Ensuring Customer Safety/Cosmetics | 2025-26 Hanmi Science ESG Report

Material Issue 2-2

Ensuring Customer Safety/Cosmetics

Ⅰ. Corporate Governance

Decision-Making Structure

Hanmi Science operates a cosmetic safety management system with the CEO as the highest decision-maker to systematically manage the safety and quality of cosmetics. The CEO has final approval authority for strategies to ensure customer safety in the cosmetics sector. The Head of Consumer Health Division, who oversees cosmetic customer safety, manages and approves cosmetic safety objectives, annual action plans, major policies, and directions. The QA manager of the Cosmetics Group verifies product safety and compliance with laws and regulations, and ensures consistent application of domestic and international regulations. Through this, from raw material selection to advertising and labeling, potential risks throughout the entire process are pre-inspected and prevented, thereby striving to provide safe and reliable cosmetics to consumers. Through this decision-making structure, Hanmi Science systematically manages all processes related to cosmetic safety and promotes continuous improvement activities with customer safety as its top priority.

Roles and Responsibilities

Category	Key Roles and Responsibilities
CEO	ㆍFinal approval of customer safety assurance strategies
Head of Consumer Health Division	ㆍDecision-making on food and cosmetic safety-related matters ㆍApproval of goals and action plans related to food and cosmetic safety
Cosmetics Group QA Manager	ㆍVerification of product safety and regulatory compliance

Mandatory Professional Training

Target Audience	Frequency	Training Content
Cosmetics Group QA Manager	Once a year	Training for Cosmetic Responsible Sales Managers (Ensuring product safety, quality control, cosmetic labeling and advertising regulations, document management, industry status, etc.)

Ⅱ. Strategy_Risk and Opportunity Identification

Hanmi Science identifies key risks and opportunities that can significantly impact stakeholders and sustainability related to ensuring customer safety, based on the results of IRO analysis, and continuously strives to establish effective response measures based on this.

RISK
Potential for consumer misunderstanding caused by misleading advertising and labeling as pharmaceutical products
Characteristics of Impact	Potential Impact
Affected Stakeholders	Customers, Government, and Related Institutions
Severity of Impact on Society and Environment	Scale ■■■□□ Scope ■■■■□ Recoverability ■■■□□
Expected Financial Impact	Likelihood ■■■□□ Impact ■■■■□
Impact on the Company	ㆍIncreased risk of customer safety incidents such as product use errors, misuse, and side effects ㆍPotential for administrative sanctions due to violations of advertising and labeling regulations
Company's Response	ㆍSystem for drafting product advertising and labeling phrases based on domestic and international regulatory standards ㆍSystem for managing product advertising and labeling phrases to provide accurate and reliable information

OPPORTUNITY
Proactive global regulatory compliance and stringent quality management system
Characteristics of Impact	Actual Impact
Affected Stakeholders	Customers, Government, and Related Institutions
Severity of Impact on Society and Environment	Impact ■■■■□ Scope ■■■□□
Expected Financial Impact	Likelihood ■■■□□ Impact ■■■■□
Impact on the Company	ㆍEnhanced product reliability and global competitiveness ㆍReduced operating costs by proactively preventing regulatory agency sanctions and fines, product recalls, and compensation for damages
Company's Response	ㆍSelection of raw materials conforming to international standards ㆍThorough quality verification through full ingredient safety assessment and skin compatibility clinical trials

Ⅱ. Strategy_Risk and Opportunity Response Plan

System for drafting product advertising and labeling phrases based on domestic and international regulatory standards

Hanmi Science adheres to the following 4P principles, based on its cosmetic advertising and labeling phrase drafting process established in compliance with domestic and international cosmetic laws. Furthermore, for advertisements or expressions that could mislead consumers, a ‘Zero Tolerance’ policy is applied. If a violation is confirmed, immediate corrective action will be taken, along with concurrent education and system improvements to prevent recurrence.

Basic Principles (4P Principles)

System for managing product advertising and labeling phrases to provide accurate and reliable information

Hanmi Science manages product advertising and labeling phrases across all stages — proactive prevention, monitoring, and incident response — to provide consumers with accurate and reliable information. Given the nature of the cosmetics industry, where products are applied directly to consumers' skin, proactive management, real-time monitoring, and immediate response in the event of an incident are crucial to minimize consumer misunderstandings and adverse effects from misuse.

Proactive Prevention	Advertisement Phrase Pre-screening System	ㆍOperation of an advertisement phrase pre-screening system to provide accurate information to consumers
Proactive Prevention	Joint Review Process with Partners	ㆍOperation of a review process with partners' RA teams in accordance with relevant laws (Cosmetics Act, Act on Fair Labeling and Advertising, etc.)

Monitoring	Real-time Monitoring	ㆍReal-time monitoring of consumer inquiries and complaints received through various channels such as call centers, official malls, and social media
	Immediate VOC sharing	ㆍImmediately share all received issues with quality control personnel ㆍThoroughly review product ingredients, manufacturing processes, and distribution stages to identify abnormal signs
	VOC data analysis and reflection	ㆍIdentify recurring complaint types ㆍIncorporate feedback into quality improvement and new product development stages

Incident Response	Activation of 3-step response process	ㆍActivate a 3-step response process: ‘Immediate suspension – Cause identification – Consumer notification’ ㆍImmediately suspend the relevant advertisement and temporarily halt sales and promotion of related products upon problem discovery
Incident Response	Cause Identification and Notification	ㆍIdentify the cause through internal investigation and verification, then provide public notification to consumers

Selection of Raw Materials Conforming to International Standards

Hanmi Science thoroughly complies with cosmetic safety regulations in major countries such as the United States and Europe, providing products that global consumers can use with confidence. To achieve this, from the new product planning stage, we review the list of prohibited and restricted ingredients (Negative List) in each country and use internationally verified safe ingredients. This process is part of our efforts to establish a proactive safety management system at a global level, going beyond mere legal compliance.

