Sustainable Development Status

Implementation of Sustainable Development and Deviations from the Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies and Reasons:

Evaluation Item
Implementation Status
Deviations and Reasons
Y
N
Description of Summary
1. Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate sustainable development policies and reporting to the board?
V
The company established a Sustainability Committee in 2022 as the unit to promote sustainable development. The committee is composed of 5 directors, including 3 independent directors, to effectively drive the setting of the company’s sustainability goals. Under this committee, there are subgroups for Corporate Governance and Risk Management, Information Security and Process Management, Environmental Protection and Supply Chain, Employee Care and Social Participation. They are responsible for sustainable corporate proposals, execution of work, and reporting.

 

The committee is convened by the chairman of the board, and each subgroup has a group leader responsible for the communication and coordination of the matters under their group’s purview, and for consolidating the provision of relevant data from their group’s purview, to facilitate the promotion of various projects and respond to major issues of each functional aspect.

 

The Sustainability Committee convenes once every six months in principle, and can be flexibly adjusted if necessary. In addition to the routine attendance of the committee members and the heads of each subgroup, each meeting can invite related personnel to attend the meeting based on actual needs, convened by the head of each functional subgroup.

In 2023, the implementation of the Sustainability Committee’s two meetings was reported to the Board of Directors. The proposals included:

Date of meeting Period Agenda Committee members’ opinions The Company’s response to the committee members’ opinions
May 9, 2023 The 1st meeting in 2023 1. Progress of the 2022 Alltek Technology ESG Report

2. Completion of TCFD Climate-related Financial Disclosures

3. Reorganizing and rebuilding the Alltek Technology official website’s ESG section

Not applicable Not applicable
November 7, 2023 The 2nd meeting in 2023 1. Stakeholder Communication Report for the Year 2023

2. Division of Work and Preparation for the 2023 Alltek Technology ESG Report

Not applicable Not applicable

The board of directors’ supervision and jurisdiction over sustainable development include:

  1. Establishing corporate sustainability policies and overall goals, in the hope that corporate governance, customer care, environmental protection, and social welfare can all develop based on business strategy, and comply with legal regulations.
  2. Reviewing the annual corporate sustainability planning and related proposals.
  3. Reviewing the implementation progress and annual results of various corporate sustainability proposals.

4. Reviewing the corporate sustainability report.

None
2.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
  1. The disclosure period is from January 1, 2023 to December 31, 2023. The risk assessment boundary is mainly based on Quanta Technology’s Taiwan operating headquarters, covering the Xizhi Warehouse and Taoyuan Bonded Warehouse, but not including subsidiaries established for investment or financial tax purposes, and subsidiaries without operational control.
  2. The Sustainability Committee, based on the materiality principle of the Sustainability Report, communicates with internal and external stakeholders. The data is reviewed by the heads of each functional subgroup for correctness and completeness, and the executive office of the Sustainability Committee is responsible for overall planning, communication integration, and data collection. To ensure the implementation and achievement of each material issue, the Sustainability Committee holds a meeting every six months to review the progress of the corporate sustainability management proposal and compile relevant achievement data, stakeholder negotiation results, and sustainability promotion suggestions for review by the responsible supervisors. It is also required to report to the board of directors every year as required.

 

  1. The Company has conducted risk assessments of operational, financial and information security, or environmental issues related to the Company’s business and operating characteristics, and formulated the “Risk Management Policies and Procedures,” which were approved by the Board of Directors in 2022. The Sustainability Committee also conducted an analysis based on the principle of materiality and integrated the assessment data of various departments to assess the sustainable development issues of materiality. The risk category management measures for relevant material issues in 2023 are as follows:

 

Risk category Risk management performance
Operational risk 1. Developed the “Sustainability Development Practices Guidelines” in accordance with the regulations of the securities regulatory authority as a management guideline for economic, environmental, and social risks and impacts, and revised the “Procedures for Sustainability Committee Establishment”.

2. Conducted risk identification and risk assessment in each department to establish risk response and risk monitoring systems.

3. Implemented compliance with laws and regulations, and there were no illegal activities affecting operations in 2023.

4. The audit department formulated an annual audit plan based on risk assessment and executed it according to the plan.

Financial risk 1. Enhance the management of major assets such as inventory and accounts receivable. Hold weekly meetings with department-level supervisors and monthly meetings with department-level managers to review operational status, assess risks, and develop response plans.

