Corporate Sustainability Corporate Sustainability Corporate Sustainability

CORPORATE SUSTAINABILITY

CORPORATE SUSTAINABILITY

REXON ZERO BLUEPRINT PATHWAYS
AND ACTIONS (TCFD)


Rexon's Net Zero Blueprints and Actions (TCFD) (Material Topic) _

The "Global Risk Report 2024" released by the World Economic Forum pointed out that the risk related to climate change will remain the most serious risk factor to the world in the next 10 year. This includes extreme climate, significant changes in the environmental system of the earth, reduction in the biodiversity, damage to the ecosystem, and shortage of natural resources. How to cope with the impact brought about by the climate change has become a global issue that needs to be faced together. Governments around the world have proactively established laws in recent years to strengthen the response to the climate change and set the net-zero carbon emission goals.
Taiwan amended the "Climate Change Response Act" in January 2023 to incorporate the goal of 2050 net-zero emissions in the law. Other climate-related regulations targeting the industry are expectedly enacted in the future, and these will bring both challenges and opportunities to the companies. Facing the climate-related risks and opportunities, the Company identifies and analyzes significant climate-related risks and opportunities in the value chain in line with the governance and strategies adopted to address the climate change issues. We follow up on the management implementation status by setting indicators and goals.

Climate Change Management

Material Issues

Climate Change Management (Energy Management)

Material Issues

Description of positive benefits

Climate Change Management (Energy Management)

As a part of the traditional manufacturing industry, Rexon recognizes the importance of energy efficiency. We strive to enhance product value while also improving energy usage efficiency and implementing energy conservation practices. We support energy-saving designs in our equipment and aim to enhance management capabilities through the implementation of an energy management system.
Our goal is to progressively reduce energy consumption within our facilities year by year, in alignment with our commitment to reduction of environmental impact, social responsibility, and sustainable business practices.

Material Issues

Description of negative benefits

Climate Change Management (Energy Management)

  1. Develop an energy management system to reduce energy consumption.
  2. Increase the electricity bill.
  3. Power rationing affects production.
  4. Imposition of carbon tax increases the cost.

Material Issues

Remedial mechanisms / measures

Climate Change Management (Energy Management)

Continue to implement energy saving and renewable energy utilization plans, set energy saving goals, be committed to carbon neutrality and net zero emission by 2050, and take specific actions to mitigate the negative impact of climate change.

Material Issues

Complaint / communication channels

Climate Change Management (Energy Management)

Contact person: Sustainability Office
Email: esg@rexon.com.tw

Material Issues

Policy / commitment

Climate Change Management (Energy Management)

Adopting the concept of resource sustainability, reviewing and assessing process operations and implementing a circular economy approach, establishing an energy management system.

Material Issues

Objective

Climate Change Management (Energy Management)

Be dedicated to accomplishing low-carbon, green and environment-friendly processes in the hope to promote environmental awareness and transformation in the traditional industries and achieve the goal of effective reduction of greenhouse gas emissions.

Material Issues

Responsibility

Climate Change Management (Energy Management)

Reduce energy consumption within the factory every year and lower the on the environmental impact through implementation of the energy management system and improvement of the management ability.

2023 goals

Achievement status of 2023 goals

Short-term Goals(2024~2026)

Long-term Goals(2027~2030)

2023 goals

  1. Complete power distribution regulations by the year of 2023.
  2. Reduce the energy consumption of compressed air systems by 10% by the year 2023.

Achievement status of 2023 goals

  1. Complete power distribution regulations by the year of 2023.
  2. Reduce the energy consumption of compressed air systems by 10% by the year 2023.

Short-term Goals(2024~2026)

  1. Achieve a 5% energy saving in processing and manufacturing processes by 2024.
  2. Evaluate the implementation of an intelligent energy management system, and initiate trial production by 2025.
  3. Increase the overall coverage rate of LED lighting equipment to 70% by the year 2025.
  4. Achieve a 50% replacement rate of high-energy consumption air conditioning equipment on production lines by 2025.
  5. Reduce the energy consumption of compressed air systems by 30% by the year 2025.
  6. Achieve 100% coverage of LED lighting equipment by the year 2026.

Long-term Goals(2027~2030)

  1. Implement an intelligent energy management system by the year 2028.
  2. Achieve a 50% replacement rate of high-energy consumption air conditioning equipment on production lines by 2028.
  3. Reduce the energy consumption of compressed air systems by 50% by the year 2028.
  4. Achieve a 10% energy saving in processing and manufacturing processes by 2028.
  5. Achieve 15% green energy usage across the entire factory site by 2030.
  6. Achieve a 100% replacement rate of high-energy consumption air conditioning equipment on production lines by 2035.

Material Issues

Climate Change Management (Energy Management)

Material Issues

Specific actionsin 2023

Climate Change Management (Energy Management)

  1. Establish the Energy Management Project Team.
  2. Assess and introduce an energy management system to monitor and manage energy loss.

Material Issues

Management Measurement Mechanism

Climate Change Management (Energy Management)

Set energy management KPIs and measure the effectiveness - with the baseline year as the basis and1% reduction per unit of electricity consumption as the goal.

Material Issues

Results

Climate Change Management (Energy Management)

In 2023, 604,220kW of electricity was saved, 382,566kg (382.56 tons) of carbon emissions were reduced, and annual electricity bills were reduced by NT$ $2,845,876 through replacement of old air conditioners and process equipment.

