yfy gri report...2017 yfy sustainability and social responsibility report 34 about yfy...

YFY GRI Report

2017 YFY Sustainability andSocial Responsibility Report

34

About YFY Sustainability Environment Harmonious Society Co-prosperous Economy Appendix

ContentsAbout YFY

Company Profile

Defining Reporting Content and Stakeholder Engagement

Corporate Governance

35

40

42

Sustainability Environment

Energy and Resource Management Approach

Energy Plan

Raw Material Usage

Handling of Solid ProductionResidual Material

Air Quality Control and Monitoring

Water Resource Management Approach

Water Resource Use

Discharge Water Processing

Supplier Environmental Assessment

46

46

47

47

48

48

48

49

37

Harmonious Society

Occupational Safety and Health Management

Employee Care

Training and Education

Local Community Engagement

YFY Product Responsibility

50

53

55

56

58

Appendix

Co-prosperous Economy

Economic Performance

Market Presence

Report Profile

GRI STANDARDS Index

SGS Assurance Statement

35

37

59

61

66


35Company Profile Defining Reporting Content and Stakeholder Engagement Corporate Governance


YFY Inc (herein referred to as YFY) was first established in 1924 by Mr. Chuan Ho (Hsin-yi) as the Yuen Foong Store. At the time, the business operated in the sugar, feed and fertilizer industries. Later, the company shifted into manufacturing, producing, buying and selling paper. Its products extended from artistic paper, containerboard and packaging, as well as consumer paper. Yuen Foong Yu Paper Mfg. Co., Ltd was established on February 21st, 1950, and went public in February 1977. It is one of the pioneers of the Taiwanese paper industry. In 2012, the Fine Paper and Board Division was merged into the Chung Hwa Pulp Corporation, and YFY modified into its name to YFY Inc. YFY Inc. operates a fully integrated production chain covering upstream (forestry, pulp), midstream (paper manufacturing) and downstream (printing) operations, fully harnessing the benefits of vertical integration to create value. YFY is dedicated to developing technology for the reuse and management of resources. It is committed to working towards the vision of a pristine environment by working towards buildings a circular economy. YFY´s work can be roughly divided into three categories: containerboard and packaging, consumer products, and pulp and fine paper production. This corresponds to the three subsidiaries of YFY: Yuen Foong Yu Packaging Inc., Yuen Foong Yu Consumer Products Co., Ltd., and Chung Hwa Pulp Corp. These subsidiaries together serve a vast market ranging from industries to consumers. The Head Office provides consultation and advice in fields such as financial, legal, accounting, resource management, human resources,

Company Profileinformation technology, research, development, strategic integration, public affairs, and land management. In 2017, YFY´s paper businesses accounted for 88% of its operation, while business other than the production and trade of paper accounted for 12%. The YFY Inc. headquarters are located in Taipei City, Taiwan. YFY´s market cap is NTD 16.6 billion. In 2017, thanks to the effort of the management and all of our employees, the combined revenues of the three branches of our Group reached NTD 66.7 billion, for an EPS of NTD 0.97. For more information about management and operations, please refer to the consolidated financial statements from 2017.

YFY Economic Performance

16,603,715Capital

66,769,908Operational Income

54,763,338Operational Cost

7,620,859Salary and Benefits

996,222Cash Dividend

706,926Income Tax Paid

13,894,534Remaining Surplus

GRI 201GRI 102-1~GRI 102-13

Unit: NTD1,000




Taipei Head Office

Taoyuan MillXinwu Mill

Yangmei Mill

Pek Crown MillZhunan Mill

Hualien Mill

Taitung Mill

Qingshui MillChenggong Mill

Changhua Mill

Kaohsiung MillJiutang Mill

Qingdao Mill

Dongguan Mill

Tongnai Mill

Pingcheng MillPingyang Mill

Longan Mill

Jiashing Mill

Shanghai Mill

Kunshan MillYangzhou Mill

Guangdong Dingfung Paper

Tianjin MillBeijing Mill

Nanjing Mill

Fuzhou Mill

Xiamen Mill

Zhongshan MillGuangzhou Mill

Suzhou Mill

China

Vietnam Taiwan

・2 Paper mills and 21 paper containerand coloring mills

・Covers entire Greater China region

・Main supplier for leading companiesaround the world

Containerboardand PackagingYuen Foong YuPackaging Inc

Consumer ProductsYuen Foong Yu

Consumer ProductsCo., Ltd

・7 Consumer products mills

・Leading consumer companies acrossa variety of brands and products

・Leading brands in Taiwan and Mainland China

・4 Pulp mills and 1 forestry

・First Taiwanese company to operatea vertically integrated paper productionchain with forest farms and paper millson both sides of the Taiwan Strait

・Produces FSC certified pulp, variouscultural use papers and special papers

Forest Productsand Fine Paper

Chung HwaPulp Corp

The company’s current products include:

YFY Three Main Business Divisions

Paper manufacturing material

Bleached hardwood pulp

Raw chemicalsSodium hydroxide, hydrochloric acid, bleach, and sodium chlorite

Printing and writing paper

Coated art paper, light-weight coated paper, bit-coated wood-free paper, uncoated wood-free paper, wood-free printing/writing paper, and drawing paper

Packaging paper and cardboard

White coated board, gray coated board, coated ivory board, coated duplex board with gray back, coated duplex board with white back, single-side coated board, book cardboard paper, and grease-proof board

