环旭电子:环旭电子股份有限公司2021年可持续发展报告书（英文版）

SSE：601231
20
21ESG Report
Cover Story
Transforming the Future Leading towards Sustainability
USI's vision is to become the most reliable Electronic Design and Manufacturing company in the world
As part of our social responsibility and obligations we are committed to sustainable environmental
social and governance development
The dots form a rotating spiral that symbolizes the continuous transformation of dreams into reality
Our dedication and attention to detail enable us to keep transforming and achieve sustainable development
The blue and green color scheme represents our Low Carbon and Circular Sustainability Strategy and
accentuates our respect for nature and resources
We will continue our journey with a steadfast pace and realize a sustainable futureTABLE OF 11 Operations and 46 Value Chain Management 111 Social Involvement
CONTENTS Governance 48 Product Value Chain 113 Social Activities Overview
13 Company Profile
49 Customer Service and Satisfaction 115 Investing in Education
15 Financial Performance and Tax
Governance 51 Customer Privacy and Product Safety 117 Contributing to Society
16 Board Governance 53 Supply Chain Management 119 Conserving the Environment
4 About this Report 18 Business Ethics and Compliance 60 Conflict Minerals Compliance 121 Promoting Arts and Culture
19 Enterprise Risk Management 122 External Participation
5 Letter from the Chairman 23 Cybersecurity Management
6 Letter from the President 24 Sustainability 62 Environmental Protection 123 Appendix
Management and Occupational Safety
7 USI Contributions to 123 Management Systems
the SDGs 25 Sustainability Committee 64 Climate Change and Carbon Management Certification Table
26 Sustainability Policy 71 Water Resource Management 124 ESG Key Performance Data
9 Awards and Recognition 26 Sustainability Strategy 72 Waste Management 132 Sustainability Data - Environmental
31 Sustainable Impact Assessment 74 Air Pollution Control 136 Sustainability Data - Social
32 Stakeholder Engagement 75 Green Manufacturing and Expenditures 142 Sustainability Data - Governance
77 Occupational Health and Safety 143 Third-Party Assurance Statement
145 GRI & CASS-CSR 4.0 Index
38 Green Products 87 Inclusive Workplace 158 SASB Index
and Innovation 158 USI Specific Disclosures and
89 Human Rights Protection Additional Indicators
40 Research Patents and 94 Talent Attraction and Retention 161 Manufacturing Sites
Continuous Improvement
106 Human Capital Development 162 Sales Offices
43 Green Product Management
3About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
About this Report
Universal Scientific Industrial (Shanghai) Co. Ltd. (USI Company We) issues an annual ESG Report to publicly disclose our measures achievements and targets for all ESG key issues. This report
is the tenth ESG Report published by USI and its subsidiaries. (From 2010 to 2012 USI's indirect controlling shareholder Universal Scientific Industrial Co. Ltd. published three ESG Reports).Stakeholders could learn about our sustainability achievements through this report and join us in our ESG journey.This report has been prepared in accordance with GRI Standards (2016) Core option and CASS-CSR 4.0 Since 2013 USI has published an ESG Report in
basic framework. This year we also integrated the SASB Electronic Manufacturing Services & Original Traditional / Simplified Chinese and English every July and
Design Manufacturing Standards into our reporting for the first time. We also use other recognized is accessible on the USI Sustainability Web (https: // www.Principles for frameworks such as the Evaluation Index System of Shanghai Listed Corporate Social Responsibility usiglobal.com /csr).Report Index (2017) and the Shanghai Stock Exchange Environmental and Social Responsibility Disclosure
Compilation Requirements to provide ESG information. Please refer to the Stakeholder Engagement section for
material topics and report boundaries. Report Publication
Previous Current Next
Version Version Version
The data collection period of this report was from 01 / 01 / 2021 to 12 / 31 / 2021 and financial data Released in July Released in July Planned release 2021 2022 in July 2023
are expressed in CNY throughout the report. Environmental health and safety data are described
using accepted international standard units and indicators. The report scope includes Zhangjiang
Facility Jinqiao Facility Shenzhen Facility Kunshan Facility Nantou Facility (Nantou-TT and
Report Scope Nantou-NK) and Mexico Facility. If data numbers have a data scope different from the defined If you have any suggestions
and scope above there will be a note indicating the particular scope for that data.Boundaries please contact us at:
ASE Technology Holding Co. Ltd. is the parent company of USI and is referred to as our "parent
company" or "ASEH" in this report. * Address: N o.1558 Zhang Dong Rd. Pudong New Area
Shanghai 201203
* Tel : +86-21-5896-6996
* Email : csr@usiglobal.com
Every year we complete a third-party verification for this report to improve information transparency * Web: https://www.usiglobal.com
and accountability. SGS Taiwan Ltd. provided third-party assurance for this report following AA1000
AS v3 (2020) Type 2 Moderate Level with GRI 45 disclosures verified with High Level. This year we * Address: No.141 Lane 351 Sec. 1 Taiping Road
External Tsaotuen Nantou County 542007also verified 7 SASB Electronic Manufacturing Services & Original Design Manufacturing disclosure
Assurance topics. For details please refer to the GRI & CASS-CSR 4.0 Index and SASB Index. * Tel : +886-49-235-0876
4About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Letter from In the past year the world has yet to shake off the volatility brought USI pays close attention to environmental initiatives in the places about by the COVID-19 pandemic while facing increasingly severe we are located. After understanding the policies we develop
the Chairman natural disasters caused by extreme weather. As people face the environmental protection and carbon reduction strategies in response. threat of environmental problems governments have put forward To achieve our Science-Based Target (SBT) by 2030 we formed our
countermeasures to show their determination to protect the Net-Zero Carbon Emissions Strategy based on leveraging renewable
environment. Mainland China has committed to reducing carbon energy. We have been purchasing renewable energy certificates since
emissions to achieve 2030 Peak Carbon Emissions and 2060 Carbon 2018 and in 2021 our renewable energy consumption reached 80.3%
Neutral goals with specific policies and implementation standards at the cost of approximately CNY 3.39 million accounting for 0.006%
to be released. Therefore environmental protection (E) social of our revenue. Our net carbon emissions are on-track and already
responsibility (S) and corporate governance (G) are not only the below our SBT target.criteria for investment decisions but have also become key to In 2021 USI overcame various operational challenges and reached a
sustainable business operations. record high revenue of CNY 55.3 billion achieving a record revenue
ESG is an essential part of USI's business operations. We constantly growth of 15.94%. As an A-share listed company in Mainland China
enhance our practices to go above and beyond regulators' USI has taken the initiative to disclose ESG-related information and
requirements. In recognition of our efforts in sustainability we were has issued CSR reports for 13 consecutive years. In 2021 we renamed
invited to participate in the 2021 S&P Global Corporate Sustainability the report as USI ESG Report to reflect the importance of ESG in our
Assessment for the first time and received S&P Global Bronze Class operations.distinction in the Electronic Equipment Instrument and Component By disclosing information we hope to establish transparent and open
industry group. Not only have we maintained a BB Rating in MSCI communication channels with the outside world. With this report
Emerging Markets Index but we also continued to be included in the we also strengthen internal communication on corporate values
SSE Corporate Governance Index and maintained our SSE information improve various management policies to enhance our sustainable
disclosure A rating for four consecutive years. value and contribute to the long-term coexistence and co-prosperity
We are committed to sustainable development and are determined with our planet. Let's work and move forward together on the road to
to become the world's most reliable Electronics Design and sustainable development!
