1. Has the company constructed a governance structure to promote sustainable development and established a dedicated (part-time) unit for the promotion of sustainable development, which is managed by senior management by authorization of the board of directors and is supervised by the board of directors?

V

Although we have not yet established a dedicated (part-time) unit for the promotion of sustainable development, the make an effort to practice the concept of sustainable development in the environmental and social and corporate governance aspects. As well as this, we also do our utmost to disclose ESG-related information in the annual report of the shareholders’ meeting and on company website.

At present, the Company has not yet been required to prepare a report by the competent authorities; therefore, the Company will evaluate whether to establish a sustainable development unit depending on the future development.

2. Has the company performed risk assessments on environmental, social, and corporate issues in relation to the Company’s operations according to material principles, and formulated relevant risk management policies or strategies? (Note 2)

V

The Company’s current risk management policies or strategies are as follows:

• 1. In terms of the environment:
• (1) The Company’s “Environmental Risk Management Rules” are formulated by the General Affairs Department. Each year, the Company’s internal and external environmental issues are collected by each department and stakeholders. Finally the Company’s material environmental issues are identified by the Company’s environmental management representatives. Afterwards, the Environmental Management Review Committee reviews the implementation progress and results of measures to address risks.
• (2) Each year, the General Affairs Department establishes “environmental performance targets” and “environmental improvement project” for the current year, which are used as the basis for the environmental management targets for the relevant departments. The General Affairs Department oversees the statistics of the effectiveness and monitors the implementation.

• 2. In terms of society:
• (1) In an effort to reduce occupational safety risks, we have established an Occupational Safety and Health’s Office and abides by safety and health laws. Each year, fire drills and safety promotion are provided to develop the capabilities of employees’ emergency responses and self-safety management.
• (2) In order to reduce product safety risks, all of our products are in compliance with government laws and revelations. At the same time, to ensure customer service quality, we have established a customer service hotline and communication website, and take the initiative to conduct customer satisfaction surveys each year to further strengthen the collaborative relationship with customers. In addition, to shift product liability risks, mitigate financial losses, and improve product safety, the Company has taken out liability insurance on products.

3. In terms of corporate governance:

(1) In order to reduce regulatory compliance risk, we have established a corporate governance organization and implemented an internal control mechanism. By doing this, we ensure that all personnel and operations are in compliance with related laws and regulations. With respect to research and development of products, we also apply for patents to protect the Company’s rights and Interests.

(2) To strengthen Board functions, we plan relevant further education programs for directors each year and take out directors’ liability insurance to protect them from lawsuits or claims.

(3) As a means to reinforce the communication of stakeholders, we analyze important issues of stakeholder concerns each year and have built various communication channels for proactive communication. In doing so, we are able to reduce the risk of lawsuits resulting from confrontation and misunderstanding. An investor mailbox is also available and the spokesperson is responsible to reply to investors.

The Company will plan the same, if necessary.

3.     Environmental Issues

(1)  Does the company establish proper environmental management systems based on the characteristics of their industries?

(2)  Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment?

(3)  Has the company assessed the potential risks and opportunities for business operations now and the future regarding climate change and will it adopt response measures relating to climate issues?

(4)  Has the company calculated the GHG emissions, water consumption, and total weight of waste in the past two years, and formulated policies on energy conservation and carbon reduction, GHG reduction, water consumption, or other waste management?

V

V

V

V

 (1)  As of the publication date of the annual report, all plants in Taiwan and Shanghai plant in China are ISO-14001 certified. In addition to operating under the ISO-14001 environmental management system, we identify potential opportunities and risks through internal and external audits for further improvements and control. The most recent ISO-14001 certifications are as follows and are still valid as of the publication date of the annual report.

(2)  At the beginning of each year, the General Affairs Department selects one issue (e.g., water saving, energy-use efficiency and waste reduction) for setting “environmental performance targets” and “environmental improvement project”, which are used as the basis for the environmental management targets for the relevant departments of the current year. The contents include the establishment of base year data, promotion measures and targets and the General Affairs Department is responsible for statistics of effectiveness and supervision of the implementation.

