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nd Indigenous Relations We aim to be a good neighbor in our communities and a sought-after local employer. To achieve this, we collaborate with our communities and invest in projects that address their specific needs and concerns. Along with regularly engaging with the communities we operate in, we also seek to establish and sustain long-lasting, positive partnerships with Indigenous communities. Our Good Neighbor Commitments include: 56 <56 END>
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<START 57> 2022 Activities VOLUNTEERING OUR TIME Participating in and developing our communities through active service and volunteerism is one way that we contribute to our communities. Either through individual or group action or through paid volunteer time, we lend our support to community and conservation initiatives. Despite COVID-19 restrictions, our employees volunteered almost 2,600 hours in 2022. GIVING THROUGH UNITED WAY® CAMPAIGN We raised nearly $1.3 million through our regional United Way campaigns. This included a combination of pledges from employees and retirees, virtual fundraising events, and NOVA Chemicals’ matching dollars. DISABILITY MENTORING DAY For the eleventh year, NOVA Chemicals sponsored Disability Mentoring Day to bring together students with disabilities to promote career development and exploration. We hosted 25 students at an in- person event from our Pittsburgh office to give students an opportunity to learn about new employment possibilities and future educational opportunities. On Disability Mentoring Day and during our monthly mentoring program with Bender Leadership Academy, an organization committed to expanding opportunities for employment of people with disabilities, mentors at NOVA Chemicals help connect students with disabilities to new and empowering experiences. SUPPORTING EMERGING TALENT Our business and industry rely on the expertise from scientists, engineers, and technicians and we are passionate about increasing science literacy in the next generations to drive interest, excitement, and confidence in pursuing Science, Technology, Engineering, and Math (STEM) careers. For more than 20 years, we have delivered our genScience initiatives which aim to spark passion, innovation, and discovery around STEM in future generations. These initiatives include: • Providing up to 60 individual scholarships annually totaling just over CAD$140,000. Approximately 20% of scholarships are awarded to Indigenous students, and
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, innovation, and discovery around STEM in future generations. These initiatives include: • Providing up to 60 individual scholarships annually totaling just over CAD$140,000. Approximately 20% of scholarships are awarded to Indigenous students, and 60% of them directly target STEM-related fields. • Renewing our commitment to Let's Talk Science® program for three years with an investment of CAD$600,000. This multi- year commitment will support STEM education for children and youth across Canada, regardless of gender, geography, culture, language, abilities, and financial status. • Working with Carnegie Science Center to empower youth across Western Pennsylvania to explore a future in STEM through educational programming and connections with industry professionals and careers such as ChemFest, Engineer the Future, and Carnegie STEM Girls+ and Tour Your Future. OUR PERFORMANCE Community Investment We continue to invest in organizations that improve quality of life, including United Way, Carnegie Science Center, and Let’s Talk Science. After a brief pause on new signature investments while we refresh our strategy, we anticipate a return to pre-COVID spend levels beginning in 2023. ALLIANCE TO END PLASTIC WASTE CLEAN4CHANGE Many of our employees engage in different workstreams that help to advance the Alliance to End Plastic Waste’s mission. In 2022, NOVA Chemicals employees participated in a global clean-up, Clean4Change, sponsored by the Alliance. Together over 2,000 global volunteers picked up over 1.4 million pieces of litter in 32 cities. 57 <57 END>
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<START 58> ENGAGING WITH INDIGENOUS COMMUNITIES Across the regions where we operate, we work with our local Indigenous communities to strengthen our partnerships and relationships. Respect for the unique history, culture, and rights of Indigenous communities guides our engagement with them. We proactively seek opportunities for engagement and learning including effective dialogue and consultation, and providing equitable opportunities in employment, procurement and through the supply chain. Periodic reviews of our outreach, communication, and engagement processes with Indigenous communities reflect our dedication to enhancing our efforts. As part of our commitment to Responsible Care initiatives, we are dedicated to upholding the United Nations- recognized Indigenous Community Codes. Our leaders play an active role in building relationships with Indigenous communities For example, NOVA Chemicals' environment and public affairs leaders meet with Aamjiwnaang First Nation's (AFN) environmental lead and attend Clean Air Sarnia and Area meetings alongside representatives from AFN. NOVA Chemicals' Vice President of Manufacturing East also engages with the AFN Chief and Chairs the Sarnia-Lambton Environmental Association which hosts engagements with the AFN Chief and counsel. We are a member of Visions of Harmony group which focuses on career development opportunities for local Indigenous youth. In addition, our Indigenous Student Achievement Award provides financial support for Aamjiwnaang students. As we continue to expand our operations, we are committed to seeking out new opportunities for the future to support Indigenous communities across Canada through skills training, employment, business development, and community investment. RECOGNIZING NATIONAL DAY OF TRUTH AND RECONCILIATION To honor the residential school survivors and lost children, their families, and communities, NOVA Chemicals recognized National Day of Truth and Reconciliation.
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elopment, and community investment. RECOGNIZING NATIONAL DAY OF TRUTH AND RECONCILIATION To honor the residential school survivors and lost children, their families, and communities, NOVA Chemicals recognized National Day of Truth and Reconciliation. Employees were encouraged to wear their orange shirts and pins and welcomed a presentation from two members of the Indigenous community. The speakers, two residential school survivors, joined us for an impactful conversation that included discussion on their own histories of the residential school system and why reconciliation is such an important process. Polytechnique Montreal BONFIRE® Platform Pilot Program In 2022, we completed a three-month pilot program with Polytechnique Montréal to bring our proprietary BONFIRE film development platform to students. Graduate students in the Chemical Engineering program used the BONFIRE platform to simulate novel package designs for the final project of their Polymer Packaging Engineering course. Through the program we aim to inspire future packaging designers and provide students with practical experience for their careers. Students also give NOVA Chemicals valuable feedback on the platform which will help us build new capabilities for our customers and the plastics industry. CASE STUDY: SUPPORTING STEM EDUCATION 58 <58 END>
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<START 59> Our unwavering commitment to sustainability and our Responsible Care program is complemented by our long-standing commitment to transparency and accountability. We continually improve our governance and business practices and work to promote a culture of ethical behavior in our company and with our customers and partners. I N T H I S S E C T I O N Corporate Governance 60 Risk Management 61 Ethics 67 Responsible Supply Chain 70 Cybersecurity 73 Public Policy 75 ESG Governance 62 ESG Integration 63 59 <59 END>
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<START 60> Role of the Board The role of our Board is to safeguard the interests of NOVA Chemicals’ shareholder, provide high-level oversight of our activities and performance, including our strategy, and to evaluate the effectiveness of management’s policies and decisions. With the launch of the new NOVA 2030 corporate strategy, the Board's role regarding the oversight of ESG within the company has become more prominent. Refer to the ESG Governance section of this report for more information. Board Structure At the end of 2022, our Board of Directors was comprised of nine members, three of which are independent. The Board has two standing committees: the Audit, Risk, & Compliance Committee and the Remuneration Committee. In addition, we have a Pension and Savings Plan Committee, which is a subcommittee of |the Audit Committee and the Remuneration Committee, comprised of members of management. Board Renewal and Diversity Recognizing that diverse backgrounds bring invaluable perspectives to our team, we seek Directors with diverse competencies, skills, and experience. We do not have term limits or a formal retirement policy for Directors. At the end of 2022, the average tenure of a Director on our Board was 2.1 years. Executive Compensation Our underlying principle is to provide competitive compensation that attracts, retains, and motivates highly capable executives to achieve the company’s business plan. NOVA Chemicals’ executive compensation is heavily weighted towards incentive plans with 76% of our CEO and an average of 62% for other executive officer compensation considered “at-risk” and dependent on performance against targets. Corporate Governance Our continued success is inherently linked to effective corporate governance. Our robust corporate governance practices enable us to responsibly manage and protect the value of our company, as well as maintain alignment between the Board of Directors, management, and all of our stakeholders. WHY IS CORPORATE GOVERNANCE
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rnance. Our robust corporate governance practices enable us to responsibly manage and protect the value of our company, as well as maintain alignment between the Board of Directors, management, and all of our stakeholders. WHY IS CORPORATE GOVERNANCE IMPORTANT? Sound corporate governance is critical to mitigating risks, achieving strong performance, and maintaining accountability to stakeholders. BOARD AND GOVERNANCE INFORMATION Board composition and independence Size of Board 9 Percent Women 11 Independent Directors 3 Separate Chair and CEO Yes Independent Chair* No Board Meetings Held in 2022 8 Average Meeting Attendance 90% Board renewal Mandatory Retirement Age No Average Director Tenure 2.1 years Ethics Code of Conduct for Directors, Officers, and Employees Yes All data as of Dec. 31, 2022. * An independent Chair does not apply in a private ownership setting. 60 <60 END>
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<START 61> Our Risk Management Policy defines the framework of NOVA Chemicals’ enterprise- wide risk management by providing principles, roles and responsibilities, and guidelines for risk assessment, mitigation, and reporting. The Policy aims to ensure the implementation of sound risk management practices across the organization. Our ERM program includes a process to identify all significant risks to our company. When we evaluate and assess risks and opportunities, we consider multiple criteria, including the likelihood of occurrence and the severity and nature of a potential impact. The assessment of our risks is mapped in our risk matrix (formatted as a heat map) and tracked in our risk register. Our approach includes risk and opportunity identification and evaluation for physical and transition risks. Climate-related risks that could have a material impact on business operations, financial condition, and company reputation are considered in our strategic and financial planning. Risk Management At NOVA Chemicals, we have a formal Enterprise Risk Management (ERM) program. Our approach to risk management is guided by the Committee of Sponsoring Organizations of the Tradeway Commission (COSO) Enterprise Risk Management Framework. 61 61 <61 END>
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<START 62> Governance structure and details on Board members and their ESG roles The Board is responsible for approving and supervising the execution of NOVA Chemicals’ corporate strategy, including the NOVA 2030: Roadmap to Sustainability Leadership. Additional responsibilities include overseeing the identification and management of climate-related risks, compliance with relevant ESG-related regulations and reporting, and evaluating the effectiveness of risk mitigation policies, decisions, and climate action plans. The Board receives information on climate- related performance, including progress towards climate ambitions, and climate- related risks, opportunities and/or mitigation actions from the Executive Committee. The Audit, Risk, and Compliance Committee (ARCC) of the Board oversees annual disclosures and recommends ESG disclosures for Board approval. The Executive Committee includes the President and CEO, who is the highest individual responsible for the corporate strategy, including ESG strategy. The SVP, General Counsel & Corporate Secretary has the highest level of management accountability for NOVA Chemicals' ESG regulatory reporting. The remaining members of our Executive Leadership are responsible for various aspects of NOVA Chemicals' ESG performance. Additional management-level functional teams such as the Sustainability Function, Site-Based Environmental Specialists, the Operations Leadership Team, Enterprise Risk Management, the Finance team, the Corporate Environmental Affairs team, and the Supply Chain and Procurement team support management of climate- related issues and the implementation of the decarbonization plan. These enabling groups support the Executive Committee in managing climate related risks and opportunities and new material ESG risks at NOVA Chemicals. LINKING ESG TO COMPENSATION Our Executive compensation is linked to NOVA Chemicals’ performance against annual ESG objectives. In addition to financial and safety objectives, our Long-
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s and opportunities and new material ESG risks at NOVA Chemicals. LINKING ESG TO COMPENSATION Our Executive compensation is linked to NOVA Chemicals’ performance against annual ESG objectives. In addition to financial and safety objectives, our Long- Term Incentive Plan includes objectives to address NOVA Chemicals' risks and opportunities associated with the Circular Economy, Climate Care, and Inclusion and Diversity (I&D) goals. The Short-Term Incentive and Technical Variable Pay plans continue to emphasize social aspects related to occupational and process safety performance. ESG Governance Many of our stakeholders play a crucial role in overseeing our ESG progress, helping to ensure that we remain on course, and advance effectively towards our vision. To meet our commitments and be successful in the long term, ESG must be embedded in activities, roles, and responsibilities across the company. 62 <62 END>
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<START 63> ECOVADIS SILVER RATING In 2022, NOVA Chemicals was awarded a Silver medal by EcoVadis for the second year in a row. Our actions to further strengthen our sustainability management systems with the implementation of new measures and policies such as our Sustainable Procurement Policy, our Supplier Code of Conduct, and our Business Partner Due Diligence Policy, was reflected in our improved score, which places us in the top 11% of companies assessed by EcoVadis in our industry category. EcoVadis assesses companies using a scorecard that covers 21 sustainability indicators in four themes: Ethics, Environment, Labor and Human Rights, and Sustainable Procurement. NOVA's Labor and Human Rights score was in the top 1% of companies rated by EcoVadis in our industry category. We aim to meet or exceed compliance obligations and commitments, improve our performance, and create long-term value by: • Providing resources to meet Responsible Care principles and ethics • Prioritizing work using a risk-based approach (e.g., including climate risk and plastic risk in our Enterprise Risk Management System) • Setting and achieving goals and objectives • Implementing science-based solutions and best practices • Adopting continual improvement methods • Aligning our interests with those of interested parties ESG Factors Informing Capital Investment NOVA Chemicals' project-screening tool includes ESG factors. The scoring system used in our capital process includes environmental and sustainability criteria such as the degree of alignment to the corporate strategy. By using this tool, we can identify projects that have ESG and sustainability value and prioritize them for further review. This approach also brings greater attention to the non-quantifiable or longer-term benefits of some sustainability initiatives. ESG Integration and Principles Our Sustainability and Responsible Care Policy directs our sustainability activities at the highest level. 63 <63 END>
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<START 64> Policies and Responsibilities for the Management of Our Material ESG Topics ESG TOPIC WHO IS RESPONSIBLE MANAGEMENT SYSTEM AND/OR POLICIES Plastic Circular Economy • Our Market-Focused Teams are composed of marketing, product development, sales, and technical services specialists. These teams collaborate with Operations to bring new products to market • Our Sales and Marketing Leadership Team has accountability for plastic circular economy growth, including our Circular Solutions and rPE resin sales • We follow a stage-gate approach to product development, with several built-in checkpoints to ensure we develop products that meet market needs • Responsible Care PRGM 900 Product Safety Climate Care • Our Climate Solutions Team is responsible for the decarbonization roadmap, including the identification of short-term and long-term initiatives and technologies for GHG emissions reduction • The accountability for implementation of our GHG reduction plan is with our Executive Committee, with implementation responsibility across many functions including the Operations Leadership Team, Finance Team, Sustainability Team, and Supply Chain and Procurement Team • Our Sustainability function is responsible for the environment and GHG strategies and internal reporting on corporate ESG performance • Our Sustainability and Responsible Care Policy guides our practices and aspirations, including our management and advocacy approach to key risks and opportunities • All our facilities have management systems to govern all facets of Responsible Care. These systems align with the requirements of the American Chemistry Council (ACC) or the Chemistry Industry Association of Canada (CIAC) • We are transitioning to the RC14001 management system, a standard that combines elements of Responsible Care and ISO 14001. In 2020, all U.S. sites achieved RC14001 certification. Canadian sites have made significant progress to becoming RC14001 certification-ready. • Eight Responsible Care Strategy Teams:
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standard that combines elements of Responsible Care and ISO 14001. In 2020, all U.S. sites achieved RC14001 certification. Canadian sites have made significant progress to becoming RC14001 certification-ready. • Eight Responsible Care Strategy Teams: • Environment • Occupational Health • Industrial Hygiene • Occupational Safety • Contractor Safety • Emergency Services & Security • Process Safety • Product Safety Employee and Contractor Safety Process Safety Air Emissions, Waste, Water Health and Wellness Product Safety Transportation Safety • Our Safety and Operational Risk Council is made up of senior leaders (CEO, SVPs, facility VPs, and Directors) and is responsible for demonstrating Responsible Care leadership, identifying risks and performance trends, allocating resources for safety and risk initiatives, and improving organizational performance towards Goal ZERO • Eight Responsible Care Strategy Teams are accountable for developing strategies to improve our Responsible Care performance • The Responsible Care Strategy Teams are integrated across locations and functions • The Product Safety Team is responsible for understanding and communicating the health, safety, environmental, regulatory, and security impacts of our products throughout their lifecycle, and reports to the Product Safety Strategy Team on a quarterly basis • The Logistics and Procurement Team is responsible for transportation safety, including tracking and managing transportation incidents, near hits, and non-accident releases. Metrics are reported monthly to the Logistics Leadership Team. The Supply Chain Risk Exposure Evaluation Network (SCREEN), a work group within Logistics, evaluates transportation risks and reports to the Director, Logistics and Customer Service 64 <64 END>
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<START 65> ESG TOPIC WHO IS RESPONSIBLE MANAGEMENT SYSTEM AND/OR POLICIES Inclusion and Diversity Talent Management • Our Human Resources Team is responsible for tracking performance and developing programs in pursuit of our I&D goals and to develop our leaders and employees • Our I&D Strategy will guide our actions towards a more inclusive and diverse workplace • Our formal leadership development is largely delivered through a program called CONNECT The Neuroscience of Quality Conversations • Respectful workplace and Violence Prevention Policy Community and Indigenous Relations • Our Regional Public Affairs Team is responsible for developing programs to engage with and support our communities including fostering long-term positive relationships with Indigenous stakeholders • Sustainability and Responsible Care Policy • CIAC Accountability Code. ACC for Geismar operations • Community Investment Principles Ethics and Compliance • The Ethics and Compliance Team is responsible for developing, implementing, directing, reviewing, and revising the Ethics and Compliance program to be consistent with our risk profile and business strategies and to meet best practices • The team reports metrics quarterly to the Executive Committee and the Audit, Risk & Compliance Committee of the Board and annually to the Board of Directors • Code of Conduct • Anti-Trust Compliance Policy • Anti-Bribery and Corruption Policy • Conflict of Interest Policy • Business Partner Due Diligence • Risk Rate Due Diligence Management System • Digital incident management system with built-in reporting metrics (e.g., calls to the ethics hotline, cases) and automatic notifications and reminders Responsible Supply Chain • The Logistics and Procurement Team, working within the Responsible Care Outreach Program, is responsible for the business relationships with its supply chain partners, including evaluating the operational risks of the transportation functions • Responsible Care Outreach Program • Supplier Code of Conduct
