To identify and manage sustainability risks, the Group follows the Global Reporting Initiative’s (GRI) four-stage process for identifying material topics as outlined in the GRI Standards 2021. This involves conducting a materiality assessment, analyzing global trends, and collecting stakeholders’ concerns on sustainability issues. After conducting internal impact analysis and evaluating the significance of sustainability issues on economic, environmental, and human rights, the Group weights them against competitors, customers, international trends/national policies, etc., to preliminarily screen out material topics. These are then confirmed and supplemented by the Group’s General Management Department. During the board meeting of the first quarter, “Practical Guidelines for Sustainable Development of Listed and OTC Companies,” and the “Ethics Corporate Management Report” (including ESG material topics) were reported. We will conduct an annual review of material topics and perform a major materiality identification process every two years. We regularly assess the impact of issues as the basis for planning our sustainability strategy. We also transparently disclose both positive and negative impacts of sustainability issues, aiming to respond to stakeholders’ needs and expectations.
Materiality Analysis Process
| Stakeholder identification | Collection and summarization of sustainability topics | Evaluation on the level of impacts from sustainability issues | Analysis and sorting | Confirmation | Disclosure |
|---|---|---|---|---|---|
| 6 Key Stakeholders | 20 Topics | 52 copies of impact questionnaire | 9 material topics | 9 Deciding disclosure boundaries | Reviewing the progress of goal achievement |
| The Group identifies six key stakeholders with the greatest impact on the Group, based on the five principles of influence, tension, responsibility, dependency, and diverse perspectives of the AA 1000 Stakeholder Engagement Standard (SES). These stakeholders are shareholders, government agencies, customers, suppliers, employees, and the media, and they are the primary communication targets. | Based on GRI principles and considering international standards (SDGs, SASB, TCFD), nature of the industry, status of our counterparts, the Company’s development goals, and information required during the stakeholders engagement process, 20 major sustainability topics were identified as relevant to the Group. | We distribute impact questionnaires to the six key stakeholders, assessing the positive and negative impacts of each sustainability topic on “economy, environment, and humans (including human rights)” separately. The assessment of impact takes into account both the “probability of occurrence” and the “scale and scope of the impact,” with weighting applied to competitors, customers, international trends/national policies, etc. | Based on the analysis results from the previous step, we ranked the impact levels of each sustainability topic on “external economy, environment, and humans (including human rights)” that scored an average of 3.67 or higher in positive/negative impacts. We plotted a bar graph of the Group’s material topics for 2023, identifying 9 material topics in the following order: climate change (positive/negative), waste management (positive), water resource management (positive/negative), customer relationship management (positive/negative), material efficiency (positive/negative), sustainable supply chain management (positive/negative), economic performance (positive/negative), talent recruitment and retention (positive/negative), and occupational health and safety (positive/negative). | After identifying the 9 material topics, further assessment was conducted to determine the internal and external boundaries for these material topics, ensuring that important sustainability information has been fully disclosed in the report. | The task force, in accordance with the reporting requirements for material topics, has outlined relevant response strategies, objectives, performance outcomes, and management policies in this report, ensuring that sustainability information and performance are adequately explained. |
Impact Assessment Results of Material Topics
Based on the assessment results for the year 2023, there are 9 key topics with positive impacts and 8 key topics with negative impacts. In the analysis process of material topics, Eurocharm referred to stakeholders’ suggestions and decided to classify sustainability issues rated as important or above as topics to be disclosed in this year’s report. The table below provides detailed explanations of the changes in sustainability topics compared to last year’s results.
