About the Report This Sustainability Report (“SR2021”) marks the third consecutive year of sustainability reporting by NIPSEA Group, covering the sustainability performance of our operations spanning 22 geographical locations we operate in, for the financial year of 1st January to 31st December 2021. This year, we have expanded our reporting scope to include 9 additional entities – 5 of which fall under the Europe Group. SR2021 articulates NIPSEA Group’s strategies, performances and initiatives with regard to Environmental, Social and Governance (“ESG”) issues that are identified to be the most relevant and critical to our operations and valued stakeholders. All data and information disclosed in this report are in relation to all of the Group’s entities across the 22 geographical locations unless stated otherwise. Due to changes in methodologies and assumptions for certain topics, there are some restatements made in this report. GRI Standards The report has been prepared in accordance with the Global Reporting Initiative Sustainability Reporting Standards (“GRI Standards”), which provides a systematic framework for organisations to disclose their economic, environmental, and social performance and impacts. We have also updated our sustainability disclosures and reporting line to align with the 2021 revision of GRI’s Universal Standards. Please refer to the GRI Content Index at the end of this report for additional information on the relevant topics and references. External Assurance Data and information disclosed in this report are not externally assured at this current point in time. Nonetheless, NIPSEA Group will explore options to externally assure sections of high materiality when a higher level of maturity in reporting has been established. Feedback NIPSEA Group deeply values the views of its stakeholders. We are happy to receive any suggestions on how we can improve our sustainability reporting and practices. To share your thoughts on how we can further our sustainability commitments, contact NIPSEA Group’s Sustainability Working Group at: sustainability@nipsea.com.sg. We will continue to closely monitor the management of our business activities to ensure that the Group drives long-term value creation for our business and valued stakeholders in a transparent and strategic manner. Content Chapter 1: About NIPSEA Group Pg 4A Message from the Group Chief Executive Officer Pg 62021 Highlights Pg 7 Business Legacy Pg 8Key Industries and Global Presence Chapter 2: Sustainability at NIPSEA Group Pg 12 Management Philosophy Pg 13 Materiality Matrix Pg 14 Sustainability Pillars Pg 16 Sustainability Goals and Stakeholder Engagement Chapter 3: NIPSEA Group’s Focus Pg 20 People Pg 27 Environment Pg 36 Customers Pg 40 Community Pg 52 Technical Capability Chapter 4: Appendix Pg 58 ESG Performance Data Pg 76 GRI Content Index PAINTING THE WAY FORWARD BEYOND COATINGS BEYOND ASIA 1Chapter 1 PAINTING THE WAY FORWARD BEYOND COATINGS BEYOND ASIA 32 NIPSEA LFG SUSTAINABILITY REPORT 2021 ABOUT NIPSEA GROUPA Message from the Group Chief Executive Officer, NIPSEA Group WEE SIEW KIM Group Chief Executive Officer, NIPSEA Group “We work towards our goal of strengthening these connections by harnessing our robust resources to accelerate change and devise solutions toward meeting our stakeholders’ needs.” As the world was ravaged by the pandemic over the last year, our people did their part, especially in applying our know-how to develop paint and coating solutions while extending assistance to the communities we are associated with. While the global economy slowly recovers from the aftermath of the COVID-19 pandemic, we remain committed to providing innovative solutions that cater to our customers, partners and local communities. In 2021, we extended our COVID-19 support across the region by stepping up on value-added community initiatives that have proven to bring about positive and sustainable impact. Through collaboration with local governments, business partners, and NGOs, we strived toward making a tangible social impact by ramping up our efforts to aid groups most affected by the pandemic. Our teams rallied together to contribute more than US$3.3 million in the form of financial support, provision of paint materials, and distribution of necessities to support needy communities. The migrant worker community was one of the more vulnerable groups we extended relief to during this period. Many of them had been stranded in different countries without employment for extended periods and faced tough challenges with securing