Chemical Company of Malaysia Berhad Sustainability Report 2018

Our Commitment To Sustainable Economic Practices Since May 2018, our Chemicals Division has been minimising its hydrogen gas emissions and reducing its carbon footprint by converting the traditional fossil fuel-powered boiler to a dual-fuel boiler that utilises hydrogen gas. The total reduction in the Division’s emissions can be found in the ‘Carbon Footprint’ section. As for our Polymers Division, we aspire to create new markets by developing innovative raw material alternatives under a long-term product development strategy that serves to identify and formulate disruptive products. The Division also utilises alternative supplies to maintain multiple raw material sources. This ensures limited, if not zero disruption that goes a long way in satisfying product output and customer demand. The Division is also focused on developing other emerging value-added products which cater to customer requirements by making improvements to its product formula. On 7 August 2018, an Innovation Competition was held at Common Ground, Citta Mall to strengthen individual potential and cultivate an innovation culture within the Group. The objectives of the event was to raise the idea generation, innovative thinking, problem-solving and business-pitching skills among our employees. Each of our business division was represented by four groups. The groups brainstormed and pitched their ideas to the judges. The best ideas were presented by Team Nanopure from CCM Polymers and Team CCM PGW from CCM Chemicals, which ultimately led to them winning our Innovation Competition 2018. Both teams represented CCM at the PNB Group Innovation Challenge (IC) 2018 that was held on 29 October 2018 at Sime Darby Convention Centre. We are delighted to announce that Team Nanopure from Polymers won the major prize at the PNB Group IC Competition 2018. PROCUREMENT PRACTICE AND SUPPLY CHAIN PARTNERSHIP [102-9, 102-10, 204-1] The practice of sourcing locally is essential to insulate a business from the risks and challenges that may arise from procuring from abroad. We recognise the significance and benefits of spending on local products and services. These include the efficiency in logistics arrangements, the cost savings and the shorter lead time that only local suppliers can provide due to their close proximity as compared to overseas suppliers. The following table highlights the reasons why we prefer to procure locally. 1. Flexible and quick delivery arrangements Local suppliers can be more flexible in terms of delivery arrangements as compared to suppliers from abroad. Product deliveries are quicker as local suppliers are able to coordinate logistics with ease as opposed to the hassle of administrating shipments from across the globe. 2. Responsive and timely communications When working with foreign suppliers, the difference in time zones sometimes emerges as a problem when we require a quick response or assistance in any matter. This can be avoided when procuring locally as most of our suppliers are readily reachable within the same time zone and via many channels such as email, phone call or text messaging. 3. Better control and monitoring Before we finalise our business dealings, or for any other matter during the procurement process that will allow us to address concerns and ensure all purchases meet our standards, we may want to conduct visits to the suppliers’ factory, warehouse or manufacturing plant. Working with local suppliers serves an advantage as we can easily access their operating floors to survey their product offerings and monitor our purchased supplies, if required. This is not always the case with overseas suppliers. 4. Cost reduction Local sourcing results in cost reduction as the amount of money that the Company spends on logistics, specifically on shipment and warehousing, is significantly lesser than when procured from outside the country. 5. Supporting the Bumiputera Vendor Development Programme (BVDP) The Bumiputera Economic Empowerment Agenda is a national initiative that the Company has been supporting from the establishment of the CCM BVDP in 2007. The CCM BVDP is implemented in our business operations and is one of our key performance indicators as a Government-Linked Company (GLC). Sourcing locally, especially from Bumiputera suppliers, will boost the creation of genuine Bumi-entrepreneurs who are reliable and competitive, encourage research and development for products and services as well as contribute to the economic growth of the communities that we operate in. 29 CHEMICAL COMPANY OF MALAYSIA BERHAD