| Sustainable Development Practice

Implementation Item

Implementation status

Summary

I. Does the Company have a governance structure that promotes sustainable development, and have a special unit or designate an existing unit for the task of sustainable development promotion? Does the Board of Directors of the Company authorize the management to handle relevant matters? How does the Board of Directors conduct supervision?

1. To fulfill the corporate social responsibility, facilitate the improvement of the economy, environment and society, and achieve the goals of sustainable development, the Company has established the “Tatung System Technologies Inc. Sustainable Development Best-Practice Principles” with reference to the “Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and relevant laws and regulations. The Principles have come into force after being reviewed by the Audit Committee and approved by the Board of Directors, and submitted to the shareholders’ meeting. The same procedure is also applicable to the amendment of the Principles. The Principles were established on August 08, 2014. The last amendment was made on March 03, 2022. and published on the official website of the Company.
2. Chief corporate governance officer: The CSO of the Company acts as the chief corporate governance officer concurrently to implement the corporate sustainable development. For this, a corporate sustainable development committee has been established with three groups: 1. Corporate Governance and Ethical Management Group is subject to the Human Resources Department. It perform dissemination regularly, establish regulations, and urge employees to act accordingly; 2. Sustainable Supply Chain Group is subject to the Procurement & Logistics Department. It implements green procurement and reduces the impact of the transport on the environment to facilitate its sustainable development; 3. Social Care Group is subject to the Corporate Image & Public Relations Section to encourage employees to participate in sustainable development and social welfare activities.
3. In addition to arranging senior management to participate in the education, training, and dissemination of the issues on corporate sustainable development every year. The Company formulates sustainable development implementation plans, defines key performance indicators (KPIs), and combines these with the performance evaluation system to review the effectiveness of the implementation.
4. After being approved by the Board of Directors, the corporate sustainable development policies, systems or relevant management approaches, and specific action plans of the Company are reported to the shareholders’ meeting. When shareholder raise a proposal related to the corporate sustainability, the Board of Directors shall take it into account and incorporate it as a proposal of the shareholders’ meeting, and shall reported to the Board of Directors in the current year.

II. Does the Company conduct risk assessment for environmental, social and corporate governance issues related to the Company’s operations in accordance with the materiality principle, and formulate relevant risk management policies or strategies?

1. The Company provides communication channels for stakeholders (shareholders, employees, suppliers, and customers) to ask questions and express their opinions, and, with respect to the corporate sustainability topics that stakeholders are concerned about, conducts questionnaire surveys to identify the issues on the sustainable development of the environment, society, and corporate governance based on the materiality principle.
2. As for the materiality principle issues, the Company has established relevant risk management policies and strategies with reference to the GRI: Core Option of the Global Reporting Initiative (GRI), the considerations in the GRI Standards, the characteristics under the industry standards (Software & IT Services) of the Sustainability Accounting Standards Board (SASB), and the UN SDGs.
3. The Company takes actions against potential risks in the strategies, operations, finance and other hazard risks, and enhances corporate risk management for the long-term responsibility of sustainability to the industry and society and for the development of the internal audit based on the corporate governance, including detection, assessment, reporting and handling of risks.

III. Environmental issues
(1) Does the Company have an appropriate environmental management system established in accordance with its industrial characteristics?

(2) Is the Company dedicated to enhancing energy efficiency and using recycled materials with low impact on the environment?

(3) Does the Company assess the current and future risks and opportunities which climate change potentially brings to the Company? Does the Company take measures in response to climate-related issues?

(4) Does the Company make statistics of the greenhouse gas emissions, water consumption and total waste weight in the past two years? Does the Company have policies for energy saving and carbon reduction, reduction of greenhouse gas emissions, reduction of water consumption or other waste management policies?

(1) The Company is a member of the information service industry. For the environmental pollution generated during the manufacturing process, we implement internal energy saving and carbon reduction policies as well electronic documentation control and approval. The Company also assist customers in the implementation of energy saving plans, and externally promote the “ESG Zero Carbon Integration System” solution to make a contribution to the energy saving and carbon reduction with our professional information service knowledge. In addition, the tsti Group has implemented the ISO 14001 environmental management system at the Group level since 1996 to improve the environmental performance on an ongoing basis.

