM tHE pRopulSIonSyStEM tHRougHultRA StEAM tuRBInE InStAllAtIon

Case Study

One of the 18 vessels that received the prestigious award “great ships of 2016” by The Maritime Reporter & Engineering News.

steel reduction ofabout 3% with the introduction of Integrated Hull Structure while improving the overall structural strength.

Over 5 million safe working hours with zero LTIF and TRCF.

Selective Catalytic Reduction (SCR) system in compliance with iMo nox tier iii requirement.

Achieved at least 12% improved eedi over Seri B Class (Steam Ship) types.

The upgraded high performance antifouling paint system provides a lower speed loss over 60 months which results in fuel savings during operation.

99

Water use

It is anticipated that water will be a critical resource in the future, especially with rising population growth and increasing levels of resource consumption due to affluence. In recognition of this, at MISC, where water is used at both our shore and sea facilities, we remain cognisant of our commitment to ensure water resource efficiency. In 2016, total fresh water drawn in for our shore operations stood at approximately 1.07 million cubic metres, 80% of which is from MHB, due to the nature of its business in marine repair and offshore solutions. This amount represents an 18% reduction as compared to the previous year, mainly due to lesser water usage at our shipyard. The data on fresh water withdrawal excludes our leased office spaces, where the water use is captured through a central metering system by the building management and hence, is unavailable for reporting. We are continuously working towards minimising water use at our shore facilities.

Freshwater consumption by our vessels are produced on-board by each vessel’s freshwater generator, hence, depletion of fresh water resources is not considered material for our sea operations.

Nevertheless, we recognise that water uses on our vessels for domestic and the running of machineries are tied to energy use as energy consumption as a significant amount of energy is required to generate freshwater from our freshwater generators.

In 2016, our vessels consumed 385,534 cubic metres of freshwater for all our operations at sea. This represents a total of 24% reduction of freshwater consumption as compared to the

previous year. This positive result is contributed by the Energy Awareness Campaign for MISC’s LNG and Chemical vessels, where a total of 39 vessels were monitored by the Energy Efficiency Unit in 2016, achieving a reduction of 18.7% in freshwater consumption per vessel (exceeding the set target of 10%). Our Petroleum vessels had also contributed to this overall reduction, with a 10% reduction of freshwater consumption per vessel in 2016 as compared to the previous year.

REDuCtIon of 18% In non-SHIppIng fRESHwAtER wItHDRAwAl

24% REDuCtIon In totAl fRESHwAtER ConSuMptIon foR ouR SHIppIng opERAtIonS

18.7% REDuCtIon In fRESHwAtER ConSuMptIonACHIEvED, BASEDon 39 vESSElSMonItoRED(ExCEEDIng tHESEt tARgEt of 10%)

Misc group freshWater WithdraWal (non-shipping)

0

400,000

800,000

1,200,000

1,600,000

1,356,438 1,301,790

1,072,501

2014 2015 2016

Wat

er c

onsu

mpt

ion,

cub

ic m

etre

Note: For LNG and Chemical vessels only

freshWater consuMption per vessel

3,000

3,400

3,800

4,200

4,600

5,000 4,952

4,655

4,026

2014 2015 2016

Fres

hwat

er c

onsu

mpt

ion

per

vess

el,

met

ric to

nnes

TargeT(4,457 MT)

18.7%reducTion

Freshwater Consumption

ReductionTarget

ActualConsumption


Waste ManageMent Currently, about 1.3 billion tonnes of municipal solid wastes are generated in a year globally and are expected to increase to approximately 2.2 billion tonnes a year by 2025. In view of such scenarios and the environmental impacts associated with waste disposal, at MISC we remain committed in ensuring our diligence towards waste management. Aligned to our Mission ‘to care for the environment and operate responsibly’, the Group aims to reduce, reuse and recycle its waste where possible. This commitment has been further encapsulated in our Environment Strategy, with waste being one of the focus areas, where we will be embarking on a more structured and strategic approach in the management of waste, through the establishment of waste separation and waste minimisation targets and plan.

At MISC, waste is managed according to the two areas of operations – shore and sea. The nature of the operations at these two areas necessitate different methods of

waste handling in addition to the difference in regulations where our shipping business which, unlike our land based operations, inherently depends on a global regulatory framework to operate efficiently.

Waste management for our shipping operations is governed by MARPOL as stipulated by the IMO. All of our vessels have a garbage management plan in place to ensure that wastes generated are managed in a responsible manner and in compliance with the requirements under MARPOL. Waste separation is carried out on board and recyclables such as plastic, paper and glass are sent to shore recycling facilities. Other types of waste are collected for treatment, recovery or disposal at shore, while waste which are permitted for on board incineration are disposed of in the shipboard incinerator. The only waste that is allowed to be disposed at sea is food waste, and the disposal is carried out in compliance to the MARPOL requirements. The amount of waste generated from our shipping operations reduced by 4% compared to the previous year.

SHIppIng opERAtIonSwAStE REDuCEDBy 4%

• Recyclables• Oil sludge for recovery/

treatment/ disposal

• Oil sludge• Garbage permissible

for incineration

sent to shore facilities incinerated disposal at sea

• Food waste

disposal Method

types of Waste

shipping Waste ManageMent

101

The Group’s non-shipping operations generate a considerable amount of waste, especially MHB due to the nature of its business in marine repair and offshore solutions. The significant rise of hazardous waste in 2016 from our shore operations, is mainly due to the increase in spent copper slag generation from the high volume of blasting operations at our shipyard. However, all of the spent copper slag generated at the shipyard are recycled into raw material for cement mixing industry. Overall, 91% of hazardous waste from MISC’s shore operations are recovered and recycled with the remaining sent to final disposal facilities.

In addition, MHB operates an onsite treatment facility where spent garnet generated from blasting operations is treated using a mechanical separation process to remove paint chips and sediments. This facility is capable of recovering 98% to 99% of reusable garnet, known as Garnet-R, that can be used in ceramic tile manufacturing as an abrasive for water jet cutting system. In addition to optimising resource use and minimising the amount of waste sent to final disposal sites, this initiative also results in cost savings.

Misc group Waste generation (non-shipping)

0

10,000

20,000

30,000

40,000

Met

ric T

onne

2014 2015 2016

33,098

16,641

9,920

19,225

11,792

7,333

General Waste Hazardous Waste

Oil sludge and oil slops are also recovered and reused for generating energy at MHB. There is an onsite waste-to-energy plant and a slops recovery facility. Oil sludge is incinerated and the heat is recovered and converted to electricity, while the slops recovery facility enables the recovery of usable oil from the waste stream. Wastewater generated from the process is treated to meet local effluent standards before it is discharged.

Mechanical separation process to remove paint

chips and sediments

• Ceramic tile manufacturing• Abrasive material for water

jet cutting systems

Recycled

Raw material incement

manufacturing

Alternative sourcefor generating

electricity

RecoveredPetrochemical

Product

spent garnet spent copper slag oil sludge oil slops

Incinerated Recovered using oil slops recovery facility

types of Waste

Method

non-shipping operations Waste ManageMent

reused as

91% of non-SHIppIng SCHEDulED wAStE ARE RECovERED AnD RECyClED

oIl SluDgE AnD oIl SlopS ARE RECovERED AnD REuSED foR gEnERAtIng EnERgy At MHB


Case StudyIn 2016, we had made further efforts to strengthen internal processes and capabilities on waste identification and characterisation, as an initiative towards ensuring the effective and efficient management of waste. This initiative forms part of our waste management strategy, in line with the overarching objective of setting waste reduction targets and plans. The main aim is to ensure the hazards of hazardous wastes generated from our operations are properly identified and communicated to all relevant parties.

