2024 SUSTAINABILITY REPORT BEYOND INNOVATION
ABOUT THE REPORT • This Sustainability Report focuses on the sustainability strategy, practices, priorities, targets and performance of our operations across key markets during the financial year ended 31 December 2024. • Unless otherwise stated, this Report covers all material subsidiaries under the Group. For data where there is a qualification on the coverage, ST Engineering is progressively expanding the coverage to all businesses over time. • This Report is approved by the Board and prepared with reference to Global Reporting Index (GRI) Standards, Singapore Exchange Limited (SGX) Listing Rules 711A, 711B and Practice Note 7.6, Sustainability Accounting Standards Board (SASB) Standards – Aerospace and Defence, and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). • ST Engineering adopts the GRI Standards as it is the most widely referenced sustainability reporting framework and it addresses areas that are of interest to our stakeholders. • SASB Standards focuses on the needs of investors and the Group adopts its disclosure requirements for Aerospace and Defence to provide our investors a clearer picture of our businesses. • ST Engineering is a signatory of the United Nations Global Compact (UNGC) and is committed to the Ten Principles. This Report supplements our Communication of Progress. • Stakeholders are advised to read the ST Engineering’s Annual Report 2024 for more information on the Group’s business and financial performance. OVERVIEW i About the Report 01 Assurance & Verification 01 List of Abbreviations 02 Sustainability Dashboard 03 Board Statement on Sustainability 04 Message from the Group President & CEO OUR SUSTAINABILITY APPROACH 06 Sustainability Framework 08 Material Stakeholders & Engagement 10 Materiality Assessment ECONOMIC 14 Economic Performance & Productivity 18 Technology & Innovation 22 Responsible & Resilient Supply Chain ENVIRONMENTAL 26 Environmental Protection 34 Sustainable Quality Products & Solutions SOCIAL 40 People Excellence 50 Total Workplace Safety & Health 58 Corporate Community Contributions GOVERNANCE 68 Ethical Business & Regulatory Compliance 72 Cybersecurity & Data Protection Feedback regarding the sustainability report can be sent to sustainability@stengg.com. CONTENTS ST ENGINEERING | SUSTAINABILITY REPORT 2024 i
ASSURANCE AND VERIFICATION LIST OF ABBREVIATIONS ST Engineering is committed to providing a balanced and accurate sustainability report. Unless otherwise stated, the information disclosed in this report is a consolidation of data compiled from all material subsidiaries under the Group globally. Our Internal Audit team performed a review on the sustainability report for 2024 as mandated by SGX. All recommendations highlighted during the internal review were taken into consideration during the development of this Sustainability Report. The Greenhouse Gas (GHG) emissions data reported by our Singapore entities is verified under the International Organisation for Standardisation (ISO) 14064-1:2018 Greenhouse Gases by Lloyd’s Register Quality Assurance Ltd. This includes Scope 1, Scope 2, Scope 3 Category 6 (Business Travel) and Scope 3 Category 7 (Employee Commute). We are progressively extending external verification for GHG emissions to all our material entities worldwide over the next few years. Our intention is for the external verification and assurance of our Sustainability Report to be done progressively in stages. ABBREVIATION DEFINITION AI Artificial Intelligence AM Additive Manufacturing CI Continuous Improvement CPAS Cerebral Palsy Alliance Singapore CSR Corporate Social Responsibility DPS Defence and Public Security ECRs Export Control Regimes EFW Elbe Flugzeugwerke EHS Environmental, Health and Safety ERM Enterprise Risk Management ESG Environmental, Social and Governance EXCO Group Executive Committee GEC Group Engineering Centre GenAI Generative AI GHG Greenhouse Gas GRI Global Reporting Index GTO Group Technology Office HQ Headquarters HR Human Resources HVAC Heating, ventilation and air-conditioning IFRS International Financial Reporting Standards IMOC Integrated MRO (Maintenance, Repair and Overhaul) Operations Centre IoT Internet-of-Things IROs Impacts, risks and opportunities ISO International Organisation for Standardisation ISSB International Sustainability Standards Board IT Information Technology KPI Key Performance Indicator ABBREVIATION DEFINITION LED Light-emitting Diode OEST Operations Excellence Specialist Team MRO Maintenance, Repair and Overhaul NTU Nanyang Technological University P&CEO President and Chief Executive Officer PwDs Persons with Disabilities PV Photovoltaic RFR Recordable Frequency Rate RSC Risk and Sustainability Committee RSR Recordable Severity Rate R&A Risk and Assurance R&D Research and Development SASB Sustainability Accounting Standards Board SGX Singapore Exchange Limited SgIS Singapore-Industry Scholarship SME Small and Medium Enterprise STEM Science, Technology, Engineering and Mathematics STESU ST Engineering Staff Union SWEEP Safe Work Environment Engagement Programme SWITCH Singapore Week of Innovation and Technology TCFD Task Force on Climate-related Financial Disclosures UNGC United Nations Global Compact UN SDGs United Nations Sustainable Development Goals UVC Ultraviolet-C WSH Workplace Safety and Health View our External Assurance Statements 01 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
OVERVIEW SUSTAINABILITY DASHBOARD ENVIRONMENTAL GOVERNANCE FINES Zero significant fines in 2024 GHG EMISSIONS 25% reduction in absolute Scope 1 and 2 GHG emissions from a 20151 base year GREEN ENERGY 20% of electricity consumption from global operations derived from renewable energy BRIBERY AND CORRUPTION Zero bribery and corruption cases in 2024 ECONOMIC R&D AMOUNT $420m spend on Research & Development (R&D) in 2024 SUPPLY CHAIN $1.2b purchases from Small and Medium Enterprises (SMEs) in Singapore SOCIAL LEARNING & DEVELOPMENT 29 average training hours per employee INCIDENT RATE 0.41 Recordable Frequency Rate 6.65 Recordable Severity Rate CORPORATE COMMUNITY CONTRIBUTIONS $2.8m worth of community contributions by the Group, employees and other stakeholders PEOPLE MANAGERS 16% of male employees are people managers 15% of female employees are people managers RECOGNITION COMMUNITY CHEST AWARDS – CHARITY PLATINUM AWARD SIXTH CONSECUTIVE YEAR Constituent of Dow Jones BEST-IN-CLASS ASIA PACIFIC INDEX BASED ON LONG TERM ESG CRITERIA 1 Previously, we set a target to halve our Scope 1 and Scope 2 absolute GHG emissions by 2030 compared to 2010. This year, we refreshed our base year to 2015, in line with best practices. .* RFR = Recordable Frequency Rate; RSR = Recordable Severity Rate. We are progressively including non-material overseas branch offices under our operational control. 02 ST ENGINEERING | SUSTAINABILITY REPORT 2024