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Responsible Care Outreach Program, is responsible for the business relationships with its supply chain partners, including evaluating the operational risks of the transportation functions • Responsible Care Outreach Program • Supplier Code of Conduct • Business Partner Due Diligence Program • Sustainable Procurement Policy Public Policy • Our Government and Industry Relations Team is responsible for engaging with government officials and regulators • We follow Canadian, Alberta, and Ontario lobbying acts in Canada and rely on industry and trade associations and lobbying firms to advocate on our behalf in the U.S. Cybersecurity • Our IT organization is responsible for procuring systems and developing processes that protect our assets, data, and information • NIST® cybersecurity framework • IT User Policy • Code of Conduct 65 <65 END>
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<START 66> How We Improve STANDARDIZATION Standardizing processes is a vital component of our ongoing efforts to improve. We prioritize standardization of company-wide policies and procedures, with a focus on high-risk activities that pose a frequent threat of injury or have the potential to cause severe consequences. We successfully implemented significantly revised programs, including contractor safety, industrial hygiene, occupational health, process safety, product safety, risk and security. We also developed and/or revised procedures for a number of critical areas including hazardous products management, protection from oxygen deficient atmospheres, Responsible Care outreach, occupational injury/illness management, working from heights, personal protective equipment and risk alerts process. ENHANCING VISIBILITY Our interactive Business Intelligence (BI) Dashboards provide employees and leaders with access to facility- and corporate-level performance data, including safety and production metrics. Through the dashboards, users can visualize, explore dozens of variables and analyze performance trends. This tool is a key component of NOVA Chemicals' wider digitalization effort, aimed at leveraging data to enable insights leading to identifying areas for improvement, fostering mutual learning, and driving continuous progress. OTHER IMPROVEMENT ACTIVITIES • Our Continuous Improvement Program is a comprehensive strategic management system for improving our business on an ongoing basis; • We periodically review our policies and programs to ensure we comply with changing regulations, address societal expectations, and respond to sustainability risks and opportunities; • We assess our risks and ensure they are eliminated or controlled to appropriate levels; • Our operations undergo internal and external audits according to a schedule or based on the results of our risk assessments; • We measure our performance, benchmark against our peers, and assess
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are eliminated or controlled to appropriate levels; • Our operations undergo internal and external audits according to a schedule or based on the results of our risk assessments; • We measure our performance, benchmark against our peers, and assess our improvement over time; and • We investigate ethical, environmental, health, safety, and security incidents and apply appropriate mitigating actions and analyze trends. SPOTLIGHT ON RESPONSIBLE CARE All our facilities have management systems to govern all facets of Responsible Care standards. These systems align with the requirements of the ACC or the CIAC. We are transitioning all of our facilities to a new RC14001 management system, a standard that combines elements of Responsible Care and ISO 14001. Benefits of the RC14001 unified management system include enhanced transparency and accountability, improved clarity on value chain influence and responsibility, reduced variation across the organization, and alignment with international standards. To keep our management systems certified, our facilities must undergo third-party audits every three years. In 2020, all U.S. sites achieved RC14001 certification. Our Canadian sites are in the process of updating their current management system and have made significant progress towards being RC14001 certification-ready. The Canadian facilities continue to meet our commitments to CIAC and undergo an extensive external verification every three years. We successfully completed our ninth verification in 2022. 66 <66 END>
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<START 67> Management Approach: How We Manage Ethics SETTING EXPECTATIONS Our Business Conduct Policy, and the suite of policies it contains, provides employees with clarity and guidance on expected work behaviors. Some of our key policies are: • Code of Conduct: Our Code is designed to assist everyone who works for or represents NOVA Chemicals, including employees and Directors, in making decisions with integrity and honesty. It includes references to our policies and guidelines that promote compliance with laws and regulations. We monitor changes and developments and maintain up-to-date controls. • Anti-Trust Compliance Policy: This policy gives our employees guidance on how to conduct their day-to-day activities without engaging in prohibited conduct or entering into unlawful agreements that protect free and open competition. • Anti-Bribery and Corruption Policy: This policy provides a structure to manage bribery and corruption risk by establishing rules to ensure that all of NOVA Chemicals’ activities are conducted with the highest level of integrity and ethical standards and fully comply with all applicable laws. • Conflict of Interest Policy: This policy provides guidance on recognizing possible conflict of interest situations and describes the process employees must follow to disclose potential conflicts. • Supplier Code of Conduct: Our Supplier Code of Conduct outlines our ethical and compliance expectations of suppliers in the areas of human rights; integrity; transparency; health, safety and the environment; and confidentiality. Ethics At NOVA Chemicals, we are committed to conducting our business with honesty and integrity, and we are fully committed to doing so in a responsible manner. To ensure that we live up to these values, we have robust systems and policies that guide employee conduct. OUR AMBITION Continued assessment of our management of the Ethics and Compliance program emphasizing compliance with Anti-Bribery and Anti-Corruption
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sure that we live up to these values, we have robust systems and policies that guide employee conduct. OUR AMBITION Continued assessment of our management of the Ethics and Compliance program emphasizing compliance with Anti-Bribery and Anti-Corruption regulatory requirements (where applicable) and our Anti-Bribery and Anti- Corruption risk as it relates to international agents and distributors. What does our ambition mean? Our anti-bribery management program includes all our policies and procedures that support our employees in preventing incidents of bribery or corruption in our dealings with suppliers, customers, and governments. In 2022, we instituted robust procedures to this end. In 2023 we developed a plan to identify any gaps and, by the end of 2023, will begin the implementation of our plan to close identified gaps. 67 <67 END>
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<START 68> OUR PERFORMANCE • Business Partner Due Diligence Policy: This policy outlines the expectation for Business Partners Due Diligence such that NOVA Chemicals works only with business partners who meet our standards in relation to ethics and compliance, and have a shared commitment to acting in a legally compliant manner. • Respectful workplace and Violence Prevention Policy: This policy promotes a safe and respectful workplace, where all individuals are free from workplace harassment and violence. We recognize that conducting business ethically, maintaining compliance, and upholding human rights is critical to the success of our business. We routinely review our policies and practices and update any aspects as necessary. ASKING QUESTIONS AND REPORTING CONCERNS Our EthicsPoint reporting system is a 24-hour confidential and anonymous (or otherwise) telephone and online reporting system. The EthicsPoint system is for employees, contractors, business partners, and members of the public to ask questions about ethics matters, request help in decision-making, or report possible violations of the Business Conduct Policy and associated policies. In addition to using the EthicsPoint reporting system, concerns or questions can be raised to leaders, the legal department, or human resources staff. All matters reported through the EthicsPoint system or other means are investigated, documented, and resolved or further followed up on. We also identify improvements and organizational learning opportunities to prevent reoccurrence. Retaliation against anyone who, in good faith, reports a suspected, potential, or actual violation is strictly prohibited. PROVIDING COMMUNICATIONS AND TRAINING All employees are required to complete a business ethics and compliance curriculum within their first two months of hire at NOVA Chemicals and annually thereafter. Most of the training consists of online learning modules, with some additional training sessions provided in
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ed to complete a business ethics and compliance curriculum within their first two months of hire at NOVA Chemicals and annually thereafter. Most of the training consists of online learning modules, with some additional training sessions provided in person. In addition to annual training and refreshers on the Code of Conduct, we provide in-person presentations related to the following topics: anti-bribery and corruption, anti-trust and competition law, conflicts of interest, gifts and entertainment, interactions with suppliers and customers, and trade compliance. In 2022, 97% of permanent active employees completed business conduct training. AUDITING, MONITORING, AND REMEDIATION Our Ethics and Compliance Team continues to oversee and implement monitoring and remediation plans for ethics and compliance risks and violations. Ethics-Related Reports per 100 Employees We compare the number of reports received through our ethics line to the NAVEX Global® benchmark. NAVEX Global has a database of 3,430 organizations that collectively received more than 1.5 million individual reports in 2022. Although there is wide range of call volumes between organizations, NAVEX Global notes that organizations with higher reporting rates (calls per 100 employees) may be experiencing the positive business outcomes discussed in the George Washington University study Evidence on the Use and Efficacy of Internal Whistleblowing Systems, which shows that higher report volumes are associated with fewer and lower amounts of government fines and material lawsuits. We investigate all matters received. A substantiated allegation might result in employee education, coaching, discipline, or termination, where permitted by local law. Ethics-Related Matters Received in 2022 53 % QUESTIONS 7 % ALLEGATIONS REMAINING OPEN AT YEAR-END 25 % UNSUBSTANTIATED ALLEGATIONS 16 % SUBSTANTIATED ALLEGATIONS 68 <68 END>
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<START 69> 2022 Activities NOVA Chemicals is a participant in the United Nations Global Compact (UNGC) and supports the Ten Principles of the UNGC on human rights, labor, environment and anti-corruption. Our operational sites are in countries that are governed by strong legal and human rights regulations. We comply with all human rights-related laws in the countries in which we operate. We protect and support the communities where we work by maintaining safe working conditions in which all employees are given an appropriate number of working hours and fair compensation for their work. The use of child and forced labor of any kind is illegal and nonnegotiable at NOVA Chemicals. In 2022, we rolled out two new policies to demonstrate our ongoing commitment to upholding the highest ethical standards within the company and across our value chain. • Our Supplier Code of Conduct outlines our expectations for all suppliers to meet our standards in the areas of human rights; integrity; transparency; health, safety and the environment; and confidentiality. • Our Business Partner Due Diligence Policy outlines the minimum requirements for NOVA Chemicals’ business units’ due diligence procedures to ensure that we exclusively engage with entities that uphold our ethical and compliance standards, and are equally committed to legal compliance. It further details the approach to assess the risk of a business relationship with a potential partner and monitor that risk throughout the course of a relationship. Human trafficking, or modern slavery, is a criminal industry that denies people their freedom and human rights. We stand firmly against human trafficking and slavery and all human rights violations. We are hired fairly and with consent, and we hire others fairly and with consent. REINFORCED COMMITMENT TO ETHICS AND HUMAN RIGHTS ENHANCED AWARENESS OF ETHICS We are advancing our work on a business ethics and human rights training program for our leadership team. The goal of this
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sent, and we hire others fairly and with consent. REINFORCED COMMITMENT TO ETHICS AND HUMAN RIGHTS ENHANCED AWARENESS OF ETHICS We are advancing our work on a business ethics and human rights training program for our leadership team. The goal of this training is to demonstrate to our employees that our leaders are well-equipped to manage concerns, complaints, or violations in an ethical manner, and encourage them to speak up about anything they may consider potentially unethical. WHY IS IT IMPORTANT FOR US TO MANAGE ETHICS? Maintaining a robust ethics and compliance management system is critical to reducing reputational and operational risks associated with potential violations or wrongdoing. It is also key to upholding human rights in our company and within our supply chains. 69 <69 END>
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<START 70> Management Approach: How We Manage our Responsible Supply Chain Our suppliers are a critical component of enabling our operations and provide us with feedstocks, raw materials, labor and materials for maintenance and capital improvements, corporate services, and transportation services. To carry out our manufacturing, construction, and services, we work with over 2,000 suppliers. Key policies that guide our actions to ensure suppliers are aligned with our Sustainability & Responsible Care values include: • Supplier Code of Conduct: Our Supplier Code of Conduct outlines our ethical and compliance expectations of suppliers in the areas of human rights; integrity; transparency; health, safety and the environment; and confidentiality. • Business Partner Due Diligence Policy: This policy outlines the expectation for Business Partners Due Diligence such that NOVA Chemicals works only with business partners who meet our standards in relation to ethics and compliance, and have a shared commitment to acting in a legally compliant manner. • Sustainable Procurement Policy Framework: Sets out our practices on responsible sourcing including how we identify and/or evaluate qualified suppliers of products and services. We are also a participant in the United Nations Global Compact, which is a voluntary initiative focused on implementing sustainability principles, including human rights. Responsible Supply Chain We seek to work with suppliers, customers, agents, and distributors who are aligned with our efforts to conduct ethical business practices. Our business impacts include the indirect impacts from our supply chain, and we are committed to ensuring that our partners meet our standards and commitments for environmental responsibility, human rights, and health and safety of employees and communities. OUR AMBITION • By 2026, engage 100% of our targeted suppliers to align with NOVA's Responsible Supply Chain principles • Increase awareness of the Operation Clean Sweep program
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nsibility, human rights, and health and safety of employees and communities. OUR AMBITION • By 2026, engage 100% of our targeted suppliers to align with NOVA's Responsible Supply Chain principles • Increase awareness of the Operation Clean Sweep program through engagement with 100% of our key customers and transportation partners by 2025. What does our ambition mean? Our standards and commitments for Responsible Supply Chain, including environmental responsibility, human rights, and health and safety of employees and communities, are embedded in our policies and programs which guide our actions. We deploy a range of approaches and tools to engage with targeted suppliers as determined by our risk identification, assessment and prioritization, to understand, mitigate and address adverse impacts and to foster continuous improvement. The OCS program is an initiative to prevent the loss of plastic pellets to the environment during manufacturing or transportation. By engaging with key customers and transportation partners we increase awareness of the OCS program through our supply chain. 70 <70 END>
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<START 71> INTERNAL AND THIRD-PARTY SCREENING Using a combination of an internal screening process and third-party service providers, we assess the risks associated with our suppliers, customers, and distributors. Criteria we evaluate include trade-prohibited countries, denied parties (according to relevant government agencies), and value of the business arrangement. The level of risk determines the level of further due diligence which may include further investigation and risk mitigation and greater scrutiny. External assessments are also critical in our sourcing and supply chain partner relationships. We use EcoVadis assessments, NAVEX RiskRate Due Diligence Management System and ISNetworld® software to review and score the sustainability performance and management systems of targeted supply partners on topics such as Environment, Labor and Human Rights, and Ethics. SUPPLY CHAIN RISK EXPOSURE EVALUATION Our Supply Chain Risk Exposure Evaluation Network (SCREEN) is a cross-functional team that supports our commercial and logistics functions to identify and manage risks associated with the transportation and storage of products in the supply chain. • Security Programs: To protect the security of our international supply chain, we are a registered partner in the U.S. Customs Trade Partnership Against Terrorism and the Canada Border Services Agency’s Partners in Protection program. • Responsible Care Outreach: We implement a Responsible Care Outreach Program to encourage the adoption of Responsible Care principles throughout our value chain. Following a risk assessment of supplier and customer categories, we engage with targeted customers, suppliers, carriers, and other stakeholders to help them understand our commitment to Responsible Care and our expectations for doing business with us. We stand by the principle that everyone has the right to be treated with dignity and respect. NOVA Chemicals is dedicated to supporting and upholding
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them understand our commitment to Responsible Care and our expectations for doing business with us. We stand by the principle that everyone has the right to be treated with dignity and respect. NOVA Chemicals is dedicated to supporting and upholding the preservation of human rights in all our operations and throughout our supply chain. As a proud participant in the United Nations Global Compact, we recognize and respect human rights. Our commitment to human rights is included in our Code of Conduct. We expect our partners to do the same. We have policies and processes in place to help us identify, prevent, mitigate and address adverse human rights impacts in our supply chain, such as our Supplier Code of Conduct, our Business Partner Due Diligence Policy, and our engagement with EcoVadis, ISN and RiskRate to assess supplier sustainability management systems. OUR COMMITMENT TO HUMAN RIGHTS 71 <71 END>
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<START 72> 2022 Activities SUSTAINABLE PROCUREMENT POLICY FRAMEWORK AND SUPPLIER CODE OF CONDUCT In 2022 we developed our Sustainable Procurement Policy Framework, which sets out our practices on responsible sourcing including how we identify and/or evaluate qualified suppliers of products and services. In 2022 we increased our efforts to engage with our suppliers to understand their sustainability journey and to gather more information relevant to our Ecovadis assessments. We also launched our Supplier Code of Conduct which outlines our expectations for our suppliers' actions related to important topics such as human rights, anti- bribery and corruption, competition, and health, safety and the environment. At the end of 2022, the Supplier Code of Conduct had been incorporated into the standard language for all new supplier contracts. Utilizing RiskRate Due Diligence Management system through our NAVEX® system, we conduct reputation screenings of all contractors or suppliers competing in a strategic sourcing event, e.g. RFI — Request for Information or RFP — Request for Proposal. The tool allows us to review reports and understand the possible risks to NOVA Chemicals from adverse media related to our contractors. Technical and Corporate Procurement currently qualifies contractors and suppliers by utilizing a third-party to gather, evaluate and grade against industry aligned health, safety and environmental criteria. Utilizing this same platform, steps were taken in 2022 to map out a Sustainability Scorecard to allow us to score and grade our supply base on their ESG practices and objectives, with the plan to implement an ESG scorecard by Q4 2023. OPERATION CLEAN SWEEP We support OCS in its campaign to eliminate plastics from the environment. To contribute to this mission, we aim to prevent pellet loss at our sites and in our supply chain. To achieve this, we assess each of our polyethylene sites quarterly, ensuring we have the necessary tools for clean up.
