Decision-Making Process for Major Issues

Collection

Collect ESG issue
Take sustainable standards, international ratings and initiatives, domestic & foreign industry trends, concerned issues of stakeholders, the company's sustainable vision as the basis of issue collection
Narrow down ESG issue
Members of sustainable report team from the Corporate Sustainablity Committee consider external expert opinion to integrate and narrow down various issues.
Approve ESG issue list
Head of Corportate Sustainablity Committee will approve ESG issue list

Investigation

Investigate concerned issue of stakeholders
Via questionnaires every two years to know stakeholder's concern level on ESG issue
ESG issue's impact on organizational operations
Invite division manager (included) or higher to fill in questionnaire, measure ESG issues' impact on "revenue growth, customer saticifaction, centripetal force, operation risk"

Analysis

Global risk assessment
By referring to the correlation between issue and top 10 risks in global risk report from World Economic Forum (WEF) to assess the materality of issue
Dynamic materilaity analysis
Analyze stakeholder's concern level on ESG issue, and measure ESG issues' impact on the company's operation; create materiality matrix
Double materiality analysis
From the opportunity and risk perspectives, link the ESG issue with the impact on the company's development, performance, and industry role; and consider impact level of sustainable development derived from the company's operation activity to economics, environment and human (human riights).
Report materiality analysis result
Working group report the materiality anaylsis result to head of Coprporate Sustainablity Committe

Approval

Approve materiality issue
Head of corportate sustainablity committee will approve materiality issue
Set managment target
As to material issues, relevent divisions set management target, and sumbit to the head of corporate sustainability committee for approval of materiality management target and review the effectiveness every year.
Submit to board of directors
Report to board of directs for the management effectiveness of materiality issue

Material Issues

Faraday has initially identified 24 ESG issues, of which 7 fall under the governance category. These are not included in long-term targets, however, the relevant information will be regularly disclosed in the annual report and on Faraday’s official website. The 17 non-governance issues were analyzed in a dynamic materiality matrix, leading to the definition of 12 material issues, including innovation management, green product design, and diversity, equity, and inclusion, covering the economic, environmental, and social aspects.

Economic aspect: Innovation management, sustainable supply chain management, customer relationship management, information security
Environmental aspect: Green product design, climate and energy
Social aspect: Diversity, equity, and inclusion, talent attraction and retention, talent development, human rights, occupational safety and health, social inclusion

Communication with Stakeholders

Sustainability Committee summarizes the “Faraday's communication status with stakeholders” yearly and submits it to the board of directors. The communication status with stakeholders in 2023 has been reported to the board of directors as below on October 24th, 2023.