BOARD STATEMENT The Board of Directors oversees the review by management of material environmental, social and governance (ESG) factors for ST Engineering and takes them into consideration when setting the Group’s strategic direction. In our review this year, we reaffirmed the importance and relevance of our ten material ESG factors and assessed such factors from the perspective of their impact materiality and financial materiality. We remain steadfast in positively impacting people’s lives and the health of our planet by operating responsibly in our communities and the wider global ecosystem. We create value by addressing real-world problems, including those related to climate change, urbanisation, pandemics, public safety and evolving security challenges. We harness technology and innovation to enable a more secure and sustainable world. In our efforts to decarbonise, we are focusing in the medium term on seizing opportunities and managing risks related to climate change across our global units. We link a range of operational, financial and non-financial key performance indicators to our material ESG factors to encourage the adoption of strategies and practices that are aligned to the sustainable and long-term success of the Group. 03 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
MESSAGE FROM GROUP PRESIDENT & CEO OVERVIEW We aim to harness our diverse capabilities and collaborate with innovative companies and institutions for more sustainable solutions. A PURPOSE-DRIVEN GROUP At ST Engineering, we are dedicated to harnessing technology and innovation to foster a more secure and sustainable future. Our sustainability journey is driven by a commitment to long-term resilience and the creation of sustainable value for all our stakeholders, including customers, employees, communities, shareholders, governments, and suppliers. In an increasingly uncertain world caused by geopolitical tensions, extreme weather, and industry disruptions, we are steadfast in our commitment to integrating sustainability into our strategies and operations to ensure our continued resilience. DOING OUR PART 2024 has been a progressive year for us. We made steady advancements in various key sustainability areas as we continue to strengthen our commitment to ESG principles: • ENVIRONMENT: We continued to foster an environmentally conscious culture among our employees through regular events, such as our Tree Planting Days. Previously, we set a target to halve our Scope 1 and Scope 2 absolute GHG emissions by 2030 compared to 2010. This year, we refreshed our base year to 2015, in line with best practices. Compared to the 2015 base year, we achieved an emission reduction of 25% in 2024. This was achieved through a combination of initiatives, including streamlining processes and facilities via smart systems and other energy-efficient technologies and expanding solar panel installation. 20% of our electricity consumption from global operations were derived from renewable energy. • HEALTH & SAFETY: Beyond our regular workplace safety walkabouts helmed by senior management, we offered a range of health and wellness programmes to our employees, including a newly implemented heat stress management programme. We had zero fatalities in our operations this year. • PEOPLE: Our people are vital to our business success. We recognise the importance of diversity, equity, and inclusion and also place great emphasis on employee benefits and training. In 2024, we signed the Enabling Employment Pledge to affirm our commitment to adopt an inclusive mindset towards employees with disabilities, create barrier-free workplace environments, and implement supportive employment policies for employees with disabilities. Additionally, we introduced the online AI training programmes to upskill our employees. In recognition of our workforce’s AI skills achievement, ST Engineering was named the AI Pioneer at the 2024 LinkedIn Talent Awards, which celebrates organisations leading the future of work. • COMMUNITY: Our efforts in contributing back to the local communities we operate in, are 04 ST ENGINEERING | SUSTAINABILITY REPORT 2024
guided by our Corporate Social Responsibility (CSR) pillars – Improving Lives through Charitable Gifts, Empowering Lives through Education and Transforming Lives through Technology and Innovation. In 2024, we contributed $2.8m to community causes. Dedicated to making a positive impact in the broader community, we contributed our technology such as the EasyExo, a soft passive exoskeleton designed to provide assisted support to nursing staff; and Airbitat, a sustainable evaporative cooling solution, to our non-profit partners. Our engineers also contributed their skills and developed a wheelchair canopy prototype for the clients of Cerebral Palsy Alliance Singapore (CPAS). In recognition of our efforts, ST Engineering was conferred the Company of Good – 3 Hearts by the National Volunteer & Philanthropy Centre (NVPC) in Singapore. We remain dedicated to pursuing purpose-driven practices and fostering collaboration to build a caring, inclusive and compassionate society. DISCLOSURES: As part of regulatory compliance and stakeholder engagement, we continue to disclose sustainability information in our Annual and Sustainability Reports. Our reporting is guided by global reporting frameworks, including GRI, SASB and TCFD. From 2025 onwards, our climaterelated disclosures will incorporate the climate-related requirements in the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB). • DATA: We expanded the collection and reporting of ESG data globally with our material international business units. We further enhanced engagement efforts with our internal stakeholders to strengthen the accuracy, traceability and transparency of our data. In addition, we embarked on our roadmap for expanding our Scope 3 data collection to build a more comprehensive carbon inventory across our value chain. Given the complexities of estimating Scope 3 emissions, we will progressively fine tune the reporting process and methodology employed in consultation with both internal and