About This Report

Shannung Foods Co., Ltd. (hereinafter referred to as "Shannung Foods" or "the Company") hereby publishes its 2024 Sustainability Report to fully disclose to all stakeholders the Company's annual performance, management strategies, and future commitments across the three dimensions of Environment, Social, and Governance. This report marks Shannung Foods' seventh consecutive year of publishing an annual sustainability report, fully demonstrating the Company's firm commitment to transparent disclosure and continuous improvement.

The information in this report covers the period from January 1, 2024, to December 31, 2024, and its boundary encompasses Shannung Foods Co., Ltd. itself (including Taipei Headquarters, Taichung Flagship Plant, Changhua Noodle Plant, Tainan Sauce Plant, Kaohsiung Beverage Plant, a total of five major production bases). The disclosed data covers 100% of the Company's total revenue as presented in its financial statements. This report is prepared in accordance with the Global Reporting Initiative (GRI) Standards 2021 Edition, and also references international frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD), the Sustainability Accounting Standards Board (SASB) Agriculture category, and the United Nations Sustainable Development Goals (SDGs).

All quantitative data in the main body of this report has undergone third-party independent assurance, conducted by SGS Taiwan Ltd. (SGS Taiwan) in accordance with AA1000 Assurance Standard Type 1, Moderate Level of Assurance. The assurance statement can be found in the appendix. Should you have any questions or suggestions regarding the content of this report, please feel free to contact the Company's Corporate Sustainability Promotion Department via the corporate sustainability hotline (02-2738-8800 ext. 3310) or email (esg@shannung-foods.com.tw).

Regarding information disclosure principles, this report adheres to the eight reporting quality principles required by the GRI Standards: accuracy, balance, clarity, comparability, completeness, timeliness, reliability, and sustainability context. Financial data is based on consolidated financial statements audited by accountants, while environmental and social data are compiled from measurement systems at each plant, human resources, and occupational safety management systems, and are included in the disclosure after internal cross-verification. All data involving estimations (such as Scope 3 emissions) are annotated with calculation methods and assumptions in the relevant chapters to ensure readers can correctly understand the data's implications.

The full text of this report is divided into five major chapters: Chapter 1, "About This Report," explains the preparation guidelines, stakeholder engagement, and materiality assessment; Chapter 2, "Corporate Governance," discloses the Company's overview, board operations, risk management, and supply chain management; Chapter 3, "Environmental Sustainability," focuses on climate, water resources, and the circular economy; Chapter 4, "Social Responsibility," covers food safety, talent, occupational safety, and community contributions; Chapter 5, "Sustainability Indicators Appendix," provides a GRI and SASB content index and third-party assurance statement. This structure aims to help readers with different needs quickly locate issues of interest.

This year's report was coordinated and prepared by the Corporate Sustainability Promotion Department, and a cross-departmental editorial team was established, with members covering representatives from finance, environmental safety, human resources, quality assurance, legal, procurement, and public relations departments. Three rounds of internal review procedures ensured that all data sources are traceable and that there are no significant omissions in the content. The draft report was reviewed by the Sustainability Committee, approved by the Board's ESG and Sustainability Committee, and then finalized before being sent to SGS Taiwan for external assurance, forming a complete quality control chain of "department submission—cross-departmental review—governance level approval—external audit."

Compared to the previous year's report, this year's disclosure scope includes three important adjustments: First, "farmers" have been added as an independent stakeholder group, reflecting the Company's emphasis on sustainable transformation at the agricultural source; Second, estimated data for Scope 3 greenhouse gas emissions Category 1 (purchased goods and services) and Category 4 (upstream transportation and distribution) are disclosed for the first time, expanding the carbon inventory boundary; Third, the perspective of Double Materiality analysis has been introduced, simultaneously measuring the impact of issues on corporate finance and on the external environment and society. All the above changes have been explained in the corresponding chapters to maintain comparability of information between years.

The future goals, plans, and outlook contained in this report are forward-looking statements made based on information available and reasonable assumptions at the time of report preparation. Actual results may differ from expectations due to factors such as regulatory changes, market conditions, climate conditions, or supply chain situations. Shannung Foods will continue to track and disclose the achievement status in subsequent annual reports. The electronic file of this report and all historical versions are published in the sustainability section of the Company's official website for stakeholders to download and review, and an accessible reading version is simultaneously released to enhance information accessibility.