safe return home, taking a toll on their mental health too. We partnered with several local charities and organisations to provide daily essentials such as food, water, masks, and hand sanitisers to support them through the pandemic. By leveraging our technical and logistical capabilities, we also reached out to hospitals and schools with our anti-viral and protective paints to provide a safe and conducive space for the more vulnerable groups. These community-focused initiatives embody our belief that the mission of maximising shareholder value (“MSV”) went hand in hand with a thriving community and environment. Long-term commitment to sustainability Our customers, communities we work with, and employees are our top priorities. At NIPSEA Group, we work towards our goal of strengthening these connections by harnessing our robust resources to meet our stakeholders’ needs. Our sustainability approach is anchored by five key pillars – People & Community, Environment, Customers, Technical Capability and Organisational Health. Even though much has changed as the economy transitions into a post-pandemic normal, we believe that our focus on the five pillars continues to be highly relevant. In the third edition of our Sustainability Report, we will demonstrate how NIPSEA Group has continued to leverage our technical capabilities, our people’s passion for sustainability, and our strategic collaborations with other organisations to drive sustainable value. For example, the “Anatolian Meetings” organised by Nippon Paint Turkey throughout the country sought to raise awareness of thermal insulation by educating key opinion leaders from public institutions, local governments, non-governmental organisations, academia, and the media. Such engagement would go a long way toward galvanising concrete climate action on accelerating the transition to a more sustainable future. Over the course of the past 2 editions of our Sustainability Report, NIPSEA Group continues to place emphasis and drive progress on the material topics that we had identified in 2020. Year-on-year we pride ourselves on exceeding customer expectations in delivering excellent functional coatings, whilst also providing a wider range of products and services catered to safeguarding customer health and well-being. This Sustainability Report not only records our achievements of the year but further emphasises our resolve to fulfil the commitments to our stakeholders and the environment in the pursuit of MSV in a meaningful way. PAINTING THE WAY FORWARD BEYOND COATINGS BEYOND ASIA 54 NIPSEA LFG SUSTAINABILITY REPORT 20212021 Highlights Business Legacy 2021 marks another year as we celebrate NIPSEA Group’s growth and achievements in delivering sustainable business value while we transition to a post-pandemic normal. Much like other companies with international operations, we have not been completely immune to supply chain disruptions caused by the COVID-19 pandemic which affects both downstream and upstream processes. However, we have observed an increasing demand for our growing category of sealants, adhesives, and fillers (“SAF”) as a result of our advancements in product and service innovation. At the same time, we ensured that our architectural, automotive, industrial, marine, and protective coatings segments remain strong. The diversification of our portfolio and increased focus on adjacent businesses is expected to contribute significantly to our revenue growth over the next few years. During this year, we have made considerable progress on the environment and social sustainability front through emphasising research and development in formulating innovative and environmentally friendly products for our consumers. Moving forward, NIPSEA Group will continue optimising its assets and resources to best serve the immediate needs of the community. Below, we share our FY2021 achievements as we continue to identify and work on key sustainability-related issues and opportunities while operating in today’s business context. NIPSEA Group was established in 1962 as a partnership between Nippon Paint – our parent company – and Wuthelam Holdings Pte Ltd. As a leading paint and coatings solutions company that serves a diverse range of sectors in Asia, we have rapidly accelerated our growth in the region through expansion into 22 geographical locations to date. In 2007, we witnessed the beginning of a new era for NIPSEA Group following our acquisition of consolidated subsidiaries across the Asia Pacific. Today, the company continues to forge ahead as the 4th largest