< Previous28 NIPSEA LFG SUSTAINABILITY REPORT 2020 We leverage global standards such as ISO 9001:2015 and ISO 14001:2015 to guide the development of our policies and processes. Additionally, in Nippon Paint China, we abide by our Green Procurement Principles that encourage the purchase of environmental-friendly raw materials, the re-use of materials, and the practice of less packaging where possible as some of the key guidelines. This includes the procurement of unpackaged raw materials and the transition to usage of reusable barrels and bags to minimise material consumption. We use Systems, Methods and Procedures (SMP) management systems to monitor our material usage efficiency – in particular tracking the usage of renewables and non-renewables. We then review our progress by comparing data collected against the organisational targets determined at the beginning of each year. We are in the midst of developing policies to incorporate material usage input from suppliers. As at FY2020, while our production processes utilise a significant proportion of non-renewable raw materials, we have increased the use of renewable raw materials by 13.2% . In FY2020, we increased the percentage use of renewable raw materials in our operational processes by 13.2% Responsible Material Use NIPSEA Group aims to increase the adoption of sustainable means to material usage in our operational processes, without compromising process efficiency. Our material usage includes renewables and non-renewables, adopting a two-pronged approach of Reduce and Replace. Materials Used By Weight (Tonnes) Renewable materials 1,931,202 Non-renewable materials 4,110,274 We look to reduce the amount of non-renewables in our manufacturing processes, where possible We leverage technological innovation to develop alternative sustainable materials or reformulate products that require a decreased amount of material input R e d u c ePAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 29 ActivitiesDescription Skills Training We provide employee skills training in the area of design innovation and energy-related procurement topics ranging from machinery, tools and production equipment to enable proactive management of energy efficiency in current processes. Maintenance and Monitoring Programmes We put in place programmes that keep track of electrical power consumed per equipment per unit of output. Management Reviews and Meetings We set up an independent Energy Management Committee to review and renew environmental work plans and targets every financial year. In addition, monthly management meetings discussing energy and emissions performances allow for quick course revisions, whenever necessary. Impact Assessments We develop assessments that identify inefficient energy users across the facility’s process chain. Depending on facility, we use Incoming Quality Control programmes to flag up such machinery or processes, and an annual capital expenditure budget is specifically set aside for capital upgrades or replacements. Clear Communication We communicate the energy conservation responsibilities of all employees, from executive to management levels, in complying with the measures and targets drafted. Energy Efficiency for Reduced Emissions Being a part of the chemicals manufacturing industry, NIPSEA Group recognises that a significant portion of our environment footprint is contributed by greenhouse gas (GHG) emissions that stem from energy use. We adopt an integrated risk and opportunity approach in rethinking and reinventing process applications that occur in our manufacturing operations to improve energy efficiency. Our actions are guided by the Green Plan, a whole-of-company movement to advance the agenda on sustainable development – Profit, People, Planet, reduce both direct and indirect energy consumption within our business value chain. To ensure that our energy conservation efforts go beyond regulatory compliance where possible, we strive to inculcate a culture of environmental responsibility at the Group through the following activities. At present, we use a combination of renewable and non-renewable sources of electric energy that include hydro turbines and solar panels, and petrol and diesel respectively to power both operations-related and non-production related activities. 30 NIPSEA LFG SUSTAINABILITY REPORT 2020 NIPSEA Group manages GHG emissions directly at the operating facilities under ISO 14001:2015 environmental management systems, where we carry out an environmental impact control check for GHG emissions at each stage of the product life cycle. We strive to reduce the amount of emissions generated where possible, such as utilising battery-operated forklifts instead of diesel. In FY2020, our Scope 1 and 2 GHG emissions totalled 181,246,560 kgCO 2 , an increase of 12.7% as compared to the FY2019 measurement, while our emissions intensity measured 40.7 kgCO 2 /tonne , a decrease of 2.91% as compared to the FY2019 measurement. In FY2020, we reduced our emissions intensity by 2.91% as compared to the FY2019 measurement. Greenhouse Gas Emissions (kgCO 2 ) Direct (Scope 1) GHG emissions 28,415,819 Energy Indirect (Scope 2) GHG emissions 152,830,741 We also manage emissions