2015 innolux csr report · 2016-08-10 · 3 4 2015 innolux csr report contents gri g4 index table a...

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2015 Innolux CSR Report Contents GRI G4 Index Table

21

19192426

27

283035353738

11

14

23479

Chapter 2 Corporate Management and Development

2.1 Company Governance 2.1.1 Corporate Organization 2.1.2 Risk Management 2.1.3 Ethical Corporate Management and Internal Control System 2.1.4 Basic Practices of Corporate Social Responsibility 2.1.5 Customer Satisfaction2.2 Operational Performance 2.3 Supply Chain Management 2.3.1 Supply Chain Risk Management 2.3.2 Sustainable Supply Chain 2.3.3 Green Supply Chain

1.1 Stakeholder Communication and Participation1.2 Materiality Analysis

Chapter 1 Stakeholders Engagement

Editorial PrincipleA Message from the Chairman Innolux Company Overview Enhancing Sustainable Development2015 CSR Performance

3.1 Green Living3.2 Green Operations 3.2.1 Climate Change Mitigation and Adaption 3.2.2 Energy Resources Management 3.2.3 Water Resources Management 3.2.4 Pollution Control and Environmental Impact Reduction 3.2.5 Environmental Material Flow Information3.3 Green Value Chain 3.3.1 Smart Green 3.3.2 Green Innovation 3.3.3 Lean Green 3.3.4 Green Engagement3.4 Green Environment

424344

485154

57

585858606061

Chapter 3 Green Vision To Earth, with L.O.V.E.

4.1 Safety

4.1.1 Health and Safety Strategies and Operations Management 4.1.2 Occupational Health and Safety

Risk Management4.2 Mental & Physical Wellness4.3 Initiative on Social Care 4.3.1 Participation in Charity Services 4.3.2 Educational Empowerment4.4 Living 4.4.1 Health Risk Management 4.4.2 Daily Life 4.4.3 Disability Care4.5 Employee –friendly Workplace 4.5.1 Recruitment and Staffing 4.5.2 Compensation and Benefits 4.5.3 Training and Development 4.5.4 Zero Distance Communication

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67696971727274757777818283

Chapter 4 Humanistic Vision to People, with S.M.I.L.E

Independent Assurance Opinion StatementGRI G4 Index TableUN Global Compact Comparison TableISO 26000 Index Table

85879899

Appendices

Contents

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Report Scope and Boundary

The report discloses issues of concerns related to stakeholders in the following chapters: “Stakeholders Engagement,” “Corporate Management and Development,” “Green Vision to Earth, with L.O.V.E” and “Humanistic Vision to People with S.M.I.L.E.”

To facilitate information and data management, employees from the Human Resources Department, Legal Department, Intellectual Property Department, Finance Department, Facility Engineering Department, Environmental Safety and Health Department, General Administration Department, R&D Department, Procurement Department, Quality Assurance Department, Sales Department, Public Relations Department, and Innolux Education Foundation were invited to collaborate with the CSR Department in collating data. The data were then reviewed through an internal administrative process. Cost and accounting information in the company annual report was reviewed and verified by certified accountants. Data concerning environment and greenhouse gas inventory and those concerning the management of occupational safety and health were inspected annually by a third party in accordance with ISO 14001, ISO 14064-1, and OHSAS 18001.

Data were obtained for the period from Jan. 1 to Dec. 31, 2015. The financial statements were compiled in accordance with the International Financial Reporting Standards (IFRS). The numbers listed in the financial statements are in NTD. Environment and health and safety performances are expressed using universal indices. Numbers and indices with special meanings have been noted and explained accordingly.

The aspect boundary of the report includes the material aspects identified by Innolux and the internal and external boundaries of the organization.

Report Assurance

This report is verified by SGS-Taiwan (an independent third party) as one that fully meets the GRI G4 Application Type 2 assurance level (Comprehensive Disclosure) based on AccountAbility 1000 Assurance Standard (AA1000AS). The independent assurance statement is included in the appendix of this report.

For eight consecutive years, Innolux has issued the annual Corporate Social Responsibility Report. This report was written in accordance to the G4 Guidelines issued by the Global Reporting Initiative (GRI), comprehensively disclosing Innolux’s efforts and performances that have resulted in its sustainable development and corporate social responsibility practices. We welcome all feedback from the public and aspire to continue improving our service to the public.

Contact Us

Issue Unit：Innolux CorporationEditorial Team：Innolux CSR editorial teamContact Window：CSR DepartmentPhone：+886 6 505 1888Headquarters Address：160 Kesyue Road, Hsinchu Science Park, Jhunan Township, Miaoli County 35053.Website：www.innolux.comCSR Report website: http://www.innolux.com/Pages/TW/

CSR_TW.htmlCopyright： All rights reserved. Please request written

consent and authorization for any reprinting articles.

Editorial Principle

Issue Period

According to the Taiwan Stock Exchange Corporation Rules Governing the Preparation and Filing of Corporate Social Responsibility Reports by TWSE Listed Companies, Innolux issues Corporate Social Responsibility Reports annually in June and publishes the reports on its website as well. The latest report was published in June 2015. The report for this year (2016) is expected to be published in June 2017.

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A Message from the Chairman

The decline in global economy was more drastic than anticipated in 2015 which led to INX’s performance of Q3 and Q4 below expectation. However, INX maintained profitable in 2015. The company was evaluated for the first time in the Dow Jones Sustainability Indices (DJSI) and was selected as a constituent of the DJSI World Index, which is an international recognition in the CSR performance . I express my most sincere gratitude to each and every employee, customer, supply chain partner, investor, and stakeholder of Innolux for their support and cooperation.

Jyh-Chau Wang, Chairman

Taiwan is a leader in the global science and technology industry, particularly its panel production. Panels are key component in all digital products. “Panel Anywhere” has become an indispensable part of everyday life. The panel industry is not only a national strategic resource in Taiwan, but also a pillar stabilizing Taiwan’s economy. As a leader in Taiwan’s panel industry, Innolux has received the “Golden Award for International Trade” issued by the Bureau of Foreign Trade, Ministry of Economic Affairs, consecutively for five years (2011-2015). The company is tasked with not only achieving profit goals, but also promoting the “reindustrialization” of Taiwan.

In 2015, Innolux was awarded the “National Industrial Innovation Award” for its outstanding performance in corporate innovation. The company’s “All-In-One Fab” innovative business model is just the beginning. Innolux is moving a portion of its production lines back to Taiwan, and then integrating its supply chain to form a complete all-in-one optical conglomerate. The company also aims to utilize local production and manufacturing to exponentially enhance productivity and yield, thereby creating employment opportunities, upgrading the industry, reinforcing the manufacturing industry, and boosting the return of “real economy”in Taiwan. These efforts shall consequently raise Taiwan’s position in the global science and technology industry, improve national export capability, and ensure national sustainable development.

Talent is a key resource in industrial development. Maximizing talent value is a CSR objective that Innolux endeavors to fulfill. Innolux invests considerable resources in fostering Taiwanese optical R&D specialists and manufacturing talents. In 2015, the company collaborated with four universities to provide AIC opportunities. Nearly 80% of the interns were employed as official staff. Alternatively, Innolux hired 1,159 employees with disability in 2015, which is an increase of 23.5% from 2014, achieving excellent results in its execution of the “Greater China Platform for the Disability—Creating an Accessible Work Environment.” The company received the Global View CSR “Enterprise of the Year Award” for its achievements in combining CSR into its business strategies.

Innolux uses innovative and differentiation techniques to provide advanced and integrated display solutions and specifications. The company leads the world in 4K2K TV panels, where the market penetration rate continues to increase and large-sized TVs are becoming increasingly prevalent. Innolux received the highest acclaim with the reception of the “Golden Award” in the 23rd Taiwan Excellence Awards for its “100% high-color saturation 4K2K full series LED display modules.” More recently, Innolux is working on an integrated design for its ultra-high color contrast and resolution product series. Thin and energy-saving characteristics are not only representational aspects of Innolux’s environment-friendly products, but also the factors that create mutually beneficial situations for the company and its clients.

The long-term efforts in achieving green environmental protection is a key component in Innolux’s development in the panel industry, with its green vision, “To Earth, with L.O.V.E,” to exert company influence. Innolux was rated the highest score among the panel industry in the Carbon Disclosure Project (CDP) in 2015. The company was also nominated a constituent of the Carbon Disclosure Leadership Index (CDLI) in the second year. Innolux owns six plants in Taiwan that received recognition of outstanding energy conservation. It has received the “Outstanding Green Procurement Award” issued by the EPA consecutively for seven years. In 2015, Innolux achieved a process water-recycling rate of 94.2% in its Taiwan site. The Foshan plant was also honored“International Carbon Value Award—Green Responsibility Award” for its implementation in three dimensions, namely, material saving, energy saving, and water saving.

Twenty years in the panel industry, Innolux has been competing with various countries in the field of upcoming capability, new techniques, and new competitors. On the eve of transition to future competition, the idea of “Smart manufacturing” is applied on the operations of “Production upgrade” to usher in a new era of Industry 4.0 in the panel industry. The ultimate goal is to create high value manufacturing which could realize CSR implementation and sustainable development.

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On May 12, 2016, the Boa rd o f D i r e c t o r s approved the nomination of Mr Jyh-Chau Wang a s t h e p o s i t i o n o f Chairman

Innolux Global Presence

Holland

Singapore

JanpanKoreaChinaGermany

USA

Tainan

JhunanTaiwan

Sales OfficeTaiwan, China, Japan, Singapore

Holland, USA, Germany

Production Site

Taiwan: Jhunan, Tainan

China: Ningbo, Foshan, Nanjing, Shanghai

Global Labor Distribution

Taiwan ＋ China ＋ Others ＝ 80,348

35,373 44,692 283

Innolux was founded in 2003. The company merged with Chimei Optoelectronics and TPO Display in March 2010,

becoming the largest merger in the history of the panel industry. Innolux owns production lines for various generation

products, including 3.5G, 4G, 4.5G, 5G, 6G, 7.5G, and 8.5G, and is the only all-round panel display provider in the world

offering a complete selection of small, medium, and large LCD and touch panels.

Innolux employs 80,348 employees around the world, with its R&D center in Taiwan to train talented technical

personnel. Its production centers and sales centers are distributed around the world. Front-end TFT-LCD production

plants are largely located in Jhunan and Tainan, while terminal manufacturing plants are located in Shanghai, Ningbo,

Foshan, and Nanjing in China. This extensive distribution reduces logistics and labor costs and contributes to energy

conservation and carbon reduction. Through the business approach of rooting panel products and vertically integrating

suppliers in the supply chain, Innolux strives to provide clients with complete solutions.

Innolux endeavors to enhance customers’ visual experiences with unparalleled technologies as well as to satisfy the

needs of our shareholders, customers, employees, and the community.

Innolux Company Overview

Company MissionTo become an enterprise with competitiveness ;

To make returns for shareholders;

To have customer satisfaction;

To make employees proud;

To expand the horizons of humanity.

Company VisionTo become the most valuable panel display solutions provider

Founded January, 2003Address 160 Kesyue Road, Hsinchu Science Park, Jhunan Township, Miaoli County 35053Employees 80,348Capital NT$ 99.5 BillionRevenue NT$ 364.1 Billion

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Innolux Milestone

1998 2003

1999 2006

2010

2012 2014

2013 2015

Aug. 2015

The 65" 8K4K (ultra-high-resolution 7,680x4,320), highly-saturated, large-screen panels was successfully developed

Dec. 24,1999

TPO Displays established.

Jan. 14, 2003 Innolux Display Corp. (INX) established.

Oct. 24, 2006

INX lists its shares on the Taiwan Stock Exchange, becoming the fastest company to be listed in the panel industry.

Mar. 18, 2010

INX announced the completion of merger with CMO and TPO , becoming the largest merger in the history of the panel industry.

Mar. 16, 2012

CMI Board of directors elected Dr. Hsing-Chien Tuan as new chairman of the board.

Jan. 1, 2013

ChiMei Innolux Corporation (CMI) changed its name to “Innolux Corporation”.

Dec. 31,2014

Recorded “3 New Highs” since the merger in 2010: Total Gross margin, net profit margin and operating profit margin after-tax; Also “2 New Lows”: Number of days holding inventory and total net debt.

Aug. 6,1998 Chi Mei Optoelectronics (CMO) established.

Product Application

Main product are TFT-LCD panels and touch solutions

Applications

Automotive and Avionics Display Application

Consumer Electronics Application

Medical Display Application

Tablet/Hybrid Solution Application

Smart Phone/Mobile Application

LCD TV Application Monitor Application Notebook Application Industrial Display Application

65 65

CFLCD LCM

TFT

Industrial Processes

ArrayThe front-end Array process is similar to that for semiconductors, the only difference being that the thin-film transistors are placed on the glass substrate, not on the silicon wafer.

CellThe Cell process fits the Array substrate to a color-filter substrate; liquid crystal is then inserted between the two substrate layers.

Module AssemblyBack-end Module Assembly involves taking the panel from the Cell process and bonding the LCD driver IC, and assembling backlights, metal frame and other components to make the finished product.

Innolux is a manufacturer of TFT-LCD panels and provider of integrated components for system assembly.

▲ Association of the Industrial Hierarchy

LCM module

LCD panel

Polarizing flimDriver IC PCB Backlit

module

Liquid Crystal

Glass Substrate Mask ITO

conductive glass

Innolux Products

Other consumer electronicsMobile/TabletNotebookLCD MonitorLCD TV

Consumer

Midstream

Upstream

Downstream

Color filiter

Please refer to http://www.innolux.com/Pages/TW/Technology/Production_Process_TW.html for process introduction

TFT LCD Processes

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Enhancing Sustainable Development

CSR Policy and Implementation Plan

CSR-related policies of Innolux have been reviewed and approved by Chairman and CEO Hsing-Chien Tuan. The Code of Conduct is the basis of corporate social responsibility for Innolux Corporation. The Electronic Industry Code of Conduct (EICC) serves as the core principle of the company, while corporate governance, environmental protection, employee care, supply chain SER management and community participation represent the five main policy directions. Innolux is committed to strengthening its communication with interested parties and reaching their expectations.

Social Aspect

Environmental Aspect

Dedicated to achieving “sustainable environment” and developing a “humane society”

CSR Committee and Promotion Organization

In 2011, Innolux established a CSR Committee, with President Mr. Jyh-Chau Wang to serve as the CSR management representative and supervisor to all CSR activities. The committee comprises the top executives of the business departments in Taiwan and China and is to support various operation-related matters. The CSR Department reviews the risks and opportunities concerning corporate governance, environment, and society. It collates important aspects of CSR and reports these aspects along with management measures to the general manager during quarterly CSR committee meetings. Annual management review meetings are also held to review sustainability trends, stakeholders’ interests, company performance, and future objectives. In 2015, 21 CSR promotion items were established. They shall be implemented into various platform operations to continue promoting sustainable development and performance.

•Legal compliance platform

•CSR reporting platform

•Carbon disclosure management platform

•Energy and water conservation platform

•L abor rights platform

•Disability care platform

•Supplier CSR risk assessment platform

•Public welfare platform

Committee: comprised of the top executives from each business department.

Jhunan Manufacturning Plants

Ningbo M

anufacturning Plants

Foshan Manufacturning Plants

Nanj ing M

anufacturning Plants

Shanghai Manufacturning Plants

Green products

Environmental safety

Factory services

Procurement

Legal

Public relations

Taiwan China Function Departments

Tainan Manufacturning Plants

Hum

an resources

General A

dministration

Chairman of the Board/CEO

CSR Committee

Bureau: CSR Department

Functional Platform Feedbacks

▲ Innolux CSR Committee Organization and Function Platforms

The philosophy behind “To Earth, with L.O.V.E.” sets the Earth as the core principle, emphasizing Earth’s sustainable development, green living, green operations, green value chain, and green environment. Innolux Corporation uses its influences to deliver the message regarding the Earth’s sustainable development.

“To People, with S.M.I.L.E” is Innolux's vision, which focuses on realizing a safe culture, mental and physical wellness, , initiative on social care, and friendly workplace. We also continue to enhance humane harmony and co-prosperity.

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The 2030 Agenda for Sustainable Development

In 2015, the United Nations announced the “Transforming our World: The 2030 Agenda for Sustainable Development” in the annual World Summit on sustainable development. The agenda comprised 17 sustainable development goals with 169 targets. Based on the aforementioned global sustainability framework, Innolux reviewed its CSR Policy and implementation guidelines introduced in 2010 to ensure that the long-term sustainability goals of the company are consistent with international expectations. To achieve its goals, Innolux has implemented and promoted a number of projects for many years. A number of new instigators have also been implemented recently. We firmly believe that sustainable actions must be coupled with business operations, and that the compatibility of sustainable action strategies must be reviewed regularly.

Source: The Sustainable Development Knowledge Platform, SDKP

UN Sustainable Development Goals Innolux—Mid/Long-Term Goals

[1] End poverty in all its forms everywhere• Provide care and empowerment, help people with disabilities, and

develop a co-prosperity consumption system[2] End hunger, achieve food security and improved nutrition, and

promote sustainable agriculture

[3] Ensure healthy lives and promote well-being for all at all ages • Assist employees in achieving mental/physical balance and provide

a safe work environment

• Build a safe environment and reduce occupational hazards by

following international environment safety management systems [4] Ensure inclusive and equitable quality education and promote

lifelong learning opportunities

[6] Ensure availability and sustainable management of water and

sanitation for all• Actively develop new techniques to enhance water efficiency

[7] Ensure access to affordable, reliable, sustainable, and modern

energy for all• Actively develop new techniques to enhance resource efficiency

[8] Promote sustained, inclusive and sustainable economic growth,

full and productive employment, and decent work for all

• Create a work environment favorable to people with disabilities

and promote employment

• Collaborate with universities to identify and foster external talents;

Open communication and use innovation to retain internal talents

•Provide competitive salaries and benefits

[12] Ensure sustainable consumption and production patterns• Promote optimal resource utilization on sites and reduce

environmental impact

[13] Take urgent action to combat climate change and its impacts •Green harmony, reach zero-carbon in 2050

[17] Strengthen the means of implementation and revitalize the

global partnership for sustainable development• Promote green value supply chains and low-carbon supply chains

▲ The 17 Sustainable Development Goals of UN

In addition to the new EICC 5.0 released in April 2015, the implementation of CSR in 2015 focused on reviewing relevant labor terms and conditions and health and safety issues, auditing and reviewing management systems, and continuing the application of the "Legal Compliance System" and the “Sustainability Improvement System” to enhance autonomous operations. Moreover, the company also engaged in supplier risk assessment and auditing to maximize supplier potential, urge them to implement low-carbon production, and care for people with disabilities.

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Innolux joined the Dow Jones Sustainability Indices (DJSI) evaluation for the first time. It was selected as a constituent of the DJSI World Index. This was an immense recognition of the CSR and sustainable development efforts of the company.

Foshan plant received the “International Carbon-Value Award—Green Responsibility Award.”

Carbon Disclosure Project (CDP) presented Innolux with a CDP score of 100, the highest among the panel industry. The company was also selected for a second year into the Carbon Disclosure Leadership Index (CDLI).

Innolux’s CSR report received “Golden Award” for presenting one of the best CSR reports among the top 50 companies in the electronic information manufacturing industry.

2015 CSR Performance

!

!

Information Transparency

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Economic Aspect

• Received the “Taiwan Excellence Gold Award” for the 100% high-saturation

4K2K series LCD panel modules.

• Received the “Golden Trade Award” presented by the Bureau of Foreign Trade,

Ministry of Economic Affairs, consecutively for five years for outstanding trade

performance.

• Filed 650 patents, with an ownership of 8,500 patents worldwide.

• Established the Quality Assessment Center and developed 36 techniques for

product assessment, increasing vehicle product assessment rates to 99%.

Environmental Aspect

• The company received 1,600 million tons in carbon credits for its performance in carbon

reduction form the EPA, the most in Taiwan.

• PFC emission was 0.104MMTCE, a reduction of 15.4% from 2014.

• The GHG emission intensity of the TFT-LCD production process was 39.6 kgCO2e/m2, a

reduction of 8.2% from 2014.

• The water consumption per unit of substrate in TFT-LCD Fabs was 0.357 m3/m2, a reduction

of 5.8% from 2014.

• Process water recycling rate in the Taiwan sites was 94.2%, which was better than the

national standard of 85%.

• Innolux has been awarded the “Green Procurement Excellence Award” by the EPA for 7

consecutive years.

• Tainan plant (Fab2) received the “Energy Saving Excellence Award” presented by the

Ministry of Economic Affairs.

• Foshan plant received the “Environmental Pioneer” award presented by the Lion’s

Head Mountain Township Environment Protection Office.

Contribution and Performance

Social Aspect

• The manufacturing plant in Taiwan and China employed 1,159 workers with disabilities,

a total increase of 23.5% from the previous year and achieving an employment rate of

1.45%.

• The company received the Global View CSR “Enterprise of the Year Award”

for the “Greater China Platform for the Disabled—Creating an Accessible Work

Environment.”

• The company arranged the 5th Labor Health Forum, establishing an AIC platform to

create and promote a health workplace culture.

• The company has promoted the Employee Weight Loss Initiative for 6 consecutive

years, receiving the “National Workplace Weight Loss Award” presented by the

Health Promotion Administration in 2015.

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1.1 Stakeholder Communication and Participation

▲ Stakeholders of Innolux Corporation

Media

Customers

Government authorities

External appraisal agencies

Communities

Shareholders and investors

NGOs

SuppliersEmployees

Innolux Corporation's CSR policy objective is to create maximum social value through excellent operations and a commitment to enhancing the communication with stakeholders; continued efforts are made to meet stakeholder expectations.

We establish diverse and unobstructed communication channels such as the provision of investor services, supplier areas, business service/product inquiries, media liaison, and an anticorruption-reporting mailbox on the company website ([email protected]). In addition, a corporate social responsibility mail box ([email protected]) managed by the CSR Department has also been established. The said department forwards all questions and concerns to the responsible departments to facilitate timely response, enabling the communication with stakeholders and the collection of their feedback; the goal is to meet their needs and expectations.

Chapter 1 Stakeholders Engagement

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ch1 - Stakeholders Engagement

1211

Stakeholders Communication Channels Issues of Concern Major events in 2015

Employees

• Communication mailbox and hotline 67885, INX newsletters, and culture gallery

• Interactive meetings, such as labor-management meeting, mobilization meeting, and employee welfare meeting

• Production line survey, caring forum, and new personnel forum

• Compensation and benefits

•Financial performances• Recruiting and

retaining of competent employees

•Personnel training

‧ Examined domestic and international compensation and benefits survey reports and used them as a reference to propose competitive conditions.‧ Collaborated with Southern Taiwan University

of Science and Technology, Kun Shan University, National Kaohsiung First University of Science and Technology, Kao Yuan University; provided tutorship to 117 trainees.‧ Held “InnoStar Project” which involved on-

campus recruitment.‧ Convened 5 meetings of disability caring

platform, involving cross-department communications and management.

‧ Established the “Promotion Taskforce for Friendly Workplace” for the Greater China region, enhancing employee recognition.

Customers

•Designated customer service to timely respond to customers’ needs

•Regular review meetings with the management level

•Customer satisfaction survey and analysis•Trend analysis of customer audits and

questionnaires

‧ Product quality and customer satisfaction‧ Sustainable supply

chain management‧ Greenhouse gas

emission and carbon management‧ Green product

management

‧ Gain insight into customer feedbacks and request using the VOC system.‧ Timely and fully collected customers’

feedbacks on quality through INNOLUX Intelligent Portal.‧ Organized customer on-site audits and CSR-

related survey questionnaire to enable understanding of Innolux’s implementations.

Shareholders/investors

•Release of annual reports•Organization of regular annual shareholder

meetings•Investor hotline and mailbox managed by

designated employees to reply to inquiries•Participation in seminars organized by

domestic and foreign investment institutions and investor forums organized by brokerage companies; meeting with investment companies in overseas road shows

‧ Financial performances‧Corporate governance‧ Recruiting and

retaining competent employees‧ Sustainable supply

chain management

‧ Participated in DJSI evaluation to measure and evaluate Innolux’s performances in sustainable development from global investors’ perspectives.‧ Issued the 2015 annual report and organize

regular shareholder meetings.‧ Released monthly revenue and shipment

reports.‧ Held quarterly investor conferences

to announce the company’s financial performance and operation results.

Suppliers

•Interactive platform for supplier and procurement/material control

•Periodic meetings with suppliers•Anti-corruption reporting mailbox•Supplier CSR risk investigation and analysis

‧ Sustainable supply chain management‧ Green product

management‧ Pollution control and

prevention

‧ Performed supplier performance evaluation to select qualified suppliers.‧ Held a total of 6 annual suppler conferences in

Tainan, Ningbo, and Foshan sites to promote green product management.‧ Conducted CSR risk assessments of 178

suppliers, evaluating their compliance with EICC regulations.‧ Implemented the new Conflict Mineral

Reporting Template and assessed 483 suppliers to make sure no conflict minerals were used.‧ Activated the Material Flow Carbon Reduction

Promotion Plan and built the cross-company 3R Recycle Circulation Platform.

Government authorities

•Participation in public hearing and business seminars

•Proposal of support to government authorities’ relevant activities

•Collaboration with government authorities in CSR forums

‧ Greenhouse gas emission and carbon management‧ Energy and resource

conservation‧ Environmental

education‧Disability employment

‧ The Foshan site assisted in organizing “Environment and Law—the Beauty of Shishan” event of Shishanzhen to share the corporate’s energy saving experiences.‧ The Ningbo site organized the social activities

for disadvantaged employees in Beilun District on the National Disability Day.

‧ The Taiwan sites were invited to the Labor Affairs Bureau of Kaohsiung City Government to share its experiences in disability employment with 46 business representatives.

Stakeholder Communication

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Stakeholders Communication Channels Issues of Concern Major events in 2015

Media

• Sharing of the company’s business accomplishments and development directions with media

•Convention of periodic press conferences or issue of press releases

•Designated personnel responsible for communicating with the media by phone or email

‧Financial performances‧ recruiting and retaining

competent employees‧Corporate governance‧ Water resources

management

‧ Presented television products with the highest resolution worldwide in Touch Taiwan 2015 exhibition.

‧ Innolux Education Foundation presented the green, low carbon documentary titled “Restoring the Lost Balance.”‧ Organized Inno-Star Summer Trainee Recruiting

Project to cultivate photoelectric talent.‧ For the innovation of technology industry and

talent cultivation, Honorary Chairman Hsing-Chien Tuan participated in the Industrial Innovation Forum, an event organized to celebrate the 70th anniversary of the Department of Electrical Engineering, National Taiwan University, sharing innovative concepts of the panel industry.

External appraisal agencies

•Replies to questionnaires•Annual reports of the company•CSR Report•Participation in appraisals•Official website of Innolux

‧ Greenhouse gas emission and carbon management‧ Water resources

management‧Corporate governance‧ Community participation

and social welfare

‧ Participated in DJSI evaluation to measure and evaluate Innolux’s performances in sustainable development from global investors’ perspectives.‧ Participated in the international CDP (Carbon

Disclosure Project) to enhance the transparency of carbon management information.

‧ The CSR participated in the Taiwan Corporate Sustainability Awards to strengthen the transparency and quality of disclosed sustainability information.

Communities

•Designated units to communicate with community members

•Periodic visits to nearby community leaders, residents, and disadvantaged groups

•Periodic organization of community participation activities

‧ Pollution control and prevention‧ Community participation

and social welfare‧ Occupational health and

safety‧ Recruiting and retaining

competent employees

‧ Foshan Innolux Optoelectronics Charity Foundation donated to support poor students from close by villages.‧ The coverage of organic vegetables in group

meals was again increased to enhance the regional influence of organic farming.‧ Participated in on-campus recruitment in 9

universities, including National Taiwan University, National Cheng Kung University, National Tsing Hua University, and National Chiao Tung University, actively gather external talent.

NGOs

•Participation in NGO-organized seminars

•Conducting CSR projects with NGOs•Hosting events or forums in which

NGOs are invited to participate, facilitating two-way communication

‧ Community participation and social welfare‧Disability employment‧ Pollution control and

prevention‧ Occupational health and

safety

‧ Organized the 5th Labor Health Forum 2015 with the assistance from the Taiwan Environmental and Occupational Medicine Association and the Taiwan Occupational Health Nurses Association, establishing and promoting occupational health culture.‧ Participated in the Energy and Climate Policy

Workforce organized by BCSD-Taiwan and TCSF, which was joined by 18 Taiwanese corporates. Completed and publicized the Energy and Climate Policy White Paper—Climate Change and Energy Policy Recommendations to the Government.‧ Collaborated with Taiwan Fund for Children

and Families as well as FamilyMart to set up FamilyMart-TFCF Convenient Stores and a Dream & Love store in the sites, which together provided 19 job opportunities in 2015. This enables employees to support the minorities as they shop.

Stakeholder Communication

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1413

Compile Electronic Industry Code of Conduct (EICC) and trend-related topics proposed by the CSR Committee as well as include specific, industry-related issues and customer audits. By combining the seven communication goals and using the dimensions listed in the Global Reporting Initiative (GRI) as

reference, 32 communication goals were collected.

A Failure Mode and Effects Analysis (FMEA) is adopted to perform an assessment. The assessment is based on three key principles, which are listed below: “whether stakeholder is concerned with the communicated issues,” “the level of concern with the issues on the part of stakeholder,” and “the level of effect that the issues have on realizing the goal of strategic communication.” The assessment results are used to determine the weight of the evaluation criteria as indicated by the Analytic Network Process (ANP). Subsequently, the Risk Priority Number (RPN) of each issue is calculated for priorization.

Step1

Communication Goals

Step2

Step3

Identify stakeholders

Issue collection and analysis

1. Become customers’ preferred supplier.

2. Increase employee participation in CSR and corporate commitment.

3. Enhance Innolux’s efficiency in realizing green vision.

4. Enhance suppliers’ support and collaborations to promote CSR

5. Strengthen investors’ trust in Innolux Corporation.

6. Identify engagement strategies to reward to the communities to build a

positive impression of Innolux.

7. Strengthen the interaction and communication with the media and NGOs.

After a discussion with an internal expert team, 7 communication goals are

established by the Innolux. Through the disclosure of information via the Corporate Social Responsibility Report, communication between the Innolux and stakeholders are achieved.

Establish communication goals

Innolux divides its key stakeholders into 9 categories, which are employees, customers, communities, shareholders, suppliers, government authorities, external appraisal agencies, NGOs, and media. Stakeholders are those who meet the following principles：• Groups or individuals who the company bears legal, financial, company

operation-oriented responsibility.• Groups or individuals whose benefits are influenced by the company’s

operations.

