Biodiversity Management Policy

Guided by the Environmental Sustainability Policy approved by the Board, FENC is aggressive in the implementation of biodiversity management, and nature-related impacts have been incorporated into its corporate risk control procedures. Having committed to abiding by the Kunming-Montreal Global Biodiversity Framework and protecting nature, FENC has established the following long-term visions:

2030: Zero Deforestation

2035: No Net Loss

2050: Net Positive Impact

FENC established the Sustainability Implementation Committee to oversee policy implementation, inter-departmental collaboration and performance review across the entire corporation, including all self-owned operational sites and employees and subsidiaries under FENC’s direct operational control, as well as affiliates, associates, suppliers/contractors and other business partners with significant influence. The Company’s strategies regarding biodiversity are as follows:

1. Evaluate or monitor biodiversity risks and opportunities, including the risks of biodiversity dependencies and impacts, follow the mitigation hierarchy of “avoid, minimize, restore and offset,” establish management measures and integrate biodiversity risk assessment into the corporate risk management process to strive for reducing the impact of operations and the value chain on nature and ecosystems.
2. Include nature-related and biodiversity risks as evaluation criteria when selecting suppliers, other business partners or the location of production sites to avoid operational activities in significant global or national biodiversity areas.
3. Engage with stakeholders on biodiversity issues to enhance the awareness and management capabilities of suppliers and other business partners, forming collective actions in the implementation of environmental empowerment and nature-positive initiatives.
    

Environmental Sustainability Policy

Actions Supporting TNFD

In March 2026, FENC was officially recognized by TNFD as an adopter, the first enterprise in Taiwan’s chemical industry to be included on this list, which underscores the Company’s leadership and strategic foresight in TNFD disclosure.

Nature Governance Framework and Oversight Mechanism

FENC’s nature governance is led by the Board of Directors which oversees the Company’s climate- and nature-related strategies and management guidelines. It also set up a functional committee at the board level, the Sustainability Committee. Within its production business, the Sustainability Implementation Committee was established, with the President of Corporate Management serving as the convenor, collaborating with the production sites and business units of each Business and the Corporate Management to implement climate- and nature-related management actions

Management Procedures for Nature-Related Issues

FENC has adopted the LEAP approach from the TNFD framework to establish management procedures for nature-related issues, integrating these topics into the Company’s management processes. The responsible units coordinate nature-related management tasks, while the Sustainability Team under the Corporate Staff Office consolidates relevant performance outcomes and reports to the Sustainability Committee and the Board of Directors, ensuring the governing bodies effectively manage nature-related issues.

 

Ecological Footprint and Critical Natural Capital Identification in the Value Chain	Critical Natural Capital Risks and Opportunity Identification and Impact Analysis	Setting Measurement Metrics and Management Targets	Monitoring, Measurement and Disclosure
LEAP Approach: L1-L4、E1-E4	LEAP Approach: A1-A4	LEAP Approach: A2、A3、P1、P2	LEAP Approach: P3、P4
Define the scope and boundaries of the nature assessment. Use international nature-related databases to analyze value chain characteristics and establish evaluation principles for Critical Natural Capital. Analyze the value chain’s critical dependencies on ecosystem services, nature-related impacts, and sensitive locations. Consolidate and analyze results to identify and locate Critical Natural Capital and priority management sites within the value chain.	Study international reports and industry status to compile a list of risks and opportunities related to Critical Natural Capital. Identify Critical Natural Capital risks and opportunities in accordance with material risk and opportunity identification principles. Use scenario analysis, financial impact estimation, and other methods to quantify the impacts of material nature-related risks and opportunities, providing information needed for decision-making.	Develop measurement methods for Critical Natural Capital and establish monitoring and performance tracking indicators. Formulate concrete management measures for material nature-related risks and opportunities, and set medium- to long-term action plans. Set clear and traceable management objectives as the basis for performance evaluation and improvement.	Refer to the TNFD framework’s dimensions of governance, strategy, risk management, and metrics and targets to implement nature-related performance disclosure and information communication. Regularly report management outcomes and progress on relevant issues to the Sustainability Committee and the Board of Directors.

 

Nature-related Risk and Impact Assessment Using the LEAP Approach

Following TNFD’s LEAP approach, FENC prioritizes its primary operation sites under the Production Business and critical raw material suppliers as the scope for assessment and considers the comprehensive evaluation of factors such as proximity to sensitive areas, species sensitivity, water risks, pollutant emission profiles, operational scale, management accessibility and value chain significance. The results are applied towards identifying sites, products and services with significant actual or potential impacts on biodiversity.

Data sources encompass internal operational data, site-specific information and supply chain records, supplemented by secondary and modeling data from public databases of international or local governments. At this stage, FENC is focusing on its major production operations and critical raw material suppliers, and the future plan is to gradually extend the scope upstream to include more supply chain tiers and downstream with additional value chain segments. Meanwhile, efforts to engage with suppliers and refine data will continue to enhance assessment accuracy and coverage.
 