Manufacturing company. Following our Sustainability Strategy's
four dimensions Low Carbon Circular Collaborative and Inclusive
we drive our sustainability initiatives through our Sustainability
Committee. Through the Committee we strive to create a safe
working environment build sustainable partnerships with our
stakeholders to accelerate our value chain's growth and promote
social development through cooperation and innovation. Chairman Jeffrey Chen
5About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Letter from In 2021 the COVID-19 virus continued to mutate the global energy since 2018 with 100% renewable energy being used in our pandemic became even more severe and human travel continued to Mainland China Facilities and 31% renewable energy being used in
the President be heavily restricted in many ways resulting in logistics disruptions our Mexico Facility. The solar power system built at the Nantou-NK shortages of labor and materials imbalances in market supply Facility generated a total of approximately 1508 MWh of renewable
and demand and inflation. At the same time the unending trade energy electricity by the end of 2021. On the other hand since
wars political turmoil in some countries and the carbon reduction 2013 the Company has been participating in the Million Tree Project
and 2050 net-zero emissions targets set by countries in response of Shanghai Roots and Shoots Youth Activity Center to promote
to global climate change are among the many challenges that are reforestation and environmental education.sweeping the industry making us all the more aware of the urgency USI's efforts to promote sustainable development have been
of implementing sustainable strategies. recognized with several awards: The Company was invited for the first
In these uncertain times USI has been strictly self-disciplined and time to participate in the 2021 S&P Global Corporate Sustainability
initiated emergency response strategies to mitigate impact and has Assessment and won the Bronze Award in the Electronic Equipment
made concerted efforts to set a new record of CNY 55.3 billion in Instrument and Component industry group. The Company also
revenue and 15.94% year-on-year growth in 2021. In terms of the achieved the first place in the electronics industry in Sina Finance's
global deployment strategy Vietnam Facility as the first production 2021 China ESG Top 500 Excellent Enterprises and the China
base of USI in Southeast Asia was officially put into production Corporate ESG Golden Award Corporate Social Responsibility Award.in July 2021 which also demonstrates the Company's ability to In 2021 the Company also achieved a social contribution value per
serve overseas customers' orders more flexibly and promote the share of CNY 2.89 (1).development of the local economy and high-tech industries.Through the Sustainability Committee's five Taskforces -
In recent years value chain management has become a top priority Corporate Governance Green Products and Innovation Value
in the technology industry. In November 2021 USI held a Greater Chain Management Employee Care and Social Engagement and
China Global Sustainable Supply Chain Webinar to promote the Environmental Protection and Occupational Safety USI continues to
Company's policies and corporate philosophy and communicate utilize corporate resources and invest in social services to contribute
directly with suppliers around the world. The content included the to the long-term development of Earth. No one is an outsider when
continuous promotion of a green supply chain in line with the trend it comes to ESG compliance. We must work together to reduce
of international environmental protection requirements and included energy consumption and protect the natural environment improve
the sharing of the requirements implementation experience and the working environment and promote diverse talents proactively
future goals of ESG for suppliers. 276 supplier representatives disclose information achieve fair and transparent management and
attended the meeting and after the meeting we received more than strive for sustainable development.half of the questionnaires distributed that gave us a feedback of "very
satisfied". Being awarded the 2021 Lenovo Lean Management Award
by our customers is a solid recognition of our achievements in driving
value co-creation.President C.Y. Wei
In order to reduce the negative impact on the environment in our
operations USI has been actively promoting the use of renewable
Note 1. Social contribution value per share = (earnings per share + tax payments + employee salaries + interest expenses + total social input) ÷ total number of shares issued in the year
6About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
USI Contributions to the SDGs
● Invested in 5 rural ● Supplied free COVID-19 nucleic acid testing and rapid testing for ● Employees have the right ● Purchased certified renewable ● Installed solar panels on the roof
revitalization programs employees with 9176 participants. to equal pay for equal work energy to offset carbon of Nantou-NK Facility to promote
benefiting 1050 ● Promoted COVID-19 vaccination with a complete vaccination rate of regardless of gender. dioxide emissions generated solar power and generated 1508
students. over 83%. ● Increased percentage of females by traditional electricity used. MWh of green electricity in 2021.● Held 42 health activities such as occupational health promotion in senior management positions 100% renewable energy use in ● Encourage innovation and
blood donation weight loss competition and bone density testing for 4 consecutive years and Mainland China Facilities and increased R&D employees to 2332.with 13028 participants. promoted 4.7% compared with 31% in Mexico Facility.● Provide medical and emergency support for unexpected or sudden 2020. ● Saved 1944 MWh of electricity
illnesses for employees on business trips or stationed overseas.  with energy-saving measures in 2021.● Donated Care Packages ● Donated a cumulative total of 725 boxes of books to ● 36.4% Reduction of ● 15.94% Revenue growth in 2021 compared to 2020.with rice oil and dried the Philanthropic Libraries. water use intensity ● Actively engaged in sound tax policies and honest tax
goods to 18 Kunshan ● Built 5 computer classrooms through the Rural Digital from the baseline contributions to support the government's efforts to promote
households in need Education Program benefiting 1614 students. year 2015. economic growth.before Chinese New ● Trained a cumulative total of 867 USIU internal ● 73.1% Recycling rate ● 84% Satisfaction rate from our major customers.Year. lecturers. of process water in ● Starting salaries for direct laborers at each facility are higher
● Supported 133 employees to take advanced studies. 2021. than local minimum wages.● 411 employees are enrolled in 14 On-Job Degree ● Provided 17923 job opportunities worldwide with 97% local
Programs held in partnership with local schools. employment.
7About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
● Tightened the banned ● Promoted green product design reduced energy loss and engaged ● Supported the Million ● Provide a wide range of electronic products and
substance elimination in continuous improvement to reduce CO2 emissions saving 95754 Tree Project for 9 services under Global Demand Local Service to
program and limited MWh of electricity in 2021 equivalent to reducing 46888 metric years running planting our customers with operations covering Asia
3 substances (Indium tonnes of CO2. a total of 107833 Europe America and Africa.
