Sustainability Policy

Sustainability Policy

Smothong Group Public Company Limited (the “Company”) and its subsidiaries are committed to sustainable development and business operations.^[1] By adhering to the principles of Good Corporate Governance^[2] and maintaining responsibility toward society and the environment, we aim to mitigate risks and ensure long-term organizational growth. Accordingly, the Company has established this Sustainability Development Policy (the “Policy”) to express our commitment and define guidelines for transforming the organization toward sustainability. This involves setting directions, strategies, and business development goals that align with the organizational context and the expectations of all stakeholders, leading to sustainable growth through the following 5-step business drive process:

1. Analysis of Organizational Context, Business Relationships, and Stakeholders

1. Study and understand the organizational context by analyzing the vision, mission, corporate culture, value chain, strategic plans, business risks, and opportunities, as well as industry directions and trends.
2. Identify and analyze stakeholders, examining the mutual impacts between the business and its stakeholders, while establishing engagement methods for each group.
3. Define and prioritize sustainability materiality issues by considering the economic, social, and environmental impacts significant to both the business and its stakeholders, which affect the capability for sustainable operations. These issues are prioritized to define directions, strategies, and business development guidelines that align with the organizational context and stakeholder expectations.

2. Policy Setting and Roles and Responsibilities

Define policies and targets for organizational sustainability management, while designating responsible parties and roles for driving key sustainability issues to ensure integrated operations as follows:

2.1. The Board of Directors is responsible for:

1. Defining policies and overseeing corporate governance to achieve sustainable development by conducting business ethically, respecting rights, and maintaining responsibility toward stakeholders, benefiting society, and developing or mitigating negative environmental impacts.
2. Overseeing the analysis of the environment, factors, and risks that may affect relevant stakeholders throughout the value chain, including factors that may impact the achievement of the Company's objectives and goals.
3. Ensuring communication so that all directors, executives, and employees understand the policy, and establishing sufficient mechanisms to facilitate practical implementation, monitoring performance, and regularly reviewing policies and practices.

2.2. The Risk Management Committee is responsible for:

1. Considering and approving the risk register related to sustainable development to ensure that the Company has adequate and appropriate risk management in place.
2. Supporting risk management processes and activities, as well as the development of the organization toward sustainability.

2.3. The Executive Committee is responsible for:

1. Defining the vision, mission, organizational culture, strategic plans, and the overall organizational management framework to achieve sustainable development goals.
2. Defining policies, frameworks, and practical guidelines for developing the organization toward sustainability, including reviewing policies at least once a year for consistency and suitability with the business context, and proposing them to the Board of Directors for approval.
3. Overseeing organizational sustainability operations and the disclosure of sustainability information to stakeholders, including reviewing performance for continuous improvement and development.
4. Ensuring communication so that all personnel understand the policy, and establishing sufficient mechanisms to facilitate practical implementation.

2.4. The Risk Management Working Group is responsible for:

1. Reviewing, examining, and screening the analysis, identification, and assessment of risks related to corporate governance, society, and the environment, as well as preparing additional risk management plans to ensure the business achieves its sustainable development objectives.
2. Executing risk management related to sustainable development in accordance with defined risk management processes, such as risks regarding governance measure deficiencies, failure to obtain construction permits from government agencies, non-disclosure of material information, human rights violations, failure to meet environmental impact regulations, community opposition to factory construction in neighboring areas, climate change, water scarcity, and environmental impacts of factories on communities.

2.5. The Chief Executive Officer, Senior Executive Vice President (Office), and Director (Office) are responsible for:

1. Driving sustainable development initiatives in accordance with the established policy framework.
2. Communicating organizational sustainability efforts to ensure all personnel understand the policy and establishing sufficient mechanisms to facilitate practical implementation.
3. Overseeing organizational sustainability operations and the disclosure of sustainability information to stakeholders, including reviewing performance for continuous improvement and development.