external stakeholders, to establish a robust foundation for Scope 3 reporting. ENABLING OUR CUSTOMERS We remain committed to supporting our customers in their sustainability journey by providing more sustainable quality products and services. Opportunities: Group-wide, we leverage opportunities in three focal areas – reducing GHG emissions, tackling urban and city challenges, and contributing to the circular economy, through enhancing our existing capabilities and tapping on the strengths of our diverse business. Our annual Venture Building business challenge, In.Vent, fosters and develops promising and scalable business ideas, whilst accounting for their sustainability. New Solutions: Our latest sustainability-linked products and services include carbon-lite electric buses, which are designed with a strong emphasis on safety and state-of-the-art technology. Key design features include a tripledoor design for shorter dwelling time at entry and exit, automatic ramp with dual wheelchair bay for all-inclusive transport, ultraviolet-C light-emitting diode (UVC LED) air disinfection system, solar panel on the roof, camera mirroring system and advanced blind spot detection system (AGIL DriveSafe+) to assist bus captains. Supply Chain: A sustainable and resilient supply chain is paramount to our continued success. We broadened the application of our Supply Chain Resilience Framework across the Group and developed plans and strategies to mitigate key supply chain risks, which included our suppliers’ ESG performance. With an increasing focus on human rights risks in supply chains, we seek to progressively collaborate with stakeholders to understand such risks using a risk-based approach, build upon existing policies and governance framework, as well as enhance supply chain screening, due diligence and ongoing engagement processes to strengthen the resilience of our supply chain. Concurrently, we leverage opportunities to engage more closely with our suppliers and foster more resilient and mutually beneficial relationships. COMMITMENT TO THE JOURNEY ST Engineering remains committed to sustainability, whether in our own operations, or through enabling our customers and other stakeholders. We seek to leverage our diverse capabilities and partner with innovative firms and institutions to deepen our expertise and broaden our offering of technologies, as we pursue greater sustainability in our businesses and operations globally. Sincerely, VINCENT CHONG Group President & CEO 10 MARCH 2025 05 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
SUSTAINABILITY FRAMEWORK ECONOMI C GOVERNANCE SOCIAL ENVI RONMENTAL OUR SUSTAINABILITY APPROACH The Group’s success hinges on delivering value to our stakeholders in a sustainable way. Our business practices are built upon our commitment to long-term thinking and consideration of multiple stakeholders’ interests, while harmonising current customer needs with future global requirements. We believe in doing our part by conducting our business sustainably, ethically and responsibly to build trust among our stakeholders while managing risks to our business. This includes shaping a sustainability-conscious culture amongst our employees through mandatory e-learning modules on sustainability. Our courses introduce all full-time employees worldwide to the foundational concepts of sustainability, ST Engineering’s approach to sustainability initiatives, as well as best practices to reduce our carbon footprint, conserve energy, save water and cut back on waste generation. We strive to enable our customers on their journey by offering products and solutions that will help them grow and operate sustainably. Our people and the communities we operate in are vital to our global success. We support inclusive development and foster an ecosystem that promotes the continuous growth of our business. We facilitate this by contributing to the communities that we operate in and investing in the development of our people. Amidst volatile markets and an uncertain world, integrating sustainability into our strategy and operations is key to ensuring our businesses remain resilient and relevant. RESPONSIBLE GLOBAL CITIZEN ENABLER OF A SUSTAINABLE WORLD Doing Our Part Building Trust & Managing Risks Enabling Our Customers Growing with Partners & Seizing Opportunities 06 ST ENGINEERING | SUSTAINABILITY REPORT 2024
Six Goals which we correlate strongly with OUR GOVERNANCE STRUCTURE We believe that our success hinges on nurturing a sustainable culture within the organisation, led by committed leadership, and instilling a sense of responsibility amongst employees at every level. The Board holds ultimate accountability, provides strategic direction and considers sustainability issues, including the management of key ESG factors, in the formulation of the Group’s strategies and policies. The Board’s Risk and Sustainability Committee (RSC) oversees matters related to risk, internal controls, and sustainability. The Group President and Chief Executive Officer (P&CEO), supported by the Group Executive Committee (EXCO), is responsible to the Board for implementing these strategies and directions. The Group Chief Strategy & Sustainability Officer ensures that sustainability is a core part of our business strategy, and that ESG considerations are integrated into our business strategies and operational plans. Sustainability is the responsibility of ST Engineering employees at every level. Our management teams across various business areas and Group Functions play vital roles in shaping and executing our strategy. They collaborate across the Group in critical areas such as Technology and Innovation, Operations Excellence, and Sustainability. This collaborative effort is supported by an annual planning process that is integrated with our strategic and financial planning, alongside our governance and Enterprise Risk Management (ERM) frameworks. Read more about our Commitment and ESG Performance Measurement on our website OUR CONTRIBUTION TO GLOBAL GOALS ST Engineering is a signatory of the UNGC. We support its Ten Principles and are committed to advance the broader goals of the UN Sustainable Development Goals (UN SDGs). References on the practical actions taken to implement the UNGC principles in each of the four issue areas (human rights, labour, environment and anti-corruption) can be found in the UNGC index pages. We affirm our support of all 17 UN SDGs and identified six goals which correlate strongly with our practices, operations, and in the products and services we offer. Read more about our Contribution to SDGs on our website ULTIMATE ACCOUNTABILITY Board of Directors OVERSIGHT ON BEHALF OF THE BOARD Risk and Sustainability Committee LEADERSHIP Group P&CEO Group EXCO Group Senior Business Council DIRECTION & EXECUTION Business Areas Group Functions Strong, Committed & Accountable Leadership Responsibility of Employees at Every Level Technology & Innovation Operational Excellence Sustainability 07 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