In 2021, the target for the environmental improvement project was to reduce total waste by an average of 5% or more per month compared to the same period last year in all manufacturing plants (including Jiali Plant, Jiali III Plant and Kouliao Plant) (total volume of waste divided by total production output reduction of 5% or more is deemed to meet the target). The Company strives for proper classification of waste, recovery and reuse of waste materials and formation of renewable resources to reduce the impact of waste on the environment. According to the results of the Company’s internal statistics, the volume of total waste has reduced by 16.39% compared to the previous year, an achievement rate of 130%.

In 2022, the target for the environmental improvement project is to reduce total waste by an average of 0.5% or more per month compared to the same period last year in all manufacturing plants (including Jiali Plant, Jiali III Plant and Kouliao Plant) (total volume of waste divided by total production output reduction of 0.5% or more is deemed to meet the target). The target is expected to be reached through proactive management of electricity use, replacement of old equipment and installment of energy-saving facilities. By doing this, we will reduce unnecessary power loss, further improving energy efficiency.

In terms of administration, the Group also promotes E-operations (including: introduction of document systems, letter management system) by replacing paper-based signatures with online processes, effectively reducing paper and related consumables.

(3) In an effort to reduce the risk of business s interruption, we have the “Business Continuity Plan (BCP)” in place, which identifies potential risks directly caused by climate disasters, such as floods, fires and earthquakes. Contingency measures have also been formulated for potential risks directly caused, such as unstable supply of water and electricity and impact on the Company’s image. For potential impacts, contingency measures and future opportunities of climate change on the Company, please see [Note 3].

(4) In 2021, the emissions of GHG (including carbon dioxide from water, electricity, liquefied petroleum gas and fuel oil) reduced by 20.36% from the previous year; water consumption also reduce by 18.23% compared to the previous year; this was mainly attributed to Taiwan’s adequate control of the COVID-19 pandemic, the government’s levy of masks, and a decrease in demand for pandemic prevention products. Also volume of total waste reduced by 16.39% compared to the previous year; this was mainly attributed to the effective implementation of the environmental improvement project. The statistics relating to the Company’s manufacturing plants (including Jiali Plant, Jiali III Plant and Kouliao Plant) are as follows:

(1-1) GHG emissions:

Units: ton-CO_2e

◆Scope 1:

Direct emissions from the Company’s processes or facilities, including fuel combustion from stationary equipment (e.g. boilers, emergency generators), mobile fuel from transportation (official vehicles, forklifts) and water consumption in the plant.

◆Scope 2:

Indirect GHG emissions from energy sources, with the main source being purchased electricity.

◆Scope 3:

Emissions generated from self-owned or controlled emission sources, including CO2 emissions from waste treatment vehicles.

(1-2) GHG emission intensity:
                                                     

Unit: ton-CO_2e/production volume (ton)

(2-1) Water Consumption:

Unit: Tons

(2-2) Water-use intensity:

Unit: ton/Production volume (ton)

(3-1) Total weight of waste:

Waste generated by the Company in 2021 and 2020 was non-toxic waste. The total weight is as follows:                                            

Unit: Tons

(3-2) Waste density:

Unit: ton/Production volume (ton)

For policies of GHG reduction, water reduction and other waste management, please see III. Environmental Issues (II) on P.50.

No significant difference

No significant difference

No significant difference

No significant difference

4.     Social Issues

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

(2)  Has the Company established and implemented reasonable measures for employee benefits (including: remuneration, holidays and other benefits), and appropriately reflect the business performance or achievements in the employee remuneration?

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

(4)  Does the company provide its employees with career development and training sessions?

(5) Does the Company comply with relevant laws and international standards with regard to issues of customer health and safety, privacy, marketing and labeling in relation to the products and services and establish relevant policies and complaint procedure to protect the right of the consumers or customers?

(6)  Has the company established supplier management policies demanding compliance with relevant regulations and their execution status regarding issues such as environmental, occupational safety, and health, or labor rights?

