The water intake at WT’s operating bases in Taiwan are mainly used for circulated water of air conditioners and daily-life water consumed by employees in office areas. The water is entirely sourced from the local water companies (fresh water) where each operating base is located, and no water is taken from sea water, surface water, ground water or water generated by other organizations. In order to ensure drinking water safety for employees, the water dispenser filters are replaced every month to effectively remove harmful substances in the water. Taiwan SGS is commissioned to regularly test the water every year to ensure safe and healthy water quality. Except for the evaporation and drift losses from air-conditioners, all the water used by employees in the daily life is discharged into local public sewage systems through the sewage pipes of the building. An assessment conducted by WT following the Water Risk Atlas of the World Resources Institute (WRI) found that the operating bases in Taiwan, Hong Kong, and Singapore are not in areas with water stress (high or extremely high).
The water intake was 12.95 million liters (ML) in 2022, an increase of 1.81 ML compared to 2021, mainly due to the inclusion of the Hong Kong logistics center, and the surging number of employees returning to the office from working-from-home after the COVID-19 pandemic peak. As the evaporation and drift losses of circulated water in air-conditioners are impossible to measure effectively, they were ignored as consumption in the reported discharge. The amount of water discharged was also 12.95 ML in 2022, and the water consumption was 0 ML excluding the losses that were impossible to measure. In 2022, the Taiwan headquarters continued to communicate with the management committee of the park where the offices are located to implement relevant water-saving measures.
WT’s total energy consumption was 16,271 GJ in 2022, with an increase due to the inclusion of operating bases in China and South Korea in the scope. The biggest source of energy was non-renewable electricity purchased from power companies, accounting for 95.27% of the total consumption, and the others were gasoline and diesel used by company fleet. As of the end of 2022, the non-renewable energy utilization rate was 100%, and no renewable energy has been used. The Shanghai Office is planned to be equipped with solar power generation systems in 2023 to increase the utilization rate of renewables.
The total electricity consumption was 4.3061 MWh in 2022, of which the total electricity consumption in the areas where the GHG emissions inventory was verified (logistics centers in Taiwan, Hong Kong and Singapore) was 3.0889 MWh. The electricity consumption intensity was 76.88 kWh/m², down 0.63% compared to 2021.
As fuel consumption is closely related to the operating activities, the combined energy intensity of gasoline and diesel was therefore measured by revenue. In 2022, the energy intensity of gasoline and diesel was 0.0013 GJ/million NTD-revenue, significantly down 18.75% from 2021.
Note 1:See 6-5 GHG Inventory and Verification Situations for organizational boundaries.
Note 2:In 2022, the operating bases in China, Hong Kong, South Korea, and Singapore were newly-included in the voluntary inventory scope. Due to the nature of electricity consumption in which form the majority of the energy was consumed by WT, the energy consumption intensity was measured by floor area, and the coverage rate of the energy disclose scope was 99.06% in 2022.
Note 3:The electricity data were taken from the electricity bills of each bases, and the gasoline and diesel data were taken from the record on the CPC Electronic Billing and Collection System (EBCS) and the fuel invoices.
Note 5:Thermal conversion factors for fuels were taken from the Annual Energy Report of the Bureau of Energy, Ministry of Economic Affairs, which were 1 liter of motor gasoline = 7,800 kcal, and 1 liter of diesel oil = 8,400 kcal.
Note 6:1 kcal = 4,186 joules
Note 7:The electricity intensity was measured by floor area, see Note 7 for GHG Emissions Intensity; the gasoline and diesel combined intensity was measured by annual revenue, see 2-2 Stable Financial Performance for operating incomes of the years.
Climate change is an issue that needs the world to face together, no matter who. As a distributor in the semiconductor sector, WT has operating bases, partners, collaborators, and vendors all over the world and they are all subject to impacts of climate change. WT’s management understands the potential impact of climate change on its operations and long-term development. Since 2021, it has been promoting relevant management mechanisms and operations, formulating policies and goals, and investing resources in assessment and research on transition plans. In the future, it will continue to track the achievement of goals, and take a more aggressive course of action accordingly.
The Climate Change Risk Management Task Force has convened three meetings since the fourth quarter of 2022, inviting functional and business units to identify risks and opportunities, assess financial impacts, and discuss response plans. The evaluation and planning results were to be included in the promotion and implementation plan of relevant units, and reported to the Board of Directorsas occasionally to support the governance.