2. Plan to establish new joint credit facilities with banks to enhance operational funding.

Information security risk Continuously implement information security protection measures in accordance with the “Cybersecurity Management Policy” and report the execution status to the board of directors in 2023.
Environmental risk Support the governance of climate-related risks and opportunities based on the framework proposed by the Task Force on Climate-Related Financial Disclosures (TCFD), published by the Financial Stability Board (FSB) in June 2017. Disclose annual performance and future goals according to their recommendations. For details, please refer to the section “Climate Risks” in the Company’s sustainability report.
None
3.  Environmental issues
(1) Does the company establish proper environmental management systems based on the characteristics of their industries?
V
(1) The Company has established a suitable environmental management system according to the characteristics of the industry.
None
(2) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have a low impact on the environment?
V

(2)One of the commitments of our “Environmental Policy” is to use natural resources or energy more effectively. Facing the drastic changes in the earth’s climate on which humans depend, droughts, floods, rewriting of historical temperature records, and evolving into shortages and competition for energy and food, energy conservation and carbon reduction has become a highly regarded international issue. Our company’s energy-saving plan starts with the comprehensive implementation of daily life-saving electricity.

  1. Comprehensive implementation of office lights off during lunch break for 1 hour of energy saving.
  2. Office machinery is set to power-saving mode.
  3. For electric appliances or computer information equipment that are not used for a long time, the company colleagues are advised to turn off the host and peripheral equipment power when leaving work on the eve of holidays, to reduce the waste of standby power.
  4. Install taps in pantry and toilet faucets to save water.

In addition, our company’s supplier sustainability management policy has incorporated EU RoHS, REACH compliance into control, by analyzing the chemical composition in materials for risk assessment to reduce the impact of these substances on human health and the environment.

None
(3) Does the company evaluate potential risks and opportunities brought by climate change, and take response measures to climate-related issues?
V
(3) Since 2021, Alltek has been actively supporting the four core elements of governance, strategy, risk management, indicators and targets in the Task Force on Climate-Related Financial Disclosures (TCFD) recommendation book released by the Financial Stability Board (FSB) in June 2016. They have thus initiated the governance operation related to climate change risks and opportunities and disclosed this year’s work progress and results according to its recommended framework. Detailed explanations of the company’s analysis of climate change risks and opportunities have been disclosed in the “Climate Governance” chapter of our sustainability report.

For relevant climate information, implementation status, and greenhouse gas inventory and assurance status, please refer to Attachment 1.

None
(4)  Does the company take inventory of its greenhouse gas emissions, water consumption, and total weight of waste in the last two years, and implement policies on energy efficiency and carbon dioxide reduction, greenhouse gas reduction, water reduction, or waste management?
V
(4) The company is committed to promoting greenhouse gas reduction, water saving and waste reduction, and has collected relevant data and implemented reduction plans for the past two years. From 2021, various future annual quantitative management goals have been set as the baseline, and the measures and results achieved each year have been explained since 2022.

1. Greenhouse gas emissions in the past two years (2022 and 2023) are as follows:

Year Electricity Consumption GHG Emissions
Unit: kWh Unit: metric tons of CO2e
2022 499,356 254.17
2023 496,856 245.94

*Note 1: The carbon emission factor for electricity is based on the standards published by the Bureau of Energy, Ministry of Economic Affairs. In 2022, it was 0.495 kg CO2e per kWh. The emission factor for 2023 is based on the calculation standard of the previous year, as the publication date of the standard for 2022 was in late June. Therefore, the calculation standard for 2023 is temporarily based on the year 2022.

*Note 2: The inventory of GHG emissions from office areas covers the Company’s Taiwan headquarters and offices in Taiwan.

Note 3: The inventory of GHG emissions in warehousing covers the Company’s logistics and warehousing in Taiwan.

With 2021 as the base year, Alltek aims to reduce carbon emissions by 1% each year compared to the base year. In 2023, the total greenhouse gas emissions were 245.94 metric tons, a decrease of 3.24% compared to the previous year. The goal of reducing carbon emissions by 1% annually since 2022 has been achieved. In the future, we will further introduce the ISO14064-1:2018 GHG inventory and obtain third-party verification to expand the implementation of carbon reduction operations.

2. Water usage in the past two years (2022 and 2023) is as follows:

Year Water consumption Increase/decrease compared to the base year
Unit: Cubic meters Unit: Percentage
2022 1,469 -2.33%
2023 1,269 -15.63%

*Note 1: Except for the headquarters of the company, the rest of the offices and logistics warehouses in Taiwan are handled uniformly by the building management committee, and no additional water charges are collected from the company each month. Therefore, the scope of the water consumption and water carbon emission inventory only includes the company’s headquarters in Taiwan.