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lastics from the environment. To contribute to this mission, we aim to prevent pellet loss at our sites and in our supply chain. To achieve this, we assess each of our polyethylene sites quarterly, ensuring we have the necessary tools for clean up. In 2022, we developed a hopper car unloading checklist and guideline that outlines important actions and procedures to encourage behavior changes that will help keep pellets in hopper cars after they've been unloaded at customer locations. This will be rolled out to customers in 2023. OUR RESPONSIBLE SUPPLY CHAIN JOURNEY 1985 Responsible Care Founding Member 2023 Scope 3 Emissions 2022 EcoVadis Buyer Program 2021 EcoVadis Assessment 2022 Business Partner Due Diligence Program 2022 Supplier Code of Conduct 2008 Responsible Care Outreach WHY IS IT IMPORTANT FOR US TO HAVE A RESPONSIBLE SUPPLY CHAIN? By managing our value chain according to our Values and Code of Conduct, we can have a greater impact to positively influence our entire value chain and promote sustainable practices beyond NOVA Chemicals' direct operations. 72 <72 END>
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<START 73> How We Manage Cybersecurity Risks Our holistic approach to digital risk management follows the National Institute of Standards and Technology (NIST) framework, a voluntary framework created by industry and the U.S. government to protect major infrastructure from cybersecurity risks. Our cybersecurity measures adopt a zero-trust principle and incorporate multiple factors to best protect our data, systems, and information. A multi-year strategy was designed for our risk-driven security program that considers the advancements in both threats and the protection landscape. Five focus areas were identified and various initiatives were planned to mitigate current and future challenges. Our efforts include: Security Strategy and Governance, Security Risk Management, Data Governance and Security, Asset Posture Management, and Security Operational Excellence. ASSESSING RISK We comprehensively assess and review new systems and initiatives to ensure cybersecurity standards are maintained. We also complete cyber risk assessments of third-party vendors to ensure secure cyber controls are implemented to minimize our risk exposure. As a part of continuous improvement mindset, the introduction of NOVA's standardized Security Risk Management Framework in 2022 enables key stakeholders to understand security requirements, posture, and controls. The framework adoption is part of our security strategy to drive visibility to business risks, improvements to security program, and enable risk-informed decisions. SECURING THE OPERATIONAL Our network is segregated into various zones, based on how critical they are to NOVA Chemicals. Each zone has security controls in place to manage access and ensure maximum protection from malware and malicious activities. Given their significance, we isolate our operational centers from the internet and corporate network activity to limit the risk exposure of a corporate network breach. Contract templates have been updated to
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on from malware and malicious activities. Given their significance, we isolate our operational centers from the internet and corporate network activity to limit the risk exposure of a corporate network breach. Contract templates have been updated to include cybersecurity language to ensure contractors and suppliers understand and acknowledge NOVA Chemical's cyber controls. Cybersecurity Digital advances offer significant business advantages; however, they can also potentially introduce risks related to digital piracy, cyber ransom, and business interruption or physical damages. We have robust training, auditing, and information protection measures in place and continuously improve our processes and technology to counter these threats. 73 <73 END>
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<START 74> PROTECTING INFORMATION We regularly update user policies and our processes for data loss prevention and data classification. We implement a best-in-class Identity Governance Solution to protect identities and ensure access to sensitive information is provided to only necessary parties. TRAINING To manage digital risks, we include a cybersecurity module in our mandatory Business Conduct Policy annual training. We focus on user-centric security by conducting security simulations and training to ensure we train and equip our first line of defense. Business and IT employees also engage in tabletop exercises to test incident response effectiveness and practice responding to cybersecurity events. Focused training is provided to groups with higher risk business processes. FOSTERING ACCOUNTABILITY We continue to run regular IT security campaigns including phishing to test employees’ awareness of cybersecurity monthly and ask employees to refresh their core security training annually. In 2021, we developed an IT User Policy that includes acceptable use of NOVA Chemicals' systems and guidelines for handling repeat violations during phishing campaigns. All employees and contractors must certify that they read and understood the policy. AUDITING Our cybersecurity systems are audited yearly by a third party and subject to external penetration testing. We also completed an independent security assessment to help drive improvements to security practice. 2022 Activities In 2022, we used a service-based design to identify key areas of the practice and developed our security systems to deliver operational security that accounts for people, process, and technology. We have embraced agile ways of working, and adopted a SecDevOps approach which prioritizes security to deliver a secure-by- design enterprise security system. 74 <74 END>
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<START 75> Management Approach: How We Get Involved in Public Policy We participate in public policy advocacy through trade associations in jurisdictions where we have manufacturing operations. We are members of the following business and industry associations: IN CANADA: • CIAC • Canadian Manufacturers & Exporters • Business Council of Canada • Resource Diversification Council • Alberta Plastics Recycling Association • Business Council of Alberta IN THE U.S.: • ACC • Plastics Industry Association • Flexible Packaging Association • AMERIPEN® Association • Association of Plastics Recyclers We also directly engage with regulators on key issues to support them in their efforts to protect human health and the environment. Our lobbying activities are guided by the relevant regulatory standards such as the Canadian federal Lobbying Act, the Alberta Lobbyists Act, and the Ontario Lobbyists Registration Act. We review our lobbyist registration annually to ensure compliance. We have an internal lobbying policy and provide training for any executives or employees who interact with government officials. We track and, as required, publicize any lobbying activities that are directly focused on policies, programs, and regulations. In the U.S., we work with industry and trade associations to advocate on our behalf. Public Policy We believe it is essential to have a strong and fair regulatory system to maintain a level playing field, regulatory stability, and the license to operate. Strict ethical standards have been established to guide our engagement with officials and regulators. 75 <75 END>
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<START 76> Performance Table 4 We report all environmental information, including GHG emissions, using our operational control approach. This means we report 100 percent of GHG emissions from facilities that we operate regardless of financial ownership, including operated ethylene and polyethylene assets and associated site-based infrastructure, and owned pipelines and office buildings. No emissions offsets were applied in the 2018 to 2022 reporting years. 5 NOVA Chemicals’ GHG Scope 1 emissions calculations in Alberta have been reported and assured by a third-party since 2007 and Scope 1 emissions for Ontario assets have been reported and assured by a third-party since 2011. 6 NOVA Chemicals’ value chain emissions are inclusive of the most relevant 12 of 15 categories defined in the GHG Protocol. Third-party limited assurance of Scope 3 methodology, aligned to the GHG Protocol Corporate Value Chain (Scope 3) Reporting Standard, and 2022 emissions data was conducted by SCS Global Services. We have refined our quantification methodology and approach resulting in a change in the previously reported 2020 value. 7 Emission-limiting regulations include jurisdictions with industrial carbon regulation. 8 Hazardous air pollutants (HAPs) are defined by the EPA as those pollutants that are known or suspected to cause cancer or other serious health effects, such as reproductive effects or birth defects, or adverse environmental effects. The EPA provides a list of HAPs in “The Clean Air Act Amendments of 1990 List of Hazardous Air Pollutants.” 2021 data has been restated to correct a calculation error. 9 Regulatory/Permit Exceedance (RPE) includes reportable spills and other non-compliances with federal, provincial/ state, or municipal approval, permit, or regulatory requirements with potential for adverse impact. This metric excludes administrative non-compliances and reports to the regulator related to minor issues. 10 Water stress as classified by the World Resources Institute’s
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approval, permit, or regulatory requirements with potential for adverse impact. This metric excludes administrative non-compliances and reports to the regulator related to minor issues. 10 Water stress as classified by the World Resources Institute’s (WRI) Aqueduct Water Risk Atlas tool, High (40–80 percent) or Extremely High (>80 percent) Baseline Water Stress. 11 2020 and 2021 data have been restated to correct for a prior omission of a caustic waste stream. UNITS 2018 2019 2020 2021 2022 GHG EMISSIONS (OPERATIONAL CONTROL)4 Scope 1 GHG emissions5 kilotonnes 4,094 4,135 3,963 3,820 3,729 Scope 2 GHG emissions kilotonnes 900 912 844 837 852 Scope 3 GHG emissions6 kilotonnes 15,500 15,800 14,800 14,900 13,200 GHG emissions intensity (Scope 1 and 2) tonnes CO2e/ tonne of product 0.66 0.65 0.63 0.65 0.69 Scope 1 emissions under carbon-limiting regulations7 percent 83 85 80 OTHER AIR EMISSIONS NOx tonnes 5,240 5,110 5,140 4,730 4,790 SOx tonnes 1,190 860 680 300 470 VOCs tonnes 1,710 1,720 1,460 1,460 1,010 Hazardous air pollutants (HAPs)8 tonnes 95 83 65 REGULATORY COMPLIANCE Regulatory/permit exceedances9 count 6 5 7 4 2 ENERGY USE Total energy consumed from natural gas (excluding electricity) million GJ 43.99 37.94 33.02 Total energy used million GJ 113.44 113.81 100.41 Total purchased electricity million GJ 5.91 5.93 5.55 Purchased electricity – non-renewable million GJ 5.91 5.93 5.55 Purchased electricity – renewable million GJ 0 0 0 WATER Water withdrawal thousand m3 40,850 40,150 36,300 Water withdrawn from regions with High or Extremely High Baseline Water Stress10 thousand m3 14,920 14,830 13,510 Total water discharge thousand m3 21,270 21,260 21,240 WASTE Total non-hazardous waste tonnes 20,410 27,090 32,760 Non-hazardous waste reused tonnes 12,370 15,010 21,510 Total hazardous waste11 tonnes 98,710 91,850 95,840 Hazardous waste sent for recycling tonnes 120 12 29 A note on restatements: We will restate annual data if there is a material change of five per cent or more. NR: Not reported 76
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s 12,370 15,010 21,510 Total hazardous waste11 tonnes 98,710 91,850 95,840 Hazardous waste sent for recycling tonnes 120 12 29 A note on restatements: We will restate annual data if there is a material change of five per cent or more. NR: Not reported 76 <76 END>
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<START 77> UNITS 2018 2019 2020 2021 2022 EMPLOYEE AND CONTRACTOR SAFETY Recordable injury rates – employees count per 200,000 exposure hours 0.32 0.29 0.08 0.16 0.04 Recordable injury rates – contractors 0.53 0.48 0.49 0.35 0.34 Recordable injury rates – combined 0.41 0.37 0.26 0.27 0.23 Lost time injury rate – employees 0.10 0.06 0.04 0 0 Lost time injury rate – contractors 0 0.03 0.04 0.03 0 Lost time injury rate – combined 0.06 0.04 0.04 0.02 0 Fatalities – employees and contractors count 0 0 0 0 0 Vehicle incidents12 count 36 61 35 50 48 Near misses (near hits)13 count 551 544 627 1,002 926 Safety interactions14 count 67,260 65,129 55,763 57,179 55,648 PROCESS SAFETY Total process fires15 events 21 12 10 14 13 Flammable Loss of Containment (FLOC)16 events 52 49 20 27 14 Process Safety Incidents Count (PSIC) – Tier 1 incidents 6 8 1 2 0 Process Safety Incidents Count (PSIC) – Tier 2 incidents 8 10 8 11 7 Process Safety Total Incident Rate (PSTIR)17 incidents per 200,000 worked hours 0.13 0.18 0.03 0.06 0.00 Process Safety Incident Severity Rate (PSISR)18 severity-weighted rate of incidents per 200,000 hours worked 0.39 0.49 0.09 0.28 0.00 TRANSPORTATION SAFETY Total number of transportation incidents count 16 24 22 57 25 Reportable transportation incidents19 count 1 2 5 5 2 Non-Accident Releases (NARs)20 count 0 0 0 0 0 12 Vehicle incidents include only driving-related vehicle incidents, and excludes any incidents involving powered mobile equipment or rail. 13 Near hits: A near hit is an unplanned event that did not result in undesirable consequences but had the potential to do so. We encourage near hit reporting because it is a proactive leading indicator that enables us to identify and address a hazardous situation before an incident occurs. 14 Safety interactions are peer interactions about safe or at-risk behaviors. We encourage employees to speak up when they see positive or at-risk behaviors, as part of our commitment to Responsible Care.
