ESG Sustainability Management

Implementation outcomes for 2023

Corporate Governance Aspect

Topic	Target in 2023	Implementation Status in 2023
Corporate Governance 3.0 Planning	Ensure that all directors complete the number of training hours required by law. Establish a comprehensive climate governance system. The Sustainability Report fully discloses in accordance with the 11 guidelines of TCFD. The Sustainability Report fully discloses in accordance with the SASB standards. Continuously monitor and update the progress of the "Climate Change Response Act" legislation in our country, and proactively prepare for the domestic carbon fee collection mechanism.	Relevant training course information has been promptly sent to all directors for their reference; in 2023, 100% of the directors completed the required training hours. The Company's "Risk Management Policy and Procedures" were amended and approved by the Board of Directors in the 12th term, at the 10th meeting, to incorporate climate-related risks into the governance mechanism. The sections of the Company's response to climate change have been written in accordance with the TCFD framework and reviewed by Ernst & Young Advisory Services. After confirming full compliance with the four core elements and 11 guidelines of TCFD, these sections have been included in this year's sustainability report for full disclosure. This year's Sustainability Report has fully disclosed the 19 indicators of the chemical industry as specified by the SASB standards, resulting in an additional point in the corporate governance evaluation. Continuously monitor the progress of relevant regulations and have invited Ernst & Young's CPA Roger Tseng to conduct a lecture in December to analyze various sustainability issues and grasp sustainable development trends.
Intellectual property management	Maintain the Company's intellectual property certifications (patents, trademarks, and trade secrets). Conduct a three-hour intellectual property training course for employees in accordance with TIPS regulations and achieve a 70% training penetration rate. The Company has a total of four certified intellectual property auditors.	In accordance with TIPS regulations, we have completed the initial meeting, responsible personnel training, internal audit operations, employee training, and management review. In December, we completed a 3-hour intellectual property course for all employees, achieving a 100% participation rate. On September 28, we completed internal audit training for TIPS responsible personnel, meeting the qualifications for auditors, although they have not obtained certification through external training.
Information security maintenance and management	Achieve zero significant information security incident. Obtain ISO 27001 (Information Security Management System) certification. Conduct external website vulnerability scanning. Perform internal network penetration testing.	No major information security incidents in 2023. Completed a two-phase external audit and passed the on-site verification in the second quarter, obtaining the ISO 27001 certificate on July 5. Completed vulnerability scanning of external websites for both the first and second half of the year. Completed social engineering exercises (phishing email tests) for both the first and second half of the year. The overall test results showed a significant decrease in the click rate from 16.94% to 4.75%.
Legal compliance	0 major violation of laws and regulations. Real-time identification of laws and regulations ≧ 90%. Employees who have attended three-hour legal compliance training ≧ 80% (insider trading prevention and integrity management).	No major violation of laws and regulations in 2023. Compiled monthly domestic regulation amendment information for each unit's reference. Each unit discussed whether to amend the relevant regulations, and with regulation identification amounted to 100%. This year, employee training included courses on insider trading prevention and integrity management, with all employees participating in a 1.5-hour session.
Promote a paperless office	Promoting the development of software for paperless form processing. Completed the transition of the accounts receivable process to an entirely online system, with income vouchers and certificates maintained in a paperless format. Implemented a paperless process for expense reporting and payment operations, including the planning and establishment of related software and hardware infrastructure. Planned and achieved a 60% paperless rate for mid-term and end-of-term inventory checklists.	Developed 27 electronic forms in 2023. The paperless income voucher process was launched online as of June 1. The paperless planning for expense reporting and payment operations is anticipated to be developed by InfoChamp Systems Corp. in the future. The actual paperless rate for mid-term and end-of-term inventory checklists reached over 99%, resulting in a total paper saving of 3,296 sheets throughout the year.