Phosphide Nickel Sulfate ● 0 days of production interruptions due to climate-related disasters. trees covering 76.71 ● Local purchasing rate reached 39%.Nickel Amino Sulfate) to ● Implemented TCFD (1) to analyze USI climate risks. Results include hectares. ● 100% of our key suppliers meet conflict-free
1000 ppm or less to reduce 3 opportunities 3 transition risks and 3 physical risks. We will use  mineral requirements.harm to workers and the 100% renewable energy in our operations by 2035 and achieve
environment. net-zero carbon emissions by 2050.● 85 employees volunteered in environmental conservation-related
activities.● Employed 83 people with ● Performed corporate risk management assessment and ● Cleaned up 2 coasts ● Established Sunshine Conduct Policies and Anti-Corruption Management
disabilities. implemented relevant countermeasures. and picked 335.2 kg Measures with reporting mechanisms to ensure compliance from suppliers
● Appointed 8 ethnic ● Established an email protection mechanism to strengthen USI of trash. and employees. No corruption or bribery instances were found.minorities to management email security. ● No major fines or violations related to anti-competitive practices or antitrust
positions. ● Introduced an APT (2) system to strengthen cybersecurity laws and regulations.protection capabilities.● Co-worked with suppliers to recycle pallets and packaging
Note 1. TCFD Task Force on Climate-related Financial Disclosures
materials saving approximately CNY 12.45 million. 2. APT Advanced Persistent Threat
8About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Awards and Recognition
Maintained Four Years
Information Disclosure
A Rating on Shanghai Stock
Exchange 2018-2021
Awarded
S&P Global Bronze Class in
Sustainability Yearbook 2022
2021
AWARDS
Awarded
Top 10 Exemplars of Pudong
Headquarters Economy Awarded
Sina Finance
2021 China ESG Top 500 #1 in
Electronics Industry &
China ESG Golden Awards 2021 -
Best Social Responsibility Award
Received Awarded
Wind ESG AAA Rating - 2021 Lenovo Supplier
Top Rated in Electronic Equipment Lean Supply Chain
Instruments & Components Management Award
Industry Group
9About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Governance Social Environmental
Zhangjiang Facility Zhangjiang Facility Zhangjiang Facility
2020 Outstanding Contributions to Pudong Economy 11th China Charity Festival - 2021 Social Responsibility Shanghai Roots & Shoots - 2021 Million Tree Project
15th China Listed Companies Value Award - Top 100 Valued Pioneer Award Sponsorship Award
Mainboard Listed Company 15th China Listed Companies Value Award - 2021 China Listed
10th in Shanghai Top 100 Manufacturing Enterprises 2021 Companies Social Responsibility Award Shenzhen Facility
37th in Shanghai Top 100 Enterprises 2021 GoldenBee Excellent CSR Report 2021 - Foreign-Invested and 2021-2023 Shenzhen Nanshan District Green Channel
6th in Shanghai Top 100 Emerging Industry Enterprises 2021 Hong Kong Macau and Taiwan-Invested Enterprise Enterprise
39th in Top 50 of Shanghai Top 100 Growing Enterprises 2021
Shenzhen Facility Kunshan Facility
Shenzhen Facility 2020-2021 Shenzhen Excellent Foreign Enterprise - Jiangsu Green Factory Certification
Shenzhen Advanced Manufacturing Pioneer Award Harmonious Labor Relations Promotion Award
2020 Shenzhen Excellent Foreign Enterprise - Double
Excellence Enterprise Kunshan Facility
2020 Excellent Import and Export Enterprises 2020 Kunshan A Grade Trustworthy Labor Security Enterprise
2020 Shenzhen Top 500 Enterprises 2020 Suzhou Harmonious Labor Relations Enterprise
2020 Shenzhen Top 100 Industry Leaders
2021 Sugon - Perfect Quality Award Nantou Facility
2018-2022 Accredited Nantou County Nursing Room - Most
Kunshan Facility Comfortable Room
Qiandeng Digital Economy Key Enterprises 2019-2021 Accredited Healthy Workplace - Health Advocate
2021 Jiangsu Industrial Internet Development Model Enterprise Badge
2015-2020 Innovative Transformation and High-Quality 2021 Occupational Health Promotion Outstanding Service
Development of Advanced Enterprises Award
2020 Qiandeng Outstanding Talent Contributing Tech
Innovation Enterprise Mexico Facility
Jalisco Distinction for Good Labor Practices
Nantou Facility
Authorized Economic Operator Certification
10About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Operations and Governance
USI's vision is to be the most reliable provider for electronic design manufacturing service and modularization with diversified global footprints and miniaturization solutions.Through the collective contribution of employer and employees we established effective governance mechanisms with respective responsibilities and accountabilities. We strive to
generate exceptional rewards for stakeholders and to build a better place to live.CNY 55.3 Billion Record High Sales Revenue
CNY 1.86 Billion Net Profit
A-level Rating of Information Disclosure in the SSE
Included in MSCI Emerging Markets Index
Included in SSE Corporate Governance Index
Listed as Top 10 Exemplars of Pudong
Headquarters Economy
11About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Key Performance and Targets
Achieved Not Achieved
SDGs Business Action 2021 Key Issue KPI 2021 Target 2021 Performance Status 2022 Target 2026 Target
Continue to C ontinue to
Improve economic growth Included in C ontinue to
and productivity through Corporate SSE Corporate
be included in I ncluded in be included in
SSE Corporate SSE Corporate be included in
sustainable development Governance Governance Governance Governance Index SSE Corporate
SSE Corporate
Index Governance Index Governance Index Index
1. Apply sustainable system
Business Obtain ISO 22301 O btain ISO 22301 The certification O btain ISO 22301 I mplemented or strategy and include
sustainable information Continuity certification
certification in was postponed due certification in BCMS to major
Nantou Facility to COVID-19 Nantou Facility Facilities
in routine report
2. Ensure all employees
can acquire the related
Cybersecurity USI Cybersecurity
80% completion 85% completion 1 00% completion 100% completion
information and training rate of USI rate of USI rate of USI rate of USI
consensus of sustainable Management completion rate Cybersecurity Cybersecurity Cybersecurity Cybersecurity
development training training training training
U SI Employee 100% completion
Forbid any kind of Business Code of rate of USI
100% completion 1 00% completion 1 00% completion
corruption and bribery Ethics Conduct training Employee Code
rate of USI rate of USI rate of USI
of Conduct Employee Code of Employee Code of Employee Code of completion rate training Conduct training Conduct training Conduct training
12About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Company Profile
Company Overview
USI (SSE: 601231) is a member of ASEH (TWSE: 3711 NYSE: ASX) and an industry
leader in SiP (System in Package) modules. We provide D(MS)2 product services: Company Name Universal Scientific Industrial (Shanghai) Co. Ltd.Design Manufacturing Miniaturization industrial software and hardware Solutions
and material procurement logistics and maintenance Services for brand owners. USI Registered Capital CNY 2209609072
has a total of 27 manufacturing facilities with company headquarters in Pudong New
Area of Shanghai China and over 220 SMT lines across Asia Europe America and
Africa to support customers diversified electronic products through "global reach at Stock Number / Name 601231 / USI Shanghai in SSE
a local level" strategy.Date of Stock Issue Feb. 20 2012
Provide professional services in design miniaturization
material procurement manufacturing logistics
and maintenance of electronic products such as
Main Products and Services
communication products computer and storage products
consumer electronics industrial products medical and
automotive products
Chairman and Chief Executive Officer Jeffrey Chen
President and Chief Operation Officer C.Y. Wei
Global Total of Employees 24768 (As of 12 / 31 / 2021)
Area of Manufacturing Facilities (1) 452146 Square meters (45.2146 Hectares)
Note 1. The area of manufacturing facilities only includes facilities in the scope of this report. For more details please refer to USI website (https: // www.usiglobal.com /en /global-locations)
13About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Global Operations (1)
Germany(4)
United Kingdom(1) Poland(1)
Czech Republic(1)
France(7)
Tunisia(1)
Mainland China(6)
USA Silicon Valley(1) Taiwan(2)
Mexico(2) Vietnam(1)
USI Manufacturing Locations (USI + AFG)
Note 1. For more details please refer to USI website (https: // www.usiglobal.com) or corporate videos (https: // www.usiglobal.com /en / videos)
14About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Financial Performance and Tax Governance
55.30
Financial Performance
47.70
The global supply chain was highly impacted by COVID-19
which increased uncertainty of business management.However USI achieved superior business performance and 37.20
hit new high by steady operation strategies. In 2021 USI 33.55
reported consolidated sales revenue of CNY 55.30 billion with 29.71
an increase of 15.94% comparing with 2020. Its total asset is
divided into liabilities and equity which are CNY 22.77 billion
and CNY 13.08 billion. The earnings per share were CNY 0.85
and dividend remittance was CNY 1099138448 accounting
for 1.99% of revenue. The data scope in this chapter includes
USI global operation locations please refer to 2021 USI Annual
Report for more financial information.