Information paperNo carbon required (NCR) paper, thermal paper, copier paper

Processing paper

Aluminum laminating base paper, glassine paper, masking paper, laminating Kraft paper, environmental laminating coated art paper, single-side coated art paper, grease-proof paper, and vegetable and fruit bag sets

YFY is a leading paper company in Taiwan. Its paper products can be roughly divided into 5 categories, including cultural paper, white paper, containerboards, packaging, and consumer paper. In addition, YFY also produces paper for the technology, medical and food sectors, as well as consumer products for daily use, such as cleaning products. In the face of rapidly changing global economic trends, YFY builds strong products through a vertically integrated paper production chain, expertise in a wide array of fields, and the combination of a diverse range of products. With these products, YFY builds a solid competitive advantage in the market and strengthens its revenue structure.

Environmental paper Colored recycled paper

Environmentally certified paper

FSC certified coated art paper, FSC certified uncoated wood-free paper, and FSC certi f ied woodfree printing/writing paper

Containerboard and cardboard boxes

Kraft cardboard, corrugated cardboard, corrugated paper, and corrugated cardboard boxes

Consumer paperToilet paper, facial tissues, paper napkins, paper towels, paper handkerchiefs, and wet wipes

Food packaging container paper

Food paper packaging containers for juices, dairy products, lunch boxes, etc.

Cleaning product category

Orange House series cleaning products, including laundry series, domestic series, and personal hygiene products

RFID UHF inlay, tags, and tickets




Employees

Equality is important to YFY. We do not treat employees, clients, suppliers or any other stakeholders differently on account of their race, religion, skin color, nationality, disabilities, age, gender or sexual orientation. YFY believes in meritocracy. Our hiring process is public and fair. Most of our employees are local residents. Our company and all of our employees strictly follow the Act of Gender Equality in Employment. Since our founding, there has been no case of discrimination or sexual harassment in all of Taiwan. Apart from Taiwan, our mills and offices in the United States, China, Vietnam and other locations strictly follow relevant local labor policies and regulations. All hiring conditions and contracts are in accordance with local legal standards. The majority of YFY employees are full-time employees. Our total number of employees in 2017 was 8,657. 78% of them were male and 22% were female. All operating bases comply with labor policies and management regulations. Employment conditions and labor contracts also comply with local laws and regulations. The ratio of YFY’s basic salary (disregarding gender) to Taiwan’s minimum wage is 1.14:1.

Supply Chain Management

Taiwan is the world´s 20th largest paper producer, ranked 7th in Asia. Taiwan’s paper consumption per capita is also higher than the world average. Not only is the paper industry a key industry for Taiwan, it is also one of the main energy-intensive industries in Taiwan. As the largest paper company In Taiwan, YFY has an important role to play. YFY has many diverse suppliers.. They are divided into 14 categories, including fiber raw materials, chemical raw materials, pipes and pipe joints, paper-making supplies, transmission materials, machine accessories, electrical appliance materials, hardware accessories, civil materials, consumables, fuel and petroleum, packaging materials, miscellaneous and fixed assets, etc. In 2017, YFY participated in transactions with 2,115 suppliers. To ensure the quality of the supply

2017 Employee Profile chain and fulfill its corporate social responsibilities, YFY has corresponding policies for both new and existing suppliers. All raw material suppliers and suppliers whose average monthly transaction totals amount to more than NTD 250,000 will be subject to periodic supplier audits. The audits focus on product quality, product delivery, product amount, service, compliance, and product prices, to ensure that they comply with YFY standards. If issues are found, suppliers are asked to make improvements within a limited window of time and are tracked and recorded through purchasing channels. Per the aforementioned standards, an average of 745 suppliers is subject to audits per round, with improvement rates of 100% in 2017. Every audit is fully documented and its records kept at purchasing departments for reference for future purchases and audits.

YFY’s operating base in Taiwan uses 90% local suppliers. For fiber raw materials, due to factors such as the quality of available source material and insufficient domestic production, the local suppliers provide approximately 50 percent of total demand. For paper-making supplies, due to quality concerns, local suppliers provide about 20 percent of local materials. For remaining categories, the local suppliers account for over 90 percent of total purchases. For the hardware accessories, civil engineering supplies, and fuel and petroleum categories, 100% of our need is met by local suppliers. This demonstrates YFY's commitment to supporting local suppliers and reducing the environmental impact arising from the transport of raw materials.

GRI 202

GRI 308

Taiwan

China

Total 8,657

Male Female

Male Female

3,570Full-time employees

59Contractual/

Dispatch employees

778Full-time employees

28Contractual/

Dispatch employees


130Contractual/

Dispatch employees


36Contractual/

Dispatch employees

78%Male 22%Female




Participation in Industry Associations: YFY has always been meticulous about acquiring prevailing international certifications. This self-discipline aims to not only increase the trust of our clients, employees, and suppliers, but also to fulfill our corporate social responsibility to the environment, the economy, and society, as well our responsibilities as a citizen of this planet. Therefore, we actively seek to lower our carbon emissions, from attaining Forest Stewardship Council certification to complying with the goals set out by COP21. We have also selected 5 of the 17 Sustainable Development Goals (SDGs), proposed by the United Nations, relevant to our work as our main guide on sustainable planning.