2024 was a profoundly significant year for Shannung Foods on its journey of sustainable transformation. Facing food security challenges brought by global climate change and a rapidly growing consumer demand for healthy and transparent diets, we chose to no longer view "sustainability" as an optional add-on to corporate social responsibility, but rather as a core strategy deeply integrated with business growth and brand competitiveness. Last year, the Company's greenhouse gas emissions decreased by 18.3% compared to the baseline year, achieving its mid-term target ahead of schedule; the food safety management system was fully upgraded to the latest FSSC 22000 V6 version; supply chain human rights due diligence covered 342 core partners; and the integrity governance mechanism also completed ISO 37001 anti-bribery management certification. These milestones fill me with deep satisfaction and further strengthen my belief that leading by example and doing the right thing is the only path to building long-lasting brand trust.

In the food industry, we are at the core of the value chain encompassing agriculture, processing, logistics, and consumption, and have both the responsibility and the ability to influence the entire supply chain to move towards a more sustainable direction. Therefore, this year we launched Taiwan's first large-scale farm carbon management alliance in the food industry, collaborating with 12 contract farms to promote source-level carbon reduction; concurrently, we established the "Rural Sustainable Innovation Fund" to provide financial and technical support to young farmers interested in sustainable agriculture. I believe that only when our agricultural partners can also share the fruits of sustainable transformation can Shannung Foods' net-zero commitment truly be realized.

Looking ahead to 2025, Shannung Foods will continue to deepen its climate actions: planning to complete carbon emission baseline inventories for the fourth and fifth plants, launch a Scope 3 supply chain emission reduction roadmap, advance natural packaging material replacement plans, and expand the employee stock reward system to allow more partners to share in the Company's growth. We pledge that while pursuing continuous growth, we will never do so at the expense of the environment, employee well-being, or integrity principles. We sincerely thank all stakeholders for their long-standing trust and support for Shannung Foods.

Reflecting on the operating environment this year, global geopolitical uncertainties, fluctuations in international bulk agricultural product prices, and increasingly evident extreme weather in Taiwan have all brought unprecedented challenges to the food manufacturing industry. Yet, amidst these challenges, Shannung Foods delivered solid results with consolidated revenue of NT$8.24 billion, a 6.8% year-on-year growth, and earnings per share of NT$8.32, proving that sustainable operations and financial performance are not a trade-off, but rather mutually reinforcing. I have always believed that only a company that truly values the environment and society can demonstrate the strongest resilience amidst turbulence.

Governance is the foundation of sustainability. This year, the Board of Directors completed its re-election, with independent director seats increasing to 45% and female director representation reaching 36%, and an ESG and Sustainability Committee established at the board level as a permanent oversight body. We also formally incorporated sustainability indicators such as carbon reduction progress, food safety incident rates, and employee satisfaction into the performance bonus evaluations for the CEO and first-tier executives, with a weighting of 30%, ensuring that sustainability responsibility is no longer just a slogan, but a commitment directly relevant to the management team. This institutional design aims to ensure that sustainability strategies can persist and remain unwavering across terms and personnel changes.

Employees are Shannung Foods' most valuable asset. This year, I am particularly pleased to see the employee stock ownership trust participation rate increase to 82% and the overall voluntary turnover rate drop to a five-year low of 4.7%, which signifies our colleagues' trust in the Company's future. We continue to narrow the gender pay gap to 1.4%, invested over 42,000 hours in training, and strengthened workplace mental health support. How far a company can go depends on how long its talent is willing to stay with it; taking good care of every partner is always what I care about most.

The recognition from international sustainability assessments is an important validation of Shannung Foods' efforts. This year, the Company's MSCI ESG rating was upgraded to AA, its CDP Climate Change questionnaire rating improved to B, and it was included as a constituent stock of the Taiwan Sustainability Index, further receiving the TCSA Taiwan Corporate Sustainability Award Platinum Award for Overall Performance in the Food and Beverage Industry. These honors do not belong to any individual, but to the collective efforts of all 2,847 colleagues and all supply chain partners. We will transform every recognition into motivation for continuous improvement.

Sustainability is a journey without an end. From carbon neutrality by 2040 and RE100 by 2035, to enabling every farmer, every employee, and every consumer to share the fruits of transformation, Shannung Foods is willing to take the most steadfast steps, one by one, towards that better future. We thank all stakeholders for their continuous trust and encouragement, which gives us the courage to persist in doing what is right.