HSE ElEMEntS InCoRpoRAtEDInto tHE upgRADE pRojECt

lED lIgHtIngfIttED tHRougHout tHE BuIlDIng,to fuRtHER REDuCEouR EnvIRonMEntAlfootpRInt

hse corner and recycling facilities

In 2016, in alignment with the office upgrade project at MISC’s headquarters at Menara Dayabumi, HSE elements were incorporated into the upgrade project,where a specific area (‘corner’) of each floor was dedicated to HSE matters. This area is equipped with various materials and aspects relevant to HSE which includes waste separation bins for the segregation of paper, plastic and glass waste, in recognition of our commitment to mitigate our environmental footprint at the workplace, whilst encouraging the inculcation of environmental consciousness and awareness amongst our employees. Additionally, recognising the growing concern from improper disposal of used batteries and used electronics due to the presence of toxic materials in these wastes, dedicated bins are also provided for the disposal of these items in the office.

All of these wastes are collected on a regular basis and delivered to appropriate disposal facilities to be upcycled, recovered or recycled accordingly. MISC works closely with the building management to ensure smooth coordination for these waste management efforts.

In addition to the HSE corners, LED lighting has also been fitted throughout the building levels occupied by MISC, as part of our continued effort towards reducing our carbon footprint, in this case the conservation of energy through reduced electricity consumption.

These initiatives are supported by regular awareness campaigns that is promoted via various engagement platforms which includes social media avenues and a dedicated MISC Info TV on each floor for information sharing, to further our effort of encouraging an environmentally conscious mindset in the workplace.

103

biodiversity

The primary concern for our shipping operations in terms of biodiversity protection is through the proper management of ballast water. The International Convention for the Control and Management of Ships’ Ballast Water and Sediments (BWM Convention) requires all ships using ballast water to conduct ballast water exchange at a minimum of 200 nautical miles from the nearest land and in water at least 200 metres in depth, along with other provisions to minimise the potential spread of non-native aquatic species. The introduction of such pervasive species into non-native areas can potentially have a negative impact to the marine life and surrounding communities from an ecological and economic perspective.

The Ballast Water Management (BWM) Convention adopted by consensus in 2004 will be fully enforced in September 2017. Prior to this, Ballast Water Management System (BWMS) had been developed for ships to manage their ballast water and sediments in accordance with the set standards based on ship-specific BWM plan. The Group will continue to take the necessary measures in ensuring compliance with the requirements of the Convention. To date, all of the Group’s vessels have implemented the BWMS and monitors its ballast water operations via Ballast Water Record Book as required. Additionally, all of our newer vessels and newbuilds are equipped with Ballast Water Treatment System (BWTS) to reduce the risk of spreading non-native aquatic species into the marine environment.

Additionally, the hulls of all our vessels are coated with tributyltin-free (TBT-free) paint to minimise the release of harmful biocides into the marine environment. This includes the various high-performance hull coatings as part of our energy efficiency measures.

As a further commitment to the conservation of the marine environment in which we operate, we ensure our vessels do not dispose of and discharge harmful substances to the sea. A key effort towards this end is our decision to switch to using only environmentally friendly laundry detergent. This is one of the environmental targets set as part of the ISO 14001 targets for our vessels. The criteria for environmentally friendly detergent for use on board our vessels are as follows:

laundry detergent criteria

non-toxic andbiodegradable

freeof phosphate, sulphates and petrochemicals

greencertifiedor eco-labelled

Contain onlyplant-based enzymes, among other requirements

100%


We are pleased to report that all our vessels are utilising environmentally friendly laundry detergent on board.

Our shore operations are primarily located in urban and/or industrialised areas and hence, are not within or near areas of high biodiversity value. However, our shipyard operations have in place an environmental monitoring plan to ensure the effective and efficient management of the environmental footprint of the operational sites.

As water withdrawal and water pollution is a significant material aspect for our shipyard operations due the nature of the business and its close proximity to the sea, we are cognisant of our impact in this area and have taken measures to mitigate any possible negative outcomes as a result of our operations. Water withdrawal for various operational activities including water use for the sewage treatment plant and industrial effluent

treatment system are regularly monitored. This is in addition to surface water and marine water monitoring to ensure water discharges from shipyard operational activities are compliant with the National Water Quality Standards. In the effort to increase the efficiency and effectiveness of the monitoring and reporting process, MHB has also implemented the Self-Guided Regulations by the local Department of Environment (DOE). This platform promotes self-monitoring and reporting to be conducted independently and for performance monitoring data to be submitted via an online system on a regular basis.

We are pleased to have recorded zero incidents of spill to the environment from our shipping operations and no major spill from all other operations in 2016. We take a proactive and diligent approach in terms of our engagement with local regulators in ensuring full compliance.

environmentally friendly laundry detergentutilised onboard ofall vessels.

newer vessels and newbuilds are equipped with bWts.

no major spill to the environment from all operations in 2016.

bWMs implementedat all vessels.

ballastwater monitored via Ballast Water Record Book.

no recordable incidents of spill to the environment from our shipping segment in 2016.

105

BungA AKASIA AnD BungA AlAMAnDA pARtICIpAtED In tHE ESI

AEt SHIpMAnAgEMEnt CERtIfIED wItHISo 50001:2011EnERgy MAnAgEMEntSyStEM

AllopERAtIonSAnD SuBSIDIARIESARE ISo 14001CERtIfIED

58 AEt vESSElS RECognISED foR ItS EnvIRonMEntAl ExCEllEnCE By CSA

AEt ADoptED lngDuAl fuEl SyStEMfoR ItS nEwBuIlDS

operating at international standards

With the exception of ALAM and MMS, all of our operations and subsidiaries have obtained ISO 14001 environmental certification which provides a framework for environmental management best practice to help us minimise our environmental impact. Additionally, AET Shipmanagement is also certified with ISO 50001:2011 Energy Management System, being the second company in Singapore to achieve this certification.

Two of our vessels, namely Bunga Alamanda and Bunga Akasia have participated in the certification with Environment Ship Index (ESI) under the World Port Climate Initiative (WPCI). The ESI recognises vessels that perform beyond current air emissions standards required by the IMO. Ships with ESI certification will also get rewarded by the ports for their efforts in promoting cleaner ships.

Additionally, 58 AET vessels were recognised for its Environmental Excellence by the Chamber of Shipping of America (CSA). The award honours vessels that have maintained a record of no reportable spills, no U.S. Coast Guard citations for violations of marine pollution (MARPOL), no port state citations for violations of MARPOL and no violations of state or local pollution regulations for at least a two-year period. This is a further testament to the conscientious observance of the highest Health, Safety, Security and Environment (HSSE) standards on board.

Moving forWard

Our efforts for the coming years, will be focused on ensuring the effective and efficient implementation and progress of our Environment Strategy, in support of achieving the MISC2020 Corporate Strategy and our commitment ‘to care for the environment and operate responsibly’. We will be formalising our management approach through the setting of Group targets and development of reduction plans to ensure a more robust governance process, and sustainable and successful achievement of the objectives set, with respect to the management of carbon/key emissions, waste and biodiversity.

The inculcation of environmental awareness and consciousness amongst our employees also form an important component of our Environment Strategy. Various plans and programmes are currently in the pipeline which includes programmes and campaigns specific to achieving reduction of paper, plastics and polystyrene across the Group.

Looking ahead, in our efforts towards the mitigation of our environmental footprint and in operating responsibly, we have committed to invest in environmentally cleaner ships such as the MOSS-Type LNG vessels, with this commitment further strengthened with the announcement of AET’s four Aframax newbuilds to be equipped with LNG dual fuel system. The newbuilds which are due for delivery from Quarter 3, 2018 onwards, will also be fitted with a range of eco innovations to maximise fuel efficiency and minimise their emission impact on the natural environment, which in return will enable them to be awarded the “green passport” notation. It is planned for half of AET’s Aframax as well as very large crude carrier (VLCC) fleet to adopt the LNG dual fuel system in the next few years.


lng dual fuel options for aet’s neWbuild afraMaxes

overview AET has announced that four of its new Aframax tankers will be equipped with the LNG dual fuel option. We are expecting to receive the new tankers in batches from Quarter 3 of 2018 onwards. The initiative is one of AET’s commitments to further improve its environmental footprint through adopting responsible maritime practices that move the company towards the ultimate goal of safe, secure and efficient shipping on clean oceans. This green initiative is also part of the organisation’s ongoing fleet renewal programme.

current Four Aframax newbuild tankers are under construction

future Half of our fleet

Case Study

New Aframax Features:• Fitted with twin LNG tanks• IMO – compliant ballast water

management system• Other eco-innovations and technology

to maximise fuel efficiency and minimise their emission impact on the natural environment

The Benefits:• Strengthens AET’s resilience to

fluctuations in operating costs• Eliminates almost 100% of particulate

matters (PM) and sulphur oxides (SOX)• No exhaust treatment required• Reduces carbon footprint by up to 20%• Able to trade on LNG fuel for about a

month before refuelling at the nearby bunker station.