20172018201920202021
Operating Revenue (in CNY billion)
Unit: CNY
Item 2021 2020 2019
Operating Revenue 55299654770 47696228223 37204188424
Operating Profit 2131813481 1961650751 1422151443
Operating Cost 49981479198 42710970316 33499411113
Total Profit 2138858923 1973563055 1432762959
Net Profit 1856693042 1733565232 1260107633
Taxes (1) 618989548 397576824 352271710
Earnings Per Share 0.85 0.80 0.58
Government Subsidies 50678107 76779477 52011789
Note 1. 2019 and 2020 data scope were adjusted by Financial Department
15About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Board Governance
Tax Governance Board Structure
USI established tax policy to organize tax governance and follow tax laws of global operation
locations we believe that being an honest and responsible taxpayer fosters economic growth General Meeting of Shareholders
and contributes to long term business sustainability. The Chief Financial Officer supervises tax Strategy Committee
policy compliance financial staff must take taxation training courses to prevent any risks from
Nomination Committee
uncertain tax regulations.Board of Supervisors Board of Directors
Compensation Committee
Tax Policy
President Office General Manager Audit Committee
1. Comply with all applicable tax laws and regulations of all countries in which we operate
and duly reporting and paying all necessary taxes in a timely manner.
2. Take both short term and long-term tax impacts into consideration when making major
business decisions. Manufacturing Sites Business Units Function Units Audit Center
3. Be transparent and disclose tax information in accordance with applicable regulations
and reporting requirements.
4. Pay taxes on the profits earned from business activities conducted in relevant Board of Directors
jurisdictions and ensure intra-group transactions are conducted at arm's length.
5. Don't use tax havens and tax structures that are meant for tax avoidance or aggressive The USI's Board of Directors candidates are nominated by the Nominating Committee and
tax planning. then approved by the Board of Directors and the Shareholders' Meeting. Currently USI's
6. Construct an appropriate mechanism to evaluate potential tax risks which are given rise Board of Directors is composed of 9 directors with three independent directors. Each Board
to our global manufacturing and sales activities. Director's term is three years. Jeffrey Chen serves as Chairman of the Board. The responsibilities
7. Develop mutually trustful and respectful relationships with tax authorities in the of Chairman are to supervise the execution progress of Board resolutions and exercise the
countries we operate and communicating with them on tax matters where appropriate. authorities of legal representative. Board of Directors shall exercise its authorities according to
laws administrative regulations department rules or articles of the company. Material events
must be deliberated and voted by directors after full discussion. But if the events are out of
Our principal operating facilities and offices are in Mainland China and Taiwan. Therefore a large
the authorization to Board of Directors it should be submitted to Shareholders' meeting for
proportion of operating revenue and profit before income tax is accounted by business activities
deliberation and approval. The Company holds at least two board meetings every year. There
conducted in Mainland China and Taiwan which contributed more than 70% of income tax
were 7 board meetings in 2021 with a 100% attendance rate.expense and income tax paid. The statutory tax rates in Mainland China and Taiwan are 25% and
20% respectively. Mainland China Facilities qualified as high-technology enterprises and thus Shareholders can nominate directors and independent directors. The Nominating Committee will
were entitled to a reduced income tax rate of 15% and were eligible for weighted deduction of select candidates based on their professional background and working experience. Independent
research and development expenses. Additionally Nantou Facility was also qualified as industrial director candidates are required for the attitude of independence. Company held annual
innovation enterprise and thus entitled to reduce research and development before income tax. shareholders' meeting in April 2021. In addition to reviewing 2020 directors and supervisors'
The effective tax rates in Mainland China and Taiwan were 9% and 21% respectively in 2021. working reports and financial related issues during the meeting a proposal of by-electing the
non-executive director was approved (1). For further details and the complete list of the Board of
Note 1. Tien-Szu Chen resigned from the 5th Board of Directors Gilles Baruk Benhamou was approved to fill the board vacancy Directors please refer to Section 4 of 2021 USI Annual Report.
16About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Board Diversity Board Performance and Compensation
USI considers diverse factors such as: age professional background industry experience and USI established an evaluation and incentive mechanism to measure the performance of
nationality for board composition. The directors are assigned to different committees according directors supervisors and senior officers respectively. Compensation Committee will draft a
to their expertise to enhance corporate core competitiveness increase the efficiency and quality compensation proposal according to achievement rate of annual profit and operating targets.of major investment decisions as well as perfect the corporate governance structure. Please The proposal is generated after considering about industrial salary level and company status
refer to USI Investor Relations website (https://www.usiglobal.com/en/corporate-governance/ir- and interlinking the business operator's annual salary company asset profitability and business
board) for the Board of Directors backgrounds. goals. It is expected to enhance operator's positivity perfect the mechanism to select the
superiors and strengthen goal constraint. For further details of Compensation of Directors
Continuous Education for Board Members Supervisors and Senior Officers please refer to Section 4 of 2021 USI Annual Report.To expand board members' competencies USI arranges training courses that cover corporate Conflict of Interests Management
governance and sustainability for board members in hopes that they will incorporate the spirit
of sustainability in steering USI corporate policy. In 2021 board members completed 19 hours of According to the Company Articles any corporations related to the matters in the resolutions
training. made in the director meetings and board meetings shall not vote on such resolution or
exercise the right to vote on behalf of other directors. And company has Board of Supervisors
Course Name Hour(s) which includes the representatives of the shareholders and representatives of the employees.Supervisors shall monitor the acts of the directors and senior officers audit and approve the
2021 Training Course for Corporate Governance 17 regular reports prepared by the Board of Directors. External auditor will issue an internal
audit report annually. USI held 2 Shareholders' meetings in 2021; shareholder representatives
Regulatory Working Meeting of Listed Companies 2 passed resolutions of Directors and Supervisors and financial proposals in accordance with the
laws. Please refer to USI Investor Relations website (https://www.usiglobal.com/en/corporate-
Total Training Hours 19 governance/ir-board-supervisors) for the name list of Board of Supervisors.To safeguard investor interests USI has a dedicated unit to address investors' concerns and
Board Participation in Sustainability Governance developed corporate Investor Relations Management Guidelines to build a good communication
platform for direct engagement. USI is committed to providing transparency about the status of
Three USI Board Members namely USI President C.Y. Wei USI Chairman Jeffrey Chen and our business operations and monthly updates on our Investors Relations website. Also we retain
ASEH Chief Administration Officer Dtuang Wang have roles in our sustainable governance. legal counsel to provide necessary services and maintain a long-term stable and harmonious
USI President C.Y. Wei acts as the Chair of Sustainability Committee and the other two board relationship between the corporation and investors.members are members in the ASEH Corporate Sustainability Committee. Their participation
in the Sustainability Committee can strengthen the relationship between the Board and
sustainability strategies. Each year the Sustainability Committee submits the annual ESG Report Board Committees
to the board of directors and a series of discussions and plans will be carried out by the board USI's Board of Directors has four special committees: Strategy Committee Nominating
of directors regarding our implementation of Corporate Social Responsibility activities. VP Otto Committee Compensation Committee and Audit Committee. There are rules of procedure for
Yu the Taskforce Leader of Environmental Protection and Occupational Safety shared the the committees. Each special committee reports to the Board of Directors and the proposals of
global trend of carbon reduction and USI Net Zero strategies in board meeting in July 2021. That the special committees shall be examined and determined by the Board of Directors.will help the environmental sustainability to be more implemented by corporate governance
decisions.
