Framework Reporting

We recognise that climate change presents both risks and opportunities that may impact our business operations and long-term resilience. To ensure a structured approach to climate risk management, we define short-term as 0–2 years, medium-term as 3–5 years, and long-term as beyond 5 years, in alignment with our enterprise risk management (ERM) framework.

We have identified a range of physical and transition risks that may affect our business under different time horizons:

1. Physical risks

Acute risks (short to medium term): The increasing frequency and severity of extreme weather events pose operational challenges. Disruptions to shipping routes due to storms or hurricanes could lead to delays and potential damage to vessels. Furthermore, extreme weather conditions may impact port infrastructure, affecting loading and unloading operations, resulting in higher operational costs and efficiency losses.

Chronic risks (long term): A prolonged increase in global temperatures could impact vessel performance and the well-being of offshore employees. Higher temperatures may lead to reduced fuel efficiency and increased maintenance requirements.

2. Transition risks

Policy and regulatory risks (short to long term): Regulatory developments continue to shape the shipping industry's decarbonisation agenda. BW LPG faces increasing pressure from stricter emissions regulations under the International Maritime Organization (IMO), as well as regional carbon pricing mechanisms such as the EU Emissions Trading System (EU ETS) and potential carbon taxation in other jurisdictions. These evolving regulatory requirements could lead to higher compliance costs, increased reporting obligations, and potential restrictions on vessel operations.

Market and reputational risks (medium to long term): Institutional investors, customers, and other stakeholders are placing a stronger emphasis on ESG performance, decarbonisation commitments, and transparency. Companies with inadequate climate transition strategies may face higher financing costs, reduced market access, and potential reputational risks. Maintaining a robust ESG strategy and aligning with industry best practices will be critical to sustaining long-term competitiveness.

Climate change and the transition to a low-carbon economy present both risks and opportunities for BW LPG. These factors influence our business operations, strategic decision-making, and financial planning over the short, medium, and long term.

Acute physical risks resulting in the increasing frequency and severity of extreme weather events could disrupt global shipping operations, leading to delays, rerouting, or potential damage to vessels. These disruptions may result in higher operational costs, reduced service reliability, and increased insurance premiums.

Regulatory compliance costs resulting in stricter environmental regulations, such as the IMO Carbon Intensity Indicator (CII) and Energy Efficiency Existing Ship Index (EEXI), may require BW LPG to invest in vessel retrofits, adopt new energy-efficient technologies, or transition to alternative fuels. Compliance with these evolving regulations will increase capital and operational expenditures.

While regulatory compliance and sustainability investments will increase costs in the short to medium term, they also present opportunities for long-term cost optimisation through improved fuel efficiency, reduced carbon pricing exposure, and enhanced operational performance.

The transition to low-carbon shipping will require substantial investments in fleet modernization, retrofits, and alternative fuels infrastructure. These expenditures are necessary to maintain compliance with regulations and position BW LPG for long-term resilience.

BW LPG is committed to enhancing the resilience of our business strategy by assessing how different climate-related scenarios, including a 2°C or lower scenario, could impact our operations, financial performance, and long-term sustainability. To deepen our understanding of climate-related risks and opportunities, BW LPG will conduct a climate scenario analysis in FY2025. This analysis will explore multiple climate trajectories over varying time horizons, considering potential regulatory changes, market dynamics, physical climate risks, and technological advancements in the maritime industry.

Risk identification and assessing process

See IAR 2024 page 52 for information on BW LPG's Risk Management (or Form 20-F's risk management)

Process to manage climate-related risks including process to decide and prioritise

See IAR 2024 pages 53 and 54 for information on BW LPG's Risk Management (or Form 20-F's risk management)

Processes for identifying, assessing, and managing climate-related risks are integrated into their overall risk management

See IAR 2024 page 52 for information on BW LPG's Risk Management (or Form 20-F's risk management)

Key metrics used to measure and manage climate-related risks and opportunities

See IAR 2024 page 66 for information on emissions and energy

Processes for identifying, assessing, and managing climate-related risks are integrated into their overall risk management

See IAR 2024 page 63 for information on Scope 1 and 2 data

Processes for identifying, assessing, and managing climate-related risks are integrated into their overall risk management

See IAR 2024 page 32 for information on emissions and energy targets