107

C0MMunItyIn support of our mission ‘to create a positive difference to the lives of communities’, our primary focus on value creation for the wider community is through education, with an emphasis on maritime education. Through our flagship investment in our maritime academy ALAM (also referred to as ‘the Academy’) and our Cadet Sponsorship Programme, we fulfil our community responsibilities and contribute towards the growth of the local and regional maritime industry by providing opportunities to deserving students in the field of maritime education and develop a sustainable pipeline of qualified seafaring professionals for the industry. Our Community Strategy portion of the MISC Sustainability Strategy has been developed to further strengthen our effort towards maritime education and youth development in support of our commitment to nation-building, aside from progressing towards a more coordinated and synergistic approach towards our broader community investment initiatives.

Mission

To create a positive difference to the lives of communities

objectives

• Investing in the next generation

our 2020 targets

investing in the next generation via education:Well-established and fully functioning programmes that promote education and awareness amongst the youth towards becoming the next leaders in the industry and in contributing towards their future development

COMMUNITY STRATEGY

AREAS DISCuSSEDinvesting in education

collaborationWith the MaritiMe coMMunity

bridging coMMunities


266 schoolleavers selected forMISC Cadet Sponsorship programme

ALAM shortlisted in “excellence in training award” category

ALAM consistently ranked amongst the

top 10%of the world’s MET institutions

AET Shipmanagement and FMS hostedthe 4th lng andtankers ship safety ManagementWorkshop in Shenzhen

KEy HIgHlIgHtS foR 2016

109

COMMUNITY STRATEGY

Our primary focus of value creation for the wider community is through education, with an emphasis on maritime education, aligned to our mission to ‘create a positive difference to the lives of communities’. Our Community Strategy, as part of the MISC Sustainability Strategy, was developed to encapsulate these commitments, where the strategic initiatives and programmes under the strategy had been developed to support the overarching objective of investing in the next generation via education.

In support of our mission and strategic objectives, we are committing towards having in place well established and fully functioning programmes promoting the upskilling and expansion of career opportunities for the youth and raising knowledge and awareness of our industry in a way that is long-term and meaningful. This will be achieved through various initiatives which includes sponsorship programmes, workshops and capability building events involving academic institutions of various levels, and roadshows, amongst others.

Our strategy has also been developed to promote a more cohesive, coordinated and synergistic approach towards our broader community investment initiatives that is inclusive and considerate of the Group’s goals, strengths and resources and our presence in various locations around the world, rather than a piecemeal and individualistic approach that is not aligned to the overarching Group objectives.

Further details on the implementation, monitoring and measuring process including management approach, can be found in the Sustainability@MISC and Sustainability Governance sections.

Apart from our investment in maritime education with ALAM, we also extend our support to various other causes through our subsidiaries, where their own social investment programmes are championed independently with guidance from the Group. Wherever possible, the Group also collaborates with its subsidiaries on projects to maximise their benefit and impact to the local community. All of our community investment programmes are focused in regions within Malaysia, Singapore, United Kingdom and United States due to the locality of our offices and employees.

However, as we progress ahead as a multinational and globally-focused organisation and in line with the expectations of our Community Strategy, we are moving towards a more coordinated, collaborative and synergised approach in our community investment programmes and initiatives that is inclusive and in consideration of the various businesses and localities within the Group. We believe that such a cohesive and collaborative approach will bring more value and benefit not only to the local community, but also to us as an organisation.


Apart from community investment programmes, we also extend financial support to various charitable and philanthropic causes through reputable associations and non-profit organisations. Support is allocated on a case-by-case basis, evaluated by our Community Working Committee (CWC).

We also believe it is important to encourage good citizenship amongst our employees. Apart from our corporate initiatives, our employees are also given the opportunity to contribute their time and effort through various community investment programmes throughout the year. Such participation and collaborative effort amongst our employees across the Group will be further encouraged through our Community Strategy in parallel to our Cultural Beliefs and Shared Values commitments.

We also support the global maritime community through the collaborations and sharing of resources with regulatory authorities and strategic partners. These efforts underpin our commitment to investing in the wider community, be it with local community stakeholders or industry stakeholders.

investing in education

As part of our commitment to the growth and sustainability of the maritime industry, MISC continues to help develop capable seafaring professionals via our wholly-owned maritime academy, ALAM. Over 13,000 seafarers have been trained in nautical studies and marine engineering since its inception in 1977. ALAM will continue to be the primary channel through which the MISC Group invests in education and training, particularly in the domain of maritime education and training. The Group continues to sponsor cadets for Diploma in Nautical Studies and Diploma in Marine Engineering under the MISC Cadet Sponsorship Programme. A total of 266 sponsorships totalling RM12 million were secured from various maritime organisations for school leavers to join ALAM’s Cadetship and Ratings programmes in 2016. In the same year, a total of 98 cadets were selected by the Group for these two programmes. Upon successful completion of the diploma programmes, these graduates would become officers on board our vessels.

In a largely male dominated profession, ALAM has been encouraging female cadet recruitment since 2006. Many of the female cadets trained at ALAM have gone on to become successful officers with outstanding careers within the Group and externally. Since 2006, we have sponsored a total of 129 female cadets under the MISC Cadet Sponsorship Programme.

While ALAM continues to find new avenues to improve their cadets’ soft skills, academic excellence is ultimately a key ingredient in the institution’s overall training programme. ALAM graduates are recognised for their academic excellence in the international arena. Since 2007, we have had 12 exceptional cadets accepted for the Bachelor Degree Programme at the prestigious United States Merchant Marine Academy (USMMA), better known as Kings Point. In 2016, AET sponsored four cadets originally from ALAM who had successfully secured admission for the four-year programme in the maritime academy in New York.

In 2016, ALAM lived up to its reputation of being one of the world’s best maritime academy and fulfilled its commitment of providing capable and professional seafarers for the maritime industry, when 341 students received their diplomas in Nautical Studies and Marine Engineering with Certificate of Proficiency for Deck and Engine Ratings at the 114th Convocation Ceremony. ALAM has consistently been ranked amongst the top 10% of the world’s Maritime Education and Training (MET) institutions, with an “excellent” rating by DNV-GL.

A totAl of 266 SCHool lEAvERS SElECtED foR MISC CADEt SponSoRSHIp pRogRAMME

129 fEMAlE CADEtS SponSoRED SInCE 2006

111

In strengthening the Academy’s commitment towards supporting the global maritime industry’s efforts in nurturing future maritime professionals in parallel to the nation building programme, ALAM continues to establish various collaborations and strategic partnerships with regulatory authorities as well as industry partners regionally and internationally. In this regard, the Academy achieved a significant milestone in the international arena with the signing of an International Collaborative Agreement with Liverpool John Moores University (LJMU) attended by LJMU Chancellor Sir Brian Henry Leveson & Vice Chancellor Prof. Nigel Peter Weatherill. This opens up the opportunity for ALAM’s cadets to sit for the LJMU Diploma of Higher Education (DipHE) at ALAM and subsequently transfer over to the bachelor’s degree programme at LJMU.