17About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Business Ethics and Compliance
The members of those committees shall all be directors. The number of independent directors
in the Audit Committee Nominating Committee and Compensation Committee shall be in Business Ethics
the majority and the independent directors shall be the conveners of those committees. The USI adopts a zero-tolerance attitude with the violations of fraud behaviors. To make sure
convener of the Audit Committee shall be a professional accountant. The members of the employees do not have fraud or illegal profit exchanges with related institutes USI employees
Strategy Committee shall include at least one independent director. Please refer to USI Investor must put more emphasis on incorruptible deeds. In employees' working regulations they
Relations website (https://www.usiglobal.com/en/corporate-governance/ir-committees) for the are required not to engage in activities for personal gain with their authority. USI has drawn
composition of special committees. up a Code of Business Conduct and Ethics (1) and a Privacy Policy (2) to be the business dealing
standards of company employees business partners and other stakeholders.Audit Center
Audit Center is subordinate to the audit committee under the board of directors. The employment Grievance Mechanism and Whistleblowing Protection
of the head of auditing must be approved by half of the board members. A full-time head auditor Company provides the fraud notice mailbox for all employees and outsiders to report any
is established and auditors are established in major facilities as well. integrity-related improper or suspected illegal practices. Reporting with name or anonymous
are both accepted. The Company shall do due diligence to investigate all reported cases and
Board Meeting keep confidential of reporters in accordance with the laws to ensure safety of reporters and
no threat or damage to reporters' rights and interests.Audit Committee
Audit Center Ethics mailbox
Audit Division IT Audit Department ethics@usiglobal.com
China Team 1 China Te am 2 Promotion and Training
To ensure that employees understand and comply with the USI Employee Code of Conduct
Internal Audit Process Fraud Risk Management Procedure and The Rule of Punishment for Fraud in the Sunshine
Range of audit: All operations and management of finance and business are included. Act. When newcomers accept training they are given related training courses. All employees
According to related regulations there are eight divided circles plus information circle and need to finish the required reading and pass the quiz every year. All records are listed as
financial reporting flow responsible for respective audit. tracking list to ensure the course of Employee Code of Conduct has been finished by each
Object of audit: All institutes and legal branches around the world of USI. employee. Furthermore the Sunshine Conduct Policies must be conducted to employees
Audit strategy: The regular audit is practiced based on the annual audit project decided by regularly to remind them of relevant corporate regulations and strict observance of rules.the board of directors; a special case audit will be practiced if needed. The goal is to prevent And the Sunshine Conduct is also announced to suppliers every year.possible shortages from the internal control system and present improving suggestions.Besides the Audit Center urges all departments to practice self-examination and assessment Note 1. P lease refer to USI website (https: // www.usiglobal.com /en /csr / Operation-Governance / Code-of-Ethics-And-Business-
to evaluate the rationality and effectiveness of the outcomes. The Audit Center will produce Conduct) for the complete Code of Business Conduct and Ethics
an auditing report after the auditing activity performed. The compiled report will be 2. Please refer to USI website (https: // www.usiglobal.com /en / privacy) for our complete Privacy Policy
submitted to the board of directors as the realization of the Company's governance spirits.
18About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Enterprise Risk Management
Risk Management Committee Risk Governance Process
Once the violations of the Sunshine Conduct Policies have To ensure sustainable business achievements USI organized Through worldwide manufacturing sites business units and
been verified to be true the punished personnel must return a Risk Management Committee to execute annual risk function units USI engages Enterprise Risk Management
unjustified enrichment to compensate company's losses and management activities according to business environment (ERM) project to identify risk events and factors evaluate
their bonus performance appraisal and promotion will be industrial trend and company operations. The function and adopt proper countermeasures to ensure sustainable
restricted according to the degree of negligence. units of Risk Management Committee should investigate the management and achieve business operational goals.After identified and assessed by risk management process in 6 internal and external risk factors evaluate the risk levels and 1. Identify corporate level and operational level risks list
major facilities in 2021 only Financial Department identified inspect the effectiveness of activities. According to evaluation various risks that are facing by corporate and conduct Top-
Fraud as a high risk but controllable item so there were no of risk level the committee takes the responsibilities to adopt down ERM Approach by top managements to confirm the
important corruption cases required for corrective actions. countermeasures and ensure the risk management policy can focused items.There were no instances of bribery or corruption discovered in be executed by each operation unit. 2. Conduct Bottom-up ERM Approach by operation units
2021. to check their management risks inspect internal and
external risk factors and show the control results on risk
Regulatory Compliance map according to the evaluation of Risk Level and Control Risk
Management Effectiveness.USI has devoted to maintaining the corporate image for years Committee 3. Generate a corporate risk report based on risk evaluation
and strictly complied with national or international laws results from operation units and corporate level. Inspect risk
and regulations related to corporate governance financial situations countermeasures and corporate opportunities.management intellectual property green environmental List corrective actions and risk mitigation plans for the risk
protection and safety rules labor rights and fair market items identified by each operation unit.competition. We also cherish customer value rights and 4. Monitor quarterly progress of risk mitigation plans to
interests. The contract review completion rate reached Operational ensure the risks are effective controlled and convert the
96% (1). For any negative impact on corporate image or Units corporate risk management to the effective behaviors of
violation of the law a task force will be formed by USI to take organization strategies enhancement.countermeasures. By the end of 2021 no violations resulting
in a significant penalty (2) or other non-economic punishment
occurred. And we did not use collected personal data for
any secondary purposes other than the specific purposes for
which the personal data was first collected and there were no Business Function Manufacturing Units Units Sites
incidents of infringement of customer privacy rights and no
incidents of customer data leakage.Note 1. 230 contracts remained to be reviewed by both parties by the end of 2021
2. The definition of significant penalty is sanctions over CNY 65000
19About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Risk Assessment Matrix
* Outsourcing
* Production Schedule
* Demand Controls for Raw
Materials
Risk H * Innovation Research and
Response Development
* Fraud
* Financial Disclosure
Find out and evaluate
Risk countermeasures and
Assessment corrective actions to
control risks that
include: * Geographical Politics * Talent Management /
1. Evaluate the risk Implementation * Natural Disaster Risks RecruitmentRisk
Identi f icati on levels from two cost and resources
* Natural and Man-made Disasters * Standards of Quality
aspects Feasibility and * Legal and Regulatory Compliance * Planning of Production
*The possibility of possible benefit M * Quality Management Equipment
* Compliance with Accounting * Capacity Planning
Identify focused items occurrence Proposal lead time Standards and Policies * Inventory Management
through corporate risk *The negative and schedule * Order Processing * Factory Equipment Supply
management by senior impacts on finance planning
reputation and * Out of Materials/ Lack of Materials * Suppliers Business Continuity management and
continuing * Shipment Management and Social Responsibilitiesapply Risk Evaluation
Questionnaire to operations
collect feedback from 2. Inspect the effective-
each operation unit. ness of exist activities
Manage risks by and evaluate residual * Communication
Top-down and risk after control * Enterprise Development
Bottom-up models to activities * Contract Management * Marketing / Sales Strategy