Biotechnology and Pharmaceutical Industries Promotion Association of R.O.C

Taiwan Mountain Jade Science and Technology Association

Taiwan Biotech Association

Chinese International Economic Cooperation Association (CIECA)

The Third Wednesday Club of R.O.C.

Yuan T. Lee Foundation Science Education for All

Chinese National Federation of Industries (CNFI)

The Chinese National Association of Industry and Commerce, Taiwan (CNAIC)

Taiwan Institute of Directors

Epoch Foundation

Institute for Biotechnology and Medicine Industry (IBMI)

Association of Corporate Patent Executives

End poverty in all its forms

everywhere

continue to develop charity projects and provide resources to support these

projects on a community level.

Ensure availability and sustainable

management of water and

sanitation for all

increasing reuse rates of water

resources, improving discharged water

processing systems and optimizing water processing systems through our Water Recycling Platform,

with our ultimate goal being eliminating discharge entirely

Ensure access to affordable,

reliable, sustainable and modern energy

for all

our Energy and Resource Recycling Platform monitors

the efficiency of energy and resource use, enhances energy

productivity, and develops sustainable

green energy.

Build resilient infrastructure,

promote inclusive and sustainable industrialization and accelerate

innovation

continually renewing production

facilities, using high-performance units

and installing various climate adaption

protections to strengthen resilience

of plants.

Protect, restore and promote sustainable

use of terrestrial ecosystems,

sustainably manage forests, combat

desertification, and halt and reverse land degradation and halt

biodiversity loss

spearheading FSC (Forest Stewardship

Council) recognition for Group forestry centers and acting on promises of ecological protection and sustainable logging

management.




Ethics and Integrity

“As technology evolves, the role of the human becomes even more important,”said YFY Chairman Felix Ho at the 2017 YFY occupational safety and health annual meeting, discussing how YFY treats its people. YFY always puts people at the center of corporate philosophy and business strategy. In addition respecting the professional expertise of our employees providing them with a platform, YFY emphasizes employee ethics.

In order to strengthen protection of trade secrets and maintain its competitive edge, YFY signs the Integrity, Confidentiality and Intellectual Property Agreement with its employees. Its main contents include: ownership of intellectual property rights, the obligation to cooperate, non-competition, the obligation of non-disclosure, information technology use policies, ethics and integrity, as well as consequences of violations of contracts. We strictly require our employees to follow them in order to maintain positive interactions and relationships in the workplace.

YFY stated “Dos and Don’ts”in the employee handbook, requiring that all YFY employees must develop good judgment, proactively avoid conflict of interests, to convey the culture of integrity directly to employees. The Human Resources department also reminds colleagues of the importance of workplace conduct and ethics.

Under many guidelines, YFY did not have any corruption incidents, harmful competitive behavior, antitrust or monopoly instances in 2017. We emphasize a corporate culture of

integrity, which not only strengthens stakeholders’ trust but also increases the value of the company and is conducive to sustainable management.

Information Transparency and Disclosure

YFY follows regulations set out by relevant authorities by completing various public notices within the appropriate time frame and actively disclosing information about financial, technical, market and corporate social responsibility aspects of the company on its website. Investors can search for information about our company on the Market Observation Post System. In 2017 , we submit ted our Corporate Governance Self-Assessment Report, which stakeholders can download or browse through a link on our website to understand the current state of corporate governance. We host quarterly investor conferences to publicize and explain consolidate financial information, operations situation, as well as future aspirations for the company. Relevant information is also published on the company’s website and the Market Observation Post System for investors to reference. In addition, the company appoints people to participate in various investment meetings and visit foreign investors, in order to better understand their strategic suggestions for the company’s operations through in-person discussions.

GRI 102-16


40


Company Profile Defining Reporting Content and Stakeholder Engagement Corporate Governance

Economic performance

Indirect economic impact

Market presence

Materials

Occupational health and safety

Marketing and labeling

Supplier environmental assessment

Effluents and waste

Emissions

EnergyWater

Economic Environmental Social

Labor management relations

Local communities

Customer health and safetyEmployment

Customer privacy

Training and education

Diversity and equal opportunity

High

HighLow

High impact topics Medium impact topics

Stakeholder Impact Estim

ate

Organizational Impact

Defining Reporting Content

Each year, YFY conducts scientific investigation of major issues and collate opinions from senior executives and internal and external stakeholders. We will identify the major issues as the focus of the corporate report, carry out in-depth disclosure of the critical issues and discuss management guidelines for less critical issues, so stakeholders can understand YFY from multiple perspectives. The identification results are also an important reference for YFY’s annual project and promoting better communication with stakeholders.

2017 Annual Material Aspects Matrix

Major Topics IndexIdentification

YFY puts employees, society and the environment as the focus of our corporate social responsibility, and has compiled 33 important issues regarding this for the year. At the beginning of 2018, directors of various departments were invited to conduct quantitative survey scoring based on their professional and GRI topics. The report editorial team then analyzed the results and summarized 18 issues that impacted the company's operations and stakeholders. At the same time, the report listed out the five most important stakeholders for the company, namely employees, customers, and authorities, suppliers, and contractors.

A total of 165 surveys were collected from the five major stakeholders. The quantitative analysis results drew a major theme and listed five high impact topics as the most important ones. After the report editorial team comprehensively evaluated the report and compared it to the previous years, the Chairman of the board confirms and finalizes the case.

