Executive Chairman's
Letter to Stakeholders

DEAR STAKEHOLDERS,

The discourse around waste, climate change, and inequality has intensified, and the different stress points appear to be converging with the threat of disastrous consequences. Climate change appears to have entered a vicious feedback loop. Unprecedented Alaskan, Arctic and Amazon wildfires raged during the summer of 2019, and warming in the Arctic is occurring at a rate of two to three times faster than the global average as evidenced by sea ice volume.

The Amazon's fate seems set for irreversible destruction unless drastic changes are made. Once the tipping point is transgressed, experts predict that much of the rest of the forest could follow as deforestation begins to feed on itself, turning large tracts of the Amazon basin into a drier cerrado.

Source: "Arctic sea ice volume variability over 1901-2010: a model-based reconstruction" by A.Schweiger et al, Journal of Climate 2019
A satellite image showing wildfires consuming large swathes of Arctic forests and peat in July 2019 (Image: Pierre Markuse)

Apart from the one million species that may be pushed to extinction in the next few years, a recent series of 10,000 studies concluded that many animals will not be able to adjust to changes in climate by shifting behaviours such as hibernation, reproduction and migration in order to optimise the continuation of the species. It is also becoming increasingly clear that humans are going to have an equally difficult and painful journey in adapting to the new state of climate and weather.

In light of this, YTL Group continues to push forward with coral rehabilitation, planting 109,800 mangroves and 55,600 sea pines and have rescued more than 42,226 turtle eggs from human consumption, with more than 30,838 turtle hatchlings released.

Resulting from the partnership with Lang Tengah Turtle Watch, the turtle nest adoption programme at Tanjong Jara Resort has seen more than 37,000 eggs being rescued from human consumption

The facts are undeniable, the science is clear and only the myriad trajectories of grim projections are uncertain. We have moved past the 11th hour and onto midnight on the issue of climate change. As in the parable of the workers in the vineyard, we have been standing idle for too long, and in our struggle to get ahead we may have lost sight of the need to sacrifice for the greater good, and be content with equal rewards. How God rewards others should be of no consequence to us1.

The operating environment around the globe for businesses has become more challenging. The global trade war rages on in unpredictable directions and with uncertain outcomes, and politics seem to be further polarising society in both developed as well as in developing countries. Sustainability is no longer a peripheral consideration for stakeholders, and the issues have never been more influential in our strategic decision making. The approach to organic and acquired growth in YTL Group has now shifted firmly to evaluating whether a sustainable business can be profitable, rather than whether a profitable business can be sustainable. We continue to focus on creating sustainable strategic assets that propel long-term economic value, in addition to natural, human and social value.

CLIMATE APARTHEID AND EXTINCTIONS

An additional 100 million people could be pushed into poverty by 2030 due to the effects of climate change and an estimated one billion people displaced by climate related disasters by 2050. The impacts would likely be far more pronounced in developing and poorer countries. The resulting degradation in those countries or regions receiving the refugees could be devastating as seen in Turkey and particularly in Cox Bazaar, Bangladesh.

All this could put additional stress on borders and further fragment class structures throughout the world. The message from the United Nations (UN) is that humanity needs to re-evaluate its relationship with the planet and all of its inhabitants. For example, in places like Chennai, the loss of wetlands to development combined with extreme weather patterns, has resulted in a shortage of water in mid-2019 which lasted not for days, but months. Equally worrying is the state of water conditions in the Mekong and connected lakes such as Tonle Sap which have also resulted largely from a combination of human activity and climate change.

If the Vulnerable Twenty2 (V20) group of countries wants to avoid the harm caused by climate change, these countries will need to spend up to USD250 billion a year on adaptive measures, such as coastal defences, and ironically, they face higher interest rates than similar countries less exposed to climate risks. Developed countries could be equally at risk. Singapore's Prime Minister announced in his 2019 National Day speech that the country would need to spend an estimated SGD100 billion over the next 100 years on climate change associated adaptation measures.

