AirAsia : Document

CORSIA

A321neo

Diversity

Net Zero

Technology

eBoarding Pass

Gender Pay Gap

Carbon Intensity

Carbon Offsetting

Operational Safety

Women in Aviation

Operational Efficiency

Anti-Human Trafficking

Sustainable Aviation Fuel

Anti-Bribery & Anti-Corruption

Sustainability

Report

2023

THIS REPORT

Introduction

01	About This Report	Our Sustainability Approach
02	Message From the Chief Sustainability Officer	07	Sustainability Redbook & Framework
04	Our Sustainability Journey	09	Sustainability Governance
06	Awards & Recognition	10	Stakeholder Engagement
		12	Membership of Associations
		13	Material Matters
Economic
Good Governance	Transforming into a Digital Travel and Lifestyle Brand
18	Corporate Governance	31	Guest Experience
23	Sustainable Supply Chain	40	Technology and Innovation
29	Human Rights	46	Information Security and Data Privacy
Environmental
Addressing Climate Change
52	Climate Strategy
72	Waste Management
Social
Safety As Our Priority	Uplifting Communities in Asean
80	Operational Safety	102	Growing Asean Social Enterprises
85	Occupational Safety and Health	106	Celebrating and Supporting the ASEAN
86	Food Safety		Community

Empowering Allstars

88 Diversity and Inclusion

94 Talent Attraction and Retention

Appendices

1. Performance Table

1. GRI Content Index

1. Assurance Statement

ABOUT THIS REPORT

(GRI 2-1,2-2,2-3)

Capital A Berhad (Capital A or the Group)'s Sustainability Report 2023 marks the first standalone publication of our sustainability journey, demonstrating our long-term commitment to transparent and accountable reporting. In this report, we provide updates on the sustainability initiatives executed to propel our business.

This report provides an overview of our economic, environmental and social (EES) approach, performance and achievements to create long- term sustainable value for our stakeholders. We demonstrate our ability to carefully manage pertinent sustainability risks and opportunities that impact both our business operations and stakeholders.

The focus this year is on championing the spirit of doing more with less

to resonate with our practice of delivering positive sustainable action with the resources we have. In addition, we describe new initiatives introduced as well as the progress and achievements of existing initiatives throughout the year.

This report should be read along with our 2023 Annual Report for more comprehensive disclosure on our operating and financial performance.

REPORTING FRAMEWORK,

GUIDELINES & INDICES

This report was developed based on various international and local sustainability guidelines and standards to provide our stakeholders with meaningful disclosures. The list includes Bursa Malaysia Securities Berhad (Bursa Malaysia)'s Main Market Listing Requirements on Sustainability Statements in Annual Reports with guidance from its Sustainability Reporting Guide (3rd Edition). We have also referred to the Global Reporting Initiative (GRI) Standards 2021.

Other frameworks and guidelines taken into consideration include:

• FTSE4Good Bursa Malaysia (F4GBM) Index
• Dow Jones Sustainability Index (DJSI)
• Task Force on Climate-related Financial Disclosures (TCFD)
• United Nations' Sustainable Development Goals (UN SDGs)
• Malaysian Code on Corporate
  Governance (MCCG)

REPORTING SCOPE AND

BOUNDARIES

This report covers the sustainability performance of Capital A and

its subsidiary companies for the reporting period from 1 January 2023 to 31 December 2023, unless stated otherwise. Throughout the report, the terms "we" or "the Group" refer to Capital A while each subsidiary is referred to by its own name, and the airlines collectively are referred to as AirAsia. Where relevant and available, this report provides comparative historical data.

Disclosures for the airlines include AirAsia Malaysia (MAA), AirAsia Thailand (TAA), AirAsia Indonesia (IAA), AirAsia Philippines (PAA) and AirAsia Cambodia. In 2021 and 2022, we reported only on MAA, IAA and PAA, with TAA statistics reported separately in Asia Aviation Public Company Limited's sustainability statement. This year, TAA has been reincorporated into our reporting scope in line with the Group's

acquisition of full equity in the airline, while AirAsia Cambodia has only recently been set up in late 2023.

All monetary values in this report are expressed in Ringgit Malaysia (RM), consistent with the Malaysian Financial Reporting Standards, unless stated otherwise.