Based on the analysis of the major topics, the scope and boundaries were assessed to establish the 2017 YFY Corporate Social Responsibility Report structure and the surveys. Relevant information is collected and made avaliable, and finally sent to the Chairman’s office for confirmation.

This report will help identify major topics for the next report, reviewing the major analysis at each level and checking if adjustments are needed.

01

Prioritization

02

Confirmation

03

Review

04

Defining Reporting Content and Stakeholder Engagement GRI 102-40~GRI 102-44

GRI Significant Material Topics Page

Economic performance 35

Occupational health and safety 51

Market presence 37

Energy 46

Water 48

Employment 53

Customer health and safety 58

Materials 47

Supplier environmental assessment

37

GRI Significant material Topics Page

Customer privacy 58

Effluents and waste 48

Training and education 55

Emissions 48

Local communities 56

Marketing and labeling 58

Indirect economic impact 35

Labor management relations 53

Diversity and equal opportunity 37


41



Stakeholder Engagement

Stakeholders Topics of Concern Communication Channel and Frequency Stakeholders Topics of Concern Communication Channel and Frequency

Relevant authorities

Legal complianceEnvironment protectionOccupational health and safetyPublic policy

1. Official Events and Seminars2. Compliance with law and policy3. Official documents4. Corporate governance assessment (Yearly)

EmployeesMills

Economic performanceAnti-corruptionEmploymentLabor/Management RelationsOccupational health and safety Training and educationEmployee diversity and equal opportunities

1. Employee communication conference (Quarterly)2. Joint employee welfare committee 3. Trade union and labor conference (Quarterly)4. Company internal publication (Foong Garden

Internal Magazine) (Bimonthly)5. Education and training system6. Company internal electronic platform 7. Private line and emails 8. Corporate social responsibility survey (Yearly)9. Information disclosure website (YFY Life)

SupplierContractor

Purchasing practiceOccupational health and safetySupplier specifications and evaluation

1. Signed “Integrity transaction and commitment ”2. Consultation meetings3. Corporate social responsibility status survey

(Yearly)

Local residentsNGOs

Market presenceIndirect economic impactAnti-competitive behaviorEnvironmental protectionFreedom of association and group consultationLocal communitiesPublic policy

1. Industrial zone association 2. Community care contact window3. Community charitable activities4. Corporate social responsibility survey5. Information disclosure website (YFY Life)

ShareholderInvestors

Economic performanceMarket presenceAnti-corruptionLegal compliancePublic policyCustomer privacy

1. Shareholders meeting (Yearly) and law meeting (Quarterly)

2. Financial report (Yearly)3. Information disclosed on company website or

the Market Observation Post System (MOPS)4. Private line calls and emails5. Corporate Social Responsibility Survey (Yearly)6. Information disclosure website

Media Market presenceLegal complianceHuman rights assessmentMarketing and labeling

1. Press and legal conference2. Advertising sponsorship3. Press release4. private lines and emails

CustomersConsumers

Legal complianceCustomer health and safetyMarketing and labelingCustomer privacy

1. Customer service line2. Online instant customer service3. Business visits4. Corporate Social Responsibility Survey (Yearly)

Business PartnersAffiliated Companies

Market statusPurchasing practiceAnti-competitive behavior

1. Unit coordination2. private lines and emails3. Corporate Social Responsibility Survey (Yearly)


42



Corporate Governance

responsibility. For more details about the board’s social responsibility, please see page 29 of the annual report.

YFY has set up a sustainability and social responsibility office, an energy and resource recycling platform, a water recycling platform and an occupational safety and health management platform to control various risks and issues and promote sustainable projects. By sharing the group’s information and integrating resources, we have better ability to meet economic, environmental and social risk challenges and create more opportunities and value.

Respecting professional expertise and equa l i t y i s the corners tone for any enterprise's growth and development. YFY has an aud i t ing commit tee and a r e m u n e r a t i o n c o m m i t t e e u n d e r i t s govern ing s t ructure respons ib le f o r f i n a n c i a l t r a n s p a r e n c y a n d f a i r c o m p e n s a t i o n a n d b e n e f i t s . B o a r d members are required to take more than 6 hours of corporate governance related courses each year, as well as understand the developing trend of corporate social

YFY’s Organizational Structure

GRI 102-18

Shareholder Committee

Board of Directors

Compensationcommittee

Auditingcommittee

Generalmanagement office

Audit Department

Strategic Director

Energy and ResourceRecycling Platform

Occupational Safety andHealth Platform

Water RecyclingPlatform

Chairman

Packaging group Pulp and paper group Other business groupsConsumer products group

Business unitsmanufacturing, sales and distribution ofhousehold paper and cleaning products

Business unitsmanufacturing processing and sale of industrial usecardboard, cardboard boxes

Business unitsmanufacturing, sales and distribution of pulp, paperand cardboard.

Business unitssub-related product manufacturing, sales anddistribution, chemical products manufacturing and sales

01 02 03 04


43



Sustainability and Social Responsibility Management and Operation

YFY established its Sustainability and Social Responsibility Office in 2013, with the mission of committing to achieve YFY´s goals of sustainable development and social responsibility. In addition to continued communication and collaboration to strengthen ties internally and externally, the Office also established several contact persons to coordinate its operations within the Company. The Sustainability and Social Responsibility Office is headed by the Chief Sustainability Officer Ronald Allen, who heads a full-time team of two and seven task forces each working on their respective projects:

1.Management and Control of Goals: To ingrain the vision and goals of social responsibility, with respect to the environment, our society, and human resources, in YFY.