Identification of Critical Natural Capital

FENC references the Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE) database to identify potential nature-related dependencies and impacts within its own production operations and across critical raw material suppliers to clarify the interdependencies between the value chain and natural capital.

The key ecosystem services identified are primarily provisioning and regulating services, such as water supply, soil and sediment retention, water quality improvement, water flow regulation, flood prevention and storm mitigation. Certain cultural and knowledge-based services related to material research and development are also identified, such as education, science and research services. The main beneficiaries of these ecosystem services are FENC production sites, employees, suppliers, customers and the communities adjacent to its operational locations.
 

Nature Dependence and Impact Drivers Heatmap

 

Results of Critical Natural Capital Identification

The results identified three natural capital issues essential to FENC’s own operations and critical raw material suppliers: ecosystem structure and biological integrity; water resources; species.

For FENC, stable water supply, water quality regulation and disaster mitigation capabilities pose direct influence over process stability, operational costs and supply chain resilience, while education, science and research services provided by natural systems are beneficial for innovation in material design, green products and eco-friendly technologies.

Meanwhile, FENC recognizes that its operations and supply chain activities may exert pressure on these ecosystem services in the form of pollutant emissions, water withdrawal, disturbances and resource consumption, thus taking management actions in alignment with key climate and nature-related management issues. 
 

Identification of Natural Sensitivity

FENC used multiple tools to analyze natural sensitivities across its value chains. For sites in Taiwan, ecologically sensitive area identification was conducted using the National Ecological Network spatial data published by the Forestry and Nature Conservation Agency, Ministry of Agriculture. For overseas sites, identification was carried out using Key Biodiversity Areas (KBA) spatial data, developed by the Key Biodiversity Areas Partnership. In addition, FENC used the Aqueduct Water Risk Atlas developed by the World Resources Institute (WRI) to assess water resource risks at both its own operational sites and those of its key raw material suppliers.

Finally, by integrating the results of ecologically sensitive area identification and water resource risk assessment, FENC completed its natural sensitivity assessment for both its own operations and key raw material suppliers.
 

Natural Sensitivity Assessment Result of Own Operational Sites

 

The natural sensitivity analysis of key raw material suppliers shows that suppliers in Saudi Arabia have relatively high natural sensitivity ratings because their sites are located near KBAs and involve sensitive species such as Broad-billed Sandpiper. In Taiwan, key raw material supplier sites overlap with areas of concern in the National Ecological Network and involve sensitive species such as Leopard Cat and Eastern Grass-owl, resulting in moderate or above natural sensitivity ratings. In mainland China, key raw material supplier sites are located near KBAs and in areas of high water risks, so many of these suppliers in this region are rated moderate or above in natural sensitivity.

FENC will continue to enhance its management of nature-related impacts across its global key raw material suppliers, advancing together toward a nature-positive growth path.
 

Results of the Natural Sensitivity Assessment for Key Raw Material Suppliers

 

Nature-Related Management Issues Identification Process and Results

Based on the identification results of material climate risks and opportunities and critical natural capital, and with reference to the industry’s nature-related risk and opportunity impact pathways, FENC has identified key climate- and nature-related management issues. These include water resource management and recycling, environmental pollution and emissions control, climate change and GHG management, ecosystem and habitat conservation, green product development and sustainable innovation, as well as waste disposal, recycling and reutilization. These issues remain core focus areas for FENC's ongoing efforts and continuous improvement.

The annual assessment results indicate that eight FENC’s production sites have been identified as priorities for management, including Hsinpu Chemical Fiber Plant, Kuanyin Chemical Fiber Plant, and OPTC in Taiwan, FEIS and tech textiles plant of OTIZ in mainland China, the polyester plant and knitting and dyeing plant of FEPV in Vietnam, and APG Polytech in the U.S. At the same time, FENC has also engaged closely with suppliers to ensure the effective execution of its overall management strategy.
 

 

Actions for Biodiversity Impact Management

Avoid	Reduce	Restore	Regenerate	Transform
Avoid damaging critical natural habitats and ecologically sensitive areas, and reduce the stress of operations on ecosystems. Give priority to adopting eco-friendly and net-zero-oriented production and supply chain models to raise resource use efficiency and reduce GHG and pollutant emissions.	Reduce GHG and pollutant emissions, as well as energy and resource consumption in production processes, through low-carbon and recycling technologies. Improve existing products toward low-carbon, low-pollution technologies and green product design to reduce product carbon footprint and environmental impacts.	Engage in habitat restoration and ecological rehabilitation projects to accelerate the recovery of ecosystem health, integrity, and sustainability. Participate in waste governance and resource recycling mechanisms to reduce long-term environmental impacts.	Develop green materials to promote innovative applications of renewable resources. Assess the feasibility of Nature-based Climate Solutions (NCS), focusing on ecological carbon sink and ecosystem restoration capacity.	Implement science-based climate and nature governance to enhance management effectiveness. Strengthen collaboration with government, industry, and academic institutions to promote energy transition, circular economy, and ecosystem restoration.