SCI Pharmtech Inc., - The state of the company's pushing of Sustainable Development

The state of the company's pushing of Sustainable Development

Push Item

State of Implementations

Gaps with the Sustainable Development, Best Practice Principles for TWSE/TPEx Listed Companies and Reasons

Yes

Summary

1.
Has the company established a governing structure for sustainable development, and appointed exclusive (or concurrent) dedicated units under the command of the senior executives authorized by the Board of Directors? What is the status of the supervision from the Board of Directors?

The company’s unit in charge of sustainable development is the President Office, with the Sustainable Development Committee established (please refer to Attachment 4). The Chairman of the committee is served by the Chairman of the Board and the concurrent General Manager, Mr. Wei-Chyun Wong, with 6 teams under the committee, as regular reviews will be conducted for the improvement and implementation progress of each team. In addition, the President assigned the Head of the Corporate Governance Team and Social Charity Team, Vice President Deiter Yang, to report to the Board of Directors for the implementation progress of sustainable development at least once a year.
Please refer to Appendix 4 for the company's sustainable development commitment and goals.
Please refer to Appendix 4 for the company's sustainable development policy.
Please refer to Appendix 4 for the company's sustainable development management guidelines and its implementation.
Supervision from the Board of Directors:
The current implementation status of sustainable development in 2023 has been reported by the board of directors on December 18, 2023, and the directors have no relevant suggestions.
Under the company’s Sustainable Development Committee, a total of 6 teams are established: The Executive Team, the Business Development Team, the Sustainable Environment Team, the Energy Saving & Carbon Reduction Team, the Corporate Governance Team, and the Charity Team. The teams are expected to detect business activity risks related to the environment, clients, suppliers, employees’ safety, community, corporate governance, etc., and provide timely responses.
Currently, the executive team, sustainable environment team, and energy-saving and carbon-reduction team carry out relevant inventory operations based on the greenhouse gas inventory and third-party verification schedule discussed and approved by the board of directors on 111.6.29, and report the relevant progress to the board of directors on a quarterly basis.
The company revised the risk management policies the board meeting in May 10, and the audit committee will be responsible for supervising the operation of risk management at a higher level.

None

2.
Does the company conduct risk assessments on environmental, social, and corporate governance issues related to its operations in accordance with the materiality principle, and implement relevant risk management policies or strategies?

The company has been certified with the ISO9001 (2015 version – valid until February 9, 2026) quality management system certification, the ISO 14001 (2015 version – valid until January 5, 2027) environmental management system certification, and the ISO 45001 (2018 version – valid until October 16, 2025) occupational health and safety management system certification. Through maintaining the aforementioned management system, the company has been successfully controlling risks emerging from the environment, clients, suppliers, employees’ safety, and other aspects, while providing timely responses.
To strengthen the company’s risk management capabilities, the company’s risk management policies are to determine the scope of operational risks and take appropriate actions with the procedures of identifying the risks, evaluating the risks, supervising the risks, reporting the risks, and disclosing the risks, ensuring that all operational risks are properly managed.
Please refer to Attachment 6 for the company’s risk management policies and procedures.
The company’s Head of Corporate Governance shall report to the Board of Directors on the operation status of risk management at least once each year.
Supervision from the Board of Directors: The report on the operation of risk management in
2023 was completed at the Board of Directors' meeting on December 18, 2023, and the directors had no relevant suggestions..
This disclosed information included the sustainable development performance of the company from January 2023 to December 2023. The scope of risk assessment only covered the company, as the only subsidiary, Yushan Pharmaceuticals, is currently having no operational activities.

None

3.
Environmental issues

(1)
Does the company establish proper environmental management systems based on the characteristics of their industries?

The company has been certified with the ISO 14001 (2015 version – valid until January 5, 2027)
environmental management system certification, and the ISO 45001 (2018 version – valid until October 16, 2025) occupational health and safety management system certification.
The implemented complete environmental management system has been maintaining the effective operation of the aforementioned systems.

None

(2)
Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment?

1.Improvements in energy efficiency:
The current major energy consumption of the company is electricity, followed by gas-fired power. For the energy-saving measures, the company reconstructed the plants and renewed the equipment in 2022, improved efficiency and reduced energy consumption can be anticipated as a result.
2.The recycling and reuse of solvents:
The company has also been striving for improvement in the production process through recycling and reusing solvents. The company recycled 22.8 kg of Palladium metals, and 1,026,573kg of the solvents containing Deuterium and Nitrogen in 2023.
3.Promoting circular economy:
The company and Veolia Environment established a joint venture company, focusing on "innovating new technologies for circular economy" and recycling waste solvents in the pharmaceutical industry. The rate is about 85%, implementing the vision of green manufacturing and reducing carbon emissions.