Climate Change Risk and Opportunity Management Process
WT follows the TCFD recommendations, WT will continue to follow the climate change risk management process to identify risks and opportunities, evaluate response strategies, and conduct regular internal and external reports.
Daily operations and management were analyzed to support risk assessment.
As WT is not in a sector with intensive or high carbon emissions, the impact of climate change is mainly on its value chain, including the transition pressure on the vendors and customers, and potential physical risks during the transport. In order to understand the impact of these transitional and physical risks on WT’s operations, WT uses scenario analysis to identify risks and opportunities. The assessment results are used for response plan development by relevant units, and for daily operation adjustment. The Board of Directors are briefed on a quarterly basis the GHG inventory and verification schedule planning progress for the parent company and subsidiaries, and requested to determine the guidelines.
Therefore, WT conducts the annual climate change risk assessment based on the RCP 8.5 scenario for physical risk and the national target scenario for transitional risk, information such as changes in laws and regulations, physical external environment, and issues of concern for sustainability assessments.
Climate Change Risks and Opportunities were reviewed.
In 2022, WT reviewed the ranking of risks and opportunities identified in 2021. For implementation benefits, those involving short-time impacts (1-3 years) were re-assessed for current implementation status, impact scale, financial impact, with which three key risks and two major opportunities were identified as requiring continuous attention.
Guidelines in three aspects for the net zero goals.
In response to international trends and Taiwan’s 2050 net-zero goal, WT set climate change indicators and goals in three aspects: governance and strategy, operations, and GHG reduction.
Carbon reduction efforts were successful with the target met again in 2022.
To address the increasingly serious problem of global warming, WT follows the national overall GHG reduction strategy towards the sustainable development goal of energy conservation and carbon reduction Since 2018, WT has been developing, pursuant to ISO 14064-1:2006 Part 1: Specification with Guidance at the Organization Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals, and the Greenhouse Gas Protocol, a comprehensive inventory of GHG Scopes 1 and 2 emissions. The inventory is verified by a third party to assure its accuracy and reliability every year. With 2018 as the base year, WT promised to reduce the intensity of its Scopes 1 and 2 GHG emissions by 1% every year, and keep its management policies updated according to the reduction situation.
In 2022, a GHG Inventory Task Force meeting was convened in accordance with the ISO 14064-1:2018 Greenhouse Gases to identify major indirect emission sources of the year. The meeting resolved that the indirect GHG emissions from purchased electricity (Category 2: Capital Goods) and upstream transportation and distribution (Category 4) were to be included within the boundaries, and the base year changed to 2022 after Hong Kong and Singapore Logistics Centers were included within the organizational boundaries. A higher target was also set and a promise made to reduce the annual GHG emissions by 2% compared to the base year. In 2022, the voluntary inventory was extended to include operating bases in China, Hong Kong, South Korea. A voluntary GHG emissions inventory covering all operating bases of the Group is planned to be completed by 2025, with the third-party verification completed by 2027 at the latest.
In 2022, WT emitted 2,794.05 tonnesCO2e of GHG across areas where the inventory was completed (including operating bases in Taiwan, Hong Kong, Singapore, China and South Korea), of which 1,810.08 tonnesCO2ewas verified by a third party (including Taiwan, Hong Kong and Singapore Logistics Centers). The intensity of Scopes 1 and 2 emissions was 0.0028 tonnesCO2e/NTD million, or 0.0398 tonnesCO2e/m². The target was met with a 27.18% reduction in emissions intensity compared to the base year (2018).
The market is changing constantly with new and different product applications. In response, product design must not only take into account the cost, function and quality of a product, but also the innovation of and solutions with new technologies and materials, as well as the impact of the product on the environment. In addition to maintaining a product portfolio with new technologies and high efficiency, WT also gives priority to assisting customers in adopting systematic solutions that can improve product energy efficiency, and using components containing no harmful substances, so as to meet the requirements of energy saving, carbon reduction, and environmental protection.
Semiconductor components are crucial to electronic products. In alignment with the green design thinking, WT further promotes highly efficient green semiconductor components with reduced energy loss, so that the customers may design and produce from a forward-looking and sustainable perspective environmentally friendly, high quality products with reduced energy consumption and of high energy efficiency .
Highly efficient semiconductor components with low energy loss are promoted to carry out green thinking.