Material Issues

Climate Change Management (Greenhouse Gases)

Material Issues

Description of positive benefits

Climate Change Management (Greenhouse Gases)

When actively implementing carbon reduction measures, the Company can directly reduce the carbon footprint of products, but needs to make capital investment accordingly.
Although the ultimate goal of the citizens in the world is to achieve carbon neutrality by 2050, we should focus on the most recent decade and take actions proactively.

Material Issues

Description of negative benefits

Climate Change Management (Greenhouse Gases)

In 2023, the total greenhouse gas emissions of Rexon, as a part of the manufacturing industry, amounted to 222,212.311 metric tons of CO2e per year, contributing to climate change and impacting the local community's environment.

Material Issues

Remedial mechanisms / measures

Climate Change Management (Greenhouse Gases)

Rexon has established a complaint channel where residents from the surrounding community can express their concerns and engage in discussions with our Public Relations Department.
They can utilize various channels such as face-to-face meetings, phone calls, and emails to lodge their complaints and initiate dialogue with us.

Material Issues

Complaint / communication channels

Climate Change Management (Greenhouse Gases)

Contact person: Sustainability Office
Email: esg@rexon.com.tw

Material Issues

Policy / commitment

Climate Change Management (Greenhouse Gases)

Rexon Industrial assesses the risks and opportunities brought by the climate change, proposes countermeasures, and implement different schemes to avoid greenhouse gas emissions. We are dedicated to working with key supply chains to jointly slow down the rise of the global average temperature.
We disclose the greenhouse gas management performance, including emissions, reduction goals, and implementation status, and observe relevant regulations of the government.

Material Issues

Objective

Climate Change Management (Greenhouse Gases)

Rexon Industrial actively responds to the global carbon reduction vision and is currently implementing carbon reduction actions. As approved by the Board of Directors, the Company has established the short-term, medium-term and long-term GHG emissions goals and been committed to achieving net-zero emissions by 2050.

Material Issues

Responsibility

Climate Change Management (Greenhouse Gases)

Rexon has established a greenhouse gas inventory promotion team with the Sustainability Officer as the team leader.

2023 goals

Achievement status of 2023 goals

Short-term Goals(2024~2026)

Long-term Goals(2027~2030)

2023 goals

Supply chain emission reduction actions - Rexon spares no effort in achieving the emission reduction goals. We have worked with the supply chain to implement the emission reduction plan.
In 2023, Rexon Industrial selected 15 key suppliers to collaborate with the Industrial Technology Research Institute (ITRI) to conduct education and training through the "Carbon Reduction Workshop" under the ISO 14064-1 greenhouse gas inventory.

Achievement status of 2023 goals

  1. In 2023, Rexon Industrial and 15 key suppliers worked with the Industrial Technology Research Institute (ITRI) to complete the education and training through the "Carbon Reduction Workshop" under the ISO 14064-1 greenhouse gas inventory.

Short-term Goals(2024~2026)

  1. By July 2024, we will complete the greenhouse gas inventory and verification scope for Rexon Industrial Tucheng Plant, based on the year 2023.
  2. Subsidiary Rexon Technology is expected to complete the greenhouse gas inventory and verification for the year 2024 by December 2025.
  3. The plan is to increase the proportion of greenhouse gas inventory for transportation and product-related emissions in categories 3.1 and 4.1 at Rexon Industrial Dali Plant from 80% (baseline year) to 85% by the year 2025.
  4. Subsidiary Tongxiang Rexon Industrial aims to complete the greenhouse gas inventory and verification for the year 2025 by December 2026.
  5. Subsidiary PTS Industrial aims to complete the greenhouse gas inventory and verification for the year 2026 by December 2027.
  6. The plan is to increase the proportion of greenhouse gas inventory for transportation and product-related emissions in categories 3.1 and 4.1 at Rexon Industrial Dali Plant from 85% (baseline year) to 90% by the year 2026.

Long-term Goals(2027~2030)

  1. The plan is to increase the proportion of greenhouse gas inventory for transportation and product-related emissions in categories 3.1 and 4.1 at Rexon Industrial Dali Plant from 90% (baseline year) to 100% by the year 2027.
  2. By the year 2030, Rexon Industrial Dali Plant aims to use 15% green energy.
  3. In accordance with government policies and regulations, the plan is to achieve zero greenhouse gas emissions from all operational sites by 2050.

Material Issues

Climate Change Management (Greenhouse Gases)

Material Issues

Specific actionsin 2023

Climate Change Management (Greenhouse Gases)

A key supplier conference was held in 2023 to discuss climate actions. The Corporate Synergy Development Center was commissioned to assist 10 suppliers in conducting greenhouse gas inventory and low-carbon diagnosis in December 2023.

Material Issues

Management Measurement Mechanism

Climate Change Management (Greenhouse Gases)

Establishment of energy resource reduction goals

  • Prepare implementation budget and establish a cross-company responsible unit
  • Establish an energy resource team, implement energy resource reduction projects, and follow up on the performance periodically
  • Acquire ISO 14064, ISO 14001 and other management system certifications

Material Issues

Results

Climate Change Management (Greenhouse Gases)

  1. Successfully completed the greenhouse gas inventory according to ISO 14064-1. Obtained the verification statement to validate our efforts in these areas.
  2. The greenhouse gas emissions in 2023 increased by 3,934.006 tCO2e compared to the previous year, while the emission intensity decreased.
    6.2235 tCO2e/NT$1 million; in addition to benefitting from the increase of revenue in 2023, this was mainly due to the establishment of an energy resource team, implementation of energy resource reduction projects, and periodical follow-up on the performance, resulting in specific performance in overall carbon emissions under effective management in 2023.