*Note 2: All water intake is freshwater from third parties and does not come from water stressed areas.

In terms of water resource management, Alltek has set a management goal of reducing water consumption or water carbon emissions by 1% each year from 2021 as the baseline year. The water usage in 2023 was 1,269 cubic meters, a decrease of 13.61% from the previous year (2022) and a decrease of 15.63% from the baseline year (2021). This achievement aligns with the goal of reducing water usage by 1% annually since 2021.

3. Waste generation in the past two years (2022 and 2023) is as follows:

Year Waste generated Waste density
UNIT: ton UNIT: ton / NT$ Million revenue
2022 50.63 0.0008
2023 62.93 0.0011

*Note: The survey coverage of waste generation includes our company’s headquarters in Taiwan, various offices and logistics warehouses in Taiwan.

In terms of waste management policy or reduction goal, Alltek expects to achieve the management goal of reducing the weight of waste by 1% every year compared to the previous year.

To further respond to waste reduction, ALLTEK started the “paper reduction campaign” in 2021. We promoted and implemented double-sided printing on our internal company website, set up waste paper recycling boxes to facilitate the reutilization of the reverse side of paper, and strengthened the awareness of all employees to conserve paper and reduce waste generation. Through daily self-management and environmental habits, we are strengthening the cultivation of green consciousness. The paper usage statistics of our company in the past two years at the headquarters in Taiwan, various offices and logistics warehouses in Taiwan are as follows:

Year Paper consumption for office machines Increase/decrease in paper usage compared with the previous year Increase/decrease ratio in paper usage compared with the previous year
Unit: sheet Unit: sheet Unit: percentage
2022 274,096 -96,053 -25.95%
2023 215,297 -58,799 -21.45%
This will be followed up and implemented.
4. Social issues
(1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?
V
(1)In order to fulfill corporate social responsibility and implement human rights protection, our company refers to internationally recognized human rights standards such as the “International Human Rights Code”, “Core Labor Standards of the International Labour Organization Convention”, “United Nations Global Compact” and “Responsible Business Alliance and its Code of Conduct” to formulate the following human rights implementation policies. We strive to prevent any infringements and violations of human rights, and ensure that both internal and external members of the company are treated fairly, equally, and with dignity. The policies are published on our company website. The implementation policy and related specific plans and measures are as follows:

 

Implementation Policy Description of relevant specific plans and measures
Provide a safe and healthy work environment 1. Comprehensive insurance planning from the inside out allows employees to work with peace of mind. Occupational safety and health prevention drills are held on a regular basis.

2. Establishment of employee assistance mechanisms and a two-way communication channel for colleagues: Through various communication channels such as green windows, labor-management meetings, cross-department meetings, etc., to achieve unimpeded communication and a friendly workplace.

Support employees’ physical and mental health 1. Comprehensive health management system: Implementing the four major plans of the Department of Occupational Safety and Health, along with annual health questionnaires and employee health check-ups.

2. Promote health promotion activities on a yearly basis.

Avoid discrimination of any kind that affects job opportunities 1. Creating a female-friendly workplace.

2. Support gender neutrality and their work rights.

3. Assistance plan for middle-aged and older employee.

Prohibition of child labor and illegal labor. We do not employ minors under the age of 18 according to the law. Moreover, before new employees start working, we thoroughly review their identity qualifications to ensure that all workers have a legal status to work.
Prohibit forced labor. We implement a two-day weekend system according to law, encouraging colleagues to focus on work-life balance.
Help employees achieve work-life balance. 1. Encourage and support the establishment of clubs and provide subsidy support.