WT Technology represents world-renowned semiconductor vendors, and works with varied customers to meet their demands in R&D, design, manufacturing, and brand marketing. As a bridge between vendors and customers, it has been developing new applications and introducing new solutions to improve the energy efficiency of existing products such as third-generation semiconductors, high-speed computing processors, new-generation high-speed memories, IoT microprocessors, high-performance RF components, 3D sensors, artificial intelligence, and digital power supplies. WT offers electronic components of improved energy efficiency and performance at the same power consumption to be applied in such fields as green energy, alternative fuel vehicles, industrial automation, machine vision, artificial intelligence, cloud and edge computing, data centers, energy storage systems, 5G networks, and long-haul and short-range communications and services, etc.
WT keeps informed of electronic component market development trends, new technologies, solutions and designs, and offers education and training on relevant product applications, so as to work with the customers to achieve forward-looking and sustainable design. To enhance awareness and application of the vendor’s products, a total of as much as NTD 655 millions were spent in research and development in 2022, up 7.61% from 2021.
WT systematically classifies and manages the application fields of the products it sells, so as to always provide customers with optimal services and forward-looking sustainably designed products in a timely manner. In response to the “Reference Guidelines for the Identification of Sustainable Economic Activities” promulgated by the Financial Supervisory Commission in 2022, WT analyzed the application fields of existing products and identified those meet forward-looking economic activities, such as low-carbon transportation technology applications, high-energy-efficiency equipment manufacturing, high-energy-efficiency technology applications, and renewable energy installation, etc. They accounted for 9.86% of the existing products in 2022, with another 33.18% to be determined depending on the actual use by the customers whether they meet the description of forward-looking economic activities. Forward-looking economic activities are an important industry and product development trend for global sustainable development. WT will continue to promote product applications and improve technical development and economic activities related to forward-looking economic activities, with the goal of accounting for 20% of the revenue by 2030.
An advanced electronic system was introduced for paperless inventory management.
WT has logistics centers for receiving and shipping goods in Taiwan, Hong Kong, Shenzhen, Singapore, and South Korea. Purchase orders are placed to the logistics center located the closest to the customer to keep warehouse transfer and delivery distances short. All logistics center operations are processed through paperless electronic procedures on an advanced logistics information system. With Wi-fi network accessible from every corner of the logistics center, PDAs are used to scan product and storage placement barcodes upon slotting, picking, and relocation for a real-time update of relevant accounts and stock location on the system. Stock cards are no longer needed for record keeping. An automated warehousing system is scheduled to be introduced to the Singapore logistics center in 2023 to further optimize the management of receiving, shipment and warehousing.
All logistics center operations are processed through paperless electronic procedures on an advanced logistics information system, which is used to optimize the number of freight trips, and consolidate shipment orders to minimize transportation batches and carbon mileage. In 2022, 290,767 orders were consolidated at the five logistics centers, reducing the number of bills of lading by 64.91%. Among them, the Shenzhen logistics center serves a relatively small number of customers and thus has difficulties in consolidating shipment orders.
Shipment Consolidation and electronic procedures greatly reduced paper consumption.
With an operating strategy of digital optimization, the paper-based operations have been replaced and PDAs are now used to scan product and storage placement barcodes upon slotting, picking, relocation and shipping for warehousing management procedures in the five WT logistic centers.
Less packaging, more recycling
WT continues to cut down on packaging materials with efforts including using paper pallets whenever possible for loading products in warehouses and shipments, reducing the usage of filling materials, and always using renewable packaging materials for logistics operations. In addition, nothing but the necessary stacking and transportation precautions are to be printed on the cartons purchased by WT.
Products received from the vendors will be warehoused in the original packages if repackaging is not planned for shipment. If repackaging is necessary, all the removed original cartons and filling materials will be collected for reuse, and classified as “environmentally friendly cartons” for statistics and management purposes. For shipment packaging, recycled cartons will be used whenever possible to reduce the use of new cartons. The fillers used to protect the products in the cartons are made of bio-degradable materials.
Taiwan and Hong Kong began to be kept track of for the usage of filling materials (in meters) in 2020. An average of 0.19 meters of filling materials were used per cartons in 2022, decreasing sharply by 48.65% from 2020.