identify the risk factors * Technology * Business Concentration
of impact on USI L * Supplier Chain Management * Energy Management and
sustainable develop- * Pricing Alternative Energy
ment. * Economic Conditions / Industry * Customer Satisfaction
Trends
* Cybersecurity
Yes Partial No
Control Effectiveness
20
Risk LevelAbout this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
2021 USI Risk Assessment Countermeasures (1~2)
Category Item Risk Situation Countermeasure Corporate Chance
1. Enhance all employees' cybersecurity awareness
1. Lack cybersecurity awareness mistrust 1. Hold regular cybersecurity training courses for
2. Upgrade system safety level and assure corporate
Phish or scam website employees
Cybersecurity reputation
2. Leak system account or password 2. Two-factor authentication
3. Train the employees' resilience to reduce the hazard
3. System is locked by hacker or data loss 3. Regular backup & offsite backup
impacts
Emerging Risk
Supply chain has been impacted by COVID-19
Material storage management production schedule
Supply Chain and natural disaster the production lines Develop local suppliers to reduce the material risk from
and logistics arrangements shall be more flexible
Management are facing the risks of manpower shortage uncertain international transportation schedule
base on the identified supply chain risks
unstable logistics and key parts shortage
1. Evaluate macro-economy industry trend and
emerging risk. Keep interactions with customers
and stakeholders. Adopt action plans to enhance
company core competence and operation
1. Cooperate with customers to flexible adjust production
1. In the post-pandemic era EMS industrial resilience
facilities and improve products and services value
chain and corporate operations are 2. Adjust manufacturing sites and business allocation
2. Enhance manufacturing strategy in non-Mainland China
Strategy and impacted that results in sluggish economic to reduce regional supply chain impacts from areas and convert local resources to be competitive
Regional Politics recovery and highly competitive in the field trade friction and epidemic; through business
Planning advantages; strengthen company global manufacturing 2. Due to uncertainty of regional politics the growth and merger to enhance the market
service capability
decision makers will hesitate and postpone placement of non-Mainland China areas
3. Aggressively develop and build local suppliers' capability
the major investment decisions 3. Continue to enhance supply chain management
to achieve a win-win situation
and risk identification; through corrective actions
and progress tracking to ensure supply chain
resilience and sustainability. And adjust purchasing
strategies according to regionalization trend
Note 1. Please refer to 2021 USI Annual Report for Risk Management: Section 3: (IV) Possible Risks
2. Please refer to the Climate Change and Carbon Management section for climate change related risks
21About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Category Item Risk Situation Countermeasure Corporate Chance
1. USI has bought RECs (Renewable Energy
Certificates) to offset company's carbon emission
1. Observe evaluate and publish the trend of regulations
since 2018 and climate change was one of the
and customer specifications to enhance the efficiency
major topics in USI sustainability committee
Violate local laws and losing business of energy usage and innovate low carbon products for
2. Mainland China Facilities achieved 100% of
opportunities from not following sustainable manufacturing
Energy Management renewable energy usage through I-REC purchased.governmental environmental regulations or 2. Strengthen social involvement to in line with
and Alternative Energy USI will continue to enhance energy management
customer's request to plan a comprehensive governmental regulations by industrial unions or other
and use alternative energy according to regulatory
energy program stakeholders. Review company sustainable development
changes customer requirements and sustainable
through international appraisals. Build corporate positive
goals
image and increase market value
3. Continue manage carbon emissions to achieve
2050 Net Zero target
1. Build key successor system: 1. Ensure corporate sustainable development through a
Operation and (1) Regular inventory the requirements of key successor system and prevent business impact from
Infrastructure positions unexpected changes in personnel
(2) Make succession development plans and 2. Implement talent development mechanism to ensure
Succession Plan and Operating risk from imperfect cultivation of provide resources the successors have the capability to perform key
Recruitment the talent team and management mechanism (3) Systematized talent database for ongoing responsibilities
regular tracking 3. Provide diversified development resources to potential
2. Build Talent development scheme: talents increase development opportunities and focus
the development plans of succession talents and on individual development requirements to improve the
potential talents potential talents' retention rate
1. Follow procedures for Business Continuity
A company cannot normally operate without Management and Enterprise Risk Management Through timely emerging risks plan evaluation to update
effective prevention and crisis management to ensure business continuity and recover the and implement Crisis Prevention Measures Emergency
Disasters
for emerging infectious disease it will result impacted facilities Response Plans and Business Continuity Plan. It will help
in customers and company's losses 2. Prevent and manage the impacts of emerging company to convert resilience to core competence
infectious disease such as COVID-19
22About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Cybersecurity Management
Effective cybersecurity management is fundamental to all operations. To ensure we have
consensus of cybersecurity goals USI set up a committee to boost cybersecurity awareness. The
committee members are composed of CIO CFO GISO Vice Presidents or Division heads level
above CIO shall report to Senior Vice President of Administration Group. Under the committee
there are information security representatives to assist the Information Security Committee in Cybersecurity
implementing cybersecurity affairs. USI obtained ISO 27001:2013 Certification in 2020 and the Vision Ensure the
cybersecurity management is further implemented in the USI Group. confidentiality integrity and
Protect availability of
Information Technology Unit customers and information
Chief Information Officer USI's sensitive assets
information
Strengthen
Information Security employees'
Information Security Division Steering Committee cybersecurity Establish a
Global Information Security Officer 、 holistic CIO CFO、GISO awareness cybersecurity
system and ensure
its effectiveness
Security Architecture Business Information Business Information Business Information
and Operaitions Security (Asia) Security (North America) Security (EMEA)
Cybersecurity Goals & Vision Cybersecurity Advocacy and Training
The Company's cybersecurity objectives are to ensure the preservation of Confidentiality USI has made Enterprise Network Cybersecurity Management Approach and introduced
Integrity Availability and Compliance of the core systems engaged in business operations. Advanced Persistent Threat (APT) to increase cybersecurity protection. Through regular
Additionally quantitative goals are defined according to organization level and job function to announcement employees are required to follow network cybersecurity regulations and
ensure the achievements of the ISMS (1) implementations and cybersecurity objectives. use legal software. IT Department spot-checks illegal use of software any illegal cases will
1. Protect USI's important information assets including USI and customer products be punished according to regulations. USI arranges an online training course to strengthen
manufacturing processing information and recipe R&D information services and maintain employees' cybersecurity thinking. All employees should take Cybersecurity courses and pass
their confidentiality integrity and availability. tests. IT also irregularly practices Social Engineering (Phish Insight) to enhance employees'
2. Strengthen USI employee's awareness of the company's and customer's information asset cybersecurity awareness.
protection responsibilities. To be a gatekeeper of company cybersecurity IT members not only take professional
3. Ensure that the execution of all business comply with the requirements of relevant laws or training courses but also need be certified to ensure the effectiveness of our cybersecurity
regulations. organization can systematically solve cyber incidents. USI had no cybersecurity incidents in
4. Construct a safe and convenient information network environment to protect employees 2021.
from internal and external cybersecurity threats.
5. Establish a cybersecurity sustainability plan to ensure the business contingency. Note 1. ISMS Information Security Management System
6. In-depth assess existing cybersecurity level and enhance the maturity of entire
cybersecurity management.
