SUSTAINABILITY SRI SUKUK FRAMEWORK

1
Introduction

In ER2E™, we drive our business activities towards Smart and Green initiatives to become sustainable, environmentally and socially responsible. Our initiatives adopt Sustainable Development Goals (SDG) & Environmental, Social and Corporate Governance (ESG) framework.

ER2E™ in the business of waste management and we view waste as an invaluable resource. As such, our core business involves resource recovery and responsible disposal ensuring proper pollution control, waste minimisation, recycling and recovery activities which promotes circular economy. ER2E™’s activities not only protect our environment but also the surrounding communities.

Our main full fledge integrated waste management facilities comprise of the following:

Thermal recovery from industrial waste, generating 3MWh of green energy and exporting ~ 2MWh of power to the grid, which reduces harmful effect to the environment and human health and avoidance of the use of fossil fuels. The is branded by ER2E™ as Resource to Energy Scheduled Waste (“R2E-SW”)

• Recovery of oil sludges
• Sterilisation, safe treatment and disposal of medical waste
• Solidification to treat internal residue and receive external waste
• Secure landfill to treat internal and external residue as part of our responsible disposal commitment and also receiving and treating external waste
• Waste water treatment
• GBI rated buildings using GBI rated materials for construction
• Rooftop Solar
• Rainwater harvesting
• Energy Efficiency Management and systems

We constantly research into projects which support a circular economy and waste prevention and minimisation. Amongst the resource recovery projects currently in our pipeline are listed as below:

• Polyethylene terephthalate bottle recycling and polyester staple fibre plant, also known as “PET to PSF” Recycling Plant
• Recycling of residue from our R2E-SW bottom ash which can be used as construction material and road fillers, a substitute for virgin material as an example
• Recovery of oil from sludges
• Recovery of oil from clinical waste residue (plastic to oil)
• Authorised Automotive Treatment Facilities (“AATF”)
• Solar Panel Recovery
• Electric Vehicles (“EV”) Battery Recovery

2
Our Commitment towards Sustainability

ENVIRONMENTAL
Our projects and facilities comprise the following green key features promoting sustainable environment:

• Renewable Energy
Resource to Energy exporting power, heat recovery and rooftop solar which are carbon avoidance projects.

• Circular economy
Resource recovery such as oil recovery for internal usage, plastics recovery, bottom ash recovery to be used as road filler, and used in our GBI rated buildings and/or using GBI rated materials for construction.

• Energy Efficiency
Management and Systems Deployment of sensors for LED lightings, smart air conditioning and devices, insulation, smart windows.

SOCIAL
Creating a Healthy and Safe working environment for our employees and communities which is our top priority:

• Our facilities comply with EU standard to ensure proper environmental pollution control are in place and meet all required safety compliances.
• Our facilities are equipped with safety equipment to ensure a safe working environment for its employees and the surrounding community.

Development of our employees
• Providing training for our employees to ensure that they are continuously updated on technologies advancement and processes in the waste management space. Specific allocation of SRI drawdown for social empowerment and access to vocational training.

Communication with stakeholders:
• Constant communications with our customers to ensure customers’ satisfaction and loyalty.
• Constant communications with surrounding communities and holding of educational events to raise awareness regarding the importance of proper waste management and its impact in mitigating illegal dumping activities, which are detrimental to the water table, health and the environment.

Caring and contributing to community:
 Electricity subsidy for residents within a certain fixed radius from our facilities.

GOVERNANCE
Board members and management who are committed in investments and development of projects that embrace sustainability.

• We are committed to delivering, management and operating our facilities to ensure safe and proper handling of waste that promotes sustainable technologies and processes.
• Transparency in our communications and sustainable reporting.
• ESG compliant procurement strategies amongst others initiatives.

3
Sustainability SRI Sukuk Framework

ER2E™ is committed in driving projects and technologies in waste management that focuses on resource recovery and renewable energy projects which supports circular economy, hence, contributing to a climate-resilient future and sustainable environment.

• Our Sustainability SRI Sukuk Framework therefore, promotes sustainable projects and sustainable financing. • Our Framework is in line with the following guidelines, standards or frameworks which are reviewed and revised from time to time:

The Sustainable and Responsible Investment Sukuk Framework pursuant to the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework issued by the Securities Commission; and

The ASEAN Sustainability Bond Standards issued by the ASEAN Capital Markets Forum;

(Collectively referred to as the “Framework”).

