20231013_PBRX_Laporan Informasi dan Fakta Material_31448794_lamp2.pdf

COMMENTARY


Sustainable Fitch Assigns Pan Brothers an ESG Entity
Rating of ‘3’
Wed 11 Oct, 2023


Sustainable Fitch has assigned PT Pan Brothers Tbk (Pan Brothers) an ESG Entity Rating of ‘3’
and an entity score of 50, which reflects the company’s average overall ESG profile. The ESG
Entity Rating is designed to indicate the business’ overall impact on the environment and society,
together with a view to the effectiveness of its governance. The ESG Rating report can be
accessed here.


Pan Brothers is a textile producer and one of Indonesia's largest listed integrated garment
manufacturers. The company focuses on manufacturing various types of apparel with medium to
high complexity. Its product segments include technical, functional and activewear garments;
woven garments; cut and sewn knit garments; and personal protective equipment. It is export-
oriented and supplies a wide-ranging client base that includes Adidas, Uniqlo, North Face and
Amer Sports, among others. Its geographical segments include Asia, Europe and America. Asia is
its largest geographical segment, accounting for 61% of its sales revenue.


Pan Brothers' ESG strategy and commitments cover all 13 subsidiaries and are aligned to 10 UN
Sustainable Development Goals, particularly goals 7 (affordable and clean energy), 8 (decent
work and economic growth) and 12 (responsible consumption and production). Sustainable Fitch
views the ESG strategy as developing, although the management's commitment to sustainability
appears strong, with the board overseeing the company's ESG strategy.


The company has not assessed its ESG risks and opportunities in its corporate risk management
strategy. Its subsidiaries are, however, externally audited for environmental performance by its
global partners as part of their supplier agreements. It would be best practice for Pan Brothers to
integrate its ESG strategy with its corporate strategy, and we expect the company to improve its
ESG performance in future years.


Pan Brothers' net-zero or carbon neutrality goal is not yet available to the public, but it has
committed to setting targets to be verified by the Science Based Targets initiative. The company
has indicated to us that it intends to commit to a net-zero target over the next few years, and has
been engaging with a third-party sustainability disclosure platform.


Pan Brothers has positive social contributions. The company has positioned empowerment of
local communities as one of its prioritised social material topics. There are a few notable social
initiatives that Pan Brothers engages in. Its canteen programme enables the company to

encourage the local community to open canteen facilities in its manufacturing sites. Recycling its
scrap fabrics helps generate additional income for the local community. Asking the local
community for available parking space and boarding houses for Pan Brothers employees directly
contributes to the local neighbourhood.


Pan Brothers has also promoted academic scholarships and education subsidy programmes for
its external and internal stakeholders. The company promotes scholarships and tuition
assistance programmes for students across communities, as well as education subsidies for
employee family members.


Pan Brothers has satisfactory corporate governance credentials, with its financial report, tax and
risk management proving highlights. An area of improvement would be enhancing the board’s
gender diversity and disclosing the CEO pay ratio.


GENERAL INFORMATION ABOUT SUSTAINABLE FITCH RATINGS AND OTHER PRODUCTS


Sustainable Fitch's ESG Ratings offer a global solution to assess Environmental, Social and
Governance performance of all asset classes at an entity, framework and instrument level,
helping the ESG financial community make better, informed decisions. It has developed a
modular analysis framework, enabling it to provide a Second Party Opinion (SPO) and a
monitored suite of ESG Ratings including Entity Rating, Framework Rating and Instrument
Rating.


ESG Ratings indicate an entity’s performance, commitment, and integration of environmental
and social considerations into its business, strategy and management, and the effectiveness of
governance. The ratings are provided on a scale of ‘1’ to ‘5’, with ‘1’ being the best and ‘5’ the
worst.


Contact:


Masayo Hada
Associate Director, ESG Ratings
+65 6576 0924
masayo.hada@sustainablefitch.com
Sustainable Fitch
1 Wallich Street, #19-01 Guoco Tower
Singapore 078881


Nneka Chike-Obi
APAC Head, ESG Ratings & Research
+852 2263 9641

nneka.chikeobi@sustainablefitch.com
Sustainable Fitch
19/F Man Yee Building
68 Des Vouex Road Central
Hong Kong


Media Relations: Peter Hoflich, Singapore, Tel: +65 6796 7229, Email:
peter.hoflich@thefitchgroup.com


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