(2) Optimization of electronic documentation control and approval to reduce the consumption of paper and thus the impact on the environment: We promote and set up an electronic documentation control and approval system for HR operations. Traditional paper is replaced with transmission of electronic files to reduce the paper at the office. Resource recovery and waste sorting facilities are available on each floor in the office building. The recovered resources, equipment and materials are sorted effectively for reuse to improve the energy efficiency. We implement recovery of waste computers and toner cartridges. The personal data in the media (e.g. hard disks) are deleted and the media are destroyed physical before they are scrapped to ensure compliance with the Personal Data Protection Act and the resource regeneration principle in favor of the environment.

(3) To cope with the risk of the climate change to the Company, we have established emergency response management regulations, conducted different emergency response activities and performed public safety and fire service inspections to ensure the safety of the employees and uninterrupted serviced in the emergency. As for the opportunity, we have checked the in-house products and those sold under agency in accordance with the characteristics of the industry to which the customer belongs, and assisted customers in the establishment of the measures to cope with climate change and setup of required systems and soft applications. Externally, the Company promotes the “ESG Zero Carbon Integration System” solution to make a contribution to the energy saving and carbon reduction with our professional information service knowledge.

(4) We support the environmental protection polices of the government and are dedicated to the implementation of the energy saving and carbon reduction strategies. The air conditioners were cleaned in May and October 2021 to improve their efficiency and reduce the load to the equipment effectively. As a result, the carbon emissions generated from the power consumption in 2021 was reduced by 7.89 tCO2 (13.7% or 15,717 kWh) compared to 2020. As for the old, damaged and unusable IT equipment, we have removed usable components and resold scrapped equipment and parts to recycle service providers to earn an amount of NT$4,170. We hope to create the highest benefit in energy saving and carbon reduction this way. The Company will continue taking the fulfillment of the corporate social responsibility and the sustainable operations as the goal in the future.

 * The rising freight in 2021 led to increased fuel consumption of transport cars and an increase of CO2 emissions.

IV. Social issues
(1) Does the Company have management policies and procedures in accordance with relevant regulations and international human rights conventions?

(2) Does the Company establish and implement reasonable employee benefit measures (including remuneration, leave and other benefits)? Is the operating performance or results properly reflected in the remuneration for employees?
(3) Does the Company provide employee with a safe and healthy work environment, and provide safety and health education to employees regularly?

(4) Does the Company have effective programs for development and training regarding employees’ career skills?

(5) Does the Company conform to the relevant regulations and international standards with respect to customer health and safety, customer privacy, marketing and labeling for products and services? Does your company establish the relevant consumer rights protection policies and complaint procedures?
(6) Does the Company have a supplier management policy that requires suppliers to comply with the regulations concerning environmental protection, occupational safety and health or labor rights? What’s the status of its implementation?

