Climate Strategy | RATCH Group PCL. (RATCH)

Structure of climate action governance

Organizational body	Role and responsibility concerning climate change
Board of Directors	Integrate climate change into the corporate risk management system, internal control, business strategies and targets. Define vision, missions, business direction and strategies that ensure the company’s preparedness for the energy transition and the journey towards a low-carbon organization. Endorse climate strategy and action plans including related indicators and targets, ensuring the compatibility with the company’s condition and business context. Supervise and give guidance on sustainability strategy, climate change strategy, action plans and targets as well as monitor the implementation for concrete results. Monitor progress against targets together the Risk Management Committee and Audit Committee.
Risk Management Committee	Integrate climate risks and opportunities into the enterprise risk assessment and management process. Supervise and monitor the efficiency of the risk management system and internal control as well as the alignment of the Company’s business strategy/targets and the Climate Change Strategy
Corporate Governance and Sustainability Committee	Supervise and monitor the progress of Sustainability Strategy and Climate Change Strategy as well as the management of enterprise risks and opportunities. Give opinion and guidance on Climate Change Strategy, related policies, action plans and targets supportive to the strategy and submit them for the Board of Directors’ approval.
Investment Committee	Supervise the climate risk assessment as a criteria for project investment and the management of risks and opportunities in project and enterprise levels.
Audit Committee	Supervise the implementation of Climate Change Strategy against targets and give advice.
Chief Executive Officer	Cascade the Board of Directors’ guidelines through the preparation of an action plan in alignment with Climate Change Strategy. Monitor the operational efficiency and progress of action plans against the Board of Directors-approved targets.
Chief Power Business Development Officer	Integrate climate risk and opportunities into project feasibility and conduct due diligence for the decision-making process. Give priority to suppliers with ESG and monitor compliance with legal and related requirements specified in the construction phase.
Executive Vice President - Related and New Business	Integrate climate risk and opportunities into the development or investment in related and new businesses (non-power). Manage projects and opt for technology leading to low-carbon society.
Chief Asset Management Officer	Supervise the Company Group’s efficiency of enterprise risk management and ESG operations (including subsidiaries and joint ventures). Monitor GHG management and manage climate risks to power plants/assets.
Chief Financial Officer	Source funds for the Company Group’s development/investment in green or eco-friendly projects. Monitor and ensure the conformity of responses to climate risks with creditors’ conditions, accounting standards and action-report reporting to related agencies.
Executive Vice President - Corporate Administration	Drive the Sustainability Strategy and the Climate Change Strategy and comply with the roadmap and targets of the Company and controlled entities. Monitor the execution and progress of action plans and targets and report the performance to the Board of Directors and relevant external authorities.
Internal Audit Department	Examine the completeness and sufficiency of climate change management in line with specified strategies and targets and report to Chief Executive Officer and the Audit Committee.

Climate change is an integral part of RATCH’s Sustainability Strategy in environmental dimension, as it is a pressing issue in the energy and electricity sector. Stakeholders expect market players to reduce greenhouse gas emissions, so as to limit an increase in global temperature and mitigate climate impacts. RATCH thus prepared the Climate Change Strategy to achieve carbon neutrality in 2050. Approving the strategy, the Board of Directors demanded studies in feasible carbon emission approaches and methods for the formation of Decarbonization Roadmap and setting of achievable targets in alignment with Thailand’s target.

The Climate Change Strategy will also shape operational guidelines in support of SDG 12: Responsible Consumption & Production and SDG 13: Climate Action.

Climate Change Strategy

Climate Change Strategy	Performance in 2024	Supports to SDGs
Operational efficiency enhancement	Integrated climate risk assessment into enterprise risk assessment into the enterprise risk assessment, following the Risk Management Committee’s decision to include climate risks into enterprise-and project-level risks; and reported 5 assessment results to the Committee. Studied the Internal Carbon Pricing (ICP) to obtain the monetary value for the investment decision-making process and for the preparation of greenhouse gas reduction schemes: initial study showed the carbon value at USD 5.6-15 per ton of carbon dioxide. Rewarded employees contributing to GHG reduction via the energy-saving house contest which aimed to inspire and raise awareness in efficient energy use.	SDG 12: Ensure sustainable consumption and production patterns 12.2 Achieve sustainable management and efficient use of natural resources by 2030 12.8 Ensure that people everywhere have the relevant information and awareness for sustainable development and lifestyles in harmony with nature by 2030 SDG 13: Take urgent action to combat climate change and its impacts 13.1 Strengthen resilience and adaptive capacity to climate related hazards and natural disasters in all countries 13.3 Improve education, awareness raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning
External collaboration	Ratchaburi Power Plant organized Energy-Saving Project 2024, to raise awareness in efficient energy use in the production process which would reduce the operating cost and greenhouse gas emissions: 4 ideas won Excellent, Good, and Complimentary awards for energy saving features, short breakeven points, and maintenance of work schedules.
Production efficiency enhancement	Reviewed and followed up on efficiency enhancement, to reduce fuel and energy consumption which would reduce the operating cost and greenhouse gas emissions (by the working committee, the Management and the Corporate Governance and Sustainability Committee) Offered incentives to operation and maintenance service providers that achieved the fuel and energy reduction targets, like the annual heat consumption rate.
Green and renewable business investment	Developed solar farms and wind farms in the Philippines, Vietnam, Indonesia and Australia with combined equity installed capacity of 1,391.12 MW. Studied the development and production of green hydrogen in Thailand and abroad, with memorandum of understanding signed for feasibility studies of production technology and business opportunities. Invested in Innopower Co., Ltd., making it the core investing vehicle for business ventures that support the energy transition and net zero emissions. Collaborated with King Mongkut’s University of Technology Thonburi to study bio-charcoal production from aromatic coconut waste in Ratchaburi province: Ratchaburi Power Plant expects to replace coal with the bio-charcoal in its generation process and to explore new business opportunities.
Carbon offsetting and trading	Collaborated with the Department of Royal Forest, the Department of Marine and Coastal Resources, Mae Fah Luang Foundation and community forests in implementing T-VER projects that involved terrestrial and mangrove reforestation, community forest reservation, conservation and enhancement of forest areas for carbon sinks; and calculation of carbon credits for the Company’s carbon offsetting and trading activities.