Shannung Foods adheres to the AA1000 Stakeholder Engagement Standard (SES) and, guided by the five principles of "dependency, responsibility, influence, diverse perspectives, and tension of concern," has identified six major stakeholder groups: shareholders and investors, employees, consumers, suppliers and farmers, government agencies, and communities. This year, "farmers" have been added as an independent stakeholder group, reflecting the Company's commitment to sustainable transformation at the agricultural source.

Communication methods for each group are diversified: For shareholders and investors, corporate briefings, ESG investor days, and sustainability report launch events are held; for employees, quarterly all-hands meetings, direct supervisor interviews, and anonymous feedback platforms are available; for consumers, real-time interaction is conducted through the official LINE account (with over 820,000 followers) and customer service centers. In 2024, a total of 14 stakeholder engagement activities were held, collecting over 4,300 valid opinions.

This year's stakeholder concern survey was conducted using a dual approach of online questionnaires and in-depth interviews, with a total of 2,187 valid questionnaires collected. The analysis results show that "Food Safety and Quality," "Climate Change and Carbon Management," and "Supply Chain Sustainability" are the three most concerned topics, which highly align with the Company's materiality assessment results, and will serve as the basis for prioritizing sustainability strategies in 2025.

Regarding the stakeholder identification methodology, the Company annually convenes a cross-departmental working group by the Sustainability Committee. First, a list of groups significantly related to the Company's operations is inventoried based on the five principles of AA1000SES. Then, these groups are prioritized along two axes: "degree of influence on company decisions" and "degree of being affected by company operations." This ultimately established six core groups. This identification result is not static; this year, due to the advancement of contract farming carbon reduction plans and increased demand for agricultural source emission management, farmers, originally grouped under "suppliers," were formally separated as a seventh engagement category, reflecting the principle that engagement subjects are dynamically adjusted with operational strategies.

For each group, the Company designs differentiated communication frequencies and response mechanisms. Shareholders and investors are communicated with through quarterly corporate briefings, annual general meetings, and ad-hoc one-on-one meetings, with a focus on financial performance, corporate governance, and ESG risks; employees are engaged through quarterly all-hands meetings, monthly departmental meetings, annual satisfaction surveys, and a year-round anonymous feedback platform, focusing on compensation and benefits, career development, and workplace safety; consumers interact in real-time through customer service hotlines, official LINE accounts, social media platforms, and traceability systems, focusing on food safety, ingredient transparency, and health claims, forming a real-time and two-way communication cycle.

For suppliers and farmers, the Company deepens engagement through annual supplier conferences, on-site audit guidance, contract farming briefings, and technical consultant on-site presence, focusing on quality standards, adherence to sustainable codes of conduct, and source-level carbon reduction cooperation; for government agencies, the Company actively participates in public comment periods for food safety regulations, industry associations, and net-zero policy discussions; for communities, relationships are maintained through food bank partners, food and agriculture education schools, and local environmental activities. Opinions raised by each group are compiled and responded to by the corresponding responsible departments within the deadline, and significant issues are reported to the Sustainability Committee for follow-up, ensuring that engagement is not merely a formality.

On December 10, 2024, the Company hosted its annual "Sustainability Multi-Stakeholder Dialogue Day" at the Taipei Cultural and Creative Building, inviting 42 institutional investor representatives, 9 non-governmental organizations, and 3 consumer rights group representatives for over 3 hours of direct dialogue on climate risk disclosure quality and agricultural supply chain human rights issues. Following the event, 18 specific recommendations were compiled, 12 of which were approved for adoption at the Board's ESG and Sustainability Committee meeting in Q1 2025, including strengthening the granularity of Scope 3 data disclosure and adding a real-time pesticide residue testing query function to the "Shannung Traceability" platform, demonstrating the Company's determination to translate stakeholder feedback into concrete actions.

The engagement effectiveness with the newly added farmer group is particularly noteworthy. Through the 12 demonstration farms participating in the contract farming carbon reduction program, the Company established regular channels for technical exchange and feedback collection with farmer partners. Concerns raised by farmers, such as the impact of extreme weather, fertilizer costs, and harvest stability, directly fed back into the Company's supply chain resilience strategy and source-level carbon reduction planning. This in-depth, two-way engagement in the fields allows Shannung Foods to more accurately grasp upstream agricultural risks and ensures that sustainability strategies are truly rooted at the forefront of the value chain.