V

V

V

V

V

V

(1) The Company adheres to the principles promulgated by the “UN Universal Declaration of Human Rights”, the “UN Guiding Principles on Business and Human Rights”, the “UN Global Compact” and the “UN International Labor Organization”, and respects internationally recognized basic human rights, including freedom of association, caring for vulnerable groups [employees with disabilities: 8 people, indigenous: 5 people], banned child labor [number of child workers: 0 people, controlled according to check-in data], eliminating all forms of forced labor, and eliminating discriminations in employment [incidents violating the Labor Act in 2021: 0 incidents]. In addition, the Company abides by the labor-related regulations of its business location, respecting and maintaining dignity for current employee contract and temporary personnel, interns, etc. The information is disclosed in the Company’s official website (human resources/human rights policy), and is also specified in the Company’s management rules and regulations (for example, principle 4.1 of the Employee Recruitment and Management Practices).

(2)  

A. Remuneration System:

(A) According to the provisions of Paragraph 3, Article 27 of the Articles of Incorporation, after the total profit in the current year make up for loss, no less than 1% of the total amount shall be allocated as employee compensation. The Company’s board of directors has resolved and passed the 1.51% as the distribution ratio of 2021’s employee compensation on January 21, 2022. The remuneration is expected to be issued in 2022.

(B) The Company authorizes the salary standards based on the employees’ educational background/working experience, expertise, years of experience, and personal performance. The employees’ basic pay will not vary based on their gender, race, religion, political affiliation, marital status and labor union/society.

B. Workplace Diversity and Equality:

The Group continues to build a diverse workplace which helps increase the overall business performance. As of the end of December 2021, female employees accounted for 51.84% of the total number of employees in the Group, with female senior managers at the assistant vice president level or above accounting for 40%. 19.33% of the employees were aged 51 or older, 66.46% were aged 30-50, and 14.21% were under 30 years old. There were 8 employees with disabilities and 5 were indigenous people.

C. Leave System:

The Company’s Leave System has been established as required by the Labor Standards Act and Act of Gender Equality in Employment. The existing “major injury leave,” “birthday leave,” “public welfare leave,” and “maternal leave,” are better than the leave category of the law. These leaves are handled in accordance with the regulations.

D. Allowances, gifts and subsidies.

For a detailed description, please see P.97.

E. Association between business performance and employee remuneration:

(A) The Company has formulated the “Regulations Governing Management of Employee Performance” and “Regulations Governing Management of Year-End Bonus”. Based on these operating procedures, employee performance appraisal results and the year-end bonus system are effectively linked, motivating employees to create operational performance.

(B) In consideration of the revisions of the Regulation for Basic Wages, the operating performance and price index, the Company does not regularly adjust the salary to meet regulatory requirements and maintain the standard of living of employees (the 2021 average annual adjustment is approximately 0%~3%).

(3)

A. Measures, education policies and implementation of a safe and healthy workplace for employees( please see P.98-100):

(A) All plants of the Company perform periodic inspections on the workplace environment (a total amount of NT$251,300 spent in 2021); the Company has special doctors and nurses in the plant for the health of employees (a total amount of NT$516,000 spent in 2021); to continue to follow up the health of employees, the Company regularly holds health examination (a total of 544 employees took part in 2021 for a total amount of NT$366,000). The Company regular conducts safety and health education and training programs (a total of 646 employees took part in 2021, with a total of 836 hours); a firefighting seminar was held (818 employees took part in 2021, with a total of 994.5 hours); for the safety and health promotion of employees, aside from the “Safety and Health Rules” established by the plant, the Company also sends relevant information (such as: Dengue Fever prevention) by emails, or posts the information on the Company’s internal website and bulletin boards.

(B) As a means to promote a healthy workplace, with our proactive effort, our Taipei Branch received a “Badge of Accredited Healthy Workplace” (validity: 2022/01/01-2024/12/31) from the Health Promotion Administration in 2021, to recognize our dedication to creating a healthy workplace. In 2021, we also held a “Healthy Fitness Program”, covering “weight and body fat autonomous management” and “daily walk”. A total of 62 employees signed up for the Program, losing a total of 157kg, reducing a total of 56.6% body fat. In the course of 9 weeks, a total of over 4.3 million steps were carried out.