A Memorandum of Understanding (MoU) was also signed with Kolej Yayasan Pelajaran Johor (KYPJ) to provide KYPJ culinary students career opportunities in the maritime sector. The MoU will see the inclusion of certain culinary modular courses at ALAM commencing in 2017. Furthermore in 2016, ALAM’s collaboration with the Melaka state government’s State Economic Planning Unit or Unit Perancang Ekonomi Negeri (UPEN) continued with the enrolment of 50 candidates for its upcoming Ratings programme commencing in 2017; this is in addition to the first batch of 34 ratings enrolled for the prior intake.

As a subsidiary of MISC, ALAM cadets also have the opportunity to engage in various activities organised by MISC. This holistic approach to education exposes them to the inner workings of the shipping industry, which differentiates ALAM from other similar institutions. On this note, the Academy delivered 10 research and consultancy projects to various clients and industry sectors in 2016 and jointly participated in a number of events and exhibitions that included World Maritime Day and the Sarawak Career and Training Fair 2016, which provided an additional platform to showcase ALAM’s service offerings and appeal to the wider community. One of the notable events at ALAM in the year under review was the visit by the Secretary of the International Maritime Organisation (IMO), His Excellency, Mr. Kitack Lim.

ALAM’s ongoing efforts and commitment to achieving academic excellence are gaining recognition as its list of accolades continues to grow. Notably in 2016, ALAM was shortlisted for the Lloyd’s List Asia Awards in the “Excellence in Training” category. The Academy is also now an approved training centre for Offshore Support Vessel (OSV) Training Programmes, having received approval from Jabatan Pembangunan Kemahiran Malaysia (the Department of Skills Development). The year 2016 also saw the Academy receive the ISO 9001:2015 standard accreditation from SIRIM.

The MISC Group, through ALAM, will continue to support the nation’s aspirations in producing capable and professional seafarers for the maritime industry aligned to the broader organisational aspirations and objectives. We will continue to be innovative in our service offerings, placing stronger emphasis on being relevant to the maritime industry and in our commitment to the community that we serve, specifically through the provision of maritime education.

AlAM wAS SHoRtlIStEDIn tHE lloyD’S lISt ASIA AwARDS 2016 unDER tHE CAtEgoRy of “ExCEllEnCE In tRAInIng AwARD”

AlAM ConSIStEntlyRAnKED AMongSt tHEtop 10% oftHE woRlD’S MEt InStItutIonS

Case Study

alaM’s naval reserve officers’ training unit (rotu) prograMMe

In addition to providing our cadets with training and education based on an established curriculum, we also promote our commitment towards maritime security involving our cadets and seafarers through the establishment of Pasukan Latihan Pegawai Simpanan (PALAPES) Laut, i.e. the ROTU. The objective is to prepare our seafarers to be trained in warfare and to support the national second line of defence, where graduates of ALAM are specifically prepared to be the reserve resource for the RMN. In addition to providing naval warfare knowledge and development, this programme also encourages character building and a more wholesome educational experience for our seafarers.

Since the establishment of this service in 2010, in collaboration and partnership with the RMN, more than 170 young Malaysian ALAM Cadets have joined the PALAPES Laut, which is funded by ALAM.

Further details of our maritime security commitments can be found in the Marketplace section of this report.


collaboration With the MaritiMe coMMunity

In 2016, FMS and AET Shipmanagement organised and co-hosted the Fourth LNG and Tankers Ship Safety Management Workshop in Shenzen, China. This workshop is a continuation from the last three consecutive years, and is organised to maintain bilateral engagement in the maritime industry through the sharing of knowledge and technology, as well as gaining further knowledge of the Port State Control (PSC) inspection process for Chinese ports in order to achieve zero deficiencies.

As in the prior year, FMS continues to voluntarily participate in the Singapore Straits Near-Miss Reporting initiative by the Maritime and Port Authority (MPA) of Singapore. Near-miss reporting plays an important role in preventing future accidents while assisting in the improvement of navigational safety through lessons learnt. Notably, we continue to be recognised as one of the highest contributors in the submission of near-miss reporting as part of this initiative.

In our continued effort of championing safety whilst promoting collaborative effort, AET partnered with the Malaysian DOE and RMN in two separate drill exercises held in May and September 2016. The drill exercises not only provided an added avenue for the strengthening of relationships with the participating government agencies and major refineries along the coast, but also lessons to be learned from the drill exercises that enhances the sense of collective responsibility towards ensuring safe operations.

AET also actively participates in joint maritime research projects in Singapore focusing on green shipping. The company is currently partnering with MPA of Singapore and the research team from the Energy Research Institute at Nanyang Technological University (NTU)

on developing a tool that will enable the estimation of fuel oil consumption for cargo heating, cargo temperature trends over different voyages, and optimum boiler fuel loading. Conducted under the joint MPA-NTU Maritime Clean Energy Research programme, this tool will be used to map out an energy optimisation strategy for the entire cargo heating system.

MISC and AET showed strong presence and shared industry insights at the International Association of Independent Tanker Owners’ (INTERTANKO) Event held from 25 to 27 May 2016 at Sentosa, Singapore. During the three-day event, AET President & CEO Capt. Rajalingam Subramaniam led the Group delegates as a panellist in the Tanker Summit, and also opened the Gas Forum session as the association’s inaugural Chairman for Gas Tanker Committee. Prior to this event, INTERTANKO also held a meeting for its governing council and Executive Committee (EXCO) at the same venue, where MISC President/Group CEO Mr. Yee Yang Chien attended as an EXCO member.

AEt SHIpMAnAgEMEntAnD fMS HoStEDtHE 4tH lng AnDtAnKERS SHIp SAfEty MAnAgEMEnt woRKSHop

AEt pARtnEREDwItH tHE MAlAySIAnDoE AnD RMn In2 SEpARAtE DRIllExERCISES

113

bridging coMMunities

MISC’s Outreach Programme is a staff-driven initiative that encourages community care from within. Each department or unit is allocated with resources to plan and conduct an outreach programme of their choice, focusing mainly on youth and children development, while enhancing MISC’s presence in the surrounding communities.

Some of the projects championed during the year are as follows:-

MHB in collaboration with EcoKnights, an environmental non-governmental organisation, has been organising the ‘MHB Knights of Nature’ Sustainability Camp since 2013 exclusively for young family members of MHB employees and for youths residing or studying in Johor. In 2016, the camp was located at University Teknologi Malaysia, focusing particularly on the marine environment and the challenges of balancing development and environmental protection. The camp was designed to allow participants to join in community engagement programmes through visits to nearby community-based river rehabilitation programme at Anak Sungai Sebulong. Various initiatives were conducted where participants were provided with opportunities to learn and experience from the development of solutions for pressing issues faced by the community based along the river, which included converting food waste into organic fertiliser, planting techniques for various herbs and plants, and the making of mud balls as one of many ways in rehabilitating and protecting the river. Apart from learning to develop solutions, the camp also allowed these students to develop skills in leadership, teamwork, time management and problem solving.

foR young fAMIly MEMBERS of MHB AnD tHE youtH SuRRounDIng tHE vICInIty

BEtwEEnAgES 16 AnD 25

HElD AtunIvERSIty tEKnologIMAlAySIA, joHoR

Employees from AET Singapore once again participated in a beach clean-up exercise aimed towards a cleaner and greener environment. A total of 38 employees from AET Singapore office with 95 volunteer hours combined, participated in the clean-up operations along the beach, collecting over 78 bags of waste. This beach cleaning activity saw a 52% increase in staff participation from the year before, as interest and appreciation of the value of this exercise increased.