2.Action for Sustainability: Manage and direct all mills to achieve their short term, medium term, and long term energy conservation and emission reduction targets; lead strategic discussions to propose response measures to climate change and assist in acquiring environmental certifications as needed.

3.Employee Education: Promote employee awareness of environmental protection and related issues; share the company´s goals and vision and encourage employees to provide input with regards to sustainability and social responsibility.

4.Community Engagement: Strengthen YFY's environmental image; strengthen the relationships between the mills and the neighboring communities; and encourage employees to participate in local events related to environment protection,

culture, charity, and other relevant causes.

5.Communication of Corporate Responsibility: Continue to engage with stakeholders; Improve enterprise management; and achieve transparency of social responsibility

6.Supply Chain Management: Monitor and manage al l personnel at all production lines (including contractors) to provide employees a healthy and safe workplace, and to establish the minimum standards required for YFY's suppliers, including health and safety, social responsibility, sustainable development, and other relevant causes.

7.Technological Innovation: Integrate the segments of research and development, production, market demand, and other aspects to strengthen the company on a holistic level; ensure that products and production processes are in compliance with international environmental standards, while also taking into account profitability; coordinating internal and external research and development results to facilitate acquisition of certification and support from non-governmental organizations (NGOs)

Energy Development and Treatment of Production Residual Material

The Energy and Resource Recycling Platform was established with the goal to be the "experience sharing platform for energy development and treatment of production residual material. By 2015, it was in full operation, and quarterly meetings were held for relevant executives on both sides to inspect the equipment of the designated mills. During these quarterly meetings, the latest technologies would be presented and relevant practical issues would be discussed to pursue the most ethical and feasible methods for the benefit of the economy, the environment, and the community.

The main tasks of the Energy and Resource Recycling Platform are as follows:

1. Energy Review and Inspection: Assist all mills in scheduling and setting up review and inspection plans, as well as establishing review and inspection policies. Established YFY resources big data as an important basis for equipment optimization and medium and long-term operational planning.


44



2. Development of Renewable Energy: Actively develop renewable energy, coach all mils to consider their own capacities for the construction of renewable energy equipment, and pursue a variety of possibil it ies for sustainability.

3. Reuse of Resources: Monitor solid manufacturing process residual material and air quality control. Look into cutting-edge technologies from around the world, and evaluate opportunities to reuse residual material from various perspectives.

4. Enhance Manufacturing Process Productivity: Optimize the performance of the details in manufacturing processes from a practical operations standpoint, as well as schedule and establish the maintenance and inspection plans, to not only improve production efficiency and product quality, but also significantly reduce energy consumption.

5. Education and Training: Build online education and training system and Q&A platform. Ensure that employees fully understand the operation and procedures of equipment and tools, while also reducing both the occupational injury and damaged equipment.

Water Reuse and Treatment of Production Drain Water

The Water Recycling Platform was established in 2015 with the aim of building an "experience sharing platform for water recycling and treatment.″ The director, Zheng-Guo Lin, led the team in learning about the diverse possibilities for a water circulation system, by inspecting from pipe-to-pipe and from pool-to-pool, as well as tailoring new technologies to the local community and committing to create an environmentally

friendly model for water use. The main tasks of the Water Recycling Platform are as follows:

1. System Water Conservation Plan: Plan the water circulation paths and assess the feasibility of water recycling and use from all manufacturing processes.

2. Reclaim Fibers on Water Discharge Sites: Take inventory of the quantity and quality of effluents at discharge points of all mills. Plan related recycling program to not only reduce the fiber runoff but to also alleviate the loading on waste water treatment plants.

3. Reinforce Water Treatment Function: Optimize the existing manufacturing process effluent treatment system. Install monitoring and inspection equipment, and standardize sampling and inspection standards.

4. Education and Training: Share water recycling and treatment experience. Discuss cases. Visit designated mills to foster new talent in water resource management.

5. Establish the YFY Water Resource Database: Monitor water quality and levels over long periods of time, collecting and storing data from across the Group to provide first-hand technical information to assist in internal communication.


45



Item Type of Risk Risks and Opportunities Management Policies and Physical Actions

Extreme Weather Events Physical

As typhoons continue to worsen and thunderstorms begin to increase, extreme climate events destroy buildings and facilities and threaten the safety of our personnel and products. Strengthening our anti-typhoon and anti-earthquake equipment helps increase workplace safety and also reduce losses due to stopping work during extreme weather events.

1. Establish an anti-typhoon and anti-earthquake reporting platform2. Regularly inspect and overhaul rain-shielding devices

Shortage of Fossil Fuels Physical

Production of fossil fuels such as petroleum and coal are plunging, leading to increases in production cost. Biomass fuels and high-efficiency equipment must become the core technologies of the future industry.

1. Developing of alternative biofuels 2. Improving efficiency of electricity plants and production facilities 3. Promoting a reduction of 1% usage per year 4. A total of NTD 15.977 million was invested in energy and resource management

facilities in 2017

Shortage of Water Resources Physical Changes in rain patterns lead to lengthened dry seasons. If our water

use is limited, product manufacturing will be affected.