CLIMATE RISK IDENTIFICATION


Identification and Governance of Climate Risks and Opportunities _

With regard to the risk management related to climate change, the Board of Directors is the highest governance body and conducts supervision. The ESG Committee subordinate to the Board of Directors is responsible for promotion under the supervision of the Board and reports to the Board on a regular basis. In 2023, the Sustainability Office took the responsibility for promotion, checked the operational aspects and issues affected by climate disasters, formulated action plans, and clarified the impact of the climate disasters on material operational aspects (such as assets and production) in accordance with the Task Force on Climate-related Financial Disclosures (TCFD). The Sustainability Office further checked the issues affected under each operational aspect and the reasons of the impact in order to reflect the impact of the climate disasters on the finance of the Company.
Rexon Sustainable Operations Committee (ESG Operations Committee) is comprised of the Corporate Governance Group, Supplier Management Group, Environmental Sustainability Group, Sustainable Product Group, Customer Service Group, and Friendly Workplace and Social Prosperity Group. The Committee is responsible for developing corporate sustainability strategies and vision. The Special Assistant to the Chairman serves as the convener and the heads of all the units serve as committee members to implement the tasks and management related to corporate social responsibility. The Committee holds meetings on a regular basis to review the goals of the sustainability management and the implementation of the policy, including the management strategies of climate change issues, sustainability action plans, and achievement status of the goals. The Committee reports to the Board of Directors every year to review the effectiveness of its operation.
The Sustainability Office is set up under the ESG Operations Committee. It is comprised of the General Administration Division and the representative of each department to facilitate the simultaneous management of the Company’s work. The Sustainability Office holds monthly ESG Committee meetings to review the progress of the work, manage sustainability KPIs, and integrate the TCFD framework. It is also responsible for the implementation of routine matters. The Sustainability Office collects and summarizes the performance of the Company for compilation and publication of the annual sustainability report.

CLIMATE CHANGE GOVERNANCE


Climate Change Governance and Management Framework _

Board of Directors

Board of Directors

  1. The Board of Directors is the highest decision-making body in the management of the Company's climate change risks. Its responsibilities include reviewing the policies and making important decisions related to climate change management, and supervising the effective operation of the management mechanism.
  2. The Board of Directors reviews the climate change risks and opportunities of the Company and incorporates them in the discussion scope of the annual budget, business plan and major capital expenditures.
Sustainability Committee

Sustainability Committee

  1. Report the assessment results and work progress of climate risks and opportunities to the Board of Directors every year;
  2. Take the responsibility for implementing the climate change management policy and major resolutions reviewed by the Board of Directors.
ESG Operations Committee

ESG Operations Committee

  1. Periodically follow up the information on the development trend of international climate change in order to improve the understanding of global risk trends and climate change among the employees;
  2. Take the responsibility for the identification and assessment of climate change risks and opportunities and periodical arrangement of climate change discussion meetings. It gathers the Risk Management Group to identify the physical risks, transition risks, and opportunities of climate change, proposes corresponding improvement measures, periodically follows up implementation status and goals, and continue to enhance the management of climate risks and opportunities.

REXON ZERO CARBON EMISSIONS BLUEPRINT


Rexon's Net-Zero Carbon Blueprint _

As climate change imposes an increasing threat to the environment, human existence, and national security, more than 130 countries are committed to achieving the net-zero emissions by 2050. This reflects a collective commitment to addressing pressing challenges and the urgent need for global cooperation to address the challenges brought about by climate change.
The net-zero blueprint strategy of Rexon comprehensively takes into account the international trends and "Taiwan's Pathway to Net-Zero Emissions in 2050 and Strategy Overview", including carbon emission inventory, clean energy utilization, and supply chain greening. We focus on setting specific and quantifiable goals and establish corresponding strategies and action plans. At the same time, we establish a monitoring and reporting mechanism, collaborate with stakeholders, make continuous improvement and learning, and achieve the net zero goal of the Company.

2023 (Low Carbon)

2030

2050 (Net Zero Emissions)

Process Improvement

Equipment replacement and automation

Inventory and hotspot analysis of high-energy-consuming equipment

High-energy-consuming equipment replacement

Intelligent energy management

Evaluation of intelligent energy monitoring system + ISO5001

Implementation of ISO5001

Establishment of an intelligent energy
monitoring system by plant area

Enhanced lean production efficiency

PDCA improvement activities to enhance production efficiency

Energy Transition

Installation of solar energy systems

Installation of solar panels on rooftops

Integration into the internal power grid

Use of renewable energy

Use of green electricity by 15% of the factories in Taiwan

Evaluation of purchasing
green energy certificates

Promotion of green energy usage
to 15% of the Group

Circular Economy

Research and Development (R&D) and innovation

25% proportion of the sustainable product revenue (Benican)

75% proportion of the sustainable product revenue

Improvement of design by switching to materials of low environmental impact and systematizing product carbon footprints

Sustainable supply chain

Establishment of a sustainable supply chain management policy

Promotion to the suppliers that account for 95% of the transaction amount in the previous year

CLIMATE CHANGE RISKS AND MANAGEMENT


Management of Climate Change Related Risks and Opportunities: _

Identification Process of Climate Change Related Risks and Opportunities

To effectively manage climate-related risks and opportunities, the external advisor convened a meeting of top executives on December 7, 2023 to discuss and assess the sources of the transformation risks (policy and law, technology, market, reputation), physical risks (acute, long-term), and opportunities (resource efficiency, energy source, product/service, market, resilience) in the TCFD, and select the items that have greater impact for further discussion of related countermeasures, risk assessment of the impact on the finance, and establishment of a management mechanism for the financial impact of the climate change risks and opportunities to improve the operational resilience of the Company.