BEACH ClEAnIng At pASIR RIS BEACH CoASt

95voluntEER HouRS

38 AEtSIngApoRE EMployEES

78 fulltRASH BAgSof RuBBISH

MHB Knightsof Nature Sustainability Camp

Towards a Cleaner andGreener Environment


MoRE tHAn £6,000 CASH DonAtIonS RAISED foR tHE goSH CHIlDREn’S CHARIty

In 2016, MHB had once again organised the “MHB Art of Science” programme for young family members of MHB employees also known as “Warga MMHE”, and students in Pasir Gudang. The programme, which catered for 54 participants, was held in September 2016 at MMHE Recreational Building, Pasir Gudang. The activities were conducted in collaboration with Petrosains Johor with the objective of capability building for these young minds, and a specific focus on stimulating students’ interest in science and technology particularly in the marine and oil & gas sectors.

CollABoRAtIonBEtwEEn MHB AnD pEtRoSAInS joHoR

foR “wARgA MMHE”AnD StuDEntS InpASIR guDAng.

In support of Great Ormond Street Hospital’s (GOSH) commitment towards the saving of children’s lives who are faced with life threatening illnesses such as leukaemia, a team of 11 rowers comprising AET, MISC and PETCO employees from the London office, took part in the Ocean Shipping Community Advancing Children’s Health and Research (OSCAR) Dragon Boat Race for the GOSH Children’s Charity. The rowers succeeded in raising more than £6,000 in donations, well above the initial £5,000 target. Every penny raised will help towards the funding of research into childhood diseases.

11 RowERS fRoM AEt,MISC AnD pEtCo

bridge challengeA challenge for the participants to design a bridge out of up to 60 tongue dispenser, 20 chopsticks, 2 metres of string and glue.

The winning bridge is the one that can support the most weight, while meeting the design criteria and constraints.

egg citingA science workshop using chicken eggs and quail eggs. The students learnt various science concepts such as stability, pressure, density and centre of gravity.

combustion showThe 20 minutes science show about 3 elements in combustion – Oxygen, Fuel & Heat

yard tourProvides an exposure to the participants on the nature of MHB’s business activities and to provide clear picture of their parents’ working environment

MHB Art of Science

Dragon Boat Race to fundresearch into childhood diseases

115

The Houston Food Bank is America’s largest food bank in distribution and provides 79 million nutritious meals to food pantries, senior centres and other agencies each year. This adds up to feeding 800,000 children and adults annually in 18 southeast Texas counties. A single afternoon of food sorting will provide 5,840 meals to those in need. Inevitably, with the handling of such quantities, food wastage does occur.

In understanding the issue and to ensure food from the food bank does not go to waste, volunteers from AET Houston office spent an afternoon at the Houston Food Bank to sort and categorise meat and frozen products as well as identify any items that may have perished. Once the process of sorting and categorisation is completed, the items that can still be consumed were donated to local animal shelters. Additionally some food items from the Houston Food Bank warehouse, like bread, which have become expired before it could be distributed to the community, were also identified and loaded onto a truck for delivery to chicken farms.

AEt HouSton voluntEERS HElpED SoRt AnD CAtEgoRISE pERISHED fooD pRoDuCtS

SuCCESSfully CollECtED131 BoxESof gIftS

AET’s Houston and Galveston offices collected a record number of items to put together 131 boxes of gifts for its fifth Houston International Seafarer’s Centre (HISC) Christmas Gift Box Programme. Through an internal auction and raffle fundraiser, the team raised even more funds to supplement the items donated. The gift boxes were packed and wrapped by AET employees, where a total of 12,278 gifts were delivered to seafarers who passed through the Port of Houston during the 2016 holiday season.

In 2016, ALAM continued in their collaboration for the second year with the Melaka branch of the National Anti-Drug Agency (AADK) to reinforce students’ knowledge and awareness of drug abuse. Together with AADK representatives, ALAM students participated in two separate clean-up sessions in Melaka, at Kampung Teluk Belanga and also the beach surrounding the village. These areas were chosen for the gotong-royong efforts as they were drug activity hotspots identified by the National Anti-Drug Campaign, whilst the clean-up effort at the beach also coincides with “My Beautiful Malaysia” campaign, to promote care for public spaces.

A totAl of 12,278gIftS wERE DElIvEREDto SEAfARERS

Houston Food Bank

Gotong Royong Activities withNational Anti-Drug Agency

Holiday Cheer to the Seafarers


During the year under review, MISC extended charitable contributions to support the interests of various stakeholders including:

1. Ikhtisas Kelautan Malaysia’s (IKMAL) 30th Anniversary Gala Dinner.

2. Retired Malaysian Naval Officers Association’s 82nd Anniversary Dinner.

3. Malaysian Shipowners’ Association (MASA) Malaysian Maritime Yearbook 2016/2017.

4. MASA’s Breaking of Fast and Dinner in conjunction with the Celebration of Seafarer’s Day 2016.

5. The Joint Branch of The Royal Institution of Naval Architects (RINA) and the Institute of Marine Engineering, Science and Technology’s (IMarEST) (Malaysia) 29th Annual Dinner.

Moving forWard

Looking ahead, we will be focusing on ensuring the effective and efficient implementation and progress of our Community Strategy, in support of our commitment to our mission and corporate strategic objectives. We will ensure a cohesive and synergistic approach that is inclusive of the Group as we strive towards achieving our objectives of establishing fully functioning programmes

that promotes the upskilling and expansion of career possibilities, whilst raising knowledge and awareness on the energy and maritime industry amongst the youth. This is in parallel to our ongoing commitment of providing opportunities to deserving students in the field of maritime education through ALAM, and also the various other outreach programmes throughout the year that are conducted to benefit the communities in the areas in which we operate.

pREpARED MEAlS foR tHE lESS foRtunAtE AnD pAIntED SCHoolS AnD olD folKS’ HoMES

Through their ROTARACT (‘Rotary in Action’) club consisting of ALAM cadets and employees, ALAM had organised various programmes for the surrounding community in Melaka, involving cadet volunteers from the Academy. The main objective of these programmes are not only for the betterment of the surrounding community through the initiatives carried out, but also as a learning and development opportunity for the cadets involved. The initiatives included the preparation and provision of meals for the less fortunate, and the painting of schools and old folks’ homes amongst others.

During the year under review, the cadets had also participated in a conservation programme at the Turtle Conservation and Information Centre at Pengkalan Balak, Melaka. Apart from participating in the clean-up operation of the conservation centre, the programme also gave the cadets an opportunity to increase their level of knowledge and understanding on the significance of maintaining the balance of the marine ecosystem and the value of sea turtles within the marine biodiversity. The appreciation of the importance of conserving sea turtles as a species is further acknowledged by the cadets, with their understanding that sea turtles have been listed as one of the endangered animals under the International Union for Conservation of Nature (IUCN). The cadets were fortunate enough to have also had the opportunity to participate in the release of baby sea turtles into the sea, upon the culmination of the programme.

AlAM CADEtSRElEASEDBABy SEAtuRtlESInto tHE SEA

ALAM Community andConservation Programme

Corporate Contributions

117

pERfoRMAnCE DAtA

2014

2015

2016

2014

2015

2016

2014

2015

2016

financial results (RM Million)

eMployee Wages and benefits (RM’000)

taxation (RM’000)

revenueoperating

profit

profit before

taxation

profit / (loss) after

taxation

dividends paid during

the year

9,296.3 1,841.7 2,410.3 2,320.0 401.7

10,908.4 2,782.6 2,566.9 2,535.1 602.6

9,597.2 2,228.8 2,814.0 2,793.3 1,450.7

employee Wages

contributions to defined

contribution plans

social security

cost

reversal of provision

for termination

benefits

999,274 71,963 2,918 89,592

1,484,228 95,549 4,020 (63,021)

1,331,123 79,875 5,250 (1,935)

current income tax:

Malaysian income tax

current income tax: foreign tax

28,162 80,544

22,538 16,192

31,490 8,807

fInAnCIAl


EMployEES*breakdown by business units

Misc berhad aet Mhb alaM MMs1

total number of employees

2014 10,444 3,197 2,682 3,220 173 –

2015 10,380 3,061 2,720 3,114 199 102

2016 8,677 2,934 2,910 2,506 173 154

female

2014 1,450 345 175 633 41 –

2015 1,420 344 171 562 52 22

2016 1,183 333 376 407 43 24

Male

2014 8,994 2,852 2,507 2,587 132 –

2015 8,960 2,717 2,549 2,552 147 80

2016 7,494 2,601 2,534 2,099 130 130

Malaysian

2014 7,124 2,465 509 2,816 162 –

2015 6,989 2,354 534 2,627 188 102

2016 5,276 2,314 598 2,046 164 154

non-Malaysian

2014 3,320 732 2,173 404 11 –

2015 3,391 707 2,186 487 11 0

2016 3,401 620 2,312 460 9 0

executive / officers

2014 5,332 1,965 1,623 1,363 117 –

2015 5,172 1,788 1,625 1,323 130 42

2016 4,861 1,884 1,753 1,008 116 100

non-executive / ratings

2014 5,112 1,232 1,059 1,857 56 –

2015 5,208 1,273 1,095 1,791 69 60

2016 3,816 1,050 1,157 1,498 57 54

legend* Due to the divestment of MILS in 2016, employee data for MILS in 2016 have been excluded from the Group Data and also in the

breakdown. However total Group Data for 2014 and 2015 is inclusive of MILS.1 MMS data for 2015 captured from July 2015 - December 2015.

119

breakdown by business units

Misc berhad aet Mhb alaM MMs1

permanent

2015 5,462 2,534 318 1,891 148 39

2016 2,846 632 325 1,620 123 146

contract

2015 4,918 527 2,402 1,223 51 63

2016 5,831 2,302 2,585 886 50 8

shore

2014 5,654 729 360 3,220 173 –

2015 5,650 724 327 3,114 199 102

2016 3,872 714 325 2,506 173 154

sea

2014 4,790 2,468 2,322 – – –

2015 4,730 2,337 2,392 – – –

2016 4,805 2,220 2,585 – – –

total number of employee turnover2

2014 559 62 62 345 18 –

2015 534 42 23 307 12 0

2016 846 25 43 763 15 0

total number of new employees2

2014 861 26 95 729 11 –

2015 1,063 71 63 703 32 0

2016 306 73 52 160 21 0

total number of unionised employees

2015 3,343 110 2,392 496 0 –

2016 3,107 97 2,585 425 – 0

average number of training hour per employee2

2014 – 17.1 – – – –

2015 – 29.1 NA 30.4 18.4 –

2016 18 15.7 10.4 24.8 4.2 0

legend* Due to the divestment of MILS in 2016, employee data for MILS in 2016 have been excluded from the Group Data and also in the

breakdown. However total Group Data for 2014 and 2015 is inclusive of MILS.1 MMS data for 2015 captured from July 2015 - December 2015.2 For shore employees only.

EMployEES*


EnERgy ConSuMptIonbreakdown by business units

Misc berhad aet Mhb alaM MMs Mils

total consumption (gj)

2014 64,052,827 – – – – – –

2015 61,985,0231 – – – – – –

2016 62,553,237 38,245,237 23,586,270 419,511 13,207 138,117 150,895

heavy fuel oil (tonnes)

2014 757,636 386,850 370,786 – – – –

2015 804,606 385,075 419,531 – – – –

2016 811,427 368,492 442,935 – – – –

Marine gas oil2 (tonnes)

2016 11,156 5,342 5,814 – – – –

low sulphur Marine gas oil2 (tonnes)

2016 127,838 1,360 126,478 – – – –

liquefied natural gas (tonnes)

2014 580,717 580,717 – – – – –

2015 517,420 517,420 – – – – –

2016 521,748 521,748 – – – – –

diesel (litre)

2014 7,652,380 0 17,034 3,800,239 17,046 – 3,818,061

2015 10,011,434 0 22,716 4,278,160 16,680 1,295,774 4,398,104

2016 12,539,186 0 22,716 5,152,794 18,271 3,758,384 3,587,021

petrol (litre)

2014 170,583 53,501 5,112 74,063 37,908 – –

2015 947,954 28,328 6,816 47,601 35,954 829,256 –

2016 119,701 25,544 6,816 47,333 38,867 1,141 –

acetylene3 (m3)

2016 42,986 – – 42,986 – – –

legend* MILS data for 2016 captured from January - June 2016 only. MMS data for 2015 captured from July 2015 - December 2015.1 Restated due to correction of calculation.2 Reported previously under the categories of MDO and LSGO. 3 Additional fuels monitored, commencing January 2016.

EnvIRonMEnt*

121

EnERgy ConSuMptIonbreakdown by business units


compressed natural gas1 (m3)

2016 188,081 – – 188,081 – – –

liquefied petroleum gas1 (m3)

2016 194 – – 69 27 – 98

electricity (kWh)

2014 53,735,638 2,403,020 638,862 39,060,154 2,509,696 – 9,123,906

2015 73,094,133 1,595,588 590,660 59,038,547 2,672,023 56,874 9,140,441

2016 69,992,542 2,197,115 571,726 60,133,773 2,776,018 137,193 4,176,717

gREEnHouSE gAS EMISSIonStotal ghg emissions (tonnes

co2-e)scope 1 scope 2

2014 4,576,736 4,541,271 35,465

2015 4,450,839 4,402,602 48,236

2016 4,561,663 4,513,767 47,896



scope 1 - (tonnes co2-e)- breakdown by subsidiaries

2014 2,962,796 1,557,931 10,268 133 – 10,144

2015 2,656,473 1,717,357 11,476 127 5,483 11,685

2016 2,641,283 1,831,094 20,827 222 10,258 10,082

scope 2 - (tonnes co2-e)- breakdown by subsidiaries

2014 1,586 422 25,780 1,656 – 6,022

2015 1,053 390 38,965 1,764 32 6,033

2016 1,503 412 41,132 1,899 94 2,857

legend * MILS data for 2016 captured from January - June 2016 only. MMS data for 2015 captured from July - December 2015.1 Additional fuels monitored, commencing January 2015.

EnvIRonMEnt*


gREEnHouSE gAS EMISSIonSbreakdown by business units


nox emissions (tonnes)

2014 51,059 16,142 34,886 19 1 – 11

2015 51,227 12,342 38,833 14 1 24 13

2016 49,685 12,863 36,779 21 1 11 10

sox emissions (tonnes)

2014 38,924 19,494 19,421 6.39 0 – 3.32

2015 40,076 19,015 21,051 4.56 0.04 1.77 3.83

2016 40,296 18,153 22,130 6.20 0.05 3.27 3.13

pM101 emissions (tonnes)

2014 5,724 2,901 2,820 1.61 0.06 – 1.51

2015 5,911 2,804 3,102 1.76 0.06 1.74 1.74

2016 5,908 2,639 3,264 2.04 0.06 1.49 1.42

ozone depleting substances

2014 5.14 2.91 2.09 – 0.14 – 0

2015 8.21 6.57 1.61 – 0.01 0 0.02

2016 3.50 1.65 1.09 0.76 0 0 0

wAStE breakdown by business units


total general waste (tonnes)

2014 11,792 – – 11,792 – – –

2015 9,920 – – 9,920 – – –

2016 7,333 – 12 7,268 – – 53

total scheduled waste (tonnes)

2014 19,225 – 0 19,213 0 – 12.75

2015 16,641 – 0.03 16,630 0.03 – 10.93

2016 33,098 – 44 33,051 0.04 0.57 2.80

legend* MILS data for 2016 captured from January - June 2016 only. MMS data for 2015 captured from July - December 2015.1 PM10 is a Particulate Matter (PM) emissions equal to or less than a nominal aerodynamic diameter of 10 micrometers.

