Risk management policy and procedure

On April 21, 2018, the Board of Directors approved the Risk Management Policy as the highest guiding principle for the Company’s risk management to ensure the Company’s sound operation and sustainable development, and as the basis for various risk management and implementation of the Group’s headquarters and subsidiaries. The Company’s risk management policy is in accordance with some of the provisions of the Financial Supervision and Administration Commission’s Circular No. 10000621315 dated December 21, 100, amending the “Guidelines for the Establishment of Internal Control Systems by Public Companies”, formulating appropriate risk management policies and procedures, and establishing an effective risk management mechanism to assess and supervise its risk taking capacity, the current status of risks it has tolerated, and the determination of risk response strategies and compliance with risk management procedures.

Every year, at the Group Summit, the directors of each center and the general manager of each subsidiary of the Company conduct risk factor judgment, so as to identify the relevant risks that may affect the sustainable development of the company, screen out the scope of risk management, monitor potential risks and implement preventive measures, in addition to strengthening risk management, and formulate annual operation strategies as the key implementation work for the next year.

At the end of the year, the conclusions of the summit will be submitted to the CEO and the CEO for approval, and then sent to the “Investment Risk Decision Committee” for review before submitting a report to the board of directors.

Risk management scope

The Company’s risk management area analyzes various strengths and weaknesses, as well as opportunities and threats from the external environment, through the four aspects of financial aspects, customer aspects, internal process aspects and learning and growth aspects, and formulates countermeasures in each risk area. The Company’s risk management scope includes “credit risk”, “market risk”, “liquidity risk”, “operational risk”, “supply chain risk”, “financial and accounting risk” (including risks such as high-risk and highly leveraged investment, capital lending to others, endorsement guarantee and derivative commodity trading operations) and “other risks” (including information security risk). The management center and the technical research center undertake, according to the impact of each risk characteristics in each region, each subsidiary formulates countermeasures and carries out the implementation plan.

Organizational structure

The company’s risk management system is organized by the chief executive officer’s office to coordinate the annual operation, through the first stage of analysis and discussion by the directors of the three major centers of the group, and in the second stage, the heads of each subsidiary at or above the vice president level and above discussed with each other according to the characteristics of the region, and then submitted to the group’s risk management and investment decision-making committee before submitting to the board of directors of the group, the organizational chart is as follows:

風險管理與投資決策委員會

Operating

Since 2018, the Company has held a Group Summit in the fourth quarter of each year, at which senior executives such as the Chief Executive Officer, the directors of each center, the head of audit, and the general manager of the subsidiaries discussed the major risk policies and response strategies for the following year, and reported the conclusions to the Board of Directors at the end of the year. In 2020, due to the pandemic, the event was held online, but it was also possible to discuss all risk issues in a more immediate manner.

At the end of 2022, due to the gradual easing of the epidemic situation and the lifting of epidemic prevention and control measures in various countries around the world, the company resumed physical meetings, and held the first phase of the summit review meeting by the directors and audit directors of the three major centers from September 27 to 28, 2023 to formulate the SWOT of the company as a whole in 2023, and held the second phase of the discussion meeting in Wuxi Sanneng subsidiary in mainland China from October 16 to 18, with the three center directors, audit supervisors, The deputy general manager or above of each subsidiary discusses the risk policy and response strategy, and summarizes the risk assessment issues one by one through the cross-impact analysis of the SWOT internal organization and the external environment, and analyzes the level of “incidence P” (1~3) and “impact I” (1~3) by analyzing the “incidence rate” (1~3 level), when the multiplier of the two exceeds 6, it is defined as having a high risk, so it is necessary to formulate countermeasures and set strategic measurement objectives, and generate a “risk assessment countermeasure table”. Then, based on the risk assessment countermeasure table generated, the key indicators and action plan for 2024 will be formulated. Finally, it will be confirmed by the CEO and implemented by Buda as the basis for the operating strategy and key work plan of the Group and its subsidiaries in 2024. It will be submitted to the Board of Directors of the Group after the meeting of the Group’s Investment Risk Decision Committee.

Reduction target:

1. Greenhouse gases: Reduce greenhouse gas emissions by 6% in 2027 compared to the base year (FY2022)

2. Water consumption: 2% reduction in water consumption in 2027 compared to the base year (2022)

3. Waste: 2% reduction in total weight of waste in 2027 compared to the base year (FY2022)

Promotion measures:

1. Greenhouse gases:

Due to global warming, the greenhouse effect has had an impact on all mankind, Sanneng Group takes the mission of “driving the safety, environmental protection, energy conservation and carbon reduction of food utensils”, comprehensively reviews the raw material supply chain, high-efficiency product design, and production process, follows the net-zero emission timeline declared by various countries, and follows the net-zero emission path and strategy announced by the government.

At the beginning of 2024, it is expected to install solar power panels with an annual power generation capacity of about 1.2 million kWh on the roof of Wuxi Sanneng’s own plant, and simultaneously evaluate the feasibility of installing solar power panels on the roof of Taiwan’s Sanneng’s own plant, and gradually replace equipment with higher energy consumption through energy management methods.

In addition, the carbon reduction effects brought by the company’s corporate products or services to customers or consumers are as follows:

(1) Product packaging and packaging materials: Use recycled materials, rationalize packaging, and reduce the burden of disposal on customers and consumers.

(2) R&D of energy-saving products: Provide low-energy consumption products, reduce energy consumption for customers, and achieve carbon reduction effects for customers or consumers.

(3) Promote non-stick treatment business, and use customers’ old baking utensils after environmentally friendly non-weight treatment technology, reflecting the spirit of circular economy.

It can save customers the cost of re-purchasing new products and reduce the carbon emissions caused by the use of raw materials.

2. Water Consumption:

(1) Update pure water equipment, improve water use efficiency, and reduce tap water consumption.

(2) Water recycling and reuse: Treating wastewater into reusable water resources and reducing the need for tap water.

(3) Promote water conservation: effective conservation of water use through the promotion of water-saving appliances, facilities, technologies and behavioural changes.

3. Waste:

(1) Waste sorting and recycling, promoting recycling and reuse, and reducing the impact of waste on the environment.

(2) Reduce unnecessary packaging and develop recyclable or reusable packaging materials.

(3) Strengthen education and publicity to raise awareness and awareness of waste management and reduction, and promote waste reduction.

Achievement: Greenhouse gas, water consumption and waste reduction targets were set for the first time this year, and the achievement status of each year will be reviewed in subsequent years.

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