1. Conserving use of water through recycling water2. Improving collection of discharge water 3. Water use and water processing facility audits at mills4. Total investments on water resource processing in 2017 reached NTD 242

million

Frequent Earthquakes Physical

There are frequent earthquake zones in eastern and central Taiwan.When an earthquake occurs, it may cause buildings to collapse, equipment damage, and even cause secondary disasters such as casualties, directly affecting production and sales.

1. Establish an anti-typhoon and anti-earthquake reporting platform2. Regular fire and earthquake drills

Changes in Environmental Regulations and Advocacy

Regulator

Government regulations continue to grow more and more stringent. The uncertainty around the emissions reduction goals of both central and local governments indirectly affect facility improvement and reuse projects.

1. Setting our discharge standards more stringent than the law requires2. Installing live monitoring systems for careful checks 3. Actively participating in advocacy events both in Taiwan and abroad;

understanding the trends and strengthening communication4. Total investments in air quality management facilities in 2017 is NTD 37.2 million

Energy/Fuel Taxes, Waste and Discharge Water Management Fees

RegulatorFuel taxes, waste and discharge water management fees will directly lead to increased production cost.Having waste disposal equipment and experience will be an indispensable part of the circular economy.

1. Installing waste product reuse facilities to effectively reduce waste2. Improve discharge water management facilities to facilitate reuse3. Improve energy use efficiency

Climate Adaptation and Environmental Sustainability Investments

The UN´s COP 21, SDGs and Taiwan´s ″Greenhouse Gas Reduction and Management Act″ clearly demonstrate that climate change is an issue important issue. Even though we may not be able to effectively reverse the trend of climate change in such a short time, but planning adaptations for extreme weather is a pressing issue as safeguarding the safety of our personnel and facilities. YFY investigates the potential impacts of climate change on the company through SSR office. Combining the expertise and technology of the three major platforms, we deal with climate events, environmental resource changes and legal compliance through Physical action. We face risk with a positive attitude to bring the possibility for innovation.

GRI 201


46


Energy and Resource Management Approach Energy Plan Raw Material Usage Handling of Solid Production Residual Material

YFY started off in the agricultural industry. We feel a profound connection to the environment and the land. When faced with environmental issues, we know full well our responsibilities and obligations and understand that the boundaries of environmental issues are internal and external, and include employees, residents near mills and the authorities. In order to fulfill our responsibility as a citizen of this planet, YFY have responded to environmental issues with practical and real action, whether it be raw materials, water, air quality, production byproducts, or energy.

Energy and Resource Management Approach

In 2017, Taiwan amended The Electricity Act, and began to write a white paper on energy transformation, with the goal of “20-30-50 clean energy power generation”, vigorously developing green energy and promoting circular economy. These policies coincide with YFY’s concept of "Everything is innate and useful" and the original intention of the " Energy and Resource recycling platform.”

YFY manages the energy and resource usage of each mill through the Energy Resource Recycling platform, and audits the three aspects of process efficiency, system regulation and energy and environmental protection to ensure that all of YFY’s mills comply with local environmental regulations, energy regulations and relevant regulations of the paper industry. In

SustainableEnvironment

addition to complying with regulations, we are further committed to energy transformation, by supporting the development of biogas power generation, biomass reduction technology, autonomous power-saving plans and air quality management emergency response procedures . Th is i s done through continuous technology research and development and cross-unit cooperation to create mutual energy and resources, resulting in a bridge of transformation which makes YFY a leader in green energy and circular economy.

Energy Plan

In 2017, the global carbon dioxide concentration reached a new high, and the growth rate was 50% higher than the average of the past 10 years! The main reason is likely the use of fossil fuels in large quantities. This reminds people once again that "energy saving" is a pressing issue. To this end, YFY continues to implement a five-year 5% power saving plan. In 2017, the total electricity consumption in Taiwan was 26,822.07 thousand kWh, equivalent to a reduction of 14,188.8 tons of carbon dioxide emissions. In the energy project, YFY echoes the “SDG 7 Affordable and Clean Energy” goal in the United Nations Sustainable Development Goals (SDGs). In addition to using a large amount of residual material to replace fossil fuels, this also actively improves equipment and reduces energy density.

Consumer paper (ton)

Industrial paper (ton)

Cardboard (thousand

square meters)Pulp (ton)

Fuel Oil (liter) 1.20 18.57 11.14 129.7

Coal (liter) 390.94 186.87 0 0

Diesel (liter) 0.737 0.192 0.942 0

Outsource power (kWh)

1076.5 327.83 61.14 736.9

Natural gas (kiloliter)

1.20 0 0 0

Gas (Kg) 0.02 0 0 0

Direct consumption Fuel oil (TJ) 2,080.81

Natural gas (TJ) 120.93

Gas (TJ) 0.07

Coal (TJ) 19,629.86

Diesel (TJ) 24.04

Indirect consumption Electricity (TJ) 2.39

Solid production residual material

Waste tires (TJ) 1,117.95

Sludge (TJ) 1,776.93

Slag (TJ) 355.7

2017 Product Energy Density

2017 Annual Energy and Fuel Consumption Totals

*The above form only includes TaiwanProduct energy density = energy use / total product

*Please refer to the boundary description A

GRI 302

GRI 102-46

14,188.8Reduce

t-CO2e emissions


47


Energy and Resource Management Approach Energy Plan Raw Material Usage Handling of Solid Production Residual Material

Awards

YFY Qingshui Mill received the Ministry of Economic Affairs Energy Conservation Milestone Silver Medal

YFY Qingshui Mill is the main production base of local household paper, and it saves energy every year with innovative equipment transformation. By changing the paper machine dryer , the heat conduction effect and drying capacity can be improved; with the exhaust fan modification, power consumption can be saved up to 90%. In addition, by changing the shape of the grinding shaft of the refiner, it saves about 1.61 million kWh of electricity a year, thus winning the Energy Conservation Milestone Silver Medal.