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hazardous situation before an incident occurs. 14 Safety interactions are peer interactions about safe or at-risk behaviors. We encourage employees to speak up when they see positive or at-risk behaviors, as part of our commitment to Responsible Care. 15 Process fires are any unplanned fire involving process materials. 16 Flammable loss of containment events (FLOCs) are incidents that typically involve an unplanned release of flammable materials exceeding 10% of the Tier 2 threshold in the American Petroleum Institute (API) RP 754 from 2021. 17 Process Safety Total Incident Rate (PSTIR) is calculated using the American Petroleum Institute (API) RP 754 from 2021. This rate is based only on Tier 1 incidents, which aligns with SASB recommendations. 18 Process Safety Incident Severity Rate (PSISR) is calculated using the American Petroleum Institute (API) RP 754 from 2021. This aligns with SASB recommendations. 19 Consistent with the International Council of Chemical Associations (ICCA) Guidance for Reporting Performance, an incident causing one of the following: direct involvement of authorities and/or emergency services, evacuation of people, or closure of public traffic routes for at least three hours; any release of more than 50 kg/L of dangerous goods or more than 1,000 kg/L of non-dangerous goods; any damage of more than 50,000 Euro (including environmental cleanup) resulting from a transport incident; or a death or injury leading to intensive medical treatment, a stay in hospital of at least one day, or an absence from work of more than three days. 20 Non-accident releases are the unintentional releases of a hazardous material during rail transportation, including loading and unloading while in railroad possession, that is not caused by a derailment, collision, or other rail-related accident. 77 <77 END>
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<START 78> SOCIAL CONTINUED UNITS 2018 2019 2020 2021 2022 PRODUCT SAFETY Percent of Significant Products Assessed for Risk and Prioritized based on ICCA Guidance21 percent 100 Incidents of non-compliance (e.g., product recalls and allegations) concerning the health and safety of products22 count 0 0 0 0 0 Products subject to information requirements23 percent 100 100 100 100 100 Percentage of revenue from products that contain Canadian Globally Harmonized System of Classification and Labeling of Chemicals (GHS) Category 1 and 2 Health and Environmental Hazardous Substances percent 8 11 6 Percentage of such products that have undergone a hazard assessment percent 100 100 100 EMPLOYEES Total number of employees count 2,885 2,906 2,351 2,456 2,476 Full time count 2,820 2,836 2,303 2,422 2,447 Part time count 65 70 48 34 29 Women count 710 711 592 616 617 Men count 2,157 2,171 1,742 1,833 1,851 Employees in the U.S. count 578 581 291 273 275 Employees in Canada count 2,291 2,309 2,051 2,174 2,192 Employees covered by collective bargaining agreements percent 11 11 8 8 8 Total new hires count 220 210 84 252 238 Rate of new hires percent 8 7 4 10 10 Voluntary (retire/resign) turnover percent 5 5 10 4 7 Total turnover (voluntary and involuntary) percent 7 6 18 6 8 Women at various levels Total workforce percent 25 25 25 Board of Directors percent 0 0 11 Management percent 22 23 24 Executives percent 20 14 14 Demographics 30 years and under percent 13 13 12 30 to 50 percent 55 56 59 50-plus percent 32 31 29 21 In 2022, NOVA implemented a new prioritization methodology for product risk assessments using the International Council of Chemical Associations (ICCA) Guidance on Chemical Risk Assessments. 22 Interpreted for application to NOVA Chemicals as incidents of non-compliance specifically limited to U.S. EPA Toxic Substances Control Act (TSCA) allegations, U.S. Food and Drug Administration (FDA) product recalls, and Canadian equivalents. Non-compliance with voluntary codes is not included.
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s as incidents of non-compliance specifically limited to U.S. EPA Toxic Substances Control Act (TSCA) allegations, U.S. Food and Drug Administration (FDA) product recalls, and Canadian equivalents. Non-compliance with voluntary codes is not included. 23 Products subject to information requirements for content, safe use, and/or disposal. 78 <78 END>
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<START 79> SOCIAL CONTINUED UNITS 2018 2019 2020 2021 2022 COMMUNITIES Community investment $ 2,479,642 2,390,635 2,017,962 2,181,637 1,627,191 Volunteerism (hours)24 hours 6,136 5,934 2,248 1,396 2,568 ECONOMIC VALUE GENERATED AND DISTRIBUTED Revenues million USD 4,195 3,343 3,207 5,061 4,472 Payments to governments (taxes paid net of refunds)25 million USD (17) (3) (61) (43) 239 Payments to employees (salaries and benefits) million USD 465 473 414 472 453 Capital expenditures million USD 449 793 688 670 830 ADDITIONAL INFORMATION ON TAXES Income and property taxes paid26 million USD 14 119 14 15 243 Income tax refunds received27 million USD 31 122 75 58 4 Taxes paid, net of refunds28 million USD (17) (3) (61) (43) 239 UNITS 2018 2019 2020 2021 2022 BUSINESS ETHICS AND ANTI-CORRUPTION Matters received count 92 93 87 80 89 Questions count 54 63 63 53 47 Allegations of Code violations count 38 30 24 27 42 Unsubstantiated count 17 14 17 14 22 Substantiated count 16 16 6 9 14 Remained open at year end count 5 0 1 4 6 Percent of employees who signed Code of Conduct percent 97% 98% 93% 93% 96% Percent of employees who received mandatory training percent 8% 100% 100% 100% 100% Number of employees who received optional training courses count 250 300 425 684 700 CATEGORIES FOR ALLEGATIONS AND QUESTIONS Accounting, auditing, and financial reporting percent 3 0 0 0 1 Business integrity percent 67 85 78 93 63 HR, diversity, and workplace respect percent 70 65 63 63 36 Environment, health, and safety percent 9 1 14 3 0 Misuse, misappropriation of corporate asset percent 5 4 4 4 0 24 2020, 2021 and 2022 hours reflect COVID-19–related restrictions. 25 Includes only income and property tax. Excludes sales taxes (goods and services tax (GST), harmonized sales tax (HST), Québec sales tax (QST)). 26 NOVA Chemicals is committed to transparency and responsible tax payments. We are guided by tax principles that follow the intent of the law in our tax calculations and payments. Since 2018, revenues have
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d sales tax (HST), Québec sales tax (QST)). 26 NOVA Chemicals is committed to transparency and responsible tax payments. We are guided by tax principles that follow the intent of the law in our tax calculations and payments. Since 2018, revenues have increased, most notably in 2021 when NOVA realized record profits. In 2018, 2019, 2020 and 2021 we received refunds in excess of taxes paid. In 2017 and 2018, tax losses were created as a result of unfavorable litigation. The losses were carried back and applied against taxable income in prior years to recover cash tax previously paid. The refunds were received in 2018 through 2021. In 2019, our income tax rate decreased because the Alberta Job Creation Tax Cut bill came into effect reducing the income tax rate for Alberta-based business to incentivize job creation. In 2022 income taxes were paid with respect to the record earnings achieved in 2021. 27 We received tax refunds from tax authorities/ governments after their assessment of our tax obligations. 28 This figure is our taxes paid minus tax refunds. In 2018, 2019, 2020, and 2021 the refunds exceeded the taxes we paid. However, in February 2022, we paid $230 million to Canadian taxation authorities for income taxes payable on 2021 earnings. NOVA Chemicals was not required to pay cash tax installments in 2021 and, as a result, the full balance of tax associated with earnings in 2021 was due in February 2022. 79 <79 END>
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<START 80> Appendix Material Topic Boundaries We report on the topics that are most relevant to our stakeholders and can impact the success of our business. We determined our material topics, and their boundaries, during our biannual materiality assessment in 2022. For the purposes of GRI reporting, the topics covered under our Priority and Foundational Topics are considered material topics. SUPPLIERS/ CONTRACTORS NOVA CHEMICALS FACILITIES AND LOCATIONS CUSTOMERS COMMUNITIES SOCIETAL INTEREST Plastic circular economy l l l Climate care l l l l l Inclusion and diversity l Ethics l l l Water l l l Air emissions l l l Process safety l l l Employee and contractor safety l l Responsible supply chain l l Talent management l l l This report has been prepared with reference to the GRI Standards. This section contains additional disclosures to fulfill GRI and other requirements, which are not addressed elsewhere in this report. For more information on the GRI standards please visit the GRI website. 80 <80 END>
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<START 81> Engagement with Interested Parties Our continued success depends on understanding and respecting the needs and concerns of interested parties at every stage of our operations. We consider interested parties to be people or groups who are directly or indirectly affected by our operations, those who perceive themselves to be affected by a decision or activity, and those who have the ability to influence outcomes. The table below illustrates the range of interested parties with whom we interact, the concerns they have raised, and how we engage with them. INTERESTED PARTIES TOPICS AND CONCERNS HOW WE ENGAGE Communities and Indigenous Communities • Public safety • Environmental and social impacts • Employment • Noise, light, and traffic • Support for community programs • Cumulative effects of production • Plastics sustainability • Callout system • Conversations • Community advisory panels • Neighbor events/open houses • Volunteer activities • Newsletters • Website community information • Responsible Care verification Employees • Fair total compensation • Safe work environment • Career development • Work/life balance • Impact of employee work on society • Environmental and social impacts • Newsletters • Employee sessions • Quality conversations • Engagement surveys • Intranet and direct emails • Volunteer opportunities Customers • Cost • Quality • On-time delivery • Mutual development benefits • Safety • Lifecycle of products • Plastic sustainability • Greenhouse gas (GHG) emissions • Direct engagement (meetings and events) • Joint development programs • Collaboration • Product information • Training/technical support • Innovation • Conferences Suppliers • Stability • Growth plans • Fair treatment • Mutual development benefits • Meetings • Joint development programs • Training • Technical support Owner • Return on investment • ESG performance • Strong governance and succession • Strategic planning • Board meetings • Board visits • Regular correspondence • Reports Governments/Regulators
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s • Joint development programs • Training • Technical support Owner • Return on investment • ESG performance • Strong governance and succession • Strategic planning • Board meetings • Board visits • Regular correspondence • Reports Governments/Regulators • Impact to communities • Corporate responsibility • Investment • Compliance requirements • Taxes • Climate change and plastic pollution • Reporting • Periodic conversations • Policy advocacy Providers of Capital • Long-term success • Return on investment • Cash generation/interest payments • GHG emissions • Conference calls • Reporting • Conversations Industry Associations • Advocacy for industry • Industry association meetings • Conferences • Industry surveys 81 <81 END>
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<START 82> GRI Index GRI 1: FOUNDATION 2021 Statement of use NOVA Chemicals has reported the information cited in this GRI content index for the period January 1, 2022 to December 31, 2022 with reference to the GRI Standards. GRI 1 used GRI 1: Foundation 2021 GRI 2: GENERAL DISCLOSURES 2021 DISCLOSURE LOCATION PAGE NUMBER 2-1 Organizational details About NOVA Chemicals 7 2-2 Entities included in the organization’s sustainability reporting About this Report 9 2-3 Reporting period, frequency and contact point About this Report, Advisory 10, 93 2-4 Restatements of information Performance Table 76 2-5 External assurance Assurance Statement 10 2-6 Activities, value chain and other business relationships Responsible Supply Chain 69-72 2-7 Employees How We Create Value, Performance Table 13, 76 2-8 Workers who are not employees Performance Table 76 2-9 Governance structure and composition ESG Governance, Corporate Governance 60, 62 2-10 Nomination and selection of the highest governance body Corporate Governance 60 2-11 Chair of the highest governance body Corporate Governance 60 2-12 Role of the highest governance body in overseeing the management of impacts ESG Governance 62 2-13 Delegation of responsibility for managing impacts ESG Governance 62 2-14 Role of the highest governance body in sustainability reporting ESG Governance 62 2-15 Conflicts of interest Ethics 67-68 2-16 Communication of critical concerns Ethics, Performance Table 67-68, 76 2-17 Collective knowledge of the highest governance body ESG Governance, Corporate Governance 60-63 2-19 Remuneration policies ESG Governance, Corporate Governance 60, 62 2-22 Statement on sustainable development strategy CEO Message, Introducing Our New Corporate Strategy 3-5 2-23 Policy commitments Corporate Governance, Ethics 60, 64-65, 67-68 2-24 Embedding policy commitments Corporate Governance, Ethics, Responsible Supply Chain, Performance Table 60, 64-65, 67-68, 70, 76 2-25 Processes to remediate negative impacts Responsible Supply Chain 70-72
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Corporate Governance, Ethics 60, 64-65, 67-68 2-24 Embedding policy commitments Corporate Governance, Ethics, Responsible Supply Chain, Performance Table 60, 64-65, 67-68, 70, 76 2-25 Processes to remediate negative impacts Responsible Supply Chain 70-72 2-26 Mechanisms for seeking advice and raising concerns Ethics 67-68 2-27 Compliance with laws and regulations Performance Table 76 2-28 Membership associations Plastic Circular Economy, Public Policy 15-16, 19, 75 2-29 Approach to stakeholder engagement Community and Indigenous Relations, Responsible Supply Chain, Appendix 56, 71, 75 2-30 Collective bargaining agreements Performance Table 76 82 <82 END>
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<START 83> GRI 3: MATERIAL TOPICS 2021 DISCLOSURE LOCATION PAGE NUMBER 3-1 Process to determine material topics ESG Governance, Appendix 62-63, 80 3-2 List of material topics ESG Governance, Appendix 64-65, 80 GRI TOPIC STANDARDS DISCLOSURE LOCATION PAGE NUMBER PLASTIC CIRCULAR ECONOMY 3-3 Management of material topic Plastic Circular Economy 16 CLIMATE CARE 3-3 Management of material topic Climate Care 25 305-1 Direct (Scope 1) GHG emissions Climate Care, Performance Table 26-27, 76 305-2 Energy indirect (Scope 2) GHG emissions Climate Care, Performance Table 26-27, 76 305-3 Other indirect (Scope 3) GHG emissions Climate Care, Performance Table 26-27, 76 305-4 GHG emissions intensity Climate Care, Performance Table 26-27, 76 305-5 Reduction of GHG emissions Climate Care 22, 23, 25 AIR EMISSIONS 3-3 Management of material topic Air Emissions 28-29 305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions Air, Performance Table 28-29, 76 WASTE 3-3 Management of material topic Waste 30-31 306-1 Waste generation and significant waste-related impacts Waste 30-31 306-2 Management of significant waste-related impacts Waste 30-31 306-3 Waste generated Waste, Performance Table 30-31, 76 306-4 Waste diverted from disposal Waste, Performance Table 30-31, 76 306-5Waste directed to disposal Waste, Performance Table 30-31, 76 WATER 3-3 Management of material topic Water 32-33 303-1 Interactions with water as a shared resource Water 32-33 303-2 Management of water discharge-related impacts Water 32-33 303-3 Water withdrawal Performance Table 32-33, 76 303-4 Water discharge Performance Table 32-33, 76 83 <83 END>
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<START 84> GRI TOPIC STANDARDS CONTINUED DISCLOSURE LOCATION PAGE NUMBER INCLUSION AND DIVERSITY 3-3 Management of material topic Inclusion and Diversity 36 405-1 Diversity of governance bodies and employees Performance Table 76 401-3 Parental leave Inclusion and Diversity 37 TALENT MANAGEMENT 3-3 Management of material topic Talent Management 39 401-1 New employee hires and employee turnover Performance Table 76 P404-2 programs for upgrading employee skills and transition assistance programs Talent Management 39-40 EMPLOYEE HEALTH AND WELLNESS 3-3 Management of material topic Employee Health and Wellness 41 403-6 Promotion of worker health Employee Health and Wellness 41-42 EMPLOYEE AND CONTRACTOR SAFETY 3-3 Management of material topic Employee and Contractor Safety 43-44 403-1 Occupational health and safety management system Employee and Contractor Safety, Employee Health and Wellness, Process Safety, ESG Integration 41-44, 47-48, 64 403-3 Occupational health services Corporate Governance 41-42, 64, 66 403-9 Work-related injuries Employee and Contractor Safety, Performance Table 43-45, 76 PROCESS SAFETY 3-3 Management of material topic Process Safety 47 403-2 Hazard identification, risk assessment, and incident investigation Process Safety 47-48 PRODUCT SAFETY 3-3 Management of material topic Product Safety 50-51 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships Product Safety 50-52 416-1 Assessment of the health and safety impacts of product and service categories Performance Table 76 416-2 Incidents of non-compliance concerning the health and safety impacts of products and services Performance Table 76 417-1 Requirements for product and service information and labeling Performance Table 76 84 <84 END>