Innolux Corporation uses materiality analysis as an important reference to promote CSR strategies and formulate goals. Materiality analysis comprises the following steps:

1.2 Materiality Analysis

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Primary issue of concern

13.7513.61 13.34 13.31 13.19

12.98 12.92 12.89 12.84 12.54 12.42 12.26 11.97 11.74 11.45 11.16 10.94

Energy resources managem

en

Financial performance

GH

Gem

ission and carbon managem

ent

Pollution control

Water resources m

anagement

Corporate governance

Product quality and customer

satisfaction

Occupational health and safety

Compensation and benefits

Sustainable supply chain managem

ent

Disability Em

ployment

Legal compliance

Comm

unity participat ion and social care

Green product m

anagement

Employee-friendly w

orkplace

Integrity managem

ent

Recruiting and retaining of competent

employees

10.78 10.11 10.02 9.84 9.61 9.41 9.32 8.25 7.86 7.44 7.31 7.12 6.98 6.72

Material Flow

Cost Accounting

Personnel training

Grievance and com

munication

mechanism

s

Developm

ent and innovation of products and technologies

Labor/managem

ent relations

Material

Local procurement

Risk managem

ent

Diversity and equal opportunity

Labor human rights

Antitrust

Biodiversity

Low carbon environm

ent education

Customer Privacy

Review and discussionStep4The assessment results are recorded in the annual management review for further review and discussion. The top 17 issues of concerns (high RPN) are then identified. The top issues of concerns for 2015 are listed as follows:

Secondary issue of concernEconomy Environment Society

Economy Environment Society

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Major Major Issues of Concern GRI G4 Material Aspect Corresponding Sections in the CSR Report Page

1 Energy resources management •Energy 3.2.2 Energy Resources Management 48

2 Financial performance•Economic performance•Market presence•Procurement practices

2.2 Operational Performance 30

3 Greenhouse gas emission and carbon management

•Emissions•Transport

3.2.1 Climate Change Mitigation and Adaptation 44

4 Pollution control •Effluents and wastes 3.2.4 Pollution Control and Environmental Impact Reduction 54

5 Water resources management •Water 3.2.3 Water Resources Management 51

6 Corporate governance •Anti-competitive behavior 2.1 Corporate Governance 19

7 Product quality and customer satisfaction •Customer privacy 2.1.5 Customer Satisfaction 28

8 Occupational health and safety •Occupational health and safety 4.1 Safety

4.4.1 Health Management6472

9 Compensation and benefits • Equal remuneration for women and men 4.5.2 Compensation and Benefits 81

10 Sustainable supply chain management

• Supplier Environmental Assessment

• Supplier Assessment for Labor Practices

• Supplier Assessment for impacts on society

2.3 Supply Chain Management 35

11 Disability Employment •Local communities•Compliance 4.4.3 Disability Care 69

12 Legal compliance •Compliance2.1.3 Ethical Corporate Management and Internal Control System2.1.4 Basic Practices of Corporate Social Responsibility

2627

13 Community participation and social charity •Local communities 4.3 Initiative on Social Care 69

14 Green product management•Materials•Products and service•Customer health and safety

3.3 Green Value Chain 58

15 Employee-friendly workplace • Labor practices grievance

mechanisms• Human rights grievance

mechanisms4.5.4 Zero Distance Communication 83

16 Integrity management •Anti-corruption 2.1.3 Ethical Corporate Management and Internal Control System 26

17 Recruiting and retaining competent employees

•Employment•Diversity and equal opportunity•Non-discrimination•Child Labor•Forced or compulsory labor

4.5.1 Recruitment and Staffing4.5.2 Compensation and Benefits

7781

Responses to the major issues of concern can be found in the sections listed below. Responsesto the remaining issues of concerns can be found in the CSR Report or on the Innolux Corporation official website.

Step 5 Responding to issues of concern

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Within organization Outside of organization

Taiwan（Parent company） China

Jhunan Tainan Ningbo Foshan Nanjing Shanghai

Economic Performance ● ● ● ● ● ● - - - -

Market Presence ● ● ● ● ● ● - - - -

Procurement Practices ● ● ● ● ● ● - - - -

Materials ● ● ● ● ● ● - - - -

Energy ● ● ● ● ● ● - ○ ○ -

Water ● ● ● ● ● ● - ○ ○ -

Emissions ● ● ● ● ● ● - ○ ○ -

Effluents and Waste ● ● ● ● ● ● - - - -

Products and Services ● ● ● ● ● ● - - - -

Compliance ● ● ● ● ● ● ○ ○ ○ -

Transport ● ● ● ● ● ● - - - -

Overall ● ● ○ ○ ○ ○ - - - -

Supplier Environmental Assessment

● ● ● ● ● ● - - - -

Environmental Grievance Mechanisms

● ● ● ● ● ● ● - - -

Employment ● ● ● ● ● ● - - - -

Occupational Health and Safety ● ● ● ● ● ● - ○ ○ -

Training and Education ● ● ● ● ● ● - - - -

Diversity and Equal Opportunity ● ● ● ● ● ● - - - -

Equal Remuneration for Women and Men ● ● ● ● ● ● - - - -

Supplier Assessment for Labor Practices ● ● ● ● ● ● - ○ ○ -

Labor Practices Grievance Mechanisms

● ● ● ● ● ● - ○ ○ -

Boundary

Aspect ofconsideration

Boundary and Scope of the Material Aspects

The material aspects that Innolux is concerned about have a considerable impact on each production plant and subsidiary within the organization as well as affiliated companies and stakeholders (i.e., customers, suppliers, and communities) outside of the organization. The table below defines and shows the boundaries of the effects of the material aspects inside and outside the organization.Note: The GRI G4 specific standards involved in these categories include economy, environment, and society (i.e., labor practices,

society, product responsibility, and other).

● : material with direct effect and is disclosed; ○: material with direct effect and is is planned to be disclosed.

Customers

Local comm

unity

Suppliers(front-end)

Suppliers(back-end)

Labor practices

Society

Environment

Economy

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1817

Within organization Outside of organization

Taiwan（Parent company） China


Non-discrimination ● ● ● ● ● ● - ○ ○ -

Child labor ● ● ● ● ● ● - ○ ○ -

Forced or Compulsory Labor ● ● ● ● ● ● - ○ ○ -

Supplier Human Rights Assessment ● ● ● ● ● ● - ○ ○ -

Human Rights Grievance Mechanisms

● ● ● ● ● ● - ○ ○ -

Local Communities ● ● ● ● ● ● ● - - -

Anti-corruption ● ● ● ● ● ● - ○ ○ -

Anti-competitive Behavior ● ● ● ● ● ● - ○ ○ -

Compliance ● ● ● ● ● ● - - - -

Supplier Assessment for impacts on society ● ● ● ● ● ● - ○ ○ -

Grievance Mechanisms for Impacts on Society

○ ○ ○ ○ ○ ○ - ● ● -

Customer Health and Safety ● ● ● ● ● ● - - - ○

Customer Privacy ● ● ● ● ● ● - - - -

Compliance ● ● ● ● ● ● - - - -

Responsible Procurement ● ● ● ● ● ● - ● ● -

Electronic system for green product management

● ● ● ● ● ● ● - - -

Low carbon environment education

● ● ● ● ● ● ● - - -

Safety and health accounting ● ● ○ ○ ○ ○ - - - -

Social charity ● ● ● ● ● ● - - - -

Disability Employment ● ● ● ● ● ● ● - - -

*Supplier(front-end): suppliers of front-end production, including TFT, CF, LCD.*Supplier(back-end): suppliers of back-end production, including LCM assembly.

Boundary

Aspect ofconsideration

Customers

Local comm

unity

Suppliers(front-end)

Suppliers(back-end)

Hum

an rightsProduct

responsibility

Society

Other

Society

2019


2019

The objective of Innolux is to become a national model of corporate governance. Innolux implements corporate governance and aims to maximize shareholders’ benefits. Apart from actively recruiting experienced and professional talents and experts, maintaining a sound structure of the board of directors, and sustaining a certain ratio of seats of independent board directors, Innolux also immediately discloses, pursuant to relevant laws and regulations, various major operational information. Moreover, our board of directors has established the Remuneration Committee and the Audit Office to examine and audit various internal operations, assisting managers and the board of directors to reasonably insure operational results, reliability of financial reports, and regulatory compliance. The aforementioned encompasses Innolux’s efforts in promoting corporate governance.

Major Rules of Corporate Governance

•Company charter•Procedures for board and supervisor elections•Rules governing board meetings•Procedures for acquisition or disposal of assets•Operational procedures for loaning funds to others• Operational procedures for endorsements and

guarantees•Procedures for engaging in derivatives trading•Code of ethics for directors and managers•Procedure rules for shareholders’ meetings•Remuneration Committee Charter

The aforementioned rules are posted on the company website ("http://www.innolux.com" http://www.innolux.com) under Corporate Governance.

Chapter 2 Corporate Managementand Development

2.1 Company Governance

HR Management Center

Quality Management Center

Finance & Accounting Center

Legal Affairs and Intellectual Property Center

Strategic Procurement Center

Operation Management Center

EHS Group Division Global Sales Center

Product Technology Center

LCD Panels M

anufacturing Center

Modules M

anufacturing Center

Touch Panel Business Unit

Mobile D

evice Business Unit

Production Technology Center

Sales & Marketing

Shareholders' Meeting

Board of DirectorsRemunerationCommittee

Chairman

President CSR Committee

Supervisors

Audit Office

2.1.1 Corporate Organization

Major issues of concern— DMA

Product Manufacturing

Sales & Marketing

Product Manufacturing

2019

ch2 - Corporate Management and Development

2019

Joint Ventures and Subsidiaries

The management of Innolux and its subsidiaries covers the development, manufacturing, sales, and after sales service of TFT-LCDs. In addition, a small number of affiliates focus on investment businesses to strengthen vertical integration and strategic investments, thereby facilitating future operations. Innolux consists of 47 subsidiaries, comprising 18 controlling companies, three entrepôt trading companies, 13 companies in mainland China, nine foreign companies, and four investment companies.

Affiliates

Business Activities Company

Manufacturing & selling LCD back end module related technologies and products

Ningbo Innolux Optoelectronics Co., LTDNingbo Innolux Technology Co., LTDNingbo Innolux Display LTDFoshan Innolux Optoelectronics Ltd.Shanghai Innolux Optoelectronics Ltd.Nanjing Innolux Optoelectronics Ltd.VAP Optoelectronics (Nanjing) Corp.Innocom Technology (Shenzhen) Co. Ltd.

Selling LCD back end module related technologies and products Qunan Electronics Co., Ltd

Investment activities

Yuan Chi Investment Co., Ltd.InnoJoy Investment CorporationNets Trading Ltd.Warriors Technology Investments Ltd.

Thinner glass process service Kunpal Optoelectronics Ltd.

Storage servicesNingbo Innolux Logistics Co., Ltd.Foshan Innolux Logistics Co., Ltd.

Controlling companies

Asiaward Investment Ltd. Best China Investments Ltd. Bright Information Holding Ltd. Golden Achiever International Ltd. Innolux Holding Ltd. Innolux Hong Kong Holding Limited. Innolux Optoelectronics Hong Kong Holding Ltd. Keyway Investment Management Limited Landmark International Ltd. Magic Sun Limited Main Dynasty Investment Ltd. Mega Chance Investments Ltd. Rockets Holding Ltd.Stanford Developments Ltd.Sun Dynasty Development Limited Suns Holding Ltd.Toppoly Optoelectronics (B.V.I.) Ltd.Toppoly Optoelectronics (Cayman) Ltd.

Controlling company of researching, developing, and testing Innolux Technology Europe B.V.

Testing and maintenance company Innolux Technology Germany GmbH

DistributorInnolux Technology Japan Co.,Ltd. Innolux Technology USA Inc.Innolux Corporation

Operating electronics parts and LCD display import and export sale Innolux Optoelectronics Europe B.V.

Operating electronics parts and LCD display import and export sale and after-sales service

Innolux Optoelectronics Germany GmbH

Operating electronics parts and computer display sale Innolux Optoelectronics USA, INC.

Operating TFT-LCD development, manufacture, and sales Innolux Optoelectronics Japan Co., Ltd.

Entrepôt trade companyInnolux Hong Kong Limited. Lakers Trading Ltd.Leadtek Global Group Limited

Business of display and related product Nanjing Innolux Technology Ltd.

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Board Operations

Innolux adheres to the Code of Practice for the Governance of Publicly Traded Companies, including complying with corporate ethics, maintaining operational transparency, valuing shareholders’ rights, respecting stakeholders’ rights and interests, and implementing the responsibilities of company managers. For the operations of the board of directors, please refer to the 2015 annual report.

Innolux board election follows Article 192-1 of the Company Act and uses a candidate nomination that is stated in the charter. Shareholders shall elect the board from the board candidate list. The board of directors is composed of five members with professional background and technical experience. Two seats shall be independent board directors. Board members shall possess the knowledge, skills, and qualities required for their positions and provide professional consultation regarding operations, technology, and finance. The board shall mutually bear company strategy, operation, and oversight responsibilities in order to create the highest benefit for shareholders.

Board election

The board of directors is the company’s highest level of governing unit responsible for major operational decisions, including appointing and supervising management personnel, monitoring operation performance, enforcing laws and regulations, establishing the company charter, resolving issues raised in shareholders’ meetings, and maximizing shareholders’ equity.

Board responsibilities

The compensation of board members and supervisors is based on the regulations specified in the company charter and the level of participation and the value of contributions to the company operations in line with industry standards. If the annual accounts indicate a net profit, the Board of Directors shall propose remunerations for the board and the supervisors according to the regulations in the company charter and submit the proposal to the shareholders’ meeting for approval.

Board and supervisor remuneration

• For the information of Board of Directors’ remuneration, please refer to P.55 of Innolux Annual Report 2015

Board members shall continue to participate in training courses outside their professional competence every year to improve their knowledge and application regarding corporate governance. The relevant course topics include finance, risk management, operations, business, legal affairs, accounting, corporate social responsibility, internal control system, and financial reporting responsibilities.

Training

The rules governing the conduct of board meetings clearly stipulate an article related to avoiding conflict of interest of the board. Board members may only assert their point of view and reply to inquiries regarding items on the agenda which they themselves or the corporations they represent have a vital interest in, which in turn may harm the interests of the company. They may not participate in the discussions or the voting and shall avoid involvement in the said process. They shall also not exercise the voting rights of board members on their behalf. Board members shall self-regulate and shall not support each other.

Conflict of interest avoidance

• For the information of Board of Directors’ training, please refer to P.39 of Innolux Annual Report 2015

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Members of the Board

Title Name Gender Current position at Innolux

Chairman Hsing-Chien Tuan Male Chairman and CEO

Corporate director

Hongyang Venture Capital Co., Ltd.Representative:

Hong-Ren Zhuang Male ---

Hongyang Venture Capital Co., Ltd.Representative

Jeng-Wu TaiMale ---

Jia Lian InvestmentRepresentative:Jyh-Chau Wang

Male General Manager

Independent board director

Stanley Yim Male ---

Qi-Jia Xie Male ---

Supervisor

Ren-Kuang Lin Male －

Yi-fang Chen Female －

Yicheng VentureCapital Co.Ltd

Representative: Dechai Huang

Male －

•The Board of Directors was re-elected on 19 June, 2013 in the shareholders’ meeting.

•A total of 5 board members, including 2 independent directors and 3 supervisors, were elected.

• Age distribution of the Board of Directors：

Age group 50~59:4 persons; Age group 60~69:4 persons; Age group 70~79:1 persons

• A total of 18 meetings were held between 1 July, 2013 to 31 December, 2015. A total of 5 meetings

were held in 2015.

Note: In the 19th meeting of the sixth term Board of Directors held on 12 May, 2016, the Board of Directors accepted the resignation of Chairman and CEO Hsing-Chien Tuan for the reason of reaching retirement age. The Board approved the nomination of President Jyh-Chau Wang for the positions of Chairman and President, effective May 12, 2016 until the re-election in Shareholders’ Meeting to be held on June 24.

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Title Name Background

Independent Director Qi-Jia Xie Same with Chart Board of Directors

External expert Qi-Lin Wei

PhD in Economics, University of ParisChairman, Waterland Financial Holdings (current position)

External expert Guan-Jun Wang

Graduate Institute of Labor Science, Chinese Culture UniversityPart-time lecturer, Department of Labor Relations, Chinese Culture University (current position)

Remuneration Committee

To continually strengthen corporate governance and connect with international standards, Innolux has established the Remuneration Committee in August 2011. The Remuneration Committee, authorized by the board of directors, oversees the overall remuneration policy of board members, supervisors, and general and vice managers (including financial and accounting managers), faithfully exercise authority, and propose board reviews. The Remuneration Committee consists of one independent board director and two external experts with at least five years of work experience and relevant qualifications, sufficient for maintaining independence, professionalism, and fairness. In addition, professional feedback from external experts is considered as a method to understand the thoughts and opinions of stakeholders towards remuneration matters. Based on the Remuneration Committee Charter established by the company, the Remuneration Committee shall convene at least twice a year. Since establishment, the committee has convened 14 meetings as of December 2015.

Salary Income Ratio

Innolux’s annual salary income is composed of salary, various allowances, rewards, and employee bonuses from the surplus. The amount of employee bonus is based on the proposed allotment approved by the board. The remuneration of executives is based on regulations and approval by the Remuneration Committee. Related information has been appropriately disclosed in the company annual report.In 2015, the highest annual salaries were 7.7 and 35 times higher than the median salaries in Taiwan and China, respectively. The ratios of annual compensation raise % of the highest-paid individual to the median of annual compensation raise % for all employees in Taiwan and China were both zero.

Site/Year

Highest-paid compensation/median compensation for all employees

Highest compensation raise (%) / median raise (%) for all employees

Y2013 Y2014 Y2015 Y2013 Y2014 Y2015

Taiwan 11 26 35 22 0 0*

China 6 6 7.7 0 0.8 0*

*

• Both the fixed highest paid salary and median salary in 2015 remained unadjusted (0% adjustment).

• The median annual total compensation for all employees and the median of annual compensation raise % for all employees excluded the highest-paid individual.

• The compensation package of the highest-paid individual and all employees includes wage, management allowance, various bonuses, various allowances, employee dividends (including stock dividend and cash dividend), provision of dormitory or company vehicle, etc.

Transparent Information Disclosure and Investor Communication

Innolux is committed to provide investors with transparent information disclosure system and set up Investor Relations Department and Stock Administration Section to convey company’s operating philosophy and results and to meet shareholders’ best interests. In order to ensure that investors can obtain company’s messages correctly, timely and efficiently, we disclose all our financial information onto “Investors Relations” on our official website and on Taiwan Stock Exchange’s Market Observation Post System. Shareholders may propose their suggestions to the company in writing during the annual shareholders’ meetings as stated in the Company Law. Proposal to the company could also be made through investors and shareholder service hotline or e-mail as listed on company’s official website.

Investor Relations URL: HYPERLINK "http://www.innolux.com/Pages/TW/InvestorRelations_TW.html" Investor Relations e-mail address: HYPERLINK "mailto:[email protected]_"

Active Participation in Associations and Societies

Innolux voluntarily participates in related industry association and society activities such as Taiwan TFT LCD Association, Taiwan Electrical and Electronic Manufacturers’ Association, Taiwan Digital Television Industry Alliance, Chinese Society for Quality, ClimateChange.tw, the Allied Association for Science Park Industries, TCSF, the Chinese Institute of Environmental Engineering, and Environmental Management Accounting Network-Taiwan. Innolux has actively responded to industry opinions and demands, and has provided experience in the hopes of contributing to the healthy development of the panel industry.

Selected a Member of DJSI

In 2015, Innolux was incorporated in the DJSI World Index—an impressive achievement in its first-ever participation. Innolux’s accumulated performance in promoting corporate social responsibility and sustainable management has gained the recognition of international sustainable management standard. Among 22 evaluation criteria in 2015, Innolux acquired top scores in risk and crisis management, innovation management, brand management, environmental and social developments, social reporting, and health and safety in the industry group of ITC Electronic Equipment, Instruments & Components, leading international benchmark corporations from Europe, the United States, Japan, and South Korea.

Remuneration Committee Member

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Companies face numerous risks during their operation, including economic recession, regulatory changes, a more competitive market, damage to company reputation, and interrupted operation. Innolux has established a risk management mechanism to periodically review related financial, legal, climate change, water resources, supply chain, information security, and occupational safety and health risks. Relevant risk assessment and management measures are disclosed in Chapter 2.1.2, 2.1.3, 3.2.1.1, 3.2.3, and 4.4.1.

Financial Risk Management

The TFT-LCD panel industry is a business with short product cycles and extensive sales fluctuations. Based on conservative and surefooted principles, Innolux continues to focus on strategic objectives, such as optimizing financial structures, strengthening risk management, and maintaining stable growth of shareholders’ remuneration. The financial department assesses and analyzes domestic and foreign economic development trends, company operating conditions, and financial market development, formulates or adjusts hedging strategies, and executes risk management measures according to internal control systems and relevant operational procedures. The result of each risk management measure is periodically reviewed according to internal control mechanisms and relevant information is disclosed in accordance with laws and regulations, thereby increasing the transparency of financial information. We must respond rapidly to intense industry competition, as well as expand production and carefully assess related capital expenditure. This is to avoid overexpansion that can affect management efficiency.

Liquidity risk Asset and operation interruption risk

To prevent natural disasters or accidents from causing damage to company assets or interrupting operations, various risk management costs, insurance costs, and reserved quota have been assessed and insurances have been purchased to transfer related risks.

Information Security Risk Management

Innolux is committed to protecting the confidential information of the company, our clients, suppliers, and employees, as well as company intellectual property, which is the key of the competitive advantage. This is to ensure the overall benefit of the company, our clients, employee, and shareholders, and to maintain company competitiveness.

Innolux has established a private corporate mobile messaging platform (INX MApp) to prevent security risks when employees use public communication software. This platform also increases the overall information communication efficiency and achieves the objects of rapid response and decision-making for work-on-the-go.

Main security protection mechanisms of the mobile messaging platform:

(1) The organizational structure is integrated to the authorization system, which automatically removes permissions when personnel resign.

(2) A privatized mobile platform prevents leakage of information to public systems.

(3) The INX MApp can only be successfully installed after staff authentication.

(4) Group member control system prevents non-job-related personnel from acquiring confidential information.

To increase liquidity, fund allocation focuses on preserving capital and maintaining high fluidity. At the same time, the company is expanding long and short-term financial channels to diversify financing sources and prevent sudden financial market events from causing system liquidity risks. At the appropriate time, the company will use capital market investment tools to strengthen capital structure.

Credit Risk Market Risk

Set transaction method and credit transaction limits based on customers’ financial situation and credit rating. Periodically review accounts receivable payment status and collect on due payments. Analyze industry and customer operation status and respond with appropriate measures to ensure operation performances.

(A) Finance Department assesses the impact of exchange rate and interest rate changes on company assets and debts to establish hedging strategy and implement hedged transactions. Hedged transactions are primarily focused on avoiding real position risk and taking on financial products with simple structures that are highly fluid. The subjects of transactions are various financial institutions.(B) For foreign exchange rate risks, the company hedges by balancing asset and debt. Derivative financial product transactions engaged in by this company are in coordination with company operations and has the objective of hedging against exchange rate risks. In response to operation and investment activity needs, the company has borrowed floating debt to prevent financing cost uncertainties caused by market interest rate fluctuations. At an appropriate time, the company will commit to interest rate hedging financial products to lock interest rate risks.

2.1.2 Risk Management

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Business Continuity Management

Since introducing the ISO 22301 business continuity management system in 2012, Innolux has identified potential weaknesses through business impact analysis (BIA) and risk assessment (RA). In the event of a major business crisis, company operation can be maintained in a shortage of resources.

Overview of the Business Continuity Plan

• Confirm and rescue personnel

• Building interior/exterior and environmental safety

Incident management

• Internal/external communication

• Minimize impact on company

• Develop crisis elimination scheme

Estimate loss

Business continuation

Survive

• Establish short-term survival target

• Establish long-term survival target

Minimize impact on corporate image

Business recovery

Transform

•Recovery strategy• Resource competition

and allocation• Disaster cleanup and

recovery

Emergency response

Stabilize Communicate

Emergency response procedure Environmental safety

Business Continuity Exercising and Testing

The 2015 BCP factory site drills simulated earthquakes, infectious diseases, and compound disasters that result in fire hazards or water/material shortages. Subsequently, internal risk inventory programs were implemented together with business impact analysis (BIA) and risk assessment (RA) at each site to identify the weaknesses in company continuity. Next, the Advanced BCP project was promoted to expand the scope of simulation scenarios and connect relevant upstream and downstream networks in the disaster drills, thereby significantly improving survivability and minimizing risks of interrupted operations in the event of a major disaster.

Year BCP Scenario Implementation Site

Y2015

Earthquake(induced compound disasters such as fire and water/material shortages)

Jhunan (JOC), Tainan (TOC, Fab1, TAC, Fab5, Fab6, Fab7, FabC)

Contagious disease Foshan, Ningbo, Nanjing

Blackout Shanghai

Y2014

Earthquake Jhunan (JOC), Tainan (Fab3, Fab6, Fab7)

Fire Jhunan (JOC), Ningbo, Nanjing, Shanghai

Information interruption Ningbo

Contagious disease Foshan

!

Establish Business Continuity Plan and Backup Water Guideline

In response to natural disasters caused by climate change or catastrophes inflicted by human factors, Innolux has established a Business Continuity Plan (BCP) and Backup Water Guideline in 2015 to minimize harm to the company. According to these guidelines, each site shall simulate various severity settings, assess impacts, and develop exclusive recovery and relevant stabilization procedures to shorten recovery time. Together with subsequent BCP training, the impact on company production can be minimized.

!▲Business Continuity Plan

!▲Backup Water Guideline

Process

Strategy

Tactics

Activation

▲ Earthquake compound disaster exercise at Fab7 (Taiwan)

▲ Emergency response team competition in Ningbo (July 2015): guests include the Beilun Fire Brigade, Ningbo Administration of Work Safety, Administrative Committee of Ningbo Free Trade Zone, Yongbao Police Station, and peripheral businesses.

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Integrity and righteousness are the foundation of Innolux management. The company has established the “Innolux Code of Ethics for Directors, Supervisors, and Officers,” the “Innolux Code of Conduct for Employees,” and the “Supplier Corporate Social Responsibility Code of Conduct Operating Standard” as ethical references for the board, supervisors, managers, employees, and suppliers, strictly prohibiting corruption and bribery.

Anti-Corruption Policies and the Integrity Commission

To reinforce and promote anti-corruption policies, Innolux demanded in 2015 that all indirect employees in Taiwan and mainland sites must receive digital anti-corruption training. The program registered a 95% graduation rate and will continue to push the remaining trainees toward course completion.Innolux calls its suppliers for compliance with Innolux’s anti-corruption policies: Suppliers are required to sign the Innolux’s Supplier's Undertaking, which guarantees that suppliers will refrain from bribing or offering to bribe (i.e., soliciting, agree to accept, or accept) Innolux's employees. Suppliers shall not offer bribes or benefits to political parties or candidates either. If suppliers violate provisions of the undertaking with unethical behavior, it will be regarded as a severe breach of contract and Innolux will immediately terminate or annul all contracts and/or orders, and supplier’s qualifications.

Mailbox for Anti-Corruption Reporting

Innolux has established a mailbox for anti-corruption reporting ( HYPERLINK "mailto:[email protected]" [email protected]). Employees and external personnel can use this mailbox to make anonymous reports regarding misconducts. Innolux has established management units, investigation teams, and the Integrity Commission dedicated to managing, investigating, and resolving corruption-related cases. Investigation procedures shall be processed pursuant to the Innolux Standards for the Investigation and Management of Corruption Incidents. Moreover, investigations will be conducted in private, and after the investigation is completed, investigators will deliver an investigation report to the Integrity Commission for deliberation. If misconduct is determined, then internal punishment or recourse will be taken. In 2015, a total of two Integrity commission meetings had been convened and two reported incidents had been confirmed to violate company regulations. In 2015, 33 incidents had been reported, filed, and investigated in which 64% of the cases had closed by the end of the year. Pending cases shall be continually investigated.

Item Internal External Total Proportion

No. of reported cases 5 28 33 --

No. of filed cases 5 28 33 100%

No. of resolved cases 2 19 21 64%

Internal Audit Organization and Operation

The board of directors has established the Audit Office to implement various on-site audits or document reviews in the audit plan authorized by the board. The Audit office shall audit regulatory compliance, process design, system compliance, accurate financial reporting, operation performance and efficacy, and when necessary, provide various departments with recommendations for improvements. This is to assist the board of directors and managers in reasonably ensuring that internal control systems are being continuously and effectively implemented. Relevant audit results will be periodically reported to the board of directors. Furthermore, the Audit Office will supervise and assist each department in conducting their own annual internal control system assessment to realistically carry out company self-monitoring mechanism.

Organization of the Audit Office

Laws and Regulations

Internal control activities are audited in compliance with the “Regulations Governing Establishment of Internal Control Systems by Public Companies” stipulated in the Securities and Exchange Act. The types of operational cycles are categorized according to the control processes: sales, procurement, production, R&D, labor and wage, computer systems, finance, property, plant and equipment, investment, and non-operating cycles.

Dimensions of Audit

Mailbox for Anti-Corruption Reporting in 2015

Projects

Anti-corruption auditing is performed according to instructions from senior managers and facilitated by the requirements of the Integrity Commission’s Mailbox for Anti-Corruption Reporting to reinforce Innolux’s integrity and righteousness standards.

Operation

After assessing various processes and locations, operations are audited where deemed necessary in addition to those specified in relevant laws and regulations.

!

Audit Office

Shareholders' Meeting

Board of Directors

Chairman

General Manager

Supervisors

2.1.3 Ethical Corporate Management and Internal Control System


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CSR Management System

Innolux has established the CSR Department to conduct internal labor human rights, ethics, and environmental safety and health audits based on the specifications of Innolux CSR Management Manual, the latest Electronic Industry Code of Conduct (EICC), and customer audit requirements. The CSR Committee operates annual management review and links various function platforms to implement the CSR management system. The CSR Information System discloses company CSR management strategies and various key management indicators to strengthen communication between each site and functional departments.

CSR Training and Promotion

For new employees, Innolux has included the Innolux Code of Conduct in their training. The content includes the Company Code of Conduct, Employee Code of Conduct, and CSR policies and the promotion of actual accomplishments. In 2015, a total of 122,110 people were trained with a total of 79,298 hours. Furthermore, labor human rights and CSR concepts are added to assembly-line foreman and supervisor training to strengthen their awareness. In 2015, a total of 741 sessions of assembly-line foreman training were conducted, which totaled 32,923 hours. Relevant human rights training were also provided to security personnel. The human rights policies include the freedom to select occupations, prohibition against child labor, reasonable work hours, salary and benefits, humane treatments, forbiddance of discrimination, and freedom of association. Procedural trainings comprised duty-related principles and code of practice. The Taiwan and mainland sites have employed 682 security personnel and accumulated 682 training hours, registering a 100% rate of trained employees.

Innolux was selected as a top 30 corporation in 2015 by the Global Views Monthly for Excellence in Corporate Social Responsibility. The criteria included strategic planning, organizational structure, environmental performance, social performance, and industry-specific topics.

