Climate Change Data

Pou Chen Corporation

Climate Impact & Sustainability Data (2018, 2020, 2023)

Reporting Period: 2018

Environmental Metrics

Total Carbon Emissions:797,000 tons of CO2e (Scope 1 and 2)
Scope 1 Emissions:49,000 tons of CO2e
Scope 2 Emissions:748,000 tons of CO2e
Scope 3 Emissions:9348.2 tons of CO2e (downstream transportation) + 759.3 tons of CO2e (business flights)
Renewable Energy Share:Not disclosed
Total Energy Consumption:5,477.5 TJ
Water Consumption:14,767 million liters
Waste Generated:567.6 metric tons (Taiwan)
Carbon Intensity:4.7-1.8 kg CO2/pair (China, Indonesia, Vietnam)

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • 77.0% of footwear production bases implemented ISO 14001 management system, 62.0% passed ISO 14001:2015 certification
  • Taiwan RPE chemical plant received Cleaner Production certification
  • Pou Sheng factory in Vietnam awarded Top 100 Sustainable Enterprise for three consecutive years
  • Energy saving of 124,235,588.0 MJ in 2018
  • Reduced compressed air system leakage rate from 45% in 2017 to 33% in 2018

Social Achievements

  • Became the only FLA-accredited footwear manufacturer globally
  • Launched employee life counseling system (1999), further expanding employee care in four dimensions: listening, life care, home visits, and faith support
  • Collective Bargaining Agreement covers approximately 300,000 workers (92.6% of footwear sector employees)
  • Held a 30-day “Pou Chen China Children’s Summer Camp” benefiting 3,893 households since 2010
  • Employee Relationship Management system recorded a 99.1% settlement rate for 7,089 complaints and inquiries

Governance Achievements

  • Ranked top 5% of listed companies in the TWSE Corporate Governance Evaluation for the fifth consecutive year
  • Board of Directors comprised of 9 directors, including 3 independent directors and 2 female directors
  • Established Remuneration Committee and Audit Committee
  • Implemented a candidate nomination system for director elections
  • No material violations resulting in heavy fines or administrative penalties in 2018

Climate Goals & Targets

Long-term Goals:
  • Not disclosed
Medium-term Goals:
  • Reduce energy consumption intensity by 8% by 2020 (compared to 2016)
  • Complete water balance maps of all compounds by 2023
Short-term Goals:
  • Disclose treated sewage discharge volumes within 2 years
  • Complete water statistics for all boundary compounds in 2020

Environmental Challenges

  • Severe climate changes and the need for emission reduction
  • Risks to sustainable production operations due to increased likelihood of natural disasters in Southeast Asia
  • Possible increase in energy consumption due to automation and technology-based footwear production
  • Changes in Chinese government's energy policy delaying solar power generation plan
  • Material labor disputes in Vietnam and Cambodia
Mitigation Strategies
  • Integrating environmental protection into operational thinking
  • Improving energy efficiency and introducing a digital waste management system
  • Close cooperation with brand customers and strategic suppliers to establish a green supply chain
  • Implementing energy conservation and carbon reduction measures
  • Formulating a four-year energy conservation plan (2016-2020) aiming to lower energy consumption intensity by 8% by 2020
  • Gradually implementing a de-steaming policy and replacing steam heating with electric heating
  • Active communication and cooperation with local government and unions to resolve labor disputes
  • Expanding compensation adjustments to eligible employees in Cambodia

Supply Chain Management

Supplier Audits: 39 suppliers audited for RSL management practices, 91 for sustainability development

Responsible Procurement
  • Local development and local supply
  • Compliance with local regulations, product/information security, and anti-corruption principles
  • Supplier selection mechanism assessing quality and sustainable development
  • RSL compliance

Climate-Related Risks & Opportunities

Physical Risks
  • Natural disasters and climate variability in Southeast Asia
Transition Risks
  • Changes in government energy policies
Opportunities
  • Development of energy-efficient products and processes
  • Increased utilization of green energy

Reporting Standards

Frameworks Used: GRI Standards (Core option)

Certifications: ISO 14001

Third-party Assurance: SGS Taiwan Ltd.