Chennai reservoir in June 2019 (copyright Deccan Herald)
Tonle Sap low water levels in August 2019 (The Diplomat Image Credit: Tran Van Tu)

FROM THROWAWAY LIVING TO EXTENDED PRODUCER RESPONSIBILITY

 

In 1955, Life published an article praising "Throwaway Living" and single use plastic. Following the invention of Parkesine in 1862 and then Bakelite in 1907, it was the perfect storm of an industrial revolution, rapid innovation and an increasingly upwardly mobile society. It was perhaps the turning point that led to the improved quality of life which is now polluting and poisoning us. Startling research published at the time of writing this letter revealed that one litre of Arctic snow could hold up to 10,000 particles of plastic, rubber and ship varnish micro fragments.

Unless there are drastic and immediate changes in our industrial processes, habits and regulations, our legacy will be the Anthropocene era3, known for the rate of mass extinctions and deposits of waste.

Businesses will need to start to see packaging as part of their inventory and as an asset class which should have value in the balance sheet throughout its active life in the supply chain. At the same time, individuals will need to see it as a valuable resource which must be treated with respect. Whilst technology is largely available, new business and financial models are urgently needed to keep products in use for longer. Designing and establishing circular supply chains is essential to ensure proper recycling and reuse which will eventually lead to reduction and elimination of mining Earth's resources. The only way forward is for producers and retailers to design products with a full view of closing the loop on the entire supply chain.

In YTL Group, we have committed to the elimination of single use plastic globally by 2025, and are now firmly headed in that direction with our Say No to All Plastic (SNAP) campaign which was rolled out earlier this year. We already have visibility on this goal with an estimated reduction of one million plastic water bottles and 200,000 straws from just a handful of our properties.

Pictured are some of the SNAP (Say No to All Plastic) campaign initiatives at YTL Hotels' properties

We will also continue to recycle where possible, as much more can be done in that regard throughout our operations. Countries and cities are also moving forward. Shanghai has recently launched a bold and ambitious waste sorting scheme, and Japan has successfully reduced waste headed to landfills to less than 5% of all municipal waste after years of building a culture of recycling through taxes, subsidies, incentives and regulations. This has resulted in the creation of appropriate infrastructure. For example, in our hotels in Niseko, Hokkaido, we now recycle almost 100% of the waste, separating all waste into 17 different categories before sending to recycling and composting facilities. Meanwhile, already within reach of its target of zero waste to landfill by 2020, Wessex Water has reached 99.8%. 100% of its office waste is already diverted from landfill, and the remaining 0.2% includes items such as contaminated soil and construction waste that are difficult to reuse or recycle.

PT YTL Jawa Timur's FABA paving block production (left), used in one of the 680 biogas units (center) and reef blocks (right) near the power plant

PEOPLE AND COMMUNITIES

Our people continue to be our key valued resource, and we have made progress in meeting our goals of equal opportunity employment and hiring people with disabilities which now numbers 63 across YTL Group.

For communities where we operate, we also take our commitments seriously. We have continued to extend the rural renewable energy programme in Java, Indonesia through PT YTL Jawa Timur's (YTLJT) efforts across off-grid communities who live in proximity to the power plant. The tally at the time of this report was 680 biogas units (each with a capacity of 6 m3), 40 micro hydro units (each with between 2 – 5 kW), and 65 units of solar panels at 8.71 kWp. The biogas domes are now using paving blocks made of fly ash and bottom ash (FABA) originating from our coal-fired power plant for construction.

As mentioned last year, education remains one of the cornerstones of our strategic sustainable development and philanthropic initiatives, and YTL Foundation has now completed 300 Frog Classrooms4 in Malaysia. They also awarded the first scholarship to a visually impaired scholar, and have built two unique Frog Classrooms in Sepang and Perak, that cater to students with special needs and learning disabilities.

A very special classroom was built in Taiping for students with learning disabilities aged between seven and 14 years old, equipped with special toy racks, a pendulum swing, climbing wall, mini ball pit and fun slide
Part of the solar PV installation at YTL PowerSeraya power plant in Jurong Island, Singapore

ENERGY AND GROWTH

Global carbon emissions continue to rise, and in a series of papers from 2011 to 2015, T. J. Garrett, from the Department of Atmospheric Sciences, University of Utah, explains why. He simply says that the growth of human economy "cannot be decoupled" from energy consumption. The data shows that for every USD1 of economic growth, worldwide, human enterprise requires about 9.7 milliwatts (mW) of energy (± 0.3 mW). But these growth targets can be met in different and less harmful ways. For instance, ASEAN wants renewable energy to make up 23% of the region's energy mix by 2025.

