Implementation of Sustainable Development

Implementation ItemImplementation StatusDeviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
YesNoAbstract Explanation
A. Whether or not the Company establishes a governance framework and sets up a dedicated (concurrent) unit that promotes sustainable development; whether or not senior management is delegated by the Board of Directors to deal with sustainable
development issues and the supervision of the Board?		V The Company designates the Finance & Accounting & Business Management & HR Division Group as the responsible unit for promoting corporate sustainable
development. On September 24, 2021, the Board of Directors formulated the Company’s Sustainable Development Best Practice Principles, and authorized the Chairman or his/her designee to propose and implement corporate social responsibility policies, systems or related management guidelines and specific
promotion plans, and to conduct risk assessments of environmental, social or corporate governance issues related to the Company’s operations in accordance
with the material principles. The implementation result for year 2022 and the work plan for next year were reported to the Board of Directors on February 9,
2023, so that the Board could supervise and assist the management team in practicing the corporate social responsibility to promote sustainable performance.		No significant difference compared to Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
B. Does the Company assess ESG risks associated with its operations based on the
principle of materiality, and establish related risk management policies or strategies?		V 

The Board of the Company has established Risk Management Policy and Procedures to regularly review the risks related to finance, laws and regulations, climate change, water and electricity resources, industrial supply chain, cyber security and occupational safety and health, so as to improve its competitiveness in the industry.

The risk management process mainly includes risk identification, risk assessment and risk response.

  • Risk identification:：identifying relevant risk items according to laws and regulations, industrial standards and international development
    trends.
  • Risk assessment：comprehensive consideration of the severity and frequency of the risk.
  • Risk response： formulating control measures and response plans according to the degree of risk. The criteria for evaluating control plans generally include the effectiveness, feasibility and cost.
No significant difference compared to Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
C. Environmental issues

(a). Does the Company establish proper environmental management systems based on the characteristics of their industries?

V (a). The Company has been actively implementing the occupational safety and
health management system and the environmental management system in
accordance with the laws and regulations related to occupational safety and
health and environmental protection. The Company had passed the BSI
certification audit and obtained the ISO14001:2018 environmental management
system certificate in October 2020, and passed the annual certification audit in
August 2022, with the certificate valid until the end of August 2023. The
Company will continue to strive for sustainable environmental management and
system improvement.		No significant difference compared to Sustainable Development Best
Practice Principles for TWSE/TPEx Listed Companies

(b). Does the Company endeavor to utilize energy resources more efficiently and use renewable materials which have low impact on the environment?

V (b). The Company has been reducing the discharge of environmental pollutants from source through machine design, technology improvement, continuous parameter
adjustment and optimization, and promotion of raw material consumption
reduction and recycling. For example: the Company has applied for and
obtained the approval for recycling economic operation of the raw material
cesium iodide, and has set the ultimate goal of “100% recycling rate of cesium
iodide for manufacturing process”.

(c). Does the Company evaluate potential risks and opportunities brought by climate change, and take response measures to climate-related issues?

V (c). The Company follows the “National Climate Change Adaptation Policy
Outline” and implements corresponding measures in line with the government’s
greenhouse gas examination and reduction plan.

(d). Does the Company compile statistics of greenhouse gas emissions, water use, and total weight of waste in the past two years, and does it establish policies for energy conservation, carbon reduction, greenhouse gas emission reduction, water use reduction, and other waste management?

V (d). The Company accepted the first greenhouse gas examination with the base year
of 2021, and had obtained the greenhouse gas examination statement for ISO14064-1:2018 issued by DNV Company after examination on June 21, 2022. In the future, the Company will continue to cooperate with the TPSA to conduct annual greenhouse gas examination and research and plan for greenhouse gas reduction programs and measures.
D. Social issues

(a). Does the Company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?

V (a). The Company formulates relevant employee codes in accordance with labor standards law, employment service law and gender work equality law, etc. to protect the rights and interests of colleagues. The Company also established a corporate culture with equal opportunity according to international labor standards and local labor laws.No significant difference compared to Sustainable Development Best
Practice Principles for TWSE/TPEx Listed Companies

(b). Does the Company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries?

V (b). The Company provides employees with work and life leave plans, festive
bonuses, and group insurance. It also plans a competitive salary level. In
addition to considering the external competitiveness and internal fairness of
salary and benefits, it also has an overview of the Company’s financial and
operating conditions. The industry’s annual salary adjustment strategy and
personal work performance, improve the planning and execution of annual
salary adjustment operations, design and issue incentive bonuses to motivate and
retain outstanding talents.

