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2

TABLE OF CONTENTS

OVERVIEW 03

1. MESSAGE FROM THE CHAIRMAN 04

2. CORPORATE PROFILE 05

2.1 An Introduction to Yageo 05

2.2 Business Summary 06

2.3 Financial Highlights 07

2.4 Corporate Governance 08

2.5 Stakeholder Identification and Communication 12

2.6 Investor Engagement 13

2.7 Corporate Security and Risk Control 14

2.8 Awards Received in the Reporting Period 16

3. EMPLOYMENT 17

3.1 Employment 17

3.2 Employee Development 20

3.3 Compensation and Benefits 20

3.4 Employee Relations 21

3.5 Work and Life Balance Program 21

3.6 Safety and Health 22

4. CUSTOMER SERVICE & SUPPLIER MANAGEMENT 23

4.1 Customer Service and Satisfaction 23

4.2 Supply Chain Risk Management 24

4.3 Helping Suppliers Improve Delivery and Quality 25

4.4 Ensuring Supplier Compliance 25

5. ENVIRONMENTAL PROTECTION 27

5.1 Green Management Organization and System 28

5.2 Declaration of Metal Conflict Free 30

5.3 Environmental Compliance Record 30

APPENDIX 32

GRI G4 Guidelines Content Index 32

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ABOUT THIS REPORT

Yageo have always fully devoted ourselves to the corporate social responsibilities, in order to be a

good corporate citizen. We continue to strengthen the ties with our employees and suppliers,

enhance corporate governance, business ethics, maximize social contribution, and environmental

protection. We provide a clean & healthy living environment to the society to show our care for the

earth and the next generation. Yageo’s business and our commitment to sustainable growth are

depending on these cornerstones.

Report Scope

This report contains information related to all Yageo offices & factories located in Taiwan (Taipei

and Kaohsiung), as well as our wholly-owned subsidiaries, Yageo (China) – Dongguan and Suzhou.

Financial figures in this report are expressed in New Taiwan Dollars unless otherwise specified.

This report is published in English and is available on Yageo’s corporate website.

Reporting Period

We publish the Social Responsibility Report on an annual basis, and the previous report was

published in June 2016. This CSR report describes performance data from January 1, 2016 to

December 31, 2016.

Reporting Criteria

This CSR report has been compiled in accordance with the Core option of

the Global Reporting Initiative (GRI) G4 guidelines for disclosing

CSR-related strategies, concepts, measures, and performance. Compared

with Yageo’s 2015 CSR report, this report does not revise misleading data

from previous reports.

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1. MESSAGE FROM THE CHAIRMAN

As an industrial leader, Yageo’s core value is a constant focus on achieving higher levels of

operational, environmental and safety performance. We spare no efforts to maintain a strong,

healthy workforce, operate safely and responsibly, and deal ethically with our stakeholders,

partners and the public. Our objective is to create sustainable value for our employees,

shareholders, suppliers, business partners and the communities.

We are dedicated to preserving a green globe and minimizing environmental impacts by reducing,

reusing, and recycling materials used in our manufacturing processes.

Yageo’s Social Responsibility Statement is as following:

To ensure labor's obligations and rights, Yageo draws up regulations and system according

to Labor Standards Act

Yageo fully complies with "Gender Equality in Employment Law" and labor related

applicable obligations in Labor Standards Act. Yageo prohibits sex, race, religious belief,

age, marital status, disability, and nationality discrimination

According to company employment policy, Yageo does not engage in child labor, employ

anyone below 16 years of age and avoids enforced labor

Yageo respects the human rights, complies with "Gender Equality in Employment Law" and

takes steps to avoid issues of sexual harassment

Yageo is devoted to environmental protection. Our environmental policies are :

- To implement pollution prevention by complying with legal requirements

- The reduction and disuse of prohibited materials, resource recycling

- Strive for sustainable business development and continue environmental improvements

- To establish/ implement an environmental management system to provide a safe and

healthy working environment for employees

We firmly believe that Yageo's vision and competitive edge in environmental conservation and

workforce protection will create corporate and product value, drive a sustainable growth and benefit

all of our stakeholders. We will continue to fulfill our social responsibilities for a better tomorrow.

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2. CORPORATE PROFILE

Yageo is the world’s leading passive component service provider, providing the industry’s leading

process technologies and the comprehensive product portfolio. Yageo’s leading industry position is

based on a combination of key differentiating strengths: technology leadership, manufacturing

excellence, and customer partnership.

2.1 An Introduction to Yageo

Founded in 1977 and headquartered in Taipei, Taiwan, the Yageo Corporation has become a

world-class provider of passive components services with capabilities on a global scale, including

production and sales facilities in Asia, Europe and the Americas. The corporation provides

one-stop-shopping, offering its complete product portfolio of resistors, capacitors and wireless

components in both commodity and specialty versions to meet the diverse requirements of

customers.

Yageo currently ranks as the world No.1 in chip-resistors, and No. 3 in MLCCs, with 28

sales/service offices in 18 countries, 9 production sites, 8 JIT logistic hubs and 2 R&D centers

worldwide.

Yageo’s broad product offerings are targeting at key vertical markets, including applications for

mobile, tablet PC, industrial/power, alternative energy, medical and automotive. We serve

diversified leading global customers, such as EMS, ODM, OEM and distributors.

MilanItaly

MoscowRussia

RoermondBenelux

TaipeiTaiwan

SeongnamKorea

SuzhouChina

DongguanChina

TokyoJapan

KaohsiungTaiwan

MunichGermany

SkierniewicePoland

SzombathelyHungaryGuadalajara

Spain

TrajoucePortugal

San JoseUSA

GuadalajaraMexico

Singapore

Malaysia

ShanghaiChina

DallasUSA

DetroitUSA

AtlantaUSA

MinnesotaUSA

HamburgGermany

ChicagoUSA

Montréal Canada

BostonUSA

LondonUK

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Table 1 Yageo products’ sales performance in 2016

Proportion 2016

Main products Unit of total sales (NT$1,000) %

MLCC 12,557,333 42.4

Chip Resistor 11,876,157 40.1

Wireless Component 444,245 1.5

Leaded Resistor 977,340 3.3

Ferrites 1,925,063 6.5

Others 1,836,214 6.2

Total 29,616,351 100

The market brands carried including : Yageo, Phycomp, and Vitrohm. The company is listed on the

Taiwan Stock Exchange since October 1993, and GDR listing on the LUX since September 1994.