2. Organize employee health days, family days, public welfare activities, etc.

None
(2) 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
(2)The Company’s Articles of Incorporation stipulate that no less than 1% of the Company’s annual profit shall be set aside for employee remuneration, and that compensation shall be prudently evaluated based on employee performance and the actual status of the Company’s operations and remuneration of future risks.
None
(3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees regularly?
V
(3) The Company provides a safe and healthy working environment for its employees. In addition to holding regular employee health checks, implementing various environmental hygiene measures and fire safety inspections, with annual fire safety checks and quarterly environmental hygiene checks, the Company implements regular safety and health education for its employees and makes safety education and training a mandatory course for new employees. In accordance with the law, the Company also provides health consultation to employees at the Company on an annual basis in conjunction with professional doctors and nursing staff. There were no number of employee occupational disasters or fires in 2023.
None
(4) Does the company provide its employees with career development and training sessions?
V
(4) The company designs courses according to functional attributes and title levels to enhance employees’ professional abilities and knowledge skills.
None
(5) Do the company’s products and services comply with relevant laws and international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer protection and grievance procedure policies implemented?
V
(5) The Company’s products and services are handled in accordance with relevant domestic and international regulations and standards, and a special area is set up on the Company’s website to provide a channel for suppliers to ask questions, complaints or suggestions, which the Company handles appropriately and in good faith.
None
(6) Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational health and safety, or labor and human rights? If so, describe the results.
V
(6). For supplier management policies, the Company uses an assessment mechanism to ensure the competence of service providers and helps service providers understand and comply with the Company’s “Supplier Management Operating Procedures.” The “Supplier Assessment Sheet” is used for annual assessment. Considering the diversity of supplier management and evaluation, Alltek referred to the Code of Conduct of the Responsible Business Alliance (RBA), that regulates five aspects: labor, health and safety, environment, business ethics, and management system, and formulated its “Supplier Code of Conduct” in 2022. Therefore, before collaborating with a service provider, Alltek not only evaluates the supplier’s capabilities, but also requires the supplier to sign the “Supplier CSR Commitment” or to propose the supplier’s related social responsibility policies. By doing this, we jointly promote sustainable environmental development, protect basic human rights and fulfill related obligations with our suppliers.
None
5. Does the Company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance from a third-party verification unit?
V
In 2023, the Company has disclosed and published the non-financial information of the Company in the 2022 Sustainability Report, and has commissioned SGS Taiwan Ltd. was delegated to provide assurance for this report based on AA1000 AS v3 Type 1 Moderate Assurance Level and GRI Standards Version 2021 reference options. An Independent Assurance Opinion Statement is enclosed in the Appendix of the Sustainability Report.
It will be enforced in the future in line with the provisions of the Act.
6. If the company has its own corporate social responsibility policy in accordance with the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies, please specify its operation and the difference from its policy: None
7. Other significant information for explaining the implementation status of sustainable development practices:

(1) Promote the “Paper Reduction Campaign.” According to the work process of each department, legal requirements are met and system coordination is adjusted to reduce the consumption of paper printed during work and improve work efficiency. 215,297 sheets of paper were used in 2022, a decrease of 58,799 sheets from 2022. The amount of paper reduced is equivalent to approximately 7.06 trees less felled.

(2) There is no packaging waste in the warehouse environment. All received boxes and filler materials are recycled.

(3) In 2023, we held “The 4th Health Together Line – Advancing Health” where we put ESG sustainability into practice through health promotion activities. By linking this with public welfare activities and green living, everyone can become an ESG practitioner.

(4) The company’s 2022 sustainability report was compiled based on the GRI standards issued by the Global Reporting Initiative (GRI), SASB standards, and the structure of the Task Force on Climate-related Financial Disclosures (TCFD). For related information, please visit our company’s website.

Attachment 1. Implementation of climate-related information

Item Status of implementation
1.    Supervision and governance of climate-related risks and opportunities by the Board of Directors and management. With respect to the governance structure of climate change related risks, the Company’s Board of Directors is the top unit for risk management, with the objective of complying with laws and regulations and promoting and implementing the Company’s overall risk management. The Board of Directors has a clear understanding of the risks faced by the operations in order to ensure the effectiveness of risk management and assumes the ultimate responsibility for risk management. The Board of Directors has established a “Sustainability Committee” and formed a “Corporate Governance and Risk Management Team” under it. The head of corporate governance serves as the convener. The “Risk Management Team” is responsible for executing risk management and is tasked with identifying and assessing operational risks, financial risks, information security risks, and environmental risks (climate change), among others. It regularly reviews risk management reports from various units, tracks execution and improvement progress, and consolidates and reports the results of risk management execution by various units to the Sustainability Committee.

The Sustainability Committee submits an annual report to the Board of Directors on the implementation of risk management policies, including necessary improvement suggestions. It also sets the priority of risk control management based on changes in internal and external environments and resolutions of the Board of Directors.

