Materiality Analysis

Stage

Step and Process

Results

I. Identification

Step 1: Communication Target

Employees investors/shareholders, customers, suppliers, the government, media, non-profit organization and communities are the 8 main targets of stakeholder communication for Compal based on the AA1000 SES Stakeholder Engagement Standard Communication focuses on the practice of sustainability behaviors at Compal.

8 Key Stakeholders

Step 2: Sustainability Topics

To obtain a full picture of Compal-related sustainability topics, we used domestic/foreign sustainability guidelines/standards, sustainability initiatives, feedback from internal/external stakeholders, the Company’s business strategy, and internal feedback managers to arrive at 15 sustainability topics.

15 Sustainability Topics

II. Analysis

Step 3: Investigate Degree of Stakeholder Concern

An online survey was used to investigate the degree of concern among key stakeholders for each sustainability topic. A total of 475 valid responses were collected from customers (8), suppliers (167), shareholders/investors (6), employees (281), the media (4), the government (1), non-profit organizations (2), and communities (5).

475 valid responses

Step 4: Analysis of Impact on Company Operations (Internal)

The four factors of revenue growth, employee cohesion, customer satisfaction, and operating risk were used to assess the degree of impact that sustainability topics have on Compal operations.20 executives above the grade of manager (inclusive) from the Sustainable Development Function Team took part, with 65% being senior executives.

20 executives

Step 5: Analysis of Sustainable Development Impacts (External)

Based on international standards such as the Value Balancing Alliance (VBA), the Impact-Weighted Accounts initiative of Harvard Business School, and the London Benchmarking Group (LBG), 13 positive impacts and 8 negative impacts were defined. The significance of Compal’s external economic, environmental, and human (rights) impacts in the management of various sustainability topics was assessed, with a total of 23 members of the Sustainable Development Function Team participating in the process.

21 Impacts

Step 6: Confirmation of Material Topics

The screening process for material topics involved not only analyzing “degree of stakeholder concern”, “impact on Company operations”, and “sustainable development impact.” The short-term correlation (2 years) between the top ten risks and topics from the World Economic Forum (WEF) Global Risks Report 2024 along with Compal’s long-term sustainable development strategy and goals, were discussed by the ESG Office and senior executives to arrive at 8 material topics, namely: “Ethical management and anti-corruption”, “Green product”, “Supply chain management”, “Talent recruitment and retention”, “Privacy and information security”, “Risk management”, “Climate risks and opportunities”, and “Talent cultivation and training.” The topics were then reported to the Board for approval.

8 Material Sustainability Topics

III. Confirmation

Step 7: Review of Disclosure

The 8 material sustainability topics identified by Compal corresponded to 7 specific topics in “GRI Standards.” This was then used to define the information disclosure boundaries of the Compal value chain (supply chain management, operations, products, society as the basis for reporting.

7 GRI Topics

Step 8: Formulation of Long-term sustainability Goals

To ensure that sustainability initiatives can match stakeholder expectations and serve as an internal measurement of performance, Compal drew up 8 long-term sustainability goals based on the material topics and set 2030 as the target year.

8 Long-term sustainability Goals

Material Issues

Privacy and Information

Security  

Green products

Supply chain management

Business Case

Compal possesses confidential and private data of the company, customers, and supply chain. If not properly protected, it could pose risks to Compal's stakeholders, reputation, and competitive advantage. Therefore, Compal is committed to ensuring continuous operation and enhancing customer satisfaction. We implement information security policies and management systems to actively protect and mitigate cybersecurity risks.

Under the trend of low-carbon sustainability, customers are increasingly demanding higher standards for managing the environmental impact of products. Producing products with low energy consumption and minimal environmental impact will be key to maintaining Compal's competitiveness and will also help Compal continuously create new business opportunities.

Compal regards suppliers as partners in creating shared value. Regular communication and management can reduce operational risks in the supply chain and enhance cooperation. The sustainability performance and achievements of suppliers will impact Compal's reputation and business interests. Therefore, Compal has implemented sustainable supply chain management to address ESG-related risks in the supply chain and collaborate with suppliers to enhance sustainability practices, thus creating long-term value together.

Business Impact

Risk

Revenue

Risk

Business strategies

Fully implementing information security management mechanisms and regularly tracking the effectiveness of information security policy implementation:

1. Implement risk assessment of information assets.

2. Maintain the confidentiality, integrity and availability of critical information assets.

3. Continuously improve the information security system through the Plan-Do-Check-Act (PDCA) management cycle.

4. Comply with customer contracts to protect customer information security.

5. Follow and comply with relevant government information security regulations.

6. All employees and outsourced suppliers fully participate in the process.

Compal has formulated an environmental sustainability policy and is committed to introducing life cycle assessment thinking into green product design. The R&D team focuses on "minimizing environmental load" at each stage, using this as a perspective to develop and design products, and assist customers based on According to the needs of the sales area, apply for an environmental label that incorporates the life cycle into the assessment.