CSR Regulation Identification and Risk Assessment

To comply with relevant laws and regulations, Innolux established the Legal Requirements Management System in 2012 for control and management. In 2015, 221 laws and regulations have been collected related to labor rights and business ethics, covering sites in Taiwan and China. Based on the EICC, the list of laws and regulations is updated and identified every fiscal quarter. Additionally, risk assessments on labor rights and business ethics are performed every year to improve the items of medium and high risks.

Compliance with Antitrust Laws

To educate staff the company’s antitrust policy, various training and promotional methods are continually implemented (e.g., screensavers, computer boot screens, and e-papers).The company conducts key antitrust law training for supervisors higher than assistant managers and procurement, sales, R&D, marketing, and other employees who have direct contact with customers or suppliers. The supervisors and employees are required to sign the Letter of Commitment to Comply with Antitrust Laws and pass a minimum test score of 80. Additionally, the system will automatically notify staff members every two months to complete an antitrust law questionnaire survey for periodic management and control. In 2015, the antitrust training course has been added to recruit training to promote Innolux’s antitrust policies.

Customer Concerns Regarding EICC

Innolux’s 2015 customer audit regarding the implementation of the EICC continued to place emphasis on labor rights management and raise concerns over intern management at China sites. Innolux continues to conduct internal audit and periodically, actively monitors labor rights through relevant channels (i.e., the labor rights platform). Regarding environmental protection, a number of clients have shown concerns over the volume and management of greenhouse gas emissions. Innolux performs annual verification and implements measures to reduce greenhouse gas emissions. Through the carbon disclosure project (CDP) and CSR report, Innolux increases the transparency of carbon emission management.

Compliance with the Personal Information Protection Act

In 2015, Innolux has been promoting the Personal Information Protection Act and identifying relevant regulations to reinforce staff’s knowledge on the subject matter. In compliance with the Personal Information Protection Act, informed consents were duly revised regarding the collection of personnel data of job applicants and personal profiles of employees.To also stress the importance of protecting trade secrets to the company, all site employees across Taiwan and China are obligated to participate in educational trainings regarding the Trade Secret Act. Meanwhile, to increase staff’s awareness of regulatory compliance, the importance of protecting trade secrets is emphasized in e-papers and screensavers. Additionally, Innolux’s suppliers are required to conform to regulations for protecting trade secrets stipulated in the Supplier’s Undertaking, which they must sign. All businesses and units involved in information exchange are required to sign the undertaking to protect the trade secrets of the company. The company shall take actions or recourse in accordance with disciplinary measures for behaviors in violation of the protection of trade secrets.

CSR Internal Audit

A CSR internal audit has been conducted each year since 2010 to ensure the effective operation of the CSR management system. In 2015, emphasis has been placed on EICC v.5.0 and customer concerns, such as work hour, interns, and storm water management. Innolux owns seven production sites and has performed six onsite audits at Jhunan (Taiwan), Tainan (Taiwan), Foshan (China), Ningbo (China), and Shanghai (China), achieving an 85.7% audit rate. The audits identified 62 risk points, which will be systematically and continually improved by each competent unit.

Compliance with CSR Related Regulations

2.1.4 Basic Practices of Corporate Social Responsibility


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“Maximize Customer Satisfaction” is the ultimate goal of Innolux’s quality control. The sales, R&D, design, production, testing, after sales service, and feedback are all pursuant to relevant regulations, product safety specifications, customers’ needs, and articles stipulated in ISO 9001, ISO/TS 16949, ISO 13485, AS 9100, ISO 17025, and QC 080000.

Each year, Innolux establishes quality goals for its 11 major processes based on the quality condition of the previous year, customers’ quality requirements, and the industry’s quality management indicators. These goals then serve as a basis for departments and sections—including product manufacturing, quality control, administration, sales and so forth—to set their performance indicators for quality control. By holding regulator quality meetings and management by objective (MBO) review meetings, Innolux ensures that the quality control management system operates efficiently.

Customer Satisfaction Level

Innolux collects voice of the customer from feedbacks and messages taken from regular quality review meetings. When a decline in quality is noted, Innolux then determines improvement measures so as to fulfill its commitment to continuous enhance customer satisfaction.

Quality improvement events in 2015

1. Projects to “Quality Continuous Improvement” were directed by senior managers. Based on levels of urgency and importance, resources are allocated to issues that require long-term surveillance.

2. A quality management information platform was established to timely report customers’ important feedback regarding quality, including complaints, production defect rates, market defect rate, etc. This information is then transferred to INNOLUX Intelligent Portal to establish collective indicators for improvement.

In addition, Innolux values customers’ confidential information and privacy in products and services. Throughout the year 2015, Innolux did not receive any fines for violating product and service information labeling or any complaints in regards to privacy breach or information leakage.

In 2015, the First Cross-Site QCC Result Presentation was held. Twelve teams from the sites in Ningbo, Foshan, and Nanjing participated in the competition.

First place:“The Lei-Feng Circle” from the Stamping Plant in FoshanUtilizing QC and IE tools, with fishbone diagram, Gantt chart, flow chart, and brainstorming, the team discovered the hidden true causes bit by bit and implemented experimental countermeasures, saving approx. 605,186 RMB each year. The judges were very impressed by their achievements.

Second place:“The Salvation Circle” from the Print & Cut Plant in FoshanThe team carefully found and verified true causes, then provided foolproof countermeasures. They not only created roughly 560,000 RMB of benefit for the company, but also grew together as a team.

Third place: “The Outstanding Circle” from 3rd BEOL Plant in NingboThrough fishbone diagrams, the team evaluated the problems in heavy SMT process. Taking into account human factors, devices, materials, methods, and environment, they timely tracked the problems, made improvement, and achieved their objectives, saving roughly 556,404 RMB each year.

QC080000 AS9100

ISO13485

ISO17025

ISO9001ISO/TS16949

INX QMS

Customer Satisfaction Survey Analysis

3.634.00

3.55 3.36

3.81

3.41

3.724.04

3.643.80

4.15

3.62

Y2013 Y2014 Y2015

Comprehensive index

Quality index Technology index Service index

Participation in Quality Improvement—the First Cross-Site QCC Result Presentation

Notes:• Scoring method: scoring based on the ranking between Innolux

and other LCD panel suppliers.• 5: Excellent, 4: Good, 3: Satisfactory, 2: Unsatisfactory, 1: Very

Poor• The above questionnaire survey includes TV, notebook , and

monitor (display) customers.

2.1.5 Customer Satisfaction


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The Jhunan testing center has added nine new test items into its test for vehicle products in unique environment, including sun exposure, vibration, dust, gas corrosion, head impact, NVH (noise, vibration and harshness), finger friction, and voltage variation tests. These evaluations have been recognized by several well-known European car manufacturers.

With the exception of EMI testing, all other tests for vehicle products can be carried out in the testing center. This enables Innolux to correctly select materials and design products that meet specific environmental requirement in the early stage of product design, thereby efficiently avoiding waste of resources due to design change or product failure.

The testing centers will continue to professionally develop various testing technologies and enhance relevant testing abilities for vehicle products in accordance with the customers’ needs. Innolux aims to gain recognition from major car manufacturers in the world. Through onsite testing, Innolux is able to efficiently reduce the carbon footprint resulted from product transportation.

2015 Results

2016 Outlook

In 2015, Innolux achieved many great results including the development of 18 testing technology related to product components, materials, and environment and the 111 applications of new testing technologies in anomaly analyses. Moreover, 10 technology documents were uploaded onto Innolux’s Knowledge Management (KM) platform with detailed references for future coworkers to carry out these tests. In addition, documents on the KM platform are all under strict management and control to ensure that the technologies are preserved for future use and to prevent the leakage of key technologies.

The following are two examples of newly-developed testing technology being applied to anomaly analyses and product development.

1. Anti-fingerprint AS and anti-reflective AG coating—friction coefficient test Anti-fingerprint AS and anti-reflective AG coating—friction coefficient testIn order for touch panels to be anti-fingerprint and anti-reflective, special processes are required during production. “The friction coefficient testing method” was developed to immediately verify the tactile sensation of a film surface as soon as it is developed.

2. Electrical properties of thin films—TOD/BS-ITO antifriction testTOD (Touch on Display) is an exclusive embedded touch product developed by Innolux. It is equipped with outstanding touch quality and cost advantage. The ITO (indium tin oxide) film on the TOD panels serves a key role in the touch features. The successful development of the ITO film antifriction testing method allows Innolux to accurately and rapidly monitor the product’s touch features during design and mass production stages.

Quality Testing Center

Innolux’s testing center in Tainan site has been established for three years, and the testing center in Jhunan site also began operations in 2015. Both centers have successively developed multiple advanced testing technologies, established rapid and careful product verification mechanisms, and acquired industry-leading analytic abilities. We are enhancing product quality and speeding up the pace of product development to improve customer satisfaction.

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Financial Performance

With the effort of the management team, the company had a fairly good business result in 2015. The annual consolidated revenue amounted to NT$364.1 billion, gross profit amounted to NT$46.6 billion, operation profit amounted to NT$22.4 billion, net income amounted to NT$10.8 billion, and earnings per share amounted to NT$1.09 per share.

Items Y2013 Y2014 Y2015

Operating revenue 422,730,500 428,661,898 364,132,984

Gross profit (loss) 37,759,115 50,385,001 46,640,105

Operating profit (loss) 15,349,268 28,173,396 22,430,709

Non-operating profit (loss) -9,705,915 -5,639,056 -7,571,522

Net income (loss) 5,095,019 21,676,908 10,814,141

Earnings (loss) per share 0.57 2.31 1.09

Income tax expense (benefit) 548,334 857,432 4,045,046

Capital expenditure 18,370,343 20,526,552 24,511,490

Employee remuneration 38,023,935 46,106,336 46,113,875

R&D expenditure 12,265,650 12,177,083 14,404,490

Total assets (year-end) 508,200,885 482,516,555 387,442,336

Total capital (year-end) 91,094,288 99,545,364 99,532,372

Total market value of equity (year-end) 103,392,017 153,299,861 98,935,178

Government subsidies 353,344 222,933 271,746

Expenditure on pensions 1,769,124 2,010,717 2,294,465

Unit: NT$ 1,000 (except when earnings (loss) per share are in NTD)

Consolidated Financial Report

Y2013 Y2014 Y2015

103,392,017

Market value of equity – year-end total

153,299,861

98,935,178

508,200,885

Y2013

Total assets (year-end)

91,094,288

482,516,555

99,545,364

387,442,336

99,532,372

Y2014 Y2015

Total capital (year-end)

Note: Innolux adopted the International Financial Reporting Standards (IFRS), International Accounting Standards, the Interpretation Statements, and the Regulations Governing the Preparation of Financial Reports by Security Issuers acknowledged by the Financial Supervisory Commission for compiling the consolidated financial report.

Unit: NTD 1,000

Unit: NTD 1,000

18,370,343

Y2013

12,265,650

20,526,552

12,177,083

24,511,490

14,404,490

Y2014 Y2015

Capital expenditure R&D expenditure

Unit: NTD 1,000

2.2 Operational Performance


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Market Competition

The TFT-LCD panel industry is competitive. Countries that invested in the industry are, as listed by the order of surface area produced, South Korea, Taiwan, China, and Japan. Operating a panel business in Taiwan was even tougher in 2015. Thus, in November of the same year, Innolux urged the negotiations for Cross-Strait Goods Trade to speed up the agreement on duty-free panels so as to strategically increase the market share of Taiwanese and Chinese panels in mainland China and maintain the win-win advantage held by supply chains on both sides of the strait.In response to severe market changes, Innolux will continue to optimize its production size, product design ability, quality yield, delivery operations management, and financial stability to enhance competitiveness.

Market Share

According to the statistic of IHS/DisplaySearch report, until Q3 2015, Innolux is the world’s third-largest LCD panel supplier. The market share by product application is as below:

Market Analysis

Region2015 Sales amount(Unit: NTD 1,000)

Proportion

Domestic 103,617,666 28.46%

Export

North America 21,274,692 5.84%

Europe 24,000,586 6.59%

Asia 213,401,351 58.61%

Other 1,838,689 0.50%

Subtotal 260,515,318 71.54%

Total 364,132,984 100%

R&D and Product Planning

The R&D organization of Innolux is divided into Technology Development and Product Development Departments. In order to continue leading the industry, Innolux has invested a considerable amount of R&D resources, employing 4,515 R&D staff members, which accounts for 5.6% of its total employees worldwide. In 2015, Innolux invested a total of NT$ 14,404,490,000 in R&D, which accounts for 3.96% of the operating revenue in 2015.

Taiwan47%

China30%

United States16%

Other7%

2015 Patent Distribution

Innolux has obtained more than 650 patents worldwide in 2015, and has accumulatively gained 8,600 patents around the world.

Product Proportion in Operations

Y2014

40.3%

4.1%

18.0%

20.2%

16.2%

44.3%

1.3%

15.3%

19.4%

16.3%

48.4%

0.6%

10.7%

18.8%

13.7%

55.8%

1.0%

Y2015Y2013Y2012

21.4%

20.8%

13.4%

R&D and Intellectual Property Empowerment

Through close cooperation between the Intellectual Property Department and the R&D Department, Innolux has continuously improved the intellectual awareness of R&D personnel and enabled them to plan for intellectual property in advance. The intellectual property personnel not only master market movement, but also develop high-value patents, such as the popular UHD panels and the advanced technology of IGZO and OLED panels. Innolux has prepared and completed the planning of patents for these panel displays in order to build a sound and solid intellectual wall. Furthermore, Innolux provides a complete and generous patent reward system to encourage its employees to continue improve and propose innovative technology.

8,682,421

Y2014 Y2015Y2013Y2012Y2011

10,751,03812,265,650 12,177,083

14,404,4901.79%2.28%

2.90% 2.80%

3.96%

R&D Investment By Year

R&D Investment, Unit: NTD 1,000 % of revenue

Application Global market share Global ranking

LCD monitor panel 18.3% 2

LCD TV panel 19,1% 3

Notebook panel (incl. tablet) 17.4% 3

OtherLarge modulesNotebook modules

Medium size modulesLCD monitor

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Item Description

Large panels

TV:‧ Successfully developed the 65” 8K4K (7680 x 4320) ultra-high definition (ultra HD) and high color

gamut television panel, which is scheduled for mass production in the second quarter of 2016.‧ Successfully developed the 100” 4K2K large size television panel, which is the largest 4K2K HD

television panel produced by a Taiwanese corporate. It is scheduled for mass production in the first half of 2016.‧Successfully mass produced all series of high color gamut 4K2k models with 100% DCI coverage.

MNT:‧ Developed a series of high energy efficient products, with each size consuming 30% less power on

average and meeting the regulations of Energy Star 7.0 as well as China’s energy-saving standards.‧Developed the ultra-wide color gamut panel with an NTSC coverage as high as 95%.‧Developed sharp ultra HD 4K2K products.

NB:‧ Developed high saturation products, which elevates the color gamut to 94% and draws closer to the

requirement of 100% sRGB.‧Developed and mass produced narrow border (<3.5 mm) models.‧Developed automotive assembly models that greatly reduce the labor and cost on the assembly line.

Medium and small panels

‧First in the industry to provide a-Si Full HD mobile products to enhance price competitiveness.‧ Alongside the development of new plastic materials and the enhancement of process capability, the

size of cell border was greatly reduced to improve product competitiveness.

Touch panels

‧ Developed the new Inno-touch technology to meet with the trend of developing affordable electronic products with touchscreen.

‧ Developed the integrated TOD (Touch on Display) technology to elevate the competitiveness of portable electronic products.

‧ Developed the integrated TID (Touch in Display) technology to make thinner portable products with finer tactile sensation.

Special application

‧ Launched 21.3” to 30” (AAS 5, 6, 10, 14 megapixels) medical LCD panels with the new 10 bits driver technology and a highly efficient, wide color gamut color filter. A machine with both color and monochrome options allows for more precise medical judgement and better efficiency.

2015 Innovative Breakthroughs

The Ministry of Economic Affairs regularly gives out the “Award for International Trade” to recognize corporates that actively expand export businesses and their performances in foreign trades, foreign exchange, and the development of emerging markets. Innolux’s foreign trading performance reached a new high in 2014 with a total of 7,969.69 million USD and received the Award for International Trade for the fifth consecutive year in 2015.

!

Panel Business is a Strategic Industry that Fuels the Export Economy of Taiwan

Technology Roadmap

The 8K4K (resolution of 7680 x 4320) panel has the highest definition among the world’s television products. It greatly improves the issue of choppy images. In response to the plan that the 2020 Tokyo Olympics will be broadcasted with 8K resolution, Innolux has planned a mass production of 65” 8K4K panels in the second quarter of 2016, with the first batch targeting at the Japanese market. In order to meet the technology demands of the consumer market, Innolux intends to speed up the development of next generation display technology, such as the technology strengths of flexible, OLED, and enhanced vehicle displays as well as medical sensors and displays that have huge market growth potentials.

2016 Outlook

Business Development Planning

In addition to continuing R&D of advanced flat panel display technology, enhancing process capability, and optimizing existing product capacity, Innolux also invests appropriate R&D resources in the new display technology. In particular, Innolux is cultivating the ability to develop embedded integrated touchscreen technology, ultra-narrow borders, ultra-thin design, ultra HD panel, curved panels, niche applications and products, etc., so as to take an early step into the brand new monitor application industry and to optimize strategical plans. Moreover, this will enable Innolux to emphasize the value of chain integration and the development of products with high added-value, simultaneously maintaining the competitiveness of product price and specification and providing customers more value added solutions and services, as well as high quality visual experiences.

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Innolux’s Eye-Catching New Products

At Touch Taiwan 2015—Touch Panel and Optical Film Exhibition, Innolux presented a series of innovative, leading ultra-HD display panel, as well as a series (85, 75, 65, 58, 50, and 40”) of 4K panels and integrated touchscreen solutions.

Advanced Mobile Device Display Technology

With the growth of wearable devices and IOT, Innolux introduced the HD round panel and advanced smart phone panel equipped with the TODTM touch technology and the patented on-cell touch technology.

• The 1.3” high color gamut and HD round panel satisfy the requirements of smart watches and wearable devices.

• The 1.5” round transflective wearable device enables low power consumption and high definition. With its transmissive mode, items are clearly displayed and readable under the sun in outdoor environment.

Vehicle Display Panels

The development of color screens focuses on large size, high definition, wide viewing angle, high contrast, and high color saturation features. The color screens also have characteristics of high weather resistance and low reflectivity. The following products were displayed:• The 8” Central Information Display

(CID) with high contrast and high color purity.

• The 10.2” Rear Seat Entertainment (RSE) with capacitive multi-touchscreen that passed the head impact test of the world’s top car manufacturers.

• The 12.3” Automotive Display with high brightness that can replace the traditional analog dashboard.

Touch Taiwan 2015 Annual Panel Festive

2015Taiwan Excellence Award

•100% NTSC High Color Gamut 4K2K LCD TV Module—Taiwan Excellence Gold Award•15.6” HD TOD Touch Total Solution—Taiwan Excellence Award•5.5” a-Si FHD Ultra High Resolution Integrated Touch Display—Taiwan Excellence Award•6.8” FHD Ultra-Thin Integrated Touch Display•72% NTSC High Color Gamut 4K2K LCD—Taiwan Excellence Award

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Site 2015 Promotions Achievements

Taiwan

‧ Established automated production plants to ensure the control of Innolux’s own technology and to achieve

equipment assembly with high efficient and low cost.

‧ Successfully developed a P2* automated integrated assembly line for notebook (NB) modules that involves backlight

assembly, panel coincidence, and inspection. The P2 line was later optimized and upgraded to become a P3 line.

‧Developed the first P3 line for mobile phone modules and the first P1 line for vehicle modules.

China

Ningbo

‧ Introduced two P1 integrated production line, a breakthrough from having no P line project to the implementation

of the P1 lines.

‧ Enhanced the equipment stability, effectiveness, and the utilization rate introduced back in 2014 and optimized

existing system, preparing for the introduction of Industry 4.0.

Foshan

Established the AGV R&D Center with an aim to build an integrated service line involving self-R&D, design of AGV,

assembly, trail operation, and delivery of finished products to the plants.

Executed improvement projects of factory automation to enhance factories’ satisfaction of automation.

Nanjing

‧ Prepared for automated assembly machine, light on test (LOT), automated panel inspection (API), potting machine, etc., so as to reduce labor by increasing utilization rate of machines.

‧ The first self-assembled overhead line, One Tome Program (OTP), coating machine, etc., successfully began to operate online.

Shanghai

‧ Completed seven integrated lines for FPC/IC mounting, inspection, and reinforcement that reduced 50% or labor and doubled the production capacity.‧ Implemented automated upload system of factory production information. The system analyzes and predicts

machine or product failures to realize Electronic Data Collection (EDC) and introduce Electronic Data Analysis (EDA) as a smart manufacture plant of Industry 4.0.

In 2015, the Ningbo site has become the center of automation equipment design and manufacturing in China. In response to changes to personnel requirement and organizational structure brought about by automation, there has been a greater need for mechanical, electronically controlled automation development, and application talents. The Ningbo site collaborated with Hangzhou Dianzi University in a “3+1 Excellence Project” that aimed to cultivate automation talent. The project involved recruitment of junior students as interns to study practical courses in the company for one year. Student performances were evaluated to determine intern positions in the following year. This project is to foster seed talent and achieve the integration of industry, academia, and research to build a talented force for industrial development.

!

!▲ Presentation to students of Hangzhou Dianzi University

by Ming-Cheng Wang of Innolux’s Automation Division

The Promotion of Automated Industrial-Academic Collaboration in Ningbo Site

Automation Promotion

Innolux actively promotes automation in order to upgrade manufacturing on both sides of the strait. The promotions were carried out on the sites in Taiwan and China, with the outcomes becoming gradually more visible. In 2016, Innolux hopes to continue optimize the system by reproducing the achievements of Taiwanese sites in China and extending Chinese sites’ automated logistics to other sites.

!

*P1: 40% or more automation; P2/3: 80% or more automation; P3: product design using plastic spray instead of plastic adhesive.

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The suppliers have always been important partners in Innolux’s operations. Our CSR promotion also considers the participation of the overall supply chain. In addition to the quality and delivery, we strongly urge our suppliers to value human rights, environmental protection, as well as health and safety, improving the suppliers’ environmental, social, and governance (ESG) management to mutually establish a sustainable supply chain.

1-Supplier Management 2-Supplier Audit and Guidance3- Supplier Management System

Certification

Supplier Quality Management

Innolux established vertical and horizontal integration systems for supply chains covering upstream raw materials, downstream components and materials, and semifinished products. Through supplier evaluation and product development material assessment schemes, the suppliers are evaluated each month based on quality, cost, delivery, technology, etc. Those who do not meet the standards will be given assistance and guidance to improve. However, if no visible improvements are made, said suppliers would be removed from the qualified supplier list. Innolux’s selection criteria for suitable new suppliers are based on suppliers’ finance, technology, quality, price, and green energy aspects.

Four Major Aspects of Supplier Management and Guidance

Organize monthly/quarterly quality meetings with suppliers based on material properties or important components. Use an innovative product risk assessment platform (NUDD) and assess production yield for newly developed parts to lower failure cost after mass production. Furthermore, supply chains for in-vehicle and mobile phone products were added in 2015, and a preferred supplier list (PSL) was established and included in the material evaluation management.

Draft and conduct annual on-site audits based on material properties. Suppliers must propose improvement solutions for relevant deficiencies to meet Innolux’s requirements.

Urge suppliers to protect the environment and improve safety and hygiene. All new supplier applicants are required to obtain international quality, environmental, and occupational safety and health certifications, such as ISO 9001, ISO 14001, and OHSAS 18001. Applicants who have not obtained such certifications must propose plans to do so.

*Data include all module suppliers for TVs, notebooks, monitors, and touch panels.

Supplier Rating

Y2014 Y2015Y2013Y2012

26%

68.1%

23.3%

72.4%

22.2%

74.3%

16.5%

86.1%

D: score ＜ 65 (listed for guidance and quantity adjustment)

C: 85 ＞ score ≧ 65 (listed for guidance)B: 95 ＞ score ≧ 85

A: score ≧ 95,

4-Supplier Rating

Conduct monthly raw material supplier assessments for shipment failure rate on arrival, line rejection rate, and customer complaint categories. Innolux performed guidance and audits for C and D grade suppliers in 2015, which increased 2015 supplier qualification rate by 1.1 % compared to that in 2014.

2.3 Supply Chain Management

2.3.1 Supply Chain Risk Management


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Supplier CSR Risk Management

Innolux has formulated the Supplier Corporate Social Responsibility Code of Conduct Operating Standard based on the EICC Code of Conduct. In April 2015, EICC 5.0 was publicized and Innolux immediately inspected and adjusted supply chain management documents to ensure the suppliers follow various labor, ethics, environmental, and health and safety regulations.

Innolux requires all new suppliers to sign the “Supplier’s Undertakings” as a promise to follow EICC regulations. For existing suppliers, Innolux will conduct risk assessment in social, financial, and environmental aspects of the key component suppliers. Audit control will be implemented for suppliers that receive high risk results. Suppliers with actual and potential negative deficiencies will be monitored and asked to improve. Suppliers are required to provide improvement plans for items that fail to meet the requirement one month after receiving the audit report. A supplier who fails to efficiently lower the risk during the counseling period will be blacklisted for corporation. Since 2010, when risk assessment was first introduced, the number of audited suppliers has accumulated to 583 as of 2015. Until now, no supplier has been blacklisted due to relevant CSR issues.

In 2015, risk assessments for 178 key suppliers were carried out, involving about 340 thousand personnel. Six suppliers were identified to have high risks. Due to adjustments of annual operation periods, audits for suppliers evaluated to have high risks will be postponed until 2016.

NOTE: SAQ STANDS FOR SELF ASSESSMENT QUESTIONNAIRE. IT IS A DETAILED QUESTIONNAIRE FORMULATED IN ACOORDANCE WITH EICC REQUIREMENTS TO FURTHER UNDERSTAND SUPPLIERS’ COMPLIANCE WITH THE FIVE ASPECTS OF EICC REQUIREMENTS.

617

55100

High risk

Medium-high risk

Mediym risk

Low risk

Number of Suppliers

Number of Suppliers

77

Y2010

16

Y2011 Y2012 Y2013 Y2014 Y2015

11097

178

105

Number of supplies with CSR risk assessment

2015 Supplier CSR risk assessment

3837


3837

Around 91.62% front-end materials suppliers are from Taiwan in 2015. For back-end materials, around 49% suppliers are China local. The slight increase in demand of high-end display in 2015 led to higher dependence on special application suppliers outside China region.

Front-End Materials

Target6%

Others (chemicals, alignment film, gases, etc.)13%

Glass48%

Liquid crystal20%

Photoresist13%

Back-End Materials

Optics46%Electronic

components39%

Mechanical materials7%

Touch modules5%

Packaging materials3%

Local Procurement

Innolux’s production is concentrated in Taiwan and China. Its supply chain mainly comprises of machine equipment, key components (such as glass substrates, color filters, polarizers, backlight modules, driver ICs, and printed circuit boards), materials, energy resources, and transportation suppliers and relevant contractors. To shorten material preparation time and to speed up development of new products, material localization is implemented for both front-end and back-end productions.

Key Component ratio

2.3.2 Sustainable Supply Chain

1 Front-end materials refer to resources and materials required in early stage of TFT, CF, and LCD productions; mainly used in Taiwan sites.

2 Back-end materials refer to components and materials required in LCM module production; mainly used in China sites.

Y2015

Y2014

Y2012

Y2013

91.6% 8.4%

71.1% 28.9%

87% 13%

88.9% 11.1%

Local (Taiwan)

Non-Local (Japan, South Korea, China, United States)

Taiwan (Local)91.62%

Japan2.92%

South Korea1.86%

China3.34%

United States0.26%

Japan0.67%

South Korea2.83% others

0.65%

China (Local)48.98%

Taiwan46.87%

Y2015

Y2014

Y2012

Y2013

82% 18%

91% 9%

88% 12%

74% 26%

South Korea0.98%

Japan0.54%

others3.26%

Taiwan (Local)82.23%

China12.85%

United States0.36%

Y2015

Y2014

Y2012

Y2013

49% 51%

51% 49%

53% 47%

56% 44%

Y2015 Taiwan Sites Taiwan Site by year

Y2015 China Sites China Site by year

Y2015 Taiwan Sites Taiwan Site by year

Local (China)

Non-Local (Taiwan, Japan and others)

Local (Taiwan)

Non-Local (Japan, South Korea, China, United States and others)

Procurement Amount Ratio

Front-End Materials

Back-End Materials

3837


3837

Procurement Risk Management

Shortage Risks Disaster Risks

Innolux has long-term strategic partnerships with the suppliers and regularly negotiates material preparations with them. Base on the required preparation time for each material and component, sufficient storage has been built to ensure smooth operation of the supply chain.

To prevent shortage risks or single sourcing, product and a material development assessment is used to select two or more qualified suppliers. If single sourcing occurs, a new qualified supplier will be chosen based on product needs through selection and evaluation process to ensure sustainable supply.

To prevent natural disasters or uncontrollable factors from affecting the stability of material supply, Innolux has set three criteria for its suppliers. A supplier with the following characteristics are given higher priority:

1. Has factories in at least two different places, and if possible, in different counties or cities

2. Has at least two sources of raw materials (Innolux requires its supplier to have two sources of material selection).

3. If the aforementioned conditions cannot be fulfilled, the suppliers are asked to increase their stock storage so as to meet all customer needs.

For example, when the U.S. West Coast Port labor strike in February 2015 prevented a silane shipment from leaving port, another supply was immediately provided by vendors in Asia. Another example was the one-month shutdown of Korean suppliers due to explosions in their factories in May 2015. Supplies from non-Korean vendors were instantly provided to avoid delaying product delivery to customers.

In the event of a disaster, Innolux will actively assist suppliers that require supports. At the same time, Innolux will immediately investigate the suppliers’ plant facilities, personnel safety, upstream material supply, shipping of finished products, and other damages. The information will be consolidated into a report that serves as a reference for relevant units to make appropriate responses. Depending on post-disaster damages, emergency resource allocation meetings may be organized in accordance to adjust supplying amount of each supplier. When necessary, new suppliers will be evaluated for future support to the supply chain. Current suppliers will also be asked to form a reporting mechanism so that Innolux can confirm the suppliers’ recovery progress and supply status.

Supply Chain Communications and Experience Sharing

In order for suppliers to fully understand Innolux’s green product policies and concepts, annual supplier conferences are held every year to illustrate the promoted topics in detail. The experience sharing and discussions have grown more and more in depth every year. Participations in green activities help Innolux and its partners to achieve mutual growth.