TCFD education and training

The external advisor refers to internal and external information and list business-related climate change risk and opportunity factors.

Summarization identification results

The Sustainability Office summarizes the climate change risk and opportunity factors of each department and calculates the likelihood of occurrence and impact of climate change risks/opportunities

Establishment of response strategies

The responsible unit writes down response strategies for major climate risks and opportunities

Calculation of potential financial impact

The responsible unit calculates financial impact of risks/opportunities

Establishment of goals

The responsible unit establishes corresponding indicators and goals for evaluating the implementation status of relevant response strategies

Implementation of policies

The Sustainability Office follows up the implementation status on a regular basis. The Sustainability Committee report to the Board of Directors periodically as a reference for follow-up of performance.

Climate-related Risk

Climate-related Risk Types and Response Strategies

As for the risk, Rexon Industrial identifies the top two risks of the Company according to the risk items of policy and law, market, technology, reputation, and physical risk as well as the materiality of the risk factors. The top two risks are "change of customer behavior - needs for transformation to low-carbon products and services", "transformation to improvement and innovation of low-carbon and high-performance technologies", and "extreme temperature change."
Rexon Industrial establishes management measures based on the risk, makes an inventory of resources for the response measures, assesses the financial costs that may incur, and improve the Company's awareness of risk control.

Risk Type

Risk Category

Impact on Rexon

Expected Term

Countermeasure and Strategy

Financial Impact

Risk Type
Transformation risk
Risk Category

Change of customer behavior - needs for transformation to low-carbon products and services

Impact on Rexon
  1. Needs for transformation to low-carbon products and services
  2. Customers change their needs and request for provision of low-carbon products and services. Does the Company have the capability of product and service transformation?
Expected Term

Medium Term

Countermeasure and Strategy
  1. Utilization of green energy
  2. Investment in R&D of low-carbon technologies
Financial Impact

Increase of operating costs
Increase of capital expenditure

Risk Type
Transformation risk
Risk Category

Market risk/transformation to improvement and innovation of low-carbon and high-performance technologies

Impact on Rexon
  • Investment in research and development of new technologies and increase of the cost
  • The success/failure risk of investment in research and development of new technologies and increase/decrease of extended orders
Expected Term

Medium Term

Countermeasure and Strategy

Short-term (1-2 years): 2023-2024

  1. Market survey and assessment: Conduct market research Immediately to ensure that there is actual market demand for the research and development of low-carbon and high-performance technologies.
  2. Establishment of partnership: Seek and establish partnership to share R&D costs and technology resources.

Medium-term (3-5 years): 2025-2027

  1. External collaboration: Seek opportunities for industry-academia/industry-government collaboration. Share knowledge and resources through joint R&D or technology transfer to facilitate the steady development of the Company.
  2. Diverse product portfolio: Expand product portfolio, seek and invest in emerging technologies to diversify risks and improve the market competitiveness of the Company.

Long-term (6-8 years): 2028-2030

Sustainable development strategy: Establish long-term sustainable development strategies, including explicit environmental policies, to ensure the long-term commitment of the Company to environmental protection and sustainable development.

Financial Impact

Increase of operating costs
Increase of capital expenditure

Risk Type
Physical risk
Risk Category

Long-term/extreme temperature change

Impact on Rexon
  1. Increase of the long-term average temperature year by year
  2. Causing thermal injury or increased electricity consumption.
Expected Term

Short Term

Countermeasure and Strategy

Short-term (1-2 years): 2023-2024
Improvement of energy efficiency - medium term
Medium-term (3-5 years): 2025-2027
Continuous improvement of energy efficiency and use of energy-saving and low-carbon products.
Long-term (6-8 years): 2028-2030
Use of energy-saving and low-carbon products

Financial Impact

Increase of operating costs
Increase of capital expenditure

Climate-related Risk and Opportunity Types and Response Strategies

As for the opportunity, Rexon Industrial identifies the top two opportunities of the Company based on the opportunity items of resource efficiency, energy source, product and service, market, and resilience and the materiality of the opportunity factors. The top two opportunities are the "energy resource efficiency" and "product and service and market".
For the opportunities, Rexon Industrial assesses the solutions that can be used in the future in the hope to maximize the benefits brought by potential opportunities. We review the resources needed for implementation of the solutions, analyze the possible financial costs, and enhance the assessment of the resourced needed for the Company to implement the opportunities.

Type of Opportunity

Meaning to Rexon

Expected Term

Countermeasure and Strategy

Potential Financial Impact

Type of Opportunity
Energy resource efficiency
Meaning to Rexon

Actively respond to policies, regulations, and customers' green requirements, improve production efficiency, reduce energy resource costs, and generate environmental benefits to achieve sustainable development.