(C) In terms of occupational disaster prevention, the Company adopts the PDCA cycle - Plan, Do, Check, and Action to improve systems while continuing to implement audits and management review. By doing so, we are on par with the requirements of the safety and health policy, objectives and management plans in order to improve the capabilities of safety and health autonomous management. Moreover, we also carry out consultation with employees and their representatives and encourage them to proactively participate in the process of the activities of safety and health management system for improvement.

B. In 2021, there were 12 occupational accidents, injuring 12 employees (accounting for 1.23% of the total number of employees at the end of 2021), not reaching the target of zero occupational safety incidents. After reviewing and formulating plans for improvement, protection facilities and warning signs were added to the production line in the plant. As well as these, machines were also inspected to ensure the safety of employees at work.

(4) The Company has standardized provisions for each unit and position (please refer to the job description and departmental training manual), and implements educational training in accordance with the approved annual education and training program. Furthermore, we also take a proactive approach to promote the KNH curriculum system to construct a talent development mechanism. We aim to achieve the sustainable and diversified talent cultivation through two major aspects: new employee education and training and on-the-job general training, in 3 major areas: management function, professional functions and core functions. Furthermore, the Company has initiated succession plans. For 2021 employee career development training implementation and key management succession plans, please see V(I)3 “Employee Education and Training Implementation” on P.98.

(5)  

A. We have established “Regulations Governing Management of New Product Risks”, “Regulations Governing Management of Personal Data Protection” and various product regulations. In the aspects of customer health and safety, customer privacy, marketing and labeling, we comply with regulations of the Company and laws and international guidelines in places where our products are sold, or follow the clear labeling required by customers.

B. The Company has established the “Regulations Governing Customer Service”, “Corrective Prevention and Constant Improvement Rules” and set up a “consumer service hotline” at 0800-213168 via which dedicated personnel are assigned to process customers’ complaints. The Quality Assurance Center is responsible to verify the cause and reply with a complete investigation report within 10 days. Furthermore, all products have been insured under product liability insurance.

C. The Company established “Regulations Governing Market Monitoring and Recall Notification” to ensure the stability of product quality and trust of consumers. Each year, meetings are also arranged for communication with key customers.

(6) The Company has established the “Code of Conduct for Suppliers,” which requests suppliers to follow all applicable environmental laws in order to provide a safe and health workplace for employees. The Company avoids discrimination against labors and prohibits child labor and should further value the rights and benefits of labors. As of the end of December in 2021, 404 suppliers have signed to comply with the Code of Conduct.

We have set up “Regulations Governing Management of Supplier” as the guidelines for supplier assessment. New suppliers are required to fill in the “Vendor Survey” and sign the “Quality Agreement”. The Company’s Quality Assurance Unit must also conduct on-sit audits, covering environmental, safety and health items, such as education and training, plant design, technical standards, health management, and laboratory control. The QA unit then completes the “Supplier Assessment Audit Form” as the assessment result.

The Company classifies suppliers according to their influence and importance on products (1-6 categories) and assessment scores (4 levels). An evaluation on quality performance is conducted for suppliers of specific categories. In 2021, we conducted 13 on-site audits on suppliers.

No significant difference

No significant difference

No significant difference

 No significant difference

No significant difference

 No significant difference

5.     Has the company taken reference from the internationally accepted reporting standards or guidance when compiling CSR reports to disclose non-financial information?  Have the reports mentioned previously obtained the assurance of third party verification?

V

We are not within the scope of companies that are required to prepare a sustainability report by the competent authorities. Although we have not yet prepared a sustainability report, all of our units continue to make every effort to exercise sustainable development concepts. We also strive for disclosing ESG-related information in the annual report of the shareholders’ meeting and the company website.

The Company will evaluate whether to prepare a sustainability report and obtain a third-party verification depending on the future development needs.