2015 Annual Supplier Conference

① Greenhouse gases inventory

① Restricted substance management② Greenhouse gases

inventory③ Product carbon

footprint inventory

① Restricted substance management

② Low carbon 3C management③ Greenhouse gases

inventory④ Digital education

course

①Conflict minerals inventory② Restricted substance

management③ Low carbon 3C

management④ Greenhouse gases

inventory⑤Digital education course

①Conflict minerals inventory②Restricted substance management③Low carbon 3C management④Greenhouse gases inventory⑤Material flow cost accounting⑥Digital education course⑦Introduction of iGCD system⑧ Regulat ions and promotions of

volatile organic compounds

First Conference (March)Conferences were held in Tainan, Ningbo, and Foshan sites. The conference mainly focused on explaining the introduction of Innolux’s brand new iGCD (Integrated Green Component Database) system, promoting material flow cost accounting, and introducing a product carbon footprint system.

Second Conference (July)Conferences were held in Tainan, Ningbo, and Foshan sites. In response to concerns regarding vehicles products and components releasing volatile substances in an overheated car, the conferences covered topics such as Innolux’s green product specifications, explanation on containing restricted substances, introduction of relevant laws and regulations, and responses to advanced issues relating to the introduction of the iGCD system. Furthermore, Innolux specifically established and promoted regulations on volatile organic compounds. It also invited Bureau Veritas, a global company in testing, inspection, and certification services, to participate in the conferences and assist in detailed explanations.

2.3.3 Green Supply Chain

Taian

Y2011 Y2012TaiwanNingboFoshan

Y2013TaiwanNingboFoshan



Supplier Meeting Topic by year

4039


4039

Supply Chain Resource Utilization Enhancement Plan

In 2015, Innolux initiated the “Material Carbon Reduction Promotion Project” with its suppliers, sharing its internal implementation experiences and methods to suppliers who are willing to participate. The project has three stages—model inventory, group inventory, and annual inventory. Innolux plans to gradually increase the number of inventory suppliers until eventually reaching 60 suppliers by 2018. Through inventorying suppliers’ material flow cost accounting (MFCA) database, Innolux hopes to establish a cross company 3R Recycle Circulation platform, realizing a circulating, sustainable eco-supply chain.

Waste Recycle Circulation Platform

Raw Material Material

Natural Environment

SupplierProcess

ManufacturerProcess

SellerProcess

Consumer

Product Product

Reuse Waste(Manufacturing)

Reduce Source(Source End)

Sell Waste(Back End)

recycle reuse reduce

Material Loss or WasteRecycled Materials or Products

In 2009, Innolux began conducting the supplier greenhouse gas inventory. In 2012, suppliers were selected based on their CDP questionnaire response and procurement ratio to participate in low carbon supply chain promotions. In 2015, inventory subjects were suppliers who account for 80% of the procurement total. Suppliers must complete an ISO 14064-1 verification (or publicly disclose the amount of greenhouse gas emission), a supplier carbon management risk form, a greenhouse gas reduction plan, and a water usage report. Based on the inventory and calculation of the suppliers’ overall company emission data, the 2015 inventory found that the suppliers’ 2014 contributions of carbon reduction totaled to 125,541 tCO2e, which exceeded the goal of 124,000 tCO2e in reduction. The objective for 2016 is to reduce carbon emission by 130,000 tCO2e.

Year Inventory SubjectsGreenhouse Gas Inventory Suppliers Inventoried for

Water Usage Key Suppliers CO2 Reduction Contribution (tCO2e)

2015• Suppliers that account for 85% of expenditure• Suppliers of materials with high carbon emissions • Suppliers inventoried in 2014

60 125,541 57

2014• Suppliers that account for 80% of expenditure• Suppliers of materials with high carbon emissions • Suppliers inventoried in 2013

51 112,806 43

2013 • Suppliers that account for 70% of expenditure• Suppliers of materials with high carbon emissions 43 88,622 Non-applicable

2012 •Suppliers that account for 60% of expenditure 38 59,009 Non-applicable

Suppliers’ contributions to carbon reductionParticipating suppliers

59,009

Y2015 Y2016 Y2014Y2013Y2012

88,622112,806 125,541

130,00038

4351

60

3.5%vs.2015

Y2016 Supplier inventoried:• Suppliers that account for 87%

of expenditure.• Suppliers of materials with

high carbon emissions.• Suppliers inventoried in 2015.

Suppliers Greenhouse Gas Inventory

2016 Target

Continuous Promotion of Low Carbon Supply Chain

4039


4039

Conflict Minerals Management in Responsible Procurement

Electronic component suppliers

Mechanical component suppliers

Front-end material suppliers

Packaging material suppliers

483 suppliers

Inventory rate 90%

Product Carbon Footprint Database

The Product Carbon Footprint inventory system was officially launched in 2014. The systemic management of suppliers’ carbon emission data may be integrated into innovative product design and development in the future to provide new options of low-carbon materials in design stage to indirectly achieve the goal of reducing greenhouse gas emission. In 2015, the suppliers of representative products were selected for material inventory. As of today, there have been 74 suppliers participating and providing their materials’ carbon emission data to Innolux’s database. The company will continue product carbon emission inventory to build a complete database, implementing Innolux’s policy of low-carbon green product management.

As of 2011, Innolux has strictly banned the use of “conflict minerals” obtained using armed forces or from invasion of others’ rights . This ban is incorporated in the Restricted Substances Management Standard. The company will screen high risk component suppliers, inventory their metal’s place of origin, and require suppliers to sign a guarantee not to use conflict metals. In 2015 August, the Conflict-Free Sourcing Initiative (CFSI) was publicized with a new Conflict Minerals Reporting Template 4.01a. To meet the requirements of international organizations and its customers, Innolux restarted investigations using the new template and completed surveys for 483 suppliers in 2015, attaining an achievement rate over 90%.

166185

6369

4241


4241

●Fully Completed ◆ Partially Completed

Green Vision

Major Environmental Issues

Major IssueMid- to Long-Term

Approaches and GoalsProgress in 2015 Key Focuses in 2016

Energy Resources Management

Actively developingnew technologiesto improve energyresource efficiency

● Foshan site won the “Carbon-Value—Green Responsibility Award”.

● Tainan site (Fab2) won the “Energy Saving Carbon Reduction Outstanding Performance Award”.● Self-established solar power generator produced

1,298,338 kWh in 2015; which is 14 times of 2014.◆ Goal: Electricity consumption (TFT-LCD stage) slightly

increased by 0.4% since 2014 to 66.8 kWh/m2, failing the target of 3.5% reduction.

Achieve an energy reduction of 2.5% (vs. 2015) in the TFT-LCD stage, and evaluate the extension of solar power generation in Taiwan and China sites.

Greenhouse Gas Emissions and Carbon Management

Green harmony; become a zero-carbon enterprise by 2050

● Continued efforts in carbon reduction to become Taiwan’s leading enterprise in carbon credit acquisition (16 million tons).● Installed 8 additional combustion local scrubbers,

achieving an overall FC reduction of 2,139,043 tCO2e.◆ Goal: The emissions of FCs is 0.104 MMTCE, which is a

reduction of 15.4% of 2014 and outperforms the target 0.116 MMTCE.

● China sites reduced their GHG emissions to 0.116 MMTCE.

• Install more combustion local scrubbers to meet the FC emissions target 0.112 MMTCE

• Reduce the GHG emissions of the China sites to 0.106 MMTCE.

Pollution Prevention

Achieve optimal resource reutilization and reduce environmental impact

● The average processing efficiency of VOCs across the Taiwan sites achieved 94.5% (statutory processing efficiency = 90%).◆ Goal: The overall waste intensity in the China sites was

1.4723Kg/m2, failing the target discharge of 1.4004 Kg/m2 .

• Achieve the overall waste intensity 1.4353Kg/m2 in the China sites.

• Promote advanced waste reduction schemes in the Taiwan sites to reduce organic/inorganic sludge and SRS residue.

Water Resources Management

Actively develop new technologies to enhance water resource efficiency

● The Taiwan sites recycled 235.95 million tons of PCW for an effective PCW recycling rate of 94.2%.

◆ Goal: Water withdrawal (TFT-LCD stage) reduced by 5.8% to 0.357m3/m2, which is very close to the goal of 6%.

Achieve a water reduction of 5% (VS. 2015) in the TFT-LCD stage.

Green Product Management

Promote green value chains and establish low-carbon supply chains

● Introduced the “Material Flow Carbon Reduction Promotion Plan” to the suppliers to develop a closed-loop eco-supply-chain that achieves sustainable utilization.

● Established a product carbon footprint database to audit the carbon emission of materials provided by the suppliers (74 suppliers have joined).

● Goal: Extend the scope of annual supplier inventory (top 85% by transaction amount) and achieve a reduction of 124,000 tCO2e.

• Goal: Extend the scope of annual supplier audits (top 87% by transaction amount) and achieve a reduction of 130,000 tCO2e.

• Recruit 60 suppliers into the “Material Flow Carbon Reduction Promotion Plan” by 2018.

• Continue product carbon emission inventory to create a more comprehensive product carbon footprint database.

Chapter 3 Green Vision To Earth, with L.O.V.E.

In the Environmental dimension, we care the environment by green vision “To Earth, with L.O.V.E.” through green living, green operations, green value chain and green environment to spread corporate influence on the sustainability of the earth.

4241 4241

ch3 - Green Vision To Earth, with L.O.V.E.

Green Living Activities

Innolux comprehensively enforces the “Air-Con 26” regulation. The air-conditioners in meeting rooms are also set to automatically deactivate after 1 hour. Moreover, the company has also offered shuttle buses across the sites and train station and free employee commuting bus for each shift. Elevators are re-set to reduce the lower floor operation and site convenience stores no longer sell bottled water. The Company also encourages “think before printing” and “Red-Meat Free Day” twice a week, and irregularly arranges green activities to encourage employees to adopt green living.

Innolux Earth Day—Taiwan Site

The Innolux Education Foundation held the “2015 Innolux Earth Day—New Green Living” on 18 April in the Taiwan sites, attracting the attendance of roughly 1,350 employees and their family members. To continue the tree-planting activity held in the previous year, True Green Chinese Elm seedlings were planted in areas representing the five major continents of the world to aspire environment protection in Taiwan. The event was also divided into three major themes, including the “Grassland Lecture,” “Farm Product Game Area,” and “World Cinema.” The secretary-general of the Homemakers United Foundation, Lai Hsiao-Fen, was invited to discuss food safety during the Grassland Lecture activity, which was extremely useful for everyone present. The “Innolux Earth Day” event has been held for seven consecutive years, attracting over 10,000 participants to love and care for the earth.

!

Low-Carbon Marathon to Celebrate the Launch of Three Major Projects

2015 is a memorable year for the Foshan site. It celebrated the launch of three major construction projects in August, including the activation of the 190,000 m2 solar-grid generation system, estimated to help reduce 12,467 tCO2e a year. In addition, the completion of the east gate and the 654-m sheltered corridor has greatly benefited the employees working at the Foshan site. This year’s event celebrated these achievements in the form of a marathon, attracting 480 enthusiastic runners to join. The event also highlights the progress of Innolux in fulfilling its healthy, low-carbon goal.! !

12th March Tree Planting Activity

The warm Spring of March is perfect for planting trees. Trees assist in reducing carbon dioxide in the atmosphere. Innolux’s Nanjing site arranges a tree-planting event each year to do its part in environmental protection and add greenery to the workplace. Participants left their names on the trees in remembrance of upholding green concepts. Two hundred and seventy people participated in the event.

!

Dragon Boat Festival Creative T-Shirt Show

Innolux colleagues reused discarded items, such as poker cards, newspaper, and plastic bags, to create artistic apparel. Models displayed the eco-friendly and fashionable items as they walked down the stage. The event not only demonstrated the creative vitality of Innolux employees in the Nanjing site, but also fully highlighted the environmental concepts of “To Earth, with L.O.V.E.” Roughly 800 people participated in the event.

!

3.1 Green Living

4443


4443

Items/

Cases

No. of Reported Cases in Taiwan and China

No. of Processed and Resolved Cases

Percentage of Processed and Resolved Cases

Internal Feedback 122 119 97.54%

External Feedback 353 353 100%

Environmental Accounting

In 2008, Innolux introduced the environmental accounting classification, becoming the first company in Taiwan to establish such classification by integrating the purchase requisition system and accounting system according to the EPA’s Environmental Accounting Guidelines for Taiwan’s Industries. The classification aimed to manage and identify the company’s environmental expenditure, and to encourage employees to promote measures that make source improvements and generate end-of-pipe treatment benefits. In 2015, Innolux promoted various environmental activities and improvement solutions. The environmental expenditure in the Taiwan sites in 2015 amounted to NT $2.622 billion.

Environmental Expenditures in Taiwan Sites in 2015

Item/Year/Amount 2015

•Operating Cost

Pollution prevention costs: air pollution prevention, water pollution prevention, and other forms of pollution prevention

1,357,440,087

Recycling and reuse costs: general/hazardous waste recycling/reduction, external waste disposal treatment, energy conservation

1,021,159,005

Global environmental protection costs: greenhouse effect prevention 3,918,389

•Environmental Management CostEnvironmental training costs, certification fees, environmental detecting and monitoring, activities, environmental management system

181,546,659

•Environmental Protection R&D CostEnd-of-pipe treatment R&D costs, production process pollution reduction R&D costs, marketing and R&D costs for pollution reduction

29,925,443

• Customer and Supplier (Up- and Down-Stream) Relationship CostGreen procurement, product recycling, packaging material recycling, other customer environmental requirements

27,884,353

•Social Activity CostCommunity relations costs, corporate marketing costs, other social activity costs

695,000

•Loss and Compensation CostPollution clean-up and restoration, pollution litigation and compensation, other losses and compensation

0

Total 2,622,568,936

! To advocate the importance, value, and latest development trends of green accounting, and promote green accounting in the science park, the Hsinchu Science Park Bureau hosted the “Counseling and Outcome Presentation for the Establishment of a Green

Accounting System” on 19 November 2015. The event invited the Taiwan Environmental Management Accounting Network to give a thematic presentation. Innolux also had the honor of sharing its green accounting counseling experience. A total of 60 people participated in the event.

2015 Law Amendments and ImpactMajor amendments included:The Taiwan government announced amendments to the Water Pollution Control Act in February 2015, stipulating that companies shall disclose potential pollutants, concentrations, and emissions of their discharged wastes (pollutions) when applying for or adjusting their water pollution prevention plans.The government of China announced amendments to the Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution in August 2015, stipulating that companies shall conduct EIAs on atmospheric impact items and disclose their assessment outcomes. Amendments also enforce the establishment of air pollution outlets and the prohibition of pollution discharge, taking effect on 1 January 2016. Innolux has formulated relevant measures to comply with these amendments.

Sharing Experience CSR and Green Accounting

3.2 Green Operations

Through the means of the Safety Health and Environment Committee, Greater China Utility Meeting, Energy and Water Conserving Platform, and the CSR Committee, Innolux has promoted clean production processes, carbon reduction and energy conservation, product green designs, and pollution prevention. In 2015, the company reinforced its smart and lights-off production efforts and upgraded its automation processes, making considerable progress in achieving low-carbon production.

As a result of its long-term efforts in carbon reduction, Innolux joined a carbon reduction pilot project organized by the EPA and became Taiwan’s leading enterprise in carbon reduction with 16 million tons. In terms of achievements, the company received the “Outstanding Green Procurement Award” for seven consecutive years; the Foshan site received the “Carbon-Value Award” issued by World Economic and Environmental Conference (WEC); the Ningbo site passed the “Cleaner Production Enterprise” audit, the Tainan site (Fab2) received the “Energy Saving Carbon Reduction Outstanding Performance Award” issued by the Bureau of Energy, Ministry of Economic Affairs; and all Taiwan and China sites passed the ISO 14001 accreditation. Moreover, no violations of environmental protection laws were recorded in 2015.

Environmental Issues Communicated in 2015

Environmental Risk Management

Amount (Encompasses Taiwan Sites)

Environmental Accounting

Unit: NTD

(Unit: NTD)


Y2013

3,365,886,837

2,738,298,451 2,622,568,936

Y2014 Y2015

4443 4443


Carbon-Value Award

The event was co-organized by the IEEPA, UNIDO, and UNESCO to recognize the outstanding enterprises in their efforts to promote low-carbon concepts, sustainable economic and environmental development, and outstanding achievement in carbon reduction. Innolux’s Foshan site fully implemented the three major aspects of carbon reduction and environmental protection, namely, material, energy, and water conservation. Its efforts were recognized with the issuance of the “Carbon-Value Award—Green Responsibility Award,” outperforming 116 companies.

!

Carbon Credit Acquisition

Innolux has devoted considerable efforts to the greenhouse gas reduction. Innolux applied for early carbon credits as per the Principles for Promotion of the Early Greenhouse Gas and Offsetting Plans proposed by the EPA for its carbon reduction performance between 2005 and 2011. It received 16 million tons in credits in 2015, the most in Taiwan, and it completed the authentication and approval process. In the several years that Innolux has voluntarily reduced carbon emissions for the acquisition of carbon credits, the company’s efforts have improved carbon management capacity, reduced carbon risk, and maintained shareholder value and government carbon management goals.

A total of 16,652,916 tCO2e credits has been acquired.

CSR Committee

Energy and water conservation

Green Product Management/ESH/FAC/CSR

Carbon disclosure management platform

EHS Committe

ESH/FAC/Manufacturing

▲Climate Change Management Organization

3.2.1 Climate Change Mitigation and Adaption

FAC/CSR


Climate change increases the frequency and intensity of water shortage, drought, and flooding, consequently influencing production operations. Matters such as reducing greenhouse gas emissions, mitigating climate change, and improving adaptability to climate change were discussed in the 2015 COP21. Innolux actively evaluated the impact of climate change on assets, processes, human resource management, logistics, market, and finance, and endeavored to implement relevant mitigation and adaptation actions.

Climate Change Management Organization (CCMO)

Based on the strategies, individual management item, and key performance indicator established by the CSR Committee, Innolux CCMO has promoted a number of related platforms. In addition, the CCMO reports the progress of various performance items to the CSR Committee quarterly, and analyzes international trends to develop countermeasures.

4645


4645

Carbon Disclosure Project (CDP)

!

Energy and Climate Policy White Paper Presentation

Innolux and 17 other Taiwanese enterprises joined the “Energy and Climate Policy Workforce” established by BCSD-Taiwan and TCSF to discuss domestic/foreign energy usage conditions, energy safety, and climate change contingency policies; review the difference between Taiwan and other countries; and assist the BCSD in compiling a manual of suggestions and information that can serve as a reference for the government.

!

Disclosure Score

In this context, the Energy and Climate Policy White Paper—Climate Change and Energy Policy

Recommendations to the Government was officially released on 30 June 2015. The White Paper was presented by the Chairman of the BCSD-Taiwan, Mr. Dong-Liang Li, on behalf of the taskforce to the Minister of Economic Affairs, Mr. John Deng, and the Minister of the Environmental Protection Administration, Mr. Kou-Yen Wei. Subsequently, the BCSD-Taiwan continues to monitor the responses of the government. Innolux aspires to help Taiwan transition into a low-carbon economy and do its part in formulating various policies to accelerate this process.

Y2011

80

89 89

96

100

Y2012 Y2015Y2014Y2013

Score

Performance Band

Year Grade

2015 B

2014 B

2013 B

2012 B

2011 C

Every year, CDP invites enterprises to disclose their greenhouse gas emission volumes and contingency strategies for the investment risk and opportunities

concerning climate change. Innolux’s disclosure score improved from 96 in 2014 to 100 in 2015, becoming the highest scoring company in the panel industry. Moreover, the company has been nominated for the CDLI for two consecutive years (2014 – 2015).

!

4645 4645


Issue Risk Opportunity

Physical Disasters

• Extreme precipitation is escalating because of owing to climate change. The condition is harming the water resource environments. Taiwan began experiencing water shortages in the spring of 2015. A number of cities and counties are on the verge of water restriction for both industrial and domestic use.

• Continue operating the Energy and Water Conservation Platform; monitor energy efficiency indicators using the Energy Management System (EnMS); and establish improvement goals to reduce the influences that water/energy cost fluctuations have on business operations.

• Implement procurement risk dispersion management and establish a “Business Continuity Management Team” to analyze the impact of natural disasters on business operations, plan contingency measures and drills, reinforce client confidence, and enhance company competitiveness.

• Construct an EnMS to monitor energy efficiency indicators.

International Conventions and Local Regulations

• Taiwan passed the Greenhouse Gas Reduction and Management Act in 2015. In future, enterprises can expect a cap management on carbon emissions.

• Taiwan’s Ministry of Economic Affairs announced the Regulations for the Formulation and Implementation of Energy Saving Targets in 2014, stipulating that users with a capacity exceeding 800 KW should achieve an average annual energy conservation rate of >1% between 2015 and 2019.

• China announced the 12th Five-Year Energy Saving Plan and its plan to establish a national emissions trading market by 2017, placing increasing constraints on enterprises for the consumption of natural resources.

• Innolux applied for early carbon credits by the EPA for its carbon reduction efforts between 2005 and 2011, receiving 16 million tons in credits in 2015, the highest in Taiwan.

• In terms of the Regulations for the Formulation and Implementation of Energy Saving Targets, Innolux’s Taiwan sites achieved an average annual energy conservation rate of over 1%, fully highlighting its energy saving and carbon reduction potential.

• All factories conducted a feasibility evaluation for the installation of solar panels. Solar power generation achieved 1,298,338 kWh in 2015, which is a 14-times increase from 2014, showing effective low-carbon production.

• In terms of the 12th Five-Year Energy Saving Plan in China, the Ningbo, Foshan, and Nanjing sites all reached the expectations stipulated by the Commission of Economy and Informatization in 2015.

• China announced the Interim Measures for the Administration of Voluntary GHG Emission Reduction Transaction, enabling companies to participate in CCER. The Foshan site officially initiated “PV Generation” in December 2015, cumulatively generating 2,065,438 kWh, which is a coal conversion of roughly 253.84 tons.

• Innolux proposed policy and regulation amendments to the government through the TTLA. The company also joined the EPA to establish the “Alliance of Development of Clean Energy and Carbon” to monitor trends.

Company Reputation and Consumer Behavior Changes

• Consumers and investors exhibit an increasing interest in the ESG performance of enterprises. Negative ESG performance not only influences company image, but also weakens investors’ valuation of company stocks. Innolux is an international traded company, and thus requires adequate measures to manage ESG performance.

• Many members of the EICC are key clients of Innolux. The EICC requests that supply chains disclose data concerning carbon emission, energy consumption, and carbon management and energy management planning.

• Innolux issues an annual CSR report and participates in the CDP to show stakeholders the results of its efforts in climate change management. Innolux achieves a score of 100 in the 2015 CDP. The company was selected as one of the components of the DJSI World Index for its first participation and received the bronze medal for the “Sustainability Leader Award.”

• Innolux emphasizes green value and carbon reduction. The Foshan site received the “Carbon-Value Award—Green Responsibility Award,” outperforming 116 companies.

• Innolux promotes low-carbon logistics and plans to improve transportation and management. The company exponentially improved the inbound/transfer/outbound efficiency of its containers by 70%, reducing 200,000 tCO2e a year.

• Innolux continues to improve the resource efficiency, material conservation, and carbon reduction performances of its Material Flow Cost Accounting endeavors. The company effectively reduced 3,180 tCO2e in its front-end production and backlight component manufacturing between 2012 and 2015.

• Innolux established the Product Carbon Footprint Calculation System. In 2015, the company audited the carbon emissions of 69 suppliers and 132 materials. It plans to continue monitoring carbon emission trends each year to establish a comprehensive database.

Climate Change Management

3.2.1.1 Climate Change Risks and Opportunities

In reference to the risks, opportunities, evaluation, and contingency items proposed by the CDP, Innolux had divided its climate change management strategies and results into three categories, each of which is discussed below.

4847


4847

Greenhouse Gas Inventory

Innolux conducts a greenhouse gas emission inventory throughout the entire company each year using its self-developed “Greenhouse Gas Information Platform,” which helps effectively reduce inspection time, maintain information consistency, and enhance emissions information control. The greenhouse gas emissions data collected from 2005 to 2015 have all passed the third party verification according to ISO 14064-1.

Scope 3: Other Indirect GHG Emissions

Inventory Scope：• Emission amount for business travel (airplane) and

commuting (transport vehicle dispatch) in 2015 was 0.008 million tCO2e.

• Emission amount for waste transport, incineration, and bury in 2015 was 0.0104 million tCO2e. The energy consumption amount was 12,471.2 GJ.

Emissions: 0.018 million tCO2e in 2015

Item/YearScope 3 Emissions (unit: million tCO2e)

Waste TreatmentBusiness Travel and Commuting

Total

Y2015 0.010 0.0081 0.018

Y2014 0.032 0.003 0.035

Y2013 0.013 -- 0.0131 The carbon emissions of business travel by air were included in the inventory of 2015.

(unit: million tCO2e)Scope 1 Scope 2 Scope 3

Y2013

2.857

0.523

0.013

3.135

0.5110.035

2.804

0.4390.018

Y2015Y2014

GHG Emissions by Scope

Scope 1: Direct GHG Emissions

Inventory Scope: Quantitative and qualitative inventory of various PFCs, such as SF6, NF3, and CF4, and fuels in public systems.

Emission: 0.439 million tCO2e in 2015

GHG -Scope 1

Taiwan China (unit: million tCO2e)

0.005 0.016

Y2013 Y2015Y2014

0.428

0.0110.495

0.518

Greenhouse Gas Reduction

Among the greenhouse gas emissions of Innolux, 79% was originated from purchased electricity (Scope 2) and 3.8% was from PFCs (Scope 1). Thus, Innolux sets energy conservation goals each year to enhance energy utilization efficiency and improve the manufacturing process of specific procedures. Regarding the control indicator for TFT-LCD, the greenhouse gas emission intensity per unit area was 41.7 kgCO2e/m2 in 2015. A reduction of 3.5% was achieved from 2014 to 2015.

GHG Emission Intensity

3.6463.380

Y2013 Y2015Y2014

3.243

44.643.2

41.7

Total GHG emission (Scope 1+Scope 2)Unit: million tCO2e

GHG Emission Intensity per Input Substrate at TFT-LCD stageUnit: kgCO2e/m2

Y2013 Y2015Y2014

Innolux installed additional combustion local scrubbers between 2011 and 2015, collectively eliminating 1,200 million tons of FCs. An additional eight combustion local scrubbers were installed in 2015. The total emissions of FCs was 0.104 MMTCE in 2015, which was a 15.4% reduction from 2014. More local scrubbers are scheduled for installation in 2016, and Innolux plans to reduce FCs emissions to 0.112 MMTCE.

FCs Emission and Reduction Volumes

FCs reduction by removal equipment Unit: tCO2e

2,622,000

0.1280.123

0.104

2,465,6942,139,043

FCs emission amounts Unit: MMTCE

3.2.1.2 Climate Change Mitigation and Management

Y2013 Y2015Y2014

Scope 2: Indirect Energy-Based GHG Emissions

Inventory Scope: Quantitative and qualitative inventory of purchased electricity.

Emission: 2.804 million tCO2e in 2015

0.459 0.454

2.6812.398 2.388

0.416

GHG -Scope 2

Taiwan China (unit: million tCO2e)

4847 4847


3.2.2 Energy Resources Mangement

Energy Efficiency Review

Innolux consumed 4,955 million kWh in 2015. The Taiwan sites consumed 4,548 million kWh, which constituted 91.8% of the overall energy consumption, while the China sites consumed 407 million kWh. Based on the “TFT-LCD Electricity Use per Unit Area,” the 74.5 kWh/m2 recorded in 2011 was reduced to 66.8 kWh/m2 in 2015, for a 10.3% reduction. However, the 66.8 kWh/m2 recorded in 2015 was a slight increase of 0.4% compared to 2014. Thus, the goal for 2015 was not achieved with an offset of 3.5%. The estimated root cause of the failure was climate factors (increase in enthalpy) and delays in the improvement of the HEPA cooling pump. Innolux remains focused on energy saving, estimating a further reduction of Electricity Use per Unit Area by 2.5% in 2016.

Five Major Energy Resources Usage Systems

① Total site energy consumption ② Production energy consumption③ CDA energy consumption④ Cold water energy consumption⑤ Pure water consumption⑥ Running water consumption⑦ Fan filter unit energy consumption (Absollute target)

Seven Major Energy Resources Management Indicators

① TFT/CF/LCD energy consumption② Ice machine③ Air compression system④ Fan filter unit⑤ Pure water system

Innolux manages energy efficiency indicators through various platforms, such as the UTILITY conference, Energy and Water Conservation Platform, and the CSR Committee. The company uses the Energy Management System (EnMS) to focally inspect the five major energy resource usage systems and seven major energy resources management indicators.

Electricity Consumption

In response to the promotion of national renewable energy development policies in 2015, various manufacturers have begun evaluating the feasibility of installing solar energy generation systems and creating low-carbon environments. Based on the Regulations for the Formulation and Implementation of Energy Saving Targets proposed by the Ministry of Economic Affairs, Innolux’s average annual energy conservation rate of its Taiwan sites was 1.39%, which complied with the minimum requirement of 1%.

In addition, China announced the Interim Measures for the Administration of Voluntary GHG Emission Reduction Transaction, enabling companies to voluntarily participate in the China Certified Emission Reductions (CCER). The Foshan site officially initiated “Photovoltaics Project” in December 2015, cumulatively generating 2,065,438 kWh, which is a coal conversion of roughly 253.84 tons according to the Guangdong Municipality on Carbon Emission Administration.

• The site implemented 51 energy saving measures, including 40 for improving system performance, 6 for equipment replacement, 4 for energy recycling, and 1 for hydropower generation.

• The site saved 4,793,000 kWh for an energy conservation rate of 2.63%.

•The site reduced 2,429 metric tons of CO2 emissions. !

The Tainan site (Fab2) received the “Energy Saving Carbon Reduction "

4.421

396

unit: million kWh

4.817

4.528

413

4.9424.583

443

5.026

4.548

407

4.955

Y2013 Y2015Y2014Y2012

Taiwan ChinaCorp.

Energy Efficiency Annual Progress

3,877.8

4,317.5

4,233.9

4,328.8 4,350.6

Y2013 Y2015Y2014Y2012Y2011

Electricity consumption of TFT-LCD input substrateunit: kWh /m2

TFT-LCD manufacture electricity consumptionunit: million kWh

74.5

65.7 65.4 66.5 66.8

10.3%vs.2011


(Intensity)

5049


5049

Energy Saving Indicator Performance Solar Power Generation

Sites in both Taiwan and China are actively evaluating the feasibility of installing photovoltaics to create green-energy, low-carbon environments. The photovoltaics in the Ningbo and Foshan sites began operation in 2015, increasing the company’s solar power generation capacity by 14-fold compared to 2014, for a total generation volume of 1,298,338 kWh.