Expected Term

Medium-term and long-term

Countermeasure and Strategy

Short-term (1-2 years): 2023-2024
Prevention of leakage during the production (compressed air, cold air, etc.). Change of lamps to LEDs.

Medium-term (3-5 years): 2025-2027

  1. Introducing energy management systems, monitoring power consumption effectively, responding to abnormal power consumption quickly, adjusting the upper limit of process power consumption in low and high seasons, and implementing energy-saving measures at the factory level.
  2. Improvement of high energy consumption equipment (air conditioner, air compressor, etc.).
  3. Investment in research and development of green and low-carbon processes for both environmental protection and low energy consumption.

Long-term (6-8 years): 2028-2030
Purchase or generation of green electricity (solar energy, wind power).

Potential Financial Impact

Improvement of energy resource efficiency
Reduction of electricity costs and carbon emissions

Type of Opportunity
Product and service and market
Meaning to Rexon

Developing low-carbon products or services, entering new markets, developing new customer groups, and expanding the scope of products/services.

Expected Term

Short-term, medium-term and long-term

Countermeasure and Strategy

Short-term (1-2 years): 2023-2024
Development and use of low-carbon materials and products that have less impact on the environment.
Medium-term (3-5 years): 2025-2027


Enhancing the promotion of ESG, reducing the carbon footprint of products, and promoting the acquisition of product carbon footprint labels.
Long-term (6-8 years): 2028-2030
Continuous promotion of green energy products and winning of international design awards through development of cross-industry collaboration.

Potential Financial Impact

In line with the market trend and increase of the revenue

ENVIRONMENTAL PROTECTION


Environmental protection _

Rexon Industrial upholds the environmental policy of "energy innovation, benchmark learning, performance evaluation, quantitative review, water and electricity consumption, smart management, carbon footprint verification, and environmental sustainability" and is dedicated to establishing specific green sustainability goals. As for internal environmental management, we combine safety and health management system for risk assessment to ensure the safety and health of operation procedures and assess their impact on the environment to produce maximum risk assessment benefits. As for external environmental management, we monitor the impact of the waste generated from the production process on the environment outside the factory, realize the idea of green energy in the design at the very beginning, and make improvement step by step to reduce unnecessary waste of resources.
In the aspect of education and training, Rexon continues to promote sharing of environmental knowledge and the philosophy of sustainable culture to ensure that employees can adapt themselves to the requirements of the Company and the change of the environment. The implementation of the ISO 14001 environmental management system has a positive impact on the Company in many aspects. It not only protects the environment and reduces the cost, but also improve the image and competitiveness of the Company. Rexon upholds the spirit of ISO 14001 and continues to develop and operate the environmental management system.

Operation of the EHS Management System

Planning, implementation, checking, action cycle: Ensure the suitability, adequacy, effectiveness and completeness of the management system and continue to improve the EHS performance. System process: Ensure that the EHS management system process that the Company establishes and implements can achieve the expected results and continue to improve the performance.

Monitoring and Inventory of Energy Consumption

Rexon Industrial has monitored energy consumption within the organization since 2022. The preliminary inventory of the energy consumption in 2021 was performed. Inventory was added for Tucheng Plant in 2023 based on the boundary of inventory set for 2022. The inventory included five direct energy items of natural gas, gasoline for company cars, LPG for canteens, diesel for company and factory transportation vehicles (mobile source), and emergency diesel generators, plus an indirect energy item of purchased electricity. The total consumption in 2023 was 23,185.26GJ, an increase of 2,072.95GJ compared to 2022 primarily resulting from the increase in operating activities.

Energy Intensity

The energy sales intensity in 2023 was 3.4563 GJ/million, which was less than the 2022 value of 4.6410 GJ/million by 1.1847 GJ/million. This was mainly due to the recovery of the customer needs and the increase of the orders in the circumstance where the energy consumption remained unchanged. Rexon Industrial will take measures more actively in 2024, make comprehensive assessment, and propose action plans to further achieve the goals of environmental protection and sustainable development.
With these efforts, we demonstrate our leadership in the environmental protection and sustainable development. Rexon Industrial is dedicated to responding to the expectations of the stakeholders on environmental, social and governance issues in the global ESG trend to lay a solid foundation for the future development of the Company.

Year

2022

Item

Energy Consumption (GJ)

Percentage

Purchased Electricity

19,897.20

94.24%

Diesel Fuel (Fluctuating)

332.65

1.58%

Liquefied Petroleum Gas

0.37

0.00%

Gasoline

873.66

4.14%

Diesel Fuel (Stationary)

8.43

0.04%

Total

21,112.31

100.00%

Revenue(million NT dollars)

4,549

Energy Intensity(GJ/million of revenue)

4.6410

Year

2023

Item

Energy Consumption (GJ)

Percentage

Purchased Electricity

22,177.87

95.65%

Diesel Fuel (Fluctuating)

258.56

1.12%

Liquefied Petroleum Gas

0.35

0.00%

Gasoline

748.28

3.23%

Diesel Fuel (Stationary)

2.11

0.01%

Total

23,187.17

100.00%

Revenue(million NT dollars)

6,708

Energy Intensity(GJ/million of revenue)

3.4566

Note:

  1. The source of the coefficient for purchased electricity, gasoline, and diesel fuel is the Energy Bureau of the Ministry of Economic Affairs, Energy Product Unit Heat Value Table.
  2. The source of the coefficient for liquefied petroleum gas is the Environmental Protection Administration’s Greenhouse Gas Emission Coefficient Management Table version 6.0.4.
  3. The conversion formula for heat value is: Original Usage Amount * Unit Conversion Coefficient * Heat Value Conversion Coefficient.
  4. Only Tucheng Plant used natural gas in 2023.
Percentage of Energy Data Use in 2023

Electricity
95.65%

Gasoline 3.23%

Others

Percentage of Energy Data Use in 2023

Others

Diesel Fuel (Fluctuating) 1.12%

Diesel Fuel (Stationary) 0.01%

Liquefied Petroleum Gas 0.00%

Natural Gas 0.00%

Rexon fully understands the potential impact of the energy use and waste involved in the production process on the environment. Therefore, the Company has reserved a budget for the environmental sustainability plan since 2023, and promoted and participated in different environmental protection actions. Rexon started to implement the environmental management system in 2023 in the hope to manage resources and improve the energy saving result effectively.
We are dedicated to receive the ISO 14001 environmental management system certificate issued by SGS, a third party institution. The Company follows the management approaches set by the environmental management system and implements energy resource management accordingly, such as replacement of traditional lamps with LEDs in phases (see the table below), to demonstrate good environmental performance.

Rexon Plant April May June July August September October November December
Quantity of LEDs
in all plants
4631 4631 4631 4631 4631 4631 4701 4701 4701
Total quantity of
traditional lamps
in all plants
3155 3155 3155 3155 3155 3155 3085 3085 3085
Coverage of LEDs
in all plants

In 2023, Rexon Industrial overcame the sluggish market demand in the pandemic era. While the business volume grew steadily, we thought about how to prevent leakage and improve efficiency to reduce energy consumption. We made significant achievements in the creation of green energy.

Energy Saving Improvement Activities of the Manufacturing Department:

Field

Energy Conservation Measures

Power Saving

Cost Saving

Emission Reduction

Field

A2F

Energy Conservation Measures

Replaced 3 TECO 20ton air conditioning units to reduce energy consumption from 19.8 kWh to 17.47 kWh.

Power Saving

Reduced from 118,800 kW to 104,820 kW with an annual saving of 13,980 kW

Cost Saving

Reduced from NT$559,548 to NT$487,413 with an annual saving of electricity bills by NT$72,135

Emission Reduction

13,980 x 0.495kg = 6,920kg(6.92 tons)

Field

Plastics Department

Energy Conservation Measures

A total of 7 plastic dryer timers were repaired in 2023; drying materials overnight (10hrs) after getting off duty, which was energy consuming, was canceled; the material dryer started to dry materials automatically before the work began in the morning.

Power Saving

Reduced from 1,416,576 kW to 826,336 kW with an annual saving of 590,240 kW

Cost Saving

Reduced from NT$6,672,073 to NT$3,842,462 with an annual saving of electricity bills by NT$2,829,611

Emission Reduction

590,240 x 0.495kg = 292,169kg(292.17 tons)

Energy Saving Improvement Activities of the Factory:

The solar energy in Building E was launched in November 2023 and power generation began
- Annual power generation is 417,069.44 kW as estimated
- Annual reduction of carbon emissions (CO 2 e) 417,069.44 x 0.495kg = 206,449kg (206.45 tons) The solar energy in Building B was launched in August 2019 and power generation began
- Annual power generation is 736,984.64 kW as estimated
- Annual reduction of carbon emissions (CO 2 e) 736,984.64 x 0.495kg = 364,807kg (364.81 tons)

Climate Change Management:

According to the identification and resolution of material issues in 2023, the proportion of green power in 2030 was 15%
The solar energy in Building E; annual power generation is 471,069.44 kW as estimated
The solar energy in Building B; annual power generation is 736,984.64 kW as estimated
The average annual power consumption in the recent five years was about 8,500,000 kW; the current green power is 1,154,054 kW, accounting for about 12%. The solar energy system of the Tucheng Plant will be built in 2024 to an estimated output of 230,802.16 kW, accounting for about 14.6%.

GREENHOUSE GASES


Greenhouse Gas _

Rexon Industrial is committed to sustainable business practices and aims to contribute to the well-being of the planet. In line with the government's 2050 net-zero policy, the company proactively conducted a greenhouse gas inventory in 2021, ahead of schedule. This initiative aims to accurately understand the company's greenhouse gas emissions and embrace the DNA of continuous improvement through the PDCA cycle. Clear goals have been set in terms of pollution reduction, energy efficiency, and recyclability to enhance the company's product and manufacturing advantages. To measure progress and performance, 2021 has been established as the baseline year, and sustainable key performance indicators (KPIs) are being implemented across departments. The organizational boundary for 2023 was the headquarters building, Renhua Plant, and Tucheng Plant. The inventory adheres to the ISO 14064-1:2018 standard, covering seven greenhouse gas categories: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3), for voluntary greenhouse gas inventory. Based on the internal inventory results, the total emissions were calculated to be 100,183.763 tCO2e. This data is scheduled for third-party verification in June 2024. Comparing the results of the voluntary greenhouse gas inventory, the total emissions in 2022 amounted to 96,249.7576 tCO2e per year, while showing an increase of 3,943.006 tCO2e per year.
Company the annual greenhouse gas emission intensity, the 14.9350 tCO2e/NT$ million in 2023 was less than the 21.1584 tCO2e/NT$ million in 2022. In addition to benefiting from the increased revenue in 2023, the main reason is the establishment of the energy resource team, the promotion of energy resource reduction projects, and the follow-up actions, resulting in concrete achievements under effective management of overall carbon emissions in 2023.