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

Although the Company has not yet established Sustainable Development Best-Practice Principles, we still uphold our original intention of “giving back to local society”. During the unfortunate period of SARS, bird flu, or COVID-19, the Company was the first to donate face masks to medical personnel and prevention units. The Company was doing its utmost to support the supply of medical grade masks and mask materials in Taiwan. As the consumption of face masks was extremely large during the COVID-19 outbreak in 2021, we took the initiative to donate 160,000 3D medical-grade masks to 10 grassroots offices in administrative districts in Tainan. By doing this, we were able to offer peace of mind to front-line workers. Also, as a way to thank pandemic prevention workers, we held a dinner from 6 district offices in Greater Beimen District. In addition, we team up with a badminton player, Tai Tzu-Ying and launched a co-branded face mask. For every mask sold, NT$1 was donated by both parties to public welfare organizations for disadvantaged children and women. We selected “The Garden of Hope Foundation” as the organization for donation, as it shared the same philosophy of long-term care for children and women. A total of NT$175,540 was donated. The Company also provides “public welfare leave” to encourage employees to take part in external public welfare services and events. In 2021, there was a total of 16 persons/hours taking part.  At the same time, we fulfill our corporate social responsibility by caring for disadvantaged groups through donations of money or materials. Our specific actions are briefly described as follows:

(1)   Donated items:

Aside from the above donation of epidemic prevention materials, the Company has cooperated with the “United Way of Taiwan” since 2008, and obtained the demand for maternal and child health products from various social welfare units through the association. It directly transports maternal and child health products to social welfare units in need, which thereby assisted many social welfare organizations. In 2021, the Company donated to 54 public welfare groups including: Chang Jung Christian University, National Beimen Senior High School Alumni Association, the Nurses AIDS Prevention Foundation, Good Neighbors Taiwan, and Tainan City Cultural Foundation. The total donation amounted to NT$5.77 million.

(2)   The promotion of local tourism development and promotion of corroborate resources with the combination of industry, government, and academic resources: 

By upholding the philosophy of innovative breakthroughs, industrial knowledge inheritance, talent cultivation and social feedback, the Company constructed the first nonwoven tourism factory “KNH Creative Nonwoven Kingdom (the Kingdom)” in Taiwan in 2013. The Company has carefully planned the themes in the Kingdom including the “Manufacturing Process,” “Knowledge for Women and Children,” and the “Nonwoven Kingdom” as a means to pass down the knowledge in terms of the industry and women and children. We have also established digital multimedia and interactive facilities so that tourists are able to further understand the nonwoven industry through the method of the combination of industry, government and academic resource such as the Exhibition Room, DIY Classroom, and the “5-Senses Experience.” In order to achieve the corporate spirit of giving back to the local community, the Kingdom has been open to the public free of charge. According to statistics, a total number of 6,934 people visited the Kingdom in 2021, down 43% compared to the previous year due to the impact of COVID-19. We hope that, by combining traditional industry and tourism industry, more people will be able to know more about the nonwoven industry through concepts of knowledge, education, passing on the legacy, and industrial sustainability.

At the beginning of 2022, we signed a “Campus Moon Project” memorandum of cooperation with Bureau of Education, Tainan City Government. We provided sanitary pads to Bureau of Education, Tainan City Government at a low price, which were delivered to disadvantaged female students, benefiting over 2,100 females. Meanwhile, we also expanded sanitary products in public toilets in Yonghua and Minzhi municipal centers and 37 districts to jointly create a gender-friendly city together. This action also prompted other places in Taipei and sanitary pad companies to follow suit, promoting the positive cycle of exerting private company resources.

(3)   High quality and development of green energy products:  

The Company has a strong sense of social responsibility. In addition to adhering to the direction of manufacturing products that are closer to the needs of consumers, we also research and develop products that pose beneficial factors to society. For example, we have won the National Brand Yushan Award, a number of Taiwan Excellence Awards and have joined the Epidemic Prevention National Team, and was awarded “Contribution to Commercial Development and Employment by Companies Over 50 Years” by MOEA in 2021. In terms of green energy products, we have invested in the development of eco-friendly solid-state batteries and R&D plans of biodegradable and eco-friendly nonwoven fabrics in order to make a contribution to the environment. While doing this, we also adhere to our ultimate goal of “create a better, cleaner and healthier future”.