MATERIAL STAKEHOLDERS & ENGAGEMENT Stakeholder Our Responsibility Our Engagement Efforts Customers We forge enduring relationships with our customers and make sure our products and services stay relevant, are safe and reliable, and meet their expectations. We do what it takes to understand our customers, their needs and their challenges. We work closely with them to cocreate solutions that enable them to be more effective in their operations. • Regular customer surveys • Company visits • Regular project review meetings • Technology seminars • Dialogue sessions Employees and other workers People are our most valuable asset. We focus our efforts in growing and enhancing their capability and capacity, strengthening a passionate and engaged workforce, and being at the forefront of people practices. • Regular town halls • Annual business conventions • Continuous performance discussions • Team activities, including celebrations, team building and wellness initiatives • Implementing health and safety policies to protect them • News updates via our Corporate Intranet OUR SUSTAINABILITY APPROACH We believe that creating sustainable value for all our stakeholders is essential to the Group’s long-term success. Regular engagement with stakeholders allows us to understand and address their concerns while strengthening the essential relationships which our businesses depend on. Material stakeholders are identified as part of the Group’s ERM process, based on the extent to which these parties can impact or be impacted by the Group’s activities. 08 ST ENGINEERING | SUSTAINABILITY REPORT 2024
Stakeholder Our Responsibility Our Engagement Efforts Local Communities We contribute to the development of our host communities. We act responsibly, protect the environment and contribute to our communities’ wellbeing through our corporate community contributions. We also work closely with local government agencies to support the economic development imperatives that are in line with our growth plans. Where possible, we ensure that our health and safety policies, including pandemic precautions, protect our community beyond our workplaces. • Corporate community contributions • Collaborations with educational institutions to develop Science, Technology, Engineering and Mathematics (STEM) talent • Partnerships with SMEs Suppliers and collaborators We cultivate strong, ethical and mutually beneficial relationships with suppliers and collaborators. Our worldwide partners are the cornerstones of our global businesses. • Engagements with partners including strategic programmes with SMEs • Surveys and feedback sessions with suppliers on procurement policies Shareholders and investors In line with our strong emphasis on corporate governance, we continue to build investor trust and confidence through open dialogue and two-way communication with shareholders and the investment community. • Quarterly market updates • Half-yearly financial results briefings • Investor conferences and roadshows • Investor Day • Annual General Meeting & Extraordinary General Meeting • Facility visits • Group and one-on-one meetings Regulators and governments We disclose pertinent information in a clear and concise manner, and on a timely basis. We comply with legal and regulatory requirements in the jurisdictions where we operate in. • Providing feedback to the public • Regulatory consultation exercises • Incorporate trends and learning points in our business through regular engagements with regulators and governments 09 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
MATERIALITY ASSESSMENT OUR SUSTAINABILITY APPROACH In assessing materiality, ST Engineering considers factors that impact our businesses and our stakeholders from both financial and non-financial perspectives. Our key stakeholders include customers, employees and other workers, local communities, suppliers and collaborators, shareholders and investors, and regulators and governments. Our 10 material factors cover four broad areas of Economic, Environmental, Social and Governance. MATERIALITY REVIEW PROCESS Building on ST Engineering’s past materiality reviews, our stakeholders accounted for our unique business and sustainability contexts and collectively reaffirmed the significance and relevance of our 10 material topics and their corresponding actual and potential impacts. We performed internal assessments, benchmarked against external standards and disclosure requirements, such as the GRI Standards, SASB – Defence and Aerospace standards, SGX Core ESG Metrics and TCFD recommendations, and reviewed the significance (likelihood and severity) of the topics identified. This process was conducted for material factors across four broad areas: Economic, Environmental, Social, and Governance, in collaboration with the Board and senior management. Considering the evolving compliance requirements, ST Engineering introduced the concept of double materiality through a management workshop this year, in anticipation of the European Union’s Corporate Sustainability Reporting Directive (CSRD). Double materiality considers key sustainability-related impacts, as well as risks and opportunities that are material to organisations based on their scale, scope, irremediable character and likelihood of occurrence, from non-financial and financial lenses. Going forward, we will monitor the developments in sustainability reporting standards and the need for the Group to perform any double materiality assessment. Read more about our Materiality Review Process on our website 10 ST ENGINEERING | SUSTAINABILITY REPORT 2024