Solar Power

Y2012

83,814

unit: kWh

Y2014 Y2015Y2013

82,387 85,861

1,298,338

!▲ The Photovoltaics of the Foshan Site Spans 190,000 m3

Electricity Consumption Intensity

14 times

vs.2014

Sites Local Government Requirements Compliance Status in 2015

TaiwanBureau of Energy, Ministry of Economic Affairs

Regulations for the Formulation and Implementation of Energy Saving Targets

Annual energy conservation rate of 1% or more(2015-2019)

● Achieved an average of 1.39%

China

NingboNingbo City Commission of Economy and Informatization

2015 Energy Conservation Mission Statement for Key Energy-Consuming Enterprises

8.30 kilogram of standard coal/10,000 dollars(Applicable to the Building-A, -B, and -C)

● Achieved 8.288 kilogram of standard coal/10,000 dollars

Nanjing

Nanjing City Commission of Economy and Informatization

The 12th Five-Year Energy Saving Plan

19.29 tons of standard coal/unit(applicable to LCM1)

● Achieved 0.82 tons of standard coal/unit1

1 unit = 10,000 pcs

FoshanGuangdong Province Commission of Economy and Informatization

The 12th Five-Year Energy Saving Plan

0.77 kilogram of standard coal/unit

● Achieved 0.53 kilogram of standard coal/unit

Regulatory Issues ● Full Compliance ◆ Partial Compliance

Taiwanunit: KWh/m2

Chinaunit: KWh/pcs

Ningbo Foshan

Nanjing Shanghai

Only the TFT-LCD sites were calculated; the module sites were not included.

Y2015Y2014

66.866.5

Y2015Y2014

0.530.52

Y2015Y2014

6.586.91

Y2015Y2014

0.1850.135

Y2015Y2014

2.222.17

5049 5049


2015 Major Energy Conservation Projects

Site Project Description Saving (kWh/yr)

Taiwan

Jhunan

Centrifugal Compressor Blade Restoration (reducing preset pressure)

Components of the body of the centrifugal compressor were adjusted to balance outlet and usage pressure.

475,000

New Cooler Installation for Dry Air Compressor

A glass-free automatic condenser was added to the first and second stage coolers of the air compressor.

426,000

Redesign of Pressure Valve on the 14°C Cold Water Pipe

The original hand valves on the 14°C cold water pipeline of the dryer were changed to pressure valves, which only activate during the cooling stage to reduce the amount of cold water.

270,000

Tainan

Machine Vacuum Energy Saver Establishment (Stage 2)

A self-developed vacuum regulator was installed to reduce the energy use of the vacuum pump.

1,386,000

Automatic Washing Machine on the Ice Condenser

The approaching temperature and thermal exchange efficiency of the ice condenser were stably controlled to reduce the energy consumed during operation.

1,059,000

Cleaning the Intake Air of the Air Compressor

High-performance filters were installed at the intake terminal of the air compressor. These filters not only trapped dust particles, but also stabilized the pressure loss at the intake terminal of the air compressor, thereby reducing the energy consumed during operation.

78,000

China

Ningbo Rooftop Photovoltaics Construction Project

The site implemented contract energy management by providing its rooftop to investors for construction. Innolux receives 20% of the energy generated and 100% of the carbon credits received.

320,000

Foshan Replacing T5 and T8 Fluorescent Lights and Streetlamps into LED Lights

Long-life and eco-friendly light sources were incorporated, gradually replacing old light sources (a total of 11,450 fixtures and 26 streetlamps were replaced).

1,399,000

Foshan Pure Water System High-Pressure Valve Energy Conservation Project

An inverter was added to the high-pressure pump of the pure water system. 75,000

Nanjing Variable Air Compressor EstablishmentA variable air compressor was installed to buffer CDA pressure changes and to reduce energy consumption.

187,000

Shanghai Cold Water System Energy Efficiency Improvement Project

The secondary cold-water pump (75KW) at the SH Fab 2 was transferred to the SH Fab1. The SH Fab 2 was replaced with two 22KW cold-water relay pumps to supply cold water from the mains.

131,069

5251


5251

Water Resources Management Policies

Climate change has caused extreme rainfall conditions, degrading water resource environments. The worst drought of the decade hit Taiwan in spring 2015. Innolux was also challenged with the shortage of water, to which it has activated relevant contingency measures.

Innolux performed business impact analysis and business continuity planning based on water resource risks, outlining water conservation and water recycling/reuse as the two focal aspects. Because water resources and water quality management are closely associated with local regions, various sites are required to formulate water-related plans and goals based on their production characteristics and local laws and regulations. They are also requested to use the cross-site energy and water conservation platform to share their efforts, which are reviewed by the CSR Committee, to enhance water efficiency and reduce the impact of water shortage.

3.2.3 Water Resources Management

Water Resources Risk Management

SiteTaiwan China


water withdrawal(million tons) 4.56 19.62 0.77 0.73 0.40 0.17

Proportion 17.4% 74.7% 2.9% 2.8% 1.5% 0.6%

SourceYonghe Mountain ReservoirLiyutan Reservoir

STSP: Nanhua Dam, Zengwun Dam

KSP: Agongdian River, Nanhua Dam, Gaoping River Weir

Ninghai Baixi Reservoir

Tanzhou Waterway Qinhuai River Yangtze River

Destination of Water Discharged Hsinkung River STSP: Yanshuei River

KSP: Agongdian River East Sea Xinan Chong New Qinhuai River

Mid and lower reaches Yangtze River

Water Conditions

•Approximately 1,650 mm of rainfall a year.• Significant differences between wet and dry

seasons with steep rapids and poor water resources accumulation and utilization; improvement to water contingency management is required.

• Water conservation projects are scheduled for implementation each year to gradually improve water efficiency.

• Business continuity management contingency mechanisms were established to regulate water use and cross-site dispatch and to reduce production.

Approximately 1,650 mm of rainfall a year

No immediate risks


No immediate risks


No immediate risks


No immediate risks

Water Risk Management

Innolux withdrew 26.25 million tons of water in 2015. Most of the water was used in the front-end production processes in the Taiwan site, accounting for 92.1% of the total water usage. Innolux adopted the water risk assessment tool developed by the WRI to identify the situation of sites located in dry areas and the risks of floods and storms, and consequently formulate appropriate management countermeasures.

Contingency for Regulatory Issues

Renewable Water Sources

The Water Pollution Control Act (draft) recently approved by the government of Taiwan requires companies to further raise the recycling and reuse rate of wastewater within industrial park, with a short-term goal of zero increase in water withdrawal, and a medium to long term goal of 100% reuse of recycled wastewater. The Tainan City Yongkang Recycling Plant was one of the six demonstration plants. The water recycled in the Yongkang Recycling Plant is supplied to the Tree Valley Park and the STSP. Innolux has already signed a letter of intent to use recycled water, which will reduce the impact of water shortages during drought periods, co-create renewable water-friendly environments, and promote sustainable water resources.

Upscaled Rates for the Overuse of Water

The Ningbo Municipal People’s Government announced Document 146, “Announcement for Upscaling Rates for the Overuse of Water,” in 2002. The regulations stipulated in the document took effect in the first quarter of 2015. The average water consumption per quarter for the last three years was upscaled to 1.2x to serve as the quarterly water limit. Enterprises that exceed this limit were charged extra 100% of their original water rates. To avoid the impact of these regulations, Innolux not only continued to promote its water conservation policies, but also adjusted the frequency of water efficiency inspections to once a day. As of 2015, the water efficiency of the Ningbo site in the last two years was within the usage limit.


5251 5251


Storm water Risk Management

A storm water risk analysis conducted using Aqueduct Tool developed by the WRI indicated that the flood occurrence rate in Taiwan, Ningbo, and Shanghai was “high,” and that in Foshan and Nanjing sites was “extremely high.” In response, Innolux established the “Typhoon/Storm Contingency Protocol,” which stipulated the use of gutters, roads, pipes, flood valves, water pumps, sandbags, and other blockage or drainage facilities, and listed various subsistence equipment, such as distribution boards, emergency generators, water tanks, and wastewater pumps as key management items. Moreover, the company established a liaison mechanism with the municipal irrigation and drainage station to promptly receive water conditions and reduce the impact of storm disasters. Moreover, the company collaborated with the release of the EICC 5.0 to complete runoff risk assessments of various sites and implement key monitoring procedures during storms, thereby avoiding flood and the occurrence of secondary pollution.

Water Shortage Risk Management

• The water shortage risk at production sites of Taiwan, Ningbo, Foshan, Nanjing, and Shanghai was analyzed using the Aqueduct Tool developed by the WRI.

Drought results indicated “low risk.”

!

!

• Regions that show water availability level higher than 1,700 m2 per person per year denotes “non-water stress” areas.

According to the Water Resource Bureau, Ministry of Economic Affairs, the rainwater availability of the Taiwan sites were roughly 4,074 m2 per person per year.

5453


5453

Water Efficiency Review

The total water withdrawal in 2015 reached 26.25 million tons, with the Taiwan sites using 24.18 million tons and the China sites using 2.06 million tons. The amount of processing water saved in the Taiwan sites achieved 235.95 million tons in 2015. Regarding the “TFT-LCD Water Use per Unit Area” index, Innolux reduced water usage from 0.410 m3/m2 in 2011 to 0.357 m3/m2, for a reduction of 12.9%. The original water reduction goal was 6% less than the 0.379 m3/m2 achieved in 2014. The company achieved 5.85%, which was very close to its goal. In 2016, Innolux anticipates further reducing water use per unit area by 5%.

Site DescriptionWater Conservation Estimation (tons/yr)

Taiwan

Jhunan

Recycled RO-concentrated water from the high-concentration organic wastewater recycling system and used the preprocessing biological and flotation systems to reduce the concentrations of overall organic carbon in the RO.

23,000

Recycled the water discharged from the multilayered tower of the biological system during backwash.

8,000

Changed the pipeline for discharging the condensate from the slurry drying machine to the organic recycling system for recycling.

3,000

TainanAdded and expanded the MBR wastewater-recycling device. 1,392,000

Replaced the old filters of the MBR. 366,000

China

Ningbo Recycled the surface rainwater at the site's CUB area. 8,000

FoshanRerouted the Class-1 RO-concentrated water from the pure water system to the pretreatment pool to reduce the amount of running water used to replenish the pure water system.

349,000

NanjingDecreased the conductivity of polarized water to less than <10us/cm and used the same water to replenish the cooling tower, thereby saving the use of extra water to replenish the cooling tower and enhancing the water quality in the tower.

39,000

Nanjing Recycled ROR water for sanitary cleaning. 18,000

2015 Major Water Conservation Projects

Water Conservation Performance

Water Withdrawal Intensity

Taiwanunit: m3/m2

Chinaunit: m3/pcs

Only the TFT-LCD sites were calculated; the module sites were not included.

0.357

Y2015

0.379

Y2014

0.0023

Y2015

0.0025

Y2014

0.00151

Y2015

0.00121

Y2014

0.0307

Y2015

0.0356

Y2014

0.016

Y2015

0.015

Y2014

Total water usage

unit: million m3

Taiwan ChinaCorp.

24.19

2.06

26.2526.22

3.01

29.23

25.92

2.99

28.91

24.37

3.04

27.41

Y2013 Y2015Y2014Y2012

Y2011

21.34

0.410

TFT-LCD manufacture water withdrawal - unit: million m3

0.3660.381 0.379

24.0624.60 24.68

23.23

0.357

Water Efficiency Index Annual Progress

Y2012 Y2013 Y2014 Y2015

12.9%vs.2011

Ningbo Foshan

Nanjing Shanghai

Water withdrawal intensity of TFT-LCD input substrateunit: m3/m2

5453 5453


To effectively deal with the environmental impact of waste gas, wastewater, hazardous substances, and noise, Innolux installed pollution prevention and control facilities to research and develop measures to control air pollution, increase wastewater recycling efficiency, enhance waste utilization, and reduce waste.

3.2.4 Pollution Control and Environmental Impact Reduction

Air Pollution Prevention Mechanisms

The air pollutant discharged by Innolux comprises VOCs, NOx, NH3, SOx, Cl, HCl, HNO3, H3PO4, and particulate matter. Air pollutant is filtered during processing to sort out organics, acids, alkalis, and particulate matter. These substances are then sent to specific treatment facilities according to their type for processing to meet the discharge limit. In 2015, Innolux placed considerable efforts in improving environment odors, such as the emission of NOx. Moreover, the Taiwan sites achieved an average VOC processing efficiency of 94.5% in 2015, which outperformed the regulated efficiency of 90%.

Taiwan Plants 2015 Input Improvement Results

T2 Installed an additional acid pollution scrubber to reduce NOx emissions and odors. NO2 concentration dropped from 20-30 ppm to 7.1 ppm.

T3 Installed an additional condensing and demisting machines to improve the recycling efficiencies of the strippers.

Increased the recycling efficiency of the strippers by 0.2% and reduced the dosage of the scrubbers by 15%.

Fab6,7,8 Installed an additional acid pollution scrubber to reduce NOx emissions and odors. Average NO2 concentrations dropped by 49%.

Fab1,3,5Attenuation of processing efficiency was found in the regular inspection of the organic emission zeolite rotor. Replacement of rotors was done to improve efficiency.

The removal efficiency of the organic emissions system conformed with the standard of operationg permit(Fab1-85%, Fab3-75%, and Fab5-75%).

Air Pollution Prevention Projects

Average process rate of VOC

94.5%

VOCs SOx NOx

Air Pollutant Emissions by Year

150

11.86.6

170

7.8 10

262

9.3 14.1

266

16.315.2

250

42.415.8

Y2011 Y2012 Y2013 Y2014 Y2015

unit: tons

Water Pollution Prevention

The types of wastewater produced during various production processes include wastewater from cleaning, dying, etching, developing, stripping, as well as water containing chrome and fluoride. Based on the type of wastewater, a combination of biological, fluidized bed crystallization, and coagulation and sedimentation treatment method is employed to process the wastewater, ensuring that the discharge complies with park regulations.Innolux produced a total of 19.82 million tons of wastewater in 2015. Of which, the Taiwan sites produced 18.28 million tons, comprising 92.3% of the overall amount, and China sites produced 1.53 million.

Item/Year/SiteY2014 Y2015

Taiwan China Total Taiwan China Total

Wastewater (tons) 19,946,773 1,860,422 21,807,195 18,288,309 1,534,232 19,822,541

COD (tons) 1,870.5 282.2 2,152.7 1,489.2 289.3 1,778.5

BOD (tons) 584.3 119.0 703.3 447.3 109.1 556.4

SS (tons) 797.6 205.7 1,003.3 734.2 133.5 867.7

Wastewater treatment-Membrane Bioreactor System （MBR）

1.39million tons water

recycled by the new and extended MBR facility in 2015

Wastewater Discharge Statistics

unit: tons

Y2014 Y2015Y2013

21,895,68721,807,195

19,822,541


5655


5655

Increasing the Recycling Rate of Process Water

Innolux actively endeavors to improve process water sources, process water recycling, and terminal wastewater recycling, such as the recycling of wastewater discharged from the rework machines in the clean rooms, the recycling and reuse of ROR discharged from the MBR recycling systems, and the recycling of the RO-concentrated water from the high-concentration organic recycling system, thereby improving recycling efficiency. The Taiwan site saved 235.9 million tons of process water in 2015 (equivalent to roughly 94,000 standard-sized swimming pools), for an average process water recycling efficiency of 94.2%1. These results exceeded the requirement of 85% regulated by the Science Park Management Office.

Effluent and Ammonia Discharge Standards

In response to the second phase implementation of the EPA’s Effluent Standards in 2017, which will tighten the ammonia emissions from 90 mg/L to 60 mg/L, Innolux continues to collaborate with National Cheng Kung University to incorporate laboratory findings into the industry to establish more stable operating parameters to improve the nitrification performance and nitrogen removal performance of biological treatment systems. Moreover, the company installed MBRs in its wastewater treatment processes to add biological treatment functions to wastewater treatment, thereby reinforcing nitrification. The company also recycles and processes high concentrations of TMAH on-site before sending to external water treatment parties for refinery. The treated water is then returned to the site for reuse, thereby reducing overall ammonia emissions. In 2015, all sites conformed with the second phase restrictions.

Waste Reduction

Innolux is committed to promoting waste reduction and utilization at the source. The company actively participated in the development of the waste liquid crystal recycling technology jointly initiated by the EPA and the ITRI in 2015. This technology not only saves the cost of treating waste, but also recycles liquid crystal, which is extremely beneficial to the environment. The China sites also implemented numerous reduction projects, such as the reduction of mercury tubes, waste ink, waste acetone, waste refrigerant, and trays. Innolux produced roughly 97.694 tons of waste in 2015; of which, 83.72% was recycled for a 4% increase from 2014. The company aims to focus on developing refined waste treatment plans for organic slurry, inorganic slurry, and SRS residue in Taiwan in 2016.。

To mitigate the risk of water shortage, Innolux set a zero-discharge goal for a plant (Fab5) in Tainan in 2011.• The plant began implementing a three-phase project in the

fourth quarter of 2011, where the RO-concentrated water from MBRs was re-concentrated and biological wastewater was recycled.

• The plant completed the improvement project in the fourth quarter of 2015. It anticipates that water discharge can be reduced to less than 1,800 cubic meters/day in the first quarter of 2016. Its annual goal is to reduce the water consumption per unit area to less than 120 L/m2.

2020 Zero Wastewater Discharge

2015 average process water

recycling rate94.2%

• Recycling includes off-site recycled and reused waste, resource recycling, and physical treatment.

•Other waste refers to during and chemical treatment.

Waste Treatment Ratio

Overseas Treatment of Hazardous Waste

Item Mercury Lights

Cadmium Batteries

Y2013Weight (tons) 0.66 0.426

Proportion 0.002% 0.001%

Y2014Weight (tons) 0 7.42

Proportion 0 0.025%

Y2015Weight (tons) 0 0

Proportion 0 0

Y2014 Y2015Y201311.46%8.97%

77.91%

1.66%

8.60%9.59%

79.72%

2.10%

8.81%2.17%

83.72%

5.29%

IncinerationLandfill

Recycling

Others

1 The equation for calculating process water recycling was revised in 2015, causing significant changes to recycling quantity and recycling rate. The water charts and statistics of various sites were inspected and approved by the Bureau of Environmental Inspection.

Zero-discharge wastewater treatment technology

RGB wastewater recycling technology

MBR, ROR wastewater recycling technology

Renewable wastewater recycling technology

Project Implementation1. AIC research (NCKU projects)2. Trial run by Fab5 and vendors3. Reduce the water usage of machines for on-site processing

Process Waste

unit: tonsGeneral Waste

39,963.3

31,823.040,118.1

459.7

28,746.5

45,917.236,178.0

422.0

28,962.0

41,775.3

26,700.6

256.2

Y2014 Y2015Y2013Taiwan China

Hazardous Waste

Taiwan China Taiwan China

5655 5655


Packaging Material Reduction

Innolux increases the efficiency of recycling of packaging materials supplied by upstream suppliers by controlling its procurement procedures and collaborating with downstream customers in recycling and reusing packaging materials. The weight reduction of packaging materials, the carbon saved by enhanced loading volume, and the use of recycled materials instead of new ones collectively reduced 25,099 tCO2e, which is equivalent to the carbon reduction achieved by 65 Daan Forest Parks.

9,805

5,416

Y2014 Y2015Y2013

12,021

7,138

9,907

15,192

Packaging Material Carbon Reduction

39times

Carbon reduction design (tCO2e)

Carbon Reduction through Recycling (tCO2e)

Annual CO2 absorption of Daan Forest Park

Chemical Recycling Efficiency

Innolux upholds the “3R” principle when treating chemical waste liquid. The company not only implements recycling measures on its production lines, but also collaborates with suppliers and treatment vendors to achieve waste utilization through purification and recycling. These efforts have helped Innolux to improve recycling rates each year, particularly in 2015. In terms of the recycling rates of various chemicals, Innolux achieved 77.2% for stripper, 82.4% for NMP, 8.3% for PGMEA, and 24.9% for TMAH. The company plans to continue improving its purification-recycling rate and reduce the energy consumption of delivery.

Low-Carbon Logistics

Innolux has invested considerable efforts into the development of green logistics. Empty imported containers are directly converted into full exported containers to avoid the waste of resource in transporting empty containers to the container storage area, thereby improving the utilization of inbound, transit, and outbound containers, enhancing the turnover for the use of supplier trailers, reducing carbon emissions, and creating cost-saving benefits. These efforts create a three-way win situation for the company, logistics vendors, and the environment.

• Innolux introduced Packaging Material Return Shipping Policy in early 2010. The company collaborated with freight forwarding/shipping companies to convert inbound packaging material containers into outbound containers.

• The inbound, transit, outbound container utilization was only 32% in January 2012. A review of the problems revealed that the low utilization rate was caused bypoor sailing schedule;changes in freight-forwarding; andpoor shipping container conditions.

• Innolux spent two months communicating with freight forwarding/shipping companies starting in March 2012. Issues of discussion comprised the implementation of a concentrated sailing schedule policy, which scheduled the arrival of packaging materials to be consistent with outbound schedules. Management mechanisms were established to control container return standards and improve container utilization. These mechanisms also resolved the inbound, transfer, and outbound gaps between different freight forwarders. The transfer utilization rate of containers improved to 70% to 80% between 2014 and 2015.

167,151.6

Y2012 Y2013 Y2014 Y2015

208,517.4

269,675.0 235,156.6

Carbon Reduction by Improving Container Utilization

unit: tCO2eCarbon reduction

Innolux greatly improved its inbound, transfer, and outbound container utilization rate and reduced the number of transportation through improved transport planning and management, thereby reducing carbon emissions1 of roughly 200,000 metrics tons per year, which is equivalent to the amount of CO2 absorbed by 604 Daan Forest Parks2.

Chemical Recycling and Reuse Rate

78% 76% 77.6% 76.2%82.4%

77.2%

68.3%53%

61%67.5%

62.8%55%

35%

56%

0

13%16%

20.1%24.9%

Y2011 Y2012 Y2013 Y2014 Y2015

Stripper

TMAH

PGMEA

NMP

Notes:‧ Carbon reduction design: The dimensions of the hard box were

modified after December 2012; therefore, the carbon reduction value was calculated based on weight and quantity reduction of materials.‧ Carbon reduction through recycling: The purchase quantity

of recycled materials was screened to convert the weight of the reduced new production materials and the weight of the reduced carbon emissions.

‧ Carbon reduction design and carbon reduction through recycling do not include MD (medium and small size products) packaging material.‧ The annual CO2 absorption of Daan Forest Park is roughly 389

metric tons.

49times

65times

1 Carbon emissions = transport distance x cargo weight x emissions coefficient x number of trips

2 According to the statistics released by the Bureau of Energy, Ministry of Economic Affairs, in 2011, the annual CO2 absorption of Daan Forest Park is roughly 389 metric tons.

5857


5857

Scope 1 *1 0.439 million（tCO2e）

Scope 2 *1 2.804 million（tCO2e）

Scope 3 0.108 million（tCO2e）

GHG Emissions

Air Pollution EmissionVOCs * 2 250 tons

SOx * 2 42.3 tons

NOx * 2 15.8 tons

Wastewater 19,822,541 m3

COD * 3 1,778.5 tons

BOD * 3 556.4 tons

SS * 3 867.7 tons

Wastewater Discharge

Recycled Process Recycled Amount 235,957,877 tons

Process Water Rete 　94.2 %

Waste DisposalHazardous Waste 29,218.2 tons

General Waste 68,475.9 tons

Production

Raw Material Purchasing

R&D

Transportation & Sales

Customer

3.2.5 Environmental Material Flow Information

Notes:1. For VOCs, NOx, and SOx, the measured values were converted into emission intensity (kg/m2), then the total emission was calculated using

the actual panel area.2. COD, BOD, and SS are calculated based on actual test results.3. The scope of recycling process water encompasses all Taiwan and China sites, with the exception of “Air Pollution Emissions” and

“Recycled Process Water,” which only encompassed the Taiwan site.

Glass Substrate 79,735 tons

Liquid Crystal 100.0 tons

Aluminium Etch 19,280.6 tons

Developer 21,294.3 tons

Stripper 15,048.3 tons

Thinner 7,190.7 tons

Photo Resists 6,647.2 tons

Purchased Electricity 17,837,212 GJ

Renewable Energy（Solar Power） 4,674 GJ

Natural Gas（LNG） 458,510 GJ

Disel 11,317 GJ

NMP Recycling Rate 82.4 %

Stripper Recycling Rate 77.2 %

PGMEA Recycling Rate 68.3 %

TMAH Recycling Rate 24.9 %

Major Materials

Energy Consumption

Water WithdrawalMunicipal 26,254,237 m3

Rainwater 665,387 m3

Recycled and Reused Materials

ODS -Ozone Depleting Substances

Eco-friendly Refrigerant 　7.32 tons

Input Output

Large-Size（>10 inches） 141.4 Million pieces

Medium/Small- Size（<10 inches） 320.2 Million pieces

Panel Output

5857 5857


Innolux adopts eco-efficiency and eco-systems as the core aspects of green product management where “energy saving,” “material conservation,” and “non-toxic materials” are the three primary factors in product design and manufacturing management. Based on these factors, the company further formulated four major green strategies, namely smart green, green innovation, lean green, and green engagement, to fulfill low-carbon green management, contribute to the economy, environment, and society, and achieve sustainable development.

4 Strategies of Low-Carbon Management

To promote smart green, Innolux collated information concerning green product management and integrated supply chain material platforms. Based on these efforts, the company collected a large amount of environmental data pertaining to value chains. The data was stored in diverse databases to extract information that is useful for saving conservation costs, promoting innovation, prioritizing realistic and immediate environmental footprint and client problems, and aiding in the formulation of ideal policies and simple procedures, thereby improving the efficiency of green product management.

Innolux has continued to seek innovative opportunities in value chains, as well as identify methods to reduce environmental impact and optimize resource utilization efficiency while upholding the three core principles, specifically, non-toxic materials, energy saving, and material conservation. Innolux also centers efforts on refining its non-toxic product designs. In 2015, it became the first company to initiatively develop a vehicle panel that detects and controls VOCs. Moreover, the company also incorporated energy saving and material conservation mechanisms into its product design and development stages, enhancing the green competitiveness of its products.

The Integrated Green Component Database (iGCD) System

To simplify management procedures and in collaboration with relevant material integration policies, Innolux developed and introduced the iGCD System which replaces three previous systems. It encompasses the following benefits:

• The iGCD System performs all surveys concerning green materials and safety recognition of suppliers, VOCs, and conflicting materials to achieve platform integration.

• The username and password used by suppliers to log into the system are the same as Innolux’s QMP, and those used by employees are the same as those used for their personal computers, thereby achieving comprehensive username/password integration.

• Suppliers can download and view digital content from the bulletin board to frequently learn new green environment knowledge and regulations, achieving the sharing of educational resources and green engagement.

!

Product Design for Energy Reduction Design

1. Regarding the innovation in the design of energy-saving products, Innolux aims to create products with the same or even better performance with less energy consumption. For example, the company uses new-generation LEDs to replace old-generation LEDs, which not only enhance luminous efficiency by 20% at the same energy consumption level, but also fulfill customer’s need.

2. In response to energy saving trends, Innolux selected 15 monitor (MNT) products to implement energy saving designs. The designs primarily entailed the development of highly effective backlight sources (LEDs), incorporation of high-penetration optical materials, and application of low-energy electronic components, thereby improving the products’ energy efficiency and reducing the power consumption of panels. A comparison between the 2015 and 2016 energy consumption data show that the newly developed products drastically reduced average power consumption by 15%, which will be incorporated in 2016. These products not only comply with the Energy Star 7.0 standards, but also satisfy Class 1 and Class 2 of China’s energy saving policy. These designs enable Innolux’s products to achieve an even better energy-saving potential.

Luminescence characteristics and data collation show that a shift from yellow to blue light reduced luminous efficiency by 8.9%. Test results indicate that old-generation yellow LEDs produced a lumen value of 42.8 lm (typ.). Data estimations show that a shift to blue LEDs reduced the luminous efficiency to roughly 38.99 lm (typ.). A lumen value of 47.8 lm (typ.) was achieved when using new-generation blue LEDs under similar energy consumption levels, increasing the luminous efficiency by roughly 20%.

3.3 Green Value Chain

3.3.1 Smart Green 3.3.2 Green Innovation

Material

Conservation

Energy

Saving

Non-ToxicMaterial

SmartGreen

GreenInnovation

LeanGreen

GreenEngagement

Bluish LED (new generation)

panel

Yellow LED (old generation)

panel


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Non-Toxic Product Designs

Prohibition/Limitation of Chemical Substances Used in Products

Based on the continual amendments to regulations concerning the prohibition/limitation of chemical substances, and the increasing complexity and stringency of managing chemical types and items, Innolux reviewed the environmental protection directives of various countries, as well as industrial and client specifications, and developed the Innolux Restricted Substances Management Standard to rigorously evaluate the integrity of its products, components, and materials, ensuring their compliance with requirements.

Continuous Promotion of the QC 080000 Hazardous Substances Management System

To maintain the effectiveness of managing hazardous substances, Innolux has implemented the QC 080000 management system since 2008. In addition, the company receives annual audits and reviews from third party international notary units. All Innolux’s Taiwan plants have completed the QC 080000 management certification since 2013 and maintained QC 080000 operations in 2014. In 2015, the Nanjing (Kunbo) and Foshan (LCM3 and affiliates) sites were included in the list of certified sites, both of which receive external audits.Innolux’s continuous improvement of its management systems reduces the risks of external parties and suppliers, decreases the influences that products impose on the environment, and most importantly ensures its green commitment to its clients, elevating their satisfaction.

Y2014

Y2015

Y2013

46 Substance Categories

1.RoHS + HF2.REACH SVHC


1. Threshold limit for the use of lead are upwardly revised.

2. The number of banned substances has increased

3. Illegal wood, paper, and plant materials used for packaging are added to the banned list.

4. Death minerals are added to the list of monitored items.


1. CFR and BFR threshold limits are added to the control limit of substance.

2. NP/NPE/Red P are listed as banned substances.

3. IARC 1 and 2A carcinogens are listed as banned items.

4. The parts defined as Green 1 or Green 2 should meet CFM requirements.

5.VOC management is added.

Management of Banned and Restricted Substances

Y2008Incorporated the QC 080000 management system

Y2013

All sites passed the QC 080000 management system certification

• Continue implementing the management system

•New certified sites:Nanjing – KunboFoshan – LCM3 plantFoshan – affiliates

Y2015

VOC Management for Vehicle

In terms of the management of hazardous substances, considerations are largely centered on the risk of human contact or subsequent disposal issues. However, the harm of invisible gases is rarely discussed. In this context, Innolux not only incorporated VOCs into its management agenda in 2013, but also initiated research pertaining to VOCs at the end of 2014 to analyze and evaluate VOC content in its products. Moreover, the company aimed to analyze the concentration and distribution trends of VOCs in various materials for a true understanding of how to manage VOC in various products. Innolux was the first company of its field to conduct such research.Since the initiation of VOCs management in September 2015, Innolux has collected nearly 4,000 sets of VOC data. The company plans to collate the data into a database and incorporate extant control requirement to promote the second stage of VOC management; that is, the reduction of VOCs in vehicle parts. The subsequently development of environmentally friendly materials will inevitably be beneficial in the future.

VOC management

• Sep.— Formally launched the iGCD system.

• By Dec.— Accumulated 4,000 sets of VOC data.