As I mentioned in previous letters, the price of solar equipment has continued to fall, and YTL Group will continue to focus on ground mounted and building integrated solar installations within its own assets. We have already installed 970.5 kWp on the roof of YTL PowerSeraya power plant in Singapore, with further expansion planned. This adds to our modest but growing portfolio of solar photovoltaic (PV) in Indonesia, and the UK which now boasts around 1.3 MW of installed capacity. In terms of further carbon mitigation, YTL PowerSeraya has replaced diesel vehicle with electric vehicle(EV), and YTLJT continues to expand its electric motorcycle use at Paiton and in Jakarta. Similarly we have expanded our EV fleets of light vehicles and motorbikes in the UK, Singapore and Indonesia. The KLIA Transit and KLIA Ekspres services now take over four million vehicles off the road every year, and reduces CO2 emissions by 24,000 tonnes.

The new enhanced fleet of KLIA Express or Ekpres Rail Link trains have won ERL the Project of the Year at the prestigious Global AirRail Awards 2018
The "Bristol as a Future City" event tour bus seen here powered by biomethane derived from human excretion and food waste processed at GENeco's anaerobic digestion plant facility in Avonmouth, Bristol, UK

Wessex Water won the Queens Award for Sustainable Development for the third time, and their subsidiary GENeco UK celebrated their tenth anniversary by replacing ten GENeco UK diesel vehicles with electric equivalents and the installation of associated infrastructure across four sites. At GENeco UK, we continue to grow our food waste digestion facility, where biogas and fertiliser are sold to the grid and farmers respectively. Another strong example of innovation at Wessex Water is where nitrates are prevented from entering water sources by offsetting through the EnTrade platform, and the introduction of the Wessex Water Marketplace, a hub where they publish the outcomes needed, allowing the market to propose solutions rather than asking for a price for a pre-determined answer.


By using EnTrade, Wessex Water has:

CONCLUDING THOUGHTS

Costa Rica is a good example of how a country and the companies that operate there can mitigate environmental impacts, a countrywith less than five million population. In 2015, Costa Rica pledged to become carbon neutral by 2021. Whilst this is mainly through sometimes controversial hydropower, they also plan to get rid of single use plastic by 2021 through legislation and cultural change. In a slightly more challenging area, they have managed to double their tropical rainforests in just a few decades as a result of reforestation of degraded land largely through tree planting and payments for environmental services.

The ancient Greeks had a word for recycling palímpsēstos or palimpsest "again scraped", a compound word that literally means "scraped clean and ready to be used again", and as early as the eighth century BC, the book of Isaiah mentions both recycling and living harmoniously. Isaiah wrote "They will beat their swords into plowshares and their spears into pruning hooks. Nation will not take up sword against nation, nor will they train for war anymore. Come, descendants of Jacob, let us walk in the light of the Lord." (Isaiah 2:4)

There is still time for us to work together to halt and mitigate environmental damage already done, and at the same time to cease and prevent injustices perpetrated against one another. That time is now. I pray that we find the strength and courage to work together at this most challenging juncture in our planet's recent history so that future generations will look back at our legacy in awe and not contempt. May God continue to guide us on our journey to Making a Good Future Happen.

TAN SRI DATO' (DR) FRANCIS YEOH SOCK PING
PSM, KBE, CBE, FICE, SIMP, DPMS, DPMP, JMN, JP
Executive Chairman
YTL Corporation Berhad

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1 (Matthew 20:1-16) ‘These who were hired last worked only one hour,' they said, ‘and you have made them equal to us who have borne the burden of the work and the heat of the day.'

2 The V20 Group was established in 2015, consisting of the Top 20 nations from all over the world that are most affected by the catastrophes rooted from climate change. For more information, kindly view https://www.v-20.org/about/

3 The Anthropocene is the proposed epoch commencing from the start of significant human impact on Earth's geology and ecosystems, including, but not limited to, anthropogenic climate change

4 The Frog Classroom is an initiative by YTL Foundation in collaboration with FrogAsia, provider of the Frog Virtual Learning Environment. The Programme aims to transform classrooms in government schools throughout Malaysia into 21st century learning spaces that promote technology-enabled, student-focused learning