Stakeholder	Relevance to the organization	Priority issue	Communication methods and frequency	Communication actual performance
Customer	Customers are Faraday's best strategic partners. Upholding a customer-oriented spirit, we continuously develop all kinds of products and services and dedicate ourselves to help customers succeed.	Customer service management R&D innovation and quality competitiveness Sustainable management of supply chain Customer privacy and information security	Phone/email (daily) Customer satisfaction survey (quarterly) Quality meeting (monthly/quarterly) Customer meeting(irregular) Customer audit (irregular)	2023 customer satisfaction reached 87.2%, improvement measures and recurrence prevention of customer issues were all implemented. Finished and replied 18 ESG-related questionnaires and self-assessment forms from customers. New product development projects all held meeting with customer by schedule to fully communicate with customer for project specification and progress. Continuously promote a number of mixed-signal silicon IPs based on Ultra Low Power process, providing customers with a complete solution of low power consumption, to reduce earth energy consumption and redundant carbon emissions.
Employee	Faraday's most important resource, creating maximum value for the company.	Employee wages and welfares Employers-employee relations and friendly workplace Occupational safety and health Employee career development	Employee forum (quarterly) Labor management conference (quarterly) Occupational safety and health committee (quarterly) Welfare committee (half-year) Training committee (quarterly) Performance review (annually) Email comment box/bulletin board (irregularly) Employee satisfaction survey (annually) Human rights due diligence (every three years)	Listed as a constituent stock in “TWSE RAFI Taiwan High Compensation 100 Index” since 2014 Internally announced over 200 related messages about employee welfare, occupational safety and health, information security, legal compliance, and training in 2023. Continuously cultivated talent development, the total training hours are 9511 hours in 2023. Employee forum, labor management conference, employee welfare committee, training committee, occupational safety committee, and annual performance review meeting all held as scheduled. Conducted employee satisfaction survey every year, satisfaction reached 94%; based on care and compassion for colleagues, add better-than-legally paternity care leave of 3 days (Miscarriage under 20 weeks of pregnancy) Conducted employee Human Rights Due Diligence (HRDD) in 2023, Faraday's human rights related issues are all low risks. Among them, human rights issues with medium impact are listed as Faraday's important human rights issues; we will continuously optimize human rights issue management and regularly track the execution results.
Investor/Shareholder	Provide the funding that Faraday needs for business operations.	Corporate governance and operational performance Risk management Competitiveness in R&D, innovation & quality	Shareholder general meeting (annually) MOPS (Market Observation Post System)(irregularly) Investor conference (quarterly) Meetings (irregularly) Phone/email (irregularly)	Held online investor conference every quarter, four times throughout the year, and held Shareholders' meeting early in the end of May. Made material information announcement in Chinese/English at the same time, disclosed quarterly financial report, annual report of shareholder meeting, and related information in Chinese/English; 28 material information and announcement in Chinese/English in 2023
Supplier/Contractor	Provide the resources and services needed for the company's operations, to grow alongside Faraday.	Risk management Integrity & legal compliance Sustainable management of supply chain	Phone/email (daily) Supplier audit (quarterly/yearly) Quality meetings (monthly/quarterly) Customer complaint channels (irregularly)	Continuously requested suppliers to fulfill the responsibility of corporate sustainability, and have completed signing “Declaration of Non-use of Conflict Minerals” and “Commitment Not to Use Environmental Substances”, achievement rate is 100% Production suppliers provided quality monthly report every month as scheduled. Conducted RBA audit to supplier when annual audit, the audit result in 2023 showed that 100% supplier all met RBA's requirement. Conducted Human Rights Due Diligence to supplier in 2023, listed the middle risk issues as Faraday's important human rights issues; will continuously optimize the audit management of supplier and regularly track the execution results.
Government/Associations	Utilize the infrastructure and governmental services provided by the government agencies and associations; obeying governmental laws.	Corporate governance and operational performance Risk management Integrity & legal compliance Climate change	Corporate governance evaluation and other related certification (yearly) MOPS (Market Observation Post System)(irregularly) Financial report (quarterly) Shareholders' meeting information (yearly) Sustainability report (yearly)	Be ranked in the 6th ~ 20th percentile of listed companies in terms of corporate governance evaluation results for 3 consecutive years. Continuously listed as a constituent stock in “TWSE RAFI Taiwan High Compensation 100 Index”. Continuously listed as a constituent stock in “TWSE Taiwan Mid-Cap 100 Index”. Continuously listed as a constituent stock in “TWSE Corporate Governance 100 Index”. Has been approved as a constituent stock in “TIP Customized Taiwan IC Design Total Return Index” in October 2023. Awarded Premium Award for “Promoting Workplace Gender Equality” from Hsinchu Science Park Bureau, National Science and Technology Council in 2023. Awarded the “Taiwan I sports Certification” from Sports Administration, Ministry of Education in 2023 Workplace” from Health Promotion Administration, Ministry of Health and Welfare in 2023 Earned “Green Leadership” and “Corporate Sustainability Reporting” of Asia Responsible Enterprise Awards in 2023. Earned ANQ recognition for Excellence in Quality Practice Award in 2023, standing out among more than 50 countries and regional organizations in Asia, getting recognition for Faraday's excellent quality management. Received 2023 AQM Excellent Quality Practice Award (R&D and Innovation) Be the world's first ASIC design service company and the top 30 supporters in Taiwan listed in the TCFD official website. Faraday is one of the first batch of Taskforce on Nature-related Financial Disclosures (TNFD) architecture imported Taiwan enterprises; Faraday is also the world's first ASIC design service company to advocate for TNFD.

Participation in Sustainability Initiatives


Task Force on Climate-related Financial Disclosures, TCFD Introduced the TCFD framework in 2020, as one of the top 30 companies in Taiwan and the first ASIC design service company globally listed on TCFD official website	Taskforce on Nature-related Financial Disclosures, TNFD Introduced the TNFD v1.0 framework in 2023, as one of 320 companies globally, one of 14 companies in Taiwan, and the first ASIC design service company globally to adopt TNFD	TALENT, in Taiwan To promote Diversity, Equity, and Inclusion (DEI), joined the "TALENT, in Taiwan - Taiwan Talent Sustainability Action Alliance" to foster a DEI-friendly workplace