UN Sustainable Development Goals

  • SDG 4 (Quality Education)
  • SDG 8 (Decent Work and Economic Growth)
  • SDG 13 (Climate Action)
  • SDG 3 (Good Health and Well-being)
  • SDG 1 (No Poverty)

Various initiatives described throughout the report contribute to these goals

Sustainable Products & Innovation

  • New patented materials from Taiwan RPE chemical factory

Awards & Recognition

  • CommonWealth Magazine Corporate Citizen Awards (Top 100)
  • Global Views Monthly CSR Awards
  • FTSE4Good Emerging Index constituent
  • FTSE4Good TIP Taiwan ESG Index constituent
  • Top 100 Sustainable Enterprise in Vietnam (Pou Sheng factory)
  • Fire Protection Best Performance Award (Pou Sheng factory)

Reporting Period: 2020

Environmental Metrics

Total Carbon Emissions:69.21 thousand tons CO2e (2020)
Scope 1 Emissions:5.57 thousand tons CO2e (2020)
Scope 2 Emissions:63.64 thousand tons CO2e (2020)
Scope 3 Emissions:7,563.6 metric tons CO2e (downstream transportation) + 1,522.88 metric tons CO2e (employee air travel)
Total Energy Consumption:938,739.1 MWh (2020)
Water Consumption:16,812.2 million liters (2020)
Waste Generated:94,489.7 tons (2020)
Carbon Intensity:1.85 ~ 5.05 kg CO2e / pr (2020)

ESG Focus Areas

  • Decent Work
  • Economic Growth
  • Responsible Consumption and Production
  • Gender Equality
  • Good Health and Well-being
  • Clean Water and Sanitation
  • Peace, Justice and Strong Institutions
  • Green Manufacturing
  • Affordable and Clean Energy
  • Climate Action
  • Sustainable Cities and Communities
  • Corporate Governance

Environmental Achievements

  • Reduced energy consumption intensity by 6.1% (compared to 2016)
  • 68% of shoe factories have ISO 14001:2015 certification
  • Implementation of MRSL and ZDHC requirements

Social Achievements

  • Only footwear manufacturer accredited by the Fair Labor Association (FLA)
  • 92.1% of footwear manufacturing employees covered by collective bargaining agreements
  • 3,551 grievance and consultation cases closed within 2 months (99.6% settlement rate)
  • Various employee welfare benefits provided (healthcare, life & entertainment, festival benefits, family care)

Governance Achievements

  • Selected as a constituent stock in FTSE4Good Emerging Index and FTSE4Good TIP Taiwan ESG Index
  • Ranked in the top 5% of listed companies in the 7th Corporate Governance Evaluation by TWSE

Climate Goals & Targets

Medium-term Goals:
  • Zero carbon dioxide emissions growth by 2025

Environmental Challenges

  • COVID-19 pandemic impacting global economy and supply chain
  • Climate change risks converting to material damages and threats
  • Complex impacts and challenges from global economic and environmental changes
Mitigation Strategies
  • Established a dedicated pandemic prevention unit and issued global guidelines
  • Implemented various pandemic prevention measures (daily meetings, monitoring, countermeasures, material preparation, etc.)
  • Adjusted manufacturing capacity allocation, closed facilities in Hubei, China, and temporarily adjusted production capacity in Southeast Asia
  • Implemented strict cost control and personnel expense conservation
  • Adopted a prudent approach to major capital expenditure
  • Promoted salary reduction for senior management
  • Implemented reduced shifts
  • Focused on cash flow management
  • Expanded the application of green energy
  • Improved energy use efficiency of machines and equipment
  • Implemented leakage control
  • Promoted energy management systems

Supply Chain Management

Supplier Audits: 20 times (environmental safety and health and human rights management)

Responsible Procurement
  • Local development and local supply
  • ISO 9001 quality standards
  • Compliance with local environmental protection regulations
  • Supplier self-evaluation form
  • On-site field visits
  • Document review
  • RSL project audit

Climate-Related Risks & Opportunities

Physical Risks
  • Extreme weather
  • Flooding
  • Drought
  • Water shortage
Transition Risks
  • Carbon emission limits
  • Carbon pricing
  • Increased Greenhouse Gas Emission Inspection and Validation Costs
Opportunities
  • Increased Renewable Energy Use rate
  • New green materials and technologies
  • Energy-saving process improvements
  • Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards (2016): Core option, AA1000 Stakeholder Engagement Standard (AA1000 SES 2015)

Certifications: ISO 14001

Third-party Assurance: SGS Taiwan Ltd. (Type II High Level)

UN Sustainable Development Goals

  • Goal 1 (No Poverty)
  • Goal 3 (Good Health and Well-being)
  • Goal 4 (Quality Education)
  • Goal 8 (Decent Work and Economic Growth)
  • Goal 13 (Climate Action)

The report details initiatives aligned with these SDGs throughout the document.