Year

2022

2023

Revenue(million NT dollars)

4,549

6,708

Type

Total Emissions
(tCO2e)

Percentage
(%)

Greenhouse Gas Emissions Intensity
(tCO2e/NTD million)

Total Emissions
(tCO2e)

Percentage
(%)

Greenhouse Gas Emissions Intensity
(tCO2e/NTD million)

Direct Greenhouse Gas Emissions

Category 1(Direct Emission)

344.6211

0.36%

0.0758

426.1051

0.57%

0.0635

Indirect Greenhouse Gas Emissions

Category 2(Energy)

2,735.865

2.84%

0.6014

3,043.2969

4.07%

0.4537

Category 3(Transportation)

594.1112

0.62%

0.1306

925.9911

1.24%

0.1380

Category 4(Product Used)

92,575.1592

96.18%

20.3507

70,448.5887

94.13%

10.5022

Category 5(Use of Products)

0.0000

0.00%

0.000

0.0000

0.00%

0.000

Category 5(Other Sources)

0.0000

0.00%

0.000

0.0000

0.00%

0.000

Total emissions

96,249.7576

100.00%

21.1584

74,843.982

100.00%

11.1574

  1. The scope of the inventory in 2022 only includes the Taiwan headquarters and the Renhua plant in Taichung. In 2023, the Tucheng plant in Taichung will be further included. Subsequently, domestic and international sales locations and production sites will be gradually included according to the future greenhouse gas management schedule.
  2. The operational control approach is used to define the boundaries, and the calculation method adopts the emission factor approach.
  3. The emission factors used are referenced from the Environmental Protection Administration's Greenhouse Gas Emission Factors Management Table (Version 6.0.4, June 2019) for different emission sources. Other factors, such as carbon footprint information from the Product Carbon Footprint Information Network, Ecoinvent v3, mass balance calculations, Global Warming Potential (GWP) coefficients from the IPCC Fifth Assessment Report (2021), and carbon emissions from flights based on ICAO data, are used for conversion. In the future, if the government announces new factors, we will comply with the regulations of government agencies and adjust the selection of GWP coefficients accordingly.
  4. The emission factor for electricity used at the Taiwan headquarters is 0.509 tonnes of CO2e per kilowatt-hour (announced by the Bureau of Energy, 2021).
  5. The greenhouse gas emission intensity is calculated as the annual greenhouse gas emissions divided by the net consolidated revenue for the year (in million dollars).

WATER RESOURCES MANAGEMENT


Water resource management _

Rexon Industrial implements water saving strategies, continue to monitor the water consumption at our main production sites, and incorporates water resource management as one of the priorities in our environmental policy. Although our manufacturing process does not need a large amount of water and has a relatively small impact on the surrounding environment, we are dedicated to reducing water consumption and encouraging effective management of water resources within the factory.

Unit: million liters

Year

Water Use by Type

Water Intake Volume

Wastewater Discharge Volume

Water Consumption Volume

Year

2021

Water Use by Type

Water Intake Volume

Wastewater Discharge Volume

Water Consumption Volume

Water Use by Type

Building tap water

Water Intake Volume

8,376

Wastewater Discharge Volume

2,897

Water Consumption Volume

5,479

Water Use by Type

On-site tap water

Water Intake Volume

3,094

Wastewater Discharge Volume

1,070

Water Consumption Volume

2,024

Water Use by Type

Total

Water Intake Volume

11,470

Wastewater Discharge Volume

3,967

Water Consumption Volume

7,503

Year

2022

Water Use by Type

Water Intake Volume

Wastewater Discharge Volume

Water Consumption Volume

Water Use by Type

Building tap water

Water Intake Volume

7,464

Wastewater Discharge Volume

2,638

Water Consumption Volume

4,826

Water Use by Type

On-site tap water

Water Intake Volume

3,124

Wastewater Discharge Volume

1,104

Water Consumption Volume

2,020

Water Use by Type

Total

Water Intake Volume

10,588

Wastewater Discharge Volume

3,742

Water Consumption Volume

6,846

Year

2023

Water Use by Type

Water Intake Volume

Wastewater Discharge Volume

Water Consumption Volume

Water Use by Typ

Building tap water

Water Intake Volume

7,358

Wastewater Discharge Volume

2,442

Water Consumption Volume

4,916

Water Use by Type

On-site tap water

Water Intake Volume

2,509

Wastewater Discharge Volume

833

Water Consumption Volume

1,676

Water Use by Type

Tucheng Plant

Water Intake Volume

426

Wastewater Discharge Volume

141

Water Consumption Volume

285

Water Use by Type

Total

Water Intake Volume

10,293

Wastewater Discharge Volume

3,416

Water Consumption Volume

6,877

Unit: million liters

Note: Water Consumption = Water Intake - Water Discharge

We have established water pollution prevention and management measures. The water mainly come from Liyutan Reservoir and is supplied by Taiwan Water Corporation. No industrial wastewater is generated from the production line or manufacturing process. The wastewater generated from the factory mainly comes from water for the daily life of the employees. To assess the impact on the water source area, we refer to the "Aqueduct Water Risk Atlas" of the World Resources Institute. It shows that the water risk level of the Dali Industrial Area in Taiwan is low to medium (Level 1-2). Therefore, Rexon did not bring about immediate risk or significant impact on the environment or water resources during the period from 2021 to 2023. We cooperate with third-party environmental monitoring companies that comply with laws and regulations to conduct long-term testing and control of domestic wastewater to ensure that it meets the discharge standard. The treated domestic wastewater is directly discharged into the local surface water body.
The production and service locations of the Company are mainly located in urban and township areas and are not close to environmental protection areas or the areas of high biodiversity value. Thus, the impact of our operating activities on the biodiversity is not significant.