(c). Does the Company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?

V (c). The Company has dedicated safety and health management personnel responsible for drafting occupational safety and health management plans, promoting the identification, evaluation and control of work environment and operational safety, and other safety and health management matters. The Company has set up an Occupational Safety and Health Committee, which meets regularly every quarter to discuss occupational safety and health issues, and employees can also participate in the discussion of occupational safety and health issues through labor representatives, so that the implementation of occupational safety and health policies can most fit for the needs of employees on site, thus achieving the purpose of safety and health of all employees. The Company has passed the ISO45001 and TOSHMS certifications and obtained certificates in 2020, and is regularly audited and certified by a fair external third party organization (SGS). We will adhere to the spirit of continuous improvement of occupational safety and health management system and actively create a safe, healthy, comfortable and friendly working environment with the goal of “zero accident”. In addition, all of our new and existing employees are required to receive regular occupational safety and health education and
training.

(d). Does the Company provide its employees with career development and training sessions?

V (d). Based on the “medical device regulatory requirements” and the “cognition education” thought, the Company plans a sound certification development framework, and vertically promote relevant courses with professional and management function certifications as the cornerstone, and then promote various departmental trainings horizontally. In accordance with the Company’s operational strategy, we also provide internal/external training channels, such as language learning, E-book learning, on-the-job training and other talent
development networks, to enhance the professional knowledge and skills of our
employees and achieve the Company’s goals and diversified education and
training paths required. We also offer a series of courses on digital transformation, according to the learning blueprints of different targets, and
cooperate with academic institutions to introduce online and physical learning
courses to enhance the intelligent thinking of employee, continue to increase and strengthen the overall competitiveness of employees and organization in response to the AI wave of Industry 4.0 and the integration of cross-domain management talents and technology leaders.

(e). Does the Company comply with relevant regulations and international standards in customer health and safety, customer privacy, and marketing and labeling its goods and services etc., and has it established consumer rights protection policies and complaint procedures?

V (e). The Company has established operating principles that are customer-oriented
and through means of telephone calls, email exchanges and face-to-face meetings, we are able to have solid grasp of customers’ needs so as to formulate improvement strategies to respond to customers in a timely manner. The Company has also established customer service related procedures to ensure that all customer needs can be properly responded to.

(f). Does the Company have a supplier management policy, require suppliers to comply with regulations on environmental protection, occupational safety and health, and labor rights, and what is its implementation status?

V (f). The Company has established a Supplier Code of Conduct Statement, which
requires suppliers to comply with the Code in all business activities, including
labor, health and safety, environment, business ethics and management system,
and to fully comply with the laws and regulations of the countries/regions where
they operate. In addition, the Company will conduct regular audits, and the audit
results are an important factor for the Company to make decisions
E. Does the Company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the Company, such as ESG reports? Do the reports above obtain assurance from a third party verification unit? VThe Company has not prepared the sustainability report for the year 2022.The Company intends to cooperate with the competent authorities to promote
the policy of “Corporate Governance 3.0 – A Blueprint for Sustainable
Development” to collect information and prepare the sustainability report.

F. If the Company has established the Sustainable Development Best Practice Principles based on “Sustainable Development Best Practice Principles for TWSE/TPEx Listed
Companies”, please describe any discrepancy between the Principles and their implementation:

The Company has established the Sustainable Development Best Practice Principles based on “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies”, and its related operations are disclosed on the Company’s website and the Market Observation Post System. All employees and affiliates of the Company are required to comply with these regulations, which have no significant difference compared to Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies.

G. Other important information to facilitate better understanding of the Company’s sustainable development implementation:

The Company adheres to the concept of co-prosperity for enterprise and society, and integrates the sustainable development policy with the management strategy, and jointly promotes sustainable development with the “Innolux Education Foundation”. In 2022, the Company and the Chiayi Forest Area Management Office of the Forestry Bureau held the “Fishing Light. Remaining Light – Shelter Forest Enterprise Volunteer” event, which allowed employees and their relatives to experience the environmental explanation of the shelter forest and to play games to inspire the awareness of caring for the ecological environment; we also carried out beach and forest cleaning work, so that employees could understand the function and importance of the shelter forest and participate in the protection of shelter forest.