CORPORATE SUSTAINABILITY

Policy Commitment

The management team at Rexon upholds the corporate culture of "honesty, stability, and growth." Through comprehensive lean management and technological innovation, we strive to differentiate ourselves and maintain a competitive edge. We aim to meet customer needs, foster win-win partnerships, and pursue high-quality growth and sustainable operations for the company.

Action Plan

1. Collaborating with our customers with Rexon's professional team to enhance efficiency and communication quality and ensure prompt responsiveness to customer needs.
2. Collecting market information to stay abreast of the rapidly changing market and understand product trends and market dynamics.
3. Measuring the achievement of financial indicators on a monthly and quarterly basis based on the annual budgets set by each business unit/subsidiary. These indicators primarily include revenue, gross profit, operating profit, pre-tax and post-tax net profit.
4. Monthly operational review meetings and new product committee meetings are held to evaluate various operational objectives, including production volume, quality, sales of new products, and lean production management. If the targets are not met, solutions will be developed, and progress will be tracked for improvement.

Medium-term and Long-term Goals

Short-term Goals:

• Hold regular meetings with key customers on a monthly basis.
• Conduct annual assessments and evaluations of significant risk factors, prioritize improvement recommendations, and continually monitor and track progress.
• Improve the production and operation efficiency of the Company by implementing lean management throughout the Company to enhance the competitive advantages.
• Establish an information security unit with dedicated management and personnel responsibilities.

Short-term Goals:

• ® Based on the risk assessment results, the Audit Department will develop the audit plan for the next fiscal year and carry out operational audits accordingly.
• ®Develop operation models and innovative technologies in line with the trends and opportunities to increase product and technology innovation results and improve the overall added value.
• Obtained ISO 27001

Long-term Goals:

• ®Enhance supply chain quality, capacity, cost, and delivery to strengthen competitive advantage.
• ®Meet the needs of the customers in every aspect by providing comprehensive and attentive services.

Policy Commitment

Practicing Rexon's "co-prosperity" philosophy. Collaborating with suppliers while considering ESG factors in the cooperative process to minimize the negative impact of business activities on the environment and society.

Action Plan

1. In May 2022, a survey was conducted with 376 suppliers (313 responses received). Out of all respondents, 109 suppliers expressed interest in participating in the activities. From this pool, a selection was made based on their high willingness to cooperate, representativeness, and scale. A total of 15 suppliers were chosen, with 1-2 suppliers selected from each category. These 15 suppliers will be included in the ESG carbon inventory counseling focus for 2023.
2. Encouraging suppliers to participate in ESG courses to gain an understanding of ESG issues and complete carbon inventory data collection.
3. Providing educational training courses for the purchasing team members in Global Procurement Departments 1 and 2.

Medium-term and Long-term Goals

Short-term Goals:

• Draft the "Supplier Code of Conduct (Guideline)."
• Within the existing R-Team Lean Supply Chain organization, an ESG team will be established to provide guidance to 15 selected suppliers in the first phase of carbon inventory assessment, scheduled to take place in 2023.

Short-term Goals:

• Enforcing the signing of the "Supplier Code of Conduct" by Tier 1 suppliers

Long-term Goals:

• By the year 2025, achieve a 100% signing rate of the "Supplier Code of Conduct" (or "Supplier Guidelines") by suppliers.

Policy Commitment

Rexon regards "enriching people's lives" as the shared goal for the common good. We uphold the entrepreneurial spirit of “honesty, stability, and growth,” as proposed by our founder Casey Wang, as a legacy in our corporate culture. We always adhere to the spirit of pursuing excellence in quality.

Action Plan

1. Risk Monitoring Indicator Management Frequency: Conduct a review at least once a year. Each department should identify the risks they may face and present a risk assessment management sheet.
2. Cost-effectiveness training and assessment with KPIs scheduled for 2023, a total of 12 sessions.
3. Annual manager presentations and assessments for KPIs scheduled for 2023, a total of 12 sessions.
4. In response to the commercialization of innovative products and the cultivation of an innovative culture within the company, an Innovation Management Committee will be established. The committee will gather market trends and internal innovation proposals from various channels. Regular monthly evaluations will be conducted to assess whether the innovation proposals from each department align with the company's development direction and have the potential for further development.