Limit VOCs in vehicle parts

Y2015

Y2013 Y2016

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3.3.3 Lean Green

Participating countries of the United Nations Climate Change Conference held in Paris in September 2015 and supporting businesses have attached considerable value to environmental issues. Various countries have undertaken aggressive actions to curb the impact of climate change and suppress greenhouse gas emissions. Innolux adopts the principles of lean green and green management to constantly improve the efficiency of its products, and invests considerable effort in eliminating resource wastage in its production processes. These efforts aim to improve resource utilization, achieve cost conservation, decrease the amount of carbon emitted in suppliers’ production processes, and reduce the impact of climate change.

Continuous Improvement in MFCA

Innolux introduced the Material Flow Cost Accounting (MFCA) and relevant resource utilization improvement as well as material/carbon reduction plans in 2011. Since passing ISO 14051 accreditation in 2012, the Foshan BLC site has continued to improve. Demonstrative audits were gradually completed at various sites in 2015, including the BLC sites of Foshan, Ningbo, and Nanjing, as well as the Tainan SMT site, FAB3 site, and Jhunan T3 site in Taiwan. Between 2012 and 2015, the company has saved NT $177 million in material conservation for the implementation of the 3Rs in its front-end processes and backlight component production. In addition, a total of 3,180 tCO2e has been saved, equaling roughly 8.1 Daan Forest Parks. (Source: 2011/7 Energy Report announced by the Bureau of Energy, Ministry of Economic Affairs, P.5)

3.3.4 Green Engagement

Eco-friendly product is inevitable for all enterprises. Sufficient support from supply chain is essential from product design and development to production, marketing, and shipping. Innolux actively promotes the range of influences of its supply chains based on the implementation of green product policies, concepts, and experiences. Moreover, the company encourages the sharing of professional knowledge and experiences, frequently inviting suppliers to collaboratively promote green initiatives.

Planned and established training courses

Y2008 Y2012 Y2015 Implemented an online learning system in the Taiwan sites

Implemented the online learning system in all sites

Supplier

Through the iGCD system, suppliers are able to download digital materials from the bulletin board. Innolux updated the digital materials in 2015 to include green product control requirements and VOC control requirements. The 2015 Suppliers’ Conferences were held in the Tainan, Ningbo, and Foshan sites. A total of two conferences were held in the first and second half of 2015. The main issues discussed in the conferences were conflict mineral audits, restricted substance control, low-carbon 3C management, greenhouse gas audits, MFCA, iGCD system implementation, and VOC regulations and propaganda.

Employees

Various courses have been arranged for different departments since 2008, assisting employees to gain a greater understanding of the core concepts of low-carbon green product designs. The overall pass rate for courses was roughly 90% in 2015.

MFCA Implementation Performance

7301,092

1,625

Y2013 Y2015Y2014Y2012

7,0906,665

2,880

317508

Carbon reduction (tCO2e) Benefit (NTD10,000/yr)

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3.4 Green EnvironmentTo focus on the promotion of low-carbon environment education, Innolux established the Innolux Education Foundation, combining businesses, employees, and social groups to address various environmental issues. The Foundation has become a leader in low-carbon environment education.

Environment and Law – Environmental Protection Promotional Activity Held in Shishanzhen

The “Environment and Law—the Beauty of Shishan” event was held in June 2015. The event was co-organized by the Shishanzhen Township Environment Protection Office and Innolux Foshan site to help more people understand environmental laws and knowledge, encourage people to actively participate in environmental protection tasks, and collaborate in establishing a green Shishanzhen (township). The Foshan site arranged an “Environmental Knowledge Competition” to propagate corporate environmental protection and energy/resource conservation knowledge to the public in the form of questions and answers. Moreover, the Foshan site actively participated in the “Environmental Protection Fashion Show,” where recycled polyethylene foam and plastic foam packaging materials were used to design various apparels to promote the recycling of waste. Small games were also organized in the Foshan site to help participants subconsciously learn correct environmental behaviors and recycling classifications. A total of 500 people participated in the event. The Foshan site also demonstrated the value and influence of an advanced environmentally-friendly enterprise, receiving the “Environmental Pioneer” award presented by the Shishanzhen Township Environment Protection Office.

The “Restoring the Lost Balance” Low-Carbon Documentary

Innolux released it “Restoring the Lost Balance” low-carbon documentary in 2015, a film that took over 18 months to produce. The film discusses the influences that the panel industry has on the environment based on the three basic vital elements—air, soil, and water—and Innolux’s efforts in creating a low-carbon environment. Innolux expects that with the portrayal of actual industry examples, students can develop various aspirations towards environmental education. The documentary includes methods to save water and materials, recycle glass, and change sludge into gold. Moreover, the film explains over 300 processes in panel production. The company aspires to utilize every drop of water and every type of material, alleviating the burden humans have put on the environment and rooting low-carbon education, thereby reminding the next generation of the importance of restoring the balance. As Jane Goodall once said, “People of the present are not borrowing the future of the next generation, they are stealing it.” The “Restoring the Lost Balance” documentary is archived in the “Innolux Education Foundation” website. Innolux welcomes schools to share and broadcast the film.

http://www.innolux-foundation.org/ap/page232.aspx?sn=3e9d88b0-116f-4cec-80c2-ca3ece7c43d6

!

Sharing and Promoting Environmental Education Experiences

Innolux won the 1st National Environmental Protection Education Award. The company was invited by the Northern Environmental Education Regional Center to share its experiences in the “Topical Study and Enterprise Research and Negotiations Meeting” held in August 2015. The event was co-organized by the Hsinchu Science Park Management Office and centered on CSR and the promotion of environmental education.

Innolux provided the following content: “Innolux contemplates on green building, sustainable development, carbon footprint, water footprint, and disaster prevention, and implements relevant measures into its production processes. In addition, the company manages or prohibits the use of hazardous substances in its products and focuses on material- and energy-saving product designs. Moreover, it encourages conservation and recycling to minimize the impact of production on the environment. Innolux also implements its Food Wise Plan in the cafeteria to achieve sustainable consumption. The company and its employees buy from local farmers and indirectly promote local marketing group. Innolux provides its employees with courses to enhance their environmental education competency, assisting them in improving their environmental knowledge, attitude, skills, and values. The company also arranged various external events, such as charities, summer camps for remote children, and forest restoration projects, and built zero-carbon classrooms in five elementary schools in Miaoli. Production, life, and ecology are co-existent. Innolux aspires to fulfill its CSR.” A total of 50 public and private organizations participated in the event.

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Humanistic Vision to People

“To People, with S.M.I.L.E” is In-nolux’s humanistic vision to take care of employees and promote commu-nity and societal development in the aspects of safety, mental and physical wellness, initiative on social care, and living and employee-friendly workplace. We also continue to enhance humane harmony and co-prosperity.

Major Issue Mid- to Long-Term Approaches and Goals Progress in 2015 Key Focuses in 2016

Occupational Health and Safety

Abide by international environment safety and health (ESH) systems. Construct a healthy and safe environment to reduce occupational hazard

● Organized the fifth annual “Labor Health Promotion Forum” to investigate how to develop healthy workplace and construct a healthy culture.

● Completed implementation of “Business Continuity Plan” and “Backup Water Supply” guidelines.

1.Thematic audits (SMA)2.Chemical source management3. Promote an autonomous healthy culture and

construct a healthy workplace.

Recruiting and Retaining Talent

Identify and cultivate external talent in schools.Increase internal staff circulation and promote innovative measures to retain talent.

● Successfully recruited 700 fresh graduates through “InnoStar Project,” an industry-academia collaboration and school cultivation programs—such as scholarships, summer internship, etc.

● Successfully recruited 1,100 professional talents into the industry through individual interviews.

Satisfy the company’s needs for talent recruitment. Follow InnoStar’s objectives and recruit talents who possess the qualities of S, T, A, and R. Continue to promote industry-academia collaboration and school cultivation projects.

Disability Employment

Create a disability-friendly work environment to promote the disability employment.

● The number of disability employee in the company was 1,159, which is a 23.5% increase from 2014 and with an accession rate of 1.45%.

● “The Greater China Platform for Disability—Accessible and Friendly Workplace” project received the “CSR Excellence Award” from the Global Views Corporate Social Responsibility Award.

Continue to implement disability employment. The goal is to meet the accession rate as regulated by local laws: Taiwan site (1%) and China site (Ningbo 1.5%, Foshan 1.5%, Nanjing 1.5%, Shanghai 1.6%).

Community Participation and Charity

Care for and cultivate talent among disadvantaged groups.Assist disadvantaged groups to become independent and establish a prospering consumption system.

● Quantified the amount of investment in charity by referencing to LBG’s (London Benchmark Group) community investment assessment model; the amount of investment reached NT$ 13,398,000 in 2015.

● Collaborated with factories in Taiwan, charitable organizations, and convenience stores in cultivating disadvantaged groups. Provided a total of 19 job opportunities in 2015.

Assist disadvantaged farmers and promote non-toxic and organic agriculture in order to facilitate community participation and charitable events. This will enhance the rapport between stakeholders.

Wages and Benefits

Offer competitive wages and benefits.

●Fully complied with local laws on basic wage.● Referenced local and international wage and benefit

reports to ensure market competitiveness.

Continuously review wages and benefits; provide market-competitive packages to attract and retain excellent talent.

Talent Cultivation

Establish stringent requirements on training and certification to cultivate sufficient and high-quality professional talent.

● Conducted industry-academia collaboration with 4 schools: Southern Taiwan University of Science and Technology, Kun Shan University, National Kaohsiung First University of Science and Technology, and Kao Yuan University. Counselled 117 intern students and offered employment to 36 outstanding talents; the employment rate was close to 80%.

● Established an occupational certification system and framework. Different levels of management courses were comprehensively promoted.

1. Develop and expand the cultivation of seed lecturers in China sites; build up the lecturer talent base.

2. Promote different levels of management courses in China sites; build up management strengths.

3. Develop qualitative courses for factory line managers in mainland China to increase basic-level supervisors’ leadership skills.

4. Comprehensively promote occupational certification and complete the construction of professional courses for different positions.

Employee-FriendlyWorkplace

Provide a balanced, safe, and healthy workplace.

● Surveyed the demands for an “employee-friendly workplace” in the Taiwan site and determined over 20 suggestions for optimization based on survey results.

● The China site focused on enhancing the qualities of food, clothing, living condition, transportation, and entertainment, including facilitation measures, dining conditions, benefits, and staff events.

“Friendly Workplace Promotion Teams” in different sites will set up goals and continue to implement the optimization projects.

Chapter 4 Humanistic Vision to People, with S.M.I.L.E

● Fully Completed ◆ Partially CompletedMajor Environmental Issues

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ch4 - Humanistic Vision to People, with S.M.I.L.E

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4.1 Safety

The Innolux Environmental Health and Safety Policy was established and comprehensively developed based on regulations such as ISO14001, OHSAS 18001, and TOSHMS. Corporate safety is elevated through promoting the environmental safety and health system.

Organization Design and Labor Participation

Innolux has established an Environment Safety and Health Division operating under the direction of the President. The division is responsible for the operation of the ESH management system. Moreover, precautionary measures for loss control management and business continuity were devised as decision-making reference for managerial personnel. This encourages the practice of enterprise risk management (ERM). Every quarter, respective sites’ senior management, competent authorities, and labor representatives gather to convene an “ESH Committee Conference,” where issues such as the objective progress, internal and external communication, performance measurement, and result evaluations are discussed. In 2015, 697 labor representatives from the Taiwan site attended the meeting, accounting for about 41% of the committee members; 306 labor representatives from the China site attended the meeting, accounting for about 47% of the committee members.

4.1.1 Health and Safety Strategies and Operations Management

ESHIP

Safety in Operation

Environment Protection

Risk Management

Mental and Physical Health

Hygiene Management

● International Trends

● Energy Preservation and Carbon Reduction● Waste

Reduction● Loss and Prevention

Auditing●Risk Warnings● Business Continuity

Plan

●Psychological Counselling●Weight Loss Activity●Health Examination

●Accident Prevention● Construction

Management●Automatic Inspection

●Epidemic Prevention Planning●First Aid Training●Human Factors Prevention

Item/Annum Y2011 Y2012 Y2013 Y2014 Y2015

Work-related fatalities 1 0 0 0 0 　0

Cases of work-related illness 0 0 0 1 0

Occupational Illness Frequency Rate 2 0 0 0 0.0039 0

Item/Site Taiwan China Corp.

Disabling Injury Frequency Rate

(F.R.)

Female 0.16 0.07

0.23Male 0.48 0.24

Total 0.32 0.32

Disabling Injury Severity Rate

(S.R.)

Female 4 0

6Male 16 3

Total 10 4

Occupational Hazard Reduction

Innolux conducts accident management and general improvements through an e-system, which performs statistical analyses on occupational hazards and risks for employees and contractors. Intrinsic safety is strengthened by applying hazard source management to potential risks. To prevent the recurrence of accidents, a “general system” was employed to various plants simultaneously.The 2015 disabling injury frequency rate (F.R) and disabling injury severity rate (S.R) respectively increased 9.5% and 28.7% compared to 2014. Therefore, each plant was required to set up an annual goal and was given challenges regarding Lost Workday Cases and Restrictive Workday Cases in 2016. Moreover, the performance management mechanisms in Taiwan and China sites were integrated and projects such as risk-themed audits were implemented in order to achieve these goal.

Notes:F.R.: Disabling accidents per 1 million hours of work (equation:

number of disabling accidents x 1 million hours of work / total hours of work).

S.R.: The number of lost workdays due to accidental injuries per 1 million hours of work (equation: accumulated number of lost workdays due to accidental injuries x 1 million hours of work / total hours of work).

F.R. and S.R. Trends for Occupational Hazards

Disabling Injury Frequency Rate (F.R.)Disabling Injury Severity Rate (S.R.)

Y2011 Y2012 Y2013 Y2014 Y2015

0.49

4

6

0.23

3

5

0.210.18

5

0.26

1 Workers who died of occupational injuries or illnesses during the period of employment by the organization.

2 n = the number of cases of work-related illness; “million work h” denotes the total number of workhours (in millions) during the year.


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Vendor Management

Innolux cares about the safety management of contractors. Vendors’ awareness of ESH management is strengthened through regular bidirectional meetings and irregular construction safety training courses. In addition, contractors must work with Innolux on hazard identification, risk assessment analysis, and emergency response plans. In the event of any accidents, Innolux’s “Electronic Accident Management System” is used in accident investigation and analysis, as well as the execution of correction and precautionary measures.c

Item/Annum Y2011 Y2012 Y2013 Y2014 Y2015

Vendors’ rate of accidents 0 0 0.21 0 　0

‧ Vendors’ rate of accidents = number of vendor injuries * 1000,000/vendors’ total number of work hours .‧Data is from Taiwan sites only.

!

!▲ESH Management Training for Vendors

ESH Educational Training

Educational trainings are the ESH management system’s base for promoting and employing its practical operations. Innolux HYPERLINK "http://www.wordhippo.com/what-is/another-word-for/at_intervals.html" at intervals holds training courses to equip employees with the general knowledge about safety and health, as well as professional knowledge and technical skills. The courses include environmental protection management, damage prevention, business continuity management, site and equipment safety, chemical hazards and prevention, fire management, occupational injury and illness prevention, and health seminars. A total of 493,601 people were trained in 1,999 sessions of ESH educational courses (including new staff trainings) held in 2015; on average each employee participated in over 5 ESH educational trainings per year.

!

Y2011 Y2012 Y2013 Y2014 Y2015

6241,000

1,3461,609

1,999131,811

240,000 245,441277,858

493,601ESH Educational Training

Sessions Participants

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4.1.2 Occupational Safety and Risk Management

In 2014, Innolux completed the overall risk inventory for the different sites and conducted subsequent analyses. The comprehensive risk management project then commenced in 2015.

Improvement Projects—Improve the Attributes of Risk Prevention

The project aimed to reduce the number of items that were found to be prone to risks. In 2015, competent departments and ESH units jointly discussed and implemented improvement measures to fully enhance all aspects of risk prevention.

▲ On-site testing of the smoke damper’s wind speed

!▲ On-site testing of the cooling water

tank’s water sprinkler system

Auditing Projects—Thematic Audit for Risk Prevention

The project selected key items from prevention inspections, introduced the auditing theme of functional test equipment, broke through early limitations on document reviews, and further confirmed the reliability of SOPs and safety equipment protection. The project conducted three thematic audits, including the firefighting systems’ automatic checks, comprehensive planning of fireproof/smoke proof areas, and gear and equipment safety. This ensured that the equipment inspection methods and protective functions operated normally.

System Projects— Five Steps of Construction Risk Management

In order to preserve knowledge and experience for future employees and plan related system integration, the project “Five Steps of Construction Risk Management” was implemented. These different levels of inspection helped the plant to achieve the highest standards of safety management. The five steps of construction risk management include:

!!

Part 1Editing and regulating the white papers for plant damage prevention

Part 2Specifications and graphic reviewof new plant design

Part 3Full construction areainspections and checks

! !!

Part 4Safety inspectionsof plant facilities and equipments

Part 5Process equipmentsafety inspections

Index key technology and confirm design concepts

Evaluate outsourcing designs and review final designs

Irregularly inspect construction sites and confirm compliance

Ascertain that the plant’s operation and safety meets international standards

Manage risky machine to become a role model in the high technology industry

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Mental and Physical Wellness Activities in 2015

4.2 Mental & Physical WellnessInnolux cares about employees’ mental and physical wellness. Hardware such as the Innolux Recreation Center and Tree Valley Recreation Center and various activities were provided to help employees release pressure. In addition, we encourage employees to join club activities to develop personal interests while contributing to society.

50M 50M 50M 50M

The Tree Valley Park Recreation Center

Innolux Recreation Center

‧Departmental Coherence 35,000‧ALL STAR at Innolux 4,000‧Group Enjoyment and Vitality Project 190

▲ Taiwan-Strengthening physical fitness

at Group Enjoyment and Vitality

Taiwan

‧Shishan basketball competition 100‧ports season at Foshan site 8,300‧ Life enjoyment Group: Entertainment

Activity 2,500

▲ Foshan-Sports season

Foshan

‧Healthy long walks 50‧ Experience nature and relax-a trip to Mount

Mogan 100‧ Beautiful and comfortable atmosphere-flower arrangement 60‧Happy Mid-Autumn Festival 1,000‧Parent-child bonding day in June 80‧ Fragrant bamboo leaves on Dragon Boat

Festival 100

▲ Shanghai-Parent-child bonding day in June

Shanghai

‧ Lantern Festival on January 15th: Moonlight and lanterns at Innolux 500‧ Innolux’s happy family day-the first annual parent-child activity 250‧ The battle returns-the second table tennis competition 100

▲Nanjing-The first annual parent-child activity

Nanjing

‧ The start of the Year of the Goat-new year celebration 500‧Attractive clubs-joint club recruitment 400‧ Childhood memories-rice dumplings on Dragon Boat

Festival 5,000‧Oceanic Ningbo-happiness at Innolux 120‧ Glorious competition-the second annual large-scale sports

day 4,500‧ Mid-Autumn Festival and the second annual talent show

competition 11,000

▲Ningbo-Joint club recruitment

Ningbo

Unit: People count

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Innolux has a diverse selection of clubs to satisfy staff’s needs for activities. These clubs not only facilitate exercises, stress relief, and hobbies, but also enhance employees’ mental and physical wellness. In 2015, Taiwan site had a total of 40 clubs, while China site had 30 clubs. The clubs’ subsidies and resources created an energetic and joyful work environment.

Diverse Clubs

▲ Taiwan-The volleyball club won championship at the 16th Nanke Cup Volleyball Competition

▲ Taiwan-Kendo club won championship at the 2015 Tainan City Mayor Cup—Group Division

!▲ Ningbo-Club won second place in the “Tax Enterprise Cup”basketball contest

▲Foshan-Cultural club

▲Foshan-Swift rollerblade club

▲Nanjing-Bike club

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4.3 Initiative on Social Care

Innolux integrates “social responsibility” and “operating strategies,” forming a synergized “sustainable operation.” Supporting the disadvantaged and promoting charity are Innolux’s main focuses in social issues. In addition, the company provides substantial support for the Innolux Education Foundation to promote “social harmony and prosperity” and facilitate friendliness among the relevant parties. Innolux also referenced the community investment assessment model proposed by London Benchmark Group to quantify charity investments. The quantified data were used as reference in making decisions regarding charity events.

Innolux connected the Greater China area by a 6000-km marathon relay road race; the activity featured persistence and inspiration.

Y2011

Innolux used the budget for year-end party to organize “Loving Marathon” in the greater China area. The project delivered love to elementary schools in remote townships, and took action in caring about our next generation’s education.

Y2012

Employees traveled around Taiwan on bicycles as an act of determination and persistence for green production.

Y2013

During the year-End Party and Starlight Musical Concert organized in collaboration with the “Executive Yuan’s Post-Typhoon Morakot Reconstruction Work Committee,” 61 LCD TVs were given to the post-disaster reconstruction area “Rinari” in Pingtung County’s Majia Township. The TVs will be used in elderly care, school children care, and demands for community production, marketing, as well as public activities.

Y2014

Based on the concept of cohesion, participants held hands to symbolize the kindness of Innolux’s employees. The staff shared a wonderful time on Charity Family Day.

Y2015

4.3.1 Participation in Charity Services

The 2015 Investments in Social Charity

13,398,000

Y2014 Y2015

29,367,000Total

Management Costs

10,719,000

416,000

5,283,000240,000

93,000

26,000

2,344,000

23,642,000

In-Kind Contributions

Time Contributions 1

Cash Contribution

Unit: NTD

The Types of Social Charitable Activities in 2015

Community

Investments

85.07%

NT$ 11,398,000

Commercial

Initiatives

9.33%

NT$ 1,250,000

Charitable

Donations

5.6%

NT$ 750,000

Y2014

1,696hrs 28,473hrs

Y2015Employee contribution time 1

1 Employee contribution time: Includes work hours or paid service hours, as well as hours of participation in the company’s charity events.

1 Time contribution: Work hours or paid service hours are calculated and converted into cash.


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Charity Seminar “Sensible Vision”

The theme “Sensible Vision” was closely connected with the concept of a charitable spirit. The event invited famous performers Chi-Chien Kuo and art celebrity Cyril Chu to host 4 art seminars at Northern Miaoli Art Center and National University of Tainan’s Cheng Kung Auditorium. Through the “speakers’ senses of humor, real life experiences, and

stardom,” the stories at the seminars inspired employees to feel the happiness that comes from helping others through. About 1,250 people attended the seminars.

“Collaborating with Family Support to Cultivate Disadvantaged Groups”

Innolux continues to work with family support centers and Family Mart on “Family Support from Family Mart” and “Shops for Family Support and Dreams” in its Jhunan and Tainan plants. These projects mainly hired economically disadvantaged groups including single mothers, disadvantaged adolescents, and placement adolescents. The projects helped these disadvantaged groups cultivate independence. Nineteen job opportunities were offered in 2015. Moreover, employees’ relevant consumption simultaneously provided assistance to disadvantaged groups.

!

Visiting Changlai Welfare Home during the Winter Festival

On February 5, over 20 kindhearted employees walked into Beilun District’s Changlai Welfare Home for a second time. Not only did they deliver “lifestyle gift packages” and “heart-warming gift packages” to 102 elders, but they also performed Yue and Ningbo opera. The elders broke into beautiful smiles as they enjoyed the wonderful performances.! Volunteer Activity at Ting Ting Kindergarten for Hearing-Impaired

Children

On the sunny day of April 26, over 50 employees visited Ting Ting Kindergarten for Hearing-Impaired Children to work as volunteers! They cleaned up the kindergarten and played games with the children. Do you also feel inspired by their lovely faces of smiles?In order for the disadvantaged children with hearing impairment to experience outdoor learning, we brought the children to walk through ancient dragons and experience cultural customs on the hot breezy day of July 18. A total of 50 people participated in the activity.

!

Innolux’s Book Donation to Gao Tang Elementary School

On 2014 Christmas Day, the Ningbo site used the charity income from the Innolux Compassion Farm to donate more than 700 books to the teaching station of Gaotang Elementary School and established the Innolux Love Library. Since love and caring are long-term commitments, a series of events was held specifically for the second book donation in 2015 between April 24 and May 3.These events were divided into two parts. The first part involved large donation and charity sale activities with the theme “Innolux Love—You and Me.” The second part was a second book donation to Innolux library, themed “Long-Lasting Love—Happy Children’s day.”This series of donation and charity sale events was not only strongly supported by Innolux’s senior managers and employees, it also had help from six suppliers including Skyworth, Tonlion, Red Bull and Lenovo, with more than 3,000 staff members participated. Charity donations from the employees and the suppliers were used as funding for the second library donation.On the Children’s Day (June 1), over 20 employees brought more than 1,000 books to donate to the teaching station of Gaotang Elementary School. Together with the school, they presented gifts to 280 outstanding students and spent a wonderful Children’s Day with them.

!

!

Creation by Smiles and Kindness—2015 Charity Family Day

The essence of the 2015 Charity Family Day was “Warm Smiles and Happiness.” More than 30 charitable organizations were invited to set up booths, sell handmade food or goods at the

event. All revenues generated on that day were used for charitable purposes, which gave the busy staff a chance to be part of charity works. A total of 16,000 people participated in the activity. The second theme of the Charitable Family Day revolved around “food.” With a rising concern for food

safety, the proportion of organic vegetables increased in 2015. Small organic farms that have collaborated with Innolux for many years were invited to set up booths at the activity to provide extra food choices for participants.

The Event of “Holding Hands to Deliver Kindness”

There are 190 employees with physical disabilities at the Foshan plant, which was recognized as the “Disabled Employment Demonstration Base in Guangdong Province.” An event that sent love to our employees with physical disabilities was organized on Christmas day, where warm quilts were delivered. In collaboration with Foshan City’s Service Center for the Disabled, seminars were held after the delivery. Psychological counselling presented in abundant and interesting games and activities was available for employees with disabilities. This allowed them to face their life and work with a healthy and optimistic psychological mindset.

!

Innolux Stipend

Innolux Ningbo established a stipend of $100,000 at Xinlei Kindergarten Group. The objective was to encourage children to maintain physical fitness, activate their interests, and provide them with comprehensive development in moral, intellectual, physical, and aesthetic abilities.

Qun Zhi Charity Fund “Collaborate with Innolux to Help Students Achieve Their Dreams”

“Innolux Foshan’s Qun Zhi Charity Fund” for students is divided into several categories, namely elementary school, junior high school, senior high school, college, and university. The fund allocated RMB $62,000 and benefited 32 students. The fund mainly targeted impoverished students in remote villages. Now entering its fourth year, the fund has benefited 123 students with over RMD $200,000 of donation.

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For the innovation and talent cultivation of Taiwan’s technology industry in 2015, Innolux’s Chairman Hsing-Chien Tuan entered schools and shared innovative ideas about the panel industry at the “Industry Innovation Forum” held in celebration of the 70th anniversary of National Taiwan University’s Department of Electrical Engineering. As he emphasized, Taiwan has first-class polytechnic education and manufacturing power in the world. Hence, “confidence,” “ambition,” and “initiatives” in Taiwan’s industry should be strengthened for talents to demonstrate their values. This can then increase the industry competitiveness, and successfully overturn Taiwan and reindustrialize the country.

4.3.2 Education Empowerment

Integrating Academic Knowledge and Industrial Practice

In order to integrate academic knowledge with industrial practice, fulfill academia-industry’s persistent concept, and lead Taiwan’s industry and academia innovation, Innolux actively collaborates with local universities to jointly cultivate professional talents in R&D and hands-on skills through persistent industry-academia collaboration projects. The company currently collaborates with National Chiao Tung University, National Kaohsiung First University of Science and Technology, Southern Taiwan University of Science and Technology, Kun Shan University, and Kao Yuan University to provide students with diverse career development options. In 2015, the projects counselled 117 interns and offered employment to 36 outstanding technical talents; the employment rate was about 80%.

Innolux Academy

Innolux is committed to enhancing humans’ extreme visual enjoyment, as well as R&D talent recruitment and cultivation. It is dedicated to become an innovative leader for upgraded panel module automation. Collaborating with numerous technical universities in Taiwan to conduct talent cultivation, Innolux established the “Innolux Academy” to provide practical internship opportunities in the enterprise. Moreover, it employed 16 professional lecturers to jointly plan and set up 14 practical courses, as well as provide machine equipment. Professional talents in R&D are cultivated through persistent practical courses and internship projects. Thus, the industry and academia can be seamlessly integrated to help students learn from internship and obtain employment after graduation.

Innolux Stipend—A Reward for Outstanding Students

In order to encourage outstanding students to participate in TFT-LCD research, Innolux offers a $300,000 stipend to master’s students enrolled in polytechnic programs at schools including National Taiwan University, National Tsing Hua University, National Chiao Tung University, and National Cheng Kung University. A $600,000 stipend is also offered to Ph.D. students in these schools. The 2015 stipend was totaled to be 1.2 million dollars. The stipend project is expected to assist and cultivate professional talents in the field of display image.

‧ Southern Taiwan University of Science and Technology‧ Kun Shan University‧ National Kaohsiung First University of Science and Technology‧ Kao Yuan University

Partner SchoolsGovernment● Subsidy amount:

NT$ 4,003,450

The implementation of Innolux Academy (from 2013 to 2015)

Intern Positions‧Engineers‧Equipment technicians‧Engineering technicians

- Professional Lecturers

36 people

- Courses Launched

109

Intern Departments‧ Automation Development‧Tainan Manufacturning Plants‧Module Manufacturing Center in Tainan‧LTPS TFT Manufacturing CenterInnolux

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Innolux genuinely cares for its employees, from preventive health care to their daily lives. It also continues to improve, manage and development new systems for employees with disabilities.

The health management system provides cautions and information. The method of health risk analysis was constructed based on OHSAS18001 and TOSHMS management system, as well as based on references to resources from the World Health Organization (WHO), international literature and case studies. Thus, the health risks of a particular operation can be assessed. This not only enhanced the concept of autonomous health care, but also introduced health factors into operational risk identification, and increased the awareness of hazard prevention.

The Prevention and Management of Maternal Health Risks

In recent years, the government has issued quite a few laws and regulations to ensure the well-being and protection of female employees. The “Occupational Safety and Health Act” clearly states that employers should consider the influences of gender differences and pregnancy on health risks, and implement the necessary maternal health care activities and management.

Innolux adopted the following measures for maternal health care:1. Collaborated with the Ministry of Labor and implemented

parental leave allowance, enhanced tocolysis leave, and strengthened rights for family care leave. Relevant protection measures were also employed. In reference to the “Guidelines for Maternal Health Care in a Workplace” published by the Ministry of Labor, female employees who return to work within a year after pregnancy and childbirth will undergo health risk assessment, hazard control, risk communication, and their responsibilities may also be adjusted as necessary.

2. Provided health guidance on pregnancy and lactation to pregnant employees, as well as provided a break room and breast milk pump room for them. Thus, Innolux created a female-friendly workplace that considered both maternal protection and workplace equality.

All Innolux plants in Taiwan have been awarded the following: ‧ “Healthy Workplace Independent

Certification and Health Promotion Mark”.‧ “Healthy Workplace Certification Smoking

Prevention Mark”.