Assessment of climate-related risks and opportunities

RATCH requires a risk review every 3 years accordingly to the Recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). In 2023, RATCH reviewed the assessment of risks of 22 investment projects in Thailand, Australia, Indonesia and Vietnam under the TCFD framework. There was no change in physical risks, both acute and chronic risks, or transition risks driven by changes in related policy, legislation or requirements and technology. However, additional risk management measures were introduced. Details are summarized as follows:

Climate risks

Physical Risks
Type of risk	Acute risks	Chronic risks
Possible events	Risks resulting from severe climatic events such as storms and floods	Risks arising from long-term shifts in weather patterns such as rising average temperatures and sea level or heat waves
Possible Impacts	Floods leading to dangerous levels of sedimentation in dams, which harm or damage power generation turbines Water stress or drought that may result in water shortage and limited volume of usable water for power generation Lightning that disrupts power generation and causes damage to the generation system	Heat waves that may dampen job operators’ capacity and the efficiency of power generation equipment

Analysis of physical risks

RATCH based the assessment of physical risks of operational controlled entities in Thailand, Australia, Vietnam and Indonesia on 2 scenarios, considering the level of impacts: Scenario RCP2.6 (lowest impact) when average global temperature could be 1.6 degree Celsius warmer in 2050 and Scenario RCP8.5 (highest impact) when average global temperature could be 4.3 degree Celsius warmer in 2050.

The analysis took into consideration significant impacts on the Company’s strategies in 6 aspects: 1) Finance 2) Health, safety and he environment 3) Partners and customers 4) Regulatory landscape 5) Reputation and image and 6) Target and achievements. The impacts may be witnessed in 3 periods: short term (within 2 years), medium term (3-5 years) and long term (6-10 years).

Summary of physical risk analysis results

Physical risk factor: Drought
Impact forecast	Water shortage or insufficient volume of usable water for power generation, affecting the Company Group’s business activities and the main source of income.
Impact period	Short and medium terms
Assessment result	Australia’s drought timescale tends to lengthen the most under Scenario RCP2.6, 8% in 2030 and 8.5% in 2050
Response measures	Invest in supplementary water sources and secure emergency supply in light of insufficient raw water from the primary water sources of operational controlled entities. Consider shifting to less water-intensive power generation patterns or shifting to renewable energy like wind and solar power in Australia, given the high level of drought risk in both short and long terms from 2030 onwards. Prepare an emergency plan for small power plants in the Eastern region of Thailand to tackle emergency shortage of raw water for the production process and prevent damage to machinery and equipment. The plan involves retrieving water from storm water ponds, steam consumption of heat exchangers and water cycling of cooling system. It requires the power plants to coordinate with EGAT’s National Control Center for production adjustment and secure raw water from external suppliers. Impose extra measures and new water use targets concerning cooling tower water cycles. Study rainfall records (100-year statistics) and make rainfall forecasts to assess risks and impacts, while preparing EIA/selecting project sites.

Physical risk factor: Floods
Impact forecast	Damage to high-value assets and machinery, causing impacts on production and transmission system.
Impact period	Short and medium terms
Assessment result	Maximum number of days with heavy rainfall in Thailand, Vietnam and Indonesia tends to increase the most under Scenario RCP 8.5 in 2050.
Response measures	Build rainfall retention ponds and drainage system, to retain rainfall or tackle foods or water shortage. Connect with the rainfall-monitoring network. Study rainfall records (100-year statistics) and make rainfall forecasts to assess risks and impacts, while preparing EIA or selecting project sites.

Physical risk factor: Extreme weather
Impact forecast	Damage to infrastructure, machinery and equipment. Injury due to falling objects. Damage to the transmission grid from lightning and damage to infrastructure from hail storms.
Impact period	Long term
Assessment result	Extreme weather conditions particularly on the wind speed in Thailand, Vietnam and Indonesia tends to increase the most under Scenario RCP8.5 in 2050.
Response measures	The risk does not impose significant impacts on the Company, concerning damage to infrastructure, injury or damage to the transmission grid due to lightning. As such, response measures follow legal requirements and requirements specified in the EIA.