through a systematic, long-term assessment of pollutant levels through Ambient Air Quality Monitoring. Performed twice a year, we collect and measure ambient air quality, stack emissions, Volatile Organic Compounds (VOCs) level and chemicals emitted. Air pollution control devices such as wet scrubbers, dust collectors, and spray paint booths are also installed to reduce the amount of chemical pollutants released into the air. In FY2020, our total energy consumption as a Group totalled 1,152,701 GJ , an increase of 27.2% as compared to the FY2019 measurement, while our energy intensity ratio for the organisation measured 259.0 MJ/tonne , an increase of 9.6% as compared to the FY2019 measurement. This is due to a 19.6% increase in production volume as compared to the previous year. Progressively, we will expand energy consumption monitoring activities to include buildings and more types of machinery used in key manufacturing processes to develop energy efficient solutions and reduce our overall emission levels. We anticipate the use of solutions that include the increased use of greener technology, decentralised generation models, as well as optimised production processes to reduce the amount of energy consumed at present by 20-30%. Concurrently, we are also developing plans to increase the deployment of solar energy and the use of electric vehicles in our operations. PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 31 Increasing Water Positivity Reducing UsageEncouraging Reuse and Recycle Leveraging Technology We adopt technology that uses ultra-violet light and reverse osmosis to filter Effluent Treatment Plant (ETP) water to be reused. Sewage Treatment Plant (STP) water is also recycled via the same process and used for gardening purposes. Feedback System Internal communication and reporting systems are in place for employees to report any issues or suggestions for improvement. Self-Initiated Campaigns Individual organisations are encouraged to initiate self-starter water saving campaigns. Use of Management Systems and Regulations Under ISO14001:2015 and local laws such as the Sewerage and Drainage (Trade Effluent) Regulations in Singapore, we use Systems, Applications and Products (SAP) to monitor status of aspects such as machinery life cycle and water usage at consumption points across operation processes. Infrastructural areas that can improve water efficiency are identified and rectified on a priority basis. Coordination Amongst Facilities We facilitate close cooperation across different production plants to enable cross- production recycling activities. For example, the wastewater of the binder production facility can be used as the raw water for the formation of certain water-based paints. Wastewater that cannot be reused or recycled Such wastewater are disposed as industrial waste and collected by a licensed collector for further treatment in accordance with local laws. Wastewater that requires treatment before disposal Wastewater from lab basins are first treated in a dilution tank and tested by a third-party assessor, before they can be released as public sewage. Wastewater that can be disposed directly Wastewater from toilets and wash basins are linked directly to public sewage. Water is a critical raw material that supports our manufacturing processes in powering machinery as well as for general cleaning. In FY2020, our total water consumption totalled 1,349 Megalitres , a decrease of 30.3% as compared to the FY2019 measurement. We are continually looking into enhancing our water efficiency measures as part of our process optimisation and re-engineering efforts. NIPSEA Group adopts the 3Rs – Reduce, Reuse and Recycle – in the management of our water-related activities. NIPSEA Group also ensures that any wastewater that leaves our facilities is adequately treated to prevent environmental pollution to our operating surroundings. We impose checks such as soil testing around our sites to mitigate potential pollution issues that arise from water seepage. In the event of a chemical spill, spill kits and emergency response teams are readily on-hand. We specify different wastewater discharge treatment requirements at our manufacturing sites depending on the type of wastewater discharged.32 NIPSEA LFG SUSTAINABILITY REPORT 2020 Minimising Waste Discharge 1 Disposal Treatment Depending on the type of waste, different treatments are accorded. Recyclable materials such as metal and wooden pallets are reused and recycled by third-party contractors or done in-house. Other types of waste that cannot be recycled will be sent to landfills, composted or incinerated. 4 Checks and Balances Under ISO:14001 and local waste disposal laws regulation, we conduct impact assessments to identify and track sources of waste generation to put in place procedures to manage them efficiently. 2 Product Labelling We provide clear labelling on our end products that advises the proper disposal method after the product has left our premises. This is in addition to minimising waste generation throughout the product development cycle. 