FORWARD-LOOKING STATEMENTS

This report contains certain forward- looking statements which reflect the Group's expectation of future value creation as well as financial and non- financial performance. Such statements are based on current assumptions and circumstances which could change, hence necessarily involve uncertainties. Unforeseen events and risks may arise beyond the Group's control, leading to actual results differing from those stated in the statements.

ASSURANCE

To ensure the accuracy and integrity of our disclosures, this report has been reviewed by Capital A's Sustainability Working Group (SWG), audited by the Group's internal audit department in line with the International Professional Practices Framework, and endorsed by the Board of Directors. The Board has, further, validated the report's relevance to the Group's business and performance. Moving forward, we aim for a more comprehensive internal audit to further strengthen the credibility of our sustainability reports.

CONTACT US

In order to continuously improve our reporting and sustainability efforts, we welcome ideas and comments from our stakeholders. Please direct your enquiries, feedback or comments on Capital A's 2023 Sustainability Report to:

[e-mail]

Website: https://www.capitala. com/sustainability.html

S U S T A I N A B I L I T Y R E P O R T 2 0 2 3

1

INTRODUCTION

Message from the Chief Sustainability Officer

(GRI 2-22)

Welcome to our first standalone sustainability report, published in a year that holds special significance for all of us at Capital A. This is the first year since 2019 that all AirAsia airlines have been able to fly uninterrupted by lockdowns at our hubs and stations. It is also the year that our entities charted a return to profitability. In sustainability, we finally reaped the fruits of a strategic realignment that we started over two years ago to prioritise the management of our ESG risks and to communicate better. This earned us improvements in ESG scores across all our tracked indices and won us our first Gold Environmental Sustainability Rating from the Centre for Aviation (CAPA).

2 C A P I T A L A B E R H A D

Of the progress made this year, there are three areas that I wish to highlight. The first relates to the phenomenal effort that our aviation arm has put into rebuilding our network. Getting aircraft that have been mothballed for two years back to tip-top shape remains challenging, given a continued global shortage of skilled manpower, parts and maintenance slots. However, in measuring our guest experience, we found that our airline group had maintained an overall on- time performance of 77% in tandem with a strong recovery of our Net Promoter Score to 52 from a low of 36 in 2022. This was while retaining our 7* safety rating by AirlineRatings.com. Our carbon intensity measures have also fallen below 2019 levels, indicating a full recovery in operational efficiency performance.

Alongside reactivation of our fleet, we also had to recruit rapidly while keeping sight of our diversity target to employ at least 30% women in all job categories. Some significant wins were in raising the number of women in leadership positions in our aviation arm to 15.2% from 10.5% the previous year and increasing female pilot representation to 7% from 6.6%. We also successfully raised the representation of women in IT to 23.9% from 17.7% in 2022.

Third, we launched a fresh approach to communicating our sustainability and net zero commitments, sharing our perspectives on aviation sustainability at numerous national and international fora. In all our AOC countries, we have been able to establish new relationships with stakeholders in the environmental sector, from government officials to carbon market players. AirAsia representatives were also appointed as experts to ICAO's Committee for Environmental Protection.

As we move into the new year, we will be continuing the core initiatives that have been set in motion and raising the bar on others. Ongoing initiatives would include securing regulatory approvals for our plan to manage our CORSIA offset and reduction exposure, and taking our aviation sustainability awareness campaign regional. At ADE, we are finalising plans to introduce renewable energy at our maintenance facilities while GTR aims to expand its fleet of e-vehicles. With our digital business streamlined to drive growth, we are also investing in enhancing our information security infrastructure. We can also expect to see renewed activity at AirAsia Foundation to develop partnerships on sustainable travel.

These initiatives will enable us to continue raising the bar on sustainability performance across the Group and keep air travel safe, secure and accessible.