2.6. Individual Departments are responsible for their respective roles and duties, for example:

• Quality Management System, Safety, Occupational Health, and Environment Department: Responsible for overseeing occupational health and safety standards, promoting corporate social responsibility (CSR) activities, and managing impacts and opportunities arising from environmental factors or other assigned tasks.
• Branch Factory and Biogas Departments: Responsible for overseeing production processes to minimize environmental impact, managing wastewater from production, reducing energy consumption, promoting equality between Thai and migrant workers, and supporting corporate social responsibility (CSR) activities.
• Human Resources Department: Responsible for overseeing labor standards, human rights, community relations, and corporate social responsibility (CSR) activities.
• Executive Secretariat Office: Responsible for overseeing documents, contracts, and permits to ensure compliance with laws and good corporate governance principles.
• Company Secretary: Responsible for overseeing legal documents related to business operations to ensure compliance with laws and good corporate governance principles.
• Domestic/International Sales and Marketing, Quality Control, and Logistics Departments: Responsible for responding to customer needs and ensuring customer satisfaction in terms of both product quantity and quality, and services as fully stipulated in contracts.
• Project Engineering Department: Responsible for overseeing investments that take all stakeholders into account to ensure that investments by the Company and its subsidiaries support sustainable development.
• Corporate Strategy Department: Responsible for drafting strategic plans aligned with sustainable development goals while ensuring risk management covers governance, social, and environmental risk factors.
• Accounting Department: Responsible for preparing financial reports in accordance with accounting standards, ensuring no window dressing of financial statements, and maintaining tax transparency.
• Finance Department: Responsible for overseeing and preventing financial fraud and irregularities.
• Raw Material Purchasing and General Purchasing Departments: Responsible for managing suppliers and partners throughout the supply chain.
• Information Technology Department: Responsible for ensuring data security and organizational data access, as well as utilizing information technology innovations to reduce impacts from governance, social, and environmental risk factors.

3. Defining Organizational Sustainability Strategy

1. Establishing the Sustainable Development Framework and Strategy

   The Company and its subsidiaries define short-term, medium-term, and long-term business development strategies for sustainability across economic, social, and environmental dimensions. This includes evaluating risk factors related to corporate governance, society, and the environment (ESG) and establishing risk management plans to ensure the organization achieves its sustainable development goals.

2. Establishing the Sustainability Roadmap

   Define short-term, medium-term, and long-term sustainability action plans to address key organizational sustainability issues based on their priority. Clear Key Performance Indicators (KPIs) are established to provide responsible parties with a definite framework for execution and to enable the assessment of value or impact created for the business.

4. Sustainability Drive Policy Guidelines

4.1. Corporate Governance Dimension

1. Define strategies, visions, policies, goals, and missions that create sustainable value for the business. This includes monitoring management's execution of strategies and ensuring fair treatment, engagement, and communication with all stakeholder groups, as well as providing annual training on corporate governance, social, and environmental issues.
2. Oversee internal control systems and manage risks appropriately to achieve objectives, while maintaining financial credibility and transparency in information disclosure.
3. Operate with integrity, fairness, transparency, accountability, and professional due care. Adhere strictly to work regulations, business ethics, and related policies, such as the Corporate Governance Policy, Anti-Corruption Policy, Conflict of Interest Policy, Whistleblowing Policy, Insider Trading Policy, and Information Technology Security Policy, as well as all applicable laws and regulatory requirements.
4. Promote responsible innovation for society and the environment to enhance efficiency and effectiveness, while creating value for the organization and its stakeholders.
5. Continuously seek ways to develop and improve operational efficiency across all activities by defining targets, measurement methods, monitoring, and sustainability assessments.
6. Promote and support partners, suppliers, and stakeholders throughout the supply chain^[3] to conduct business in accordance with sustainable development guidelines.