2.1.1 Membership in Industry Association

As a leader of passive component supplier, Yageo actively participated in trade and industry

associations. Yageo is the member of ECIA (Electronic Components Industry Association). As an

organization made up of the leading electronic component manufacturers, their manufacturer

representatives and authorized distributors, ECIA members share a common goal of promoting and

improving the business environment for the authorized sale of electronic components to the end

customer. In doing so, we contribute to making the Americas region more competitive in the design

and production of electronic goods.

Since automotive grade chip resistors and MLCCs are our product development focus in recent

years, Yageo also joined AEC as a member and participate the technical seminars on a regular

basis. The Automotive Electronics Council (AEC) is an organization based in the United States that

sets qualification standards for the supply of components in the automotive electronics industry.

AEC was formed in 1993 by Chrysler, Ford Motor, Delco Electronics. AEC developed several

notable specifications for automotive electronics

2.2 Business Summary

Yageo made fundamental transformation throughout

the organization in the past few years. As we continue

into 2017, we're excited by the incredible

opportunities ahead. Yageo will continue to create

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value for shareholders, customers and employees by the following main strategies:

Expand the niche market share: continue to optimize the product mix, strengthen the

partnership with large customer, increase the sales portion of high contribution products and

customers; focus on the application areas of high prices and high margins, expand

automotive electronics, industrial products, power supplies, Internet of Things, VR / AR

innovation and technology, and enhance the market share of Europe and the United States

market.

Implement excellent operations: provide total solutions and integrated services, offer a

comprehensive product portfolio to meet customers "one-stop-shopping service"; provide the

best quality global logistics services with high efficiency automated logistics and warehousing

management platform; continuous integration of the business units and global sales network

resources, update the system and operating processes in a timely matter.

Develop the quality and innovative products: based on the existing products and technology,

continue to invest in adjacent technology high-end product development, introduce high-value

new component categories, solid execution of new product development and go-to-market

plan. Improve quality management processes, provide high quality and comprehensive

product line to meet the needs of all types of customers

Progress toward a high performance organization: a clear division of functions, and foster

professional successors, attract and retain talents, continuously construct a high-performance

organization through the organizational and process innovation.

Yageo will continue improving the fundamentals, offering product portfolio with a holistic launch to

be impactful to the market. We will leverage our leading position in Greater China home market,

further penetrate Europe and N. America with the in-depth segmentation strategy backed with R&D

resources.

2.3 Financial Highlights

Yageo achieved USD916 million revenue (NT$29.6 billion) in 2016, a 7.6% increase compared to

the previous year. Breakdown by product, MLCC and R-Chip account for 42% and 40%,

respectively, by region, China is our largest contribution which accounts for 73% of total revenue.

However, the efforts of AVL at customer’s HQ in Europe, N. America, Japan and Korea also cannot

be ignored.

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Table 2 Yageo Corporation’s financial performance for 2016 and 2015 (Unit: NT$1,000)

Item 2016 2015

Financial revenue/expenditure

Business revenue $29,616,351 $27,512,865

Operating costs 22,357,997 20,973,877

Gross profit 7,258,354 6,538,988

Net income before tax 4,975,284 4,563,375

Income tax 969,584 891,310

Net profit 4,005,700 3,672,065

Profitability Net profit per share 6.83 5.48

2.4 Corporate Governance

Yageo Corporation is firmly convinced that a sound corporate governance practice is the

cornerstone of the company. By holding on to the highest standard of corporate transparency and

integrity, Yageo has benefited from effective risk management, efficient organizational functioning,

and greater investor confidence and increased market attractiveness in recent years even though

the stock market is bearish and the economy is in a slump.

Reinforcing the framework of corporate governance has proven to be as essential to the end results

as an appropriate business model in Yageo's seeking to

become the world's finest passive component services

provider.

As a principle, Yageo maintains strict reporting

requirements across its global organization. In addition to

publishing monthly sales information via the press and on

Yageo website, Yageo also holds the annual general meeting and one-on-one investor meetings to

keep the investor communities informed in un-prejudiced, consistent and timely manner.

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2.4.1 Company Structure

Graphic 1. Organization chart

2.4.2 Board of Directors

Yageo’s Board of Directors consists of nine renowned members with a diverse experience and

knowledge, they are world-class business leaders or scholars. Under Chairman Pierre TM Chen’s

leadership, Yageo’s Board of Directors takes a straightforward and serious approach to its duties

and is a proficient and independent Board.

The primary responsibilities of the Board of Directors are supervision, counseling and direction to

the management of the Company. They also provide guidance to the management team of the

Company. The Board’s detailed responsibilities include, but are not limited to, the following:

1. Composing the business plan;

2. Proposing earnings distribution plan or plan for making up the losses;

3. Proposing plan for capital increase or decrease;

4. Approving important corporate policies and contracts;

5. Electing and terminating the President and Managers of the Company;

6. Establishing and withdrawing the branch offices;

7. Approving the budget and financial accounts;

8. All matters shall be decided by resolutions of the board of directors, unless the Law or

Memorandum of Incorporation provide certain matters shall be resolved at the Shareholders

Meeting.

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Table 3 Yageo Directors, Supervisors

Title Name Experience Education

Chairman Pierre T.M. Chen Chairman, Chilisin Electronics Corp.

BS, Engineering, National Cheng

Kung University

Chairman, Teapo Electronics Corp.