None

(3)
Does the company assess the current and future potential risks and opportunities of climate change to the company, and adopt measures to respond to climate-related issues?

Rainstorms, strong wind, and typhoons may cause unstable water supplies and impact the production line, collapsed or flooded roads will impact the deliveries, and the power failure may result in disrupted production or other issues. As for the response measures for such situations, the company has installed electricity generators, built water towers, and purchased business interruption insurance to reduce operational risks.

None

(4)
Does the company count the gas emissions ofgreenhouse, water consumption and total weight of waste in the past two years, and does the company
formulat policies on energy saving and carbon reduction, reduction of greenhouse gas and water consumption or other waste management?

1. Energy saving and carbon reduction, and reduction of greenhouse gas :
The company's president's office, environmental protection department and safety office are responsible for the promotion and implementation of environmental protection, safety and health-related businesses, and an environmental management implementation committee is established to formulate the company's overall environmental safety and health policies and proposals. Environmental safety and health meetings are held every two weeks. Meeting to
review execution direction.
Some production areas resumed work in 2022 and 2023, and the total greenhouse gas emissions were 6,289 and 10,570 tons of CO2e respectively. The emissions of the production areas that resumed work in 2023 were approximately 63% of the emissions before the fire accident in 2019 (16,682 tons of CO2e).
The company has successively promoted various product carbon footprint projects since 2022, and one product has passed ISO14067:2018 verification, and is expected to obtain ISO14064-1:2018 verification in 2024. Through carbon footprint and greenhouse gas inventory, review emission hotspots, with the goal of reducing 1% annual temperature emissions, strive to improve the utilization efficiency of various equipment, continuously improve product manufacturing processes, and reduce the impact of company operations on the natural environment.

2. Water consumption :
The company’s current major water source is tap water, and the water usage in the plant can be
classified into 4 categories: Cooling water, boiler water, process water, and domestic water.
In recent years, the total water consumption (tap water consumption + recycled water consumption) was 104 and 259 thousand tons respectively in 2022 and 2023
In terms of water recycling policy, the cooling water and the high and low pressure steams used for the cooling and heating in the processes are recycled to reduce raw water consumption, and the annual recycled water is approximately 35% ~ 40% of the total annual water consumption. The underground pipes will gradually be phased out and replaced by elevated pipes in the future, which will allow the operators to have a clear understanding of the water supply route of the plant, and will also prevent the large losses of water resources when pipe leakage occurs.

3. Total weight of waste :

	2023	2022
Heading	Carrying capacity (kg)	Carrying capacity (kg)
solvent	1,977,202	2,063,060
General garbage	132,046	128,090
General business waste	83,632	86,120
Hazardous business waste	1,266,655	493,690
Total	3,495,535	2,77,960

4. Other energy saving measure :
The company has implemented multiple energy-saving measures, such as using automatic devices to activate and deactivate the lights in the plant at a fixed time, installing water dispensers and automatic doors, enabling the air conditioner to be turned on only when
the room temperature exceeds 28 degrees Celsius, setting the air conditioner to be automatically turned on and off, establishing a paperless working environment, using recycled paper, and the
improvement renovation on the air conditioning ventilation of the office building, to save electricity and other resources.

None

4.
Social Issues

(1)
Has the Company referred to
international human rights conventions to formulate policies and specific management plans for the protection of human rights, and disclose them on the company's website or annual report?