Awards & Recognition

  • CommonWealth Magazine Corporate Citizen Awards (Top100)
  • Global Views Monthly CSR Top 65 company
  • Global Views Monthly CSR Awards-Traditional Industry Model
  • Top 100 Sustainable Businesses in Vietnam (Pou Sung plant)

Reporting Period: 2023

Environmental Metrics

Total Carbon Emissions:630,200 metric tons of carbon dioxide equivalent
Scope 1 Emissions:44,800 metric tons of carbon dioxide equivalent
Scope 2 Emissions:585,400 metric tons of carbon dioxide equivalent
Scope 3 Emissions:17,141.84 metric tons of carbon dioxide equivalent
Renewable Energy Share:21%
Total Energy Consumption:3,379.13 TJ
Water Consumption:13,675 million liters
Waste Generated:62,435 metric tons
Carbon Intensity:1.11 to 4.06 kg CO2e per pair

ESG Focus Areas

  • Corporate Governance
  • Sustainable Environment
  • Responsible Production
  • Best Workplace
  • Safety Culture
  • Relations with Communities

Environmental Achievements

  • 73% of plants passed environmental inspection
  • Amount of Green Power Generated: 5,036 MWh
  • Percentage of Green Power: 21%
  • CO2 Scope 1: 4.48ຬtCO2e
  • CO2 Scope 2*: 45.72ຬtCO2e
  • CO2 Scope 3: 1.87ຬtCO2e
  • Waste: 62,435 metric tons
  • Waste Density (Hazardous): 0.03 kg/pair
  • Waste Density (General): 0.32 kg/pair

Social Achievements

  • FTSE4Good TIP Taiwan ESG Index constituent
  • Only FLA-accredited footwear supplier globally
  • Occupational Accidents reduction of 45%
  • Sample Survey Pass rate 100%
  • Collective Bargaining Agreements: 95.55%
  • Public Welfare Expenditure: USD 10/10k
  • Compassionate Housing: Accumulated 308 buildings
  • Suppliers' Undertaking of Ethics and Integrity: 100% signed

Governance Achievements

  • Received Level 1 ranking in the Taiwan Stock Exchange's Corporate Governance Evaluation for Listed Companies for the 6th time
  • Independent directors: 33%
  • Female directors: 22%
  • Established a Risk Management Advisory Committee

Climate Goals & Targets

Long-term Goals:
  • Net-zero emissions
Medium-term Goals:
  • Reduce absolute greenhouse gas emissions in Scope 1 and Scope 2 by 46.2% by 2030 (2019 as base year)
Short-term Goals:
  • Achieve zero growth in carbon emissions by 2025
  • Reduce overall air compressor leakage rate to less than 13%

Environmental Challenges

  • Weak global demand and inventory adjustments negatively impacted footwear manufacturing business
  • Climate change impacts operations: Shutdowns due to floods and snow, high-temperature subsidies and regulations, insurance costs, resilience against natural disasters
  • Tightening of global climate regulations affects operations and profitability
  • Suppliers do not meet company or regulatory requirements, resulting in unstable supply of raw materials
  • Supply chain indirectly damages the company’s image
Mitigation Strategies
  • Developed agile business strategies and improved risk management mechanisms
  • Implemented climate risk management in accordance with the TCFD framework
  • Expanded the use of green energy
  • Improved energy efficiency
  • Implemented supplier management policies and practices
  • Strengthened supply chain management
  • Improved manufacturing process
  • Innovative design

Supply Chain Management

Supplier Audits: 391 suppliers (periodic document assessment), 38 suppliers (annual review & counseling), 2 suppliers (on-site audits with un-notified), 77 suppliers (on-site audits)

Responsible Procurement
  • Code of Conduct
  • Supplier sustainability requirements
  • Supplier-Friendly Workplace Guidelines

Climate-Related Risks & Opportunities

Physical Risks
  • Extreme weather events
  • Increase in average temperature
  • Sea level rise and flood risk
Transition Risks
  • Enhanced carbon disclosure requirements
  • Carbon pricing mechanism
  • Mandatory use of renewable energy
  • Low-carbon production
  • Impact on production
  • Impact on company image
Opportunities
  • Participation in the carbon trading market
  • Automated process development
  • Improved water usage efficiency
  • Participation in renewable energy markets
  • Establishment of a circular economy in the footwear industry
  • Adoption of more efficient modes of transportation
  • Improved energy efficiency
  • Introduction of new technologies

Reporting Standards

Frameworks Used: GRI Universal Standards 2021, TCFD, SASB

Certifications: ISO 14001, ISO 14064

Third-party Assurance: SGS Taiwan Ltd.

UN Sustainable Development Goals

  • SDG 1
  • SDG 3
  • SDG 5
  • SDG 8
  • SDG 10
  • SDG 12
  • SDG 13

Pou Chen's efforts and endeavors are in line with the 17 Sustainable Development Goals (SDGs) published by the United Nations.

Awards & Recognition

  • RoSPA Gold Award
  • Excellent Company in Occupational Health and Safety
  • Green, Clean and Tidy Occupational Health and Safety Award
  • Recognition of Enterprise Serving Workers Wholeheartedly
  • Guangdong Province Excellent Manufacturer in Labor-Management Communication and Negotiation
  • Outstanding Achievement in Labor Union Collaboration
  • Healthy and Efficient Women Workers Campaign
  • Excellent Enterprise in Environmental Protection Certificate