Society

Topic	Target in 2023	Implementation Status in 2023
Signing of collective bargaining agreements	Conduct collective bargaining negotiations with labor union.	On November 30, a third preparatory meeting was held with the Labor Union of CSCC. All procedural matters were agreed upon, and a formal negotiation meeting is scheduled to take place in January 2024.
Talent development program	Conduct training courses for succession planning and achieve a 80% training completion rate among PMP middle managers Plan to have each employee attend 25 hours of training courses on average. Optimized the development of a training registration and inquiry system. Conducted company-wide employee training.	On December 14 and December 21, hosted PMP basic and practical training courses for personnel at the level of Chief Instructor and above (with a planned 30 participants, achieving a 100% completion rate). The average training hours per employee for the year 2023 were 45.1 hours. On November 1, implemented an internal training online sign-in system. On July 7, July 21, August 4, and August 18, conducted four sessions of general education training for all employees.
Healthy workplace certification and health promotion among employees and contractors	Obtained the Health Workplace Certification from the National Health Service of the Ministry of Health and Welfare. Conducted at least two health promotion activities annually. Provided on-site occupational health consultations at least 12 times per year; the Pingnan Factory has added on-site occupational health services. Integrated the health information management system with the EIP system, offering employees access to health check queries and health education integration features.	On December 22, the National Health Service announced that the Siaogang Factory received the Health Promotion Award, and the Pingnan Factory received the Health Initiation Award. The Pingnan Factory will apply for the Health Promotion Award again in 2024. The annual weight reduction competition concluded at the end of August, with 122 participants achieving an average weight loss of 2.98 kilograms, an increase from the previous year; the health points activity involved 64 employees, with 28 meeting the reward criteria. In 2023, a total of 16 on-site occupational health consultations were conducted (12 at Siaogang and Headquarters, 4 at Pingnan). On November 24, proposed a comprehensive plan to InfoChamp Systems Corp. for the addition of health checkup scheduling in the ERP system; a separate meeting will be arranged to confirm detailed requirements for health check-related issues.
Supplier Management	Include environmental issues, labor conditions, human rights issues, and code of social conduct as new supplier evaluation items. Achieve zero major workplace safety incident among transportation providers. Proportion of locally procured materials > 60%.	Newly selected suppliers must sign the "Supplier Code of Conduct and Commitment" during the evaluation process to qualify as approved suppliers. This practice is ongoing; a total of 59 new suppliers have signed the agreement this year. In 2023, there were zero major safety incidents involving transportation suppliers. Unscheduled on-site inspections with transportation suppliers were conducted three times, with no abnormalities or violations reported. In the fourth quarter, the local procurement ratio of materials was 69.70%; the cumulative ratio for the year was 65.74%.
Contractor selection, management, and training programs	Establish a contractor management system to manage contractor safety and health in a systematic manner.	The contractor management system for coal chemical production plants was introduced at the end of 2022. A total of 19 contractors, including those from the Siaogang and Pingnan Factories, have been incorporated into the system, with ongoing plans for system optimization.
Workplace safety management and fire prevention	No major occupational accident. Zero major fire accident. Total number of employees and contractors suffering disabling injuries per year ≦ 2.	No major occupational accident in 2023. In 2023, there were no major fire incidents, and the fire detection system for the electrical room at the Siaogang Factory was completed. In 2023, there were no incidents of disabling injuries involving employees or contractors.
Social welfare and community engagement	Promote at least two art and cultural activities per year in collaboration with CSCC Group. Organize two social welfare activities per year such as beach cleanup, mountain cleanup, and tree planting. Adopt rural elementary schools, sponsor summer camp activities organized by local elementary schools, and sponsor steel and environmental education activities organized by the CSCC Group Education Foundation. Carry out at least two sustainable environment awareness activities and fraternal activities with societies and associations in local neighborhoods each month.	Sponsored four cultural and artistic events, including the "We Are 2023: Our New Year's Eve" event by the General Assembly of Chinese Culture, the "2023 Believing in Love, Slow Flight Without Obstacles" concert by the Eden Foundation, the "Love Drama Together" charity children's theater #26 by the Genesis Foundation, and the "Modern Classics and Nostalgic Reflections II Music Concert" by the China Steel Choral Group. Organized four community activities: a tree-planting event on April 15, a mountain cleaning event on April 29, a Family Day event on June 10, and a beach cleaning event on September 9. Continued to support the Jin-Jhu Elementary School with annual funding for transportation, talent classes, and after-school care programs, and conducted monthly moral education courses; sponsored various steel and environmental education activities organized by the China Steel Group Education Foundation, and maintained sponsorship for air quality maintenance and greening at Siaogang District Qingshan Elementary School. Hold an average of 4.5 local neighborhood group activities, community associations, and environmental promotion activities each month in 2023.

