November 30, 2021

To our stakeholders:

I am pleased to confirm that MODEC, Inc. 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,

Takeshi Kanamori
President & Chief Executive Officer MODEC, Inc.

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

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

With the aim of preventing 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.“

During this reporting period, we formulated and publicly announced our Mid-term Business Plan 2021-2023 and, as one of the important themes in the plan, we selected 5 goals from 17 SDGs that our business activities can contribute the most to achieving sustainable society. These include goal related to human rights such as:

Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work

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 environmental and social responsibility. We established “MODEC Human Rights Policy” for safeguarding human rights, preventing labor issues and promoting environmental conservation. Also, in order to implement an appropriate supply chain for society and environment, we expect all our suppliers to understand, embrace and comply with our “MODEC Human Rights Policy”.

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

During this reporting period, we have defined our target for selected SDG in our Mid-term Business Plan:
Our Target for Goal 8: Take measures to eliminate child labor and forced labor

In addition, we have published our first annual Modern Slavery Statement in Australia, which explains the actions taken to assess and address modern slavery risks in our business and supply chains.

During the reporting period, in order to mitigate modern slavery risk in supply chains, we have implemented the measures which include:
- Reinforced our supplier/ subcontractor pre-qualification process to better and timely identify the modern slavery risks
- Developed a risk assessment matrix for key suppliers and subcontractors
- Conducted risk assessment on key suppliers and subcontractors
- Upgraded our standard terms and conditions of purchase orders and subcontracts to reflect the best contract management practices of modern slavery risks

We will continuously review our business processes to proactively identify and address modern slavery risks across our operations.

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 “MODEC 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 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 pay at least the living wage for employees and shall not unreasonably reduce wages.

During this reporting period, we formulated and publicly announced our Mid-term Business Plan 2021-2023 and, as one of the important themes in the plan, we selected 5 goals from 17 SDGs that our business activities can contribute the most to achieving sustainable society. These include goals related to labour such as:

Goal 5: Ensure Achieve gender equality and empower all women
Goal 8: Promote sustained , inclusive and sustainable economic growth, full and productive employment and decent work

During this reporting period, we have been implementing measures based on guidance received from authorities of each government in order to help prevent the spread of COVID-19 virus with the following basic policy.
- To reduce the exposure of people and maintain the safe operations of our FPSO/FSO fleet around the world, we reduce the personnel on board our offshore facilities, and implement a strict access control to our vessels.
- Based on regulations and/or guidelines from the authorities of each country, most onshore staffs around the world work from home.

In addition, we have defined our target for selected SDGs in our Mid-term Business Plan as follows:
Our Target for Goal 5: Improve comprehensive support for diversity and gender equality
Our Target for Goal 8: Promote safe and secure working environments for all workers

We organize “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. The status (including KPI’s) of Group HSSEQ activities is reported to Board of Directors meeting monthly.

While there has been some delays of construction and disruption of oil production due to the COVID-19 pandemic, it is expected that the impact to our HSSEQ activities and integrity is kept at minimal level by several measures implemented across the organization.

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.

During this reporting period, we formulated and publicly announced our Mid-term Business Plan 2021-2023 and, as one of the important themes in the plan, we selected 5 goals from 17 SDGs that our business activities can contribute the most to achieving sustainable society. These include goals related to environment such as:

Goal 7: Ensure access to affordable, reliable, sustainable and modern energy for all
Goal 13: Take urgent action to combat climate change and its impact
Goal 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development

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 International Convention for the Prevention of Pollution from Ships (MARPOL) adopted by the International Maritime Organization (IMO) and environmental laws and regulations in each country and region in which we conduct our business.

During this reporting period, we have defined our target for selected SDGs in our Mid-term Business Plan as follows:
Our Target for Goal 7: Develop and supply clean energy solution based on our technologies
Our Target for Goal 13: Take action to reduce GHG emissions
Our Target for Goal 14: Take action to reduce marine pollution

Additionally, in order to raise awareness of environment, we recognize April 22nd as the Earth Day , the theme of which for 2021 was “Restore Our Earth”, and we encouraged our employees to celebrate Earth Day in the office/ offshore/at homes.

We have made the following efforts to minimize environmental impacts;

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

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

In addition, we, as a company in oil & gas industry, have continued to consider how we can contribute to the reduction of GHG emissions emanating from our offshore facilities through refining the procedure to calculate them.

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”.

During this reporting period,
- We conducted annual training on anti-corruption through e-learning group-wide and a total of approximately 5,000 directors, officers and employees have attended the training.
- We conducted annual global Compliance Week through company intranet inviting all directors, officers and employees across the globe to join. The objective of this event is to raise awareness of compliance by providing daily quizzes, tips on company policies and procedures, and delivering compliance messages from company executives.
- We conducted Compliance & Ethics annual conference which is designed to review the past year’s successes, lessons learned, with a focus on future program development. This year, due to travel restriction, the conference was held online.

- We are implementing the MODEC Ethics Hotline (the “Ethics Hotline”). Any person may report suspected legal or ethical violations by calling 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. A reporter has the option to report anonymously via the Ethics Hotline, provided it is allowed by local law. We will promptly review all reported concerns, investigate, and take appropriate action to address them. Also, we never tolerate retaliation against anyone who makes a good faith report of suspected legal or ethical misconduct.
- We commenced annual campaign to collect compliance certification from officers and employees globally. The certification requires respondents to certify that they have complied and will comply with the CODE and the relevant policies. It also requires to disclose any information, if any, that may have deviated from their obligation under the CODE.
- We conducted the first global compliance ethical survey to collect comments and views of compliance from directors, officers and employees. The input will be used to identify area of improvement for Compliance & Ethics program and assist the company in improving the compliance culture.