SCI Pharmtech, INC. supports and adheres to the fundamental principles of human rights recognized internationally, such as the Universal Declaration of Human Rights (UDHR), the International Bill of Human Rights, and the International Labor Organization's Declaration on Fundamental Principles and Rights at Work.
SCI Pharmtech, INC. has formulated a human rights policy to safeguard the rights and interests of current employees and also expects our suppliers and contractors to comply with the following principles to uphold human rights:
1.Adhere to labor standards laws and relevant applicable laws to protect employees' rights.
2.Provide a safe, healthy, and harassment-free working environment.
3.Follow the principle of equal employment, and not discriminate or treat individuals differently based on race, nationality, age, gender, marital status, political views, religion, etc., and protect the labor rights of vulnerable or marginalized groups, such as indigenous people, women, migrant workers, contract employees, and persons with disabilities.
4.Prohibit forced labor and the use of child labor.
5.Respect employees' right to privacy and freedom of association.
6.Support and assist employees in maintaining physical and mental health and work-life balance.
7.Establish smooth labor-management communication channels and provide complaint mechanisms.
8.Regularly review and evaluate relevant human rights systems and actions.
The company also complies with the governmental labor laws and regulations which prohibited any child labor, as no employees are under the age of 18.The company’s recruitment activities are all conducted via public channels, such as employment websites or the company’s official website, with sufficient disclosure on the job vacancies and equality recruitment policy practiced. Under the precondition of not impacting the corporate governance and internal control, the company encourages internal hiring as a priority to promote the harmony and stability of the labor-management relationship.Specific management solutions:
1.Implement recruitment and selection control, screening application letters and interviews, and indeed check identity documents to eliminate the problem of child labor employment; since its establishment, SCI has not hired child laborers under the age of 16, nor has there been any labor disputes.
2.Take a 45-minute break at noon and leave work at 17:15 to avoid traffic spikes; hire a group meal company to provide food for employees, facilitate employee meals, and have a moderate lunch break after meals.
3.Implement leave and encourage colleagues to pay attention to work-life balance.
4.Provision is made for human rights protection education and training for colleagues once a year.
5.For other specific explanations, see Labor Relations on pages P.100-102.
The company evaluates that the implementation of the 2023 human rights policy is in good condition.

None

(2)
Does the company establish And implement reasonable employee welfare programs (Including salary, leave, and
other benefits) and adjust employee remuneration according to business
performance?

Employee remuneration : Please refer to page 139-140.
Employee leave : All practices are in line with the Labor Standard Act.
Other benefits :
Trip activities, wedding gifts, childbirth gifts, funeral condolence money, hospitalization allowance, work-related injury leave, emergency aids, end of the year dinner party, employees’ dormitory, complimentary meals, service award, insurance planning, and indoor sports court are all provided to employees.

None

(3) Has the Company provided employees safe and healthy working environments? Are
employees given regular training courses on health and safety?

The company provides employees’ health examinations each year, 8 hours of fire emergency exercise each year, 4 sessions of industrial safety training for field operators each year, group catering and drinking water safety inspection each year, and environmental inspection for chemical agents, carbon dioxide, and noises every six months.
Passed ISO45001 (2018 edition) Occupational Safety and Health Management Department system certification.
There were no employee occupational accidents in 2023.

None

(4) Has the Company established effective career and competence development and training plans?

The company has enacted the performance evaluation and human resources management procedures, and outstanding employees with potential are nominated via the performance evaluation system and the managerial meetings, who shall receive training and position rotations to develop the employee career using both the bottom-up and top-down approaches.

None

(5) Has the company followed relevant laws, regulations and international guidelines for the customer health and safety, customer privacy, and marketing and labeling of its products and services and established related consumer protection policies and
grievance procedures?

The company’s products comply with the related laws and regulations of GMP and other international standards, while also have passed the inspection and review of the Ministry of Health and Welfare of Taiwan, FDA of the USA, EDQM of Europe, and PMDA of Japan.
The company does not sell its products directly to the consumers and the company insured the products with the liability insurance of USD$2 million.

None

(6) Has the company established the
supplier management policies requesting suppliers to comply with laws and regulations related to environmental protection, occupational safety and health,
or labor rights, as well as supervised their compliance?

Please see Attachment 9 for our company’s supplier management policy.
The company is regulated by Article 26 of the company’s Sustainable Development Best Practice Principles and the Environment, Safety, and Health Management Procedures on its purchase operations.
Due to the surge in the number of in-factory audits , the Quality Assurance Department of the company inspected 1 suppliers through the Internet in 2023. In addition to the product quality, the supplier inspections also covered the environmental health, public safety, and environmental protection status of the suppliers.
The company has enacted in the Corporate Social Responsibility Principle that the company most ideally shall evaluate the supplier’s history of impacting the environment or society before establishing any business relationships to prevent conducting transactions with suppliers contradicting the Corporate Social Responsibility Principle.
The company has enacted in the Ethical Corporate Management Best Practice Principle that the
company shall most ideally evaluate the supplier’s history of unethical behaviors, and if the contracted supplier was involved in any unethical behaviors, the company may terminate or cancel the agreement at any time.

None

5. Does the company refer to
internationally accepted report
preparation standards or
guidelines to prepare Sustainable
Development reports to disclose
the company's non-financial
information? Has the company
received assurance or certificationof the aforesaid reports from athird party accreditation institution?

