Dear Friends,

Businesses around the world now face unprecedented challenges incurred by the ongoing impact from the coronavirus pandemic, Russia-Ukraine war crisis, global inflation and rate hike cycle, supply chain breakdowns, shortages of coal and electricity, as well as emerging risks associated with climate change and carbon reduction issues. Despite such challenges, Walsin Lihwa shall move steadfastly forward by proactively strengthening corporate governance, leveraging new technologies, pursuing intelligentization of manufacturing processes, establishing business presence in green energy industries, and strengthening supply chain integration to carry out sustainability in day-to-day operation to rapidly adapt to changes.

Believing environmental, social, and governance (ESG) are necessary for business sustainability, Walsin Lihwa regularly and proactively reviews its ESG practices and complies ESG reports to continue strengthening sustainability by effectively identifying and addressing operational risks. Walsin Lihwa keeps pace with international trends to make ESG disclosure by referring to the Corporate Governance 3.0-Sustainable Development Roadmap and in compliance with what is required by the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board. In 2021, Walsin Lihwa took the initiative to have the new Universal Standards of the Global Reporting Initiative implemented to enable a comprehensive sustainability review and strengthen the momentum for ongoing growth.

Effectively Strengthened Corporate Governance for Risk Control and Management

The board of directors of Walsin Lihwa, the highest governance body of sustainability at the company, consists of professionals with different backgrounds to help carry out sustainability through the company’s individual promotion centers. In 2021, Walsin Lihwa established its Nomination Committee to set up the criteria for election and appointment of the board of directors and managerial officers as well as nomination of the candidates for the aforementioned positions. The Nomination Committee also implements external evaluations of board performance as a reference for ongoing improvement of board functions and strengthening management mechanisms. For five consecutive years, Walsin Lihwa has ranked among the top 5% in the Corporate Governance Assessment conducted by the Corporate Governance Center of the Taiwan Stock Exchange and the top fifty of Taiwan Corporate Sustainability Award winners. Moreover, Walsin Lihwa has been twice selected as a constituent stock of the the FTSE4Good TIP Taiwan ESG Index and the Taiwan EMP 99 Index, and has a long-term credit rating at twA- assigned by Taiwan Ratings. Walsin Lihwa’s achievements in sustainability are widely recognized.

To cope with extreme climate risks, Walsin Lihwa continues improving its climate-related financial disclosures pursuant to the TCFD framework and engages in roll wave planning for identification of climate change opportunities and risks.

Moreover, to expedite product upgrades and innovations as well as intelligentization of manufacturing processes, revalidation by the Taiwan Intellectual Property Management System was sought in 2021 and the system implemented was at the Hsinchuang plant to further perfect the risk control related to intellectual property management. Supply chain management-wise, Walsin Lihwa promoted sustainability at supplier conferences, arranged sustainability assessment survey, and conducted onsite inspections of supplies to help strengthen supply chain resilience and exert positive influence on supplier partners to strengthen sustainable competitiveness together with them.

Energy Saving and Carbon Reduction Initiatives for Circular Economy Development

To help strengthen environmental sustainability, Walsin Lihwa always considers environmental protection, energy saving and carbon reduction, as well as resource reuse its top priorities. Therefore, all the emission intensities at Walsin Lihwa are considerably lower than statutory limits and the constant decrease in air pollution intensities at the Taiwan and overseas plants is obvious as a result of their initiatives for air pollution control engineering. In November 2021, all the four plants in Taiwan passed ISO 14064-1 validation and completed their carbon inventory system implementation to timely meet the future needs in carbon management.

To realize circular economy, Walsin Lihwa promotes waste reduction at source as well as recycling and reuse to help mitigate environmental impacts. In 2021, Waltuo Green Resources Corporation was established to commence academia, government, and industry cooperation for waste reclamation, dedicate to value-added manufacturing and R&D for innovation of recycled materials, and establish a resource recovery industry chain. In terms of green manufacture process development, emission reduction is successful by product development and manufacture process optimization as well as equipment energy saving, while green product and material development is steadfastly pursued to expedite the development of low-carbon circular economy and new energies.

Enhancement of Organizational Momentum and Timely Local Care

Committed to development of a fair, friendly, and reasonable work environment, Walsin Lihwa held its corporate annual convention and a series of employee events in 2021 to celebrate its 55th anniversary while strengthening the consensus on company development directions and employee cohesiveness. In response to the strategic transformation of Walsin Lihwa, various core competency projects are promoted step by step to employees and proposals for innovation are encouraged at different levels of the company to help develop systematic thinking skills and strengthen the knowledge and ability of intelligent technologies. There is also an employee intranet platform to facilitate team cooperation, strengthen learning communities, and establish learning together playgroups. Under the coronavirus pandemic, Walsin Lihwa is even more attentive to employees’ mental and physical wellbeing and provides employees a variety of healthcare assistance including sports center, medical consultation hotline, and blind massage kiosk.

The four pillars of corporate social responsibility fulfillment at Walsin Lihwa are corporate citizenship, care for the underprivileged, environmental protection, and community outreach. In 2021 when confirmed coronavirus cases were surging, Walsin Lihwa promptly financed Lo Sheng Sanatorium and Hospital of the Ministry of Health and Welfare to acquire medical instruments and equipment as well as various anti-pandemic medical supplies to support frontline medical workers. Individual Walsin Lihwa plants also purchase agricultural products in large quantity from small farms to help them make it through the pandemic. Supporting environmental and ecological preservation as well as organic agriculture, Walsin Lihwa also commenced cooperation with Taiwankiwi in 2021 by subscribing to the Taiwan indigenous organic kiwifruits grown by contract farming in an area of 2,644 square meters at this local kiwifruit farm to together shoulder climate change risks with the farm and support environmentally friendly farming.

Facing up to incessant challenges, Walsin Lihwa shall continue leveraging advanced technologies to strengthen productivity and production line efficiency of its core businesses, further improving product applications and competencies for manufacturing service industry and developing the products and services relevant to future trends as an effort to keep pace with post-pandemic economic and industry development trends. Walsin Lihwa is fully aware that today’s businesses shall go far beyond profit orientation and creation of value for shareholders to become visionary enough to deliver corporate support for social communion and live up to stakeholders' expectations while pursuing ongoing growth to achieve greater social value.

Chairman, Yu-Lon Chiao