CEO &

Director Dora C. W. Chang

Chief Financial Officer, Advantech Co., Ltd. MBA, Finance, UCLA Anderson

School

VP Finance, Procter & Gamble, Greater

China

Independent

Director Jerry Lee Chairman, Teapo Electronic Corp.

BA in Accounting, Tam-Kang

University

Independent

Director Hilo Chen Founder & Chairman, GuoShi Partners Co. EMBA, National Taiwan University

Director Shih-Chien Yang Chairman and CEO, Global Strategic

Investment Fund

Ph.D., Electrical Engineering,

Northwestern University

Director Bob P.Y. Wang Chairman, Kuo-E Corp.

BS, Electrical Engineering and

Microelectronics, National Cheng

Kung University

Director Tzong-Yeong Lin Director, Kuo Shin Investment Ltd Master of Law, National Taiwan

University

Director Victor C. Wang Chairman, VW & Co, CPA EMBA, National Taiwan University

Supervisor Yuan-Ho Lai Director of the Board, Chilisin Electronics

Corp. LL.M. & LL.D. from Kobe U., Japan

Supervisor Lawrence Lai-Fu Lin Independent Director, O2Micro International

Limited

Meetings of the Board of Directors

1. Chairman of the Board

The Board of Directors shall appoint a Chairman to represent the Company and a Vice Chairman

from among the board members. In the case the Chairman is on leave or unable to perform his or

her duty, the Vice Chairman shall take the place of the Chairman. In the case the Vice Chairman is

also on leave or unable to perform his or her duty, the Chairman shall designate one of the board

members to take his or her place. If the Chairman fails to make designation, the board members

shall appoint a member among themselves to take the place of the Chairman.

2. Frequency of Meetings

The regular meetings are held per quarter and shall give 7-day notice to Directors and Supervisors

before the meeting. In the case of emergency, the meeting may be convened at any time.

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2.4.3 Compensation Committee

Other than improving corporate governance, strengthening the compensation management power

of the Board, and assessing and determining the compensation for directors, supervisors, and

managers, the Compensation Committee must also assist Yageo with project consultation and

training of senior-level managers.

Roles & Responsibilities

Define the policies, systems, standards, structures related to the performance and compensation of

directors, supervisors, and managers.

Compensation and Selection

The Compensation Committee members are appointed by the Board of Directors, which include

two independent directors and an external advisor, with one of the convener. In 2016, the

Compensation Committee convened two meetings, with an attendance rate of 100%. All members

of the Compensation Committee must abide by independent and professional specifications and

regulations; the term of office for committee members is the same as that for the Board of Directors.

2.4.4 Internal Audit System

The purpose of internal auditing is to monitor and evaluate the efficiency and implementation of our

internal control system. Yageo requires all auditing personnel to maintain an independent and

objective attitude when reviewing the main operation areas and relevant regulations to assist the

board and management in achieving the company’s revenue, performance, and asset protection

goals, and reasonably guarantee the reliability of financial reports and regulatory compliance.

Under the leadership of the Board of Directors and Audit Committee, Yageo’s internal audit process

is aimed at thoroughly examining the company’s operations and identifying improvement

opportunities. The auditing unit conducts audits according to the findings of previous operation

audits, risk assessments, and key project initiatives relating to the company’s operating strategy.

Thematic audits based on various real-work functions are also conducted by using a specific

indicator to compare the performance of all global units, or conducting a thorough audit of

operations for specific area or department. The ultimate goal is to establish solid operating

strategies that build a strong foundation for long-term corporate development. .

2.4.5 Corporate Compliance

The EICC Code of Conduct was established to ensure worker safety and fairness, environmental

responsibility, and business efficiency. Yageo adopts the EICC Code of Conduct, has created a

manual to manage, efficiently implement, the promotion of EICC and to protect human rights and

social aspects.

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EICC (Electronic Industry Citizenship Coalition) Code of Conduct:

Prevention of occupational injury and illness.

A commitment to uphold the human rights of employees, and to treat them with dignity and

respect.

Obey environmental laws and regulations.

Conduct business operations with reference to ethics.

Protect intellectual property

Emphasize continuous improvement

Yageo’s management team closely scrutinizes both domestic and foreign government policies and

regulatory developments that could have a potential impact on Yageo’s business and financial

operations; we have established related risk management procedures. As of today, Yageo has

never been subject to any material monetary fines and/or non-monetary sanctions for

non-compliance with any regulations and statutory laws.

2.5 Stakeholder Identification and Communication

Yageo has established a core team to lead corporate social responsibility activities, including

representatives from Investors & Public Relations, Human Resources and Corporate Marketing.

The core team identifies stakeholders and integrates stakeholders’ concerns into annual plans and

routine tasks, also keeps flexibility to incorporate ad-hoc issues into annual plans.

The core team also quests support from other departments if necessary.

Yageo stakeholders include employees, suppliers, customers/partners, investors and stockholders,

government, and the community. Yageo assumes certain responsibilities to its stakeholders and

needs to regularly communicate with them through different measures and channels to understand

their needs and expectations from Yageo. We also take these needs and expectations into

consideration for corporate social responsibility policy and projects.

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Table 4 Yageo stakeholder key concerns and communication channels

Stakeholder Key Concern Communication Channel Frequency

Company policies, strategies Investor conference Annual

Corporate governance Board of directors meeting Quarterly

Risk management Market observation post system Ad-Hoc

Economic/financial performanceFinancial reports QuarterlyCompliance with product-related laws and regulations Key account QBR review meetingQuarterly

New products/applicationinformation Interactive seminars Semi-annual

Pricing, capacity International and domestic exhibitionAd-Hoc

Factory audit Ad-Hoc

Procurement practice Audit and evaluation Annual

Supplier management & evaluationBusiness meeting Ad-Hoc

Labor relations & employee welfareEmployee welfare committee Ad-Hoc

Training & development Training Ad-Hoc

Health & safety Employee portal Ad-Hoc

Company policies, strategies Bulletineboard Ad-Hoc

Strategic sales & marketing meetingSemi-annual

Employee complaint mailbox Ad-Hoc

Laws & regulations compliance EHS compliance evaluation Semi-annual

Labor relations Public announcement Ad-Hoc

Media Economic/financial performanceRevenue announcement Ad-Hoc

Society/Community Industry/market trends Industrial membership Ad-Hoc

Investors/Shareholders

Customers

Suppliers

Employees

Government/Institution

2.6 Investor Engagement

The objective of Yageo’s business strategies and financial

policies is to support and enhance the value of our long-term

shareholders. In addition to align ourselves with international

standards that demonstrate our reputation and position as a

premier investment and sustainability leader, we are also highly

ranked within the passive component industry. Since public

listed in TSE in 1993, we have consistently delivered value to

shareholders through cash dividends, maintaining a solid

financial status, and keeping high credit ratings among

technology companies.