23About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Sustainability Management
USI integrates core values of four sustainability strategies Low Carbon Circular Inclusive and Collaborative into corporate policy and operation management. Not only bringing in
the most benefits for shareholders and investors but create social value to pursue the sustainable development of co-existing environment society and governance.We commit to
Provide a fulfilling and challenging working environment
Generate exceptional rewards for stakeholders
Contribute towards building a better place to live
Note 1. ISMS Information Security Management System
24About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Sustainability Committee
USI Sustainability Committee is the highest-level organization of corporate sustainable development management. The committee The committee coordinators will hold quarterly meetings;
covers all manufacturing facilities. The committee's mission has been divided into five taskforces Corporate Governance leaders and task force members will decide and track
Green Product & Innovation Value Chain Management Employee Care & Social Involvement and Environmental Protection & the sustainable targets in the meetings. The sustainable
Occupational Safety. Committee members are representatives chosen from each department and the President acts as the Chair achievements will be presented to committee Chair and
Vice Presidents and Division heads act Leaders and Coordinators respectively. Through policies and actions set by the committee members in the annual Sustainability Committee meeting.and corporate-wide cooperation we promote and implement a sustainable business model. A Sustainability Committee Annual Meeting & Forum was
held on December 14 2021. Sustainability consultants were
1. Study and Develop the Vision Policy and invited to share and suggest directions for USI sustainable
1. Plan Operation Mechanism of Target of Group Sustainable Development performance.
Group Sustainable Development 2. Identify Risks and Opportunities of Group
2. Coordinate and Promote Group Sustainable Topics to Decide Strategies and To raise awareness about sustainable practices USI has
Sustainability Targets USI Sustainability Investments
3. Integrate and Promote Action Committee 3. Supervise the Plans and Implementations of a multi-stage sustainability training course in our LMS
Plans of Group Sustainable Group Sustainable Strategies (e-learning) system. First all new employees are preliminary
Development 4. Monitor and Disclose Group Sustainable trained to recognize the concept of sustainability. Committee
4. Evaluate the Executive Performance
Performance of Group 5. Report Working Plan and Performance to members and representatives must undertake specialized
Sustainable Development ASEH Sustainability Committee training to enhance their capability and knowledge of
5. Disclose Performance of Group Executive Secretariat
Sustainable Development sustainable standards and practices.
6. Study and Develop Group S&HS Division
Sustainable Topics
7. Manage Group Integrated
Sustainable Affairs
AFG Group
USI Sustainable
1. Evaluate Risks and
Opportunities of the Specific Development Taskforces
Sustainability Topics. Suggest Corporate Governance
and Plan the Sustainable Green Product & Innovation
Development Targets of Group
or Specific Operating Area Value Chain Management
2. Plan Actions and Assist to Employee Care & Social Involvement
Promote the Actions
3. Track Action Progress and Environmental Protection & Occupational Safety
Evaluate Performance 1. Follow Corporate Sustainability Policy
4. Provide Professional Consulting 2. Manage and Implement Site Sustainable
and Experience Sharing Actions Sustainability Committee Annual Meeting & Forum
5. Submit Recommendation 3. Respond and React to Local Sustainable Manufacturing
Report to Group Sustainability Topics Based on Corporate Sustainable Policy
Committee Sites 4. Support and Provide Site Sustainable Performance Data
25About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Sustainability Policy Sustainability Strategy
Through the understanding of Environmental Social and To reach the United Nations Sustainable Development Goals (SDGs) and pursue corporate sustainability USI follows four
Governance (ESG) dimensions in sustainability USI considers sustainability strategies Low Carbon Circular Collaborative and Inclusive to prioritize response SDGs based on the Company's
that sustainable business development is closely linked core values. This enables the Company to take comprehensive actions concerning corporate sustainability.with the interests of employees community society and
shareholders. The scope of ESG covers the issues of labor CSR/ Sustainability
rights workplace safety and health environmental protection
business ethics and social engagement. To accomplish our *Decarbonized Products & Services
ESG goals effectively and meet stakeholders' expectations *Low-carbon Manufacturing
USI set the following measures to achieve sustainability goals. Low Carbon *Adapta?on and Resilience
The complete policy can be accessed at the USI Sustainability *Green and Renewable Energy
Web (https: // www.usiglobal.com /en /csr / Sustainability- Investment
Management / Policy).*Respond to climate action;
Reduce greenhouse gas emissions *Circular Design
*Invest in green innovation; *Energy Resources Recycling
Environmental Improve energy efficiency
Circular *Waste as a Valuable Resource
*Promote circular economy; *Circular Economy in Value Chains
Prevent and control pollutants
*Ensure workforce diversity; *Environmental Conserva?on
Endorse human rights *Industry-academia
*Stimulate social welfare; Inclusive Collabora?ons
Support community investment
Social *Community Engagement*Advocate supplier development;
Achieve global partnership *Public Advocacy
*Smart Procurement
*Upgrade corporate governance; *Strategic Partnership
Uphold business ethics Collabora?ve *Supply Chain Management
*Create company value; Go High Tech
Connect with stakeholders
Governance * *Environmental Educa?onDrive transparency culture;
Disclose sustainable indicators
Commitments/ Value
26About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Strategic Approaches and Targets of Key Sustainable Issues
In 2021 we generated strategic approaches and 2026 targets according to key sustainable issues tracked the target achievements and published the sustainable missions and performances in the
annual Sustainability Committee meeting.On-schedule Room for Improvement (1)
Corporate Governance
On the premise of abiding local regulations and Key Issue Strategic Approach 2026 Target Assessment Mechanism Status
eliminating corruption and fraud continue to
increase the Company's market competitiveness
and ability in evaluating and responding to T hrough monthly governance
operational risks optimize external communication Implement laws and regulations: sanctions & fines data
channels to establish a rapid accurate and safe
Regulatory 1. Promote legal compliance awareness collection to control major information network and train the Company through training courses Maintain 0 major regulatory violations of each
to develop competencies and skills required for Compliance 2. Perfect legal compliance management regulatory violations facility and analyze and track
sustainable operations. mechanism and process the progress of corrective
actions
Implement the related policies and T hrough e-learning system
specifications of business ethics: 1 00% coverage of to arrange Business Ethics Business Ethics Continue to promote training courses and employee annual Code courses for employees track
reflect business ethics in daily operations of Conduct training and follow up the completion rate to ensure 100% coverage
Perfect cybersecurity mechanism:
1. Strengthen USI employee's awareness
of the company's and customer's Through e-learning system
Cybersecurity information asset protection 1 00% coverage of to arrange Cybersecurity
responsibilities annual Cybersecurity courses for employees track
Management 2. Construct a safe and convenient training and follow up the completion
information network environment to rate to ensure 100% coverage
protect employees from internal and
external cybersecurity threats
Note 1. For target performance results please refer to the respective chapter and section for more information
27About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
On-schedule Room for Improvement
Green Products & Innovation Key Issue Strategic Approach 2026 Target Assessment Mechanism Status
Respond to the trend of global environmental
regulations and make Green Product Specification
to control hazardous substances in the products.Ensure the green products we manufacture and
sell are in compliance with environmental laws
regulations and requirements around the world in
terms of environmental protection while satisfying Through USI patent review
customers' needs and the development trends of C ontinue encouraging meeting to oversee patent Innovation
environmental protection following company's Management Follow green product specifications; innovation and green
proposals and patent
standards for internal control and continuing continue to develop product innovation and product design and rights maintenance. The
innovation and improvement. & Sustainable manufacturing process improvement accumulate 1611 review meeting annually
Production patents investigates the necessity and effectiveness of patents
to maintain database
Through customer satisfaction survey
Value Chain Management Customer to understand customers' expectations Score at least 84% Quarterly track the results (1)
Gain satisfaction and affirmation from customers Relations and needs. Precisely answer customers' customer satisfaction of QBR and customer
and users with after-sales service quality and questions and provide the best services to rate satisfaction survey to ensure Management
safety of our products. On issues regarding human customers the achievement rate
rights morality and environment we further ask
the suppliers to establish sustainable partnerships. Support local suppliers
and achieve 35% local
supplier procurement Calculate local procurement
rate amount to confirm the
Make sustainable procurement policy to 1 00% Key suppliers achievement rate(3)
Sustainable evaluate and audit suppliers' environmental comply with Conflict- Through CMRT survey to
and social performances and comply with Free Policy ensure the achievement rate
Supply Chain
conflict-free minerals purchasing More than 76% suppliers Through Supplier
complete RBA (2) Sustainability Assessment
Supplier Sustainability Questionnaire to calculate
Assessment the achievement rate
Questionnaire (SSAQ)
Note 1. QBR Quarterly Business Review
2. RBA Responsible Business Alliance
3. CMRT Conflict Minerals Reporting Template
28About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
On-schedule Room for Improvement
Environmental Protection & Key Issue Strategic Approach 2026 Target Assessment Mechanism Status
Occupational Safety
In response to climate change and global Obey local laws and regulations to manage
environmental issues enhance USI's capabilities Air Pollution air pollution implement air pollution Q uarterly check and confirm
in resource utilization and pollution prevention to control continue to monitor and reduce air 0 air pollution violations facilities air pollution
reduce environmental impact during operations. Control pollution emissions without violations
Promote OHS culture enhance USI's capabilities
in risk management injure prevention and
emergency response to create a safe and healthy
workplace.