Shannung Foods conducts its annual identification of material topics in accordance with the GRI 2021 "Materiality Principle." The assessment process is divided into four stages: extensive collection of ESG issue lists (including SASB Agricultural Processing Industry Standards, GRI Topic Library, and peer disclosures), stakeholder impact assessment, business impact matrix analysis, and final approval by the Sustainability Committee. This year, a total of 8 material topics were identified, covering both positive and negative impact aspects.

The eight material topics are ranked by impact as follows: (1) Food Safety and Quality Assurance, (2) Climate Change Risk and Carbon Management, (3) Agricultural Supply Chain Sustainability Management, (4) Circularity of Packaging Materials, (5) Water Resource Management, (6) Talent Development and Employee Well-being, (7) Contribution to Community Food Security, (8) Corporate Governance and Integrity Management. Among these, "Agricultural Supply Chain Sustainability Management" was listed in the top five for the first time this year, reflecting that supply chain carbon management has become the most concerned disclosure item for institutional investors.

For the eight material topics, the Company sets specific quantitative targets and tracks them quarterly. For example, the carbon management target is a 25% reduction from the baseline year by 2025 (18.3% already achieved ahead of schedule); the food safety target is zero major food safety incidents (continuously achieved); the water resource target is a further 10% reduction in water intensity by 2026; and the packaging material circularity target is to achieve 100% recyclable or reusable packaging materials by 2025.

The materiality analysis adopts a Double Materiality perspective, with the horizontal axis measuring the degree of impact of issues on corporate finance, and the vertical axis measuring the degree of impact on the environment and society. Issues scoring 3.5 points (out of 5) or higher on both dimensions are placed in the upper-right quadrant of the matrix and defined as material topics. This year's matrix analysis methodology received external review comments from the Deloitte Risk Advisory team, ensuring that the identification process meets the rigorous requirements of GRI 3 Material Topics disclosure standards.

During the issue collection phase, the working group systematically inventoried four sources: GRI 2021 Universal and Sector Topic Standards, SASB Food & Beverage Processing (FB-PF) disclosure topics, benchmark analysis of domestic and international peer sustainability reports, and key areas of concern from international sustainability ratings (MSCI, CDP, DJSI). This initially compiled a total of 27 candidate issues covering the three dimensions of environment, social, and governance. This list was then subjected to a dual screening process using stakeholder questionnaires (2,187 responses collected) and internal business unit impact assessments, gradually converging on a group of issues with substantial importance, ensuring that the materiality assessment considers both external expectations and internal operational realities.

Compared to last year, three significant changes occurred in the ranking of material topics this year: First, "Agricultural Supply Chain Sustainability Management" jumped from 7th to 3rd place, reflecting the simultaneous increase in the financial and impact importance of supply chain issues following the launch of contract farming carbon reduction plans and Scope 3 emissions disclosure; Second, "Circularity of Packaging Materials" was newly listed as an independent material topic, responding to high consumer and investor concern regarding single-use plastic reduction; Third, "Climate Change Risk and Carbon Management" continued to hold steady in the top two, indicating that carbon issues have become a long-term core challenge for the food industry. This change in ranking will directly guide the Company's resource allocation and strategic priorities for 2025.

Each material topic corresponds to a clear management mechanism and specific GRI standard disclosure: Food safety corresponds to GRI 416 and is primarily managed by the Quality Assurance Department; climate and carbon management corresponds to GRI 305 and is primarily managed by the Environmental Safety Department; supply chain management corresponds to GRI 414 and is primarily managed by the Procurement Department; water resources correspond to GRI 303; talent development corresponds to GRI 401; community contributions correspond to GRI 413; and corporate governance and integrity correspond to GRI 205. For each topic, a first-tier executive is assigned as the person in charge, with short-, medium-, and long-term quantitative targets set, and quarterly reports submitted to the Sustainability Committee, forming a complete management closed-loop of "identification—targets—execution—tracking—disclosure."

To ensure the impartiality and rigor of the materiality assessment, in addition to commissioning an external professional organization to review the methodology, the Company also submits the list of material topics and matrix results to the Board's ESG and Sustainability Committee for review and approval, ensuring that the governance level has a full understanding of the key sustainability issues facing the Company. In the future, the Company will continue to review the dynamic changes of material topics annually and closely monitor the development trends of international sustainability disclosure standards (such as ISSB S1, S2), adjusting identification methods and disclosure frameworks as appropriate to maintain the forward-looking nature of information disclosure and alignment with international standards.