Yageo has established an effective communication system to distribute information to better serve

investors and the investment community. Each quarter, our Investors & Public Relations

Department reports and publishes company performance to the investors. Yageo Investors &

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Public Relations team holds investor and analyst meetings on a regular basis. All these efforts

emphasize on serving investors with timely, accurate and transparent information regarding Yageo

business, operations and performance. In addition, information regarding Yageo’s business

performance and Material information released on TSE Market Observation Post System is posted

on Yageo’s corporate website in a timely manner.

2.7 Corporate Security and Risk Control

Yageo is committed to create a safe working environment and protect proprietary information.

Therefore, in order to safeguard the interests of the Company, customers, employees and

shareholders, Yageo is dedicated to physical security, employee security, and vendor security.

Yageo takes effective risk management to avoid possible security incident.

2.7.1 Risk Management Policy

Purpose

Risk management relates to the culture, processes and structures directed towards the effective

management of potential opportunities and adverse effects within Yageo’s corporate environment.

The purpose of this policy is to describe the corporation's fundamental approach to risk and risk

management. It provides guidelines and information on how Yageo Corporation manages risks.

Organizational Scope

Risk management is a corporate-wide policy. A systematic application of management policies,

procedures and practices and also include a clear understanding of roles and responsibilities will

lead to an effective risk management.

2.7.2 Risk Assessment & Effect Analysis

Yageo has incorporated risk management into its daily operations, and regularly implement risk

reduction strategies. Yageo’s risk response strategy includes preventive implementations,

adjustments, corrective measures and monitoring.

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Table 5 Yageo’s risk response strategies for ensuring business continuity

2.7.3 Contingency Response Plan

Purpose

The purpose of this Contingency Response Plan (the “Plan) is to sketch the standard procedures

for Yageo employees to follow when disasters occur at its manufacturing plants.

Scope

This Contingency Response Plan provides action plans which include:

1) The preparation work for disaster prevention.

2) Standard Operating Procedures for responding to various disasters.

Disasters 1) Fire Accident (Emergency Incident)．

2) Natural Disasters (Typhoon, Earthquake or

Flood)

3) Explosion

4) Accidents That Cause Major Environmental

Impact

5) Chemical Spills

Potential Risk Potential Effect Possible Causes Preventive Meaures Corrective Measures Person incharge

1Equipment failure/interruption

Product output andgoods delivery

1. Lack of spareparts/machine 2.Equipment aging

Prepare backup/spareparts/machines

1. Establish regularmaintenanceplan/resource2. Regularreplacement

R+M

2Raw materialshortage Capacity and delivery Insufficent stock

1. Regular stockreview and prevention2. Deveop secondsource

Set safety stock levelWarehouse,Procurement

3 Water outageEquipment andproduction

Natural disaster,water companysystem failure

Keep contact withwater company

Prepare waterreservation tanks Factory

4 Power outageEquipment andproduction

1. Natural disaster2. Power companymalfunction

Keep contact withpower company UPS IE

5 Labor shortage

1. Insufficientproduction output2. Delivery delay3. product quality

Insufficent training,high turnover rate

Employee care andcommunication

1. Provide training2. Employee retention3. Offer competitivepackage

HR

6 Customer payment Payment delay

1. Sales people'snegligence2. Customer'seconomic/creditissue

Regular review

1. Regular customervis it2. Monthlyreconciliation withcustomer

Sales

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6) Utility Outage (Ex: Power and water)

7) All other possible accidents

2.8 Awards Received in the Reporting Period

2016 Supplier Excellence Award from TTI (North America, and Asia)

Yageo is honored to receive the Supplier Excellence Award (SEA) Bronze Level in both N.

America and Asia from TTI, Inc. an authorized, specialty distributor of interconnect, passive, and

electromechanical (IP&E) components. Winning this award means that Yageo has been

acknowledged for consecutive 2 years as an outstanding performance on all quality

measurements. TTI created its SEA program to uphold supplier quality at all levels, including

receiving, customer-reported and administrative quality, and on-time delivery supported by reliable

operations and business systems.

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3. EMPLOYMENT

People are one of the most valuable assets

to support Yageo’s business success.

Yageo’s True Colors Every employee in the organization is

expected to adhere to Yageo’s True Colors

- our core values of Speed, Innovation,

Efficiency and Flexibility. These values are

also the basis on which we build the trust

and integrity that will allow our business to

continue to succeed.

3.1 Employment

Yageo’s principles of human resource planning to ensure resources are available to meet current

and future business needs, which are described as below:

Organization planning and headcount budgeting according to business plan and strategies.

Develop various recruiting channels such as job banks, internal referral, outsourcing

agents, campus recruiting.

Prepare 5~10% extra workforce as backup manpower.

Provide training to upgrade workforce capability.

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Yageo’s goals and practices for realizing the core values are summarized as below: Table 6. Yageo’s social management goals and practices

Corresponding Issues/Items Practices

Human rights

Prohibits the use of child labor and forced labor; ensuresequal employment opportunities; no human rights complaintcases reported; and all employee jobs are protected underthe Labor Safety Act, which ensures reinstatement afterparental leave

Employer/employeecommunications

Labor meetings, departmental meetings, seminars,suggestion box, Employee portal, bulletine board

Compensation and benefits

Adheres to the minimum base salary specified in the LaborStandards Act, provides various insurance benefits,contributes to a pension fund, and conducts periodicperformance appraisals.