Investing in solar plant developer and serving as a representative director
WT invested NTD12.5 million in Daypower Co., Ltd. in April 2023. WT owns 10% shares of Daypower and serves as a representative director. Daypower is a solar plant developer and completed 5.05 MW installation in 2023. Self-held solar plant reached 2.34 MW installation accumulatively in 2023, which generated 2.9 million kwh in 2023, equaling to 1,435 ton CO2 reduction.
In recent years, the proportion of purchases from the top 20 suppliers of WT’s revenue has reached more than 90% of the total group’s purchase amount. The relevant supplier management is also mainly focused on the top 20 suppliers. Considering WT as an agent channel in the supply chain, the three main management goals for the supplier environmental and social policy management are to implement supplier code of conduct, chemical management, and responsible minerals.
Implementation of Supplier Code of Conduct
WT has a code of conduct that governs its own operations and business relationships with suppliers, to ensure that all operations comply with applicable laws and international business ethics standards. WT’s major supplier are also required by their end-customers to comply with the Code of Conduct of the Responsible Business Alliance (RBA), which covers the aspects of ethics, human rights, environment, safety, and management systems. In addition, 18 of WT’s top 20 suppliers have passed RBA audits in 2022, strengthening the credibility of compliance results through third-party audits.
100% of the top 20 supplier are in compliance with chemical management regulations.
WT is always aware of the latest updates to chemical use regulations in various countries. Based on customer needs, we actively require suppliers to provide international regulatory declarations and relevant documents for individual product needs to ensure compliance with regulations and industry standards. Currently, the regulations included in the management include the EU Restriction of Hazardous Substances Directive (EU RoHS), the EU Chemicals Registration, Evaluation, Authorization, and Restriction Act (EU REACH), the US Toxic Substances Control Act (TSCA), the Chinese Administrative Measure on the Control of Pollution Caused by Electronic Information Products (China RoHS) and the California Proposition 65 (Prop 65).
In the future, we will establish an e-based management process. During product filing, the relevant departments will obtain relevant chemical management documents for individual products from suppliers in the process (such as non-use of banned substances guarantee certificates, electronic component composition analysis reports, and hazardous substance test reports from third-party testing organizations). A document update verification mechanism will also be established to ensure that customers can obtain chemical management documents that meet the current status of the product when purchasing the product.
In response to customer requests to not purchase products containing conflict minerals, such as tin, tantalum, tungsten, and gold, from human rights-disputed areas such as mines in the Democratic Republic of the Congo and surrounding countries, WT regularly reviews our supplier’s conflict minerals policies to confirm that they continue to meet responsible minerals requirements.
In addition, to ensure that direct or indirect procurement sources do not contain conflict minerals, WT will gradually promote and implement traceability management for the above metals procurement from suppliers, following the Responsible Minerals Initiative (RMI). Through RMI’s annual updates to the results of each smelter’s assessment and the version of the Conflict-Free Smelter Responsibility Tracking (CMRT) document, WT will gradually expand its request for CMRTs from suppliers to verify smelter source information in the supply chain, in order to achieve the goal of implementing the responsible minerals policy. In 2022, 18 of WT’s top 20 suppliers disclosed their compliance with the conflict-free minerals policy on their websites, while the other two disclosed their responsible minerals policies in their sustainability reports.
Local procurement accounted for 98.3% of general supplies spending.
As WT’s vendors are global IC giants, its management of local procurement issues focuses on general supplies and excludes transactions with the vendors. According to statistics in 2022, procurement from Taiwanese suppliers accounted for 98.3% of the Taiwan headquarters’ spending on general supplies including office supplies, information equipment, and logistics center procurement, 1.5% up from the previous year.
The Taiwan Financial Supervisory Commission (FSC) released the Roadmap for the Sustainable Development of Listed Companies in March 2022. However, WT has already begun GHG inventory development as early as 2018 and voluntarily extended the boundaries. In 2022, the external GHG inventory verification scope has been extended to include operating bases such as Hong Kong and Singapore logistics centers. In 2022, the GHG inventory of operating bases such as China, Hong Kong, South Korea, and Singapore was also be voluntarily completed (without third-party verification). In 2023, the GHG inventory will be further extended to more operating bases and verified by a third party. The GHG inventory of all the Group’s operating bases estimated to complete in 2025, with third-party verification to be completed by 2027 at the latest.
Environmental management spending has been increased over the years.