Following the above guidelines, our Framework is structured around the four (4) key pillars:
• Utilisation of proceeds
• Process for Projects Evaluation and Selection Criteria
• Management of Proceeds
• Reporting

3.1
Utilisation of Proceeds

The Proceeds will be used to finance our waste management projects that fulfil the eligibility criteria of this Sustainability SRI Sukuk Framework (“Eligible Projects”)

Eligible Project Description

Energy from Waste
• Investment in process optimisation and energy consumption management for electricity from thermal waste recovery, Resource to Energy Scheduled Waste (“R2E-SW”)
• Investments in flue gas cleaning to fulfil BAT criteria (“Best Available
Technology”) for Waste Incineration
Investments in CEMS (“Continuous Emission Monitoring System”) for R2E-SW, a 24-hour monitoring of emission from the facility
• Investment in Leachate Treatment Plant (“LTP”) for leachate treatment to meet Standard A* requirements.
Treated leachate (standard A water), will be re-used in our operations.
• Secure landfill to ensure proper final disposal and pollution control.

Eligible Criteria

• Environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to minimize their adverse impacts on human health and the environment.

• Significantly reduced waste generation through recycling and re-use.

• Substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination through improper disposal or illegal dumping.

• Improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe reuse.

• Reduce the adverse per capita environmental impact of cities, including air quality and municipal and other waste management.

• Support domestic technology development, research and innovation in waste management.

Eligible Project Description

Circular economy in waste management

•  Recovery of bottom ash from R2ESW facility.
•  Recovery of oil from sludges.
•  Recovery of oil from clinical waste residue (plastic to oil)
•  Post consumers PET bottles
recovery
•  Authorised Automotive Treatment
Facilities (“AATF”)
•  Solar Panel Recovery
•  EV Battery Recovery

Eligible Criteria

• Significantly reduced waste generation through prevention, reduction, recycling and re-use.

• Renewable Energy

Rooftop Solar renewable energy for operations

•  Installation and maintenance of rooftop solar at our facilities

• Increase substantially the share of renewable energy in the global energy mix

• Green Building
• Energy Efficiency

Buildings meeting GBI standards

•  Energy-efficient building include
the orientation of the building for
optimal natural lighting, use of
building materials that insulates
heat and use of renewable energy
such as solar.
•  LED sensor lighting, smart air
conditioning and devices.
•  Rainwater harvesting whereby the harvested water will be used in our facilities.
•  Target GBI certified for storage
facilities and Gold standard for
administration buildings.

• Support least developed countries, including through financial and technical assistance, in building sustainable and resilient buildings utilizing local materials.

• Clean Transportation

E-Vehicles

•  Investment in the purchase of electric vehicles (“EV”) and installation of EV charging stations including Electric forklift trucks.

• Provide access to safe, affordable, accessible and sustainable transport systems.

•  Employment Generation
•  Socioeconomic Advancement
and Employment

Employment Generation in
Sustainable Waste Management

ER2E™’s projects involves employment of competent person in our waste management facilities who will be exposed to technologies and innovation in waste management and processes that embrace sustainability. This is a critical step to ensure proper waste management treatment.

ER2E™ is therefore allocating a certain amount of expenditure in training programme allocated for the purpose of training our employees to be qualified as competent persons as recognised by the department of Environment

Achieve higher levels of
economic productivity through diversification, technological upgrading and innovation, including through a focus on highvalue added and labourintensive sectors.

• Affordable basic infrastructure.
• Access to essential services

Caring and contributing to community

•  Electricity subsidy for residents within a certain fixed radius from our facilities.

• With the electricity generation from our R2E-SW facility, ER2E™ is committing a certain amount of its Sustainability SRI sukuk drawdown into an electricity subsidy programme.

• Pollution Prevention and Control
• Environmentally sustainable
management of living natural
resources and land use.

River rehabilitation and Tree Planting

•  ER2E™ via its Eco Trail programme
is committing to river rehabilitation in which we adopt a one (1) km section of a river for rehabilitation. We will have drones to monitor illegal dumping and hence, preventing river pollution.

•  Part of this programme will also
involve beautifying the area with
trees planting for Co2 reduction
along the river. Additionally, we
will have exercise trail to
encourage recreational activities
by the river side for residents to
enrich the lives of the
surrounding communities.

• Protect and restore water-related
ecosystems, including mountains, forests, wetlands, rivers, aquifers
and lakes.
• Support and strengthen the participation of local communities in improving water and sanitation management.
• Substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination.

Any project, asset, expenditure or investment (included unallocated proceeds) related to the following activities will be excluded:

• Fossil based energy; and
• Projects which involve activities that pose a negative social impact related to alcohol, gambling, tobacco and weaponry.

3.2
Project Evaluation and Selection

ER2E™’s Executive Committee (the “EXCO”) will be responsible for the project evaluation and selection process and ensure that the identified projects comply with the eligibility criteria as stated in Section 3.1 “Utilisation of Proceeds” and ER2E™’s sustainability commitment statement as described in Section 2. The EXCO meets on a monthly basis.

