We conducted a materiality assessment to identify important sustainability issues.

We will conduct annual materiality assessments to replace, remove, and/or add issues. The process and results of the materiality assessment will be disclosed in our annual ESG reports in a transparent manner.

Materiality Assessment Process

• ESG Issue Pooling

  We analyzed global economic, social, and environmental issues, as well as international standards and evaluation metrics, to understand the economic, environmental, and social impacts of Pan Ocean’s business activities.
  This analysis identified 31 key sustainability issues.

• Materiality Analysis of Issues

  To prioritize these 31 issues based on materiality, we used various evaluation methods, including industry benchmarking, media research and analysis of ESG inquiries from investment institutions. The results of these evaluations were then quantified.

  Financial Materiality

  International Financial Recommendations and ESG Evaluation Indicators	Analysis of finance-related international recommendations and ESG evaluation indicators, including KCGS, DJSI, SASB and IFRS
  ESG Inquiries from Investment Institutions	Collection and analysis of requested information from the capital market
  Surveys of Employees and Investors	Analysis of key issues from a financial perspective

  Impact Materiality

  International Initiatives and Guidelines	Analysis of international initiatives and guidelines, including GRI and ESRS
  Media Research	Analysis of major news articles in 2023
  Industry Benchmarking	Analysis of issues reported in sustainability reports from similar industries
  External Stakeholder Surveys	Analysis of key issues from the perspective of external impacts

• Measurement of Issue Impact

  We conducted a stakeholder survey using the concept of double materiality to identify key issues from a financial perspective and those affecting external stakeholders. To determine the significance of external impacts (impact materiality), we quantified each issue's likelihood, severity and scope, and incorporated these factors into the overall impact scores.

  Summary of the Pan Ocean Stakeholder Survey

  Period	February 21, 2024 ~ February 28, 2024
  Method	Online survey
  Participants	Pan Ocean/POS SM employees1) and external stakeholders2)

  • 1) Employees and executives (including board members)
  • 2) External stakeholders: Customers, suppliers, local communities/NGOs, government/agencies, academic/research institutions, media organizations, ESG evaluation agencies, consulting/advisory firms, shareholders/investors

• Selection and Validation of Key Issues

  Through the materiality assessment, we identified four key issues and five general issues by considering both financial and ESG (environmental, social, and governance) impacts. For each key issue identified, we disclose the management approach, implementation performance and mid- to longterm performance targets. The report comprehensively reflects these key issues and the materiality assessment process and reporting accuracy have been verified.

• Board Reporting and Strategic Integration

  The key issues identified were reported to the ESG Committee within the board of directors, and these issues were taken into account when developing the company-wide risk management strategies.

Application Method of Double Materiality

1. ESG Issue Investigation

   ESG Disclosure Index

    

   Investigation of domestic and international ESG disclosure standards and guidelines

   • - GRI, IFRS, ESRS, etc.

   ESG Evaluation Index

    

   Investigation of requests and evaluation criteria from domestic and international ESG evaluation agencies

   • - KCGS, SASB, MSCI, DJSI, Sustainalytics etc.

2. Materiality Assessment

   Financial Materiality

   Inward Importance

   Issues that Pan Ocean needs to manage with priority for financial stability and business creation

   • - Finance-related international recommendations and ESG evaluation indexes
   • - ESG inquiries from investment institutions
   • - Employee surveys

   Social and Environmental Materiality

   Outward Importance

   Issues that Pan Ocean needs to manage importantly for external impact management

   • - International initiatives and guidelines
   • - Media research
   • - Benchmarking of similar industries
   • - External stakeholder surveys

3. Impact Measurement

   Pan Ocean Impacts

   Inward Impact

   Consideration of potential impacts on Pan Ocean’s finance and business

   Identification of business areas causing social and environmental impacts

   Stakeholder Impacts

   Outward Impact

   Measurement of the likelihood that important issues will affect stakeholders(probability of occurrence)

   Measurement of the magnitude of the impact of important issues on stakeholders (severity)

   Identification of key stakeholders likely to be affected by significant issues (impact range)

4. Identification of Key Issues

   Top 4 Key Issues

    

   #1. Greenhouse Gas and Energy Management

   #2. Enhancement of Safety and Health Management

   #3. Establishment of Ethics and Compliance Management

   #4. Collaborative Growth Activities and Supply Chain Sustainability Management

Materiality Assessment Results

Based on the results of the materiality assessment, we selected top nine priorities as the material topics to report. This report contains details on our management activities and responses for each of the topics.

Materiality Assessment Matrix

No.	Financially Materiality	Impact Materiality
1	EGreenhouse Gas and Energy Management	EGreenhouse Gas and Energy Management
2	SEnhancement of Safety and Health Management	SCollaborative Growth Activities and Supply Chain Sustainability Management
3	GEstablishment of Ethics and Compliance Management	GEnhancement of Safety and Health Management
4	EManagement of Environmental Pollutants (Including Spill Risks)	EEstablishment of Ethics and Compliance Management
5	EClimate Change Response	EEstablishment of a Human Rights Management System
6	SEstablishment of a Human Rights Management System	SClimate Change Response
7	EStrengthening of Environmental Management Systems	EInvestment in Eco-Friendly Vessels
8	SRespect for Diversity and Prohibition of Discrimination	SSecuring of New Growth Drivers

Management of Key Issues

	Issue	Stakeholder	Inward/Outward		Impact		Page
			Financial	Social·Environmental	Likelihood	Type
E	Greenhouse Gas and Energy Management	Environment, Local Communities	●	●	Actual	Positive	24-32, 90
S	Enhancement of Safety and Health Management	Suppliers, Customers	●	●	Actual	Positive	44-51, 98, 100
G	Establishment of Ethics and Compliance Management	Suppliers, Customers	●		Actual	Positive	75-80, 103-104
S	Collaborative Growth Activities and Supply Chain Sustainability Management	Suppliers, Customers		●	Actual	Positive	52-53, 101
E	Climate Change Response	Environment, Customers	○	○	Actual	Positive	24-32, 90
S	Establishment of a Human Rights Management System	Suppliers, Customers	○	○	Actual	Positive	54-57, 98
E	Management of Environmental Pollutants (Including Spill Risks)	Environment, Local Communities	○		Actual	Positive	40-42, 92-93
E	Investment in Eco-Friendly Vessels	Environment, Suppliers		○	Actual	Positive	37-39, 93-94
S	Respect for Diversity and Prohibition of Discrimination	Suppliers, Local Communities, Customers	○		Potential	Complex	58-65, 95-97, 99, 101

* In scoring the results of the materiality assessment, we set thresholds for both financial and social/environmental materiality, and then classify issues as ● High or ○ Low based on the scores.