With regards,

Yap Mun Ching

Chief Sustainability Officer

Capital A Berhad

1st

GOLD

Environmental Sustainability Rating from the Centre for Aviation (CAPA)

Female pilot

representation:

7%

(2022: 6.6%)

Women in leadership positions:

32%

S U S T A I N A B I L I T Y R E P O R T 2 0 2 3

3

INTRODUCTION

Our Sustainability Journey

2003

• Extension of cabin crew retirement age to 55 years
• Employed first female pilot,
  Captain Janet Chen Nyuk Jin

2006

• First in the region to have
  Airbus A320 full-flight simulators at the new AirAsia
  Academy
• Hosted first EU-Malaysia civil aviation safety conference

2002

• AirAsia goes

ticketless

2005

• First batch of cadet pilots completed training

• Received first Airbus A320ceo reducing carbon emissions by 15% per seat

2012

• AirAsia Foundation established to contribute to Asean community building
• First airline in the world to operate the Airbus A320 with Sharklet wingtips

2008

• Introduced ambulift facility for disabled guests

2010

• Introduced self check- in kiosk facilities

2013

•	Launched Malaysia's first
	baggage self-tagging service
•	First to adopt the Required
	Navigation Performance

2015

• e-boardingpass available for all flights

2014

• Raised RM7.6 million through To Philippines with Love campaign to aid reconstruction efforts in Typhoon Haiyan affected areas
• INTERPOL and AirAsia reaffirmed commitment to integrate I-Checkit system for enhanced international travel security
• Launched onboard Wi- Fi service to increase connectivity

• Launched mobile bookings

2007

• Employed first in-house counsellor

Authorisation Required (RNP-

AR) approach for flight paths

in Malaysia

4 C A P I T A L A B E R H A D

2017

• Launched anti-human trafficking training,
  #KnowtheSigns
• RNP-ARapproach extended to other flight paths in Asean

2019

• Received the first Airbus A321neo, which brings 20% fuel savings per seat
• Launched artificial intelligence (AI) powered chatbot, AVA, to improve the customer experience
• Published the Group's
  Environmental Policy
• Opened the first social
  enterprise hub, Destination GOOD

Onwards #NeverStop

2022

2020

• Listed on FTSE4Good Bursa Malaysia (F4GBM) Index for the first time

• Revised and strengthened the Anti-Bribery and Anti- Corruption Policy

2018

• Opened a creche at RedQ to support Allstar parents
• Launched Malaysia's first airport facial recognition system, Fast Airport Clearance Experience System (FACES)
• Debuted the new Mirus Hawk seats that avoid 200 tonnes of carbon emissions per aircraft per year

• Appointed the Group's Chief
  Sustainability Officer
• Officially a TCFD supporter
• Published the Group's
  Sustainability Policy
• Launched the Group's sustainability strategy for the next five years under Sustainability Redbook
• Participated In the Bloomberg
  Gender Equality Index for the first time
• Introduced Digital Trip Files to reduce paper printing and manual workflow on the ground

2023

• Hosted our first Sustainability

Day for key stakeholders

• Publication of Doing More with

Less: AirAsia's Guide to Aviation

Sustainability

• Contributed to the national

2016

• First airline in Asean to fly the Airbus A320neo aircraft, improving fuel efficiency by 16%-20% and saving up to 666 litres of fuel per flight

2021

• Announced goals towards net zero carbon emissions by 2050
• Established the Board Risk Management and Sustainability Committee (RMSC)
• Aligned with the Task Force on Climate-related Financial Disclosures (TCFD) for the first time
• Published the Group's gender pay gap analysis
• Introduced the Group's Anti-Harassment Policy

State Action Plan version

4, incorporating updated

emissions mitigation measures

and more ambitious targets

• Introduced the Group's Diversity

Recruitment Guidelines

• Appointed to the ICAO

Committee on Aviation

Environmental Protection

Experts' Working Group

• Appointed as an adviser on

the national climate change

advisory panel

• CAPA Gold Environmental

Sustainability Rating

S U S T A I N A B I L I T Y R E P O R T 2 0 2 3

5

INTRODUCTION

Awards &

Recognition

Recognition received for efforts carried out in 2022 that were assessed in 2023:

1	CAPA
Centre for
Aviation
2	FTSE4Good Bursa
	Malaysia Index
3	London Stock
(LSEG)Exchange Group
4	S&P Global
Corporate
AssessmentSustainability
5	The Stock Exchange
of Thailand

Gold rating

In the CAPA-Envest Global Airline Sustainability Benchmarking & Rating Report 2023