paint and coatings solutions company in the world. Since its inception by Mr. Moteki Jujiro in 1881, Nippon Paint has grown to become Asia’s No.1 coatings manufacturer after pioneering Japan’s first paint plant. As of last year (2021), NIPSEA Group has been a wholly-owned subsidiary of Nippon Paint Holdings. PAINTING THE WAY FORWARD BEYOND COATINGS BEYOND ASIA 76 NIPSEA LFG SUSTAINABILITY REPORT 2021 * The emissions conversion factor used in FY2020 for one of the sub-entities under BETEK Turkey was amended to reflect a more reasonable representation for the emissions data. As a result, the FY2020’s Scope 1 and 2 GHG emissions should be revised to 184,038.1 tCO 2 e from 181,246.6 tCO 2 e in SR2020, while the FY2020’s emissions intensity should be revised to 41.4 kgCO 2 e/tonne from 40.6 kgCO 2 e/tonne in SR2020. Global presence across 22geographical locations 25,870employees in NIPSEA Group, an increase of more than 11% compared to 2020. 4.3 billion litres of paint produced in the year, an increase of more than 12% production volume as compared to FY2020 figure. *These economic values differ from those disclosed in SR2020 as NIPSEA Group updated its computation methodology this year as follows: Direct Economic Value Generated: Revenues = Net sales + revenues from financial investments, sales of assets & other income Economic Value Distributed = Sum (Operating costs, employee wages and benefits, payments to providers of capital, payments to government by country, community investment) Economic Value Retained = Direct Economic Value Generated - Economic Value Distributed Net Revenue = Gross sales from products and services - (returns + discounts + allowances) Business Achievements Direct Economic Value Generated (USD‘mil) Economic Value Distributed (USD‘mil) Economic Value Retained (USD‘mil) 2020 $3,311 * 2020 $501 * 2021 $5,126 2021 $487 2020 $3,812 * 2021 $5,613 Asia’s No.1 paint and coatings company (in terms of net revenue; USD’mil) Number of manufacturing facilities 2021 $5,518 2021 94 2020 83 2020 $3,736 * Sustainability Achievements EnvironmentalSocialGovernance Energy intensity decreased by 2.3%. Emissions intensity decreased by 1.9%*. >57%of senior managers hired from the local community. New hire rate of26.0%and turnover rate of18.7%. 99.4%of significant product and service categories for which health and safety impacts were assessed for improvement. No substantiated complaints concerning breaches of customer privacy and no cases of customer information leaks/thefts. Today, the NIPSEA Group is a global industry leader working towards a sustainable future through customer- centric growth. Inspired by the needs and ambitions of the people we serve, we’re coming together and leveraging our strengths to bring you Innovation with Heart, and People at our Core. At Nippon Paint, we’re Inspired by You. The NIPSEA Brand NIPSEA Group LogoBrand PersonalityBrand Tagline Our logo has evolved over the years, but it has always represented the same guiding philosophy; we always focus on innovations that put customers at our core in the geographies that we operate. This is why the red “n” in the center of our symbol represents the attention we give to our diverse customers, while the blue represents the world of opportunity. We’re open and approachable, always smiling and willing to welcome others in! We value the meaning of relationships above all else, and put in the effort to maintain them, especially the ones that have stuck with us through thick and thin. Our colleagues and partners hold us in high regard as we’re loyal and honest, striving to work towards win-win situations for everyone. Our tagline captures succinctly the NIPSEA Group brand promise in a catchy and memorable way. Use the tagline in the copywriting for various marketing and communications materials to reinforce our branding. Take inspiration from the tagline and leverage concepts of innovation, customer-centricity and quality to convey various key brand messages. Friendly, Warm and CaringKey Industries and Global Presence In 2021, we maintained focus on three core business areas to spearhead our transition toward operating in a sustainable economy spanning 22 geographical locations of operations. The identified locations are where we believe we can create the biggest impact through leveraging our capabilities in coatings solutions of over 130 years. 