In order to fulfill its responsibility for environmental sustainability, WT’s Taiwan and Hong Kong Logistics Centers have both been certified with ISO 14001: Environmental Management System (see 6-8 for details of the effective date for the management system), and have been developing GHG inventory for many years. In addition to third party verification, the inventory has been extended to include more operating bases over the years for a more precise and accurate information disclosure. Additional environmental management training sessions have also been conducted across departments to enhance sustainable development awareness for all employees and promote reduction programs. In 2022, training on SASB sustainability accounting, TCFD risk management and others were introduced, and the Taiwan headquarters invested NT$3.23 million in environmental-oriented management systems, training, and related activities. In addition, a total of 208 hours of training on environmental management and goal implementation were delivered at Taiwan, Hong Kong, and Shenzhen Logistics Centers in 2022.
Much attention has been paid to climate change in response to UN SDGs
In 2015, the United Nations formulated the 17 Sustainable Development Goals (SDGs) in hope that the collective attention of countries around the world to climate change will help stakeholders identify climate change-related risks and opportunities. In line with the international trend, WT has been improving environment-oriented development.
Increased proportion of renewable energy use
In response to the Taiwan Ministry of Economic Affairs’ plan to achieve 20% renewables in electricity generation matrix by 2025 and the Paris Agreement’s goal to keep the temperature rise under control, despite not being a major electricity consumer or carbon emitter which is subject prioritized control, WT voluntarily planed and invested RMB 1.428 million to set up a 100 KW solar power generation system on the roof of the Shanghai office. The system generates about 9,000 kWh of electricity per month, and the power generated is mainly for self-use. WT will continue to conduct feasibility assessments on future green energy power generation, voluntary purchase of green electricity, and renewable energy certificates, in order to adopt green energy solutions that are most beneficial to the environment, gradually increase the proportion of renewable energy usage, and reduce WT’s GHG emissions.
NTD 15.66million were spent on purchasing green-labeled products in 2022
WT, as an IC distributor, mainly works in electronic components trading and research and development. Although the trade does not involve manufacturing or significant environmental pollution, WT has been making efforts with it suppliers to develop and apply green technologies, and mitigate the concerns about exhaustion of energy sources. WT is committed to purchase green-labeled products whenever possible. It has been filing its green procurement under the guidance of the New Taipei City Environmental Protection Bureau every year, and recognized for three consecutive years in the “New Taipei City Private Enterprises and Organizations Green Procurement Excellence Awards Ceremony”. The amount declared at the end of 2022 was NTD15.66 million, up 5% from the previous year. In the future, WT will continue to purchase green products whenever possible as an effort towards green consumption, choose products that cause less harm to the environment and human health, and give preference to products with the Environmental Protection Label, Energy-saving Label, Green Building Material Label, Water-saving Label, Category II Environmental Protection Label, Carbon Footprint Reduction Label which the Taiwan Environmental Protection Agency urges the private sector to choose.
WT was awarded the Excellent Enterprise of Green Consumption and Environmental Protection Volunteer by New Taipei City (Fourth from left: WT Associate Manager CHEN Yung-Ling)
WT continues to advocate the spirit of environmental sustainability, and participate in activities such as community greening, ecological protection, recycling and reuse, and sharing of old objects. In order to shape a sustainable environment, it also adoptedbeach cleanup areas, and has been urging the employees to participate in beach cleanups and tree planting activities.
The protection of environmental resources has always been an issue that the world attaches great importance to. In addition to reducing the source of pollution at all levels, the disposal of garbage is crucial as well. A lot of garbage discarded in the ocean are brought up to the shore by waves, and over time, the beautiful coast became filled with all kinds of garbage, among which dead marine creatures. In 2022, two beach cleanups were organized, where 137 participants removed a total of 1,484.2 kilograms of marine debris. Since 2023, WT adopted Shimen Baisha Bay, Kite Park, and Laomei Lushicao Beach on the north coast of New Taipei City and organized beach cleanups on a monthly basis, during which knowledge may be disseminated with increased interactions. Starting from beach cleanups, WT went further to advocate effective waste treatment, remind individuals not to litter, and encourage sorting at office or home , etc.