Health Promotion

Innolux organizes a variety of health promotion activities. Through industry-academia-government collaboration, the Taiwan site formed a refined health promotion culture, whereas the China site operated a sharing platform that integrated the resources of health promotion activities in different China plants for comprehensive sharing. In 2015, as many as 10,581 people participated in the activity.

4.4 Living

Health Promotion Activities in 2015

Taiwan Site

!

‧The Healthy Diet Promotion Project ‧Weight loss competition‧Gynecological cancer screening

China Site

!

‧Parent-Child activities for moms‧Health week activity‧Healthy long walks‧Happiness and family appreciation ‧Health culture activity

“Innolux’s Health Culture Year” in 2015

As Innolux is concerned about the health of its employees, the Taiwan sites named 2015 “Innolux’s Health Culture Year.” In addition to including a “limitless supply of organic vegetables” in staff meals and introducing “weekly red-meat-free day,” other numerous health promotion activities such as “health week” were also implemented. The Taiwan sites also continued the 8th consecutive year of its staff weight loss program launched in 2010. The goal for 2015 was to achieve a total weight loss of 10 tons. Innolux was awarded the “National Weight Loss Performance in a Workplace Award” by the Health Promotion Administration. Moreover, Innolux promotes a sports culture by providing high quality sports and recreation centers such as Jhunan Recreation Center and Tree Valley Recreation Center for employees to exercise. The company encourages employees to value personal health and actively promotes the “Innolux’s Health Culture” among partners.

▲ National Weight

Loss Performance in a Workplace Award

4.4.1 Health Risk Management

Safety culture

Food culture

Autonomous health management

cultureSports culture

InnoluxHealth Culture


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Health Examination

Approximately over 32,000 employees in Taiwan sites participated in health examination in 2015; the participation rate was close to 100%. As the occurrence of colon cancer gradually increases, Innolux has included the fecal occult blood test (FOBT) as a required test for all employees. Innolux also initiated the “Counselling Project for Autonomous Health Management” in combination with “abdominal ultrasound inspections.” A total of 438 employees participated in these programs. The counselling helped downgrade some employees’ severe fatty liver to moderate fatty liver, or from mild fatty liver to normal with high effectiveness. In addition to the employees, the company also cares about the employees’ families. Innolux simultaneously offers health examinations for the family members, and the service was delivered to 74 people in 2015.

Special Health Inspection

Taiwan China

Gynecological Cancer

Abdominal Ultrasound

Colon Cancer (FOBT)

OtherOccupational Hazard-Prone

PositionsYoung Workers Free Clinic

No. of Participants in 2015 259 438 20,357 1,641 11,567 14,425 408

Labor Health Promotion Forum

On September 18, 2015, many large-scale enterprises and National Taiwan University’s College of Public Health jointly organized the 5th Labor Health Promotion Forum. Constructed since 2011, this platform for collaboration and communication between industry, government, and academia has always been organized by enterprises. The 2015 forum was mainly hosted by Innolux and co-organized by Taiwan Semiconductor Manufacturing Company, China Steel, and Epistar Corporation. In order to facilitate industry-academia interaction, the forum invited, for the first time, business guests and academic professors to present an introduction and conclusion. Meanwhile, the Ministry of Labor and Labor Affairs Bureau of Kaohsiung City Government were also invited to attend the forum, to investigate the direction of Taiwan’s occupational health development from an industry-government-academia perspective.

The forum focused on a healthy occupational culture and the revision of “Occupational Safety and Health Act”—such as the practical operations of maternal staff care, ergonomic management, and psychological health in a workplace. During the forum, Innolux shared its promotion of the “Physical and Psychological Gatekeeper” project, which provides counselling or referral mechanisms after exploring individual demands. This is supplemented by the optimistic strategy of actively cultivating physical and psychological gatekeepers. In the future, Innolux will continue to exert its influences as a large-scale enterprise, take on the philosophy and application techniques of labor health management in the industry, and enhance the health and well-being of workers in their workplaces in Taiwan.

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Healthy and Satisfactory Dining

Innolux cares about employees’ diet. The company canteens began to serve organic vegetables since 2008. In 2015, organic vegetables accounted for 30% of vegetables in Taiwan sites, which is about a 208kg reduction in pesticide usage. The amount of organic vegetables supplied between 2010 and 2015 reached 1,608 metric tons. Innolux will continue to develop organic vegetables in future and find more sources of organic food increase its proportion in employees’ diet.

In 2015, many new vendors were contracted to provide more food choices for employees. These included Muse Light Snacks, Xiao Hua Vegetarian Restaurant, and Bafang Yunji. By doing so, the rate of on-site dining increased about 3%-5% on average. In addition, the “red-meat-free day” that was implemented 5 years ago continues to be a highlight in Innolux’s dining. Thus, employees can feel reassured about the food they eat, while environment-friendliness can also be maintained.

4.4.2 Daily Life

Food Safety

Food Ingredient Check

The group-meal vendors are required to update information and inspection reports on their ingredients on a monthly basis. This provides timely updates on ingredient information, including bans on poultry or related foods during period of epidemic risks.

Safety Explanation

Information about “ingredients” were publicly disclosed and announced with safety certifications. This kept employees informed and reassured about the food they eat.

2

Emergency Response

Response mechanisms are immediately activated if the government makes an announcement about food safety. The ingredients in group-meals are then inventoried and subsequent responsive measures would be determined. Disqualified foods would be boycotted.

3

▲Miaoli—Jian Fu Organic Farm

Enhancing Service Quality and Quantity

Food and Beverage CultureNingbo: Was recognized by the General Association of Ningbo City as the “Role Model of Workplace

Canteen” of 2015Foshan: Introduced the policy of “40 days of free meals for new talents” as a benefit for new

employees. Introduced diverse food and beverage vendors, as well as the consumption model of Zhong Hang express card; employees could check card balance and spending record anytime.

Spatial DevelopmentTaiwan: 1. The Jhunan plant (JOC) won the “Award of Excellence in the 2015 Park Beautification and

Environmental Maintenance Contest.”2. Developed the “Patrol System APP”—By introducing a patrol and management mechanism in real-

time, supervisors could use the APP to dispatch patrollers, process reports from employees, answer questions, and track the problem progress.

Dormitory CultureTaiwan: Provided the services of ordering taxis and sending or receiving parcels Foshan: Optimized dormitory conditions for senior employeesNanjing: Free WIFI and USB recharging in the dormitory

Transportation ServicesTaiwan: Blankets, free water, umbrella covers, and magazines were provided on the shuttle buses that

traveled between the southern and northern plants.Ningbo: Welfare shuttles on circle lines were introduced, which allowed employees to travel and shop

more conveniently.Foshan: Pickup services between the plant and employees’ homes during Chinese New Year were

established to help employees travel between their homes and the plant.Shanghai: Innolux provided shuttle services to employees who live in remote areas. This reduced

the proportion of employees who drive to work and increased employees’ safety during commute.

!!

▲ Foushan plant—Free meals for new talents for 40 days

!

!

▲ Foushan plant—Transportation services during Chinese New Year

!

!! "

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Innolux established a platform and mechanism for disability care. A total of 1,159 employees with disability were hired in 2015, which was a 23.5% increase compared to 2014; the accession rate was 1.45%. In early 2013, Innolux deployed Taiwan’s success to China sites. In 2015, the China sites’ disability employment increased by 546 employees compared to 2013. Moreover, all of the plants in Ningbo, Foshan, and Nanjing achieved outstanding performances as they exceeded the 1.5% accession rate that was regulated by local laws. In addition, the Foshan plant was recognized by Guangdong Disabled Persons’ Federation as one of the first “Disabled Employment Demonstration Bases in Guangdong Province (level 1).”

Introduction to physical and psychological disabilities

1

2

Applicable analysis on the workplace

Consensus of all members

3

4

75

6

Interview selection

Job accommodation

Structured on-job training

(S-OJT)

Continuous care

Steps to Introducing Employees with Physical Disability

4.4.3 Disability Care

!

Within the technology industry, Innolux stands out as one of the few to have sufficient employees with disability. After focusing on employees with disability and achieving great effectiveness in the past four years, Innolux’s project of “Greater China Platform for Disability—Accessible and Friendly Workplace” received the “CSR Excellence Award” in 2015 at the 11th Global Views Corporate Social Responsibility Award.

‧ The project is highly unique. It is an invaluable achievement to break the old concept that people with disability cannot be hired by the technology industry.‧ The company conducted an in-depth investigation of

people with disability’s different characteristics, and designed appropriate job tasks with comprehensive counselling support. Innolux can be called an “expert of disability employment.”

The CSR Excellence Award from the Global Views Corporate Social Responsibility Award

Statistics of Disability Employment

China

382

Y2013 Y2014 Y2015

190

572

436502

938

423

736

1,159

0.72%

0.95%

1.45%

The Proportion of Disability Employment in the company

Taiwan Corp. Unit: People count

Comments from the evaluation committee


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Sharing the Business’s Practical Experience

▲Ningbo—Sign language training

!

▲ Ningbo—Caring for people with disabilities: relay and walk together on the International Day of Disabled Persons.

▲ Taiwan—Innolux shared its experiences of introducing disability employment at the Labor Affairs Bureau of Kaohsiung City Government. The event was attended by representatives from 46 enterprises.

!

▲ Ningbo—National Disabled Day: An

Affectional Event at Innolux Ningbo—Group dating activity for employees with disability in Beilun District.

Disability care activities in 2015

!

Innolux participated in the “2015 Caring Project for Disadvantaged Groups and Educational Resources Refinement, Application, and Promotion” that was held by the Southern Taiwan University of Science and Technology and the Affiliated Hearing Impaired School of National University of Tainan. An exhibition was set up under the theme “Innolux as a Friendly Workplace for People with Disability” during the celebration of the Affiliated Hearing Impaired School of National University of Tainan’s 150th anniversary. The exhibition included posters about friendly workplaces and videos of people with disability.

Innolux shared its experiences being “a friendly workplace for people with disability” with teachers and students from Hong Kong Institute of Education, who visited the Affiliated Hearing Impaired School of National University of Tainan on December 28. By doing so, Innolux was able to demonstrate industry-academia interaction through the model of business practical operations.

!

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4.5 Employee –friendly Workplace

Innolux is dedicated to building a friendly workplace that provides competitive salary, diverse educational training systems, and a variety of employee benefits to its employees. The “Friendly Workplace Promotion Team” was established in 2015 to integrate priority projects and increase employees’ sense of identity so as to reduce the number of external appeals or resignation rates. The Taiwan site collected optimization suggestions from manufacturing factory representatives and labor representatives. There was a total of 29 items and the Taiwan site has started working on reasonable assessment and making plans for improvement. In contrast, the China site focused on re-enhancing the qualities of food, clothing, living condition, transportation, and entertainment, including facilitation measures, dining conditions, benefits, and staff events. The ultimate goal is create an enjoyable work environment for the employees.

Innolux’s goal is to employ qualified personnel to facilitate the overall business performance. The company cares about diversity and equal opportunities. Innolux does not tolerate employment discrimination based on race, skin color, age, gender, sexual orientation, ethnicity, disability, pregnancy, religion, political affiliation, union membership, and marital status or otherwise. In 2015, there were 35,373 employees in the Taiwan site, 44,692 employees in the China site, and 283 employees overseas. The total number of employees worldwide was 80,348.

4.5.1 Recruitment and Staffing

Internal Talent Circulation and External Talent Attraction

Innolux has an internal recruitment platform that allows employees to search for immediate job openings. A specific contact window has also been established to provide job counselling and process employees transfer. The platform finds matches after selection and passes them to department supervisors as a reference. This facilitates the circulation of internal talent and provides employees with more diverse opportunities for learning and development. This system is set up as a measure to achieve Innolux’s philosophy of talent retention.

The company also designs thematic recruitment activities for different groups. In order to attract new graduates from school, a series of school recruitments are employed to strengthen students’ familiarity with Innolux, and increase the willingness of new graduates or

currently employed professionals to join Innolux. In 2015, recruitment activities were held in 9 schools including National Taiwan University, National Tsing Hua University, National Chiao Tung University, and National Cheng Kung University. By proactively attracting external talent, more than 4,000 resumes were collected.

The Second Inno-star Project

The Inno-star summer internship project was launched to discover new talents with potentials. It attracted as many as 450 applicants, and 370 of which were students from one of the top 10 universities in Taiwan.The interview was all about creativity. Students were asked to prepare a brief presentation on the topic of “panels and I”. Forty-eight students competed at the “Inno-star Audition at National Chiao Tung University,” from which 18 students were selected in the end.

!

We carefully arranged courses that focused on the company products, market analysis, manufacturing processes, and plant visits. This provided a quick understanding of the industry structure, and the INX WAY occupational experience demonstrated the importance of teamwork. This was followed by department internships and the launch of the blueprint learning project. The two months of internship experiences were shared at a final seminar as a measure to retain excellent talents and connect the industry and academia.

“Thanks to the experiential activies arranged by the HR department, we developed coherence during the first week of the internship,” said intern “Hong-Yi Lee” from National Chiao Tung University’s Electrical Engineering program. “This was different from other companies where it’d be difficult to connect with other classmates. By doing so, we were able to make new friends during the internship period.”!

!

“The atmosphere in my internship department was excellent,” said intern Zhe-Ning Yang from National Tsing Hua University’s Department of Materials Science and Engineering. “Everybody was willing to help me by sharing their work experiences with me. This was my most impressive observation and gain from the internship.”

▲Inno-star Audition at National Chiao Tung University

!

!!""#$%&'( !

!

▲Cource completion at the final seminar


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2015 Employment Type

Site Item/GenderFull-time Part-time

Contract( including foreign

workers)Commissioned Interns

Total

Female Male Female Male Female Male Female Male Female Male

TaiwanNo. of staff 10,627 17,286 0 0 6,238 1,222 0 0 - - 35,373

% of total staff 78.91% 0% 21.09% 0% - 100%

ChinaNo. of staff 12,691 24,513 0 0 0 0 782 2,521 922 3,263 44,692

% of total staff 83.25% 0% 0% 7.39% 9.36% 100%

2015 Workforce Structure

Site Age / Gender

Management 1

Specialist Administra-tion Staff Technician Total Percentage of

Local Managers 2PrimaryManage-

ment

MiddleManage-

ment

High-End Manage-

ment

Taiwan

<30Female 5 0 0 585 188 6,501 7,279

99.78%

Male 8 0 0 1,778 46 3,504 5,336

30-50Female 212 13 0 888 853 7,582 9,548

Male 1,463 219 11 5,171 172 6,031 13,067

>50Female 3 1 0 4 3 27 38

Male 15 26 9 43 2 10 105

Total 1,706 259 20 8,469 1,264 23,655 35,373

Percentage 4.82% 0.73% 0.06% 23.94% 3.57% 66.87% 100%

China

<30Female 57 0 0 1000 482 9672 11211

79.84%

Male 114 0 0 2,657 139 23,084 25,994

30-50Female 199 0 0 257 184 2,540 3,180

Male 448 1 0 774 74 2,988 4,285

>50Female 0 0 0 0 2 2 4

Male 1 0 0 1 5 11 18

Total 819 1 0 4,689 886 38,297 44,692

Percentage 1.83% 0.00% 0.00% 10.49% 1.98% 85.69% 100%

2015 Workforce Structure of New Employees (by gender) 2015 Workforce Structure of New Employees (by age)

Site Gender No. of staff Percentage

TaiwanFemale 1,610 36.32%

Male 2,823 63.68%

ChinaFemale 28,291 22.86%

Male 95,453 77.14%

Site Age No. of staff Percentage

Taiwan

<30 2,911 65.67%

30-50 1,518 34.24%

>50 4 0.09%

China

<30 109,777 88.71%

30-50 13,965 11.28%

>50 2 0.0016%

Above data were taken on December 31, 2015.1 Local managers in the Taiwan site are assistant section/division managers or higher who hold Taiwanese citizenship; local managers in the

China site are Chinese nationals at a middle management (including primary management) level.2 The definition of managers: Primary managers are defined as assistant managers or managers; high-end managers are those in charge of business or central units and above.

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Workforce Diversity-Taiwan

Site Year/TypeY2012 Y2013 Y2014 Y2015

No. of staff Percentage No. of staff Percentage No. of staff Percentage No. of staff Percentage

Taiwan

Disability 329 1.22% 382 1.24% 436 1.21% 423 1.20%

Foreigners 1 44 0.16% 51 0.17% 50 0.14% 37 0.10%

Site Year/TypeY2012 Y2013 Y2014 Y2015

No. of staff Percentage No. of staff Percentage No. of staff Percentage No. of staff Percentage

China

Disability 17 0.03% 190 0.31% 502 0.80% 736 1.64%

Racial Minority 1 2,468 3.81% 2,999 4.77% 3,849 6.05% 2,197 4.92%

Foreigners 2 4 0.006% 3 0.005% 2 0.003% 0 0%

Workforce Diversity-China

There are more than 100 employees in the Nanjing plant who have served the company for more than 10 years. They are the mainstay of this company. As the panel industry becomes increasingly competitive, only by speeding up the pace, increasing automation, and improving the quality can the company satisfy its clients while maintaining a leading position in technology and products. The Nanjing plant has demonstrated outstanding sales performance and goal achievement. This was made possible by employees’ hardships and selfless dedications, enabling Innolux to make new breakthroughs. Innolux will continue to apply its advantages in human resources to prepare for every challenging fight ahead.

!▲Senior Employees Recognition at the 2015 Back-to-Work Party

Protection of Foreign Workers’ Rights

The foreign laborer management at Innolux follows the Electronic Industry Code of Conduct (EICC), which safeguards their labor conditions and human rights. Brokers’ recruitment and management practices are strictly examined. For example, foreign workers’ dorms must comply with regulations as stated in the Foreign Worker Living Care Plan, including environmental regulations, passport safekeeping by themselves, and legitimate agency fees, service charges, and other costs.

In addition, Innolux’s educational trainings and agency management both considered foreign employees’ safety as well as rights and interests. For example:

1. Trainings were implemented for new talents in order for foreign workers to fully understand the work environment and job duties;

2. Seminars are held regularly and complaints channels are offered for foreign employees to freely express their will. 3. The labor agencies are regularly audited and evaluated to enhance the quality of workers’ daily care and management.

Inspections are conducted randomly to ensure that the environment is safe and clean.

1 Foreigners are employees without Taiwanese citizenship working in Taiwan.

1 Racial minority are ethnic groups are non-Han Chinese employees in People’s Republic of China. 2 Foreigners are non-domestic nationals working full-time in People’s Republic of China.

Nanjing Plant—Advantages in Human Resources

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Site Gender Y2011 Y2012 Y2013 Y2014 Y2015

TaiwanFemale 0.17% 0.20% 0.23% 0.21% 0.26%

Male 0.28% 0.31% 0.35% 0.34% 0.22%

ChinaFemale 4.01% 4.20% 3.27% 3.25% 9.94%

Male 6.20% 8.05% 7.11% 8.71% 3.23%

Total 10.66% 12.76% 10.97% 12.51% 13.65%

Site Age Y2011 Y2012 Y2013 Y2014 Y2015

Taiwan

<30 0.26% 0.27% 0.32% 0.31% 0.24%

30-50 0.19% 0.24% 0.26% 0.24% 0.24%

>50 0.0013% 0.0018% 0.0042% 0.0019% 0%

China

<30 9.91% 11.81% 9.92% 11.08% 11.75%

30-50 0.30% 0.44% 0.47% 0.88% 1.42%

>50 0.0009% 0.0002% 0.0003% 0.0001% 0%

Total 10.66% 12.76% 10.97% 12.51% 13.65%

Turnover Rate (by Gender)

Turnover Rate (by Age)

Site Y2011 Y2012 Y2013 Y2014 Y2015

Taiwan 0.43% 0.50% 0.57% 0.54% 0.40%

China 10.21% 12.23% 10.00% 11.65% 12.87%

Total 10.64% 12.73% 10.57% 12.19% 13.27%

Note: The monthly number of voluntary resignations is [(number of employees at the beginning of the month + number of employees at the end of the month)/2]*100%

Y2015 Taiwan China

Female 1.26% 1.66%

Male 0.85% 1.03%

Total 1.05% 1.23%

Absence Rate

Voluntary Resignation Rate

Notes:1. The absence rate is the total number of absent days during the reported period/total number of working days * 100%.2. Total number of working days is the total number of actual working days during the year for indirect laborers or the number of expected

working days during that year for direct laborers.3. Total number of absent days is actual total number of sick leave days (including medical leave), calculated based on the HR system.4. The aforementioned types of leave included: paid or unpaid sick leave and work-related injury leave; menstrual leave and tocolysis leave

were not included.

Retention Effort

1. Clearly explain the job description during the interview stage to avoid resignation due to misunderstandings.

2. Correctly disseminate the company information during job training to help new employees adapt to the job environment.

3. Provide a quality work environment with competitive compensation systems and comprehensive benefits.

4. Plan and execute projects for annual salary raises, incentive bonuses, and stock compensations for mid-term and long-term employment according to the company’s financial performances, operation, and individual work performances.

5. Strengthen management’s leadership skills through educational trainings for basic-level managers and factory line managers.

6. Create a friendly workplace by organizing incentive activities such as sports tournaments and movie appreciation events to retain employees.

7. Conduct caring interviews and questionnaires with resigning employees; Analyze important factors for retention and resignation in order to increase the retention rate.

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Innolux provides a quality work environment with competitive compensation systems and comprehensive benefits. It maintains its overall compensation standards through regular market research and compensation policy reviews. The salaries are determined by the job duties, employees’ educational background, professional experience, and comparison with salary surveys in the labor market. The salaries do not differentiate in any way based on factors such as gender, age, race, nationality, and religion. In addition, annual salary raises and incentive bonuses are comprehensively planned and executed according to the company’s financial affairs, operation, and individual work performances. Stock compensations for mid-term and long-term employment are also planned to encourage and retain outstanding talents.

4.5.2 Compensation and Benefits

1. Fixed salary for 12 months.2. Festival bonuses (Mid-Autumn Festival, Dragon Boat

Festival, and Chinese New Year).3. Comprehensive insurance: labor insurance, health

insurance, collective insurance.4. Incentive bonuses: calculated and awarded based on

business conditions and individual performance.5. Leave and retirement system in accordance with

Taiwan’s Labor Standards Act.

Salary/Benefits

Insurance Plan

Other than basic social insurance (labor and health insurance), the employees of the Taiwan site are also covered by group insurance from the company. There are also discounted self-paying insurance plans for their spouses, parents and children. The China sites also provide social insurance for their employees, which includes pension, medical, unemployment, work injury, and maternity coverage. In addition to the five insurance programs, China sites also provide employees’ business insurance, in order to provide greater indemnity to employees in the event of illness or accidents.

Work-Life Balance Program

In order to maintain employees’ work-life balance, Taiwan and China sites operate their own paid-leave systems in accordance with local laws and regulations—including annual leave, marriage leave, bereavement leave, maternity leave, pregnancy checkup leave, and paternity leave. Employees may apply for leave based on their individual needs. This will help employees maintain a balance between work and life.

Complete Pension System and Employee Retirement Arrangements

The pension system for Taiwan sites is managed in accordance with the Labor Standards Act, Labor Pension Act, and related laws and regulations, to adequately protect the interests of the employees. At China sites, social insurances and provident funds are paid in accordance with the local laws and regulations (pension, medical, unemployment, work injury, maternity) to help staff prepare for their retirement.2015 Labor Pension Contribution Rates

Note: Calculated in accordance with local regulations.

Item/Site TaiwanChina

Ningbo Foshan Nanjing Shanghai

Employer Contribution 6% 14% 13% 20% 21%

Employee Contribution 0~6% 8% 8% 8% 8%

Taiwan Female Male Total

No. of employees eligible for parental leave without pay in 2015

2,344 3,432 5,776

No. of employees applied for parental leave without pay in 2015

543 92 635

A: No.of employees expected to return to work after parental leave without pay in 2015

448 72 520

B: No. of employees actually returned to work after parental leave with-out pay in 2015

306 43 349

C: No. of employees returned to work after parental leave without pay in 2014 and still working in 2015

217 48 265

D: No. of employees returned to work after parental leave without pay in 2014

284 61 345

Return rate%= B / A 68% 60% 67%

Retention rate% = C / D 76% 79% 77%

Analysis of Parental Leave in 2015

The overall difference in basic wage ratio between male and female employees based on job categories in 2015 was calculated to be less than 0.08. This small difference was analyzed to be a reflection of differences in the distribution of position levels and seniority. It was not caused by gender differences. The overall results showed that Innolux’s employee salaries do not vary due to gender differences.

The Wage 1 Ratio of Male and Female Indirect Labor

Site/Item ManagementNon-

ManagementTotal

Taiwan Female:Male 0.88：1 0.96：1 0.92：1

China Female:Male 0.94：1 0.94：1 0.94：1

Total Female:Male 0.91：1 0.95：1 0.93：11 Wages: Regular salaries and premiums2 Management: Section supervisors or above

Basic Personnel The percentage of standard salary over local minimum wage

Taiwan

29.9%

China

26% 13%12%Ningbo Foshan Nanjing Shanghai

8%


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4.5.3 Training and Development

HRD Certification

Innolux believes that “employees are the bedrock of company development.” The company has set up an “HRD Time Space Map” which allows Innolux staff to quickly grasp work development space, and enables managers to quickly practice subordinate management. The Map also encourages Innolux staff to adopt a self-management attitude. Based on their position, employees receive their professional certification specification (e.g., common/professional certification), regulatory certification, or other certification, thereby improving their robustness, resilience, and competitiveness.

Innolux’s training courses are all gender-neutral. The statistical analysis of training at the Taiwan and China sites based on different labor categories are shown as follows:

Statistical Analysis on Training in 2015

Item

Taiwan China

Managers (Section and

above)Indirect Labor Direct Labor

Managers(Section and

above)Indirect Labor Direct Labor

Female Male Female Male Female Male Female Male Female Male Female Male

Trained People (a) 24,044 115,827 131,484 444,573 46,605 78,153 14,254 43,933 113,614 270,829 398,401 1,293,070

No. of People in this Category (b) 234 1,751 2,521 7,212 14,110 9,545 268 563 1,925 3,650 12,214 26,083

Average Training Hours (a/b) 102.75 66.15 52.16 61.64 3.30 8.19 53.19 78.03 59.02 74.20 32.62 49.58

Note: In the above table, working hours spent on certifications were not included in the training hours for direct laborers in Taiwan and China sites. This is because the working hours spent on certifications were not calculated based on gender and were only recorded by each individual as reference. To present the actual training hours of direct labor, the working hours spent on certifications were individually calculated as follows: the total working hours spent on certifications for direct labor was 40,145,481 hours, the total number of direct labor was 61,952, and the average training hours per person was 648.01.

International Elite Training in Taiwan—Classes for Future Managers are Ready to Go!

In 2015, elites from overseas visited Taiwan for educational trainings. “Classes for Teachers” were launched for the first time. Talented students were trained to be future seed lecturers for section-level courses on “execution power” in their respective plants. By doing so, “execution power” will become a common language for section-level supervisors, which can further facilitate the growth of Innolux’s management.

!

!

Department of Electronics Import and Export, Ningbo Plant—Wei Zhang

Everyone worked to the best of their abilities to achieve our goals. Most of us were factory supervisors with sufficient professional abilities, but we still experienced difficulties with the technology transfer courses that are solely based on management knowledge. However, we managed to study together and help each other out. We could hear people reading

aloud every day from evening to midnight. No kidding! Many people tried to memorize the course materials as they were taking a shower, brushing their teeth, or doing laundry. I was most impressed by an inarticulate and reserved supervisor on the factory end, whose performance was marked by the lecturer as in need for improvement. However, he continued to work hard and spent more than twice as

much time on practices, until he finally qualified. His dedicated and persistent spirit was worth our respects and inspirations.Students’ Comments about the Training

LCM Production Division I, Nanjing Plant—Wen Juan Liu

My perception of work changed. I was able to look at problems from a higher perspective. Moreover, I also conveyed some management concepts to young partners on the team, such as the concepts of accountability, behavior objectives, and result objectives. I also repositioned my understanding about internal lecturers. I used to think they only needed to do some talking, but now I know that teachers should guide students rather than just dumping information on them. The courses about technology transfer were very helpful to me. I was introduced to many practical management techniques, which greatly improved the practical operation of my work.Students’ Comments about the Training

!

!


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Performance Management and Development

Innolux’s “Performance Management and Development” process employs the “three musts” of PMD: the goal must be clear, evaluation must be objective, and the results must be implemented in execution. By conducting an “year-end performance appraisal” in conjunction with keeping daily management records and encouraging the Talent Review Committee to practice objective evaluations, “talent identification and development” can be achieved. In 2015, a total of 71,948 employees participated in the performance appraisals. Of the reviewed employees, 59% were male and about 41% were female. This is in line with our company’s overall gender ratio, which is another proof of the company’s pursuit for gender equality.

Occupation/Gender

Female Male Group total and Percentage

No. of personsPercentage

of this groupNo. of persons

Percentageof this group

No. of personsPercentageof total staff

Managers 623 18.11% 2,818 81.89% 3,441 4.78%

Indirect Labor 4,450 30.00% 10,382 70.00% 14,832 20.61%

Direct Labor 24,427 45.51% 29,248 54.49% 53,675 74.60%

Total 29,500 41.00% 42,448 59.00% 71,948 100.00%

4.5.4 Zero Distance Communication

▲Quick and Diverse Communication Channels—Solving Problems Quickly

Employment Relations

Innolux has established a specialized unit called “Employee Relations Division” to process employees’ complaints. The division values employees’ concerns, makes active responses, and supervises competent authorities in making timely improvements. There were 318 cases of complaints about human rights in Taiwan and China sites, and 452 cases of complaints about working conditions. These complaints have been promptly replied and solved. The division cares about employees who filed the complaints, it not only tries to satisfy their reasonable demands, but also traces back to the source of the problem to reduce similar occurrences in future. For example, it occasionally launches leadership management and communication courses for factory’s management supervisors, which may guide supervisors in leading their teams with more humane management concepts.

Site/Item Taiwan China Total

No. of Cases Reported 145 173 318

Percentage of Reported Cases Handled 100% 100% 100%

No. of Reported Cases Solved 145 173 318

Percentage of Reported Cases Solved 100% 100% 100%

Note: Working condition complaints are divided into salary and leaves, occupational health and safety, and labor management complaints categories.

Statistical Analysis on Employee Complaints in 2015

Human Rights Complaints

Working Condition Complaints

Note: Human rights complaints are divided into recruitment, sexual harassment, leadership management categories.

Innolux emphasizes harmonious labor relations. In addition to convening quarterly labor-employer meetings and employee welfare meetings, full-range communication channels have also been constructed. Through the bidirectional channels of the “Employee Care Hotline,” “Employee Care Mailbox,” and “comment boxes” at respective sites, employees may express their opinions about human rights, labor relations, or sexual harassment either explicitly or anonymously. In order to protect employees’ rights and interests, Innolux will help them deal with problems about individual rights and interests, or any unfair treatments.