HIGH • Cybersecurity & Data Protection • Ethical Business & Regulatory Compliance • Environmental Protections • Responsible & Resilient Supply Chain • Technology & Innovation • Total Workplace Safety & Health • Economic Performance & Productivity • People Excellence • Sustainable Quality Products & Solutions • Corporate Community Contributions LOW HIGH Importance to Stakeholders Importance to the Group We will continue to monitor topics that are not defined as material but might become more important moving forward X-axis: Importance to the Group: Includes current operations, business strategy Y-axis: Importance to Stakeholders: Includes our six stakeholder groups MATERIALITY MATRIX 11 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
Read more about our Governance, Framework and Commitment for each material factor on our website OUR MATERIAL FACTORS ECONOMIC ENVIRONMENTAL Economic Performance & Productivity Technology & Innovation Responsible & Resilient Supply Chain Environmental Protection Sustainable Quality Products & Solutions Impacts, risks and opportunities (IROs)* All material factors’ IROs impact the business’s bottom line of “People, Planet, Profit”. Key risks include the tightening of ESG regulations and potentially limited capacity and/or resources to cater to an increase in demand for sustainable goods and services. On the other hand, there are corresponding opportunities in the development of products and services that will enable customers to achieve their ESG goals. Global trends in digitalisation, such as the democratisation of Artificial Intelligence (AI), tightening of regulations on AI, widening AI divide and secured AI, as well as sustainability, such as energy transition requiring innovation in new fuels, new manufacturing processes to lower carbon footprint and novel low-carbon materials, can potentially impact our business – in terms of business opportunities, market competitiveness, and compliance costs. With apt and innovative approaches to respond to the above trends, there is potential for market expansion, development of new capabilities, optimisation of manufacturing processes, creation of more valueadded products and services for customers, and increased revenue, and vice versa. Key value chain risks include supply chain disruption, material price volatility, suppliers’ ESG performance and compliance with evolving ESG standards. If the above risks are not managed well, they may may result in disruptions to production schedules, resulting in decreased operational efficiency, productivity losses and reputational damage. On the other hand, if we foster resilient and mutually beneficial relationships with our suppliers, we can manage these risks well, whilst accessing greater opportunities to enhance our collective ESG performance. The risk of climate-related hazards worldwide has driven greater demand for products and solutions in climate adaptation and climate monitoring and responses. Simultaneously, the risk of rising carbon prices in the jurisdictions we operate in has also increased demand for circular economy products and digital solutions to advance operations efficiency. Whilst the impacts of these risks have been identified to be limited, we will continue to monitor climaterelated developments and opportunities closely. Whilst we have stringent safety and quality checks in place to meet our customers’ needs, there will be ongoing risks of our products and solutions posing unintended risks to customers’ health and safety, and/or exhibiting poor quality, reliability or functionality. However, this inevitable risk incentivises us to continually enhance our quality culture. We will remain vigilant in ensuring the safety of our products and services to prevent potential negative impacts, such as a loss in consumer confidence, decline in revenue and reputation, regulatory or legal costs and liabilities associated with noncompliance or product failures, and concerns over national security implications. At the same time, as our customers’ demand for more resource-lite and carbon-lite products grow, we will continue to invest in the relevant research and development for value-added products and solutions. Why it is material We are committed to delivering a sustainable and balanced triple bottom line of “People, Planet, Profit”. Inclusive growth and productive value creation for our stakeholders are key to our long-term viability. We improve lives and make the world more secure and sustainable through technology and innovation. Our ability to harness disruptive technology and to direct our engineering expertise towards building innovative products and solutions allows new business growth and differentiates us from our competitors. We depend on a resilient and sustainable supply of goods and services to meet our business needs. We are committed to managing our suppliers ethically and working with them to ensure a responsible and resilient supply chain. Climate change is an issue of urgency and importance. A low carbon business strategy is not only good for the environment, but also enables us to better respond to climate change related regulations and price volatilities of hydrocarbon resources. Cities and organisations around the world are looking to minimise their carbon footprint while reducing operating costs. Customers rely on us to meet their operational needs. Our products must be compliant with all relevant regulations and be safe to produce, operate and maintain. It must also be reliable over the product’s lifecycle. In addition, our services must meet our customers’ requirements and be delivered with the promised quality and within the committed turnaround time. UN SDGs OUR SUSTAINABILITY APPROACH Materiality Assessment 12 ST ENGINEERING | SUSTAINABILITY REPORT 2024
OUR MATERIAL FACTORS SOCIAL GOVERNANCE People Excellence Total Workplace Safety & Health Corporate Community Contributions Ethical Business & Regulatory Compliance Cybersecurity & Data Protection Impacts, risks and opportunities (IROs)* One substantial risk we face is the rising competition for talent. This competitive landscape presents an incentive and opportunity for us to strengthen our company culture,and foster a more uplifting and supportive working environment. By doing so, we can enhance employee engagement and satisfaction, making ST Engineering a more attractive place to work. If these opportunities for change are not pursued at a good pace, we may see lower talent retention and productivity. A primary risk we face is the exposure of employees to workplace hazards. This risk provides an incentive and opportunity for us to develop innovative technologies focused on predictive safety measures and hazard detection, strengthening our safety culture. With a more resilient safety culture, we can enhance employees’ sense of security and retention, whilst