Nan Pao conducts its materiality analysis in accordance with the GRI Universal Standards 2021, specifically GRI 3: Material Topics 2021, and the European Sustainability Reporting Standards (ESRS) issued by the European Financial Reporting Advisory Group (EFRAG) under the Corporate Sustainability Reporting Directive (CSRD). The analysis framework is structured based on the principle of double materiality, which integrates Impacts, Risks, and Opportunities (IRO). The double materiality approach considers both financial materiality and impact materiality — examining how ESG topics present risks and opportunities that may influence the Company's development, performance, and market position, while also assessing the external impacts of corporate operations on the economy, environment, and people, including human rights. This report is prepared primarily based on sustainability impact materiality, with financial implications assessed through a structured risk management framework.

Guided by the four core principles of Inclusivity, Impact, Materiality, and Responsiveness, the Company applies a five-step process to identify and validate its material topics:

Nan Pao's materiality assessment process draws upon the AA1000 Accountability Principles (2018) and the GRI Sustainability Reporting Standards, applying a five-step process — Establishment, Collection, Investigation, Analysis, and Endorsement — to review sustainability topics annually. The methodology and weighting are reviewed every three years, and the results are ultimately reviewed, approved, and reported to the Board of Directors.

The results of the Company's internal and external stakeholders' concerns are as follows: the Company collected, via a questionnaire survey, a total of 312 stakeholders' positive and negative concerns for each sustainability issue. After quantitatively analyzing the results, the Company presents them on the material topic matrix chart, using dot size to indicate stakeholders' levels of concern for each sustainability issue. The analysis identifies the top five issues of concern, in order: Information Security Management, Business Ethics and Anti-corruption, Economic Performance, Circular Economy, and Climate Change Mitigation. Overall, besides corporate operations and economic performance, stakeholders also place high emphasis on governance issues such as information security and integrity management, as well as environmental issues such as circular economy and climate change. These results indicate stakeholders hold high expectations for corporate governance transparency, risk management capabilities, and sustainable development performance.

Based on assessments of internal impacts and external impacts identified by 18 senior executives, the Company analyzed the impacts of various issues on corporate governance, the environment, and the economy, and developed a materiality matrix. Chemical Safety Management and Occupational Safety and Health and Emergency Response are identified as having the greatest potential impacts and are considered the most critical issues in operational management. Economic Performance is identified as having the most significant impact on internal revenue. Customer Relationship Management, along with Employee Care and Rights, is closely associated with service quality delivered to customers and employee well-being. Information Security Management, as well as Business Ethics and Anti-corruption, have significant impacts on the Company's external environment.

NANPAO refers to the Global Sustainability Standards Board (GSSB) and evaluates the economic, environmental, and social impacts, as well as human rights impacts and their scope, based on the GRI 1 Foundation and GRI 3 Material Topics standards. These impacts can have both positive and negative effects and may occur at different stages of the value chain, such as upstream procurement, company operations, and customer usage. ● Direct Impact    ○ Indirect Impact

The results of the materiality assessment have been incorporated into the Company's Enterprise Risk Management (ERM) framework. All material issues have been mapped to specific risk factors and assessed based on their likelihood and impact; they have also been linked to corresponding response measures, control mechanisms, and management actions. The 2025 materiality assessment results were reviewed and approved by Nan Pao's Board of Directors, which also oversees their implementation.

Nan Pao recognizes that constructive communication and collaboration with stakeholders is fundamental to sustainable operations. In line with the AA1000SES (2015) Stakeholder Engagement Standard, we have adopted a Stakeholder Engagement Policy and developed and implemented a company-wide stakeholder engagement plan covering all operating sites and our supply chain, ensuring that the views and concerns of communities, employees, customers, suppliers, and government authorities are effectively heard and addressed.