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<START 85> GRI TOPIC STANDARDS CONTINUED DISCLOSURE LOCATION PAGE NUMBER TRANSPORTATION SAFETY 3-3 Management of material topic Transportation Safety 53-54 COMMUNITY AND INDIGENOUS RELATIONS 3-3 Management of material topic Community and Indigenous Relations 56-58 CORPORATE GOVERNANCE 3-3 Management of material topic Corporate Governance 60 ETHICS 3-3 Management of material topic Ethics 67-68 205-2 Communication and training about anti-corruption policies and procedures Ethics 67-69 205-3 Confirmed incidents of corruption and actions taken Ethics 67-69 RESPONSIBLE SUPPLY CHAIN 3-3 Management of material topic Responsible Supply Chain 70-72 CYBERSECURITY 3-3 Management of material topic Cybersecurity 73-74 PUBLIC POLICY 3-3 Management of material topic Public Policy 75 85 <85 END>
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<START 86> SASB Index Below are the quantitative metrics and references to qualitative descriptions in this report that align with the Sustainability Accounting Standards Board (SASB) standard for the Chemicals industry. The Sustainability Accounting Standards Board is a non-profit organization with the goal of enabling businesses around the world to identify, manage, and communicate financially material sustainability information to their investors. SASB REF SASB SUGGESTED DISCLOSURES 2022 DATA GHG EMISSIONS RT-CH-110a.1 Gross global Scope 1 emissions 3,729 kilotonnes RT-CH-110a.1 Percentage of Scope 1 emissions covered under emissions-limiting regulations 80 RT-CH-110a.2 Discussion of long-term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets pages 22-27 AIR QUALITY RT-CH-110a.3 NOx (excluding N2O) 4,790 tonnes RT-CH-110a.3 SOx 470 tonnes RT-CH-110a.3 Volatile organic compounds (VOCs) 1,010 tonnes RT-CH-110a.3 Hazardous air pollutants (HAPs) 65 tonnes ENERGY MANAGEMENT RT-CH-130a.1 Total energy consumed 100.41 million GJ RT-CH-130a.1 Total purchased electricity 5.55 million GJ RT-CH-130a.1 Percentage renewable electricity purchased 0 RT-CH-130a.1 Self-generated electricity 0 million GJ WATER MANAGEMENT RT-CH-140a.1 Total water withdrawn 36,300 thousand m3 RT-CH-140a.1 Total water consumed RT-CH-140a.1 Percentage water withdrawn in regions with High or Extremely High Baseline Water Stress 37 RT-CH-140a.1 Percentage water consumed in regions with High or Extremely High Baseline Water Stress RT-CH-140a.2 Number of incidents of non-compliance associated with water quality permits, standards, and regulations 0 RT-CH-140a.3 Description of water management risks and discussion of strategies and practices to mitigate those risks pages 32-33 HAZARDOUS WASTE MANAGEMENT RT-CH-150a.1 Amount of hazardous waste generated 95,840 tonnes RT-CH-150a.1 Percentage hazardous waste recycled 0 COMMUNITY RELATIONS RT-CH-210a.1
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ks and discussion of strategies and practices to mitigate those risks pages 32-33 HAZARDOUS WASTE MANAGEMENT RT-CH-150a.1 Amount of hazardous waste generated 95,840 tonnes RT-CH-150a.1 Percentage hazardous waste recycled 0 COMMUNITY RELATIONS RT-CH-210a.1 Discussion of engagement processes to manage risks and opportunities associated with community interests pages 56-58, 81 WORKFORCE HEALTH & SAFETY RT-CH-320a.1 Total recordable incident rate (TRIR) (incidents per 200,000 hours worked) 0.23 RT-CH-320a.1 Fatalities 0 RT-CH-320a.1 Near misses (total not rate) 926 RT-CH-320a.2 Description of efforts to assess, monitor, and reduce exposure of employees and contract workers to long-term (chronic) health risks pages 41-49 86 <86 END>
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<START 87> SASB REF SASB SUGGESTED DISCLOSURES 2022 DATA PRODUCT DESIGN FOR USE-PHASE EFFICIENCY RT-CH-410a.1 Revenue from products designed for use-phase resource efficiency Not reported SAFETY & ENVIRONMENTAL STEWARDSHIP OF CHEMICALS RT-CH-410b.1 Percentage of revenue from products that contain Globally Harmonized System of Classification and Labeling of Chemicals (GHS) Category 1 and 2 Health and Environmental Hazardous Substances 6 RT-CH-410b.1 Percentage of GHS 1 and 2 products that have undergone a hazard assessment 100 RT-CH-410b.2 Discussion of strategy to (1) manage chemicals of concern and (2) develop alternatives with reduced human and/or environmental impact pages 50-55 GENETICALLY MODIFIED ORGANISMS RT-CH-410c.1 Percentage of products by revenue that contain genetically modified organisms (GMOs) Not applicable MANAGEMENT OF THE LEGAL & REGULATORY ENVIRONMENT RT-CH-530a.1 Discussion of corporate positions related to government regulations and/or policy proposals that address environmental and social factors affecting the industry page 75 OPERATIONAL SAFETY, EMERGENCY PREPAREDNESS & RESPONSE RT-CH-540a.1 Process Safety Incidents Count (PSIC), Tier 1 0 incidents RT-CH-540a.1 Process Safety Incidents Count (PSIC), Tier 2 7 incidents RT-CH-540a.1 Process Safety Total Incident Rate (PSTIR) (incidents per 200,000 hours worked) 0 RT-CH-540a.1 Process Safety Incident Severity Rate (PSISR) (severity-weighted rate of incidents per 200,000 hours worked) 0 RT-CH-540a.2 Number of transport incidents 25 incidents SDG Index GOALS RELEVANT REPORT SECTION SDG 3 Good Health and Well Being • Employee and Contractor Safety • Employee Health and Wellness • Air Emissions • Waste SDG 5 Gender Equality • Inclusion and Diversity SDG 6 Clean Water and Sanitation • Waste • Water SDG 8 Decent Work and Economic Growth • Talent Management • Inclusion and Diversity SDG 9 Industry, Innovation, and Infrastructure • Plastic Circular Economy GOALS RELEVANT REPORT SECTION SDG 12 Responsible Consumption and Production
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ion • Waste • Water SDG 8 Decent Work and Economic Growth • Talent Management • Inclusion and Diversity SDG 9 Industry, Innovation, and Infrastructure • Plastic Circular Economy GOALS RELEVANT REPORT SECTION SDG 12 Responsible Consumption and Production • Plastic Circular Economy • Climate Care • Waste • Water SDG 13 Climate Action • Climate Care • Air Emissions SDG 14 Life Below Water • Plastic Circular Economy SDG 15 Life on Land • Climate Care • Waste SDG 16 Peace, Justice, and Strong Institutions • Ethics 87 <87 END>
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<START 88> TCFD Index a) Describe the board’s oversight of climate-related risks and opportunities. • ESG Governance b) Describe management’s role in assessing and managing climate-related risks and opportunities. • ESG Governance STRATEGY a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. • Introducing our New Corporate Strategy • Climate-related risks and opportunities The following tables provide more details on our priority transition and physical risks and opportunities. Table 1: Transition Risks RISK CATEGORY29 DESCRIPTION TIME FRAME Policy/Legal Increased stringency of climate-related regulations in Canada and the U.S. M, L Policy/Legal Increased policy-driven limitations on plastic usage and/or single-use plastics. S, M, L Policy/Legal/Market/ Reputation Increased climate-related demands, disputes, and litigation in various jurisdictions across the U.S. and Canada. M, L Market Decreased demand for energy-intensive and/or fossil fuel- related products due to a shift in consumer preferences towards low-emissions products. M, L Market Reduced market availability/supply of fossil fuel-based feedstock at the current price. M, L Technology Increased need to develop and/or implement low-emissions technologies. S, M Reputation Increased use of climate performance metrics by lenders and insurance providers. S, M, L S = Short-term (5 years), M = Medium-term (2030), L = Long-term (2050) Policy/legal, market, technology or reputational risks that result from regulatory, legal and societal change related to the transition to a low carbon economy (Source: TCFD Disclosures 2022 Status Report) Table 2: Transition Opportunities OPPORTUNITY CATEGORY29 DESCRIPTION TIME FRAME Products & Services Increased demand for low-carbon, circular, or sustainability- linked products. S, M, L Products & Services Increased availability and access to climate finance (e.g., green bonds/loans) S, M, L Resource Efficiency/ Energy Source
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FRAME Products & Services Increased demand for low-carbon, circular, or sustainability- linked products. S, M, L Products & Services Increased availability and access to climate finance (e.g., green bonds/loans) S, M, L Resource Efficiency/ Energy Source Increased economic and operational feasibility of resource- efficient technologies. M, L Energy Source Increased adoption and use of renewable energies. S, M, L S = Short-term (5 years), M = Medium-term (2030), L = Long-term (2050) Resource efficiency, product- and service-related and energy source-related opportunities that result from regulatory, legal, and societal change related to the transition to a low carbon economy (Source: TCFD Disclosures 2022 Status Report) Table 3: Physical Risks RISK CATEGORY29 DESCRIPTION TIME FRAME Acute Increased intensity and frequency of heat waves. M, L Acute Increased frequency and size of uncontrolled and destructive wildfires. M, L Acute Increased frequency and severity of floods caused by extreme rainfall. M, L Acute Increased intensity and frequency of windstorms. M, L Chronic Increased water stress due to long-term changes in rainfall patters. S, M, L Chronic Increasing mean temperature M, L S = Short-term (5 years), M = Medium-term (2030), L = Long-term (2050) The risk of financial losses caused by extreme weather events (acute) or longer-term shifts in climate patterns (chronic) (Source: TCFD Disclosures 2022 Status Report) 29 Climate-related risk categorization as per the Recommendations of the Task Force on Climate-related Financial Disclosures, 2017 88 <88 END>
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<START 89> Climate Scenario Description Our climate scenario analysis incorporates a range of business considerations based on third-party scenarios and their corresponding implications for NOVA Chemicals' operational and non-operational assets as well as our supply chain for the time periods of 2030 and 2050. Table 4: Climate Scenario Description CLIMATE SCENARIOS PHYSICAL RISK SCENARIO ANALYSIS TRANSITION RISK SCENARIO ANALYSIS Aggressive Mitigation An Aggressive Mitigation scenario assumes little to no change in physical climate risk. 2050 Temperature Outcome: 1.8°C Scenario Data: S&P Global, IHS Markit Green Rules; Green Scenario - Circular Plastics Service, Chemical Market Analytics by OPIS, A Dow Jones Company Description: The revolutionary transformation toward a sustainable, low-carbon economy is driven by a strong public and political ambition to reach Paris Agreement-aligned climate targets. This leads to aggressive regulations limiting the extraction and use of fossil fuels. Middle-of-the-road 2050 Temperature Outcome: 1.7-3.2°C 2050 Temperature Outcome: 2.4°C Scenario Data: IPCC SSP2-4.5/RCP4.5 Scenario Data: S&P Global, IHS Markit Inflections; Base Scenario - Circular Plastics Service, Chemical Market Analytics by OPIS, A Dow Jones Company Description: Global and national institutions work slowly towards achieving sustainable development goals. There remain challenges to mitigation and adaptation due to ongoing environmental and societal vulnerabilities. Description: Decarbonization efforts vary across the world, but a long-term energy transition is set in motion. There is periodic wavering on climate commitments from government, markets, and society. Limited Climate Action 2050 Temperature Outcome: ~4°C A limited climate action scenario assumes little to no transition risk. Scenario Data: IPCC SSP5-8.5/RCP8.5 Description: GHG emissions are curbed based on existing policies and commitments. There is continued use of fossil fuels and energy-intensive activities,
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limate action scenario assumes little to no transition risk. Scenario Data: IPCC SSP5-8.5/RCP8.5 Description: GHG emissions are curbed based on existing policies and commitments. There is continued use of fossil fuels and energy-intensive activities, high challenges to mitigation, and low challenges to adaptation. Scenario Analysis Results: Transition Risks The results of the scenario analysis indicate that NOVA Chemicals is well positioned to manage the evaluated climate-related transition risks. Our 2030 Strategy positions us to address the changing consumer demands and continue to serve traditional customer demand, while our roadmap to reduce CO2 emissions enables us to lessen our compliance obligations (Table 5). b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. Table 5: Transition Risk Scenario Analysis Results INCREASED STRINGENCY OF EMISSIONS- RELATED REGULATIONS IN CANADA AND THE U.S. DECREASED DEMAND FOR ENERGY- INTENSIVE AND/OR FOSSIL FUEL-RELATED PRODUCTS DUE TO A SHIFT IN CONSUMER PREFERENCES TOWARDS LOW-EMISSIONS PRODUCTS Risk Type: Policy and Legal Risk Type: Markets Context: NOVA Chemicals operates in jurisdictions that regulate or have proposed to regulate GHG emissions. Jurisdictions may increase the stringency of regulations (e.g., Alberta Technology Innovation and Emissions Reduction regulation, Ontario Emissions Performance Standards regulation) for GHG emissions in Canada and the U.S. through mechanisms such as increasing carbon pricing, implementing a cap-and-trade system or carbon border adjustments. Context: Climate change is a consumer concern and is leading to brand owner commitments to reduce fossil-based plastics. Consumers are consciously choosing brands that have environmentally sustainable
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p-and-trade system or carbon border adjustments. Context: Climate change is a consumer concern and is leading to brand owner commitments to reduce fossil-based plastics. Consumers are consciously choosing brands that have environmentally sustainable practices or values. In addition, the attention to plastics is increasing with rapid development in plastics policies related to plastic waste. This may lead to a shift in consumer preferences towards low-emissions products and reduced demand for fossil-based plastic products. Impact: Increased capital investment in emission reduction technologies and operating expenditures. Impact: Decreased revenues and negative brand image. Time Horizon: Medium- and long-term Time Horizon: Medium- and long-term Potential Magnitude of Impact: High Potential Magnitude of Impact: Low to medium Risk Mitigation: NOVA Chemicals has envisioned a strategic roadmap to help us achieve our 2030 strategic ambitions including the reduction of Scope 1 and 2 CO2e emissions under operational control by 30% by 2030 from our 2020 baseline. We have established and begun initiatives to decarbonize our assets in order to achieve our ambitions. Risk Mitigation: Our corporate strategy and planned expansion of our rPE and sustainably-linked product line position us well to support the shift in consumer preferences by driving the transition to a low emission, circular economy of plastics, with 30% of polyethylene sales volume from recycled content by 2030. We have established and begun initiatives to expand our sustainable product line and will continue to monitor and mitigate this risk over time. 89 <89 END>
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<START 90> Scenario Analysis Results: Physical Risks Select NOVA Chemicals-owned assets are currently exposed to water stress and windstorms. These hazard exposures are managed through the implementation of mitigation strategies such as Emergency Response Plans and water collection and treatment facilities. The physical risk exposure analysis identified that the current exposure of NOVA Chemicals-owned assets is not projected to increase for water stress or windstorms (Table 6). However, the analysis identified that water stress is projected to increase for select supply chain assets. Further analysis is required to better understand and take appropriate action on the associated potential risks. Table 6: Physical Risk Scenario Analysis Results INCREASED INTENSITY AND FREQUENCY OF WINDSTORMS INCREASED WATER STRESS Risk Type: Acute Risk Type: Chronic Context: The Atlantic hurricane season averages 14 named storms, seven hurricanes, and three major hurricanes. Windstorms could cause wind damage, storm surges, floods, power outages, and petrochemical plant damage with flaring and pollution to the air. Context: Petrochemical processes rely on the availability of water for cooling and steam production, and water shortages may have financial implications for the company due to operating outages and delays. Impact: Increased operational disruptions, insurance premiums and capital costs, and frequency or severity of supply chain disruptions. Impact: Decreased production and productivity; increased frequency of supply chain disruptions. Time Horizon: Medium- and long-term Time Horizon: Medium- and long-term Potential Magnitude of Impact: Low Potential Magnitude of Impact: Low Risk Mitigation: NOVA Chemicals continuously monitors government weather alerts and has established Emergency Response Plans to reduce the potential impact of severe weather events including windstorms. Risk Mitigation: NOVA Chemicals mitigates the risk of water license exceedances by collecting and treating
