December 1, 2020

To our stakeholders:

I am pleased to confirm that MODEC reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to sharing this information with our stakeholders using our primary channels of communication.

Sincerely yours,
Yuji Kozai
President & Chief Executive Officer MODEC, Inc.

The MODEC Group believes that respect for human rights is essential in the course of undertaking projects all over the world. Based on this belief, we establish our “Global Human Rights Policy” and endeavor to understand local cultures, traditions, and customs all over the world.

Our “Code of Business Conducts and Ethics” and “Global Human Rights Policy” stipulate the prohibition of child labor and forced labor, and respect for individual human rights. Every employees and officers endeavor to comply with our code of conduct as a member of local communities.

Regarding to prevention of any kinds of discrimination and harassment, we are raising employee and officer awareness by providing various compliance programs.
We support and respect international standards such as the "International Bill of Human Rights*", "Guiding principles on Business and Human Rights", "the ILO Declaration on Fundamental Principles and Human Rights at work" and "Children rights and business principles."

As a company conducting business safely and continuously all over the world, the MODEC group considers it is essential for our business to build a sustainable supply chain which respects environment and social responsibility. We establish its policy as our efforts for human rights, labor issues and environmental conservation, and also, in order to implement an appropriate supply chain for society and environment, we expect all our suppliers to understand, embrace and comply with it.

Complying with international standards for child labor, we request suppliers not to employ workers under the minimum legal working age of the countries and regions where projects are located and not allow work that impairs the development of children.

During the reporting period, we updated our Core Values which have been the guiding principles of how we behave, both as individuals and as a company. By following our new Core Values and activating internal communication, we have successfully enhanced our integrity of human rights in our organization.

As one of a global company's responsibilities and to ensure its continuity, the MODEC Group seeks to develop diverse human resources with shared values. Through establishing labor standards, we promote a working environment in which every individual can achieve their full potential regardless of their nationality or sexuality.

We believe that respect for human rights is essential in the course of undertaking projects all over the world. Based on this belief, we established our “Global Human Rights Policy”. The policy stipulates prohibition in any form of discrimination based on gender or nationality, as well as it prohibits child labor and forced labor.

Additionally, we respect employees' “freedom of association" and "the rights of collective bargaining” through explicit adoption of the International Labor Standards set by International Labour Organization (ILO) and comply with applicable local laws and regulations. We endeavor to ensure that employees' working hours and use of leave entitlements are appropriately managed and excessive overtime work is prohibited by following local legislations.

Furthermore, we ensure compliance with applicable statutory minimum wages and endeavor to pay at least the living wage for employees and shall not unreasonably reduce wages.

We have in place “HSE committee” for the purpose of following aims:
1. Ensuring health and safety of our employees and protection of the environment
2. Set HSSE performance objectives, measure results, assess and continually improve processes through the effective integrated management system
3. Empower and support all employees and subcontractors with the right to STOP WORK or refuse to work in situations where conditions or practices are deemed unsafe
4. Contribute to sustainable development through environmental protection
5. Other important matters recognized as necessary for safety, health and environment protection.

Also, guided by our "Code of Business Conduct and Ethics", we prevent any form of discrimination and harassment.

General Occupational Health & Safety and Environment Manger (executive officer in charge of human resources) chairs the “HSE Committee”, which consist of Occupational physician, Health Supervisor (designated by law) and Representative of workers (appointed by half of committee members in the union).

In addition, we organizes “MODEC Group HSSEQ Executive Committee” supervising and monitoring activities of entire Group‘s occupational health & safety, environment and quality. The committee is chaired by Global HSSEQ Lead and consists of MODEC, INC. CEO, heads of each business units, Chief Compliance Officer and Global HR Lead for supervising and monitoring group wide HSSEQ activities. The status is reported to Board of Directors meeting monthly.

We have established Basic Environment Policy(“the basic policy”). In the basic policy, we declare that we will contribute to “Realization of a Low Carbon society” while also considering health maintenance and environmental conservation. Under the basic policy, we have established 4 general principles regarding Biodiversity, Climate Change, Pollution and Resource Management and Responding to Water Issues.

As a company in Oil & Gas industry, the MODEC Group engages in the prevention of pollution, waste minimization, effective use of water, energy and raw materials through complying with the Marpol Convention on the Prevention of Marine Pollution adopted by the International Maritime Organization (IMO) and environmental laws and regulations in each country and region in which we conduct our business.

We have conducted below activities to minimize environmental impacts;

- Minimize waste produced on our construction site
- Reduce gas flaring under our account
- Reduce oil spills from our offshore floating facility

Above incidents are monitored and tracked by our internal incident management system.

Our Code of Business Conduct and Ethics has been developed to ensure that all directors, officers, and employees working on behalf of the MODEC Group companies (including MODEC-controlled joint venture partnerships, as well as special purpose companies and consortia) will follow the ethical and legal standards that apply to our work. In addition, we expect our business partners who act on MODEC’s behalf—such as suppliers, contractors, consultants, and temporary workers—to abide by the standards of our Code.

The MODEC Group conducts due-diligence on Anti-Corruption before retaining or renewing an agreement with third party intermediary and business partners based on our “Vender Vetting Policy” and “Group Third Party Intermediary and Business Policy”.

In parallel, we conduct training on anti-corruption through E-learning system for our directors, officers and employees once a year and a total of approximately 5,000 employees and officers have attended this period.

We implemented the MODEC Ethics Hotline (the “Ethics Hotline”). Any person may report suspected legal or ethical violations, the Ethics Hotline or by using the Ethics Hotline web portal. The Ethics Hotline is operated by an independent third party and is available 24 hours a day, 7 days a week, and 365 days a year. You have the option to report anonymously via the hotline, provided it is allowed by local law. MODEC will promptly review all reported concerns, investigate, and take appropriate action to address them. Also, MODEC never tolerates retaliation against anyone who makes a good faith report of suspected legal or ethical misconduct.