(1) The Company has established and announced our human rights policy, formulated related labor management regulations in line with relevant laws and regulations, and observed the basic principles of labor rights specified in the international human rights conventions to protect the basic rights of the employees. In addition, the Company does not adopt discriminatory treatment in our employment policy and disseminates relevant labor regulations irregularly. A labor–management meeting is available to coordinate the labor–management relationship, promote labor–management cooperation, and facilitate harmony between the employees and the management. The Company has established an employee welfare committee to provide subsidies and organize events for the employees.
(2) The Company has established employee welfare measures (including remuneration, leave and other benefits), and reflected the business performance or result appropriately in the remuneration to the employees. In addition to distributing remuneration to employees depending on the business performance every year and enabling them to share the operating results with the Company, we implement the Employee Stock Ownership Plan (ESOP) and provide subsidies for the employees to subscribe the shares and share the operating results. We implement the volunteer bonus leave to encourage employees to participate in volunteer services and make contributions to the society.
(3) To protect the personal safety of the employees, the Company has taken out group insurance for them and arranged free health checkups on a regular basis. We implemented the ISO 45001 certification successfully in December 2020. Since then, The on-site physician, occupational health nurse, and the personnel in charge of OSH matters arrange various health management activities, health promotion lectures, and public safety and fire inspections irregularly to ensure the safety of the employees and enhance their awareness of safety. We continue optimizing internal and external occupational safety and reducing related hazards. To build a more friendly environment, a breastfeeding room is available to enable female employees to feed their babies after birth and work without concerns. To cope with COVID-19, the Company has implemented online digital health management, reporting and follow-up of body temperature, and instant reporting of testing results since 2020 to protect the health of the employees and reduce the risk of infection. The Company was selected by Common Health Magazine as a Corporate Health Responsibility (CHR) company in 2021. We are committed to implementing employee health promotion activities in the four aspects of awareness, exercise, food, and assistance. The Company was also certificated by the Sports Administration, Ministry of Education, as a Sports Enterprise in 2021 and received the Badge of Accredited Healthy Workplace from the Health Promotion Administration in the same year to demonstrate the fulfillment of the corporate social responsibility, build a health workplace together with the employees, and establish a healthy supportive environment.
(4) The Company places much importance on the training of the employees and believes that the power of differentiation comes from the increase of the human capital. We check the competences every year. Each of the more than 40 professional functions has 5 to 6 professional competences. The checkup of the competences is conducted using the HR system to analyze the strengths and weaknesses of the employees in their competence and establish more premium talent development strategies. In addition, the Company has established a career development and talent retention plan and encouraged employees to improve their professional capability continuously and create a win-win situation for their personal competency and growth. The communication and learning competences are added to the four core competences of innovation, service, team, integrity to enhance the learning organization and culture continuously. 2,399 employees participated in the physical training courses (excluding digital learning courses) of the Company in 2021 to a total of 9,578 hours.

(5) In addition to passing the software quality CMMI ML3 certification, ISO 27001 Information Security Management System certification, and ISO 20000 IT Service Management System certification, the Company is recognized by the Industrial Development Bureau, Ministry of Economic Affairs, as a technology service information organization – IT service organization, an information security service organization in the IS category, and a AI service organization in the AI category to build a more complete information service system and assist corporate clients in building an information environment of high competitive strength jointly. The marketing materials of the Company are sent in the form of EDMs. The paper-based solution manuals are printed with environmentally friendly ink and paper. We have set up an advertisement hotline and a consultation email box for the questions that customers have on our products. We provide attentive aftersales services by setting up a 0800 customer service hotline and an online repair reporting and query website.
(6) We incorporate the energy-saving electronic products sold by the suppliers in the product line and urge manufacturers to enhance their R&D in the products favorable for energy saving and carbon reduction in order to fulfill the corporate social responsibility. We take purchase of the products with the Green Mark as the first priority. Some of the products we sold have been attached with Taiwan Energy Label. In addition to entering into relevant agreements, the supplier of the Company shall sign a supplier commitment letter containing the terms of corporate social responsibility. Where the supplier acts in violation of any terms in the commitment letter, the Company may terminate or withdraw any orders or any agreements entered into with the suppliers immediately.

V. Does the Company use internationally accepted standards or guidelines as a reference for preparation of reports, compilation of the corporate sustainability report, and other reports disclosing non-financial information of the Company? Are assurance or guarantee opinions from any third-party verifying agent acquired for the aforementioned reports?

The Company discloses the information on our sustainable development and promotion of social care activities on our corporate website. The Tatung System Technologies Inc. Sustainable Development Best-Practice Principles are reviewed or amended by the Audit Committee and submitted to the Board of Directors for adoption and implementation. They are then reported to the shareholders’ meeting and announced on the MOPS according to laws.
There is a corporate sustainable development section on our official website for disclosure of relevant actions. The disclosures are recorded chronologically.

VI. In the event that the Company has established sustainable development best-practice principles in accordance with the “Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies,” please describe the deviations between the implementation and the established principles: none.