Cases of sexual harassment are reviewed by the “Sexual Harassment Complaints Committee,” which determines disciplinary penalties according to the severity of the scene. Innolux has dedicated numerous measures to protect employees from sexual harassment. In addition to regular trainings for new talents, factory line managers, and the promotion of quarterly quality meetings, advocacy posters and computer startup screens are set up irregularly to explain workplace safety, channels for complaints regarding sexual harassment, and actual cases of sexual harassment. This helps to create a friendly workplace. There were 16 cases about “sexual harassment” in 2015, which have all been replied and solved.

Site/Item Taiwan China Total

No. of Cases Reported 47 405 452

Percentage of Reported Cases Handled 100% 100% 100%

No. of Reported Cases Solved 47 405 452

Percentage of Reported Cases Solved 100% 100% 100%


‧Labor-Employer Meetings‧Employee Welfare Meetings

Platform for company representatives to communicate with the employee welfare committee

‧ Computer Start-Up Screen‧INX eNews

Policy announcement

‧Factory Director’s Email‧ On-Site Feedback Platform

First channel for Employees’ to submit feedback

‧Employee Care Hotline‧Employee Care Mailbox

Second channel for employees’ to submit feedback)

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2015 Innolux CSR Report Contents

8685

Independent Assurance Opinion Statement

8685

Appendices

8685

8887


8887

GRI G4 Content Index

Indicator Description Chapter Page Omissions External Assurance

Strategy and Analysis

G4-1

Statement from the most senior decision-maker of the organization about the relevance of sustainability to the organization and the organization's strategy for addressing sustainability

‧A Message from the Chairman 3 - 85-86

G4-2 Description of key impacts, risks, and opportunities

‧2.1.2 Risk Management‧Chapter 3 Environmental Materiality‧Chapter 4 Social Materiality

244163

- 85-86

Organization Profile

G4-3 Name of the organization ‧Innolux Company Overview 4 - 85-86

G4-4 Primary brands, products, and services ‧Innolux Company Overview 4 - 85-86

G4-5 Location of the organization's headquarters ‧Innolux Company Overview 4 - 85-86

G4-6

Number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report

‧Innolux Company Overview 4 - 85-86

G4-7 Nature of ownership and legal form ‧Innolux Company Overview 4 - 85-86

G4-8 Markets served ‧Innolux Company Overview‧Market Share

431 - 85-86

G4-9 Scale of the reporting organization ‧Innolux Company Overview‧Financial Performance

430 - 85-86

G4-10 Breakdown of workforce ‧4.5.1 Recruitment and Staffing 77 - 85-86

G4-11 Percentage of total employees covered by collective bargaining agreements

Innolux do not have trade unions; collective bargaining is thus unneeded. - - 85-86

G4-12 Describe the organization's supply chain ‧2.3 Supply Chain Management 35 - 85-86

G4-13 Significant changes during the reporting period

No significant organizational changes occurred for Innolux in 2015. - - 85-86

G4-14Whether and how the precautionary approach or principle is addressed by the organization

‧Manage the operation of the company in accordance with Principle 15: the Precautionary Approach of Rio Declaration.‧ 3.2.1 Climate change mitigation and

adaptation

44 - 85-86

G4-15

List externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses

‧ 3.2.1.1 Climate Change Risks & Opportunities 46 - 85-86

G4-16 Memberships in associations ‧2.1.1 Corporate Organization 19 - 85-86

Identified Material Aspects and Boundaries

G4-17 Report coverage of the entities in the consolidated financial statement

‧1.2 Materiality Analysis‧2.1.1 Corporate Organization

1419 - 85-86

G4-18 Process for defining the report content and the aspect boundaries ‧1.2 Materiality Analysis 14 - 85-86

General Standard Disclosure

8887

Appendices

8887


G4-19All the material Aspects identified in the process for defining report content

‧1.2 Materiality Analysis 14 - 85-86

G4-20For each material Aspect, report the Aspect Boundary within the organization


G4-21For each material Aspect, report the Aspect Boundary outside the organization


G4-22

The effect of any restatements of information provided in previous reports, and the reasons for such restatements

Because the process water recycling rate formula was revised in 2015, the water recycling amount and the recycling rate were adjusted substantially. The water balance diagram data of related sites were inspected and confirmed by the Bureau of Environmental Inspection.

- - 85-86

G4-23

Significant changes from previous reporting periods in the Scope and Aspect Boundaries

‧No significant alterations has been made to the scope o f disclosure. - - 85-86

Stakeholder Engagement

G4-24 List of stakeholder groups engaged by the organization

‧ 1.1 Stakeholder Communication and Participation 11 - 85-86

G4-25The basis for identification and selection of stakeholders with whom to engage

‧1.1 Stakeholder Communication and Participation 11 - 85-86

G4-26 Approaches to stakeholder engagement


Report Profile

G4-27 Response to key topics and concerns raised


G4-28Reporting period (such as fiscal or calendar year) for information provided

‧Editorial policy for the report 2 - 85-86

G4-29 Date of most recent previous report (if any) ‧Editorial policy for the report 2 - 85-86

G4-30 Reporting cycle (such as annual, biennial) ‧Editorial policy for the report 2 - 85-86

G4-31 Contact point for questions ‧Editorial policy for the report 2 - 85-86

G4-32In accordance' option, the GRI content index and external assurance

‧Editorial policy for the report‧Annex – GRI G4 Content Index

287 - 85-86

G4-33 Policy and current practice regarding external assurance

‧Editorial policy for the report‧ Independent Assurance Opinion Statement

285 - 85-86

Governance

G4-34

Governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental and social impacts

‧Enhancing Sustainable Development Strategies‧2.1 Company Governance

719 - 85-86

G4-35

Process for delegating authority for economic, environmental and social topics from the highest governance body to senior executives and other employees

‧Enhancing Sustainable Development Strategies‧2.1 Company Governance

719 - 85-86

9089


9089


G4-36

Process for delegating authority for economic, environmental and social topics from the highest governance body to senior executives and other employees

‧2.1 Company Governance -

The company has yet to directly report its CSR results to the board. However, quarterly CSR Committee meetings and annual management reviews are held by president Jyh-Chau Wang, who is a board member, to inspect the implementation of CSR.Innolux plans to report CSR management and overall performance results to the board in 2016.

85-86

G4-37

Processes for consultation between stakeholders and the highest governance body on economic, environmental and social topics. If consultation is delegated, describe to whom and any feedback processes to the highest governance body

‧ Enhancing Sustainable Development Strategies

‧2.1.1 Corporate Organization

719 - 85-86

G4-38 Composition of the highest governance body and its committees

‧ CSR promotional organization‧2.1.1 Corporate Organization

719 - 85-86

G4-39 Position of the chair of the board of directors ‧2.1.1 Corporate Organization 19 - 85-86

G4-40Nomination and selection processes for the highest governance body and its committees

‧2.1.1 Corporate Organization 19

Innolux has yet to incorporate the CSR professional background into the selection criteria; president Jyh-Chau Wang serves as the CSR Committee representative and supervises the implementation of CSR activities.

85-86

G4-41 Avoiding conflicts of interest ‧2.1.1 Corporate Organization 19 - 85-86

G4-42The role of the highest governance body and senior executives in setting purpose, values and strategy

‧CSR promotional organization 7 - 85-86

G4-43

Measures taken to develop and enhance the highest governance body's collective knowledge of economic, environmental and social topics

- -

Innolux plans to enhance the highest governance body's collective knowledge of CSR.

85-86

G4-44 Evaluating board performance with respects to sustainability topics ‧2.1.1 Corporate Organization 19 - 85-86

G4-45

The role of Board of Directors in the identifications and management of economic, environmental and social impacts, risks and opportunities

‧CSR promotional organization 7 - 85-86

9089

Appendices

9089


G4-46

Highest governance body’s role in reviewing the effectiveness of the organization’s risk management processes for economic, environmental and social topics

‧2.1.1 Corporate Organization 7 - 85-86

G4-47

Frequency of the highest governance body’s review of economic, environmental and social impacts, risks, and opportunities


G4-48

Highest committee or position that formally reviews and approves the organization’s sustainability report and ensures that all material Aspects are covered

This CSR Report has been reviewed and approved by the Innolux CSR committee.

- - 85-86

G4-49Process for communicating critical concerns to the highest governance body

‧ 2.1.4 Basic Practices of Corporate Social Responsibility‧ CSR Management Representative,

president Jyh-chau Wang, is also a board member.

27 - 85-86

G4-50

Nature and total number of critical concerns that were communicated to the highest governance body and the mechanism(s) used to address and resolve them

‧ Enhancing Sustainable Development Strategies‧ 2.1.4 Basic Practices of Corporate

Social Responsibility

727 - 85-86

G4-51 Remuneration policies for the Board of Directors and senior executives ‧2.1.1 Corporate Organization 19 - 85-86

G4-52 Process for determining remuneration ‧2.1.1 Corporate Organization 19 - 85-86

G4-53

How stakeholders' views are sought and taken into account regarding remuneration, including the results of votes on remuneration policies and proposals, if applicable


G4-54

Ratio of the annual total compensation for the organization's highest-paid individual to the median annual total compensation


G4-55 Ratio of percentage increase with regards to G4-54 ‧2.1.1 Corporate Organization 19 - 85-86

Ethic and Integrity

G4-56

Organization's values, principles, standards and norms of behavior such as codes of conduct and codes of ethics

‧ 2.1.3 Ethical Corporate Management and Internal Control System‧ 2.1.4 Basic Practices of Corporate

Social Responsibility

2627 - 85-86

G4-57

Mechanisms for finding advice on ethical and lawful behavior, and matters related to organizational integrity

‧ 2.1.3 Ethical Corporate Management and Internal Control System‧4.5.4 Zero Distance Communication

2683 - 85-86

G4-58

Internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters related to organizational integrity, such as escalation through line management, whistle blowing mechanisms or hotlines

‧ 2.1.3 Ethical Corporate Management and Internal Control System‧4.5.4 Zero Distance Communication

2683 - 85-86

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Material Aspects Indicator Description Chapter Page Omissions External

Assurance

Economy

Economic Performance

DMA ‧2.2 Operational Performance 30 - 85-86

G4-EC1 Direct economic value generated and distributed ‧2.2 Operational Performance 30 - 85-86

G4-EC2Financial implications and other risks and opportunities for the organization's activities due to climate change

‧ 3.2.1.1 Climate Change Risks & Opportunities 46 - 85-86

G4-EC3 Coverage of the organization's defined benefit plan obligations

‧2.2 Operational Performance‧4.5.2 Compensation and Benefits

3081 - 85-86

G4-EC4 Financial assistance received from government ‧2.2 Operational Performance 30 - 85-86

Market Presence

DMA ‧4.5.1 Recruitment and Staffing‧4.5.2 Compensation and Benefits

7781 - 85-86

G4-EC5

Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation

‧4.5.2 Compensation and Benefits 81 - 85-86

G4-EC6

Proportion of senior managementhiredfrom the local community at significant locations of operation

‧4.5.1 Recruitment and Staffing 77 - 85-86

Indirect Economic Impact

DMA ‧2.1.2 Risk Management‧2.2 Operational Performance

2430 - 85-86

G4-EC7Development and impact of infrastructure investments and services supported

‧2.1.2 Risk Management‧2.2 Operational Performance‧2.3 Supply Chain Management‧4.3.1 Participation in Charity Services‧4.3.2 Educational Empowerment‧4.5.1 Recruitment and Staffing

243035697177

- 85-86

G4-EC8 Significant indirect economic impacts, including the extent of impacts

‧2.1.2 Risk Management‧2.2 Operational Performance‧2.3 Supply Chain Management‧4.5.1 Recruitment and Staffing

24303577

- 85-86

Procurement Practices

DMA ‧2.3 Supply Chain Management 35 - 85-86

G4-EC9Proportion of spending on local suppliers at significant locations of operation

‧2.3 Supply Chain Management 35 85-86

Environmental

Material

DMA ‧ 3.2.5 Environmental Material Flow Information 57 - 85-86

G4-EN1 Materials used by weight or volume

‧ 3.2.5 Environmental Material Flow Information‧ Innolux did not use renewable raw

materials.

57 - 85-86

G4-EN2 Percentage of materials used that are recycled input materials

‧ 3.2.5 Environmental Material Flow Information 57 - 85-86

Specific Standard Disclosure

9291

Appendices

9291


Assurance

Energy

DMA ‧3.2.2 Energy Resources Management 48 - 85-87

G4-EN3 Energy consumption within the organization


G4-EN4 Energy consumption outside of the organization


G4-EN5 Energy intensity ‧3.2.2 Energy Resources Management 48 - 85-87

G4-EN6 Reduction of energy consumption ‧3.2.2 Energy Resources Management 48 - 85-87

G4-EN7 Reductions in energy requirements of products and services

‧ 3.3.2 Green Innovation–energy saving design 58 - 85-87

Water

DMA ‧3.2.3 Water Resources Management 51 85-87

G4-EN8 Total water withdrawal by source ‧ 3.2.5 Environmental Material Flow Information 57 - 85-87

G4-EN9 Water sources significantly affected by withdrawal of water

The plants located in industrial parks and do not cause material effect to water sources

- - 85-87

G4-EN10 Percentage and total volume of water recycled and reused


Emission

DMA ‧ 3.2.1.2 Climate change mitigation management 47 - 85-87

G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1)

‧ 3.2.1.2 Climate Change Mitigation Management 47 - 85-87

G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2)


G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3)


G4-EN18 Greenhouse gas (GHG) emissions intensity


G4-EN19 Reduction of greenhouse gas (GHG) emissions


G4-EN20 Emissions of ozone-depleting substances (ODS)


G4-EN21 NOx, SOx, and other significant air emissions


Effluent, and Waste

DMA‧3.2.3 Water Resources Management‧ 3.2.4 Pollution Control and

Environmental Impact Reduction

5154 - 85-87

G4-EN22 Total water discharge by quality and destination ‧3.2.3 Water Resources Management 51 - 85-87

G4-EN23 Total weight of waste by type and disposal method

‧ 3.2.4 Pollution Control and Environmental Impact Reduction 54 - 85-87

G4-EN24 Total number and volume of significant spills

Innolux did not have major leakage incident in 2015 - - 85-87

G4-EN25 Hazardous waste transported, imported, exported or treated


G4-EN26Water bodies and related habitats significantly affected by water discharges and runoff

Innolux's plants locate in the industrial park or science park. Wastewater is processed to meet the park's administrative standard before discharged to the sewage system of the park

- - 85-87

9493


9493


Assurance

Products and Services

DMA ‧3.3.2 Green Innovation‧3.3.4 Lean Green

5860 - 85-86

G4-EN27Extent of impact mitigation of environmental impacts of products and services

‧3.3.2 Green Innovation 58 - 85-86

G4-EN28Percentage of products sold and their packaging materials that are reclaimed by category

Innolux's product is not terminal products. Relevant management covers only design and manufacture stage.

- - 85-86

Compliance

DMA ‧ 3.2.4 Pollution Control and Environmental Impact Reduction 54 - 85-86

G4-EN29

Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations


Transport

DMA‧2.3.2 Sustainable Supply Shain‧ 3.2.1.2 Climate Change Mitigation

Management

3747 - 85-86

G4-EN30

Significant environmental impacts of transporting products and other goods and materials for the organization's operations, and transporting members of the workforce

‧2.3.2 Sustainable supply chain‧ 3.2.1.2 Climate Change Mitigation

Management

3747 - 85-86

Overall

DMA ‧3.2 Green operations 43 - 85-86

G4-EN31 Total environmental protection expenditures and investments by type


Supplier Environmental Assessment


G4-EN32 Percentage of new suppliers that were screened using environmental criteria ‧2.3 Supply Chain Management 35 - 85-86

G4-EN33Significant actual and potential negative environmental impacts in the supply chain and actions taken

‧2.3 Supply Chain Management 35 - 85-86

Environmental Grievance Mechanisms

DMA ‧3.2 Green Operations 43 - 85-86

G4-EN34

Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms

‧3.2 Green Operations 43 - 85-86

Labor Practices and Decent Work

Employment

DMA ‧4.5.1 Recruitment and Staffing‧4.5.2 Compensation and Benefits

7781 85-86

G4-LA1Total number and rates of new employee hires and employee turnover by age group, gender, and region

‧4.5.1 Recruitment and Staffing 77 - 85-86

G4-LA2

Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation

‧4.5.2 Compensation and Benefits‧ The benefits provided to full-time

employees were the same as those provided to temporary or part-time employees.

81 - 85-86

G4-LA3 Return to work and retention rates after parental leave, by gender ‧4.5.2 Compensation and Benefits 81 - 85-86

9493

Appendices

9493


Assurance

Labor/Management Relations

DMA Innolux follows local law and regulations on Labor Human Rights. - - 85-86

G4-LA4

Minimum notice periods regarding operational changes, including whether these are specified in collective agreements

The notice period of Innolux complies with relevant Labor Standard Act. The notice period of Innolux is as below:1. 10 days notice for 3 months to less

than 1 year of service.2. 10 days notice for 1 year to less than

3 years of service.3. 1 month notice for more than 3 years

of service.

- - 85-86

Occupational Health and Safety

DMA ‧ 4.1.1 Health and Safety Strategies and Operations Management 66 - 85-86

G4-LA5Percentage of workforce represented in formal joint management worker health and safety committees

‧ 4.1.1 Health and Safety Strategies and Operations Management 66 - 85-86

G4-LA6

Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender

‧ 4.1.1 Health and Safety Strategies and Operations Management 66 - 85-86

G4-LA7 Workers with high incidence or high risk of diseases related to their occupation ‧4.4.1 Health Risk Management 72 - 85-86

G4-LA8 Health and safety topics covered in formal agreements with trade unions

Innolux do not have trade unions; collective bargaining is thus unneeded. - - 85-86

Training and Eduction

DMA ‧4.5.3 Training and Development 82 - 85-86

G4-LA9Average hours of training per year per employee by gender, and by employee category

‧4.5.3 Training and Development 82 - 85-86

G4-LA10

Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings


G4-LA11

Percentage of employees receiving regular performance and career development reviews, by gender and by employee category


Diversity and Equal Opportunity

DMA ‧4.5.1 Recruitment and Staffing 77 - 85-86

G4-LA12 Composition of governance bodies and employee breakdown ‧4.5.1 Recruitment and Staffing 77 - 85-86

Equal Remuneration for Women and Men

DMA ‧4.5.2 Compensation and Benefits 81 - 85-86

G4-LA13

Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation

‧4.5.2 Compensation and Benefits 81 - 85-86

9695


9695


Assurance

Supplier Assessment for Labor Practices


G4-LA14 Percentage of new suppliers that were screened using labor practices criteria ‧2.3.1 Supply Chain Risk Management 35 - 85-86

G4-LA15Significant actual and potential negative impacts for labor practices in the supply chain and actions taken

‧2.3.1 Supply Chain Risk Management 35 - 85-86

Labor Practices Grievance Mechanisms

DMA ‧4.5.4 Zero Distance Communication 83 - 85-86

G4-LA16Number of grievances about labor practices filed, addressed, and resolved through formal grievance mechanisms

‧4.5.4 Zero Distance Communication 83 - 85-86

Human Rights

Investment

DMA ‧ 2.1.4 Basic Practices of Corporate Social Responsibility 27 - 85-86

G4-HR1

Total number and percentage of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening

Innolux does not have large investment in 2015. - - 85-86

G4-HR2

Total hours of employee training on human rights policies or procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

‧ 2.1.4 Basic Practices of Corporate Social Responsibility 27 - 85-86

Non-discrimination

DMA ‧4.5.1 Recruitment and Staffing‧4.5.4 Zero Distance Communication

7783 - 85-86

G4-HR3Total number of incidents of discrimination and corrective actions taken


Freedom of Association and Collective Bargaining


G4-HR4

Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights

No major risk was found after CSR internal audit (according to EICC) in 2015.

- - 85-86

Child Labor


G4-HR5

Operations and suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor


- - 85-86

Forced or Compulsory Labor


G4-HR6

Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor


- - 85-86

9695

Appendices

9695


Assurance

Assessment

DMA ‧ 2.3.1 Supply chain risk management 35 - 85-86

G4-HR9

Total number and percentage of operations that have been subject to human rights reviews or impactassessments

‧ 2.3.1 Supply chain risk management 35 - 85-86

Supplier Human Rights Assessment

DMA ‧ 2.3.1 Supply chain risk management 35 - 85-86

G4-HR10 Percentage of new suppliers that were screened using human rights criteria ‧ 2.3.1 Supply chain risk management 35 - 85-86

G4-HR11Significant actual and potential negative human rights impacts in the supply chain and actions taken

‧ 2.3.1 Supply chain risk management 35 - 85-86

Human Rights Grievance Assessment

DMA ‧ 4.5.4 Zero Distance Communication 83 - 85-86

G4-HR12Significant actual and potential negative human rights impacts in the supply chain and actions taken


Society

Local Community

DMA ‧ 4.3.1 Participation in Charity Services 69 - 85-86

G4-SO1

Percentage of operations with implemented local community engagement, impact assessments, and development programs

‧ All plants of Innolux conduct environmental assessment according to local regulations.‧ Community activities were held in

Taiwan and China sites in 2015.

- - 85-86

G4-SO2Operations with significant actual or potentialnegative impacts on local communities

No major negative impacted caused by Innolux to local community in 2015. - - 85-86

Anti- Corruption

DMA ‧ 2.1.3 Ethical Corporate Management and Internal Control System 26 - 85-86

G4-SO3

Total number and percentage of operations assessed for risks related to corruption and the significant risks identified

‧2.1.4 Basic Practices of Corporate ‧ No major risk was found after CSR

internal audit (according to EICC) and review for Taiwan and China sites in 2015.

26 - 85-86

G4-SO4 Communication and training on anticorruption policies and procedures

‧ 2.1.3 Ethical Corporate Management and Internal Control System 26 - 85-86

G4-SO5 Confirmed incidents of corruption and actions taken


Anti- Competitive Behavior


G4-SO7

Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes

Please refer to page 171 of the 2015 annual report for further details. - - 85-86

Compliance


G4-SO8

Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations

No major penalty against Innolux in 2015. - - 85-86

Supplier Assessment for Impacts on Society

DMA ‧2.3.1 Supply Chain Risk Management 35 - 85-86

G4-SO9 Supplier Assessment for Impacts on Society ‧2.3.1 Supply Chain Risk Management 35 - 85-86

G4-SO10Significant actual and potential negative impacts on society in the supply chain and actions taken

‧2.3.1 Supply Chain Risk Management 35 - 85-86

9897


9897


Assurance

Grievance Mechanisms for Impacts on Society

DMA ‧ 2.1.3 Ethical Corporate Management and Internal Control System 26 - 85-86

G4-SO11

Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms


Product Responsibility

Customer Health and Safety

DMA ‧3.3.2 Green Innovation 58 - 85-86

G4-PR1

Percentage of significant product and service categories for which health and safety impacts are assessed for improvement

‧3.3.2 Green Innovation 58 - 85-86

G4-PR2

Total number of incidents of noncompliancewith regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes

No violation against laws and regulations concerning products and services was found for Innolux in 2015.

- - 85-86

Product and Service Labeling

DMA ‧2.1.5 Customer Satisfaction‧3.3.3 Green Innovation

2858 - 85-86

G4-PR3

Type of product and service information required by the organization's procedures for product and service information and labeling, and percentage of significant product and service categories subject to such information requirements

RoHS /HF/GP have been labeled on non-terminal products based on the clients’ needs.

- - 85-86

G4-PR4

Total number of incidents of noncompliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

No violation against regulations and voluntary codes concerning information and labeling was found for Innolux in 2015.

- - 85-86

G4-PR5 Results of surveys measuring customer satisfaction ‧2.1.5 Customer Satisfaction 28 - 85-86

Customer Privacy

DMA ‧2.1.5 Customer Satisfaction 28 - 85-86

G4-PR8

Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

No substantiated complaints regarding breaches of customer privacy and losses of customer data was found for Innolux in 2015.

- - 85-86

Compliance

DMA ‧2.1.5 Customer Satisfaction 28 - 85-86

G4-PR9

Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

No penalty against the violation of laws and regulations concerning products and services was found for Innolux in 2015.

- - 85-86

Others

Responsible Procurement

DMA ‧2.2 Operational Performance 30 -- 85-86

INX-EC1

Conduct suppliers’ smelters inventories to ban the use of conflict minerals Conduct inventories to ensure the sources are legal

‧2.2 Operational Performance 30 - 85-86

E-system of Green Product Management

DMA ‧3.3.1 Smart Green 58 - 85-86

INX-EN1

Digitalize and visualize green products’ related information to enhance the management capability of the products.

‧3.3.1 Smart Green 58 - 85-86

Disability CareDMA ‧4.4.3 Disability Care 75 - 85-86

INX-SO1 Initiate and promote disability-friendly workplace ‧4.4.3 Disability Care 75 - 85-86

9897

Appendices

9897

Category 10 principles Related Chapter Page

Human rights

Organizations should support and respect for internationally recognized human rights

2.1.4 Basic Practices of Corporate Social Responsibility4.5.1 Recruitment and Staffing4.5.2 Compensation and Benefits4.5.4 Zero Distance Communication

27778183

Ensure that no human rights are abused 2.1.4 Basic Practices of Corporate Social Responsibility2.3 Supply Chain Management

2735

Labor standards

Organizations should uphold the freedom of creating clubs and the effective recognition of the right to collective bargaining

2.1.4 Basic Practices of Corporate Social Responsibility 27

Eliminate all forms of forced and compulsory labor

2.1.4 Basic Practices of Corporate Social Responsibility2.3 Supply Chain Management

2735

Effective abolition of child labor 2.1.4 Basic Practices of Corporate Social Responsibility2.3 Supply Chain Management

2735

Eliminate discrimination of employment and occupation

2.1.4 Basic Practices of Corporate Social Responsibility4.5.1 Recruitment and Staffing4.5.2 Compensation and Benefits

277783

Environment

Organizations should support precautionary approaches to environmental challenges


3.2.5 Environmental Material Flow Information3.3.2 Green Innovation3.3.3 Lean Green

54575860

Undertake initiatives to promote greater environmental responsibility

3.2.1 Climate Change Mitigation and Adaption3.2.2 Energy Resources Management3.2.5 Environmental Material Flow Information3.3.2 Green Innovation

44485458

Encourage the developments and diffusions of environmentally friendly technologies 3.3.2 Green Innovation 58

Anti-corruption Organizations should work against corruption in all forms, including extortion and bribery



262735

UN Global Compact Comparison Chart

10099


10099

Main Topics Related Chapter Page

Organization GovernanceDecision-making and execution system when implementing goals

2.1.1 Corporate Organization 19

Human Rights

Review and comply with regulations to avoid this risks caused by human rights issues

2.1.4 Basic Practices of Corporate Social Responsibility2.3 Supply Chain Management4.5.1 Recruitment and Staffing4.5.4 Zero Distance Communication

27357783

Human rights risks2.1.4 Basic Practices of Corporate Social Responsibility2.3 Supply Chain Management

2735

Avoid complicity relationship – direct, benefits and silence, etc.


2735

Resolve grievances 4.5.4 Zero Distance Communication 83

Discrimination and disadvantaged groups

4.5.1 Recruitment and Staffing4.5.2 Compensation and Benefits4.5.4 Zero Distance Communication2.3 Supply Chain Management

35778183

Civil and political rights 2.1.4 Basic Practices of Corporate Social Responsibility 27

Economic, Social and Cultural Rights

2.2 Operational Performance2.3 Supply Chain Management4.3.1 Participation in Charity Services4.3.2 Educational empowerment4.5.1 Recruitment and Staffing

3035697177

Basic rights to work

2.1.4 Basic Practices of Corporate Social Responsibility4.5.1 Recruitment and Staffing4.5.2 Compensation and Benefits4.5.4 Zero Distance Communication

27778183

Labor Practice

Recruitment and recruitment relationship

2.3 Supply Chain Management4.5.1 Recruitment and Staffing4.5.2 Compensation and Benefits4.5.4 Zero Distance Communication

35778183

Recruitment and recruitment relationship 4.5.2 Compensation and Benefits 81

Social dialogue1.3 Stakeholder Communication and Participation2.1.4 Basic Practices of Corporate Social Responsibility

1127

Work health and safety4.1.1 Health and Safety Strategies and Operations

Management66

Manpower Developments and Trainings 4.5.3 Training and Development 82

The Environment

Pollution Prevention


3.2.5 Environmental Material Flow Information3.3.2 Green Innovation3.3.3 Lean Green

54575860

Sustainable resource reuse3.2 Green operations3.3 Green value chain

4358

Climate change mitigation and adaptation

3.2.1 Climate Change Mitigation and Adaptation3.2.2 Energy Resources Management3.2.5 Environmental Material Flow Information3.3.2 Green Innovation

44485758

Environmental protection, biodiversity and natural habitat restoration

3.4 Green Environment 61

ISO26000 Comparison Table

10099

Appendices

10099

Main Topics Related Chapter Page

Fair Operation Practice

Anti-corruption



262735

Responsible political participation

Innolux has maintained an absolutely neutral stance on political issues and does not participate in any form of political lobbying and related activities, nor engage in political donations.

27

Fair competition 2.1.4 Basic Practices of Corporate Social Responsibility 27

Social responsibility to promote the value chain


2.1.4 Basic Practices of Corporate Social Responsibility2.2 Operational Performance2.3 Supply Chain Management4.5.1 Recruitment and Staffing

2627303577

Respect for intellectual property rights 2.1.4 Basic Practices of Corporate Social Responsibility2.2 Operational Performance

2730

Consumer Issues

Fair marketing, information and contract practices

Since Innolux is not a terminal product manufacturer, the company mainly focuses on the designs and manufacturing.

-

Protect consumers' health and safety 2.1.5 Customer Satisfaction3.3.2 Green Innovation

2858

Sustainable consumption 3.3.2 Green Innovation 58

Consumer service, support, complaints and dispute resolution 2.1.5 Customer Satisfaction 28

Consumer data protection and privacy 2.1.5 Customer Satisfaction 28

Provide necessary services 4.3.1 Participation in Charity Services 4.3.2 Educational Empowerment

6971

Education and awareness 2.1.5 Customer Satisfaction 28

Community Involvement and Development

Community Engagement 4.3.1 Participation in Charity Services 69

Education and culture 2.1.4 Basic Practices of Corporate Social Responsibility4.3.2 Educational Empowerment

2771

Increase employment and technological development

2.2 Operational Performance2.3 Supply Chain Management4.5.1 Recruitment and Staffing

303577

Technology development 2.2 Operational Performance 30

Create wealth and income

2.2 Operational Performance2.3 Supply Chain Management4.5.1 Recruitment and Staffing4.5.2 Compensation and Benefits

30357781

Health3.3.2 Green Innovation4.1.1 Health and Safety Strategies and Operations4.4.1 Health Risk Management

586672

2015 innolux csr report · 2016-08-10 · 3 4 2015 innolux csr report contents gri g4 index table a...

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