Climate Change Data

Environmental Metrics

ESG Focus Areas

• Use of electricity
• Hazardous Waste Management
• Product responsibility
• Health & Safety

Environmental Achievements

• LED lighting programme for gradual retrofit in showrooms
• Automated electricity control in showrooms to turn off lighting and air conditioning after operating hours
• Moving towards variable refrigerant volume air conditioning systems to reduce electricity consumption
• Meeting local regulatory requirements on hazardous waste management

Social Achievements

• Equal opportunities applied in employment policies
• Providing a healthy and safe workplace to employees; safety guidelines formulated and communicated to all employees
• Organised training to improve employees’ awareness on health and safety
• Audits on dealership stores and maintenance workshops were carried out
• Subaru Charity Drive organized with Subaru Club SG and the Subaru Forester Club, benefiting TOUCH Young Arrows

Governance Achievements

• Adoption and implementation of the Model Code for Securities Transactions by Directors of Listed Issuers
• In-house mechanism to guide directors and employees regarding dealing in the Company’s securities
• Board consists of four executive directors, one non-executive director and five independent non-executive directors
• Board meets at least four times a year
• Various board committees with written terms of reference

Climate Goals & Targets

Environmental Challenges

• Global uncertainties and the strength of the Japanese Yen negatively impacted cost of sales and reduced gross profit margins
• Substantial increase in distribution cost due to sales increase in CBU markets, rapid expansion of regional distribution and retail network in CKD markets, and operational restructuring cost of truck business in Thailand
• Contraction in Subaru sales in China due to competition from domestic Chinese brands and tighter government automotive policies
• Decline in sales and reduced business scale in truck distribution business in Thailand

Mitigation Strategies

• Restructured and downsized truck operations in Thailand, reallocating resources to existing and new businesses
• Pared down overheads and reduced headcount in Thailand truck operations by approximately 40%
• Investing in sales and service infrastructure through enhanced dealer and retail network in CKD markets of Malaysia and Thailand
• Planned joint venture investment of HK$1.1 billion with Fuji Heavy Industries Japan to produce Subaru vehicles in Thailand

Supply Chain Management

Responsible Procurement

• Preference for independent service providers and business partners employing environmentally friendly practices
• Ensuring contracting processes are fair and influencing suppliers to reduce negative social and environmental impacts

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Stock Exchange Environmental, Social and Governance Reporting Guide

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Introduced energy-saving technologies in Singapore showrooms (VRV systems, motion sensors, energy monitoring system)
• Promotes eco-driving in Japan's transportation business and improves cargo ratios

Social Achievements

• Promotes equal opportunities in employment policies
• Established Workplace Safety and Health (WSH) committee in Singapore
• Established safety committees at three levels in Thailand assembly plant
• Implements safety management policies in Japan transportation business

Governance Achievements

• Adopted and implemented the Model Code for Securities Transactions by Directors
• Board consists of four executive directors, one non-executive director and four independent non-executive directors
• Established an ESG Committee reporting to the Managing Director

Climate Goals & Targets

Environmental Challenges

• Sales volume decline in motor vehicle distribution and retail division (slowdown in Singapore and China)
• Shifting COE cycles and stricter Euro 6 emission standards impacted Singapore business
• Escalation of emission regulations and competitive dynamics in China's motor vehicle market
• Weakness in the vehicle export market and issues related to checks on vehicle safety in Japan

Mitigation Strategies

• Ongoing cost reduction and productivity initiatives
• Restructuring and initiatives to enhance Subaru brand presence in China
• Focus on expanding customer base and adapting to evolving policy trends in China's seat manufacturing operations
• Optimising nationwide distribution network operations and promoting work style reform in Japan

Supply Chain Management

Responsible Procurement

• Supplier selection and evaluation system; prefers independent service providers employing environmentally friendly practices

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Hong Kong Stock Exchange Environmental, Social and Governance Reporting Guide

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Geopolitical factors resulting in a challenging environment for businesses with a regional footprint.
• Decrease in sales volume in key markets (Singapore, Malaysia, Taiwan, Philippines).
• High initial start-up costs and logistical/production problems at the Thailand car plant.
• Decreased COE quota and softer GDP growth in Singapore.
• Uncertain business climate in Hong Kong.
• Negative growth in China automotive markets.
• Global trend of customers using ride-hailing services instead of owning vehicles.

Mitigation Strategies

• Working towards a leaner, more agile, and competitive organization.
• Continuous review across all areas with material long and short-term values.
• Reducing costs and improving productivity to eliminate Non-Value-Added Activities.
• Broadening customer base and upgrading product line-up in China.
• Focusing on developing a culture of resilience and cost competitiveness.