Analysis of transition risks

Type of risk	Aspect	Impact characteristics
Marketing	Changes in consumer and customer behaviors	Customers demanding renewable energy credits to reduce their GHG inventories in Scope 2 emissions.
Regulatory landscape	Change in legislation, regulations and policies	Enforcement of legislation relating to carbon emission reduction like the carbon trading scheme on the right to emit greenhouse gases; and the Power Development Plan for renewable energy that demands additional investment from energy companies for climate impact mitigation.
Technology	Change in technological innovation	Emergence of new products and services like new forms of renewable energy or energy management systems.
Reputation and image	Change in stakeholder mindset	Stakeholders particularly financial institutions and investors pay more attention to corporate actions on climate change: Some have pulled out investment in or reduced funding to fossil fuel power projects.

RATCH applies 3 scenarios - State Policy Scenario, Sustainable Development Scenario (SDS) and Net Zero Emission Scenario (NZE) - to analyse risks and significant impacts to the enterprise. The impacts concern these 6 aspects: 1) finance, 2) health, safety, environment 3) partners and customers 4) legal and regulatory requirements 5) reputation and image and 6) target achievements. The impacts may be witnessed in the short term (0-2 years), medium term (3-5 years) and long term (6-10 years).

Analysis results

The possible imposition of carbon tax to control or limit greenhouse gas emissions poses a risk on the operating expenses or production cost of power generation entities. The cost will rise in relation to the volume of electric power generated from fossil fuels and emissions. The risk may be eminent in the next 3-5 years.

Response measures

Devise the Climate Change Strategy and the Decarbonization Roadmap, with the goal to achieve carbon neutrality in 2050.
Target to raise the ratio of renewable energy capacity to 30% in 2030 and 40% in 2035.
Invest in or acquire new renewable energy assets or fossil fuel power plants with installed carbon storage technology and avoid or abolish investment in coal-fired power plants.
Set investment target for low-carbon businesses, innovation, future energy like hydrogen, energy efficiency management, and electric vehicles and related businesses.
Set carbon offsetting target from forest reforestation, rehabilitation and conservation; and increase internal use of renewable energy.

RATCH reviewed risks in 2024 and assessed the risks and likelihood as guided by the Task Force on Climate-related Financial Disclosures (TCFD) framework. In focus were acute, chronic and transition risks that may arise from changes in policies, legal clauses and relevant technology. The assessment found no change from the previous year.

Analysis of climate-related opportunities

Transition risks in the marketing, technology and regulatory aspects can create negative impacts on the Company’s operations. Nevertheless, they may create business opportunities. RATCH reviewed its investment plan and set a target to increase investment in low-carbon businesses and non-power businesses. Target fields involve green hydrogen, businesses in the electric vehicle value chain, solar and wind power projects, renewable energy storage system, and businesses related to the installation, production and maintenance of solar farms.

Additionally, RATCH had strengthened the capability of relevant personnel relating to TCFD recommendations, the assessment of climate-related risks and opportunities, the assessment and calculation of organization carbon footprints in Scope 1-3, internal carbon pricing, IFRS S2 Climate-related Disclosures, and updates on the situation and impacts of climate change.

RATCH has integrated the management of climate-related risks and opportunities into the enterprise risk management and under the responsibility of the Corporate Planning and Systems Development Department, identified performance indicators. All functions will work together through the Risk Management Working Committee, the ESG Working Committee and the Performance Evaluation Committee. The operational results are reported to the Management, the Risk Management Committee, the Investment Committee, the Corporate Governance and Sustainability Committee and the Board of Investors, respectively, for their consideration and acknowledgement. Meanwhile, the Internal Audit Department is tasked to monitor the efficiency and sufficiency of the risk management system and report to the Audit Committee.

GHG reduction targets

Strategy	2035 targets	2030 targets	Performance in 2024
1. Mix of fuels for power generation	Fossil fuel: 60% Renewable energy: 40%	Fossil fuel: 70% Renewable energy: 30%	Fossil fuel: 72.5% Renewable energy: 27.5%
2. GHG emission reduction	GHG reduced by 10 MtCO₂e or 100% of emissions in the base year 2015 GHG emissions per unit of electricity production reduced by 25% compared to the base year 2015	GHG reduced by 6 MtCO₂e or 70% of emissions in the base year 2015 GHG emissions per unit of electricity production reduced by 15% compared to the base year 2015	GHG emissions reduced by 3.36 MtCO₂e or 38.6 % of emissions in the base year 2015 GHG per unit produced electricity reduced by 28.9% compared to the base year 2015
3. Increase in GHG sequestration	Carbon sequestration amounting to 76,000 tCO₂e	Carbon sequestration amounting to 55,000 tCO₂e	Carbon sequestration mounting to 6,804 tCO₂e

Scope 3 GHG Emissions

Download

Disclosure in the Alignment with TCFD

Download