Raw Material Usage

In a circular economy, the two-way connection between raw materials and products must be strengthened by using a large amount of renewable materials to achieve a sustainable cycle. The primary raw material of YFY’s products is pulp and recycled paper, which are both renewable raw materials. The source of the wood pulp is only selected legally from forests and undergo careful planning and control. 98.2% of the main raw materials in industrial paper are from recycled. Other raw materials are also checked thoroughly at every stage to urge suppliers to take action to protect the environment.

Handling of Solid Production Residual Material (PRM)

YFY believes that everything is a resource, and the reason for being discarded by humans is that they have not yet found a way to use them. Therefore, since 2016, we have removed the term “waste” from our company, and renamed the unused process residues to “solid production residual material.” We are committing to converting solid process residues into resources or energy, creating an industrial chain that is truly sustainable.

Raw wood pulp/tablet(ton) 1,050,122.8

Recycled paper (ton) 1,524,705.9

Imported paper (ton) 64,211,546

The production process of YFY products and the residual materials produced by water treatment are all harmless wastes. After the experimental research on the Energy and Resource Recycling Platform, the various processes are turned into Refuse Derived Fuel(RDF), which has been successfully reused over 81% of the solid process surplus materials, and a small part are distributed to commissioned professional manufacturers to clear and deal with legally. What YFY hopes to do is not just to reduce, but also to regain the value that all resources should have.

2017 Raw Material Use Overview

Item Reuse and treatment method Total (tons)

Slag Recycle energy 82,426

Temporary storage 3,773

Sludge Recycle energy 145,871


Subcontracting 59,945

Coal ash Subcontracting 64,866



Others Energy recycle 1,757



2017 Reuse of Solid PRMS



GRI 301

GRI 306


48Air Quality Control and Monitoring Water Resource Management Approach Water Resource Use Discharge Water Processing Supplier Environmental Assessment


Air Quality Control and Monitoring

In recent years, the environmental issues that people are most concerned about include air quality and gas emissions. Since Taiwan is an island in the monsoon region, there are many factors that can affect air quality, but people still hope to see a clear blue sky. YFY has made a 110% effort on air quality control, by having all mills install dust collection systems and monitoring equipment to check them continuously.

Water Resource Use

All of YFY´s mills are located in areas with abundant water and outside protected areas and agricultural areas. Most of our water originates from groundwater. We do not compete with local residents for water, and we consciously monitor our water use. We do not take too much of the water. It is only by cherishing every water source, that we can ensure the sustainability of water resources.

Greenhouse gases (GHG) (metric tons of CO2 equivalent)

Scope 1 2,189,582

Scope 2 277,329

Sulfur Oxide (SOx) (tons) 1,061

Nitrogen Oxide (NOx) (tons) 1,579

2017 Gas Emissions

*Please refer to the boundary description A*The data are from YFY investigation in June, 2018.

*Please refer to the boundary description B for water usage and discharge.

*Water usage only includes Taiwan

2017 YFY Water Resource Use Overview

96,308

35,406,854

1,261,410

Amount of water drawn

Tap water Ground water Reused water

(cubic meter)

Total water used and discharged amount

(cubic meter)Total discharged water

Sewage Treatment Plant

Direct discharge

46,825,742

251,701Amount of water used

50,448,645

GRI 303

Paper Industry Group (metric tons of carbon dioxide equivalent / metric tons of total product weight)

1.06

Packaging Group (Metric tons of carbon dioxide equivalent / thousand square meters of total product area)

0.07

Consumer Products Group (Metric tons of carbon dioxide equivalent / metric tons of total product weight)

1.33

Pulp and paper group (metric tons of carbon dioxide equivalent / metric tons of total product weight)

1.30

Greenhouse Gases Emission Density

Water Resource Management Approach

More than 1.7 billion people around the world live near rivers. Water provides agriculture, energy and industry. It brings us a better life. However, over the past decades, with humans´ unfettered use of water, in addition to climate change and extreme weather events, water is no longer an inexhaustible resource. If we do not take action to address our use of water, according to statistics from the United Nations, two-thirds of the global population will live in areas where water is scarce by 2025. Taiwan is home to desolate terrain. Although rain is abundant, it is difficult to preserve and capitalize on this resource, making the imminent water shortage crisis all the more important. We must understand that water resources are finite and irreplaceable. They are the foundation of human activity. It is only by being more conscious of our water usage, that we can transform our future. This was the motivation behind the foundation of the Water Resource Reuse Platform. Director Cheng-Guo Lin has an incredible amount of production and water management experience down his belt. Through data and estimates from measurements on the ground, continuous monitoring and bucket cell design, we monitor water discharge at each of our mills, promote water savings and reuse, build a water resource database and sludge processing guidelines, as well as facilitate the exchange of technology and experience. Our platform provides water processing consultation for outside companies as well, helping the paper industry reach new heights in water processing technology.


