PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA NIPSEA LFG SUSTAINABILITY REPORT 2019 NIPSEA Management Company 1 Kim Seng Promenade, #10-04/05/06 Great World City East Tower Singapore 237994Chapter 1: Taking Our Legacy to New Heights About the Report 2 Contents Chapter 2: A Group of Companies United by Purpose A Message from the Group 6 Chief Executive Officer A Recap of Our 2019 8 Achievements Making an Impact in 10 Our Key Industries Creating a Sustainable 11 Future in a Measured Way Our Business Legacy 12 Our Purpose 13 Chapter 3: Our Strategy towards Sustainable Value Creation Our Approach to 16 Sustainability Management Chapter 4: NIPSEA Group’s Focus Environment 22 Customers 30 Technical Capability 34 People 37 Community 43 Chapter 5: Appendix 2019 ESG Data 52 GRI Content Index 68 NIPSEA LFG SUSTAINABILITY REPORT 2019 PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 1NIPSEA LFG SUSTAINABILITY REPORT 2019 PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 32 CHAPTER 1 ABOUT THIS REPORT Chapter 1 About the Report: Taking Our Legacy to New Heights NIPSEA Group’s sustainability performance report is not the start, but a renewed commitment to driving a more sustainable business for the long term – creating value and impact for our stakeholders in a measured and transparent way. We will align and take stock of our business activities to measure our current performance in the material areas of Environmental, Social, and Governance. The data-driven report will cover all operations of NIPSEA Group across the 18 countries where we are present in, for the financial year of 1st January to 31st December 2019. As NIPSEA Group continues on this sustainability journey, we aim to develop better reporting frameworks to capture and communicate our commitments. This sustainability report will set the stage for our organisation to look into new ways of leveraging NIPSEA’s 57 years of legacy in the paints and coating business to power change in the industry. The report has been prepared in accordance with the Global Reporting Initiative Sustainability Reporting Standards (“GRI Standards”): Core option. The GRI Standards provide the principles and disclosures required by organisations to report their economic, environmental, and social performance and impacts. NIPSEA Group applies the GRI principles in defining the report’s content and quality, as set out by the GRI Standards. Readers may refer to the full GRI Standards Index at the end of this report for an overview of the company’s approach in this regard. The data disclosed in this report is not externally assured at this time. NIPSEA Group will explore options to externally assure sections of high materiality when a higher level of maturity in reporting is established. NIPSEA Group values the opinions of its stakeholders. We welcome all suggestions and feedback on how we can better our sustainability report or sustainability practices. Please share with us how we can further our commitments by contacting NIPSEA Group’s Sustainability Working Group at sustainability@nipsea.com.sg.NIPSEA LFG SUSTAINABILITY REPORT 2019 PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 54 CHAPTER 2 ABOUT NIPSEA GROUP Chapter 2 A Group of Companies United by PurposeNIPSEA LFG SUSTAINABILITY REPORT 2019 PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 76 CHAPTER 2 ABOUT NIPSEA GROUP A Message from the Group Chief Executive Officer Investing in people and communities is the key to making a difference that matters. FY2019 was a successful year. Revenues grew by 10.7% in comparison to FY2018, and we expanded our footprint to over 18 countries and regions across Asia Pacific. Our commitment to product innovation has led us to continue to be recognised as a leading coatings partner and provider across the architectural, automotive, industrial, marine and protective coatings segments, as well as a growing sealants, adhesives, fillers (SAF) category. While this is the first year we are delivering an upgraded sustainability report, we are no strangers to the concept of sustainability. We have always believed in making a positive and tangible difference as a Group congruent to our business needs, and this report contains the many actions and initiatives we carry out to bring this commitment to life. To demonstrate our resolve to making progress in our sustainability efforts, we have from the get-go set in place appropriate targets and goals that we pledge to achieve. In this report, we have also documented our achievements and outlined a look at our sustainability journey ahead. As such, every of our action and partnership is carefully thought out and planned to mobilize our resources to catalyse real impact, requiring adept synergizing of key strengths across the Group. We adopt our business philosophy of localisation when thinking about the impact we want to make in the different regions we operate in. Going forward, we look to continuously partner up with governments, investors, local communities, amongst many others, to build this culture of collaboration. Our efforts so far have been very encouraging, and I look forward to sharing more exciting news going forward. – WEE Siew Kim Group Chief Executive Officer NIPSEA Group You will also read about how we embed sustainability into our operations and products, while working directly with underserved communities to address current and future needs, as we become more environmentally and socially responsible in our everyday work, throughout the Asia Pacific region. Entering into smart partnerships is a key approach going forward to enhance our sustainability strategy. Today, we recognise that solely engaging in corporate social responsibility is no longer enough. Creating a strong business ecosystem with sustainability as its core is not without its challenges as it requires crossing geographical boundaries and systemic changes beyond the capabilities of individual companies. NIPSEA LFG SUSTAINABILITY REPORT 2019 PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 98 CHAPTER 2 ABOUT NIPSEA GROUP A Recap of Our 2019 Achievements 2019 is a year of growth and transformation for NIPSEA Group. Collectively, we seek to expand our portfolio of expertise in two ways – build on our range of offerings through innovation to create demand and serve in new business segments; and to sustain growth