3 Employee Awareness We design programmes that promote a Reduce, Reuse and Recycle mindset at work to cultivate a circular mentality amongst our employees. NPSEA Group places great emphasis on waste disposal due to the scale of our production in the region and the heavy dependence on chemicals. We focus on prioritising action in four areas as part of a long-term strategy in managing hazardous and non-hazardous waste. We have monitoring processes to track our waste generation and disposal efficiency in all our manufacturing plants. A yearly review is conducted to review our progress and improve efficiency shortfalls through technology upgrades and maintenance. We track three sets of data in particular: 1. Amount of waste generated2. Efficiency rates of the treatment process3. Amount of recyclable material regenerated The effectiveness of our waste management programmes is evaluated against targets that have been determined at the beginning of the financial year. Improvement suggestions focused on changes to our processes will be implemented after a round of management meetings are called to review and conclude action plans. At present moment, Nippon Paint China accounts for approximately 30% of all waste materials generated. To manage this, we put in place an information management system that enables us to carry out environmental performance assessments and pollutant emission index forecasting to identify environmental process improvements. The system also keeps us up to date with annual pollutant discharge statistics, coupled with an automated function to calculate environmental taxes, per the latest guidelines and information released by the Chinese government. As at FY2020, we generated 22,209 tonnes of waste material , out of which 24.6% was directed from disposal for reuse, recycling or energy recovery purposes and 75.4% was directed to disposal. Waste disposal methods employed include incineration, deposit at landfill or other methods such as waste sorting, fuel blending and disposal by municipality.PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 33 Our Procurement department conducts an annual supplier evaluation exercise, including an environmental assessment, to ensure that they meet our required Standard Operating Procedures (SOPs) in managing environmental matters. In the event that suppliers are unable to pass evaluations, we provide solutions and guidance to elevate the supplier’s processes. Suppliers are also encouraged to attain additional accreditations by local advocacy groups to cover a wider range of green assessments that include water, material, and power management. In FY2020, we subjected 502 out of 760 new suppliers to environmental screening criteria . Environmentally Friendly Supply Chain Business Practices and Ethics Our standard corporate policies that focus on legal and regulatory compliance such as anti-corruption and fair competition laws Labour Practices and Human Rights Our commitment to human rights and equal opportunity in the workplace, amongst others Environmental Regulation and Protection Our commitment to protecting and preserving a healthy and sustainable planet NIPSEA Group Supplier Code of Conduct In FY2020, 66% of new suppliers were subject to screening based on environmental criteria NIPSEA Group is committed to conducting a responsible business, particularly in the way in which we uphold commitments to reach planet positivity. Our Supplier Code of Conduct ensures that our business partners uphold the same standards as we do, outlining clear business conduct expectations for new and existing suppliers. The Supplier Code of Conduct covers three main areas:34 NIPSEA LFG SUSTAINABILITY REPORT 2020 Upholding customer trust and confidence Conducting a responsible business is increasingly important to the customers we serve. At NIPSEA Group, we seek to adopt safe and ethical business practices in our operations and supply chain to offer quality products that give our customers a peace of mind. This is our way of delivering good customer experience to preserve their trust and confidence in us. CUSTOMERSPAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 35 NIPSEA Group’s culture of integrity ensures that our product offerings deliver superior customer satisfaction and experience, while minimising any unintended negative impacts as a result of its consumption. We focus on two aspects that have been identified to be material to our customers – Health and Safety, and Data Privacy, across the customer value chain to build trust when engaging with them. This has allowed us to maintain our reputation as a leading paint solutions provider for almost 60 years. Customer Trust Health and Safety Data Privacy36 NIPSEA LFG SUSTAINABILITY REPORT 2020 Customer health and safety related to product and service consumption is a top priority at NIPSEA Group. We adhere strictly to internal and external health and safety regulations and standards, as well as leverage modern technology to enhance the performance of materials that are incorporated into our products to minimise or eliminate any negative impact that stems from product consumption. Our product safety and legal compliance considerations cover all stages of a product lifecycle - from product conceptualisation where product safety is the first and foremost consideration, to