With the successful hiking in 2022, a series of Gathering For Fun activities will be held in conjunction with beach cleanups in 2023. In addition to the beach cleanups for public interest, employees are encouraged to go hiking for their own heath. Employees may enjoy the beauty of the mountains in northern Taiwan and breathing in energy-boosting phytoncides with their families. Moreover, the participants were invited to progress through a number of challenges intended for them to better understand the background stories of each peak and each trail, so as to enhance their knowledge and physical fitness at the same time.
The much-awaited company outings will resume in 2023, after being suspended during the COVID-19 pandemic. Much has been asked about the outings, as the itineraries have been distinctive and employees are invited to come with their families, whose expenses are also subsidized. The outings are designed to offer an in-depth understanding of local cultures, exclusive attractions, seasonal food, etc. of various places in Taiwan, and a variety of interactive games and experiences are incorporated to the program for ice breaking and team building.
Employees are offered a variety of itineraries in different styles, including parent-child experiences, amusement parks, extreme challenges, and sightseeing trips, to choose from according to their interests and whether they come alone or with families. For example, rafting trips that would fit energetic young groups, and parent-child itineraries that would be suitable for family outings. The latter would feature fun attractions that parents can enjoy with their young children and DIY activities that attract all ages. During the day, parents can exchange parenting information with each other, and children meet new friends and have fun together.
With the successful hiking in 2022, a series of Gathering For Fun activities will be held in conjunction with the monthly cleanups at different beaches on the north coast in 2023.
Waste has been sorted and recycled and packaging materials reused.
WT is committed to waste reduction and recycling from the source, and selects qualified suppliers to properly dispose the waste. The waste produced during WT’s operation is mainly made up of operational waste and daily-life waste discarded by employees in the offices, and cartons, paper boards, filling materials and waste left from carton sealing at the logistics centers. They are all non-hazardous waste.
In order to reduce the amount of waste generated at logistics centers, the packaging materials required for logistics operations, such as cartons, cardboard boxes, paper boards, etc., are actively cut down from the source. At receiving, empty cartons are recycled and to be reused for shipping packaging; and for shipping, either reusable or bio-degradable recycled materials are used for packaging. WT has a centralized waste management system, and keeps a regular record of waste quantity and waste transport data.
In order to achieve the goal of reducing the amount of waste, efforts have also been made in daily office management to buy less disposable consumer goods, use durable and recyclable products whenever possible, enhance employee education campaign on waste reduction and carbon reduction, and engage in waste sorting and recycling. As of the end of 2022, those wastes sent to the waste treatment facilities were all non-hazardous, those diverted from disposal were to be recycled and prepared for reuse only, and thosedirected to disposal were to be incinerated (with energy recovery) only. No waste was land-filled.
In 2022, the Hong Kong and Singapore logistics centers began to be kept track of for waste. A total of 101.2 metric tons of waste were incinerated (with energy recovery) in Taiwan, a decrease of 17.1 metric tons from 2021. The results show a year-on-year reduction in daily-life waste, and represent an achievement of WT’s continuous efforts in environmental protection.
WT has established a corporate governance structure to manage its business in accordance with the ROC Company Act, the Securities and Exchange Act and other relevant laws and regulations. We aim to pursue the long-term interests of our shareholders by enhancing corporate performance and accountability and by balancing the interests of our stakeholders.
Under the Board of Directors are an Audit Committee, a Remuneration Committee and a Risk Management Committee. The Risk Management Committee is composed of three independent directors, the Chairman and the CFO, and is responsible for submitting risk management-related proposals to the Board of Directors for discussion.
The Board of Directors is the highest governing body of WT. The ninth term of the Board was elected on 21 June 2019 for a term of three years and consists of seven directors who pursue a policy of diversity to strengthen the development of corporate governance. Three of the Board members are independent directors (42.86% of all directors are independent directors) and three of the Board members are women (42.86% of all directors are women). Two of the directors are employees (28.57% of all directors are employee directors). In addition, all directors of the Board are currently aged 50 or above.
The Board of Directors meets at least once a quarter to monitor the achievement of the Company’s operational goals and performance, provide strategic guidance to the management team, and supervise the Company’s compliance with laws and regulations to ensure the best interests of shareholders. In fiscal 2021, 12 Board of Directors meetings were held with an average attendance rate of 98.8% for all directors and 100% for independent directors. For information on the diversity of the Board of Directors, the Audit Committee, the Remuneration Committee and the Risk Management Committee, including their members, age range, experience and tenure, as well as information on the actual attendance rate of the Board of Directors, the status of continuing education and the implementation of the recusal of interests, please refer to the “Third. Report on Corporate Governance” in WT’s 2021 Annual Report.