EnvIRonMEnt*

123

wAStE breakdown by business units


ship oil sludge (m3)

2014 5,193 1,714 3,478 – – – –

2015 4,080 1,108 2,972 – – – –

2016 4,214 1,064 3,150 – – – –

ship effluents1 (m3)

2014 181,251 23,132 156,119 – – – –

2015 108,414 19,741 88,672 – – – –

2016 101,364 17,320 84,044 – – – –

ship garbage (m3)

2014 7,274 4,458 2,816 – – – –

2015 7,790 4,566 3,224 – – – –

2016 7,455 4,250 3,205 – – – –

wAtER freshwater Withdrawal -

non shipping (m3)

2014 1,356,438 – 18,970 1,140,739 135,208 – 61,521

2015 1,301,7902 – 3,527 1,059,580 137,999 – 100,684

2016 1,072,501 – 10,607 862,583 154,202 – 45,109

freshwater generation - shipping (m3)

2015 509,000 – – – – – –

2016 385,534 – – – – – –

legend* MILS data for 2016 captured from January - June 2016 only. MMS data for 2015 captured from July - December 2015.1 Ship effluent comprises oily water mixture from our vessels’ cargo residues and bilge water.2 Restated to exclude the freshwater consumption by shipping operation.

EnvIRonMEnt*




fatalities

2014 1 0 0 1 0 0 0

2015 0 0 0 0 0 0 0

2016 0 0 0 0 0 0 0

lost time injury frequency (ltif)

2014 0.07 0 0 0.1 0 – 0.73

2015 0.12 0.05 0.14 0.11 0 – 0.60

2016 0.11 0.06 0.07 0.14 0.91 0 0.33

total recordable case frequency (trcf)

2014 0.72 0.50 1.05 0.69 0 – 0.73

2015 0.48 0.16 0.89 0.43 0 – 0.90

2016 0.36 0.22 0.33 0.48 0.91 0 0.33

Working hours

2014 57,240,744 18,103,212 15,167,085 20,145,392 1,091,256 – 2,733,799

2015 64,991,917 18,193,663 14,556,836 27,826,808 1,094,604 – 3,320,006

2016 55,776,643 15,083,695 14,989,304 20,720,709 1,102,974 889,756 2,990,205

legend* MILS data for 2016 captured from January - October 2016 only. MMS data for 2015 captured from July - December 2015.

SAfEty*

125

gRI ContEnt InDExgeneral standard disclosures

descriptionextent of

disclosurepage

Strategy and Analysis

G4-1 Statement from the President/Group CEO Full 10-13

G4-2 Description of key impacts, risks, and opportunities Full 10-13, 14-33, 46-55

Organisational Profile

G4-3 Name of the organisation Full 2-3

G4-4 Primary brands, products, and services Full 2-3

G4-5 Location of the organisation's headquarters Full 9

G4-6 Countries of operations Full AR (18-19)

G4-7 Nature of ownership and legal form Full AR (22-23)

G4-8 Markets served (including geographical breakdown, sectors served, and types of customers and beneficiaries)

Full AR (18-19)

G4-9 Scale of the organisation Full 2-3

G4-10 Details of workforce Full 62-63, 119-121

G4-11 Total employees covered by collective bargaining agreements Full 64

G4-12 Describe the organisation's supply chain Full 2-3, 6-7

G4-13 Significant changes during the reporting period Full 8-9

G4-14 Precautionary approach or principle Full 10-13, 27-29, 52-53

G4-15 External charters, principles or initiatives Full 8-9, 58-59, 92-93

G4-16 Memberships of associations Full 55, 113

Identified Material Aspects and Boundaries

G4-17 Entities and subsidiaries within the organisation Full 2-3, 8-9, AR (22-23)

G4-18 Process for defining report content Full 8-9, 18-20

G4-19 Material aspects identified Full 8-9, 18-20

G4-20 Aspect boundary within the organisation Full 18-20

G4-21 Aspect boundary outside the organisation Full 18-20

G4-22 Restatement of previously reported information Full 9, 18-20

G4-23 Significant changes in Scope and Aspect boundaries Full 9, 18-20

Stakeholder Engagement

G4-24 Stakeholder groups engaged by the organisation Full 26

G4-25 Identification and selection of stakeholders Full 26

G4-26 Organisational approach to stakeholder engagement Full 26

G4-27 Key topics and concerns raised through stakeholder engagement Full 19, 26



disclosurepage

Report Profile

G4-28 Reporting period Full 8-9

G4-29 Date of most recent previous report Full 8-9

G4-30 Reporting cycle (such as annual, biennial) Full 8-9

G4-31 Contact point for questions regarding the report or its contents Full 8-9

G4-32 GRI Content Index (see G4 Guidelines) Full 129-133

G4-33 Policy and current practice with regard to seeking external assurance for the report

Full 8-9

Governance

G4-34 Governance structure of the organisation Full 34-39, AR (123-125)

G4-38 Composition of highest governance body Full 34-39, AR (123-125)

G4-39 Separate Chairman and President/Group CEO Full 34-39, AR (123-125)

G4-40 Nomination and selection processes for the highest governance body and its committees

Full 34-39, AR (126-130)

G4-41 Process to manage conflict of interests Full 34-39, AR (126-130)

G4-42 Role of the Board in developing, approving or updating statements, strategies or policies relating to environmental, economic and social impacts

Full 34-39, AR (125-130)

G4-45 Role of the Board in identifying and managing risks Full 37, AR (123, 138-144)

G4-46 Role of the Board in reviewing the effectiveness of risk management processes

Full 38, AR (123-125, 138-145)

G4-47 Frequency of risk reviews conducted by the Board Full 38, AR (123-125, 138-145)

G4-51 Remuneration policies for the highest governance body and senior executives for the below types of remuneration

Full AR (129-130, 135-137)

G4-52 Process for determining remuneration Partial AR (129-130, 135-137)

Ethics and Integrity

G4-56 The organisation's values, principles, standards and norms of behaviour

Full 40-45

G4-57 Internal and external grievance mechanisms for seeking advice on ethical lawful behaviour

Full 40-45

G4-58 Internal and external mechanisms for reporting concerns about unethical or unlawful behaviour

Full 40-45

not diclosed: g4-35, g4-36, g4-37, g4-43, g4-44, g4-48, g4-49, g4-50, g4-53, g4-54, g4-55

127

specific standard disclosures

econoMic


disclosurepage

Aspect: Economic Performance

EC 1 Direct economic value generated and distributed Full 118, AR (204-207)

EC 2 Financial implications and other risks and opportunities due to climate change

Partial 27-29

EC 3 Coverage of the organisation's defined benefit plan obligations Partial AR (194)

EC 4 Financial assistance received from government Full 44

Aspect: Market Presence

EC 5 Minimum wage at significant locations of operation Partial 64

EC 6 Senior management hired from the local community Partial 62-63

Aspect: Indirect Economic Impacts

EC 7 Development and impact of infrastructure investments and services supported

Partial 111-117

EC 8 Significant indirect economic impacts, including the extent of impacts

Partial 111-117

not disclosed: ec9


environMental


disclosurepage

Aspect: Materials

EN 1 Materials used by weight or volume Full 122-123

EN 2 Percentage of materials used that are recycled input materials Partial 101-103

Aspect: Energy

EN 3 Energy consumption within the organisation Full 97-99

EN 6 Reduction of energy consumption Partial 97-100

EN 7 Reductions in energy requirements of products and services Partial 97-100

Aspect: Water

EN 8 Total water withdrawal by source Full 100-127

EN 9 Water sources significantly affected by withdrawal of water Full 100

Aspect: Biodiversity

EN 11 Operational sites near areas of high biodiversity value Full 104-105

Aspect: Emissions

EN 15 Direct greenhouse gas emissions (Scope 1) Full 93-94

EN 16 Indirect greenhouse gas emissions (Scope 2) Full 93-94

EN 19 Reduction of greenhouse gas emissions Full 97-98

EN 20 Emissions of ozone-depleting substances Full 96

EN 21 NOX, SOX, and other significant air emissions Full 95-96

Aspect: Effluents and Waste

EN 22 Total water discharge by quality and destination Partial 100

EN 23 Total weight of waste by type and disposal method Partial 101-103, 126

EN 24 Total number and volume of significant spills Full 104-105

EN 25 Weight of transported, imported, exported, or treated hazardous waste

Full 126

Aspect: Products and Services

EN 27 Extent of impact mitigation of environmental impacts of products and services