Occupational health and safety

Holds relevant certification for occipational health and safety,and management systems; the porportion of laborrepresentatives in the Environmental Safety Committeeconforms to the basic requirements of Labor Safety Act; andminimizes occupational injuries by providing annualemployee health examinations (as mandated by the LaborStandards Act)

Employee code of conduct

prohibits unethical business practices and insider trading;complies with employee labor and environmental regulations;conducts self-examinations according to the ElectronicIndustry Code of Conduct (EICC); and ensures that allemployees refuse bribes and follow equal labor rightrequirements

A harmonious work place Maintain an employee cafeteria and employee parking lot

Learn Training and development Training seminars, sales & marketing workshop

Employee relations Spring wine party

The welfare committee Sports club, travel allowance, gift vouchers, movie tickets

Social welfare Donation

Work

Happy life

3.1.1 Yageo Workforce Structure

At the end of 2016, Yageo had 10,096 employees worldwide, including 7,575 production operators

and 2,521 indirect labor (factory, centralized infrastructure, sales & marketing, and logistics).

Regardless of gender, religion, race, nationality or political affiliation, Yageo has well defined the

employment policy for hiring - based on their job qualifications and company requirements. We also

have procedures in place to ensure an equal treatment for all candidates and employees in

recruitment, development, and evaluation.

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Table 7. Employee distribution

Year 2016 2015

number of

employees

Direct labor 7,575 7,824

Indirect labor 2,521 2,475

Total 10,096 10,299

Average age 33 32

Average year of service 4.86 4.63

Education

background

PhD 21 16

Master 238 212

University 2,502 2,340

High School 5,642 5,807

Under high school 1,693 1,924

3.1.2 Employee Retention

Yageo’s encourages work-life balance, enhancing managers’ capabilities, and providing career

development opportunities to keep and attractive talented employees. The average annual turnover

rate of the past three years has been less than 10%.

Table 8. Employee attrition rate

3.1.3 Recruitment

Hiring managers are required to prepare job description of the vacancy before recruiting. Yageo

recruits employees through an assessment and selection process according to qualifications

defined. We prohibit sex, race, religious belief, age, marital status, disability, and nationality

discrimination in hiring.

Yageo prepares employment contract which includes all terms of wages, benefits, working hours,

exit procedure, contract termination, information security, intellectual property… etc., The contract

shall be signed by the candidate prior to his/her employment day.

Location Monthly Attrition Rate

OP Non-OP

Taiwan 3.36% 1.31%

China 11.25% 2.3%

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3.1.4 Abolition of Child Labor

Taiwan’s “Labor Standard Law” states that no workers below the age of 15 shall be employed, and

that children between the age of 15 and 18 are not permitted to perform heavy or hazardous work.

To comply with the law, Yageo never hires employees less than 16 years old, we also conduct age

verification in recruitment process to avoid hiring underage labors.

3.1.5 Performance Measurement

The objective of Yageo’s performance measurement system is to improve the performance of

individual employees and the organization as a whole. The key evaluation criteria include:

leadership, initiatives & follow through, problem solving, teamwork, strategy executions,

communication and organization building.

3.2 Employee Development

We train workers to industry standards, and invest in the local workforce. Continuous learning is

especially important for company success in the sluggish economic situation. Yageo provides

comprehensive learning opportunities and resources to all employees and a tailor-made individual

development plan to the employee’s development needs, also with business needs. Training days

for each indirect labor received in average is 6 days, and 42 days for each direct labor.

Development and Training Programs

Yageo not only employs talented people, but is

also focusing its energies on enhancing the

leadership and capabilities of its staff. Yageo

offers opportunities for people to grow both

professionally and personally by adding value

to the organization, improving their leadership

skills and work capabilities through our

management training programs by external professional institution, which including:

Problem analysis and solving

Negotiation skills

7 habits of highly effective people

3.3 Compensation and Benefits

Yageo place employee’s benefits in high priority, employees are entitled to a comprehensive

compensation and benefits package above the industry average. Based on salary changes in the

industry, productivity at Yageo, and individual employee performances, annual salary raises will be

calculated. Yageo offers employees a wide range of benefits, which include:

Employee cafeteria

Group insurance

Travel allowance, gift vouchers, movie tickets from Employee Welfare Committee

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Incentive and festival bonuses

Working Environment

Yageo also strives to provide a comfortable working

environment for employees. These include: safe and clean

working environment, friendly safety guards within factories.

3.4 Employee Relations

Yageo believes that high productivity and performance are based on harmonious employee

relationship. Therefore, Yageo dedicated to building employee relations by recognizing employee’s

achievements and enhancing open communication channels.

In order to timely deliver company policies to employees, Yageo communicates with employees

through various channels, listening and responding to employees’ feedback. Besides the formal

channels, the employee survey and the informal channel collect employee views and concerns.

Company information is communicated with employees through

1) Corporate business review meeting

2) Department meeting

3) Employee Portal

4) Bulletin board

Employees can raise concern through channels of direct supervisor, grievance

hotline, suggestion box, health & safety committee…etc.

3.5 Work and Life Balance Program

Work-Life balance is critical for your employees and your organization as a whole Yageo’s work

and life balance program helps employees enjoy a better quality of life and it also contributes to

Yageo’s success. Yageo cares employees’ well-beings by providing a healthy, safe working

environment, and offering a variety of activities.

3.5.1 Health Care

Yageo offers annual employee health examination, consultation service as well as on-site clinics for

convenient employee medical service.

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3.5.2 Yageo Employee Welfare Committee

The Yageo Employee Welfare Committee (EWC) was established under the requirements of

Taiwan’s Employee Welfare regulations. The key objective is to provide comprehensive welfare

services to all employees, and help to keep a good balance between work and life. The EWC

organizes employee activities, special offers from contracted retailers, festival gifts, etc.