Material Topics Description
| Material Topics | GRI Standards Topics | Types of Impacts | Impacts Description |
|---|---|---|---|
| Climate change | Climate Change Emissions Energy | Positive/Actual：The Company has implemented climate governance to address climate change, including the formulation of climate strategies, assessment of climate-related risks and opportunities, and the effective implementation of risk management measures. These efforts help accelerate the global low-carbon transition and drive the industry towards a zero-carbon economy. We also implement energy and greenhouse gas management as well as promote strategies and management measures, which help reduce overall industry carbon emissions, waste, and other environmental impacts. (Economy, environment) Negative/Potential：Carbon emissions intensifies greenhouse effect, and many countries impose carbon taxes or fees to curb emissions, leading to higher costs and lower industrial competitiveness. Additionally, climate anomalies result in supply chain disruptions and frequent climate disasters. (Economy, environment) | Same |
| Waste Management | Waste | Positive/Actual：Waste management can reduce waste output, decrease procurement costs, and reduce waste disposal fees. By using recycled materials or packaging, waste can be effectively reduced, thereby minimizing environmental impact. (Economy, environment) | Same |
| Water Resources Management | Water and Effluents | Positive/Actual：The Company regularly monitors environmental parameters at its factories (air, water, waste, hazardous substances, noise) and implements effective control measures to prevent the release of harmful substances and noise from the factories, thus protecting the health of community residents. (Environment) Negative/Actual：Failure to control the release of hazardous substances and noise can seriously affect the health of community residents. (Environment) | New |
| Customer Relations Management | Customer Privacy | Positive/Actual：The Company has implemented information security management systems and tools as well as upgraded software and hardware to protect confidential data of the Company and our customers from leaking and to safeguard the interests of stakeholders. (People) Negative/Potential：Failure to effectively implement customer privacy and information security controls may result in security vulnerabilities or cyber-attacks, leading to the leakage of customer personal data or corporate confidential information, thereby violate the rights and interests of relevant stakeholders. (People) | Same |
| Material Efficiency | Materials Materials Efficiency | Positive/Actual：The Company increases resource recycling and reuse by using recycled materials or packaging, effectively reducing waste and thereby minimizing environmental impact. (Economy, environment) Negative/Potential：Using recycled materials may potentially result in unstable product quality, increasing the likelihood of product returns from customers and leading to higher costs. (Economy) | New |
| Sustainable Supply Chain Management | Procurement Practices Supplier Environmental Assessment Supplier Social Assessment | Positive/Actual：We enhance suppliers’ ESG awareness and management practices through supplier conferences, lectures, or other management methods, thereby promoting the overall economic resilience of the supply chain. We also collaborate with our suppliers to promote a green and low-carbon supply chain, continuously reducing carbon and waste emissions. Additionally, we work together with our supply chain to promote activities, e.g. regular workplace health and safety seminars to improve occupational health and safety, as well as enhance labor rights. (Economy, environment, people) Negative/Actual：If the waste generated and disposed of by the Company is not properly handled by waste removal contractors, there would be environmental and air pollution issues. In addition, improper management by suppliers can lead to environmental pollution and violations of labor/human rights. (Economy, environment, people) | Same |
| Economic Performance | Economic Performance | Positive/Actual：Sound corporate performance, market conditions, industry position, strategic direction, future business outlook, and operational risks/opportunities (including financial aspects) will have a positive impact. (Economy) Negative/Actual：When the Company’s performance is poor, and significant negligence occurs, it would affect the Company’s operations, violate the rights and interests of shareholders, customers, and other stakeholders, and consequently have a negative impact. (Economy) | Same |
| Talent Recruitment and Retention | Market Presence Labor/Management Relations Diversity and Equal Opportunity Training and Education | Positive/Actual：The Company enhances employee stability and effectively reduces turnover by offering salaries and benefits that exceed local standards. It also provides comprehensive talent development and training plans, offering employees good job opportunities and career development. (Economy, people) Negative/Actual：If the Company is unable to offer salaries and benefits exceeding local standards, as well as lacking talent development and training plans to provide employees with good job opportunities and development, it will have difficulties in recruiting and retaining talent, thereby reducing talent retention rates. (Economy, people) | Same |
| Occupational Health and Safety | Occupational Health and Safety | Positive/Actual：The Company continuously optimizes the work environment and safety and health measures to reduce any possibility of occupational accidents, providing employees with a good and healthy working environment, thereby enhancing their job quality. (People) Negative/Potential：When the Company fails to provide a safe and healthy work environment, it may lead to frequent occupational injuries or accidents, affecting employees’ work rights and causing damage to their physical and mental health. (People) | Same |
| Material Topics | GRI Standards | SASB Standards | TCFD | SDGs | Upstream-Supply Chain | The Company’s Operation-Metal Processing | Downstream-Brand Customers |
|---|---|---|---|---|---|---|---|
| Climate change | Climate Change Emissions Energy | TR-AP-130a.1 | TCFD | SDG7 SDG13 | ● | ● | ● |
| Waste Management | Waste | TR-AP-150a.1 | SDG11 SDG12 | ● | ● | ● | |
| Water Resources Management | Water and Effluents | SDG6 | ● | ● | ● | ||
| Customer Relations Management | Customer Privacy | ● | ● | ||||
| Material Efficiency | Materials Material Efficiency | TR-AP-440b.1 TR-AP-440b.2 | ● | ● | ● | ||
| Sustainable Supply Chain Management | Procurement Practices Supplier Environmental Assessment Supplier Social Assessment | TR-AP-440a.1 | ● | ● | ● | ||
| Economic Performance | Economic Performance | ● | |||||
| Talent Recruitment and Retention | Market Presence Labor/Management Relations Diversity and Equal Opportunity Training and Education | SDG4 SDG5 SDG8 | ● | ||||
| Occupational Health and Safety | Occupational Health and Safety | SDG13 | ● |
