Environmental

Environmental Sustainability Goals

Water

Water is a very important yet limited resource in our manufacturing plants where this precious commodity is critical to our glove production processes. At Hexcare, we are committed to managing and using water in the most cost-efficient way that also promotes the long term sustainability of the environment as well. Our Group targets to achieve a reduction of 10% in overall water withdrawal in 2030 with FYE22 as a baseline. Some of the water saving initiatives that the Group has put in place include:

Implemented
(i) a rain water harvesting system at our Malaysia glove production plants, which saved approximately 1000 meter cubes of water withdrawal for toilet flushing purposes since November 2022.
(ii) Installed filters in the leaching tanks to manage the sludge accumulation, reducing the frequency of water changes and downtime to clean the tanks at Rubberex (M) Sdn Berhad. Through the implementation of this initiative, we reduced the water change frequency from twice a week to once a week, and we have successfully saved approximately 740 meter cubes of water withdrawal per year throughout the Group.

Rubberex (M) Sdn Bhd

Rubberex Alliance Sdn Bhd

On-going
(i) Continuous improvements in production process parameters, particularly in the leaching process that targets reduction in water usage by 20% by end 2023; and
(ii) Re-routing pipes and reusing water from certain operational processes into the production processes where viable and feasible.

Hexcare's glove production plants are housed in within a single location in Ipoh, Perak, Malaysia where we deploy well-established waste water treatment plants and water recycling systems on-site to manage the consumption of water and address water security risks.

Recycled water is reused for general cleaning, gardening, and other non-critical functions within factory grounds. In addition to the systematic monitoring of daily water consumption, the quality of effluent discharges is also closely tracked to ensure that processed water is safely treated before it released to our drainage and local river systems.

Hexcare’s water withdrawal is primarily sourced from the local municipal water supply. In order to minimize dependency on municipal water sources, we are in the process of upgrading our on-site rainwater harvesting system at the Rubberex Alliance Sdn Bhd sites, that would be capable of capturing approximately 3,000 meter cubes of rain water a year, for recycling and use within our factory operations. With this, two out of the four sites, which constitute 50% throughout the company, will be equipped with rainwater harvesting systems. The reduction of municipal water consumption is expected to create more self-sustaining plants, improve efficiency and result in cost savings for the Group. This system is expected to be fully operational by end of 2023.

Besides pollution and emission controls, the Group’s effluent discharges are effectively treated before release to the river systems and reused in the factories. The Group is guided by the Environmental Quality (Industrial Effluent) Regulations 2009 and is in compliance to the design and construction of its industrial effluent treatment systems as well as specifications of industrial effluent treated and/or disposed. The quality of effluent discharges is closely monitored to ensure that processed water is safely treated and pose no threat to the environment before it is released to our drainage and local river systems. In FYE2022, there were no incidences of non-compliances relating to water quality or quantity permits, standards or regulations that resulted in fines, penalties or warnings from the authorities.

In year 2022, our Malaysian plants treated and released approximately 802,000 meter cubes of water back to the local river systems. Compared to water withdrawn from our national water source of 622,000 meter cubes, the ratio of 1.29 implied a higher volume of treated water released relative to that consumed and has improved from the year before. The Group has set a 7% improvement target for this ratio year-on-year to increase the volume of water treated by our effluent plants to be recycled and reused within our factory operations and will strive towards this goal for Year 2023 onwards.

*Water treated is equivalent to water discharged
**Water withdrawn is equivalent to water consumed

The Group also primarily operates in Malaysia, within Ipoh, Perak and Subang, Selangor, where, according to the WRI (World Resources Institute), are not considered water stressed areas (https://www.wri.org/applications/aqueduct.water-risk-atlas). The Group targets to maintain these bases and have no immediate plans to relocate to any water-stressed regions in Malaysia or overseas within the next five(5) years. Nevertheless, we acknowledge that floods, droughts and other water related risk issues brought on by unpredictable weather patterns and climate change will likely impact on the way businesses are organized and operated in future.

Solar Panel

Hexcare believes that efficient usage of energy is an important aspect of being a sustainable company and strives to continuously improve in this regard. On a yearly basis, Hexcare is assessed by a qualified registered electrical energy manager appointed by Suruhanjaya Tenaga Malaysia (Energy Commission of Malaysia) on compliance to relevant legislative and regulatory requirements as well as on efficient management of electrical energy. Where practical and economically viable, several cost saving initiatives were also reviewed and implemented throughout the year, such as the adoption and conversion of conventional lightings to LED types at various parts of the plants to improve lighting efficiency and reduce costs.