3.6 Safety and Health

3.6.1 Safety and Health Management

Yageo stipulated the "Safety and Health Policy" as our guidelines according to the OHSAS18001

occupational health management system standard and Yageo’s internal actual situation

requirements as the basis. Our goal is to achieve high quality of safety in the workplace, and high

security of labor health.

1. Have its business activities conducted in such a way to protect the health and safety of its

employees, and to minimize any adverse effects on the environment.

2. Implement working practices, which will prevent personal injury and damage to property.

3. Limit the potential to cause harm from known hazardous process by maintaining a safe system of

work, and by planning for emergencies which may reasonably be foreseen.

4. Involve its employee in carrying out the policy, and make them aware of their own responsibility

for the health and safety of themselves and others.

5. Provide appropriate training to ensure the competence of staff who advise on occupation health,

safety and environmental matters.

6. Secure the maximum benefit from our own experiences concerning dealing with health and

safety hazards for the good of the business as a whole.

3.6.2 Emergency Response

To ensure the safety of personnel is Yageo’s first priority of disaster response policy, followed by

avoiding pollution to the environment, to reduce property losses and maintain normal production.

We believe that when natural disasters or accidents occur, proper treatment in the initial stage of

the event not only reduce the chance of personnel injury and environmental pollution to the

minimum level, but also decreases losses and lowers the difficulty of resuming production to a

certain extent. Yageo pays a great amount of attention to emergency response - from emergency

equipment setup, creation of contingency procedures, drill, training, and other preparations.

23

4. CUSTOMER SERVICE & SUPPLIER MANAGEMENT

Yageo believes that customer service is

vital to strengthen customer loyalty and

enhance customer satisfaction, as such,

we are committed to providing efficient

and innovative services to our customers.

Customer loyalty will lead to higher levels

of customer retention and thus to

business relationships expansion.

Yageo also cooperates with suppliers to fulfill our corporate social responsibilities – we have

formed a reliable and sustainable supply chain network, which supports protection of the

environment, human rights, health and safety. The supplier selection criteria including ISO certified

vendor, non-use of hazardous substance guarantee, etc. Yageo committees and managing teams

execute a complete “Plan-Do-Check-Act” (P-D-C-A) cycle to align corporate direction in supply

chain management.

4.1 Customer Service and Satisfaction

4.1.1 Customer Service

Yageo aims to maintain its leading position in the passive component manufacturing technologies

and services. Achieving this goal will help Yageo to retain existing customers, attract new

customers, and further enhance customer relationships. To facilitate customer interaction and

information access on a real-time basis, Yageo has established a wide range of web-based

services covering applications in EDI, and online literature request. We also launched a B2B Portal

to provide online Order Management, Payment Service and Technical Support.

4.1.2 Customer Satisfaction

24

Yageo conducts surveys and reviews on a regular basis to

ensure that we understood and addressed customer’s

needs and wants adequately. We also integrated customer

feedback into our continuous improvement plans as part of

business processes.

In order to identify customer’s specific requirements and

expectation from Yageo, and gain direct feedback from

customers to evaluate Yageo’s strengths, weakness, opportunities and threats, an annual

Customer Satisfaction Survey has been carried out.

The team has reported the survey findings and analysis of customer feedback to the Yageo

management team. Appropriate action plans will be taken by related functional and regional teams,

and the improvement progress will be monitored closely.

4.2 Supply Chain Risk Management

The purchase of Yageo can be broadly classified into four major categories – raw material,

consumable parts, equipment maintenance & repair, and assets. In 2016, Yageo formed an internal

committee, dedicated to managing our supply chain - members come from global logistics,

materials management, risk management, and quality system management. The focuses of the

committee are risk alleviation and supply chain improvement. The steering team, including a senior

director and managers, guides annual goals and reviews progress on a quarterly basis.

The committee’s working team shares risk management practices with suppliers to assist them in

reducing production and transportation risks, helps suppliers improve quality systems, green

Singapore

RoermondBenelux

SuzhouChina

DongguanChina

KaohsiungTaiwan

SzombathelyHungary

SkierniewicePoland

TrajoucePortugal

25

procurement, and safety. Meanwhile, we also monitor the financial situation of strategic suppliers

through regular communication and public information, monitor the inventory of supply chain, and

draw up backup plans. The working team holds monthly meetings to keep track of progress and

actively handle suppliers’ issues.

We will ensure our supply chain conforms to ethical and environmental standards, other than

regular supplier evaluations, Yageo also maintains constant supplier communication and

relationship management. Our suppliers must guarantee and verify that their products do not

contain any of the hazardous substances prohibited by Yageo. Yageo has integrated key

CSR-related indicators, including RoHS, ISO14000 and OHSAS18000, and supplier localization

into its supplier evaluation and management criteria.

4.3 Helping Suppliers Improve Delivery and Quality

4.3.1 Lean Supply Chain

Global Logistics’ importance is increasing; logistics must support the goals of a lean manufacturing

program. We need detailed, timely and accurate information to make the right transactional,

planning and scheduling decisions for all aspects of the business. Therefore, Yageo works closely

with our suppliers to exchange inventory information, so the demand and price fluctuations can be

detected in early stage. We collaborate with our suppliers to build a strong and lean supply chain

together to reduce the supply interruption risk.

4.3.2 Collaborating for Continuous Improvement

Each quarter, Yageo evaluates strategic supplier performance for delivery, quality, and safety, and

the results of the evaluation are delivered to supplier’s top manager. Through regular meetings,

Yageo also works closely with its suppliers for performance improvement. We also provide special

technical support to suppliers through open communication meetings in certain projects.

4.4 Ensuring Supplier Compliance

4.4.1 Quarterly Business Review

Yageo conducts quarterly meetings with our key suppliers’ senior managers to review quality,

delivery and cost performance. Through semi-annual or quarterly monitoring of key indicators of a

scorecard and checklist, we ensure supplier’s compliance with Yageo requirements.

