Khung phát triển bền vững của PVCFC

SUSTAINABLE DEVELOPMENT

FRAMEWORK OF PVCFC

STRATEGIC ORIENTATION FOR SUSTAINABLE DEVELOPMENT

OVERVIEW

PVCFC's sustainable development orientation ensures alignment with the vision and common goals of creating real values for stakeholders and taking into account development trends of fertilizer industry and around the world but not limited to issues such as climate change, energy, circular economy, waste treatment, employee rights and benefits, etc.

SUSTAINABLE DEVELOPMENT AND VALUE CHAIN

As a fertilizer manufacturer, PVCFC's business and production activities have environmental and social impacts throughout the value chain. We are aware of the importance of identifying, evaluating and managing the impacts of PVCFC's production and business activities on environmental and social factors throughout PVCFC's value chain.

R&D

We have analyzed effects of products from the research state on factors such as greenhouse gas emissions, water, soil health as well as biodiversity. Based on our understanding of these impacts, we always create environmentally friendly products causing not harm to farmers.

Input materials - Production - Distribution

We understand the impacts of raw material use on the environment as well as other impacts during the production process. Therefore, we always set annual goals of input materials saving as well as improvement of e energy efficiency in the production process. PVCFC carries out a series of initiatives to improve input material usage efficiency and reduce average energy consumption per product.

Usage

We also understand the impacts of fertilizer products on the environment, water, soil and biodiversity. We have been implementing many measures to increase farmers' understanding and sustainable fertilizer practices to minimize the impact on the environment.

Waste management

We are now analyzing and managing the impacts of waste across our value chain. We have managed and treated waste during the production process according to regulations of the law. We are studying environmental impacts of using fertilizer including the environmental and social impacts of fertilizer packaging.

STRATEGIC ORIENTATION

Based on our analysis, we have worked out basic sustainable development strategic orientation framework of PVCFC as follows:

Accordingly, PVCFC's sustainable development orientation will be consistent with its business strategy, complying with regulations of the law, reflecting the expectations/concerns of relevant stakeholders. PVCFC's sustainable development orientation will also be based on general practices such as GRI, SDGs and specific practices of the Fertilizer industry including practices of the International Fertilizer Association (IFA). Sustainable Development Framework is built with three pillars: Environment, Society and Governance. For each pillar, we identify the areas of sustainable development of our focus. Periodically, BOD and Executive Board will review this sustainable development framework and make appropriate adjustments.

COMPLIANCE WITH ENVIRONMENTAL AND SOCIAL REGULATIONS

PVCFC always strictly complies with regulations of the law on environmental protection, waste and gas pollution control, resource saving, etc., actively doing researches and studying in-depth knowledge related to current environmental management regulations and ensuring assurance management according to ISO 14001:2015 standards.

PVCFC has issued quality, safety and environmental policies; issuing guidance regulations and procedures of implementation, carrying out inspection and testing to control the environment at manufacturing areas and other areas where the Company is operating. Policies, regulations, and procedures are widely disseminated to all employees to raise their sense of responsibility for community and living environment, etc.

The Company also coordinates with businesses, organizations with rich experience in assessing and improving environmental conditions.

All of the Plant's waste sources are strictly controlled and minimized in quantity quality control is ensured to meet regulations before being discharged into the environment.

In 2023, Ca Mau Fertilizer Plant always strictly controls and records no case of serious environmental incident at the plant area. PVCFC always fully meets the requirements, policies and regulations of the Law on Environmental Protection, contributing to environmental protection funds towards environmental community responsibilities.

SUSTAINABLE DEVELOPMENT GOVERNANCE

SUSTAINABLE DEVELOPMENT GOALS

Since 2023, with the sustainable development orientation, the Company has established a sustainable development working group, assigning Mr. Nguyen Duc Hanh - non-executive Director the job of building sustainable development strategic orientations and supervising implementation. The working group includes members of the Executive Board and leaders of relevant functional divisions.