Global Regulatory Compliance Status

Category		Key Details	Applicable Regions	Remarks
MoCRA (Modernization of Cosmetics Regulation Act)	Certification	ㆍRaw material safety, manufacturing process, adverse reaction reporting obligations	United States	Certification Completed
EU Cosmetics Regulation	Regulations	ㆍLabeling compliance ㆍCosmetic safety assessment ㆍCMR substance restrictions ㆍAllergen labeling requirements ㆍDesignation of Responsible Person ㆍGMP compliance	EU	Certification in Progress
EU CPNP (Cosmetic Products Notification Portal)	Certification		EU	Certification in Progress
UK Cosmetics Regulation	Regulations		United Kingdom	Certification in Progress
UK SCPN (Submit Cosmetic Product Notifications)	Certification		United Kingdom	Certification in Progress
ASEAN Cosmetic Directive	Regulations	ㆍCompliance with integrated standard ingredient list	Indonesia, Mongolia	Regulatory compliance completed

Global Market Expansion Status

Currently, having completed US MoCRA certification, we have fully entered the US market, and by utilizing ingredients compliant with the ASEAN Cosmetic Directive, we are stably supplying products to emerging markets such as Mongolia, Taiwan, and Indonesia. Additionally, we are in the process of obtaining EU CPNP and UK SCPN certifications for entry into the UK and European (EU) markets.

Thorough quality verification through full ingredient safety assessment and skin compatibility clinical trials

All cosmetic products sold by Hanmi Science, to ensure consumer safety and skin compatibility, undergo both full ingredient verification and human application tests from the product development stage.

Skin Hypoallergenic Test	Content	ㆍConducting human application tests (24–48h patch test / HRIPT)
Skin Hypoallergenic Test	Purpose and Effects	ㆍVerification of skin irritation response ㆍSecuring grounds for skin irritation assessment by patch application ㆍSecuring grounds for labeling hypoallergenic products

Cosmetic Efficacy Clinical Trials	Content	ㆍInstrumental measurement and statistical verification of product-specific functions such as moisturizing, elasticity, and sebum control
Cosmetic Efficacy Clinical Trials	Purpose and Effects	ㆍSecuring grounds for advertising and labeling claims ㆍDemonstrating consumer perceived effects

Compilation of Safety Data for Infants and Toddlers	Content	ㆍSkin irritation test (no age restriction) ㆍAnalysis of 10 types of ingredients according to cosmetic safety management standards ㆍPreparation of documents such as manufacturing records and product standards
	Purpose and Effects	ㆍEnsuring safety for infant, toddler, and children's cosmetics

Paraben 7 types and Phenoxyethanol-free test	Content	ㆍVerification of preservative residue detection using instrumental analysis equipment (7 types of parabens: Methylparaben, Ethylparaben, Isopropylparaben, Propylparaben, Isobutylparaben, Butylparaben, p-Hydrox ybenzoic acid)
Paraben 7 types and Phenoxyethanol-free test	Purpose and Effects	ㆍSecuring substantiated data for cosmetic labeling and advertising ㆍEnhancing consumer trust

Content Stability Test	Content	ㆍEvaluation of whether the contents degrade due to the passage of time or environmental changes (temperature, light, humidity, etc.)
Content Stability Test	Purpose and Effects	ㆍEnsuring consistent quality ㆍSecuring scientific evidence for product claims (e.g., spoilage)

III. Risk Management

Risk and Opportunity Monitoring

Period

Target

Method

Oversight

Operating a proactive prevention-monitoring-incident
response process

Ongoing

All products

ㆍMonitoring consumer inquiries and complaints received through various channels such as call centers, official malls, and SNS
in real-time
ㆍReceived issues are immediately transferred to the product quality control manager for response and resolution

Cosmetics Group

Ⅳ. Indicators and Goals

Key Indicators	2025 Target	2025 Performance	Achievement
Strengthening customer safety through thorough quality control	Achieved 0 product recalls through pre-verification and quality control	Achieved 0 product recalls	Achieved
	100% safety testing performed on all products	100% safety assessment and skin compatibility testing performed on all products	Achieved
	Achieved 100% U.S. FDA MoCRA registration	100% MoCRA registration completed for items subject to export to the U.S.	Achieved
Minimizing legal risks and potential for consumer misunderstanding due to misleading advertising and labeling as pharmaceuticals	Maintained 0 violations of labeling and advertising regulations	Maintained 0 violations of relevant regulations	Achieved

Key Indicators	2026 Target	Mid-to-Long-Term Plan (2030)
Strengthening customer safety through thorough quality control	Safety assessment of all ingredients and skin compatibility tests for new and renewed products 100% performed	Advanced product safety verification system and data-driven quality management system in compliance with global standards
	Establishment of a global certification-based product safety management system and expansion into global markets by enhancing compliance with major global market regulations such as the EU and UK	Enhancing product safety management system and strengthening global brand trustworthiness based on experience in responding to regulations in major global markets
Minimizing legal risks and potential for consumer misunderstanding due to misleading advertising and labeling as pharmaceuticals	Through the advancement of the pre-review process for advertising and labeling copy, strengthening the system to pre-emptively block expressions that could mislead about pharmaceuticals and maintaining 0 product recalls.	By continuously advancing advertising and labeling management guidelines that reflect global regulatory standards, we establish a management system that minimizes the potential for consumer misunderstanding.
	Through enhanced pre-screening and internal education regarding advertising and marketing content, maintaining 0 violations of laws and regulations related to labeling and advertising.	Operating a continuous content management system that responds to global regulatory changes and strengthening internal education.