2.    How the identified climate risks and opportunities affect the Company’s business, strategy, and finances (short-term, medium-term, and long-term). The Company uses “extent of financial impact” and “likelihood of risk and opportunity” to determine the level of impact of risks and opportunities. The results of the 2023 identification are as follows:

Category of issue Potential financial impact Risk or opportunity analysis of current situation

(Possible impact on the Company)

Countermeasure Impact time Risk/

Opportunity

Grade

Transition risk/policy and law Increase in operating cost The government has committed to moving towards the net zero goal in the future, and the electricity mix will increase the proportion of low-carbon and renewable energy. Based on Taiwan Power Company’s estimation, if the proportion of gas and renewable energy is increased in the power generation structure, industrial electricity may face price hikes in the future. Climate change will increase the proportion of environmental management cost year by year. To fulfill Alltek’s environmental sustainability responsibilities, the Operational Support Department promotes energy management and monitoring to effectively improve energy efficiency Short-term Low risk
Physical risk/chronic Increase in operating cost Climate change will affect the average temperature increase in the future. Under the circumstance of increasing heat load, it will lead to increased power consumption of chillers and air conditioners. Alltek promotes energy management and monitoring through the Operational Support Department:

1. Advocate the concept of setting the office temperature at an appropriate level every year.

2. Audit the storage location environment/temperature/humidity record sheet and industrial dehumidifier equipment maintenance card on a monthly basis to ensure the effective operation of temperature and humidity equipment.

Medium-term Low risk
Physical risk/acute Increase in operating cost The precision products related to chip parts and components represented by the Company have certain requirements for controlling the temperature and humidity of chips. If the intensity and frequency of typhoons and rainstorms caused by climate change in the future increase, the anomalies such as moisture damage or damage to the goods during transportation will increase. For the transportation process of high-precision products, the Company requires logistics providers to protect the goods with moisture-proof wrapping if the weather is poor or in rainy seasons to improve the safety of cargo transportation. The Company also continues to track and maintain the safe transportation insurance of the goods regularly to enhance the climate resilience. Short-term Low risk
Transition risk/policy and law Increase in operating cost

 

In response to the “Sustainable Development Roadmap for Listed Companies” and “Regulations Governing Information to be Published in Annual Reports of Public Companies,” the Company is required to commission an external party to assist in the inventory of GHGEs and hire a third-party agency to conduct verification. To meet the needs of the competent authority, the GHG inventory of all offices and warehousing locations will be completed in 2026. At the same time, the Company is expected to cultivate talent for low-carbon technology transformation through external course resources and internal book clubs. Short-term Medium risk
Opportunity/products and services Increase product revenue In response to market trends, expand the scope of agency and set foot in green high-performance semi-conductor components. Examples include  electric vehicles, smart electronic locks, GPS trackers, LED lighting, wireless sensor networks for the Internet of Things (IoT), etc., which will generate revenue, increase gross profit, and enhance overall profitability performance throughout the year. Agency and sales of low-carbon products:

1. Actively strive for the agency rights of green component production lines to increase low-carbon product portfolio.

2. Make full use of the supplier’s reputation and trademark awareness to improve the series of low-carbon products and expand the scale of cooperation with suppliers.

3. Continue to pay attention to market demand and low-carbon issues, promote green component product lines to customers, and seek opportunities for customers to develop new products.

Long-term High chance
Efficiency of opportunity/resource utilization Reduction of operating costs In response to the global trend of carbon reduction, more efficient distribution processes and transportation modes have been adopted. We continue to consolidate orders and shipments to avoid individual shipments, thereby reducing carbon emissions and lowering operating costs. A warehouse management system (WMS) is used to process consolidated orders and shipments according to the customer and shipping destination. In addition, we provide training to our warehouse management staff to ensure that all staff can handle the integrated orders with the accurate control of the WMS. Short-term High chance
3.        Financial impacts of extreme climate events and transitional actions 1. For the extreme climate and potential financial impacts of transitional actions, see Item 2 for details.

2. The Company has incorporated climate change-related risks into its governance strategy. The “Risk Management Team” set up under the Sustainability Committee assesses financial risks, and summarizes the implementation results and submits them to the Sustainability Committee.

4.        How climate risk identification, assessment, and management processes are integrated into the overall risk management system. 1. The Company’s Risk Management Team is responsible for collecting information on the risks and opportunities of climate change and energy, and conducting reviews each year. Consider transition risks (policy and legal/market/technology/company reputation) and physical risks (chronic and acute), and conduct risk assessments for possible events, including the degree of financial impact, impact time (short, medium and long term), impacted parties in the value chain, and the likelihood of risks.

2. When drafting scenarios for opportunities, we consider resource efficiency, energy sources, products and services, markets, and adaptability, and conduct an opportunity assessment that includes the degree of financial impact, the duration of impact (short, medium, and long term), the affected parties in the value chain, and the likelihood of opportunities.