Ecological Conservation
Ecological Conservation
All of Nan Pao's production sites were located in industrial development zones approved by the local government, and were not within biosphere reserves or sensitive habitats. No species listed as endangered by the International Union for Conservation of Nature (IUCN) or included in the national conservation list were found. During the early planning stage, the Company assessed the relevant environmental laws and regulations, and was committed to avoiding operational impacts on biodiversity. It also improved treatment efficiency through pollution prevention and control equipment to reduce environmental impact. In addition, Nan Pao also formulated a Biodiversity Policy, advancing management measures from the perspectives of prevention, mitigation, and monitoring, and calling on supply chain partners to participate in and support these efforts.
Nan Pao further referred to the framework of the Taskforce on Nature-Related Financial Disclosures (TNFD) and combined the ENCORE assessment tool with domestic and international species and protected area databases to analyze the Company's dependence on and impacts to natural capital. It also adopted the LEAP methodology to systematically assess the interaction between Nan Pao and natural capital, thereby strengthening the Company's ability to address nature-related risks and seize opportunities, promoting a balanced coexistence with nature, and continuing to make positive contributions toward a sustainable future.
Nature-Related Strategy and TNFD LEAP Positioning Analysis
Identification of Biodiversity-Sensitive and Priority Areas in the Value Chain
2. Bio-based Raw Materials
3. Packaging Materials
Service Scope Downstream
| Region | Service Items |
| Taiwan | Adhesive Manufacturing and Processing |
| Vietnam | |
| Mainland China | Chemical Manufacturing and Processing for Coatings and Construction Materials |
| Thailand | |
| Indonesia |
2. Garment and Textile
2. Garment Brands
3. Semiconductor Applications
4. Building and Interior Decoration
Note: coatings and construction-material chemicals also supply downstream customers such as building and interior decoration directly.
Considering that the ENCORE database conducts analyses at the industry level, it remains necessary to incorporate the spatial relationships between each site and its surrounding natural ecosystems when assessing nature-related topics. Based on LEAP, Nan Pao initially identified the natural footprint and potential sources of risk across each stage of its operating sites and the value chain, covering upstream suppliers (such as chemical raw material and packaging material vendors) and its own operating activities (such as the manufacturing, storage, and related facilities for synthetic resins and adhesives). This assessment referenced ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure), a tool jointly developed by the United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) and the Capitals Coalition, to identify dependencies on and impacts to natural capital and ecosystem services in the course of operations, and further analyzed the interface between such items with potential high and very high levels of dependency and impact and natural resources. The results showed that Nan Pao's overall operations had a low degree of dependence on most ecosystem services, with the main focus on issues related to water resources and disaster prevention and protection; at the driver level, the most direct types of impact were "disturbance," "toxic soil and water pollution releases," and "water consumption."
Note: the dependency/impact levels below have been transcribed from the Company's internal ENCORE positioning matrix; please verify the exact rating of each cell (particularly adjacent levels such as High vs. Very High) against the source working file before publication.
| Scope of Operating Activities | Ecosystem Services | Impact Drivers | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Substance | Adjust flow rate | Maintain physical, chemical, and biological conditions | Mitigation of waste, toxic substances, and other nuisances | Resource exploitation | Climate change | Pollution | |||||||||
| Water supply | Flood control | Storm mitigation | Soil and sediment retention | Flow regulation | Rainfall pattern regulation | Solid waste remediation | Clean water | Water consumption | GHG emissions | Interference | Air pollution emissions | Toxic soil and water pollution emissions | Generation and release of solid waste | ||
| Manufacturing raw materials | Petroleum and coal products manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● |
| Basic chemical materials manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
| Plastic raw materials manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
| Synthetic rubber raw materials manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
| Paints, dyes, and pigments manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
| Packaging materials | Corrugated paperboard and paper container manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● |
| Other metal container manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
| Other plastic products manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
| Plastic film and bag manufacturing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
| Direct operations | Nan Pao Group's operating plants | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● |
Given that Nan Pao's value chain extends across multiple regions in Asia, a 2.5-kilometer radius around each operating plant was selected as the potential area of influence. Spatial analysis was conducted by overlaying data on biodiversity hotspots and species distribution designated by conservation agencies. Further integration of global and regional biodiversity datasets was carried out to assess the spatial connectivity between each site and local ecosystems. Indicators such as Key Biodiversity Areas (KBA), water stress, ecological integrity, and Red List species distribution were also considered to determine whether any operational sites are located in or near areas of high biodiversity sensitivity. Based on the overlay analysis, approximately 21% of Nan Pao's operating plants are situated in areas of medium or higher natural sensitivity. Moreover, approximately 28% of plants within the value chain may be located in ecologically significant areas that warrant close attention. These findings serve as a foundation for identifying and managing nature-related risks.
* Total: 14 operating plants
* Total: 50 upstream plants
According to the TNFD (Taskforce on Nature-related Financial Disclosures) guidelines, the identification of priority areas should consider both the dependency and impact analysis of the industry within the value chain, as well as the nature sensitivity assessment. This means that, in addition to evaluating the inherent potential impact of value chain operations on ecosystem services, it is also essential to consider whether the locations of the facilities intersect or overlap with highly sensitive species or ecosystems, which may result in external contact and potential impacts. Based on this logic, combined with Nan Pao's practical management experience, we defined priority areas as those that are both located in areas of medium or higher natural sensitivity and belong to industries that account for more than 5% of procurement expenditure and demonstrate a high (H) or very high (VH) dependency and impact. Through this screening process, Nan Pao identified a total of 17 priority sites during this reporting year. Moving forward, further analysis will be conducted on the interactions between operational activities and natural capital at these sites to ensure that nature-related risks are effectively managed and addressed.
Natural Carbon Sink Strategy Planning
Based on the ongoing promotion of biodiversity assessments, Nan Pao has initiated preliminary inventory work on issues related to natural carbon sinks. Based on the natural capital assessment foundation established with reference to the TNFD framework and the LEAP methodology, the Company initially conducted a TNFD positioning analysis, identified ecologically sensitive areas, and analyzed the dependence on and impact to natural ecosystems of each operating location, laying the groundwork for the subsequent formulation of a natural carbon sink strategy.
Natural carbon sinks encompass the carbon sequestration capacity of ecosystems such as forests, soils, and wetlands, and are potentially related to raw materials upstream in the Company's supply chain (including biomass feedstock and packaging materials) as well as the ecological environment surrounding each plant site. The Company is expected to further promote issue assessment for natural carbon sink projects from 2026 to 2027, and to study the feasibility of incorporating natural carbon sinks into its overall climate- and nature-related strategy, while integrating such efforts with the existing greenhouse gas reduction pathway and carbon neutral target, and continuing to move toward a direction that balances ecological conservation and the Company's sustainable development.