Partial 92-107

Aspect: Compliance

EN 29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

Full 106

Aspect: Supplier Environmental Assessment

EN 32 New suppliers that were screened using environmental criteria Partial 92-93

not disclosed: en4-5, en10, en17-18, en31, en33-34 not material: en2, en12-14, en26, en28, en30

129

social


disclosurepage

labour practices and decent Work Aspect: Employment

LA 1 New employee hires and employee turnover Partial 119-121LA 2 Benefits provided to full-time employees Partial AR (194)

Aspect: Occupational Health and Safety

LA 5 Formal joint management-worker health and safety committees Full 79LA 6 Rates of injury, occupational diseases, lost days, and absenteeism,

and work related fatalitiesPartial 80, 81, 128

Aspect: Training and Education

LA 9 Average hours of training per year Partial 65, 121LA 10 Programmes for skills management and lifelong learning Partial 65-69

LA 11 Employee performance and career development reviews Full 67Aspect: Diversity and Equal Opportunity

LA 12 Employee diversity Partial 62-63Aspect: Labour Practices Grievance Mechanisms

LA 16 Number of grievances on labour practices Full 64human rightsAspect: Non-discrimination

HR 3 Total number of incidents of discrimination Full 41-43Aspect: Freedom of Association and Collective Bargaining

HR 4 Freedom of association and collective bargaining Full 64Aspect: Child Labour

HR 5 Child labour Full 64Aspect: Forced or Compulsory Labour

HR 6 Forced or compulsory labour Full 64Aspect: Human Rights Grievance Mechanisms

HR 12 Number of grievances on human rights Full 64-65society Aspect: Local Communities

SO 1 Local community engagement, impact assessments, and development programmes

Full 114-117

Aspect: Anti-corruption

SO 3 Operations assessed for risks related to corruption Full 40-45SO 4 Communication and training on anti-corruption policies and

proceduresFull 40-45

SO 5 Confirmed incidents of corruption and actions taken Full 40-45Aspect: Public Policy

SO 6 Political contributions Full 44Aspect: Anti-competitive Behaviour

SO 7 Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices

Full 40-45

not disclosed: la3-4, la7-8, la13-15, hr1-2, hr9-11, so3, so8-9, pr5not material: hr7-8, so2, so10-11, pr1-4, pr6-9


gloSSARyAADK National Anti-Drug Agency

ABC Anti-Bribery and Corruption

ABS American Bureau of Shipping

ACCA Association of Chartered Certified Accountants

AED Automated External Defibrillator

AET American Eagle Tankers Private Limited

AETMP Accelerated and Enhanced Talent Management Programme

AGM Annual General Meeting

ALAM Malaysian Maritime Academy Sdn. Bhd.

ATE Authorised Training Employer

ASA Advanced Safety Audit

BAC Board Audit Committee

BCP Business Continuity Planning

BMP4 Best Management Practice against Somalia Based Piracy

BU Business Unit

BWM Ballast Water Management

BWMS Ballast Water Management System

BWTS Ballast Water Treatment System

CEO Chief Executive Officer

CH4 Methane

CHSE Corporate Health, Safety and Environment

CO2 Carbon Dioxide

CO2-e Carbon dioxide equivalent

CoBE Code of Conduct and Business Ethics

CONE Corporate Orientation for New Employees

CRM Customer Relationship Management

CSA Chamber of Shipping of America

CSR Corporate Social Responsibility

DDQs Due Diligence Questionnaires

DOE Department of Environment

DMS Department of Merchant Shipping

DP Dynamic Positioning

ECA Emission Control Area

EEOI Energy Efficiency Operational Index

EGM Extraordinary General Meeting

ENE Eksesais Naga Emas

EPF Employees Provident Fund

ERM Enterprise Risk Management

ESG Environment Social Governance

ESI Environmental Ship Index

EVP Employee Value Proposition

EXCO Executive Committee

FMS Fleet Management Services

FPSO Floating Production, Storage and Offloading

FSO Floating Storage and Offloading

FY Financial Year

GHG Greenhouse Gas

GRI Global Reporting Initiative

HFO Heavy Fuel Oil

HR Human Resource

HSE Health, Safety and Environment

HSSE Health, Safety, Security and Environment

ICAEW Institute of Chartered Accountants in England and Wales

ILO International Labour Organisation

IMarEST Institute of Marine Engineering, Science and Technology’s

IMO International Maritime Organisation

INTERTANKO International Association of Independent Tanker Owners

IUCN International Union for Conservation of Nature

ISO International Organisation for Standardisation

KPI Key Performance Indicator

LED Light-emitting diode

LNG Liquefied Natural Gas

LNGC Liquefied Natural Gas Carrier

LSFO Low Sulphur Fuel Oil

LSGO Low Sulphur Gas Oil

LSMGO Low Sulphur Marine Gas Oil

LSV Lightering Support Vessels

LTIF Lost Time Injury Frequency

MARPOL International Convention for the Prevention of Pollution from Ships

MASA Malaysia Shipowners’ Association

MaSRA Malaysian Sustainability Reporting Awards

131

MC Management Committee

MCF Mandatory Control Framework

MCV Modular Capture Vessel

MDO Marine Diesel Oil

MET Maritime Education Training

MHB Malaysia Marine & Heavy Engineering Holdings Berhad

MILS MISC Integrated Logistics Sdn. Bhd.

MLC Maritime Labour Convention

MMLR Main Market Listing Requirements

MMS MISC Maritime Services Sdn. Bhd. (Formerly known as PETRONAS Maritime Services Sdn. Bhd., PMSSB)

MoA Memorandum of Agreement

MoU Memorandum of Understanding

MPAS Maritime and Port Authority of Singapore

MRV Monitoring, Reporting and Verification

MT Metric Tonnes

MyQUEST Malaysian Quality Evaluation System for Private Colleges

NOX Nitrogen Oxide

N2O Nitrous Oxide

NRC Nomination and Remuneration Committee

NTU Nanyang Technological University

OBU Offshore Business Unit

ODME Oil Discharge Monitoring Equipment

ODS Ozone Depleting Substances

OHSAS Occupational, Health and Safety Management Certification

OWS Oily Water Separator

PASKAL Naval Special Warfare Forces

PBCF Propeller Boss Cap Fins

PETCO PETCO Petroleum Corporation

PM Particulate Matters

PPE Personal Protective Equipment

PSC Port State Control

RMC Risk Management Committee

RMN Royal Malaysian Navy

ROACE Return on Average Capital Employed

SKG Skill Group

SC Steering Committee

SEEMP Ship Energy Efficiency Management Plan

SELAP Senior Engineers Leadership Assessment Programme

SFOC Specific Fuel Oil Consumption

SMS Safety Management System

SOLAP Senior Officers Leadership Assessment Programme

SOx Sulphur Oxide

SOP Standard Operating Procedures

SPM Sijil Pelajaran Malaysia

STS Ship-to-Ship

SU Service Unit

SWC Sustainability Working Committees

TBT Tributyltin

TRCF Total Recordable Case Frequency

UMMC University Malaya Medical Centre

USMMA United States Merchant Marine Academy

UPEN Unit Perancang Ekonomi Negeri

VP Vice President

VLCC Very Large Crude Carrier

WKO Watch Keeping Officer

WPCI World Port Climate Initiative

ZIZA Zero Incident Zero Accident


MISC Berhad 8178-H

Level 25, Menara Dayabumi, Jalan Sultan Hishamuddin, 50050 Kuala LumpurT : +603 2264 0888 F : +603 2273 6602

www.misc.com.my

Documents

Dynamic. Resilient. Synergistic. - MISC Groupmisc.com.my/media/2001/misc-sustainability-report-2016-website.pdf · 02 About Us 06 MISC Group Value Chain 08 About This Report 10 Foreword