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INTRODUCTION

Sustainability is about ensuring the long-term success of KPJ's business and its stakeholders, through the responsible management and development of people, safety, health, environment, communities, nations and the economy by integrating and embedding responsible practices into KPJ's decision-making processes and engaging with stakeholders transparently and justly.

How KPJ addresses sustainability issues and positions itself as a responsible corporate citizen at the national and regional level is critical to its ability to obtain and maintain its social licence and to generate value for a broad base of stakeholders, including host communities and government, employees and shareholders.

PURPOSE

The objective of the Committee is to oversee on behalf of KPJ Board of Directors, material management policies, processes and strategies designed to manage the Economic, Environment and Social risks and achieve compliance with sustainable development, responsibilities and commitments and strive for an industry leadership position on sustainability.

1. MEMBERSHIP

1.1 The Committee is organised from the management staff of KPJ as follows:-

a) Dato' Amiruddin Abdul Satar - President & Managing Director (Chairman)

b) Mohd Sahir Rahmat - Vice President (I) Corporate & Financial Services

c) Dato' Abdul Wahab Baba - Vice President (I) Business Development & Intrepreneur Services

d) Datin Sabariah Fauziah Jamaluddin - Vice President (II) Group Talent Management Services

e) Rafeah Ariffin - Senior General Manager - Group Marketing, Corporate Communication & Public Relation Services

f) Mohd Taufik Ismail - Executive Director Central Region (Northern)

g) Khairul Annuar Azizi - General Manager - Risk, Compliance & Investor Relations Services

1.2 Any changes to the membership of the Committee shall be at the discretion of KPJ President/MD. Risk, Compliance & Investor Relations Services shall act as the Secretariat for the Committee and will maintain and record the minutes of the Committee's proceedings and decisions.

1.3 The Chairman of the Committee shall be the President/Managing Director and in his absence the Chairman shall be appointed from amongst the Vice Presidents.

2. SCOPE

Sustainability within KPJ touches upon all aspects of our operations, but for clarity the Committee shall provide specific oversight of risks and opportunities in the following areas, which are based on the Sustainability Reporting Guide issued by Bursa Malaysia, relevant to KPJ:-

2.1 Procurement Practices - spending on local suppliers at significant location of operations

2.2 Community Investment - voluntary contributions made by KPJ to enhance socio-economic benefits and create a positive social impact

2.3 Indirect economic impact - additional consequences of direct impact of financial transactions and the flow of money between KPJ and its stakeholders

2.4 Environment - protection of the environment from emissions (e.g. discharge of environmentally hazardous substances, greenhouse gases) and wastes/effluents (e.g. hazardous and non-hazardous wastes)

2.5 Energy and Water - consumption, efficiency of use, recycling, renewable sourcing and other conservation and efficiency initiatives

2.6 Diversity - specifically in the workforce, management and the Board characterised by gender, age etc

2.7 Human Rights - relating to possible discrimination, freedom of opinion/expression, working hours/conditions, freedom of association

2.8 Occupational Safety & Health - refers to the anticipation, recognition, evaluation and control of hazards arising in/from workplace that could impair health & well-being of workers

2.9 Anti-Competitive Behaviour - ethical business practices without affecting consumer choice, pricing and market efficiency

2.10 Anti-Corruption - activities that promote transparency and guard against various forms of corruption eg. bribery, extortion, fraud, collusion

2.11 Labour Practices - fair treatment of employees with regards to terms & conditions of employment and skills/knowledge development policies

2.12 Products & Services Responsibility - impact of products and services on the well-being of society including privacy, health and safety

2.13 Supply Chain (social) - relates to potential social impact on society in the supply chain practices eg. supplier assessment and monitoring

2.14 Compliance (social) - adherence of KPJ business activities to the relevant laws and guidelines as demonstrated by sanctions suffered

3. MEETINGS - FREQUENCY, QUORUM, ATTENDANCE & MINUTES

3.1 The Committee shall meet at least 4 times annually and at such other times as the Committee deems to be appropriate

3.2 The quorum of the Committee shall be 4 members, one of whom must be at least a Vice President of KPJ

3.3 The Committee may invite other members of KPJ management or staff or outside parties to attend and participate in the meeting of the Committee where necessary

3.4 The minutes of the meeting shall be action oriented and record the deliberations and decisions of the Committee. The minutes shall include compiled Board instructions as Matters Arising for discussion at each Committee meeting to ensure proper follow through

4. COMMITTEE RESPONSIBILITIES

4.1 Policies

4.1.1 Review material frameworks, policies and procedures relevant to the Committee's scope

4.1.2 Consider material regulatory and voluntary developments in sustainability

4.1.3 Monitor appropriateness of KPJ strategies in addressing material stakeholder sustainability concerns

4.2 Management Processes and Resources

4.2.1 Review sustainability incidents and ensure learning is shared

4.2.2 Review KPJ's performance in relation to the Scope of the Terms of Reference

4.2.3 Oversee significant management processes designed to ensure compliance with sustainability policies and reporting requirements

4.2.4 Monitor the resources applied to achieving compliance with the policies within the Committtee's Scope

4.3 Risk Management

4.3.1 Review the effectiveness of the process for assessing and managing significant risks falling within the Scope of the Committee

4.3.2 Coordinate the Committee's risk management work with the Audit Committee, in particular in relation to reporting to the Board of KPJ on sustainability

4.4 External Audit and Assurance Reviews

4.4.1 Review the findings or comments by the external auditors on the Sustainability Statement in KPJ Annual Report

4.4.2 Oversee the process of selection and engagement of external consultant providing assurance to the Sustainability Statement, where applicable

4.5 Reporting and External Disclosures

4.5.1 The Chairman shall update the Board on the activities undertaken by the Committee and the minutes of each Committee meeting shall be received by the Board of KPJ

4.5.2 Review and recommend to the Board on the adequacy of the reporting on sustainability opportunities, risks and issues in the KPJ Annual Report and other relevant documents for public disclosure

4.5.3 Review and recommend to the Board on any change in sustainability policies, standards and procedures and its implementation where applicable

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