4.2. Social Dimension

4.2.1. Labor Standards and Human Rights

1. Manage personnel with fairness, providing training and competency development while ensuring workplace well-being to drive the organization effectively.
2. Treat employees and workers of the Company, its subsidiaries, and/or partners with respect for human dignity and fundamental rights and freedoms, ensuring equality and non-discrimination regardless of race, religion, gender, skin color, language, ethnicity, or any other status.
3. Promote compliance with human rights principles by conducting business activities in accordance with the United Nations Guiding Principles on Business and Human Rights (UNGP), focusing on protection, respect, and remedy, while respecting local customs and traditions.
4. Oversee and protect the safety of employees, workers, and the assets of the Company and its subsidiaries without compromising the rights and safety of others, while safeguarding privacy rights, maintaining confidentiality, and ensuring the proper disclosure and utilization of personal data.
5. Strictly prohibit the employment of individuals under the age of 18 and illegal labor, extending this requirement to the employees and workers of partners and/or stakeholders.

4.2.2. Safety and Occupational Health Dimension

1. Stimulate awareness and instill a corporate culture of safety, occupational health, and a positive working environment.
2. Prioritize and value the safety, occupational health, and working environment of employees, partners, and visitors to create a safe workplace, prevent loss of life and property, and avoid work-related injuries or illnesses, while encouraging creativity and enabling personnel to work at their full potential and capability.
3. Set a "Zero Accident" goal for work-related incidents and elevate safety standards to exceed legal requirements.

4.3. Community Dimension

1. Define policies and guidelines to ensure responsible operation within communities across all activities throughout the value chain, fostering sustainable coexistence.
2. Contribute to social creation and the development of quality of life to promote sustainable self-reliance through local employment and the sourcing of oil palm raw materials from the community. This includes supporting the sustainable production of oil palm and crude palm oil that is environmentally friendly and socially responsible, such as the Smothong Community Enterprise Group for Sustainable Oil Palm Production and the Community Enterprise Group for Sustainable Oil Palm Production (Tha Chana-Chaiya).
3. Respond to customer needs and ensure full customer satisfaction regarding both the quantity and quality of products and services as stipulated in contracts.
4. Promote participation from the community and relevant stakeholders by maintaining an open mind to feedback, engaging in transparent and constructive consultation, treating others with equality, and respecting differences.
5. Cooperate with government agencies, industry associations, business partners, civil society, and other stakeholders to develop and apply sustainability standards and practices.

4.4. Environmental Dimension

1. Manage energy resources conscientiously for maximum efficiency and consider renewable energy alternatives—such as biomass and solar energy—to replace limited fossil fuels.
2. Manage water resources efficiently by promoting conscientious water use for maximum benefit, reducing water consumption, and implementing water reuse and recycling after treatment.
3. Manage garbage, waste, and pollution by emphasizing the "Reduce, Reuse, Recycle" principle, improving production processes, and promoting a Circular Economy. This includes using innovation and technology in relevant processes and building awareness to influence consumer behavior toward selecting environmentally friendly products or services.
4. Manage greenhouse gas emissions that affect climate change by establishing an Organizational Carbon Footprint, setting targets for emission reductions across various activities, and engaging in carbon credit trading and carbon offset activities to mitigate environmental and social impacts.
5. Manage environmental quality and biodiversity in accordance with legal criteria and relevant regulations. This involves investing in, developing, and improving environmental management systems, as well as seeking new measures and methods to elevate the efficiency of environmental quality management and control.

5. Sustainability Disclosure

1. Disclose the Sustainable Development Policy, sustainability performance data, and results across all dimensions in accordance with the criteria and requirements of relevant regulatory agencies, as well as internationally recognized standards, ensuring sufficiency, transparency, and timeliness to demonstrate the commitment to sustainable organizational development.
2. Disclose this Policy to all personnel of the Company and its subsidiaries, as well as stakeholders, for their acknowledgment and adherence in their work and business dealings with the Company.

6. Policy Compliance

Personnel of the Company and its subsidiaries have a duty to support, promote, and perform their work in alignment with the Sustainability Development Policy until it becomes an organizational culture that considers balanced benefits across economic, social, and environmental dimensions.

7. Review

The Company shall propose this Policy to the Board of Directors for review as appropriate, at least once a year.

This Sustainability Development Policy of Smothong Group Public Company Limited was approved by the Board of Directors' Meeting No. 1/2025 on March 28, 2025, and shall be effective from April 1, 2025, onwards until further notice or change.

Surachai Chitratsenee
Chairman of the Board
Smothong Group Public Company Limited