7.  Other important information to facilitate better understanding of the implementation of the company’s promotion of sustainable development: None.

Flood

Production affected, resulting in a financial loss, decreased income.

1. 1. Set up Business Continuity Planning (BCP), as well as an emergency response team to improve emergency response capabilities and minimize disasters.
2. 2. Organize annual fire drills and earthquake drills.
3. 3. Use fireproof materials for buildings, and regularly assign people to detect fire detection system.
4. 4. Ensure that building constructions comply with the earthquake and wind resistance specifications required by the Ministry of the Interior.

Enhance natural disaster resilience

Wind disasters

Earthquakes

Unstable water and electricity supply

Production is affected, increasing operating costs.

1.  Construct eco-friendly buildings that are energy-efficient.

2. The discharged water and miscellaneous drainage of buildings after treatment are recycled and reused to improve the efficiency of water resources.

1.  Construct eco-friendly buildings

2.  Improve the efficiency of water resources

Impact to the Company’s image

When stakeholders’ expectations are not met, the Company’s reputation or image is damaged.

1. Strength innovate and high quality products (such as obtaining international certification ISO9001 and many Taiwan Excellence Awards).

2. Leaning towards developing more products that are produced using green energy, such as research and develop eco-friendly solid batteries, decomposable and eco-friendly reused nonwoven.

Increase customer collaboration opportunities

1.  Establishment of ethical corporate management policies and programs

(1) Has the company established an ethical management policy that has been passed by its Board of Directors, and clearly specified in its rules and external documents the ethical corporate management policies and the commitment by the Board of Directors and senior management on rigorous and thorough implementation of such policies and methods?

(2) Has the company established a risk assessment mechanism against unethical behavior, analyzed and assessed business activities within their business scope on a regular basis which are at a higher risk of being involved in unethical behavior, and established prevention programs at least covering the preventive measures specified in Paragraph 2, Article 7 of “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”?

(3) Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, penalty for violation, rules of appeal, and the commitment to implement the policies?

V

V

V

(1) The Company has formulated the “Ethical Corporate Management Best Practice Principle” and “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct” as the Company’s ethical corporate management policy and practice. These are also announced on the Company’s website and internal personnel management rules, applicable to the directors, managers and employees of the Company. In a bid to implement ethical corporate management, we provide education and training courses to all employees (including senior management) each year. In 2021, internal and external education and training courses cover “Ethical Corporate Management Best Practice Principle”, “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct”, Regulations Governing Procedure for Whistle-Blowing”, “Prevention of Insider Training”, and “Subsequent Handling Process After Receiving Courtesy Gifts”. A total of 3,323 employees participated in the courses, totaling 3,501.5 hours; a total of 9 directors participated in the courses (see continuing education on P.45), totaling 36 hours. The total number of abovementioned employees and directors was 3,332, with a total of 3,537.5 hours. In addition, we have completed communication and signing of the “Code of Conduct for Suppliers” of 404 suppliers.

(2) The Company’s “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct”, covering prevention measures of operating activities with higher unethical conduct risks, stipulated in Paragraph 2, Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”. Each year, the responsible unit reviews changes in company operations to determine whether to revise and adjust operating activities with higher unethical conduct risks.

(3) The Company formulated the “Ethical Corporate Management Best Practice Principle” and the “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct” on November 13, 2014 with clear statements regarding operating procedures, relevant procedures, guidelines of conduct, penalty for violation, rules of appeal for preventing unethical conduct. The Company amends and implements the above Codes on a regular basis in accordance with the relevant laws and regulations.

No significant difference

No significant difference

No significant difference

2.     Fulfill operations integrity policy

(1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts?

(2) Has the company set up a dedicated responsible unit to promote corporate ethical management under the Board of Directors, and has such unit reported its execution in terms of ethical management policy and preventive programs against unethical behaviors and the supervision status to the Board of Directors on a regular basis (at least once a year)?

(3) Has the Company defined any policy against conflict of interest, provides adequate channel thereof, and fulfills the same precisely?