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Rapidly changing automotive industry safety and vehicle emissions policies

Reporting Standards

Frameworks Used: International Accounting Standard 34, Interim Financial Reporting

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Expanded plan relating to energy saving technologies and initiatives at the assembly plant in Thailand (next phase: installation of larger solar panels in 2021)
• Plans to have a full line up of electrified passenger vehicles under the Nissan brand in Singapore by 2023 (launched three electrified cars by 2020)
• Consistently upgrades facilities and equipment for better energy efficiency
• In Japan, consistently promotes eco-friendly driving habits as part of driver training

Social Achievements

• Working with Halogen Foundation in Singapore to mentor and provide internship opportunities for young people
• Adopted Marco and Jubilee, resident giraffes at the Singapore Zoo, partnering with The Animal Project to sell limited edition tumblers with proceeds going to artists with special needs
• Promotes equal opportunities and respect in employment policies
• Provides necessary safety equipment and uniforms at the assembly plant, constantly monitors indoor air quality

Governance Achievements

• Company has complied with most of the code provisions set out in the CG Code. Various self-regulatory and monitoring measures were adopted for effective corporate governance practice.
• Adopted and implemented the Model Code for Securities Transactions by Directors of Listed Issuers
• Board meets at least four times a year, certain functions delegated to various board committees

Climate Goals & Targets

Environmental Challenges

• Covid-19 pandemic impacting all markets except Vietnam, resulting in showroom closures, suspension of COE tender processes, and reduced vehicle sales
• Tightening of penalties under Vehicle Emission Standards (VES) posing significant challenges for Subaru operations in Singapore
• Disruptions to inventory stocking levels and intense competitive market pressure in Taiwan
• Philippines vehicle market severely impacted by Covid-19 and new tariffs

Mitigation Strategies

• Ongoing cost reduction programs and productivity initiatives
• Focus on expected high rate of industrialisation in Vietnam and Thailand
• Extensive cost optimisation and reduction in sales and marketing overheads in Taiwan
• Decisive cost control countermeasures and reducing redundancies in the Philippines
• Introduction and availability of new Subaru models to mitigate the impact of VES tightening

Supply Chain Management

Responsible Procurement

• Supplier selection and evaluation system to ensure fair contracting processes and encourage suppliers to reduce negative social and environmental impacts

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ESG Reporting Guide (Appendix 27 of the main board listing rules of the Stock Exchange of Hong Kong Limited (HKEX))

Sustainable Products & Innovation

• Electrified passenger vehicles

Environmental Metrics

ESG Focus Areas

• Use of Resources
• Emissions
• Environment Compliance
• Employment and Labour Standard
• Development and Training
• Occupational Health and Safety
• Operating Practices
• Anti-Corruption
• Community Investment

Environmental Achievements

• In Singapore, 2023 sales of Nissan passenger vehicles were 100% electrified models, making Nissan one of Singapore’s top five-selling brands for electrified passenger vehicles. This is ahead of the country’s government green plan that restricts the sales of new passenger vehicles to only electrified models by 2030.
• Successful introduction of the Subaru Forester “E-Boxer GT” and Subaru Crosstrek “E-Boxer” in Singapore.

Social Achievements

• Engine donations to Thailand Automotive Institute and 9 other tertiary institutions, valued at over 7 million baht.
• Bringing 36 seniors from Methodist Welfare Services Singapore on exclusive access to our iconic Tan Chong Car Challenge event.

Governance Achievements

• Established a Board Independence Evaluation Mechanism in 2022.
• Set a measurable objective of at least 15% - 20% of members of the Board to be represented by women by 2025. Achieved 18% women representation on the Board as of the report date.

Climate Goals & Targets

Environmental Challenges

• Supply chain interruptions and operational hurdles due to geopolitical conflicts, rising inflation, and the war between Russia and Ukraine.
• Limited COE quota in Singapore impacting Subaru sales.
• Tightening of emission standards in China resulting in a suspension of Subaru Forester deliveries for 4 months.
• Short supply of microchips impacting sales in Hong Kong and Taiwan.
• Return of Sales Tax in Malaysia impacting Subaru sales.
• Government subsidies for electric vehicles in Thailand impacting Subaru sales.
• Challenging economic situation in Vietnam impacting TIV.
• Weakening market and worsening economic situation in Cambodia.

Mitigation Strategies

• Actively participating in sustainability initiatives across the region.
• Cautiously optimistic about Nissan sales outperforming market trends in 2024 due to expected increase in COE supply.
• Haval and Ora dealerships businesses in China saw healthy growth, neutralizing the drop in Subaru sales.
• Strong recovery expected in 2024 for Subaru in Malaysia and Vietnam.
• Successful marketing efforts targeting off-road users boosted Subaru sales in Thailand.
• Committed network of dealers and aggressive marketing efforts in Vietnam improved Subaru performance.

Supply Chain Management

Responsible Procurement

• Rigorous controls and systems of record to ensure compliance with contracted agreements; fair contracting processes; encouraging suppliers to reduce negative social and environmental impacts.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ESG Reporting Guide

Certifications: ISO9001 (Thailand assembly plant), G-Mark (ZERO Japan customer service centres)

Sustainable Products & Innovation

• Electrified passenger vehicles (Nissan)
• Hybrid and electrified models (Subaru)