Waste Management

To realize the idea of environmental sustainability and comply with the ISO 14001 environmental policy requirements. For the in-plant waste management, all the employees of Rexon shall follow and implement these management regulations properly. To ensure that the waste generated from the factory can be controlled from the source, during the transport, at the stage of final disposal, and in the aspect of the impact on pollution of external environment, Rexon selects qualified waste transport and disposal service providers, and records and manages transport and disposal data properly to meet the essential requirements of the ISO 14001 EMS policy. (The waste management process is shown in the figure on the right.)
The waste generated from the factory is mainly classified into three categories of domestic waste, general industrial waste, and resource waste. Domestic waste and resource waste, including metal waste, plastic waste, and waste cartons, are sorted, collected, and delivered to qualified recycling service providers. In addition, the transport supplier with which we have a long-term trading relationship recovers packaging materials for reuse to reduce waste. General industrial waste is further classified into hazardous and non-hazardous waste. Only a very small amount of hazardous waste, about 100 gallons (400 liters) on average every year, is generated from the chemicals needed for the production process. it is estimated that hazardous waste is declared for disposal once every three years on average. Hence, no hazardous waste was declared and generated in 2023. Non-hazardous waste is disposed of through incineration, landfilling, physical treatment, and thermal treatment procedures. For any special waste (defined as the waste generated by the R&D unit of the Company for development) generated from the factory, we conduct declaration in accordance with the environmental protection regulations. Hence, there were no significant waste pollution and leakage incidents in 2023.

Waste
sorting

Waste
sorting and collection

Waste storage
management

Supplier
recycling

Outsourced
waste
clearance

Waste
quantity
statistics

Retention of records

General industrial waste (unit: ton)

Waste composition Hazardous waste Non-hazardous waste Total
Disposal On-site Off-site On-site Off-site Total
Transfer during disposal 0 0 0 0 0
0 0
Direct disposal 0 0 0 3.9 3.9
0 3.9
Total 0 3.9 3.9
Total waste 3.9
In-plant temporary storage 0

Note: Only a very small amount of waste is generated from the additional chemicals used in the production process. As stated in the notice to the transport and disposal service providers, hazardous waste must reach a certain level before it can be declared for disposal. As a result, Rexon properly arranges and stores the hazardous waste depending on the status of its generation, and only when the storage of the hazardous waste reaches a certain level will Rexon notify qualified legal service providers to declare for transport and disposal. Hence, there was no hazardous waste generated in 2023.

We conduct risk assessments annually in accordance with the IOS 14001 environmental management system, and we take the reduction of industrial waste as the first consideration. We continue to assess the possibility of reducing waste generation from the production process and consider the proper disposal of waste as a last resort. For example, we can control and verify the waste removal and disposal flow through a waste disposal form and the GPS function, and arrange visits and audits of waste treatment plants from time to time to ensure that the waste is properly processed and that we can fulfill our responsibilities as a waste management body.
Rexon follows the "Waste Disposal Act" to make statistics and conduct declarations on a regular basis every month. The declaration items include the category of industrial waste, whether it has hazardous characteristics, the method of disposal, and the total weight.
Rexon successfully obtained the ISO 14067:2018 Carbon Footprint Verification Statement, which covers the treadmills and spin bikes. According to our short-term goals that we have set, from 2024 to 2025, we will select representative products from existing mass-produced products based on the 8 principles for selection and judgment of product carbon footprint demonstration models (as shown in the table below) to conduct weight reduction and green innovation design. With these, we will optimize the production process and supply chain management, reduce carbon emissions, and use recycled materials and energy efficiency methods to reduce environmental impact. The business model of Rexon is mainly B2B. At the design and development stage, we assess the use of the materials that can be recycled after the end of their life cycle to provide customers with more material options. In the plastic injection process, we reuse the plastic injection heads to increase the reuse rate of raw materials.

Principles for Selection of Product Carbon Footprint Demonstration Models

The scoring criteria are divided into 5 grades: the highest grade is 5 points and the lowest grade is 1 point

Model Selection \ Principle

Belt Treadmill

Lawnmower

Groove Cutting Machine

Leaf Blower

Remark

Customer request

3

1

1

1

Treadmills are mainly exported to North America.
There are customers requesting low-carbon design

Regulations of importing country

3

1

1

1

-

Mass production for three months

1

5

5

1

-

Main product

5

2

3

1

The belt Treadmill is a representative product in the market

Market representative

5

3

2

3

-

Large scale product sales

3

2

2

1

-

Data collection difficulty

5

5

5

5

-

Supplier's cooperation

4

4

5

5

-

Total score

29

23

24

18

-

Remark

Customer request

Treadmills are mainly exported to North America. There are customers requesting low-carbon design

Main product

The belt Treadmill is a representative product in the market

The scoring criteria are divided into 5 grades: the highest grade is 5 points and the lowest grade is 1 point