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nment weather alerts and has established Emergency Response Plans to reduce the potential impact of severe weather events including windstorms. Risk Mitigation: NOVA Chemicals mitigates the risk of water license exceedances by collecting and treating rain or stormwater at its manufacturing sites. RISK MANAGEMENT a) Describe the organization’s processes for identifying and assessing climate-related risks. • Risk Management • Climate-related risks and opportunities Our ERM program includes a process to identify all significant risks to our organization, including climate-related risks. Our approach includes: 1. Risk and opportunity identification: Our Risk Coach Network includes representatives from all business units. The network meets regularly and is responsible for continually reassessing identified significant risks and opportunities and identifying emerging risks and opportunities. The Executive Committee determines whether risks are included in our enterprise risk register. The ARCC is informed of any new or material changes to risks being managed or any changes in risk assessment. Risk and opportunity identification of climate-related transition risks: Transition risks and opportunities are identified as a part of the annual ERM risk assessment. As governments adjust regulations and their positions to align with more ambitious global decarbonization goals, we continue to monitor regulatory changes periodically. Identified risks are periodically communicated to the Risk Coach Network, Executive Committee, and the Board, to enable the consideration of identified risks in strategic and financial planning. Risk identification of climate-related physical risks: Physical risks are identified as a part of the annual ERM risk assessment. We have included physical risks, such as Canadian storm events, U.S. hurricane events, and other operational hazards in our enterprise risk register and continue to monitor changes. We also communicate
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fied as a part of the annual ERM risk assessment. We have included physical risks, such as Canadian storm events, U.S. hurricane events, and other operational hazards in our enterprise risk register and continue to monitor changes. We also communicate potential key physical risks to our senior leaders to increase awareness. We furthermore subscribe to a weather service that provides site-specific advance notifications and forecasts for tropical storms and hurricanes for our Geismar, Louisiana, facility. 90 <90 END>
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<START 91> 2. Risk and opportunity evaluation: When evaluating and assessing risks and opportunities, we consider multiple criteria, including the likelihood of occurrence and the severity and nature of a potential impact. For instance, the impact of risks can be social (impacting people), environmental (impacting air, land, water, or biodiversity), financial, or reputational. All risks are assigned an inherent level of risk (risk without mitigation) and a residual level of risk (risk remaining after accounting for current mitigation activities and insurance recoveries). The assessment of our risks is mapped in our risk matrix (formatted as a heat map) and tracked in our risk register. Climate-related risks that could have a material impact on business operations, financial condition, and company reputation are considered in our strategic and financial planning. b) Describe the organization’s processes for managing climate-related risks. Our risk management process follows a “three lines of defense” model. Our first line of defense is the “owner” of the risk, or the business unit most likely to be impacted by a risk, who is responsible for mitigating it. Our second line of defense is our Risk Coach Network, which is responsible for continually reassessing identified significant risks and identifying emerging risks. The risk coach network is guided by risk tolerance levels that are defined by the Executive Committee and reviewed by the Board. The third line of defense is our internal audit process, which verifies that risks are being managed. c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management. Our process for identifying, assessing, and managing climate-related risks is completely integrated with, and not separate from, our ERM program. The Executive Committee is responsible for the integration of risks into our strategy and policies. METRICS AND TARGETS
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or identifying, assessing, and managing climate-related risks is completely integrated with, and not separate from, our ERM program. The Executive Committee is responsible for the integration of risks into our strategy and policies. METRICS AND TARGETS a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. The following metrics allow us to understand and manage our exposure to climate- related physical risks and transition risks: • Absolute GHG and other pollutant emissions • GHG intensity • Scope 1 emissions under carbon-limiting regulations • Regulatory/permit exceedances • Energy use • Waste • Water withdrawal and discharge b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks. • Performance Tables The vast majority of our GHG emissions (~99 percent) are CO2 from combustion, with the remainder composed of methane and nitrous oxide. c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. • Introducing our New Corporate Strategy • Climate Care • Circular Economy 91 <91 END>
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<START 92> Cautionary Statement Regarding Forward Looking Information Materials in this report may contain forward-looking statements with respect to NOVA Chemicals Corporation, alone or together with its subsidiaries and affiliates (“NOVA Chemicals”). By its nature, forward-looking information requires NOVA Chemicals to make assumptions and is subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions and projections that constitute forward-looking information will not prove to be accurate, that NOVA Chemicals’ assumptions may not be correct and that actual results may vary from the forward looking information. NOVA Chemicals cautions readers of this report not to place undue reliance on its forward looking information as a number of factors could cause actual results, conditions, actions or events to differ materially from the ambitions, targets, expectations, estimates or intentions expressed in the forward-looking information. Forward-looking information gives NOVA Chemicals’ expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can often identify forward looking statements by words such as “believe,” “expect,” “plan,” “intend,” “estimate,” or “anticipate” and similar expressions, as well as future or conditional verbs such as “will,” “should,” “would,” and “could” in connection with a discussion of future operating or financial performance. In particular, forward-looking information includes statements relating to future actions, ambitions, prospective products or product development, future performance or results of current and anticipated products, sales efforts, expenses, targeted cost savings, business strategies (including the NOVA 2030 strategy), and financial results. With respect to forward-looking information, NOVA Chemicals makes assumptions regarding,
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of current and anticipated products, sales efforts, expenses, targeted cost savings, business strategies (including the NOVA 2030 strategy), and financial results. With respect to forward-looking information, NOVA Chemicals makes assumptions regarding, among other things: future oil, natural gas, natural gas liquids and benzene prices; its ability to obtain raw materials; its ability to market products successfully to its anticipated customers; the impact of increasing competition; corporate tax rates; capacity additions; global GDP growth; carbon pricing; ESG regulation and its ability to obtain financing on acceptable terms. Some of NOVA Chemicals’ assumptions are based upon internal estimates and analyses of current market conditions and trends, management plans and strategies, economic conditions and other factors and are necessarily subject to risks and uncertainties inherent in projecting future conditions and results. Some of the risks that could affect NOVA Chemicals’ future results and could cause results to differ materially from those expressed in NOVA Chemicals’ forward-looking information include: commodity chemicals price levels (which depend, among other things, on supply and demand for these products, capacity utilization and substitution rates between these products and competing products); feedstock availability and prices; operating costs; terms and availability of financing; technology developments; currency exchange rate fluctuations; starting up and operating facilities using new technology; realizing synergy and cost savings targets; NOVA Chemicals’ ability to implement its business strategies; meeting time and budget targets for significant capital investments; avoiding unplanned facility shutdowns; safety, health, and environmental risks associated with the operation of chemical plants and marketing of chemical products, including transportation of these products; public perception of chemicals
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investments; avoiding unplanned facility shutdowns; safety, health, and environmental risks associated with the operation of chemical plants and marketing of chemical products, including transportation of these products; public perception of chemicals and chemical end-use products; the impact of competition; changes in customer demand; changes in, or the introduction of new laws and regulations relating to NOVA Chemicals’ business, including environmental, competition and employment laws; loss of the services of any of NOVA Chemicals’ executive officers; uncertainties associated with the North American, South American, European, and Asian economies; terrorists attacks; severe weather events; and other risks detailed from time to time in the publicly filed disclosure documents and securities commission reports of NOVA Chemicals. NOVA Chemicals’ forward-looking information contained within this report is expressly qualified in its entirety by this cautionary statement and except as required by applicable law, NOVA Chemicals undertakes no obligation to update publicly its forward-looking information to reflect new information, subsequent events or otherwise. 92 <92 END>
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<START 93> Advisory The information contained herein is provided for general reference purposes only. By providing the information contained herein, NOVA Chemicals makes no guaranty or warranty and does not assume any liability, with respect to the accuracy or completeness of such information, or product results in any specific instance, and hereby expressly disclaims any implied warranties of merchantability or fitness for a particular purpose or any other warranties or representations whatsoever, expressed or implied. Nothing contained herein shall be construed as a license to use the products of NOVA Chemicals in any manner that would infringe any patent. Nothing herein shall be copied, reproduced, distributed or otherwise used without the express written permission of NOVA Chemicals. Trademarks • Advanced SCLAIRTECH™ is a trademark of NOVA Chemicals. • ALLIANCE TO END PLASTIC WASTE® logo is a registered service mark of Alliance to End Plastic Waste, Inc. • AMERIPEN® is a registered service mark of American Institute for Packaging and the Environment Corporation. • ASTUTE™ is a trademark of NOVA Chemicals Corporation in Canada and of NOVA Chemicals (International) S.A. elsewhere; authorized use/utilisation autorisée. • BONFIRE® is a registered service mark of NOVA Chemicals Corporation. • CANADA PLASTICS PACT™ and CCP CANADA PLASTICS PACT™ logo are service marks of The Natural Step (Canada) Inc. • CARNEGIE SCIENCE CENTER® logo is a registered service mark of Carnegie Institute. • CLOSED LOOP PARTNERS® logo is a registered service mark of Closed Loop Partners, LLC. • CONNECT The Neuroscience of Quality Conversations® is a registered service mark of NeuroLeadership Institute Inc. • CTPAT® is a registered service mark of United States Department of Homeland Security. • ECOVADIS® logo is a registered service mark of ECOVADIS SAS. • Ellevate Network® is a registered service mark of Ellevate Network LLC. • EthicsPoint®, NAVEX® and NAVEX GLOBAL® are registered trademarks of NAVEX Global, Inc.
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artment of Homeland Security. • ECOVADIS® logo is a registered service mark of ECOVADIS SAS. • Ellevate Network® is a registered service mark of Ellevate Network LLC. • EthicsPoint®, NAVEX® and NAVEX GLOBAL® are registered trademarks of NAVEX Global, Inc. • Global Compact® and UN Global Compact® logo are registered trademarks of United Nations. • GRI® is a registered trademark of Stichting Global Reporting Initiative. • ISNETWORLD® is a registered service mark of ISN Software Corporation. • ISO® is a registered service mark of International Organization for Standardization. • Let’s Talk Science® and Let's Talk Science® logo are registered service marks of Let’s Talk Science Inc. • NIST® is a registered trademark of National Institute of Standards and Technology. • NOVA Chemicals’ logo is a registered trademark of NOVA Brands Ltd.; authorized use/utilisation autorisée. • Operation Clean Sweep® is a registered service mark of Plastics Industry Association, Inc. • RC14001® is a registered certification trademark of American Chemistry Council, Inc. • Responsible Care® and Responsible Care® logo are registered trademarks of the Chemistry Industry Association of Canada. • RideTight® is a registered service mark of Virginia Sealing Products, Inc. • RiskRate®, NAVEX® and NAVEX GLOBAL® are registered trademarks of NAVEX Global, Inc. • SAP® is a registered trademark of SAP SE. • SCLAIR® and SURPASS® are registered trademarks of NOVA Chemicals Corporation in Canada and of NOVA Chemicals (International) S.A. elsewhere; authorized use/utilisation autorisée. • SUSTAINABILITY ACCOUNTING STANDARDS BOARD® and SASB® are registered trademarks of the SASB Foundation. • SYNDIGO™ and SYNDIGO™ logo are trademarks of NOVA Brands Ltd.; authorized use/utilisation autorisée. • TRANSCAER® is a registered service mark of the American Chemistry Council, Inc. • UNITED WAY® and UNITED WAY® logo are registered service marks of United Way Worldwide. 93 <93 END>
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<START 94> RESHAPING PLASTICS FOR A BETTER, MORE SUSTAINABLE WORLD. novachem.com [email protected] <94 END>
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<START 1> 1 04 1 0 8 1 1 1 1 1 9 1 2 0 1 2 1 1 2 2 Table of Contents 002 Message from the Chairperson 003 Message from the President 004 About this Report 005 ESG Performance and Highlights for 2022 006 Sustainable Development Goals and SDGs in Practice 1 Governance and Sustainability 010 1.1 Company Profile 0 1 1 1.2 Governance Framework 021 1.3 Sustainable Development and ESG Promotion 022 1.4 Risk Management 024 1.5 Information Security and Customer Privacy 027 1.6 Regulatory Compliance and Internal Control 2 Innovation Development and Quality Management 032 2.1 Business Overview 038 2.2 Product R&D and Innovation 041 2.3 Customer Demand and Quality Management 046 2.4 Sustainable Supply Chain 3 Green Production and Climate Governance 052 3.1 Climate Risk/Opportunity Assessment 054 3.2 Green Energy and Carbon Neutrality 058 3.3 Environmental Policy and Investment 062 3.4 Waste Reduction Actions 4 Human Resource Development and Friendly Workplace 072 4.1 Human Resource Management 079 4.2 Stable Partnerships 084 4.3 Employee Suitability and Diversified Development 086 4.4 Safe Workplace 5 Social Facilitation and Positive Impact 100 5.1 Cultivation of High-Tech Talents 100 5.2 Charity Activities Column - The 25th Anniversary of Taiflex and Gung Ho with Kaohsiung 8 70 30 98 50 103 102 6 Appendix 2022 Sustainability Report Appendix I: Stakeholder Identification and Communication Appendix II: Material Topics of Sustainable Development Appendix III: Comparison Table of GRI Standards Appendix IV: Comparison Table for SASB Sustainability Accounting Standards - Industrial Machinery & Goods Appendix V: Comparison Table of Sustainability Disclosure Indicators - Electronic Parts and Components Industry of the Taiwan Stock Exchange Corporation “Rules Governing the Preparation and Filing of Sustainability Reports by TWSE Listed Companies” Appendix VI: Climate-related Information of TWSE/ TPEx-listed Companies of the Taiwan Stock Exchange Corporation “Rules Governing the Preparation and Filing
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Rules Governing the Preparation and Filing of Sustainability Reports by TWSE Listed Companies” Appendix VI: Climate-related Information of TWSE/ TPEx-listed Companies of the Taiwan Stock Exchange Corporation “Rules Governing the Preparation and Filing of Sustainability Reports by TWSE Listed Companies” Appendix VII: Comparison Table of SDGs <1 END>
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<START 2> Chairperson Message from the Chairperson The past year had been full of challenges. Global economy experienced drastic fluctuations in 2022 due to multiple adverse factors including the continuous havoc of Covid-19, the Russia-Ukraine war, tightening policy of the Fed, and worldwide supply chain disruption. In a time of dire economic situation, global warming-induced extreme weather, such as record-breaking heat waves in Europe and India as well as wildfires and floods in the United States, exacerbates the situation for governments around the world and creates greater pressure on people who are already suffering from food crisis. For human survival, there is an urgent need for governments, businesses and the public to take on more aggressive measures and come up with solutions to live in harmony with nature. Consequently, various environmental protection policies have been introduced, and the public has higher expectations for environmental sustainability actions taken by companies. As a leading manufacturer of flexible printed circuit (FPC) materials, Taiflex has always considered environmental protection, social engagement and corporate governance as important foundations of our business strategy. We promote the use of renewable energy, and established Taiflex Green Power Co., Ltd. in 2021 to actively implement energy transition. We promote circular economy, establish recycling facilities for chemicals, and drive the recycling and reuse mechanisms of resource so as to prevent any waste and boost resource efficiency. In terms of social engagement, we actively participate in social welfare activities, and build diverse and inclusive management mechanisms in line with our people-oriented corporate culture. In response to the heightened interest in ESG worldwide, we established the Sustainable Development Committee in 2022 in hope to extend the depth of