Medium-term and Long-term Goals

Short-term Goals:

• Innovative proposal commercialization, research and development of auxiliary vehicles, VA/VE product optimization - 2023 KPI: 1 item per month.
• Innovation Committee: Weekly meetings with four departments - Department A, Department B, Electrical and Mechanical, and Electrical Control. Each department must pass at least one innovative proposal per month.
• New Product Committee: Monthly meetings to review sales, quality, production capacity, and progress of new projects to ensure alignment with the project plan.
• Innovation Collaboration Circle (ICC): Bi-annual competitions held for ICC members to showcase their innovations.
• Enhance Supplier QCD (Quality, Cost, Delivery) performance.

Short-term Goals:

• ®Cross-disciplinary new product mass production and adoption of green design - 2023 KPI, 4 cases/year.
• ®Optimization of Total Quality Management (TQM) organizational operations.

Long-term Goals:

• Continuous promotion of green energy products and development of cross-industry collaborations - Achieve mass production of mid-drive motors for electric bicycles and premium lawn mowers in 2023.
• ®Implementing thorough source management to ensure zero defects in quality.

Policy Commitment

Implementing an energy management system, we encourage all staff members to participate in energy conservation and carbon reduction efforts.
I. Continuously improve energy efficiency to reduce the costs associated with energy consumption.
II. Ensure compliance with regulatory requirements and comprehensively assessing energy considerations.
III. Review energy objectives and targets to ensure the acquisition of necessary information resources.
IV. Implement an energy management system to reduce greenhouse gas emissions.

Action Plan

1. Establish an energy management task force to drive improvements in electricity management, facility energy efficiency, and process energy consumption.
2. Install solar panels on the rooftop of the factory building and purchase green energy certificates.
3. Develop distribution standards that comply with government energy-saving regulations and implement a digital power monitoring system.
4. Gradually replace old-style fluorescent tubes and lighting fixtures with LED lights.
5. Conduct an inventory of high-energy-consuming air conditioning equipment, allocate budgets for annual updates, ensure air compressor pipeline system integrity to prevent leaks, add gas storage equipment to reduce gas leakage from pneumatic tools, and achieve frequency reduction targets.
6. Optimize welding and plastic injection processes and improve production scheduling management to reduce electricity consumption and enhance energy efficiency.

Medium-term and Long-term Goals

Short-term Goals:

• Complete the distribution standards by the year 2023, evaluate the implementation of an intelligent energy management system, and initiate trial production by 2025.
• Increase the overall coverage rate of LED lighting equipment to 70% by the year 2025.
• Achieve a replacement rate of 20% for high-energy-consuming air conditioning equipment on production lines by the year 2025.
• Reduce the energy consumption of compressed air systems by 10% by the year 2023 and further reduce it by 30% by 2025.
• Implement a 5% energy-saving measure in the manufacturing process by the year 2024.

Short-term Goals:

• Implement an intelligent energy management system by the year 2028.
• Achieve 100% coverage of LED lighting equipment by the year 2026.
• Replace high-energy-consuming air conditioning equipment on production lines at a rate of 50% by the year 2028.
• Reduce the energy consumption of compressed air systems by 50% by the year 2028.
• Implement a 10% energy-saving measure in the manufacturing process by the year 2028.

Long-term Goals:

• The target is to achieve 15% green energy usage across the entire factory site by 2030.
• The goal is to replace 100% of high-energy-consuming air conditioning equipment on production lines by 2035.

Policy Commitment

Incorporating a product life cycle management approach, considering product design, manufacturing, usage, and recycling stages to minimize the environmental impact of products.
Actively seeking a balance between product functionality and environmental protection, and utilizing environmentally friendly materials as a starting point for design and development. Adopting the concept of resource sustainability, reviewing and assessing process operations and implementing a circular economy approach, establishing an energy management system.