In March 2024, the Company has established the Environment - Society and Governance Committee (ESG Committee) as a specialized unit under BOD with the function of advising, consulting, and supervising sustainable development and corporate governance related areas for BOD (announced on the Company's Website).

PVCFC'S SUSTAINABLE DEVELOPMENT MANAGEMENT STRUCTURE

BOARD OF DIRECTORS: ESG COMMITTEE

Building and adjusting organizational and operational regulations of the ESG Committee and submitting to BOD for issuance.
Advising BOD to build PVCFC's long-term orientation, strategy and goals toward sustainable development
Supervising action programs, projects and sustainable development activities of Executive Board (including the General Director and Deputy General Directors) based on PVCFC's orientation, strategy, and long-term sustainable development goals approved by the Board of Directors.
Monitoring the information disclosure process on sustainable development (including sustainable development content in the Annual Report, Sustainable Development Report and other information disclosure).
Annually reviewing and evaluating compliance with Corporate Governance Policy (handbook), Code of Business Conduct (CoC) and other corporate governance policies.
Proposing BOD to approve ESG risk management policies.
Monitoring the ESG risks management and ESG related opportunities including climate change risks and opportunities.

EXECUTIVE BOARD

The General Director takes main responsibility and assigns Planning & Investment Division the job of coordinating and linking all departments/divisions/units to build plans and monitor implementation and making ESG report.

DIVISION/DEPARTMENT/UNIT

A focal officer of each department/division/unit is in charge of ESG-related issues, synthesizing and reporting to Planning & Investment Division to report to General Director/BOD/General Meeting of Shareholders.
The Audit and Risk Management Committee and the ESG Committee monitor the implementation of the ESG strategy at BOD level and report to the BOD.

ENVIRONMENTAL AND SOCIAL RISK MANAGEMENT

Being aware of possible risks, the Company has issued Risk Management Regulations, including management principles under the Company's risk management activities as the legal basis for the BOD, Audit and Risk Management Committee General Director, Supervisory Board, Internal Audit Division and affiliated units of the Company carry out risk management, applied consistently and closely associated with the Company's Mission, Vision, Core Values and Strategic Goals.

The Company's risks are identified, evaluated and prioritized by the appropriate management level based on "Risk Measures" assessing the possibility of risk as well as level of impact of the risks. All Company’s employees must comply with the risk management framework, regulations and procedures approved. Details of the risk policy are described in the Risk Management section from page 184 to page 189 of the Report. Social Environmental risk management policy is essential to sustainable governance and an important key to driving PVCFC to improve its sustainable development efforts now and in the future.

The Company's risk appetite statement addresses aspects related to the Company's operations, including environmental - social risks and IT risks.

The Company commits to complying with regulations of the law (including regulations on labor safety and environment) of Vietnam and countries and territories where PVCFC is operating.

The Company has proactively identified and ensured compliance requirements, establishing and operating management systems including (but not limited to): Code of Business Conduct (COC), policies, procedures and instructions in investment, business and production operations and implementation of contracts/commitments with customers, suppliers and partners.

Based on PVCFC's risk management framework, PVCFC is now focusing on the following environmental and social risks including:

Gas leak

In order to manage and control these risks, the Company has issued operating procedures and production related regulations and strict compliance requirements to prevent and minimize gas leak, etc
The Company has installed monitoring stations at necessary places to continuously monitor air quality to detect leaks early and take timely measures to handle.

Climate Change: Due to the characteristics of the Company's operations with natural gas as input materials and large-scale energy consumption in the production process, PVCFC creates a large amount of greenhouse gas emissions during the production process.

Continuously improving input gas efficiency
Conducting research on improving production processes toward energy efficiency.
Using renewable energy.
Doing research on greener products for the environment, etc.