The 2020-2021 sustainable development report published by the company in 2022 was composed by referencing the international general standards, yet it has not been accredited by any certification body. The sustainable development report for 2020-2021 has been uploaded at the end of September 2022.
The company expects to issue a sustainable development report for 2022-2023 in 2024.

The company publishes Sustainable Development Report once every two years.

6. Where the Company has stipulated its own Best Practices on Sustainable Development according to the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies, please describe any gaps between the prescribed best practices and actual activities taken by the Company : None.

7. Other important information useful for understanding the state of Sustainable Development operations :

(1) Environmental friendly :
A: Passed ISO 14001（2015）and ISO 45001（2018）Certification, and the company has been commissioning agencies recognized by the competent authority to conduct
   annual operational environment examinations and water quality examinations, enhancing the pollution prevention measures and maintaining the company’s compliance
   with laws and regulations of environmental protection.
B: Cooperation with Industrial Technology Research Institute allows the company to enhance its pollution protection facilities and technologies.
C: The company's related expense on environmental protection activities in 2023 is NT$71,997 thousand, approximately 5.98% of the revenue.
(2) Community involvement :
A: Sponsorship of neighboring temples to Purdue, and other sesame oil money.
B: Sponsored the Mid-Autumn Festival Gala in Haihuli and Binhaili.
C: Providing the venue to the Republic of China Armed Forces for military exercises.
   D:Participating in community activities to maintain a decent relationship with the residents.
   E: Performing joint fire safety exercises with the Shan Jiao Branch of the Fire Department.
(3) Social contributions :
A: Dedicating to the shareholders’ interest and benefit: The net profit after tax in 2023 is NT$ 294,721 thousand.
B: Contribution to the national treasury tax revenue as an honest taxpayer: The submitted business income tax in 2023 is NT$ 4,636 thousand.
C: Attending to the interest and benefits of the employees and creating job opportunities:
As of the end of 2023, the company hired 254 employees with harmonious labor-management relations and zero records of labor-management disputes. The expense on
   employee welfare in 2023 is NT$ 288,278 thousand.
D: Manufacturing medical and pharmaceutical products, striving for the improvement of human health.
(4) Social service and welfare :
A: Joining the Republic of China Criminal Investigation Association to support the development of police public services.
B: Donated NT$ 150,000 to the Zhang Zhaoding Foundation to sponsor research and publication in science, culture and talent cultivation.
C: Sponsored NT$ 30,000 for the Asian Biotechnology Conference to showcase the achievements of Taiwan's biotechnology industry and bring together global biotech
   capabilities and talents in Taiwan.
(5)Health and safety :
A: Enacting comprehensive standard operating procedures and requiring the employees to follow them strictly.
B: Requiring the employees to wear protective equipment, such as safety goggles, safety footwear, safety helmet, protective clothing, etc.
C: Installing adequate emergency medical equipment such as AED with regular inspections, updates, and operations.
D: Regularly performing internal and external industrial safety educational training sessions, as well as health, safety, and environment examinations, and the related
   deficiency shall be reflected in the distribution of performance bonuses.
E: Offering employees’ health examinations annually, with additional examination items provided to operators tackling special tasks.
(6) Other sustainable development activities :
A: Enhancing the mental and physical well-being of the employees through the promotion of travel and leisure activities.
B: The outdoor basketball court is converted into a dual-purpose indoor basketball and badminton court as a leisure sports venue for the employees.