1. The sustainable performance and performance of suppliers will indirectly affect Compal’s reputation or interests. In order to reduce potential risks, the “Supplier ESG Risk Assessment Questionnaire” is used to conduct supplier ESG risk assessment. When major international events occur, we will also investigate and understand the regions, industries, supply sources involved, etc., to help ensure the stability and sustainability of the supply chain and protect the company's reputation and interests from being affected.

2. Compal continues to promote the optimization of sustainable supply chain operation processes and systems, and assists suppliers in promoting capability building plans. Through in-depth coaching, it works with suppliers to improve sustainable performance.

Target/Metric

Availability of critical systems > 99.44% / month.

1.     Introduce recycled plastic materials with a recycling rate of >30% into green products

2.     Increase the recycling and reuse rate of plastic material tapes/packaging by 15%

Promote the“ONE+N Electronics Supply Chain Net Zero Acceleration Project”and provide in-depth guidance to suppliers, which is expected to be completed in the next two years:

(1) Greenhouse gas inventory registration of 34 suppliers

(2) 10 suppliers actually reduced production by 10,000 metric tons

Target Year

2024

2024

2025

Progress in 2023

Availability of critical systems: 99.91% / month.

1. Annual laptop product with a recycled material content of over 5%

2.     The number of products that meet the voluntary Ecolabel requirements accounts for 69%.

1. A physical supplier conference was hold in September 2023, involving representatives from 34 supplier partners, jointly announcing the “ONE+N project” with Compal

2. The number of companies registered in the carbon footprint verification coaching and carbon management system reached 22

3. Compal promotes substantial carbon reduction actions among supply chain manufacturers and has achieved a carbon reduction of 2,370 metric tons in 2023.

Executive Compensation

Green product innovation, a performance indicator related to Compal's sustainability development, has been linked with the KPIs of the CEO and top executives (including other C-level management). The annual assessment results of these key performance indicators will serve as the basis for salary adjustments, bonuses, and dividend distributions.

Material Issue for External Stakeholders

Green products

Supply chain management

Cause of the Impact

Products/Services

Supply chain

Products/Services

Supply chain

Business activity coverage

>50% of business activity

>50% of business activity

External stakeholder(s)/impact area(s) evaluated

Environment

Consumers/end-users

External employees (e.g. supply chain, contractors)

Environment

Society

External employees (e.g. supply chain, contractors)

Topic relevance on external stakeholders

Positive Impact.

Compal's product design concept is based on the "product lifecycle", which considers the environmental impact of each life cycle stage from raw material procurement, production and manufacturing, transportation and distribution, consumer use to disposal and recycling, and continues to design and develop to further reduce Environmentally impactful production methods aim at environmentally friendly design to achieve the best ecological benefits.

Positive Impact.

Compal's improvement in sustainable supply chain management is having a direct and positive impact on its suppliers. In the short term, suppliers must adhere to Compal's requirements to enhance their environmental, social, and governance operational performance. Through relevant communication and supplier conferences, Compal aims to cultivate suppliers' awareness of sustainability issues. In 2023, Compal launched the "ONE+N Electronics Supply Chain Net Zero Acceleration Project" and began collaborating with its supplier partners to advance net zero carbon reduction efforts and establish a more resilient supply chain mechanism.

Output Metric

Based on the difference in energy consumption between the previous and later generations of notebook product series, based on product operating power, product usage conditions, sales volume, and power grid emission coefficients, notebooks shipped in 2023 can reduce a total of 2,831.13 metric tons of CO2e greenhouse gases during the use phase. Gas emissions.

Compal promotes substantial carbon reduction actions among supply chain manufacturers and has achieved a carbon reduction of 2,370 metric tons in 2023.

Impact Valuation

Social cost caused/avoided：

Compal utilizes the Social Cost of Carbon (SCC), referencing the research by the U.S. Interagency Working Group on Social Cost of Greenhouse Gases. Considering the Consumer Price Index and exchange rates, it calculates the SCC for each ton of CO2 emissions in 2024 to be NTD 2,018. It also evaluates the external impact of carbon reduction on these two material issues.

Impact Metric

The material issue “Green Product” achieved a carbon reduction of 2,831.13 tons in 2023, equivalent to saving NTD 5,713,220 in Social Cost of Carbon.

The material issue “Supply chain management” achieved a carbon reduction of 2,370 tons in 2023, equivalent to saving NTD 4,782,660 in Social Cost of Carbon.