Action Plan

1. Implementing ISO 14064-1 greenhouse gas inventory and ISO 14067 carbon footprint in 2022.
2. Reimplementing ISO 14001 environmental management system with the goal of achieving certification by 2023.
3. Establishing supplier management procedures, greenhouse gas inventory management regulations, and internal audits of greenhouse gas emissions to incorporate "greenhouse gas inventory" into Rexon's management system. Additionally, integrating low-carbon concepts into supplier evaluations and collaborating with suppliers to contribute efforts towards mitigating climate change together.

Medium-term and Long-term Goals

Short-term Goals:

• In 2022, we implemented ISO 14064-1 for greenhouse gas inventory and ISO 14067 for carbon footprint assessment. We used 2021 as the baseline year and obtained a verification statement from the third-party SGS.
• By July 2024, we will complete the greenhouse gas inventory and verification scope for Rexon Industrial Tucheng Plant, based on the year 2023.
• Subsidiary Rexon Technology is expected to complete the greenhouse gas inventory and verification for the year 2024 by December 2025.

Short-term Goals:

• 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.
• Subsidiary Tongxiang Rexon Industrial aims to complete the greenhouse gas inventory and verification for the year 2025 by December 2026.
• Subsidiary PTS is expected to complete the greenhouse gas inventory and verification for the year 2026 by December 2027.

Long-term Goals:

• 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.
• By the year 2027, the goal is to further 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 2030, Rexon Industrial Dali Plant aims to use 15% green energy.
• In accordance with government policies and regulations, the plan is to achieve zero greenhouse gas emissions from all operational sites by 2050.

Policy Commitment

Adherence to human rights policy, establishment of training systems, compliance with legal and regulatory standards.

Action Plan

1. Compensation System: Develop a regular review process for the compensation system to retain top talent and ensure that the salaries of all employees are competitive in the market. Encouraging business units to propose project-based incentive measures to motivate employees, boost morale, and improve company performance, creating a win-win situation.
2. Workplace Benefits: Providing a diverse and comprehensive benefits system that takes care of employees' well-being both inside and outside of work. Ensure that employees work in a safe, satisfying, and healthy labor environment.

Medium-term and Long-term Goals

Short-term Goals:

• No significant labor incidents.
• Engage in industry-academia collaboration to cultivate technical talent within the company.
• The goal for 2023 is to collaborate with an additional 1-2 schools for technical talent cooperation and increase the number of industry-academia students to 30 or more.
• The goal for 2023 is to complete the standards for three additional major protection programs (work-related hazards, maternal health protection, prevention of diseases caused by abnormal workloads) and enhance the four existing programs.

Short-term Goals:

• ®Encourage employees to establish more diverse activity clubs, allowing them to freely gather, socialize, and engage in mutual exchange. These clubs promote cross-departmental communication and enhance overall communication efficiency within the company.
• Implement diverse and effective educational training to enhance the professional development of employees and establish a work-life balance in the work environment.
• Increase the average training hours per employee by 10% or more each year.
• Starting from 2024, aim to provide education and promotion on the four major protection programs (unlawful acts against employees, work-related hazards, maternal health protection, prevention of diseases caused by abnormal workloads) to all employees at least once per year.

Long-term Goals:

• ®Comply with labor laws and regulations.
• ®Creating a friendly workplace by continuously caring for the physical and mental well-being of employees.
• Continue to adhere to occupational safety guidelines, providing education and training based on the job requirements of each department to maintain the goal of zero major occupational safety incidents.
• Maintain the goal of providing education and promotion on the four major protection programs (unlawful acts against employees, work-related hazards, maternal health protection, prevention of diseases caused by abnormal workloads) to all employees at least once per year.
• Ensure open communication channels for employees and achieve a 100% response rate, while aiming to complete evidence collection within 3 days and provide feedback to complainants within 7 days.