4.4.2 Site Audit

Based on an annual plan, Yageo’s purchasing department visits our suppliers and performs on-site

audits. If there are special concerns identified from these audits, we co-work with suppliers to

develop appropriate action items to meet our expectations. These solutions are executed by

specified person-in-charge with a clear goal and timeframe.

26

4.4.3 Certification

Key suppliers must acquire ISO-9001 certificate. Other suppliers have priority to be chosen if they

comply with HSF requirements or acquire ISO-9000/ ISO-14000 certification or have signed

environment protection sheet. Furthermore, we conduct site audits to ensure suppliers’ factories

are well protected by fire protection systems and measure supplier safety performance through

accident counts.

27

5. ENVRONMENTAL PROTECTION Nowadays, the global environmental consciousness is rising, the

environmentally friendly products, the “green” production

environment and management system become one of the

important industrial development trends. In the past few decades,

“going green” has become a trend for businesses around the

world to begin implementing environmentally friendly business

and production practices. Some of the global leading

manufacturers not only taking the lead to adopt the

environmentally friendly electronic parts, and also consider

capability of providing “green” products and production system as

one of the key criteria to choose their suppliers.

As the global passive component leader, Yageo strives to pursue

great business performance, and also spare no efforts to contribute to the environmental

conservation. Compared with the peers, Yageo is the pioneer to adapt BME (Biomedical

Engineering) manufacturing process. But the traditional BME uses solvent base, and will cause the

air pollution after evaporation, we changed the entire BME process to the water base. Although this

has increased the production cost by 6%, in order to solid execute the environmental protection

policy, Yageo still made the decision.

SONY Green Partner certificate is one of the most strict standard and most respectable in the world.

However, Yageo’s global MLCC and R-Chip factories, have obtained the Sony green partner

certificate in 2003.

As a pioneer in the field of lead-free, non-hazardous products, all of our products are RoHS

compliant, to fulfill our commitment to the environmental protection.

Environmental Policy

Yageo devised the environmental policy as our guidelines according to the ISO14001

environmental management system standard and Yageo’s internal actual requirements as the

basis. Our goal is “Clean Production and Sustainable Environmental Protection”, and main points

are as below:

1. Establish and implement an environmental management system.

2. Implement pollution prevention in compliance with legal requirements

3. Strive for business sustainable development and continue the environmental improvements.

4. Mobilization of all employees to be fully engaged in environmental protection activities.

5. Implement energy saving and waste minimization; strengthen resource recycling and reuse;

phase out or reduce the use of environmentally hazardous materials in production..

28

5.1 Green Management Organization and System

Yageo established a Green Management Organization structure according to the

ISO14001/ROHS/EICC/OHSAS18001 standard, and also considering company’s actual situation.

BU Head is the person-in-charge of this ISO14001/ROHS/EICC/OHSAS18001 organization, PED

manager is the management representative, human resources manager is the deputy,

environmental security supervisor and HR assistant manager are the executive secretary, each

department head is the direct supervisor of ISO14001/ROHS/EICC/OHSAS18001 for their

department, each department has to allocate at least one the full time or part-time personnel to be

responsible for the promotion.

Graphic 2. EHS Organization chart

5.1.1 ESH and Hazardous Substance Management System Certificates

All Yageo manufacturing facilities in Taiwan, and China have received ISO 14001 certification for

environmental management systems, OHSAS 18001 for occupational safety and health.

Accordingto ISO 14001 and OHSAS 18001’s concept of continuous improvement, Yageo is

devoted to establish a safe and comfortable work place by carrying out its responsibilities to

prevent pollution and accident, conserve energy and resource, and reduce waste.

OHSAS 18001 Certificate ISO 14001 Certificate

5.1.1 ESH and Hazardous Substance Management System Certificates

All Yageo manufacturing facilities in Taiwan, and China have received ISO 14001 certification for

environmental management systems, OHSAS 18001 for occupational safety and health. According

to ISO 14001 and OHSAS 18001’s concept of continuous improvement, Yageo is devoted to

establish a safe and comfortable work place by carrying out its responsibilities to prevent pollution

and accident, conserve energy and resource, and reduce waste.

29

OHSAS 18001 Certificate ISO 14001 Certificate

5.1.2 Waste Management and Resource Recycling

Yageo has waste control procedures - waste gas and water produced from the production is

controlled, and there's promotion of reuse. The identification of all commercial waste before waste

management suppliers taking out from Yageo, we have to apply via the website of Environmental

Protection Administration & get the permission documents. After Yageo double confirmed the

quantity, content of waste and the time that the supplier takes the waste out from Yageo. The

supplier should report back through the official website within 48 hours for government control &

monitoring.

30

1H 2H 1H 2H

Company Total Electrical energyconsumption 48,304,000 55,937,000

Company Total Water use 865,000 934,000

Recycling rate of Total waterconsumption 2.04m3/mpcs 2.01m3/mpcs 2.3m3/mpcs 2.3m3/mpcs

Company Total Hazardous waste 787,000 910,000

Company Total Non-Hazardous waste 86,500 98,020

Average Non-Hazardous waste createdper production unit kg/mpcs

0.40kg/mpcs 0.41kg/mpcs 0.56kg/mpcs 0.56kg/mpcs

Company Total CO2 equivalentemissions or CO2 emission

52,651 60,971

kg kg

tons CO2-equivalent tons CO2-equivalent

kg kg

tons CO2-equivalent tons CO2-equivalent

2016 target

kWh kWh

m3 m3

2016 actual

kWh kWh

m3 m3

Greenhouse Gas (GHG) Emissionstons

Waste Amount kg

Water use m3

Electrical energy consumption kWh

Information for Environmental KeyMetrics

Table 9 Yageo’s environmental protection indicators example

5.2 Declaration of Metal Conflict Free

Yageo Corporation herein declares the metal Conflict-Free on products supplied to customers.