product application where trainings are conducted and safety data sheets and safety labels are in place to guide end-users with the necessary knowledge to use our products. Our product and services development and manufacturing processes are guided by the following international health and safety standards - ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018. We carry out annual reviews in accordance with the standards to discuss change and improvement. Any customer feedback or issues are recorded and deliberated, with countermeasures implemented accordingly. NIPSEA Group is in the midst of devising an integrated information system that collects health and safety information from all seven operating groups across the 19 geographical locations. This is to help the organisation develop a comprehensive view and thus take on a systematic approach in addressing all aspects of health and safety across the product life cycle, barring regulatory differences in different countries. Health and safety impact assessments 7 were conducted on 10,230 significant products and services NIPSEA Group has developed a new-generation waterborne automotive refinish coating called N-MAX. It is formulated with a unique rheological technology that increases the spraying efficiency of the wet-on-wet application, thus shortening the process duration and reducing energy consumption. While N-MAX employs the use of diluents and controllers to adapt to different spraying conditions, the amount of Volatile Organic Compounds (VOCs) present in N-MAX is lower than national protection requirements, such as the latest guidelines announced by the Chinese government. This reduces the exposure of air pollutants to painters, and in turn minimises the health hazards to them. N-MAX also helps to minimise the colour differences between dry and wet films to improve the efficiency of colour matching. 7 Criteria assessed include 1) Eco-friendly product, 2) SDS compliances, 3) Local government requirements (safety & health), 4) Customer requirements (safety & health), and 5) Professional certification. Prioritising Customer Health and Safety Reducing Health Hazards and Air Pollution with New Generation Waterborne Automotive Refinish Paint At certain sites, we engage third-party labs to carry out independent tests on products to assure their safety for use. We also work closely with our retailers to maintain packaging quality to prevent any leakages or defects during the point of purchase.PAINTING THE WAY FORWARD BEYOND COATINGS. BEYOND ASIA 37 Respecting and protecting our customers’ data privacy is key to us. While NIPSEA Group collects data such as product preference to deliver better value to our customers, we take extra care to make sure that any data shared with us is protected against unauthorised or unintended use, access, or disclosure, and used in strict adherence to data protection laws across the markets that we operate in, namely Personal Data Protection Act in Singapore and Malaysia, Data Privacy Act 2012 in Philippines, and Personal Information Protection Act in Taiwan and South Korea. As added measure, we also developed the Nippon Paint Data Protection Policy that enforces strict protocol and guidelines in how we collect, use, share, and protect our customers’ personal information. In FY2020, we recorded 0 substantiated complaints concerning breaches of customer privacy 0 cases of identified leaks, thefts, or loss of customer data All information is only retained for as long as there is a business or legal need. In certain cases, we take additional precaution to encrypt and anonymise the information. If cross-border sharing of information is required, we ensure that the organisations overseas also observe similar confidentiality and data protection obligations that we adhere to. In the event of a data privacy issue, customers are immediately notified and are constantly updated on developments by our staff. We also conduct regular internal audits on the safety and security of our data information properties and systems. How do we collect the information? Subscribing to our services Registering for our product or service Signing up for our alerts or products Contacting us with a question or request for assistance Participating in a competition, lucky draw or survey Who do we share the information with? Companies in the NIPSEA Group Business partners and vendors we work with to deliver services customers have engaged to Industry regulators or other government organisations, as required by local law and regulations Financial institutions for purposes such as facilitating GIRO payments Research institutions for market analysis purposes What information do we collect? Personal information (e.g. address, telephone, number, e-mail address, etc.) Interactions with us (e.g. a note or recording of a call or e-mail to us) Information on our products or network (e.g. feedback about our products on public sites) Indication of preferences (e.g. preferences as to how a customer would like to be contacted) Information from other organisations (e.g. fraud-prevention agencies, business directories, credit reference agencies, etc.) Protecting Customer Data and PrivacyNext >