In the previous year, Hexcare commissioned the installation of a solar photovoltaic power generation system at its plant, at an approximate cost of RM5.0 million, with the intent of harnessing the power of the sun to produce a form of renewable energy that is clean and environmentally friendly. This investment is beneficial to the Group as a hedge against electricity tariff hikes and is a practical viable approach to conserving and managing energy charges. The electricity cost savings predicted from such investment amounts to between RM1.2 million to RM1.5 million per year; this ultimately translates to higher returns to the Group in the long run. As this project was only completed and commissioned in August 2022, the Group had only just begun to gather data on such energy savings for the last five months of FYE2022.

The electricity yield from our solar panels in the previous year was 212,000 kWh, of which 77,000 kWh was utilized at our plants and 135,000 kWh subsequently exported back to Tenaga National Berhad. Based on this preliminary data, the savings generated from solar energy for the first five months of utilization amounted to approximately RM50,000.

3Rs -Recycle, Reduce and Reuse

i) Preservation of Forests and Biodegradability

Hexcare’s household and certain industrial gloves produced in Malaysia are largely made from natural rubber – they are recyclable as well as biodegradable in soil where the gloves naturally disintegrate into organic matter over time, causing no harm to the environment or water systems. Where possible, plastic and other synthetic non-biodegradable matters in our shipped goods are also replaced with wood products that are sustainable and renewable.

In another tangible effort to reduce carbon footprint, where possible, the Group also promoted the packaging of gloves in the doubled-up 200 piece-pack or 2,000 pieces per carton style so as to optimize paper and chemicals usage, contributing to less wastes, lower costs and a kinder environment in the long run.

ii) Scheduled Waste

Scheduled waste is any waste that has hazardous characteristics and the potential to impact the environment and/or harm the public if exposed. At Hexcare, responsible waste and pollution management entail the proper and correct disposal of wastes or unwanted by-products in accordance with local environmental laws issued by the Department of Environment (DOE).

The types of scheduled wastes generated by our plants include sludge, clinical waste, waste acetone, contaminated containers and other solid wastes. In FYE2022, latex sludge and compounded latex lumps make up the highest proportion of scheduled waste generated.

The disposal and management of such wastes are carried out by competent skilled personnel under the watchful eye of Management to ensure that there is no contamination of ground water, surface water and air quality that could harm the environment or affect human health.

Notes:
Scope 1 emissions refer to direct CO₂e emitted from sources that are owned by the Group, such as our machineries and company owned vehicles
Scope 2 emissions refer to indirect CO₂e emitted from the consumption of purchased electricity
Scope 3 emissions refer to indirect CO₂e emitted from the value chain of our company, including both upstream and downstream emissions

In FYE2022, our Scope 1 and Scope 2 emissions saw an approximate 50% reduction in CO₂e discharges, from 23,495 metric tons (MT) of CO₂e in 2021 to 12,200 MT in FYE2022 due to lower natural gas and purchased electricity consumptions recorded. Further reductions were recorded under Scope 1 itself when we replaced 13 units of diesel-fueled forklifts with 10 units of more environmentally friendly battery-powered ones in the previous year, a decrease of approximately 17%, or 33 MT CO₂e saved. Nonetheless, our Scope 3 emission data ballooned in FYE2022 compared to the previous year as we included business travel, employee commuting, as well as investment data in the current year. At the present time, Hexcare will not be disclosing Upstream and Downstream transportation and distribution emissions due to challenges in obtaining data, but will continue our efforts to report this in the future.

Hexcare is committed to decreasing our absolute GHG emissions for Scope 1 and Scope 2 by 35% by 2025, using FY2022 as the baseline, unless otherwise specified. In addition, our Group has set a long-term target to reduce our absolute GHG emissions for Scope 2 by 10% by 2030, using FY2022 as the baseline.

Hexcare is very much conscious of rapidly rising climate change risks, including those that are Physical and Transitional. In response, we proactively identify and manage such risks and opportunities that materially impact our value creation abilities. Driven by our in-house ESG Committee and under the direction of the Board and Management, we acknowledge the following risks and opportunities that are present in our address of climate change issues:

Risks
• Climate change related disclosures and regulations that would impact on our financial and regulatory reporting; and
• Reallocation of financing from financial institutions into other green-intensive investments that would affect our business funding.

Opportunities
• Management of climate change risks and adoption of greener technology could result in less wastages and contribute to overall cost savings for the Group;
• Stakeholders’ trust and perception could be improved through effective emissions management and disclosures; and
• Positive differentiation in the market for long-term value creation that would benefit stakeholders.

Social

Social Sustainability Goals

Governance

Governance Sustainability Goals

These policies are published on this website, under Investor Relations/Corporate Governance and are available in both English and Malay, for the accessibility and convenience of our employees. We are pleased to report that there were no incidences of disciplinary actions or dismissals of employees due to any violations of the above practices in FYE2022.

The table below outlines the attendance of the Directors and Committee members at Company meetings throughout the year 2022:

# The Nomination Committee and Remuneration Committees of Hexcare have merged on 1st January 2023, and is now known as the Nomination & Remuneration Committee