8. Climate-related information implementation status :

Item	Execution situation
(1.) Describe board and management oversight and governance of climate-related risks and opportunities.	SCI attaches great importance to the supervision and governance of climate-related risks and opportunities. The company's dedicated unit for promoting sustainable development is the general manager's office, and a sustainable development committee has been established. Chairman Weng Weijun serves as the chairman, and General Manager Zhou Wenzhi serves as the deputy chairman. . The Sustainable Development Committee has established 6 groups to review and improve the implementation by convening each group regularly. As for the board of directors, General Manager Zhou and Deputy General Manager Yang Wenzhen report to the board of directors on the current implementation status of sustainable development at least once a year to facilitate the board of directors to evaluate the company's impact on climate change and provide relevant suggestions.
(2.) Describe how the identified climate risks and opportunities impact the company's business, strategy and finances (short-term, medium-term, long-term).	SCI initially identifies climate risks and opportunities: Short-term impact: Extreme weather events or supply chain disruptions may lead to production interruptions, logistics delays and increased costs. SCI has established contingency plans to mitigate possible impacts. Medium-term impact: Unstable climatic conditions in specific regions may affect the supply of specific raw materials. Therefore, Xufu will strengthen supply chain management to ensure the stability of raw materials. Long-term impacts: Climate change may have long-term impacts on a company’s sustainability and financial stability. Xufu plans to introduce the risk assessment mechanism recommended by TCFD to conduct assessments on specific issues of climate change to understand the specific potential financial impacts, and adjust long-term strategies accordingly to ensure that the company's future development is consistent with climate challenges.
(3.) Describe the financial impact of extreme climate events and transition actions.	Extreme weather events may cause production interruptions, requiring remedial measures, such as temporary adjustments to production plans or reserve raw materials, which may put short-term pressure on financial performance; future implementation of climate transformation actions will require increased sustainability-related investments, such as purchasing more environmentally friendly products equipment and the introduction of green energy, etc. Such investment costs may have an impact on the company's cash flow in the short term. In addition, taking climate transformation actions may also increase the company's brand value and maintain the company's competitiveness in a market that increasingly values sustainability, which will have a positive impact on financial performance.
(4.) Describe how climate risk identification, assessment and management processes are integrated into the overall risk management system.	In order to strengthen corporate governance and effectively implement and improve the company's risk management mechanism and reduce the risks that may be faced in operations, Xufu has formulated "Risk Management Policies and Procedures". In the future, climate risks will be gradually integrated into the overall risk management system and closely integrated with the company's governance structure. To ensure comprehensive and effective management of climate-related risks.
(5.) If scenario analysis is used to assess resilience to climate change risks, the scenarios, parameters, assumptions, analysis factors and main financial impacts used should be described.	SCI plans to introduce the risk assessment mechanism recommended by TCFD. In the future, it will evaluate the financial impact and transformation caused by changes in production, legal compliance and market demand based on increasingly stringent regulations and policies, extreme weather event risks, supply chain stability and other analytical factors. Action feasibility assessment.
(6.) If there is a transformation plan to manage climate- related risks, describe the content of the plan, and the indicators and targets used to identify and manage physical and transition risks.	In order to mitigate the risk impact of climate change, Xufu's board of directors has approved the planning and schedule of greenhouse gas inventory and third-party verification, with the goal of completing third-party verification by 2026.
(7) If internal carbon pricing is used as a planning tool, the basis for setting the price should be stated.	In order to mitigate the risk impact of climate change, Xufu's board of directors has approved the planning and schedule of greenhouse gas inventory and third-party verification, with the goal of completing third-party verification by 2026. SCI will complete a product carbon inventory in 2023, and is expected to complete the greenhouse gas inventory in 2024. After understanding the greenhouse gas emissions in each business category and process, it will refer to domestic and foreign carbon pricing trends, based on objective and specific Use the data to complete internal carbon pricing operations.
(8) If climate-related goals are set, the activities covered, the scope of greenhouse gas emissions, the planning schedule, annual achievement progress and other information should be explained; if carbon offsets or renewable energy certificates (RECs) are used to achieve relevant goals, the information should be explained. The source and quantity of offset carbon reduction credits or the quantity of renewable energy certificates (RECs).	SCI initially aims to reduce carbon emissions by 1% per year.

9. Greenhouse Gas Inventory and Confirmation Status:

(1). Describe the emission volume (metric tons CO2e), intensity (metric tons CO2e/million yuan) and data coverage of greenhouse gases in the past two years.
When some production areas resumed work in 2011 and 2012, the greenhouse gas emissions and intensity were:
2022: Emissions: 6,289 metric tons CO2e, intensity 7.0 metric tons CO2e/million yuan. (Scope 1, 1,352 metric tons CO2e; Scope 2, 4,937 metric tons CO2e)
2023: Emissions are 10,570 metric tons CO2e, intensity is 8.8 metric tons CO2e/million yuan. (Scope 1 2,416 metric tons CO2e; Scope 2 8,154 metric tons CO2e)
The emissions from the resumption of work in the 2023 production area are approximately 63% of the emissions before the fire accident in 2020 (the emissions in 2020
were 16,805 metric tons of CO2e).

(2). A description of the confidence in the last two years as of the publication date of the annual report, including the scope of the
confidence, the organization of the confidence, the standards of the confidence and the confidence opinion.

Scope of assurance: 1 product VA
Assurance organization: SGS
Assurance criteria: ISO 14067
Assurance opinion: ISO 14067 verification has been obtained in 2023.