lowering medical costs and improving productivity. Additionally, these solutions can be adapted as external solutions for our external customers, generating more revenue. Negative risks include misallocation of funds to unintended organisations, non-compliance with local regulations or injury risk during activities, resulting in legal and financial liabilities, as well as negative publicity. These risks are managed by conducting due diligence on prospective beneficiaries, engaging government agencies to understand local regulations and put in place proper procedures and documentation to safeguard our interests. On the other hand, our community efforts could lead to positive outcomes, including new business opportunities and attraction and retention of talent, which will result in an increase in community impact, business profitability, reputation and employee engagement. Our operations across multiple countries introduce exposure to bribery and corruption risks, particularly when engaging local intermediaries to navigate diverse regulatory environments. This is especially pertinent as we pursue growth in international markets. Additionally, the increasingly complex and rapidly changing landscape of global trade rules poses a significant risk. Geopolitical tensions often lead to new sanctions or updates in trade restrictions, which can result in unintentional violations of regulations. Such violations may lead to penalties, reputational damage, and legal liabilities. The emergence of deepfake technology and increasing adoption of generative AI (GenAI) pose considerable threats. Our commercial network needs to be protected against potential malware attacks, data tampering, service disruptions and data exfiltration. On the flip side, the implementation of AIenabled cyber defence mechanisms can enhance our detection and response capabilities, drive continuous improvement initiatives, streamline workflows and generate cost savings. Additionally, developing anti-deepfake technology and expanding GenAI talent through training initiatives will strengthen our organisational resilience. Why it is material We are only as strong as our people. With a capable, motivated and agile workforce, we are able to strengthen our talent pipeline to pursue sustainable growth. We are committed to “Safety Before Profit”. Our aspiration is to create a zero-incident, safe and healthy workplace that protects employees and workers from injury, stress and illness. By doing so, we aim to reduce absenteeism and turnover while increasing productivity and employee morale. Our commitment to safety extends beyond our employees to include all visitors and contractors working on our premises. We are committed to being a good corporate citizen in the places where we operate. Making a positive impact in our host communities is aligned with our core value of compassion. We comply with applicable laws and regulations in the jurisdictions where we operate. We have zero tolerance for fraud and corrupt practices. In addition, we actively protect our data and those entrusted to us by our stakeholders. Digital technology and highly connected economies and businesses bring new vulnerabilities from a proliferation of cyber threats. We protect our data and systems including those entrusted to us. We also comply with all applicable data protection laws and regulations in the various countries we operate in. Cybersecurity is an enabler for our businesses. UN SDGs * ST Engineering’s approach to managing the material factors are included in each material factor’s section. The Group will review and assess each material factor’s IROs from time to time as the ESG landscape evolves. Read more about our Governance, Framework and Commitment for each material factor on our website 13 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
ECONOMIC PERFORMANCE & PRODUCTIVITY ECONOMIC Our organisation’s growth is underpinned by diversity, inclusiveness, and productivity enhancements. The Group aims to drive superior economic performance while generating meaningful employment and benefits for the local communities it operates in. Inclusive growth and productive value creation for our stakeholders are key to our long-term viability. Continuous Improvement (CI) increases the productivity and profitability of our business and is at the heart of our engineering heritage. Over the years, our CI initiatives have helped us to improve our processes, enabling us to work smarter and more efficiently. OUR APPROACH We Instil a Strong CI Culture Throughout the Group Throughout the years, cultivating a culture of CI has allowed us to enhance our processes, empowering us to work more intelligently and efficiently. Our CI efforts have brought about a myriad of benefits such as optimising resources, reducing emissions, improving productivity and quality, lowering operational costs and enhancing employee engagement, health, safety and wellbeing. We recognise the importance of having a strong CI culture throughout the Group. We continuously upskill our employees through CI training and create awareness through seminars and workshops. This approach encourages employees to actively seek opportunities to optimise our processes and resources, improve productivity and enhance our economic performance. Boosting Maintenance Efficiency with our FR16-20 Initiative for A320 Aircraft To address fuselage repair challenges, our Commercial Aerospace business area launched the FR16-20 Double Joggle Repair Improvement initiative for A320 aircraft. Leveraging advanced manufacturing for design-optimised training tool kits, the programme equips mechanics with essential skills, and streamlines the repair process and cutting maintenance costs. This has led to a substantial reduction in findings for inefficient processing amongst our clients and boosted operational efficiency. Additionally, wait time for post-repair non-destructive testing shortened significantly, leading to projected annual savings of more than $535,000. This initiative has garnered high customer satisfaction and set a new standard for maintenance efficiency, paving the way for a more costeffective future in the aerospace segment. 14 ST ENGINEERING | SUSTAINABILITY REPORT 2024