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nd build diverse and inclusive management mechanisms in line with our people-oriented corporate culture. In response to the heightened interest in ESG worldwide, we established the Sustainable Development Committee in 2022 in hope to extend the depth of our overall ESG sustainable management plan. We set aggressive long and short-term goals, and oversee our senior executives to integrate sustainable development planning and concepts into our strategies for daily operation. By defining key ESG performance indicators and prompt the management team for implementation, we aim to respond to increasing risks and opportunities in the future with innovative thinking. We are celebrating our 25th anniversary in 2022. In this landmark year, we have embarked on our expansion in Thailand for future sustainable development. With advanced technology for FPC materials as well as long-term development drivers from 5G communication, metaverse and new energy vehicles, Taiflex continues to invest in the development of low carbon products and processes in flexible advanced materials, thermal management materials, and semiconductor materials. We improve the performance of materials to reduce the overall energy consumption of electronic devices. In addition, we continue to introduce smart manufacturing and improve energy efficiency in our production lines, increase the use of renewable energy, and establish Taiflex climate management initiatives to gradually drive the entire value chain toward net zero. The challenges ahead will only be more diverse and difficult. Following the founding vision and mission, we will apply our people-oriented corporate culture and mindset in strengthening our core competencies, and develop outstanding talents to practice our business philosophy and contribute to the overall environmental, social, and economic developments. <2 END>
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<START 3> President Message from the President In 2022, ongoing COVID-19 pandemic, outbreak of the Russia-Ukraine war, and rising tension between the U.S. and China led to uncertainties in the global economy and long-term negative impact. Many industries are facing operational challenges as a result of these unprecedented circumstances. We have withstood trials from the complex environmental factors despite the impact of the pandemic and market changes with efforts from all of our employees. In the year of our 25th anniversary, we expand our overseas presence by breaking ground for our Thailand plant and starting the phase II of our Rudong project. Besides advancing our core technology in the R&D of FPC materials and integration of innovative applications, we are committed to promoting the development of ESG strategy for the entire Group. In the harsh and volatile environment of 2023, end customers are increasingly scrutinizing the environmental sustainability of the supply chain. ESG is not merely a corporate obligation and responsibility. Topics of circular economy such as carbon neutrality and zero waste are crucial in the sustainable developments of enterprises. Taiflex continues to plan and build smart manufacturing technology, introduce AI and big data to RPA and S&OP applications, and implement green sustainable developments of products and production processes through the combination of digital transformation and smart technology. We aim to achieve the milestones of renewable energy, low carbon emissions, and circular economy by 2030, as well as the global vision of 100% renewable energy, carbon neutrality, and 100% circular economy by 2050. We would forge ahead with our global business partners to create infinite possibilities on the path of sustainable management. <3 END>
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<START 4> ◆ Timing and Frequency of the Report The Company issues a sustainability report every year with the same frequency as financial reports, and this is the 10th report issued by the Company. The report is also available on the corporate website at https://www.taiflex.com.tw/english/Home. Previous report: June 2022 Current report: June 2023 Next report: Scheduled to be released in June 2024 ◆ Audit and External Verification Information and data in this report are provided by departments of the head office and factories and then compiled by the sustainability report unit. Next, they are reviewed and revised by the heads of functional teams within the Sustainable Development Committee, and submitted to the President and Chairperson for review before being finalized for publication according to administrative procedures. Financial performance data are extracted from the consolidated financial statements audited by Ernst & Young. Also, the Company’s 2021 greenhouse gas (GHG) emission data are based on inventory performed pursuant to the latest version of ISO14064:2018 standard with a verification statement issued by SGS Taiwan Limited. The Company plans to acquire third-party verification or assurance for the sustainability report from 2024. ◆ Feedback Please contact us if you have any suggestions regarding this report or the Company. For more information on our sustainability efforts, please access the ESG section of our corporate website. Sustainable Development Center/TAIFLEX Scientific Co., Ltd. Address: No.1, Huanqu 3rd Rd., Qianzhen Dist., Kaohsiung City, Taiwan Telephone number: 886-7-8139989 # 72350 Email address: [email protected] Sustainable Development Section: https://www.taiflex.com.tw/english/esg_overview.html About this Report TAIFLEX Scientific Co., Ltd. (hereinafter referred to as“Taiflex”,“the Company” or“we”) has issued sustainability reports since 2014. In 2022, we summarized 12 major sustainability
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https://www.taiflex.com.tw/english/esg_overview.html About this Report TAIFLEX Scientific Co., Ltd. (hereinafter referred to as“Taiflex”,“the Company” or“we”) has issued sustainability reports since 2014. In 2022, we summarized 12 major sustainability topics through understanding the context of corporate sustainability, materiality analysis and identification of issues of concern to stakeholders as well as incorporation of opinions from external experts. The report reveals in detail Taiflex’s management approach and performance on various sustainability issues using commonly used phrases, data and description. In addition to enhancing information transparency for stakeholders, the report demonstrates our determination to implement sustainable developments. ◆ Reporting Scope and Period Information disclosed in this report covers the Company’s sustainable development performance in 2022 (January 1 to December 31, 2022), including practices and performance data in economic, governance, social and environmental aspects. Except for financial data which are extracted from the consolidated financial reports, all other data are based on Taiflex’ s operation and business in Taiwan (excluding subsidiaries). For data comprehensiveness, some of the information cover the past and future of the reporting period. ◆ Preparation Principles and Guidelines This report has been prepared in accordance with the “Rules Governing the Preparation and Filing of Sustainability Reports by TWSE Listed Companies” of the Taiwan Stock Exchange Corporation, and complies with the GRI Standards issued by the Global Reporting Initiatives (GRI) as well as the reporting principles and requirements set forth therein. We also refer to the Sustainability Accounting Standards Board (SASB), the Task force on Climate-Related Financial Disclosures (TCFD), and the Sustainable Development Goals (SDGs) of the United Nations for an enhanced disclosure on Article 4, “Sustainability Disclosure Indicators - Electronic Parts
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Standards Board (SASB), the Task force on Climate-Related Financial Disclosures (TCFD), and the Sustainable Development Goals (SDGs) of the United Nations for an enhanced disclosure on Article 4, “Sustainability Disclosure Indicators - Electronic Parts and Components Industry” and Article 4-1, “Climate-related Information” of the “Rules Governing the Preparation and Filing of Sustainability Reports by TWSE Listed Companies”. Financial performance data are calculated and expressed in New Taiwan dollars while energy saving and carbon reduction figures are expressed in International System of Units to enhance the substantiveness and comparability of the report. Information restated in comparison to the 2021 sustainability report is described in the report. <4 END>
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<START 5> ESG Performance and Highlights for 2022 Completed 2021 GHG inventory pursuant to the ISO 14064:2018 version and passed the third-party audit by an impartial institution in 2022. The Company saved a total of 5,447.63 GJ in energy consumption, a reduction of approximately 735.85 MT CO2e in 2022. The Company saved a total of NT$44,236 thousand in environmental expense with expected benefits of NT$91,199 thousand in 2022. The recycling and reuse rate of NMP solvent was 93.71% , with a total recycling volume of 306.07 MT, of which 286.82 MT was reused in the production line and 19.25 MT was recycled externally in 2022. No incident of occupational disease nor major occupational accidents or fatalities in 2022. There was no deficiency identified during external audits on occupational safety and health; however, there were 28 negative observations with an improvement rate of 100% in 2022. There were 42 volunteers in the Kaohsiung City Youth Care Association with a total spending of NT$463.86 thousand. Welfare donation amounted to NT$1,211.40 thousand in 2022. There were 5,841 participants in employee training for a total of 17,949 training hours. Training expenses amounted to NT$1,717.95 thousand. Training satisfaction rate was 80.13%. The Company ranked in the top 6% to 20% in the TWSE-listed companies category and top 5% in the “TWSE- or TPEx-listed companies with a market value between NT$5 to 10 billion” category of the 2022 (8th) Corporate Governance Evaluation of Taiwan Stock Exchange Corporate. We applied for five patents in 2022 with an accumulated number of 243 applications by 2022, of which 84% are invention patents. There are 146 patents granted. We launched 11 new products in 2022, accounting for 11.21% of annual revenue. Operating revenue totaled NT$8,722 million with an earnings per share of NT$3.35 in 2022. Information security of Taiflex Group was rated A (excellent) by the SSC, an external information security specialist.
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22, accounting for 11.21% of annual revenue. Operating revenue totaled NT$8,722 million with an earnings per share of NT$3.35 in 2022. Information security of Taiflex Group was rated A (excellent) by the SSC, an external information security specialist. The Information Security and Knowledge Management Division was established per Board approval in March 2022. We secured a customer satisfaction rate of 88.5 in 2022. E Environment Aspect S Social Aspect G Corporate Governance Aspect 5 <5 END>
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<START 6> Sustainable Development Goals and SDGs in Practice Sustainability Theme ▸Short-term (2023 - 2024) ▸▸Medium-term (2025-2027) ▸▸▸Long Term (2028~) Environmental Climate Change and Opera- tional Risk Management • Establish a mechanism to assess and promote climate risk. • Publish TCFD Report. • Complete and implement specific transition plans. • Participate in CDP (Carbon Disclosure Project). Green Energy and Carbon Neutrality • 4% reduction in GHG Category 1 emissions with 2021 being the base year. • 12% reduction in GHG Category 1 emissions with 2021 being the base year. • >27% reduction in GHG Category 1 emissions with 2021 being the base year. • Use of renewable energy accounts for 1% of total electricity consumption. • Use of renewable energy accounts for 6% of total electricity consumption. • Use of renewable energy accounts for 10% of total electricity consumption. • Cumulative installed renewable capacity of 1,657 kW by Taiflex Green Power Co., Ltd. (subsidiary). • Cumulative installed renewable capacity of 2,949 kW by Taiflex Green Power Co., Ltd. (subsidiary). • Cumulative installed renewable capacity of 3,379 kW by Taiflex Green Power Co., Ltd. (subsidiary). Waste and Air Pollution Emissions • Natural gas consumption of air pollution control equipment down 10% from 2016. • Natural gas consumption of air pollution control equipment down 20% from 2016. • Natural gas consumption of air pollution control equipment down 30% from 2016. • Emission per unit for Volatile Organic Compounds (VOCs) down 3% from the base year (2021). • Emission per unit for VOCs down 10% from the base year (2021). • Emission per unit for VOCs down 30% from the base year (2021). • VOC recovery rate >1%. • VOC recovery rate >5%. • VOC recovery rate >30%. • Overall waste recycling rate >80% by 2025. • Overall waste recycling rate >90% by 2030 with UL2799 certificate. Social Product Safety and Quality • Customer satisfaction score of at least 88 points. • Customer satisfaction score of at least 89 points.
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• Overall waste recycling rate >80% by 2025. • Overall waste recycling rate >90% by 2030 with UL2799 certificate. Social Product Safety and Quality • Customer satisfaction score of at least 88 points. • Customer satisfaction score of at least 89 points. • Customer satisfaction score of at least 90 points. • 100% compliance with hazardous substances free related regulations and customer requirements. • 100% compliance with hazardous substances free related regulations and customer requirements. • 100% compliance with hazardous substances free related regulations and customer requirements. Information Security • Transition to ISO 27001:2022 (current version: 2013). • Assign a Chief Information Security Officer and establishes an information security incident management and tracking platform. • Construct an automated information security system. • Obtained Level-A Taiwan Intellectual Property Management System (TIPS) certification in 2023. • Continuous implementation of personal information protection and management and customer information protection. • No litigation arising from customer privacy breaches and information security incidents. • No litigation arising from customer privacy breaches and information security incidents. • No litigation arising from customer privacy breaches and information security incidents. • Establish the position of Chief Information Security Officer at the level of Vice President or above. • Ongoing Electronic Laboratory Notebook (ELN). Development • Employee/engineer turnover rate <20%. • Strengthen the correlation between performance and salary compensation to provide a positive drive for talent development. • Implement talent cultivation and development and establish career development blueprints for employees. • OPR operator turnover rate <40%. • Establish the link between compensation system and sustainable performance. • Enhance employee engagement. • Annual education and training achievement rate > 80%. 6 <6 END>
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<START 7> Sustainability Theme ▸Short-term (2023 - 2024) ▸▸Medium-term (2025-2027) ▸▸▸Long Term (2028~) Development • Training course satisfaction > 80%. • Establish human rights protection policy and code. • Create a friendly workplace. • Implement the essence of Social Accountability 8000:2014 (SA 8000). Occupational Safety and Health • Major event and occupational accident (hospitalization): 0 incident. • Major event and occupational accident (hospitalization): 0 incident. • Major event and occupational accident (hospitalization): 0 incident. • Maintain 0 incident of occupational disaster from chemical exposure. • Maintain 0 incident of occupational disaster from chemical exposure. • Maintain 0 incident of occupational disaster from chemical exposure. • Disabling injuries frequency rate (FR) ≤ 1.5. • Disabling injuries frequency rate (FR) ≤ 1.2. • Disabling injuries frequency rate (FR) ≤ 0.9. • Disabling severity rate (SR) ≤ 3.6. • Disabling severity rate (SR) ≤ 3.4. • Disabling severity rate (SR) ≤ 3.2. • Voluntary participation in health promotion scheme > 40%. • Voluntary participation in health promotion scheme > 45%. • Voluntary participation in health promotion scheme > 50%. Corporate Governance Corporate Governance • Rank 6~20% in the listed companies category of Securities and Futures Institute (SFI) Corporate Governance Evaluation. • Rank in the top 5% in the listed companies category of SFI Corporate Governance Evaluation. • Rank in the top 5% in the listed companies category of SFI Corporate Governance Evaluation. • Include female director on the Board. Business Ethics • Develop comprehensive management and preventive measures. • All employees participate in the “Business Ethics” education and training. • Achieve the goal of zero complaint cases. • Director, manager and employees with zero violations of ethical principle. • Director, manager and employees with zero violations of ethical principle. • Director, manager and employees with zero violations of ethical principle.