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. Our research and development work are rooted in in-depth market understanding to produce specialised and distinctive solutions for industrial applications. We steer industry standards in a competitive automotive segment by continually refining our Total Service Solution that balances design and performance. PAINTING THE WAY FORWARD BEYOND COATINGS BEYOND ASIA 98 NIPSEA LFG SUSTAINABILITY REPORT 2021 Transforming Spaces Reimagining Mobility Steering Innovation Plants in 22 geographical locations 94 ASIA EUROPEMIDDLE EAST * Due to its small presence, Romania is not counted as a geographical location. It accounts for 1 employee and 0 manufacturing facilities. ^Currently, there are 5 manufacturing facilities in Europe has shut down in February 2022. 0 5 Includes Czech Republic, France, Germany, Slovakia, and United Kingdom. Europe Group* 6 ^ 362 EgyptUnited Arab Emirates Turkey 6 1,724 1 65 0 8 South East AsiaSouth AsiaCentral AsiaEast Asia MyanmarIndia ThailandSri LankaKorea MalaysiaBangladeshKazakhstanChina (incl. Hong Kong and Taiwan) SingaporePakistan Indonesia Philippines Vietnam 3 6,946 1 282 3 830 7 1,055 1 258 1 276 1 369 1 157 5 1,527 52 10,263 4 1,060 1 629 1 53 No. of manufacturing facilities No. of employeesChapter 2 SUSTAINABILITY AT NIPSEA GROUP 10 NIPSEA LFG SUSTAINABILITY REPORT 2021PAINTING THE WAY FORWARD BEYOND COATINGS BEYOND ASIA 11Management Philosophy Materiality Matrix The philosophy of “Mutual Prosperity” lies at the heart of our sustainability agenda. NIPSEA Group believes that business success has to be measured by both the achievement of continued commercial viability and also the realisation of our commitments to our Planet and People. ESG considerations are deeply embedded into our business operations to ensure and safeguard continued growth for both NIPSEA Group and the environment. By drawing on the diverse competencies of our companies, we are able to maximise impact across ESG areas of material importance to us. In doing so, we are well-positioned toward achieving sustainable growth in the long run. Management Structure NIPSEA Group’s sustainability commitments are spearheaded by our Group Chief Executive Officer (“GCEO”). The Sustainability Steering Committee also oversees initiatives managed at the corporate group level. The committee comprises heads of departments from our five core business functions: Research & Development, Marketing & CSR, Human Resources, Finance and Business Excellence. These advisors provide insights on ESG strategies which ultimately influence the organisation’s efforts across 6 broad themes: (1) People, (2) Environment, (3) Customers, (4) Community, (5) Technical Capability, and (6) Organisational Health. The “High Priority” category refers to topics of utmost significance to us. Accordingly, we aspire to lead the way in effecting change regarding areas concerning these subjects, with essential targets implemented to monitor the progress of our efforts. Currently, there are 19 “High Priority” topics that the report emphasises. The “Emerging Priority” category refers to topics to be considered by NIPSEA Group in the short term as part of our commitment to fulfilling rising stakeholder expectations and changes in regulatory trends. Topics under this category can later be classified in subsequent reports as “High Priority” when they are of greater significance to us and our stakeholders. Currently, there are 5 “Emerging Priority” topics. Based on the GRI principles, all the topics have been categorised according to the Economic, Environment and Social categories. The colour legend provides a reference to the categorisation of topics according to GRI standards. Materiality Proposition A materiality prioritisation exercise was conducted in FY2020 to identify ESG topics of relevance to NIPSEA Group and our stakeholders. Doing so allowed us to narrow the scope of our sustainability strategy to areas where we can create the biggest positive impact, whilst also ensuring that the strategy reflects the changing needs of our valued stakeholders. The exercise incorporated a peer benchmarking and global trends evaluation, followed by a materiality assessment and prioritisation workshop with primary stakeholders. Through this exercise conducted in FY2020, we identified 17 “High Priority” material topics. This year, we promoted two topics – GRI 405 Diversity and Equal Opportunity and GRI 414 Supplier Social Assessment – from “Emerging Priority” to “High Priority” category. The 19 “High Priority” material topics were ultimately validated and approved by the Board. Materiality Matrix “High Priority” Material Topics Targets Mapping Peer Benchmarking Global Trends Research Materiality Prioritisation