Streamlining the Maintenance, Repair and Overhaul Process (MRO) through Digitisation Our Land Systems business area launched a MRO transformation initiative, setting the stage for a more streamlined future in maintenance and repair activities. A prime example of their efforts is the digitisation of their key performance indicator (KPI) monitoring processes through an e-dashboard, which was developed in-house and monitors key contracts with the power of data analytics at their Integrated MRO Operations Centre (IMOC). The dashboard enhances data visualisation to drive more informed decisionmaking, advancing customer success. This initiative has increased operational efficiency, reduced turnaround time and freed up human resources, leading to approximately $1.6 million in internal savings over six years. The subsequent redeployment of personnel allows us to focus on higher-value activities as we scale for growth. Automating Aircraft Jacking and Levelling To enhance efficiency, safety, and quality in our MRO services, our Defence Aerospace business area introduced the Automated Leveling System. This system automates aircraft jacking and leveling, reducing staff strength requirements and minimising physical strain, particularly for older workers. It features an intuitive touchscreen interface and pendant for individual jack control, simplifying jacking operations and improving safety by reducing fatigue. In the spirit of CI and a better working environment, this initiative has expanded to other aircraft platforms and trials for transport aircraft are underway, promising further improvements in safety, manpower, efficiency, and overall quality. We Automate and Digitalise Processes to Improve Productivity Automation and digitalisation of processes can help to reduce the lead time for labour intensive tasks, enable real-time data monitoring, identify anomalies and predict potential problems. 15 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
ECONOMIC ECONOMIC PERFORMANCE & PRODUCTIVITY Digitising Safety and Security Tracking, Documentation and Dissemination To reiterate the importance of staying vigilant and prevent repeat incidents, our Digital Systems and Cyber business areas launched ActNow, which is a streamlined platform that digitalises all tracking, documentation and employee news dissemination for safety and security incidents. Furthermore, the platform enables the crowdsourcing of information and allows staff to share safety and security near misses. ActNow was innovatively adapted from our Defence Aerospace business area’s Acknow platform. This successful cross-business area collaboration has improved safety and security, and liberated valuable resources for ST Engineering. ActNow saves about 80% of the time spent on the entire process, which resulted in over $400,000 productivity secured savings. Our Economic Performance Leads to Inclusive Growth and Value Creation The Group's economic performance is crucial to our sustainability goals. We contribute to the communities in which we operate through local procurement, direct and indirect employment, dividends paid to shareholders, taxes paid to governments, and investment in community programmes. In addition to our financial contributions, we develop innovation capabilities, transfer knowledge and technology to local small and medium-sized enterprises (SMEs), and provide internship and training opportunities. Read more about our community investment disclosures in our ‘Corporate Community Contributions’ section 16 ST ENGINEERING | SUSTAINABILITY REPORT 2024
OUR TOTAL ECONOMIC CONTRIBUTION WAS $10.6b Group Economic Contribution ($b) Bought-in material and services 6.5 Employee wages, salaries and benefits 3.2 Dividends and interest paid 0.7 Government taxes and levies 0.2 Total 10.6 IN 2024, OUR CI PROGRAMMES ACHIEVED $57m OF REALISED PRODUCTIVITY SAVINGS OUR GOALS • Continue to increase planned productivity savings to reach $40m • Achieved realised productivity savings of $57m in 2024 through our CI programmes, which was more than 60% higher than in 2023 • Continue to leverage technology, digitalisation and scale efforts for higher productivity 2024 OUR ACHIEVEMENTS 2025 OUR METRICS Group Economic Contribution 17 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
TECHNOLOGY & INNOVATION ECONOMIC Amidst a dynamic economic environment, an organisation’s ability to leverage technology and innovation is key to its long-term success. Our continued commitment to investing in R&D and cultivating an innovative culture ensures that technology and innovation are at the core of our business. To achieve our aspiration of becoming a global technology, defence and engineering powerhouse: • We leverage our strengths across business areas while building distinct capabilities • We leverage external capabilities to accelerate innovation and keep up-to-date with new and disruptive technologies • We focus on developing technologies that will place us at the digital and sustainability forefront We improve lives and make the world more secure and sustainable through technology and innovation. Our ability to harness disruptive technology and direct our engineering expertise towards building innovative products and solutions allows new business growth and differentiates us from our competitors. OUR APPROACH We Recognise the Importance of R&D We believe in focused R&D investment that is in line with the strategy and product roadmaps defined for business growth. We continuously monitor the latest developments and global trends and refine our strategy as needed to keep abreast with these changes. Our R&D Efforts Are Driven and Coordinated Across our Businesses R&D investments are identified by each business area to complement its business strategy and product focus, to develop its technological leadership. Our Group Technology Office (GTO) identifies and develops strategic technology capabilities, with a strong focus on advanced technologies that can be tapped upon by the various business areas. These include technologies such as quantum, future communications, advanced materials and alternative energy. Our Group Engineering Centre (GEC) has six engineering competency centres, with a common pool of skilled engineers at the Group-level in AI, data analytics, video analytics, MRO analytics, cybersecurity and autonomous system of systems. We have been delivering solutions in these six areas through common software platforms with reusable modules. Once developed, reusable modules can be deployed across multiple business areas to increase development speed and quality. We Encourage and Facilitate Innovation Our innovation approach comprises driving synergies and deepening capabilities within the Group, as well as leveraging external capabilities to accelerate innovation. We are focused on developing solutions that place us at the forefront of technology. We Drive Synergies and Deepen Capability Building We focus on identifying synergies within our existing products and services, and enhancing our capabilities in key technological areas. Efforts include: 18 ST ENGINEERING | SUSTAINABILITY REPORT 2024