1. Apply ISO 14064-1 to implement and Finish greenhouse gas inventory to pass annual ISO
Climate manage greenhouse gas inventory M aintain ISO 14064-1:
2. Through TCFD mechanism to understand 2018 certification for 14064-1 evaluation.
Change operational risks and chances to make all facilities T hrough annual TCFD
countermeasures evaluation to make operations strategies
1. Implement ISO 50001 quality M onthly review energy
management system R educe energy consumption and promote
Energy 2. Improve renewable energy usage rate consumption intensity energy saving projects
Management 3. Promote energy saving program in by 11% from the
and improve renewable
facilities baseline year 2015 energy usage to ensure
4. Promote green building project the performance of energy consumption intensity
1. Implement ISO 45001 to ensure the No major occupational T hrough Safety and Health /
Occupational management scope covers all employees injuries
Safety and and the related workers N o major occupational
Production Committee to
2. Establish internal risk assessment diseases track the progress of filed
Health 3. Promote EAP (Employee Assistance N o major infectious projects and departments'
Program) and health promotion programs diseases KPIs
29About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
On-schedule Room for Improvement
Employee Care & Social Involvement Key Issue Strategic Approach 2026 Target Assessment Mechanism Status
To build an inclusive workplace for employees
we Enforce Human Rights Policy Enable Talent Establish a comprehensive welfare system Employee engagement Hold employee engagement
Development Provide Comprehensive Benefits and harmonious labor relations: score over 85% survey every two years to
and Cultivate Harmonious Labor Relations to create 1. Encourage employees actively to I DL turnover rate understand employees'
a happy workplace. And we promote and expand Talent participate company activities
Attraction & 2. Understand employees' needs and under 10% and DL opinionssocial engagement through Investing in Education turnover rate under T rack turnover situation
Contributing to Society Promoting Arts & Culture Retention recognition through employee
engagement survey 50% every month / quarter / year and External Participation to make a positive social
3. Maintain labor relations provide a K ey talent retention and provide improvement impact on our surrounding communities.
competitive salary and welfare system over 90% plans
Accumulate more
than 1000 lecturers
through the internal Q uarterly track the situation
Integral talents development mechanism: lecturer training of lecturer training program
1. Plan suitable training programs to program and perfect internal training
Human Capital achieve information sharing and learning S trengthen employee resources
Development mechanism in facilities
sustainable Annual track the employees
2. Provide a challenging and valuable job employment number of obtaining degrees
career and promotion opportunities ability and lifelong and organize in-service learning program educated programs inside
support more than the company
80 employees get
diplomas / degrees
Appeal Channel Perform human rights risk Enforce human rights protection: No forced assessment every year and
Stakeholders can feedback or appeal through labor; prohibition of using child labor; 1 00% introduce track the improvement plans
meetings e-mail or Contact USI in USI website. Except non-discrimination; anti-harassment; human rights risks every 6-month to reduce the
internal meetings the other appeal channels could be freely association; respect employees' assessment across all risks of endangering human
anonymous to secure whistleblowers' rights. Human Rights privacy; follow the regulations of working global facilities rights
hour; manage and reduce risks of human H ire more than 120 Annual track the employment
rights to create a working place without people with disabilities status of disabled employees
@ discrimination to implement the diversified
workplace policy
30About this Report Operation and Sustainability Green Products Value Chain Environmental Protection Inclusive Social Governance Management and Innovation Management and Occupational Safety Workplace Involvement Appendix
Sustainable Impact Assessment
USI establishes value management system step-by-step and implements sustainability
strategies to realize sustainability goals. We introduced SROI (Social Return of Investment)
and EP&L (Environmental Profit and Loss) in 2019 and 2020 separately to manage social
projects' performances and make effective decisions on environmental issues. In 2021
USI implemented TIMM (Total Impact Measurement and Management) to inventory the
impacts and contributions to stakeholders from company's operations in Economic Social Employee
Environmental and Taxes in hopes to help company to improve operation performances Partnership engagement & development
through key management indexes correction. 16125.9 517.3 Social
Education cohesive
Sustainability Value and Impacts 6.7 15.2 Health & safety124.0
Through TIMM assessment USI generated CNY 25786 million worth of sustainability Investment
value for stakeholders in 2021 that created positive and outstanding contributions. 1244.3 Social Impact Greenhouse gas emissions
Economic and Tax dimensions: USI has been an industry leading position and -11.1
omers
continuously improving core competitiveness through steady operation strategies. In Cust
Emp
loy Air pollution
2021 USI achieved new high business profit bringing excellent benefits to shareholders -1.3
suppliers employees and government. Another major value was created by payroll. Payroll Water
Company supports a comprehensive compensation mechanism though the growing 3696.0 2021 consumption
numbers of employees that does not only attract and retain talents enhance employees' Sustainable Value -14.4
cohesiveness and activeness but also guarantee employees and company steady growth. CNY 25786 Waste
Environmental dimension: The major negative impacts were Water Consumption and -2.2
Greenhouse Gas Emissions. Through process water recycling system the positive benefit e N old Recycle water
of recycled water has been increasing every year. The recycled water rate was 27.5% in Profits GOs h Share 41856.7
2021 and the renewable energy rate was improved to 80.3% by purchasing certified
renewable energy. On the other hand USI's long term cooperation in NPO-led tree Ta Tree plantingx Impact