Dear Friends,

The year 2023 witnessed supply chain reshuffling prompted by geopolitics, a great leap forward of AI, and transformation to renewable energies in response to net-zero emission, which were together driving international developments. As a corporate citizen realizing its responsibility for sustainable development management, Walsin Lihwa has incorporated sustainability into its strategy and vision implementation through corporate governance, technology applications, smart manufacturing, investment in the green energy sector, and supply chain integration. We leverage our core competencies to carry out ESG in daily operations to transform challenges into opportunities and move steadfastly towards sustainability.

Energy Transformation and Environmental Protection

Coping the challenges of climate change, we have been focusing on green energy and clean technology development including submarine cables and wind power generation to explore the possibilities of innovative technologies, and our investment in the products and services that meet the needs in energy transformation demonstrates our determination to promote a fundamental change of energy structures. Moreover, we have increased renewable energy power generation and strengthened power grid resilience to help industries effectively engage in carbon reduction for net-zero emission.

To manage climate change opportunities and risks, we have been identifying and assessing such opportunities and risks pursuant to the Task Force on Climate-Related Financial Disclosures (TCFD) framework to quantify financial impacts. For native species neighboring plant, such as the ring-necked pheasant and eastern grass owl, ecological monitoring will be conducted. Simultaneously, management of ecological risks will be achieved through the Task Force on Nature-related Financial Disclosures (TNFD) framework, which involves disclosing financial information related to nature and biodiversity. The aim is to promote coexistence with nature.

Technology Innovation and High-Value Product Development

Effective technology applications assume an important role in sustainable development promotion. Facing up to an aging population and labor shortage, our pursuit for Industry 4.0 and technological innovation by actively engaging in smart manufacturing, the Internet of Things (IOT), and big data analysis helps strengthen production efficiency and product quality.

The construction of the Yangmei Smart Manufacturing Plant utilizes advanced automated equipment and smart manufacturing systems, with automatic handling and storage functions, to improve per capita productivity while reducing energy consumption and production costs. Additionally, the application of intelligent optimization of production processes has further enhanced the efficiency of resource utilization.

Industry and Supply Chain Integration

Walsin Lihwa has been actively establishing a resource-based industrial chain, targeting the high-end market, providing customers with integrated solutions, and gaining a developmental edge in renewable energy and high-value products. It is moving towards goals of low carbon, circular economy, and new energy. Through our Italian subsidiary Cogne Acciai Speciali (CAS), we have recently acquired SMP, Inox, MST, and two steel rolling mills of Outokumpu. The acquisitions shall help Walsin Lihwa expand into high-growth potential markets and stay abreast with world-class ESG standards.

In 2023, the introduction of NKT's advanced submarine cable manufacturing technology and business models will play a significant role in promoting the green energy industry chain. The construction of Taiwan's first ever offshore wind power generation submarine cable manufacturing factory is of strategic importance to the overall resilience of the power grid.

Over the past few years, Walsin Lihwa has been strengthening procurement governance by supply chain resilience development to improve corporate risk resistance. In 2023, supplier exchange conferences were expanded and entitled “Carbon Reduction Alliance, Harmony, and Common Prosperity” to establish a green carbon reduction alliance with suppliers to complete scope 1 and 2 emission disclosures together with 60% of them by 2025, promote supply chain carbon management, and move towards a net-zero future.

Employee Participation, Diversity, and Inclusion

Walsin Lihwa believes diversity is one of the keys to business success and commits itself to diverse and inclusive workplace development, so that employees can fully demonstrate their unique talents and values. We look forward to international talents joining us, strengthen academia-industry cooperation, and encourage cross-domain learning to stimulate innovative thinking and cultivate future talents. Moreover, ongoing learning resources are readily available to employees to help them achieve good development in professional and technical fields. At the same time, we have been strengthening management professionalism of managers at different levels and encourage employee participation, so that everyone at Walsin Lihwa can face up to challenges to realize self-fulfillment.

At the same time, we have been strengthening workplace friendliness and employee care. We have set up a dedicated employee fitness center and provide health counseling service on a regular basis to improve employee safety and happiness as well as organizational cohesion. As a result, we won a Vibrant Vitality Award and a Badge of Accredited Healthy Workplace from the Health Promotion Administration, Ministry of Health and Welfare in 2023.

Sustainability Governance and Social Responsibility

Sustainability governance-wise, our efforts have been recognized domestically and overseas, for example, we are a frequent winner of the Top -100 Taiwan Corporate Sustainability Award, in the top 5% of the Taiwan Stock Exchange's Corporate Governance Evaluation, have a long-term credit rating of twA- with a stable long-term outlook received from Taiwan Ratings, and have become a constituent of the FTSE4Good TIP Taiwan ESG Index, and TWSE Corporate Governance 100 Index, which evidence our strong commitment to sustainable development.

We are fully aware that as pioneers in the industry, we must not only comply with regulations but also actively promote the sustainable development of the industry and be responsible to society. At our global operational bases, we adhere to local laws and go further to be the forerunners and bearers of experience in the industry. In 2023, the PT Indonesia Morowali Industrial Park established a Sustainability (ESG) Foundation. With Walsin Lihwa's successful ESG experiences, we assist in promoting sustainable development in the Indonesian industrial park and participate in the foundation's operations, demonstrating the positive impact and social influence of the corporation.

By enhancing organizational capabilities and deepening social engagement, we are committed to becoming a company that not only pursues growth and profit but also assumes the responsibilities of a corporate citizen. Sustainable growth has taken deep roots in our core strategy development and implementation as well as daily operations. We embed sustainable development deeply into the core strategies and daily operations of our company, encouraging all colleagues to be bold in innovation and self-improvement within their roles. In the future, we shall keep strengthening our pursuit for excellence and cooperation with business partners around the world to expedite business growth and technological innovation and shall also further dedicate ourselves to environmental protection and social progress to help create an even better future.

Chairman, Yu-Lon Chiao