• Improving our core engineering capabilities • Forming strategic technology centres • Establishing product development frameworks driven by business needs and opportunities. We cultivate a culture of innovation through many initiatives. These include training employees on topics such as design thinking, organising webinars to drive cross-business collaboration, conducting design clinics, and organising our annual innovation competition – InnoChamp. We also have internal venture building programmes (In.Vent) to create new businesses for our Group’s next phase of growth. We Broaden Our Outreach to Leverage External Capabilities We complement our in-house R&D efforts by broadening our outreach to leverage external capabilities. This is achieved through four areas: • Open Lab – We unlock value from both our business units and startups by providing a platform for them to engage each other and incubate solutions for markets of mutual interest. • Corporate Venture Capital – We identify and invest in start-ups that present new business opportunity areas and disruptive technologies which are relevant to the group. A US$150 million venture capital fund was established to enable ST Engineering to invest in start-ups with strong complementary competencies and new collaboration opportunities in selected areas of technology. • Research Translation @ ST Engineering – We work with external partners to conduct translational research that can support our business needs. This accelerates the pace of innovation through knowledge transfer among our partners. • Industry Collaborations – We collaborate with partners to accelerate product development by sharing industrial knowledge and expertise. Embracing AI as a Core Component of Our Technology Development Strategy Building upon our extensive capabilities and experience to harness the power of data mining, analytics and machine learning to derive valuable and actionable insights, we further embrace AI as a core component of our product development strategy, evolving and adopting new digital technologies to enhance our offerings. For example, in sectors where precision and speed are crucial, we have launched various AI-powered solutions such as AGIL® Trust, AGIL® Response and AGIL® Care. These solutions offer advanced real-time analytics, tailored insights and automation to address complex challenges in the sector. Such new solution offerings are underpinned by substantial R&D, ensuring we remain at the forefront of these technologies. 19 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
ECONOMIC TECHNOLOGY & INNOVATION Strengthening Engineering Expertise through Collaborative Seminars Our GTO and GEC regularly organise technology and engineering seminars within the group, as well as with our external partners to share and exchange knowledge among the engineering community. In areas such as additive manufacturing (AM), which is currently at an inflexion point in the manufacturing industry, we have brought our internal AM practitioners and external experts together to exchange knowledge and ideas on the advancement made in this technology. Examples of topics covered for AM include the latest development in 3D rapid sand moulding, 3D ceramic applications and advanced material development (4D printing), amongst others. These seminars strengthen our engineering domain knowledge across the group and help reduce learning curves through peer sharing. Committed to our pursuit of R&D, we collaborate with leading experts from around the world to accelerate the development of new technologies for real-world applications. In 2024, we have conferred five new ST Engineering Distinguished Professors in recognition of their significant contributions to technology development. Professor Michael P. Short (Massachusetts Institute of Technology) Domain: Fusion Technology (Advanced Materials) Professor Lu Wei (Singapore University of Technology and Design) Domain: AI (Small Language Models) Professor Mike Shou (National University of Singapore) Domain: AI (Multi Modal Large Language Models) Professor Hatsuo Ishida (Case Western Reserve University) Domain: Advanced Materials (Composite) Professor Antoine Jacquier (Imperial College London) Domain: Quantum Technology Partnering Leading Experts to Explore Frontier Technologies and Accelerate Technology Development 20 ST ENGINEERING | SUSTAINABILITY REPORT 2024
IN 2024, WE SPENT $420mON R&D OUR GOALS • Maintain our R&D budget of up to 5% of our annual revenue to support business growth • Position ourselves for future technology adoption by broadening the scope of new technology areas being explored • In 2024, our new investment areas in R&D include AI, GenAI, cybersecurity, quantum, advanced materials and alternative energy technologies, among others. This added to the significant investments we continue to make in product development. Coupled with steady investments in R&D for Systems Integration and continuous improvements for our MRO businesses, the weighted average investments from our diversified businesses are tantamount to 3.7% of revenue • Our investments have enabled us to bring new innovations to the market quickly. For example, we currently have over 20 AI-powered solutions for various businesses and customers in the critical sectors, as showcased at our InnoTech Conference 2024 • We have established new collaborations with global partners in emerging areas, such as in quantum and smart and sustainable solutions, to explore and bring new technologies into new growth markets • Furthermore, we have explored frontier technologies with leading experts through our distinguished professorship programme, supporting translational research of nascent technologies to reach maturity and fill market gaps • Increase focus on R&D translation to develop new solutions or businesses to meet industry challenges • Increase development in AI-related technologies and mainstream AI capabilities within our businesses 2025 OUR METRICS 2024 OUR ACHIEVEMENTS 21 OVERVIEW OUR SUSTAINABILITY APPROACH ECONOMIC ENVIRONMENTAL GOVERNANCE INDEX SOCIAL
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