Material Issues

Identification of Material Issues

The LITE-ON Corporate Social Responsibility Report complies with the Global Reporting Initiative (GRI) Standards. Material issues are analyzed by following the process of identification, prioritization, validation, review in order to validate the scope of disclosure in the report as well as major internal/external sustainability challenges faced by the company. The process also serves as a comprehensive review of business performance.

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Identification

LITE-ON employees based identification of stakeholders on experience from everyday business activities and previous assignments, and listed sustainability issues that would be of interest to different stakeholders. To ensure the list of material issues is generated with objectivity, integrity, and inclusiveness, the company also looked back on the material issue matrix in the previous report and examined key concerns of leading competitors in the domestic and international markets and their indicators disclosed in GRI reports before it confirmed the final list of issues. A list of 22 sustainability issues was eventually created as the scope of material issue identification in the report.

Prioritization

Prioritization of sustainability issues was based on two factors, "the degree of influence over stakeholders' assessment and decision makes processes" and "the degree of impact of a company on the economy, the environment, and society". The degree of importance of each issue was assessed accordingly to establish the preliminary order of issues. We used external questionnaires again this year to collect opinions from key stakeholders in order to make the data more representative. The company received 1,591 valid replies, including opinions from employees (1,350) and from external stakeholders in the other eight categories (241). Statistical techniques and quantitative analysis were applied to analyze the influence and degree of impact of individual issues and generate the preliminary material issue matrix.

Validation

To ensure the results from identification of material issues would comply with the GRI integrity and stakeholder inclusiveness principles, members of the LITE-ON CSR Committee performed a preliminary review of the results from identification of material issues and considered international benchmarking analysis results, sustainability trends, and business development strategy before allocating more weight to the four issues, "product or service life cycles", "corporate governance", "talent recruitment and retention", and "climate change strategies". The adjusted results were reviewed by the CEO, and the material issue matrix was discussed and validated. We classified the 22 sustainability issues above into significant impact, secondary impact, and negligible impact according to their locations on the matrix. The identification results provided the framework for The CSR Report. and answers to the stakeholders' questions.

The 22 issues were divided into 6 significant impact issues, 13 secondary impact issues, and 3 negligible impact issues. In particular, "significant impact issues" and "secondary impact issues" are covered in the scope of material disclosure in the report; and the negligible impact issues were deemed nonmaterial issues, and would not be disclosed in the report, except where non-material issues would affect the presentation of material issues. Such non-material issues would be described and disclosed in the report as appropriate.

Furthermore, we summarized GRI indicators matching the material issues into 11 LITE-ON specific issues, and provided answers in The CSR Report.

Review

The CSR Report is intended as a review of LITE-ON's progress toward the vision of sustainability and a presentation of the company's performance in the area. Meanwhile, the report serves to maintain a two-way open communication channel between LITEON and its stakeholders so to enable LITE-ON to follow the needs and expectations of its stakeholders and take the initiative to answer issues of interest in terms of CSR targets and routine business activities. When the next report is due for publication, we will review the material issue matrix again, and make plans and engage the stakeholders as needed to determine if any adjustment is required.


2019 Material topics

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Implications of material topics for LITE-ON

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Progress towards our targets for material issues

For all the material issues, LITE-ON set mid to long term targets and strive to reach the goal. All the information are spread in our CSR report and we provide 3 examples as follows.

1. Green Product Design

Targets: Increase 2% energy conversion efficiency of power supply products compares with 2016 by 2023.

● 2018 performance: 1.19%
● 2019 performance: 1.80%

Targets: UV-LED energy efficiency to increase by 60% by 2025 compared to 2018¹

● 2018 performance: 27.2% (original target was 30% improved energy efficiency in LED by 2025)
● 2019 performance: 21.15%

  • Note 1: The existing visible LED technology was close to being fully developed in 2018. Therefore, the market strategy turned to focus on developing ultraviolet (UV) products and on improving energy efficiency for products.

Please refer to Green Product Management



2. Information security and personal Information Protection

Target: Zero complaints regarding the invasion of client privacy or loss of client data was received

● 2018 performance: No complaint was received in 2018.
● 2019 performance: No complaint was received in 2019.

Please refer to Information Security and Privacy Management



3. Climate change strategy and Energy management

Target: Reduce carbon emission per unit of revenue by 39.3% by 2025 compared to the base year 2014

● 2018 performance: -15.22%
● 2019 performance: -18.32%

Target: Reduce power consumption by 6% on an absolute basis by 2020 compared to year 2017

● 2018 performance: +3.13%
● 2019 performance: +2.25%

Please refer to Environmental Commitment and Policy



Response to the 2019 incident

The criminal charge filed by New Taipei District Prosecutors Office against LITE-ON's Leotek Business Division for suspected violation of the Anti-Corruption Act by an employee of the Business Division in the LED street lamp replacement project of Toucheng Township, Yilan County is currently reviewed by New Taipei District Court. The Company has carefully reviewed the indictment filed by the prosecutor of New Taipei District Prosecutors Office and found certain facts to be inconsistent with facts recognized by the Company. LITE-ON and the employee alleged to be involved in the case shall cooperate with judicial investigations and evidence collection in future review proceedings to clarify related facts and LITE-ON's position.

LITE-ON has always upheld honesty and integrity in business management, and has obeyed the laws and ethical standards of the countries in which it carries out its business activities. To establish a corporate culture of ethical management and healthy development of the Company, we require employees to adhere to the Ethical Management Policy and Ethical Commitment Statement established by the Company. We also established a public reporting system and internal control measures to strengthen legal compliance and the implementation of LITE-ON's Ethical Management Policy.

After the occurrence of the case, LITE-ON has reiterated its position of legal compliance and ethical management to all employees and organized training courses to increase the awareness of employees liable to violations of laws and regulations in business transactions and manage their conduct. In addition, LITE-ON also organized internal training for the ethical commitment required by customers and required suppliers to comply with the LITE-ON's integrity and ethical requirements. LITE-ON shall also implement rewards and penalties for employees' business conduct with greater precision in accordance with the Company's related regulations on rewards and penalties to implement requirements for employees' compliance with laws and regulations in their personal conduct and attain LITE-ON's ethical management standards.



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