100% attendance of Audit Committee members in person
The Audit Committee was established on June 21, 2019 and consists of all three independent directors, two of whom have accounting or financial expertise, to assist the Board of Directors in overseeing the fair presentation of the Company’s financial reports, the effective implementation of the internal control system, compliance with relevant laws and regulations, and the management of existing or potential risks. The Audit Committee meets at least quarterly, and the accountants communicate and interact with the independent directors from audit planning to audit or review results during the year. The Internal Audit Officer reports to the Audit Committee at each regular meeting of the Board of Directors on the performed of the audit. Whether the internal audit officer or the accountants can contact with independent directors directly. The Audit Committee held 10 meetings in fiscal 2021, with 100% attendance of all members in person.
The fourth term of Remuneration Committee is composed of two independent directors and one independent member. The purpose of the Committee is to make objective and professional recommendations to the Board of Directors, taking into account the Company’s operational performance, and to assist the Board of Directors in implementing and evaluating the Company’s overall compensation and welfare policies. In addition, the remuneration of directors and managers is determined and reviewed in accordance with the “Procedures for Remuneration of Directors and Functional Committee Members” and “Remuneration for Managers” as necessary to strike a balance between sustainable management and risk control. 7 meetings were held in fiscal 2021, with an average attendance rate of 85.71%(note) of all members.
Performance evaluation of the Board and functional committees
In order to implement corporate governance and enhance the functions of the Board of Directors, and to establish performance targets to strengthen the operational efficiency of the Board of Directors,WT has formulated the “Rules for Board of Directors Performance Assessments” in 2016, which stipulates that the Board of Directors and functional committees shall conduct internal self-evaluation on a regular basis every year and be evaluated by an external independent institution or an external team of academic experts at least once every three years. The evaluation results shall be reported to the Board of Directors, and the evaluation results shall be used as reference for the payment of individual directors’ remuneration and the nomination of directors for re-election.
Rigorous internal auditing to ensure fairness and impartiality
In WT Microelectronics, the Internal Audit Department (referred to as ″the Department″ hereunder) is an independent unit under the Board of Directors. A total of three full-time Internal Auditing Officer and his/her affiliated auditors are allocated. The appointment and dismissal of the company’s Internal Audit Supervisor are approved by the Audit Committee and passed by the Board of Directors. The appointment/dismissal, evaluation/review, salary/compensation of internal auditors of the Company are handled in accordance with the Corporate Governance Best Practice Principles ,shall be submitted by the Chief Internal Auditor to the Board Chairperson for approval and to evaluation and review at least once a year.
The purpose of internal audits is to assist the Board of Directors and managers in inspecting and reviewing defects in the internal control systems, measure operational effectiveness and efficiency, and to make timely recommendations for improvements to ensure the sustained operating effectiveness of the systems and to provide a basis for review and correction.
Implement self-monitoring, strengthening the system’s responsiveness
The Department shall implement regular auditing based on the annual audit plan,which is passed by the Board of Directors and based on the identified risks. The Department shall also implement special audit plans separately based on actual needs. After implementing each audit, the Department shall present the audit reports and follow-up reports, and submit them for review by the Audit Committee before the prescribed statutory date. The officer of the Department shall attend and deliver a report on the situation of each audit plan to a regular board meeting.
The Department shall supervise all internal departments and subsidiaries to conduct self-assessments once a year and implement the company’s self-monitoring mechanism. The Department shall adjust the design and implementation of the internal control system in a timely manner in response to changes in the environment.The Departments shall review the self-inspection reports and evaluate the overall efficacy of all internal control systems to serve as the primary basis for the Board of Directors and General Manager to produce Internal Control System Statements.
Our operating revenue increased by 27% from NT$353.152 billion in 2020 to NT$447.896 billion in 2021. Our profit for the year increased by 107% from NT$3.795 billion in 2020 to NT$7.855 billion in 2021, increase of NT$4.06 billion.