and Assessment Workshop Material Topics Strategic Objectives Strategic Analysis Stakeholder Engagement Recommendations and Roadmap PAINTING THE WAY FORWARD BEYOND COATINGS BEYOND ASIA 1312 NIPSEA LFG SUSTAINABILITY REPORT 2021 Importance to Stakeholders Significance to NIPSEA Group EconomicEnvironmentalSocial Low Low Emerging Emerging High High 1 28 7 5 9 3 4 6 16 13 15 10 20 1118 19 24 22 23 21 12 14 17 Head of Sustainability Committee Sustainability Steering Committee Sustainability Pillars GCEO People & Community Organizational Health Customers Marketing & CSR Environment Business Excellence Human Resources Finance Technical Capability R&D Ref 1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 9 High Priority Topics GRI 201 - Economic Performance GRI 202 - Market Presence GRI 203 - Indirect Economic Impacts GRI 301 - Materials GRI 302 - Energy GRI 303 - Water GRI 305 - Emissions GRI 306 - Effluents and Waste GRI 401 - Employment Assessment GRI 402 - Labour/Management GRI 403 - Occupational Health & Safety GRI 404 - Training & Education Relations GRI 413 - Local Communities GRI 416 - Customer Health & Safety GRI 417 - Marketing & Labelling GRI 418 - Customer Privacy GRI 405 - Diversity & Equal Opportunity GRI 414 - Supplier Social Assessment GRI 308 - Supplier Environmental Assessment 20 22 23 24 GRI 304 - Biodiversity GRI 408 - Child Labour GRI 409 - Forced Compulsory Labour GRI 204 - Procurement Practices RefEmerging Priority Topics 21 GRI 205 - Anti-CorruptionPAINTING THE WAY FORWARD BEYOND COATINGS BEYOND ASIA 1514 NIPSEA LFG SUSTAINABILITY REPORT 2021 Sustainability Pillars We envision the organisation’s expansion to deliver complementary services that supplement our core expertise in paints and coatings. At the moment, we leverage on technological resources of our sister companies in Japan and Australia as well as the expertise of academic institutions to create greater value for our customers. While the global economy gradually recovers from the COVID-19 pandemic, we have successfully increased the speed and degree to which we localise and adjust our capabilities to meet the requirements of conducting business in the countries we operate in. This ensures that NIPSEA Group is well-positioned to capture future growth while we continue to operate optimally and deliver the greatest positive impact possible. To broaden the technical skills of our employees within the paints and coatings ecosystem, emphasis is placed on training and skills development to ensure that high-quality products and services that meet customer requirements are continually provided. NIPSEA Group also focuses on ingraining soft skills in our people to ensure that the impact they deliver through our products and services goes beyond its functional benefits. Improving the way we interact with our customers while staying abreast of market development. We are currently in the process of exploring digitalisation tools and adopting e-commerce in our operations. NIPSEA Group’s “High Priority” topics are further categorised into business themes to effectively communicate our sustainability commitments in a manner that meets our stakeholder’s expectations. Our sustainability strategy comprises five comprehensive pillars – People & Community, Environment, Customers, Technical Capability, and Organisational Health. Through actively investing in three enablers - Digitalisation, Talent and People, and Technological Development - we are able to effectively drive innovation and operational transformation across our supply chain. At the same time, it also allows us to capture greater societal and environmental sustainability outcomes in our five pillars. NIPSEA Group‘s Sustainability Pillars Creating sustainable value for all stakeholders Digitalisation Technological Development Talent and People Organizational Health Ensuring continued economic viability Economic Performance Innovating to drive progress and betterment for society Technical Capability Customer Health and Safety Investing in the well- being of our employees, and building and enabling better communities People & Community Indirect Economic Benefits Market Presence Employment Training and Education Diversity and Equal Opportunity Occupational Health and Safety Labour / Management Relations Local Communities Prioritising the needs of our customers Customers Supplier Social Assessment Customer Privacy Marketing and Labelling Minimising our environmental footprint Environment Materials Energy Water Emissions Effluents and Waste Supplier Environmental AssessmentNext >