Wastewater and solid waste have had effects on air quality and biodiversity

Regulations and processes for clean water use, waste and wastewater treatment are also developed and issued to ensure compliance with quality standards of Vietnam and other countries/territories where PVCFC is operation.
Signing solid waste treatment contracts with professional units with extensive experience, being recognized by reputable organizations or competent authorities.

The risk of chemical fertilizer overuse compared to crop needs can affect soil health and water pollution, causing impacts on eco-system and creating greenhouse gas emissions

Product instructions for crop care are disseminated under various forms: distributing leaflets, posting on the website, on the 2Nong app on mobile devices, organizing live seminars for agents/farmers on how to use products at the right time, right product, right dosage, minimizing losses and negative impacts on the environment

The risk of a high job quit rate reduces operating efficiency and it requires more resources for the company to recover.

The Company has built a culture based on its original culture identity, mobilizing employees to participate in practice to always ensure Physical - Spiritual - Intellectual Strength and long-term working orientation as well as showing their dedication to work.
The Company's policy ensures that the payment of salaries, bonuses, and remunerations to employees in consistency with their effort and in compliance with payment time or payment of taxes according to each party's responsibility with full payment of social insurance.
The Company has set up talent attraction policies, training personnel according to expert ranks, and internship programs to supplement human resources.

The risk of underemployment can lead to challenges of career promotion faced by laborers. This risk can arise due to a variety of factors, including economic downturns, technological advances, changes in industry demand and changes in Government policies.

Always ensuring stable employment for labors, minimizing the risk of unemployment that can lead to social disruption.
Creating conditions to increase the rate of local labor use.
Investing in new projects to increase revenue and profits, increasing job opportunities for other subjects.

Every unit, individual and staff member is responsible for social and environmental risk management related to the Company's production and business activities. Social, environmental management criteria are assigned to divisions/departments and will be periodically evaluated by each level of management.

INFORMATION RISK MANAGEMENT AND REPORTING ON SUSTAINABLE DEVELOPMENT

Information risk management or sustainable development practices are regulated according to the regulations on information/document management issued by BOD.

Upon Reporting on Sustainable Development, BOD sets up a working group, relevant divisions/departments send information/documents to the working group for synthesizing and reporting. The Audit & Risk Management Committee and the ESG Committee are responsible for monitoring, and BOD approves information disclosure on sustainable development to ensure planned requirements.

CONTEXT OF SUSTAINABLE DEVELOPMENT IN 2023

In recent years, the global fertilizer industry has faced great challenges and opportunities with the influence of important international events, typically the COP26 Conference held in 2021, where Vietnam committed to achieve net zero emissions by 2050. Commitments from the COP26 conferences also emphasizes the importance of transition toward sustainable agricultural system, in which the Fertilizer industry plays a key role due to its significant contributions of greenhouse gas emissions from input materials to production and especially during the process of fertilizer use. In addition, the European Union has issued the Carbon Border Adjustment Mechanism Regulations (CBAM) in 2023, putting a tax on carbon intensive goods that are entering the EU based on the intensity of greenhouse gas emissions. glass during the production process, requiring the Fertilizer industry to increase transparency and reduce CO2 emissions. In addition, guidelines from specialized associations such as the International Fertilizer Association (IFA) also continuously encourage global fertilizer manufacturers around the world to focus on applying new fertilizer production technologies toward performance optimization and sustainable development. Finally, it is necessary to mention the global trend of a transition toward production of sustainable fertilizer products with clean energy as input materials, doing research on new fertilizer products with the goal of not only meeting crop nutritional needs but also reducing environmental impact. These macro changes have posed both challenges and opportunities for fertilizer companies to evaluate opportunities as well as manage sustainable development related risks.

In the domestic market, we have been hit by regulations on reduction of greenhouse gas emissions; regulations on greenhouse gas inventory as well as social and environmental information disclosure regulations. This requires us to constantly improve production and management processes to better meet requirements of emission reduction and making it public.