VII. Other information useful for understanding of the implementation of sustainable development:
Major ESG and CSR implementation results in 2021:
1. Selected as a nominee for the 6th Taiwan Mittelstand Award of the Industrial Development Bureau, Ministry of Economic Affairs, again
2. Won the ASOCIO Outstanding ICT Company Award
3. Won the Taiwan Mobile Outstanding Supplier Sustainable Governance Award
4. Won the China Life Insurance Outstanding Supplier Award – Annual Outstanding Sustainable Suppliers
5. Won the 1111 Job Bank 2021 Happy Enterprise Gold Award
6. Certificated by the Sports Administration, Ministry of Education, as a Sports Enterprise
7. Won the Customer Service Excellence Awards – Best Intelligence System Supplier for four consecutive years

Corporate governance
Legal compliance and announcement of updated internal regulations and systems: Appoint of a chief corporate governance officer, tsti System Technologies Inc. Corporate Governance Best Principles (1100505), tsti Ethical Management Best-Practice Principles (1100505), tsti CSR Best-Practice Principles (1100505), completion of the CSR audit of the suppliers in the financial and telecommunications industries, such as Taiwan Mobile, Far Eastone, Fubon Financial Holding, China Development, Mega Financial Holding, Yuanta Financial Holdings, and United Microelectronics. Selected as a nominee for the 6thTaiwan Mittelstand Award of the Industrial Development Bureau, Ministry of Economic Affairs; won the ASOCIO Outstanding ICT Company Award; passed the ISO 20000 IT Service Management System certification and the CMMI ML3 software quality management certification.

Sustainable environment
tsti is an information service company and does not have factories or machines. The carbon and water footprints and wastes are generated from the offices, such as waste sorting; use of water and electricity; company car; refrigerant used in refrigerators, air conditioners and water dispensers; and high speed rail (energy saving). We does not have the statistics on water consumption and total waste weight. As in the previous year, the greenhouse gas emissions are calculated based on the degree of the electricity used, fuel costs of company cars, and fees charged by transport service companies. The carbon emissions generated from the power consumption in 2021 was reduced by 7.89 tCO2 (13.7% or 15,717 kWh) compared to 2020. The Company will continue taking the fulfillment of the corporate social responsibility and the sustainable operations as the goal in the future. In 2021, we promoted and signed green power purchase letter of intent, drew up the environmental policy, conducted the supplier questionnaire survey on sustainability, and disseminated protection of sustainability of the environment among the suppliers. The Company promotes the “ESG Zero Carbon Integration System” solution for enterprises to make a contribution to the energy saving and car reduction with our professional information service knowledge.

Social welfare
The human rights policy of the Company is established in accordance with laws and labor management regulations, and subject to the basic principles of labor rights specified in the international human rights conventions. We continue improving, updating and jointly building a friendly workplace, workplace violence elimination statements, sexual harassment prevention measures, regulations for application with respect to the rights specified in the Personal Data Protection Act, and relevant disseminations.
We implement ISO 45001 Occupational Health and Safety Management Systems and continue improving the work environment for the employees in a systematic way, protecting their health, winning the trust of the customers to the Company, and improving our business performance
Care for disadvantaged people is an ongoing task. For this, we donated grant-in-aids to two disadvantaged pupils whom the World Vision is taking care of in remote areas. In addition to the “Yuanta Financial Holdings – Collection of Epidemic Prevention Kits for Love” by donating masks and caring for disadvantaged people, we supported Hotai Finance’s “Rich Food and Love” for Vulnerable Families and Happiness by acting as volunteers of food banks, won the 1111 Job Bank 2021 Happy Enterprise Gold Award, and Certificated by the Sports Administration, Ministry of Education, as a Sports Enterprise.

Information disclosure
There is a section on the official website for announcement of annual event records. Please visit the sustainability section on the website. (Official website > Sustainability >Sustainable Development Practice) (https://www.etatung.com/Home/ShowProductionInfoIdea?ID=310cf384-8c63-4e1f-a3c6-c89a88104749 )