Post-Pandemic Era Approaches, Positive Outlooks for Semiconductors
With the accelerated global digitization driven by the pandemic and the increased demand for energy saving and carbon reduction due to climate change, the main drive for growth in 2021 comes from as increased semiconductor content in electronic products and the rapid growth in applications such as automotive electronics, industrial control, data centers, and 5G communications. In the future, in addition to developing high-growth product markets and increasing customer penetration, we will continue to carry out digital optimization to continuously improve operational efficiency, optimize our operations management system, enhance our financial control system, and strengthen our human resources management to deepen our ability to provide added value in the semiconductor industry chain, thereby building a foundation for sustainable business operations.
To improve various major operation efficiency and enhance corporate insight, WT advances continuously on process optimization. By promoting digital optimization, we can internally set up new operations to match the current scale and help automate operations and reports for relevant operation units. Externally, we can promote B2B transaction operations to vendors and customers by linking them with Electronic Data Interchange, further establish efficient standard operation processes and management mechanisms, so that the person in charge of various departments can immediately grasp data changes and deploy relevant strategies and response in advance.
Business dashboard for quick access to practical work information
In order to assist the company’s business-related personnel at various levels in making decisions, WT customizes business dashboards to meet the requirements of each unit and level. Business data Which are collected daily, classified and compiled through system automation. Practical information is produced according to different usage objectives, which is provided to supervisors and responsible colleagues for quick review on mobile devices or the company’s internal website, so as to grasp the current status and trends of operations and identify abnormal situations for tracking and management. As of 2021, we have completed the digitization of data collection for all product lines, and with the rapid changes in market demand, we will continue to optimize the data content to enhance the efficiency of decision making.
In addition to data analysis as an aid to decision making, the business dashboard also provides real-time inquiry of shipment information from the shipping location to the customer’s receiving location, making it easy to track shipments and enhance customer satisfaction. In addition, the dashboard also supports real-time exception alerts and reminders for important to-do items.
Digital approval processes substitute paper work: efficient and energy-saving
Starting from 2019, WT has been continuing to promote the use of digital tools to replace paper-based approval process. We completed the digitization of general procurement process in 2020, improving administrative efficiency and reducing the amount of paper used. Compared to 2019, the paper consumption in 2020 is reduced by 20%, and by 2021, all approval process of general procurement is digitalized, which reduces paper consumption by approximately 35,000 sheets, achieving a significant reduction in paper consumption.
Tax is the basis for governments to provide local infrastructure and public services, and is an important source of funding to advance global sustainable development goals. In response to changes in global tax environment, increasingly complex cross- border transactions and global anti-avoidance trends, we continue to interact and cooperate with tax authorities in countries where we operate.
Under the trend of international tax equity, WT implements corporate governance and establishes a corporate tax culture through the formulation of tax governance policies and transfer pricing policies, while taking into account the overall development of operations and the creation of operating profits. We review our policies annually in accordance with international tax trends and evaluate the need for revisions. We file honestly in accordance with the regulations of each location where we operate, and make proper use of relevant government tax incentive policies.
Tax irregularities or unethical matters can be reported internally and externally through WT’s established reporting mechanism. Tax information is disclosed in relevant public channels, such as annual reports of the shareholders’ meeting. Such information is derived from financial statements certified by the accounting firm.
The effective income tax rate of 22.8% in 2021 is higher than the statutory income tax rate of 20% for profit-making businesses in the ROC. This is mainly due to the fact that the board has considered the working capital required for the future growth of the Group’s operations and retained a portion of the current year’s earnings before distribution, which is subject to the tax on undistributed earnings.
Control of risk The first step towards sound growth and sustainable operation
For the purpose of enforcing the Company’s risk management mechanisms and strengthening corporate governance while reasonably assuring the Company’s strategies, plans, and targets are achieved, the Board of Directors passed the risk management policy on January 5, 2021. The policy provides the top principles for risk management. The policy covers the purpose of management, the scope of risks, organizational structure and responsibilities, management procedures, risk categories, and risk management operations and implementation evaluation. Risks arising from the business activities are kept within the range of tolerance in order to achieve sustainability and stability.
The Risk Management Committee is responsible for risk assessment
The Risk Management Committee of WT Microelectronics is a functional committee under the Board of Directors.The risk management committee members is composed of three Independent Directors, Chairman of the Board and the Chief Financial Officer. Each Accountability Unit is responsible for the actual implementation of risk management, and the head of the accountability unit is responsible for analyzing, monitoring and reporting the risks faced by the business under its jurisdiction, and ensuring that the risk management mechanism and procedures can be effectively implemented.