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zero complaint cases. • Director, manager and employees with zero violations of ethical principle. • Director, manager and employees with zero violations of ethical principle. • Director, manager and employees with zero violations of ethical principle. Economic Performance • Return on equity at industry average. • Return on equity above industry average by 1~5%. • Return on equity above industry average by at least 5%. • Operating income at industry average. • Operating income above industry average by 1~5%. • Operating income above industry average by at least 5%. Innovative R&D and Patents • To obtain the Level-A TIPS certification with 2 patent applications per year. • Establish strategic intellectual property (IP) portfolio and improve the Company’s IP management system. • Integrate the development direction of R&D and IP rights in line with the Company’s operation strategy and revive corporate resources through IP strategies including technology sale/transfer and licensing. Sustainable Supply Chain Management (Including the Ban on Conflict Mi- nerals) • Carbon footprint inventory of raw material suppliers. • Promote all suppliers to sign the Supplier Social Responsibility Commitment (or provide relevant declaration documents). • Introduce the Code of Conduct - Responsible Business Alliance (RBA). • Work with supply chain partners in contributing to the society. • Organize supplier on-site audits. Social 7 <7 END>
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<START 8> 1.1 Company Profile 1.2 Governance Framework 1.3 Sustainable Development and ESG Promotion 1.4 Risk Management 1.5 Information Security and Customer Privacy 1.6 Regulatory Compliance and Internal Control <8 END>
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<START 9> 9 <9 END>
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<START 10> Paid-in capital NT$2,091.20 million Ticker number TWSE:8039 (Listed) Number of employees 856 employees (as of December 31, 2022) Products FCCL, coverlay, bonding sheet and composite materials Headquarters No.1, Huanqu 3rd Rd., Kaohsiung Cianjhen Technology Industrial Park, Cianjhen Dist., Kaohsiung City, Taiwan Location of operation Taiwan, China, Japan, the U.S. and Thailand • Received trophy from Kaohsiung Export Processing Zone Administration for participating in blood donation activities. • Ranked in the top 5% of the “Small and Mid Caps” category for the 8th Corporate Governance Evaluation. • Established Taiflex Scientific (Thailand) Co., Ltd., and held groundbreaking ceremony. • Obtained ISO27001 Information Security Management System certification for seven consecutive years. • Completed ISO 14064:2018 GHG inventory and third-party verification (Year of inventory: 2021). • Received the certificate of 2022 Enterprises Committed to Corporate Health Responsibility from the Common Health Magazine. • Received 2021 “Community Contribution Excellence Award” from Environmental Protection Bureau, Kaohsiung City Government for green space sponsorship at air quality purification zone in Kaohsiung City. • Received Badge of Accredited Healthy Workplace from Health Promotion Administration, Ministry of Health and Welfare. • Established Taiflex Green Power Co., Ltd. • Obtained ISO 50001 Energy Management System certification. • Received a certificate of the Kaohsiung City Government for supporting Mid-Autumn Festival gifts from Sheltered Workshop to help disabled friends. • Received a certificate of the Social Affairs Bureau, Kaohsiung City Government for supporting Mid- Autumn Festival gifts from disability organizations. • Established Taichem Materials Co., Ltd. • Approved by the Customs Administration, Ministry of Finance to be a Security and Safety Authorized Economic Operator (AEO). • Received Devotion to Social Welfare Award and Enterprise with Outstanding Employment
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Established Taichem Materials Co., Ltd. • Approved by the Customs Administration, Ministry of Finance to be a Security and Safety Authorized Economic Operator (AEO). • Received Devotion to Social Welfare Award and Enterprise with Outstanding Employment Relations Award from Export Processing Zone Administration, Ministry of Economic Affairs, R.O.C. (MOEA). Award and recognition ◈ Diversification In October 2020, we established Taichem Materials Co., Ltd. with the original R&D team and semiconductor professionals. This company is dedicated to the research of semiconductor and display packaging materials. In addition, in response to the global trends of carbon reduction and net-zero emission, we established Taiflex Green Power Co., Ltd. in March 2021. Besides developments in renewable energy, the new company effectively improves energy efficiency and energy-saving technologies in factories through systematic energy inventory and energy consumption analysis. In addition to the aforementioned investments, the Company establishes Kunshan Taiflex Electronic Co., Ltd., Shenzhen Taiflex Electronic Co., Ltd., Taiflex Scientific Japan Co., Ltd., Taiflex USA Corporation and Rudong Fuzhan Scientific Co., Ltd., and acquired Koatech Technology Corporation for a diverse business network. • Received the Occupational Health Promotion Certificate from Health Promotion Administration, Ministry of Health and Welfare. • Obtained ISO 45001:2018 Chinese National Standard Occupational Health and Safety Management Systems certification. • Received Devotion to Social Welfare Award and Enterprise with Outstanding Employment Relations Award from Export Processing Zone Administration, Ministry of Economic Affairs, R.O.C. (MOEA). • Established Taiflex USA Corporation. • Received Sports Corporation Certificate from Sports Administration, Ministry of Education. • Approved by the Ministry of Finance to be an AEO. • Received Devotion to Social Welfare Award from Export Processing Zone Administration, MOEA.
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Corporation. • Received Sports Corporation Certificate from Sports Administration, Ministry of Education. • Approved by the Ministry of Finance to be an AEO. • Received Devotion to Social Welfare Award from Export Processing Zone Administration, MOEA. • Ranked 31st in the CommonWealth Magazine’s Corporate Citizenship Awards - Large-Scale Enterprises. • Obtained IATF 16949 certification, a revision of ISO/TS 16949. 2022 2021 2020 2019 2018 1.1 Company Profile TAIFLEX Scientific Co., Ltd. was founded in 1997. Our vision is to become a world-class FPC material provider. Our market competitiveness lies in our core competencies of independent basic formula and precision coating process. We provide customers with the most reliable and advanced FPC materials as well as integration of innovative applications. Taiflex is now one of the top three suppliers of FPC materials in the world. ◈Company Overview Company TAIFLEX Scientific Co., Ltd. Date of incorporation August 16, 1997 Industry Electronics components industry Chairperson Ta-Wen Sun President Zong-Han Jiang Spokesperson Chi-Yuan Pan 10 <10 END>
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<START 11> Industry Associations, Other Member Associations and National or International Advocacy Organizations Position Taiwan Printed Circuit Association (TPCA) Director Taiwan Technology Industrial Park Electrical and Electronic Manufacturer’s Association Director Association of Industrial Relation of Export Processing Zone Director 1.2 Governance Framework Material Topic: Corporate Governance Main Reason Sustainable operation shall build on the basis of sound corporate governance. Taiflex is committed to protecting the interests of its shareholders and believes that transparency in operation is the key to improving corporate governance. In order to strengthen corporate governance and ensure sustainable and proper operations, the Company enhances information transparency to safeguard the rights of shareholders and stakeholders to be fully informed and participate as well as determine major corporate matters, thereby improving mutual understanding on the goals of business development for all stakeholders to be more confident in Taiflex and effectively promote the Company’s sustainable development. Policy and Strategy The Company has established the “Compensation Committee”, “Audit Committee” and “Sustainable Development Committee” under the Board of Directors for proper division of duties and responsibilities to achieve the function of supervision. The Company has established the “Code of Practice for Corporate Governance” as a guideline for corporate governance implementation, and assigned a corporate governance officer to perform relevant duties in accordance with the laws and realize the true spirit of corporate governance. Goals and Objectives Short-term goals (2023-2024): ◆ Rank 6~20% in the listed companies category of SFI Corporate Governance Evaluation. Medium-term goals (2025-2027): ◆ Rank in the top 5% in the listed companies category of SFI Corporate Governance Evaluation. ◆ Include female director on the Board. Long-term goal (2028~):
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listed companies category of SFI Corporate Governance Evaluation. Medium-term goals (2025-2027): ◆ Rank in the top 5% in the listed companies category of SFI Corporate Governance Evaluation. ◆ Include female director on the Board. Long-term goal (2028~): ◆ Rank in the top 5% in the listed companies category of SFI Corporate Governance Evaluation. Management Assessment Mechanisms ◆ Enhance Board operation through internal assessments every year and external assessments every three years. ◆ SFI’s Corporate Governance Indicators for enhancing corporate governance transparency. Performance and Adjustments The Company ranked in the top 6% to 20% in the “TWSE-listed companies” category and top 5% in the “TWSE- or TPEx-listed companies with a market value between NT$5 to 10 billion” category of the 2022 (8th) Corporate Governance Evaluation. Prevention or Remedy Measures The Audit Committee, which is composed of three Independent Directors, has been established to replace Supervisors. It strengthens its supervisory role with its independence. As for improvements on corporate governance, measures are carried out based on feedback and indicators of the corporate governance evaluation and recommendations from the regular external performance assessment. ◈Participation in industry associations Information exchange is an important driver for sustainable development of companies. Through participation in industry associations, Taiflex can further exchange resources with the industry and keep current on industry developments. By taking on relevant positions, we can contribute to the promotion of industry connections for industry prosperity. 11 <11 END>
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<START 12> Board of Directors Internal Auditing Office Chairperson Office Chairperson President President Office Strategic Planning Office Occupational Safety & Health Management Division Environmental Sustainability Division Quality Assurance Division Human Resource Services Division Research & Development Center Technology Center Supply Chain & Information Center Manufacturing Center Global Sales & Marketing Center Compensation Committee Audit Committee Sustainable Development Committee General Administrative Division Sustainable Development Center Finance & Accounting Center Management Center Legal and Intellectual Property Center Organizational Chart 1.2.1 Organization of the Board The Board of Directors is the highest governing body of TAIFLEX, consisting of nine directors (including three Independent Directors) with extensive industry experience. The Board is chaired by the Chairperson and is not a member of the management team. Lead by the Chairperson’s governance philosophy, the Board upholds the core values of “devotion, integrity, diversity, and independence” and is responsible for overseeing the Company’s regulatory compliance, financial transparency, prompt disclosure of important information, and elimination of internal corruption. ◈ Election of the Board The Company convenes shareholders’ meeting every year pursuant to relevant laws and holds regular election of directors in accordance with the Company’s “Director Election Procedures”. Director election adopts the candidate nomination system and directors elected shall serve a term of three years. As the term of the 8th Board expired on May 25, 2020, new directors shall be elected according to Article 195 of the Company Act. Therefore, the 9th Board was elected according to the Articles of Incorporation in the shareholders’ meeting on May 28, 2020. Directors of the 8th Board had all been reelected to take office immediately after the shareholders’ meeting for a term between May 28, 2020
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th Board was elected according to the Articles of Incorporation in the shareholders’ meeting on May 28, 2020. Directors of the 8th Board had all been reelected to take office immediately after the shareholders’ meeting for a term between May 28, 2020 and May 27, 2023. 12 <12 END>
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<START 13> ◈ Board Diversity In order to ensure the Board’ s governance capability, besides laws, regulations and the Articles of Incorporation, the Company has established the “Director and Supervisor Election Procedures” for director elections. The said Procedures require Board members to possess the following abilities: operational judgment, financial analysis, business management, risk management, industrial knowledge, global market perspective, leadership and decision-making. The Company also assesses the planning ability of directors, including whether they can consistently raise constructive issues to the management and other directors, whether their views are independent of other directors or management, and whether their actions and behaviors inside and outside the Board are appropriate. Please refer to the Company’s annual report for detailed information on Board members. Annual Report Board Members Note: ☆ partially competent ★ competent Title Name Gender Education and Selected Past Positions Selected Present Positions at Taiflex and Other Companies Industry Experience Professional Competence Finance Investment Information and Electronics Materials Science Law Accounting and Finance Business Management Risk Managemen Chairperson Ta-Wen Sun Male Bachelor of Business Administration, Fu Jen Catholic University Chairperson of Taiflex Scientific Co., Ltd. ☆ ★ ★ ☆ ★ ★ ★ Director of Rudong Fuzhan Scientific Co., Ltd. Chairperson of Qiao Mei Development Corporation Chairperson of You Ben Investment Co., Ltd. Chairperson of Innatech Co., Ltd. Chairperson of Taichem Materials Co., Ltd. Chairperson of Taiflex Green Power Co., Ltd. Director of Taiflex Scientific (Thailand) Co., Ltd. Director Chein- Ming Hsu Male Bachelor of Electrical Engineering, Chung Yuan Christian University Vice Chairperson of Taiflex Scientific Co., Ltd. ★ ★ ★ ★ CEO of 3M Thailand Limited Corporate Representative Director of Taichem Materials Co., Ltd. Corporate Representative Director of
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helor of Electrical Engineering, Chung Yuan Christian University Vice Chairperson of Taiflex Scientific Co., Ltd. ★ ★ ★ ★ CEO of 3M Thailand Limited Corporate Representative Director of Taichem Materials Co., Ltd. Corporate Representative Director of Taiflex Green Power Co., Ltd. 13 <13 END>
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<START 14> Board Members Title Name Gender Education and Selected Past Positions Selected Present Positions at Taiflex and Other Companies Industry Experience Professional Competence Finance Investment Information and Electronics Materials Science Law Accounting and Finance Business Management Risk Managemen Director Ching-Yi Chang Male Master of Business Administration, National Chengchi University Chairperson of the CID Group Ltd. ★ ★ ★ ★ ★ ★ ★ Chairperson of LandMark Optoelectronics Corporation Director of Entire Technology Co., Ltd. Director of Eurocharm Holdings Co., Ltd. Director Re-Zhang Lin Male Bachelor of Accounting, Soochow University Corporate Representative Director of Taiflex Scientific Co., Ltd. ★ ☆ ☆ ★ ★ ★ Chairperson of Taiwan Fu Hsing Industrial Co., Ltd. Corporate Representative Director of Fine Blanking & Tool Co., Ltd. Corporate Representative Director of Launch Technologies Co., Ltd. Corporate Representative Director of Advanced International Multitech Co., Ltd. Director Chun-Chi Lin Male EMBA, College of Management, National Taiwan University Independent Director of Silicon Optronics, Inc. ★ ★ ★ ☆ ★ ★ President of KANTO-PPC Inc. Independent Director of M31 Technology Corporation Executive Vice President of Global Unichip Corporation Chairperson of Taiwan Electron Microscope Instrument Corporation CEO of Xintec Inc. Corporate Representative Director of PentaPro Materials Inc. CEO/President of VisEra Technologies Co., Ltd Corporate Representative Director of Stek Co., Ltd. Chairperson of Chi Investment Limited Note: ☆ partially competent ★ competent 14 <14 END>
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<START 15> Board Members Note: ☆ partially competent ★ competent Title Name Gender Education and Selected Past Positions Selected Present Positions at Taiflex and Other Companies Industry Experience Professional Competence Finance Investment Information and Electronics Materials Science Law Accounting and Finance Business Management Risk Managemen Director Fu-Le Lin Male Ph.D. in Polymer Science, University of Akron, USA Senior R&D Director of Taiflex Scientific Co., Ltd. ★ ★ ★ ★ Corporate Representative Director of Koatech Technology Corporation Independent Director Wen-I Lo Male Master of Business Administration, National ChengChi University Chairperson of CSX Material Co., Ltd. ★ ★ ★ ☆ ★ ★ ★ ★ Vice President of CDIB Capital Management Corporation Independent Director of ADO Optronics Corporation President of China Venture Management, Inc. Corporate Representative Director of Gemtek Technology Co., Ltd. President of R.O.C. Strategic Company Ltd Corporate Representative Director of PCL (Hsinchu) Co., Ltd. President of R.O.C. Venture Co., Ltd. Director of Sweepot Inc. Corporate Representative Supervisor of REC Technology Corporation Chairperson of FengYi Capital Management Co., Ltd. Independent Director Shi-Chern Yen Male Ph.D. in Chemical Engineering, University of Wisconsin Independent Director of E Ink Holdings Inc. ★ ★ ★ ★ Emeritus professor and adjunct professor of Chemical Engineering, National Taiwan University 15 <15 END>
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<START 16> Board Members Title Name Gender Education and Selected Past Positions Selected Present Positions at Taiflex and Other Companies Industry Experience Professional Competence Finance Investment Information and Electronics Materials Science Law Accounting and Finance Business Management Risk Managemen Independent Directo Yung- Shun Chuang Male Honorary Doctorate, National Taiwan University of Science and Technology Chairperson of AAEON Technology Inc. ★ ★ ☆ ★ ★ Chairperson of EverFocus Electronics Corporation Chairperson of ONYX Healthcare Inc. Director of MACHVISION Inc. Director of King Core Electronics Inc. Director of CHC Healthcare Group Director of Winmate Inc. Director of XAC Automation Corp. Director of AtechOEM Inc. Director of IBASE Technology Inc. Director of Litemax Electronics Inc. Director of Allied Biotech Corporation Independent Director of Top Union Electronics Corp. Note: ☆ partially competent ★ competent 16 <16 END>
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<START 17> ◈ Board independence and recusal due to conflict of interests Independent Directors of the Company account for one-third of the total number of Directors. Upon assessment, all Directors have met the independence criteria. Circumstances set forth in Paragraphs 3 and 4, Article 26-3 of the Securities and Exchange Act do not exist, including situations where Directors are spouses or within second-degree of kinship to each other. In accordance with paragraph 1, Article 16 of the “Rules of Procedure for the Board of Directors’ Meetings”, for agenda items of which the director or the juridical person the director represents has a personal interest, the director shall disclose the major aspects of such personal interest at the current board meeting. If the interest may impair the interest of the Company, the director shall not participate and shall recuse himself/ herself from the discussion and voting of the agenda items. Such director shall not exercise voting right on behalf of another director. Directors and managers shall secure approvals from the shareholders’ meeting and the Board in accordance with applicable laws and regulations when they take actions that are within Taiflex’s business scope for themselves or on behalf of others and shall fully disclose all transactions with related parties in accordance with the reporting requirements of relevant securities laws. ◈ Tasks and proceedings of the Board Tasks of the Board include: (1) supervise and determine business directions to meet the short, medium and long-term market demand; (2) appoint a management team with good characters, honesty, and professionalism to carry out business strategies formulated by the Board in order to guarantee the Company’s business performance; and (3) lead the management team in formulating strategies favorable to the Company’s long-term developments. The Board of Directors meets regularly on a
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