Environment

Topic	Target in 2023	Implementation Status in 2023
Energy Management	Cumulative average annual electricity saving rate from 2015 to 2023 > 1%.	The company-wide average electricity savings rate in 2023 was 1.52%.
Water resource management	Reduce water use intensity (i.e., amount of water used per unit output) by 1% on average. Reduce wastewater intensity (i.e., amount of wastewater per unit output) by 1% on average.	Water use intensity In the fourth quarter, the water intensity at the Siaogang Factory was 0.3893, a 19.4% decrease from the baseline value of 0.4830. The annual water intensity was 0.4151, reflecting a 14.05% reduction from the baseline value. In the fourth quarter, the water intensity at the Pingnan Factory was 22.43, an 8.62% increase from the baseline value of 20.65. For the year, the water intensity was 19.96, a 3.34% reduction from the baseline value. The increase in water intensity was due to the expansion of the second-phase graphitization project, which involved increased water usage for vehicle tire cleaning and dust suppression in the construction area. The Pingnan Factory did not use recycled water. The cumulative average water intensity across the entire company decreased by 8.70% in 2023. Wastewater intensity In the fourth quarter, the wastewater intensity at the Siaogang Factory was 0.1046, a 23.86% decrease from the baseline value of 0.1375. The annual wastewater intensity was 0.1164, reflecting a 15.32% reduction from the baseline value. In the fourth quarter, the wastewater intensity at the Pingnan Factory was 5.79, a 12.65% increase from the baseline value of 5.14. For the year, the wastewater intensity was 6.1, a 5.35% increase from the baseline value. The increase in wastewater intensity was due to lower production of ACS and finished product blending, which led to higher wastewater density. The cumulative average wastewater intensity across the entire company decreased by 4.99% in 2023.
Air pollution reduction and management	Switch to clean fuels to reduce sulfur oxide (SOx) emissions to less than 5 tons per year. Switch to low-NOx burners to reduce nitrogen oxide (NOx) emissions to less than 25 tons per year.	The total SOx emissions amounted to 0.083 tons, achieving the target value in 2023. All heating furnaces have been upgraded to low-NOx burners. The total NOx emissions for 2023 were 12.706 tons, meeting the target value.
Resource recovery from waste	Increase bulk bag recycling rate to 60%. Increase pallet recycling rate to 65%.	Bulk bag recycling rate In the fourth quarter, the bulk bag recycling rate was 97.3%, resulting in a reduction of carbon emissions by 1,709.37 kilograms. In the fourth quarter, the carbonization plant recycled 283 bulk bags, achieving a recycling rate of 98.0%, which led to a reduction in carbon emissions by 331.11 kilograms. In the fourth quarter, the graphitization plant recycled 1,178 bulk bags, with a recycling rate of 96.27%, reducing carbon emissions by approximately 1,378.26 kilograms. The annual bulk bag recycling rate was 93.1%, resulting in a total reduction of carbon emissions by 6,010.9 kilograms. Pallet recycling rate In 2023, a total of 8,306 pallets were recycled, with an additional 1,600 pallets sold. The recycling rate was 89.57%, resulting in a reduction of carbon emissions by 34,221 kilograms.
Climate change and carbon neutrality	The Company has achieved a 2% reduction in greenhouse gas emissions based on the 2018 baseline (Scope 1 and 2). Greenhouse gas emissions have been inventoried in accordance with the ISO 14064-1:2018 standard. Completed the carbon footprint assessment and external verification for major products. Provided guidance to Changzhou Zhongtan for conducting greenhouse gas inventory.	A 2% reduction from the base year equates to 1,724 tons. In 2023, the production facilities completed 38 energy-saving projects, achieving a total carbon reduction of 1,870 tons, surpassing the target by 108.5%. Completed the greenhouse gas inventory for 2022, with Scope 1 emissions totaling 31,491 metric tons CO₂e and Scope 2 emissions totaling 75,336 metric tons CO₂e, aggregating to a total of 106,827 metric tons CO₂e. Completed the carbon footprint assessment and verification for six coal chemical products and four carbon material series products for 2022. Changzhou Zhongtan has completed its self-inventory of greenhouse gas emissions and carbon footprints.