Yageo Corporation take due diligence within our supply chain to assure "DRC Conflict-Free" for the

metals of gold (Au), tantalum (Ta), tungsten (W), and tin (Sn) are not derived from or sourced from

mines in conflict areas of the Democratic Republic of Congo (DRC), or illegally taxed on trade

routes, either of which are controlled by non-governmental military groups, or unlawful military

factions. Trade routes not confirmed to be "Conflict Free" include direct exports from the DRC, as

well as exports through Rwanda, Uganda, Burundi, Tanzania and Kenya or an adjoining country

(countries of whom defined in 2010 United States legislation, Dodd-Frank Wall Street Reform and

Consumer Protection Act note are global export routes for DRC-mined minerals).

We would like to confirm metals used in Products sold to customers are "DRC Conflict-Free".

5.3 Environmental Compliance Record

Yageo established communication channels regarding environmental compliance: via emails,

quarterly Environmental Safety Committee meetings, annual audit by government and customers.

In 2016, Yageo underwent self-assessment of ISO14001, RoHS, and OHSAS18001 in May and

Nov., in May, DNV conducted annual audit for ISO14001 and OHSAS18001, and all of the

non-compliance items have been fixed.

31

Yageo’s environmental compliance effort includes the following:

ISO 14001 Certification

OHSAS 18001 Certification

RoHS directive 2002/95/EC Compliance

Authorized SONY Green Partner

Samsung Eco Partner

SONY Green Partner Certificate Samsung ECO Partner Certificate

32

Page Number

G4-1 CEO statement 4G4-2 Description of key impacts, risks, and opportunities 7

G4-3 Name of the organizatoin 3G4-4 Primary brands, products, and services 6G4-5 Location of the organization's headquarters 5G4-6 Countries of operation 5G4-7 Nature of Ownership and legal form 5G4-8 Markets served 5G4-9 Scale of the organization 5-6G4-10 Composition of the workforce 19G4-11 Collective bargaining agreements 19-22G4-12 Organization's supply chain 24, 25G4-13 Significant changes during the reporting period 5G4-14 Precautionary approach 14-15G4-15 External charters 26G4-16 Memberships and partnerships 6

G4-17 List of all entities 3G4-18 Process for defining the report content and the aspect boundaries 11G4-22 Effect of any restatements of information provided in previous reports No ChangeG4-23 Significant reporting changes No Change

G4-24 List of stakeholder groups 12G4-25 Report the basis for identification and selection of stakeholders 12G4-26 Approach to s takeholder engagement 13G4-27 Key topics and concerns that have been raised 13

G4-28 Reporting period 3G4-29 Date of previous report 3G4-30 Reporting cycle 3G4-31 Contact point for questions regarding the report 3G4-32 Content index and in accordance 2

G4-34 Governance structure 9G4-35 Process for delegating authority for economic, environmental and social topics 9,10

G4-36Report whether the organizaiton has appointed positions with responsibility for economic,environmental and social topics, and whether post holders report directly to the highest governancebody

9,10

G4-37 Process for consultation between stakeholders and the highest governmance body 9,10G4-38 Composition of the highest governance body and its committees 10G4-39 Report whether the Chair of the highest governance body an executive officer 10G4-40 Nomination and selection processes for the highest governance body and its committees 10

G4-41 Processes for the highest governance body to ensure conflicts of interest are avoided and managed 11

G4-48 Highest committee or position that formally reviews and approves the organization's sustainabilityreport

10

G4-51 Remueration policies for the highest governance body and senior executives 11G4-52 Process for determining remuneration 11

G4-56 Organzation's values, principles, standards and norms of behavior such as codes of conduct andcodes of ethics

16

G4-57 Internal and external mechanisms for seeking avice on ethical and lawful behavior 11G4-58 Internal and external mechanisms for reporting concerns about unethical or unlawful behavior 11

Governance

Ethics And Integrity

Report Profile

General Standard Disclosures

Strategy and Analysis

Organizational Profile

Identified Material Aspects and Boundaries

Stakeholder Engagement

Appendix GRI G4 Guidelines Content Index

** Indicators that were voluntarily disclosed by Yageo but not included in the material aspects.

33

Report Release Date

Current Issue: June 2017

Previous Issue: June 2016

Report Issuance

This report can be accessed online at the Yageo corporate website. For any questions or

suggestions related to this report, please contact us.

Contact Details

Joanna Chiang, Corporate Marketing Department

Yageo Corporation

Address: 3F., No. 233-1, Baoqiao Rd.,

Xindian Dist., New Taipei City 23145, Taiwan

Tel. +886.2.6629.9999 Ext. 3762

CSR mailbox: csr@yageo.com

Official website: http://www.yageo.com/exep/pages/download/CSR2016.pdf

Aspect Page Number

G4-EC1 Direct economic value generated and disributed 8

G4-EC3 Coverage of the organization's defined benefit plan obligations 20

G4-EN3 Energy consumption within the organization 30

G4-EN6 Reduction of energy consumption 30

G4-EN15 Direct greenhouse gas (GHG) emission (scope 1) 30

G4-EN23 Total weight of waste by type and disposal method 29

Products andServices

G4-EN27 Extend of impact mitigation of environmental impacts of products and services 27

G4-LA2 Benefits provided to full-time employees 20, 21

G4-LA5Percentage of total workforce represented in formal joint management - wokerhealth and safety committees 20

G4-LA9 Average hours of training per year per employee 20

G4-LA11Percentage of employees receiving regular performance and careerdevelopment reviews 20

Child Labor G4-HR5Operations and suppliers identified as having significant risk for incidents ofchild labor, and measures taken to contribute to the effective abolition of childlabor

20

Indicators

EconomicPerformance

Economic Category

Labor Practices and Decent Work

Training andEducation

Human Rights

Environmental Category

Energy**

Emissions

Effluents and Waste

Social Category

Employment

OccupationalHealth and Safety