EXCO will evaluate and select projects which have gone through stringent processes to ensure that material environmental and social risks have been considered and addressed. The processes are as follows:

• Detailed feasibility study on the project site to ensure that the site is environmentally and socially safe and endorsed by PLAN Malaysia;
• Meets the Department of Environment’s and the Environmental Quality Act, 1974 (“EQA”) requirements;
• Environmental Impact Assessment (“EIA”) conducted including social impact study.

Additionally, upon commencement and throughout the operations of ER2E™’s facilities, there
will be monthly, quarterly and annual monitoring to ensure compliance with the EQA and
DOE’s requirements.

As such, ER2E™’s projects comply with the relevant environmental, social and governance standards such as the EQA and recognised best practices such as ISO 14000.

The EXCO will be responsible for:

• Reviewing and validating the selection of Eligible Projects based on the defined criteria in the Utilisation of Proceeds section and criteria explained above;
• Recommend the identified projects to Board of Directors for approval; and
• Monitoring the Eligible Projects, throughout the period of the SRI Sukuk financing ensuring that criteria are met.

The EXCO will also review and revised the Sustainability SRI Sukuk Framework, as necessary to ensure that it adopts the latest changes in relevant standards.

3.3
Management of Proceeds

The Proceeds will be allocated to the Eligible Projects as selected per the Eligibility Criteria and process set out above. ER2E™ will track the proceeds allocation and utilisation which will include the following:

• List of Eligible Projects and its components;
• Amount allocated to each Eligible Project;
• Expenditure of each Eligible Project; and
• The unutilised amount and where such unutilised amount is placed or invested pending
utilisation.

Any unutilised amount of the proceeds may be held in cash or cash equivalents, including temporary investment in money markets and other liquid marketable instruments, all of which shall be Shariah compliant.

The proceeds allocated for the Eligible projects will be credited into a designated account and tracked in an appropriate manner as described above.

The above tracking will be via its internal tracking and Enterprise Resource Planning (“ERP”) System in which the finance module is part of the ERP which will enable proper and timely tracking of the allocated and unallocated proceeds.

3.4
Reporting

Commencing from year one (1) of the issuance of the Sustainability SRI sukuk, ER2E™ will make available on our corporate website information on the allocation of proceeds to the Eligible Projects until full allocation. Where feasible and subject to confidentiality, ER2E™ will thrive in our best endeavour to make available information on the environmental impact of the Eligible Projects.

ER2E™ will report the items as listed in Section 3.3 above which is in compliance with Bursa SRI Sukuk requirements. Additionally, ER2E™ will include reporting matrices pertaining to the environmental and social impact as follows:

• A general description of selected Eligible Projects financed;

• Where applicable, metrics about the Projects’ impacts during the reporting period, such as:

o Estimated CO2 emissions reduction (in tCO2 equivalents) per ton of waste processed;
o Estimated other emissions reduction per ton of waste processed;
o Total power generated from renewable energy (R2E-SW and Rooftop Solar) at plant sites (MWh);
o Number of EVs purchased;
o Number of EV charging stations installed;
o Electricity subsidy to surrounding community (number of households receiving the subsidy); and
o Employment creation (number of jobs created).

ER2E™ will also include information on the methodology and assumptions adopted to measure the impact.
As our Resource to Energy Scheduled Waste (“R2E-SW”) facility converts waste to energy, this process reduces carbon emission into the atmosphere. Furthermore, the energy produced is green energy without the use of fossil fuel. As such, R2E-SW will be a net zero carbon emission project.

4
External Review

4.1 Second Party Opinion

ER2E™ has appointed RAM Sustainability Sdn Bhd to provide an independent Second Party Opinion (“SPO”) on this Framework. The SPO will be published on ER2E™’s corporate.

4.2 Verification

In addition, starting one year after issuance of any Sustainability SRI Sukuk, an independent “assurance” external party will be engaged to assess and provide report on utilisation and management of proceeds and reporting are in compliance with the requirements of ER2E™’s Sustainability SRI sukuk framework. The report will be made available on ER2E™’s corporate website stated above.

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SUSTAINABILITY SRI SUKUK FRAMEWORK

1
Introduction

2
Our Commitment towards Sustainability

3
Sustainability SRI Sukuk Framework

3.1
Utilisation of Proceeds

The Proceeds will be used to finance our waste management projects that fulfil the eligibility criteria of this Sustainability SRI Sukuk Framework (“Eligible Projects”)

Category

Eligible Project Description

Eligible Criteria

Category

Eligible Project Description

Eligible Criteria

Any project, asset, expenditure or investment (included unallocated proceeds) related to the following activities will be excluded:

• Fossil based energy; and
• Projects which involve activities that pose a negative social impact related to alcohol, gambling, tobacco and weaponry.

3.2
Project Evaluation and Selection

3.3
Management of Proceeds

3.4
Reporting

4
External Review

5
Second Opinion Report

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SUSTAINABILITY SRI SUKUK FRAMEWORK

1 Introduction

1
Introduction