(4) Has the company established an effective accounting system and internal control system in order to implement ethical management, and propose relevant audit plans according to the assessment results of the risks of unethical behaviors, and review the compliance status of the prevention of unethical behaviors, or entrust an account to carry out the review?

(5) Does the company regularly hold internal and external educational trainings on operational integrity?

V

V

V

V

V

(1) The Company would evaluate the trading counterpart’s ethical management record at first, and expressly state the ethical management clauses in the trading contract.

(2) Although we have not set up a dedicated unit for the promotion of corporate ethical corporate management under the Board of Directors, the duties of HR Division in the internal organization includes the promotion of ethical corporate management. The HR Division is responsible for revising and monitoring the ethical corporate management policy and plans of prevention of unethical conducts, and reports to the Board of Directors at least once a year. For the implementation status of 2021, please see I. Establishment of ethical corporate management policies and programs (I) on P.60, and a report was made to the Board of Directors on December 29, 2021.

(3) Policies to prevent conflicts of interest have been formulated in the “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct.” Aside from regular promotion and implementation, the Company also provides appropriate reporting channels.

(4) The Company has constructed a comprehensive accounting system, internal control system and various management regulations. An internal audit is also conducted from time to time to get a grasp of the implementation status of the prevention plan of unethical corporate management.

(5) The Company holds internal education and training for the “Ethical Corporate Management Best Practice Principle” for new employees, and annually conducts recurrent training. For 2021 internal and external education and training, please see I. Establishment of ethical corporate management policies and programs (I) on P.60.

No significant difference

The Company will evaluate whether to set up a dedicated ethical corporate management unit under the Board of Directors depending on the future development needs.

No significant difference

No significant difference

No significant difference

3.     Operation of the integrity channel

(1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?

(2)  Has the company implemented any standard procedures and/or subsequent measures after carrying out an investigation or confidentiality measures for handling reported misconduct?

(3) Has the Company adopted any measures to prevent the complainants from being abused after filing complaints?

V

V

V

(1) The Company discloses the “Regulations Governing Procedure for Whistle-Blowing” on Company’s website with a clear whistle-blowing system, reward system and whistle-blowing channels have been formulated. The Auditing Division has been designated to be the acceptance unit in terms of reporting objects. There were no whistle-blowing cases reported in 2021.

(2) The Company has formulated the standard operating procedures and related non-disclosure mechanism with respect to the investigation on complaints in the “Regulations Governing Procedure for Whistle-Blowing” and the “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct.”

(3) The Company has defined the protective measures in its “Regulations Governing Procedure for Whistle-Blowing” and the “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct.”

No significant difference

No significant difference

No significant difference

4.     Enhancing Information Disclosure

     Does the company disclose its ethical corporate management best practice principles and the results of its implementation on the company’s website and MOPS?

V

The Company discloses the “Ethical Corporate Management Best Practice Principle” and the “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct” and the “Regulations Governing Procedure for Whistle-Blowing” at the Corporate Governance section on its website.

No significant difference

5.  Where the company may have establish its own Ethical Corporate Management Best Practice Principle in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies,” and shall elaborate the practice of business integrity and the variations from the aforementioned regulations:

    The Company carries out ethical corporate management-related operations in accordance with the “Ethical Corporate Management Best Practice Principle” and “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct”. Therefore, there are no significant differences.

6.    Other important information to facilitate a better understanding of the company’s ethical corporate management policies:

      The Company’s board of directors has passed the amendments to the “Ethical Corporate Management Best Practice Principle” and the “Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct” on July 1, 2020 in compliance with the spirit of the latest Principle for Ethical Corporate Management Best Practice and Guidelines for Codes of Ethical Conduct for TWSE/GTSM Listed Companies. The Company has upheld the sustainable management philosophy for many years. All of the Company’s directors and high-rank management also performed their obligation to manage and supervise with due diligence to prevent insider trading or avoid benefiting themselves or others. The Company complies with the laws and regulations prescribed by the competent authority. Meanwhile, it set up the consumer service hotline and email box to provide the communication and complaining channels to consumers.