3.2/5

A three percentage point improvement from 2021

71%

Ranked 15th out of 124 passenger transportation service companies assessed

40%

Maintained score from previous year

81%

A 14 percentage point increase from the reporting year 2021

6	Maybank	59%
Investment Banking
Above the average ESG score
& Advisory
7	Bloomberg Gender	65%
Equality Index (GEI)	in 2022 - results for 2023 to be released in Q2 2024

6 C A P I T A L A B E R H A D

OUR SUSTAINABILITY APPROACH

Sustainability Redbook & Framework

GRI 2-23,2-24

Throughout the years, we have progressively strengthened the foundation laid to embed sustainability in our business. In 2022, we developed a Sustainability Redbook, which sets out our EES roadmap up to the year 2035. This roadmap will guide us towards the Group's vision of delivering positive impact for the business, environment and communities, anchored on the framework below.

			Vision
	To be the brand for sustainable business setting industry
	standards to strengthen our competitive advantage
			Mission
	To think (and be) sustainable by integrating sustainability into our corporate DNA
Pillars	ECONOMIC		ENVIRONMENTAL		SOCIAL
	Strive for best practice		Reduce carbon footprint		Create an enabling and
Strategic			inclusive workplace
Drivers
Innovate to raise the bar		Minimise waste		Invest in our communities

Our Material Matters

Corporate Governance

Sustainable Supply Chain

Human Rights

Guest Experience

Technology and Innovation

Information Security and

Data Privacy

Climate Strategy

Waste Management

Health and Safety

Diversity and Inclusion

Talent Attraction and

Retention

Community Investment

Key SDG

Alignment

Our Sustainability Redbook was designed to complement the Group's five-year business strategy, outlining a net zero roadmap as we progress towards our sustainability objectives. Under the economic, environmental and social pillars, we identified six strategic drivers to deliver outcomes categorised under 12 material topics. We have set internal time- bound targets for the short, medium and long term to track our progress towards our goals.

As the sustainability landscape is dynamic, we will keep reviewing our goals and targets to improve the Sustainability Redbook and align our business objectives with the global sustainability agenda.

S U S T A I N A B I L I T Y R E P O R T 2 0 2 3

7

OUR SUSTAINABILITY APPROACH

Environmental	• Convert all on-site servers to cloud-based servers
	Net Zero Emissions
	• Cap emissions at 85% of 2019 levels
	• Invest in Sustainable Aviation Fuel for utilisation in the
	near future
	• Utilise bio-fuels to operate ground vehicles
	• Explore and purchase suitable carbon offsets for
	residual carbon emissions
	• 15% of power consumption mix to be renewable energy
	• All new buildings to be Green certified and utilise at
	least 30% renewable energy
	• Achieve full paperless operations
Under the environmental
and social pillars, we
have centred our targets
for 2026 on four focus	Circular Economy
areas for better impact:	• Reduce waste to landfill by 10% per annum
	• Zero single-use plastics
OUR	• Cap food waste at 15%
• 30% of total procurement to be from ESG-compliant suppliers
• 10% of materials to be biodegradable or recycled
AMBITIONS FOR
2026		People and Talent
SUSTAINABILITY POLICY		• Achieve a minimum of 30%
	women representation
		across all employee levels
Our Sustainability Policy highlights our		including the Board
	• Support women in STEM
commitment to minimising our environmental
	by achieving a minimum
footprint, securing the integrity of our
	of 10% women pilots and
systems, investing in our talent, and serving
	engineers, and 30% women
our communities. The policy was approved
ocial	in tech
by the Risk Management and Sustainability
• Invest 2% of total
Committee and AirAsia Aviation Group
manpower budget into
Limited Sustainability Committee in the	S
training & development
first quarter of 2023, further strengthening
• Achieve 1.5 human capital
our commitment towards advancing our
return on investment ratio
sustainability agenda. It will be reviewed
periodically to ensure that it remains up to date

with our progress.

Our overall ambition is to do more with the resources we have and be the brand for sustainable business. Moving forward, we will continue to internalise and work towards targets set in the Sustainability Redbook while increasing sustainability awareness across our operations to Win As One.

Communities

• Positively impact 100 million people
• Generate RM12 million revenue per annum from social and micro, small & medium enterprises (MSMEs)

For more information on our Sustainability Policy, please visit https://www.capitala.com/misc/Capital_A_Sustainability_Policy_2023.pdf

8 C A P I T A L A B E R H A D