Despite multiple challenges, we understand and are proud of being a part of this trend, with a strong commitment to the future of sustainable agriculture.

Stakeholder Engagement

PVCFC always focuses on building and developing cooperative relationships, sharing and connecting benefits with stakeholders. Therefore, we always seek to study the aspirations and concerns of stakeholders via many interaction channels and in many different forms. Then, we can identify and evaluate the priorities of stakeholders and develop plans and activities to meet the needs of stakeholders.

Identifying and prioritizing stakeholders

STEP 1

Identifying key stakeholders: PVCFC identifies all stakeholders directly or indirectly affected by PVCFC's activities, decisions or business results. Accordingly, stakeholders identified by PVCFC include both internal and external parties with related interests:

Shareholders - Investors
Partners
Customers
Suppliers
Community, society
Government and State agencies
Press and media
Employees

STEP 2

Collecting contributed opinions of stakeholders: PVCFC interacts with stakeholders through various methods such as survey, interview, workshop or online platforms to collect their contributed opinions, feedback, concerns and expectations.

STEP 3

Prioritizing stakeholders’ concerns: We analyze the input information collected from stakeholders to identify common themes, trends, and priorities. Then, we rely on factors such as the importance of the issue, the impact of the issue on PVCFC and its stakeholders, urgency and feasibility to determine the priority level of the concerns of stakeholders.

STEP 4

Building action plans: Once priorities are identified, we work out action plans to address priority concerns by articulating goals, strategies and specific timeline to address stakeholders’ concerns; assigning responsibilities to stakeholders and allocating appropriate resources.

HIGH 5

Communicating and implementing engagement action: PVCFC communicates the results of the prioritization process and action plans to stakeholders in a transparent and regular manner to ensure alignment of prioritized concerns of stakeholders and the organization’s goals.

HIGH 6

Monitoring and evaluating: PVCFC continuously monitors and evaluates the effectiveness of stakeholder engagement efforts as well as progress made in addressing stakeholders’ priorities.

Stakeholder Prioritization Matrix

MATERIAL TOPICS

PROCESS TO IDENTIFY MATERIAL TOPICS

To ensure that PVCFC's efforts and resources create the highest results in sustainable development activities, PVCFC evaluates and identifies material topics based on GRI 3 standards, GRI 2021 version. Accordingly, key sustainable development topics are identified by 4 main steps:

STEP 1: ANALYZING THE SITUATION

To study the internal and external issues capable of affecting the sustainable development issues, PVCFC has carried out activities to analyze and study the situation:

Conducting market analysis and fertilizer industry analysis.
Identifying parties in interests and related parties
Analyze production and business activities, products and markets
Analyzing the situations affecting sustainable development activities domestically and internationally and by industry.
Consulting opinions with customers, partners, shareholders, investors for analysis.
Consulting opinions with experts and consulting units in specific strategic projects.

STEP 2: DETERMINING ACTUAL AND POTENTIAL IMPACTS

Given the above situation, we have determined the impacts of the Company's production and business activities from the perspective of actual and potential environmental and social impact, both positive and negative perspective. These factors are determined through various sources of information, from assessment reports, internal analysis to external reports and analysis. We also refer to opinions of parties in interest on issues that the Company needs to pay attention from the perspective of environmental and social impacts.

STEP 4: PRIORITIZING MATERIAL TOPICS FOR REPORTING

Regarding actual negative impacts, the significance of these impacts is measured by the consequences it causes in fields of finance and non-finance.
Regarding potential negative impacts, the significance of these impacts is measured by two main groups of factors: the consequences it creates and the likelihood. This assessment is similar to what we conduct in our Enterprise Risk Management ERM) framework.
We conduct measuring of positive impacts based on the potential scale and scope that these positive impacts are created actually and potentially.
While the process of assessing the significance of the impacts, we also take into account the opinions of parties in interests.
Assessment of the significance of impacts helps us focus all resources to create the best results as well as help us determine the priority of report contents.