through our core businesses in Consumer & Professional Services, Architectural, Industrial and Automotives by adapting to local needs and ways of value creation. Asia’s No.1 paint and coatings company (in terms of revenue) Producing 1.6 billion litres of coating annually Over 22,000 2 employees in NIPSEA Group 7 industry accolades affirming brand’s quality and trust mark received in 2019 Across 18 countries and regions Direct Economic Value Generated (USD‘mil) Economic Value Distributed (USD‘mil) Economic Value Retained 1 (USD‘mil) 2018 3,676 2019 4,068 2018 3,152 2019 3,516 2018 524 2019 552 Number of manufacturing facilities 2018 80 2019 82 Bangladesh 1 187 India 3 1,172 Hong Kong 55 Indonesia 3 6,184 China 51 8,523 UAE 12 Turkey 6 1,418 Pakistan 1 326 Sri Lanka 1 624 Myanmar 1 103 Thailand 4 1,079 Malaysia 3 1,055 Philippines 1 323 Singapore 1 259 Vietnam 3 813 Korea 1 47 Taiwan 1 159 No. of Manufacturing Facilities No. of Employees Egypt 1 59 1 Economic Value Retained refers to Profit before Tax (PBT) 2 Including Japan and IndonesiaNIPSEA LFG SUSTAINABILITY REPORT 2019 PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 1110 CHAPTER 2 ABOUT NIPSEA GROUP Creating a Sustainable Future in a Measured Way Making An Impact in Our Key Industries As we gain clarity of our sustainability journey ahead, we will keep focus on our three core business areas to lead the change. This is where we believe we can make the biggest difference, leveraging our strengths in coatings solutions of over 130 years. Automative Auto/Re-finish 17% We steer industry standards in a competitive automotive segment by continually refining our Total Service Solution that balances design and performance. Our research and development work are rooted in in-depth market understanding to produce specialised and distinctive solutions for industrial applications. Consumer & Professional Trade 75% Industrials & Trade 8% Creating and delivering sustainable value to key stakeholders is fundamental to NIPSEA Group. We want to make a lasting, positive impact, while reducing potential effects of any unintended consequences. To succeed in evolving business strategies to better develop sustainable value, a materiality assessment exercise, guided by a peer benchmarking study to understand industry best practices, was performed. This allowed NIPSEA Group to identify and prioritise GRI topics that are material to business operations, and also crucial to the needs and interests of our key stakeholders across our markets. NIPSEA Group’s Goals 2% 2% 0 health-related issues 2% 2% Reduce energy intensity (energy requirement of products) Reduce intensity of GHG emissions (Scope 1 & 2) Reduce water intensity Increase average employee training hours Improve occupational health and safety We are constantly pushing new frontiers in technological development and product innovation to deliver green and safe products for consumer homes, and high-performance, protective solutions to help cities preserve their value and identity. Reimagining Mobility: Transforming Spaces: Steering Innovation:NIPSEA LFG SUSTAINABILITY REPORT 2019 PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 1312 CHAPTER 2 ABOUT NIPSEA GROUP Established in 1962, as a partnership between Nippon Paint - our parent company, and Wuthelam Holdings Pte Ltd, we swiftly accelerated our growth in the region, expanding into Malaysia, the Philippines, and subsequently into China. In 2007, a new era began for NIPSEA Group, with our acquisition of consolidated subsidiaries across Asia Pacific to include markets such as Thailand, Taiwan, and South Korea. Nippon Paint was established in Tokyo by Mr. Moteki Jujiro in 1881 and is now the largest coatings manufacturer in Asia, since pioneering the first paint plant in Japan. NIPSEA Group is a subsidiary of Nippon Paint Holdings, with the exception of PT Nippon Paint Indonesia. Embedding sustainability into our solutions As we carry on this legacy, we recognize that we have immense opportunities to make a positive difference on our business, planet, and communities, to achieve the shared aspirations for improved lives as a society. Through active collaboration with stakeholders that include customers, partners, and even our own co-workers, we continuously build upon collective expertise toward solving the world’s pressing issues today. We also join forces with our groups of technologists, scientists, and chemists across the globe, while tapping on the extensive knowledge base of our suppliers and network of advanced educational and research institutes, to turn challenges into new solutions and approaches. By relying on our culture of entrepreneurship, we strive to create an impact on the world around us in all that we do. Our Business Legacy NIPSEA Group is guided by our mission to achieve sustainable long-term Value Creation for our stakeholders in the Paints & Coatings industry. This is embodied through our five commitments: Innovation, Service, Value-driven, Leadership, and Focus. At the core of our business is close collaboration between our employees and stakeholders across teams and geographies. We are guided by our Lean For Growth (LFG) principle comprising six core values (VITALS) that seek to nurture an organisational vitality that is purpose-driven. These six values form the foundation of our belief that real and sustainable growth comes from a collaborative mindset of Excellence and Growth opportunities for our people. Service We strive to serve the needs of customers and communities, be it in terms of product and service offerings or through investing of resources Focus We put a targeted focus on each market we operate in to build regional capacity and stimulate economic growth Leadership We are passionately committed as a market leader to deliver the best value to our stakeholders Value-driven We endeavor to achieve sustainable business impact and outcomes, to bring greater value to customers and growth for the company Vigilance Stamina NIPSEA Group’s LFG Principles Agility Leanness Insatiable Appetite Teamwork Our Purpose Innovation We aim to offer excellent technology and innovation through our products and services NIPSEA LFG SUSTAINABILITY REPORT 2019 PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 1514 CHAPTER 3 SUSTAINABILITY AT NIPSEA GROUP Chapter 3 Our Strategy towards Sustainable Value Creation Next >