CHENG LOONG

We believe that well communication with internal and external stakeholders is the prime mission of corporate accountability. Therefore, the Corporate Sustainability Committee holds the consensus meeting for sustainable development strategy and identifies stakeholders and material issues to provide important references disclosed in the sustainability report to meet all types of stakeholders' responses. In addition, we identified stakeholders and material issues from our senior management and Corporate Sustainability Committee. We collected responses from internal and external feedback on topics of concern to our ESG questionnaire every 3 years. The next one will be held in 2024.    

CLC references the AA1000SES Stakeholder Engagement Standard 2015, which includes 5 key principles. Based on these, we evaluate stakeholders and interviews several senior Corporate Sustainability Committee executives, including the Chairman, President, and senior management. Task force members also participate in identifying stakeholders by completing a questionnaire. Through this process, CLC identifies 6 key stakeholders affected by or interacting with its business operations: (1) employees, (2) customers, (3) shareholders/investors/financial institutions, (4) suppliers/contractors, (5) government/industry associations, and (6) society (media, local communities, non-profit organizations, academic institutions).

Every 3 years, we collect feedback from stakeholders and internal and external experts on topics of concern. We review the classification of stakeholders and the appropriateness of their concerns to make adjustments.

Given the increasing importance of information security risk control, we added a highly significant topic, "Information Security Management," in 2023. This new topic, combined with other highly significant topics such as Integrity Management, Sustainable Products and Development, Climate Action, and Waste Resource Recovery, is used to create a materiality matrix and responses. After identifying material issues, senior internal executives and Corporate Sustainability committee members further conduct a positive and negative impact analysis on 20 major topics, performing due diligence to evaluate the scope of impact across the CLC value chain. These findings are reported to the BoD through the Corporate Sustainability Committee, and upon approval, the material issues are confirmed. Positive impacts are assessed based on our current strategies and management policies, evaluating the positive benefits and likelihood of occurrence across ESG dimensions. Conversely, negative impacts are evaluated assuming no action is taken by the organization and causing being not able to prevent from or mitigate the negative impacts, assessing the severity and likelihood of occurrence across the 3 dimensions.

The results indicate that Sustainable Products and Development, and Waste Resource Recovery have the highest levels of positive impact, with further refinement expected to enhance their positive influence. Given that climate change has become significant, the results of the impact analysis also show that proactive greenhouse gas management and aiming for carbon neutrality can bring substantial positive impacts. Conversely, inaction would result in negative impacts second only to Integrity Management.

By addressing the issues that concern the 6 major stakeholder groups with this report and disclosing related information over the corporate website and multiple platforms, the CLC aims to promote positive opinion exchange with stakeholders.