49


Air quality control and monitoring Water Resource Management Approach Water resource use Discharge Water Processing Supplier Environmental Assessment

Discharge Water Processing

In the past, water processing focused on processing the end products, meaning purifying discharge water. YFY goes beyond that. Through a holistic approach, we start with changes to the production process and the product. By combining this with backend water processing technologies, we can facilitate close communication between the production end and the water processing end, allowing seamless collaboration and ensuring that our discharge water is pristine. YFY´s water discharge system includes primary chemical precipitation and secondary biological processing, effectively reducing the chemical oxygen demand (COD) and the biochemical oxygen demand (BOD) and allowing for compliance with government regulations. The detailed discharged water data and discharge locations are disclosed on our website.

Some processed discharge water is recycled for use in production. Other water is naturally discharged to water processing plants or rivers. With the exception of the Jiutang mill, which discharges water upstream from wetlands, other mills’ discharge locations do not coincide with protected areas and areas. Except for Jiutang mill’s discharge water which is the main source of water for the Old Railroad Bridge Education Wetland Zone in Kaohsiung, the remaining mills discharge water into areas that are not ecological conservation or agricultural areas.

YFY Discharge Standards

YFY Effluents Processing Procedure

Chemical oxygen demand emission standards (mg/L) (COD)

Suspended solids discharge standards (mg/L) (SS)

Mill

100ppm 30ppm Jiutang mill, Taoyuan mill, Zhunan mill, Pek Crown Mill, Kaohsiung mill, Yangmei mill, Qingshui mill

150ppm 30ppm Hualien mill

160ppm 30ppm Taitung mill

180ppm 30ppm Xinwu mill

560ppm 480ppm Changhua mill

Sludge bar screen

Mixing tank Fast mixing tank Slow mixing tank Chemicalsedimentation tank

Anaerobicselector tank

Deep aeration tank

Sludge

Sludge

Production Drain Water

Production Drain Water

Anaerobic/Facultative

Anaerobic Process

Physical/ Chemical Treatment

Biological filter

Aeration tank 2Finalsedimentation tankEffluents tank Aeration tank 1

Aerobic Biological Treatment

Storage tankFilter pressdehydratorSludge

Removal andReuse

Sludge Process Procedure

GRI 306

*Changhua mill discharges water into industrial zone water treatment plant


50Occupational Safety and Health Management Employee Care Training and Education Local Community Engagement YFY Product Responsibility


GRI 102-46

When a group of people share a culture, live together and help one another, they become a community. There are many interpersonal relationships in this community which will form groups. To make this community better, the first thing is to make the groups around you better. For YFY, employees, communities and customers are the three closest groups. To make each other better, we highly value occupational safety and health, employee care, community engagement and product liability. The boundaries of these issues cover both internal and external aspects of the organization, including employees, residents near YFY mills, customers and social welfare groups. We hope that through everyone’s cooperation, we can build a community where everyone can enjoy a good life.

In the past two years, the occupational safety and health management platform has visited cross-strait mills for on-site inspections, and established 20 categories and 232 projects based on safe leadership, safety and health education and training, accident reporting and investigation, hazard identification, and contractor safety and health management. The resulting detailed assessment report give mills the most immediate feedback and suggestions.

Employee safety and health protection clauses are also added to administrative measures, education and training, covering: procurement management, safety personnel training,

Harmonious Society

contractor management and employee health management and promotion, to do our best to prevent occupational injuries and illnesses. Pushing for a culture of safety in the workplace requires a ‘systemic’ push, including businesses and mills and beginning with changing work habits.

Through the collaboration between the unique YES system and the Occupational Safety and Health Management Platform, we believe that YFY can become the standard of occupational safety and health!

YFYs Occupational Safety and Health Management Platform(OSHMP) Milestones are:

201607

2017YFY OSHMP Established

Held a seminar for executives on "The paradox of safety and reflection" to build a culture of safety from top down

Hosted the "OSHMP Conference", inviting all YFY workers, safety personnel and executives to lay out the vision and goals of "YFY Safety Culture"

YFY implemented a "Work safety service" to identify safety hazards at work

Issued “YFY OSHMP Special Issue” to promote all-round safety culture

0801

Launched three major business groups for occupational safety and health evaluation

05

Launched Occupation-al Hazard Statistics System (EIS)

09

Hosted the “Safety and Health Practices Observation Tour” with Hualien mill.

11

Expanded “OSHMP Conference” and invited cross-strait occupational safety and health employees to participate, passing along the YFY safety culture.

09 11Organized "Occupational Safety and Health Week"

04

Began organizing the “Occupational Care Conference” Organized the “6S Inter-mill Competition”

06

Launched "Occupational Hazards Data Analysis System (BI). It became the primary reference for supervisors’ decision-making.

1010Mounth




Occupational Safety and Health Committees

Occupational Safety and Health Committees are established under the YFY´s Head Office and all of its mills across Taiwan. These committees are composed of occupational health and safety experts, mill supervisors, as well as labor representatives who are selected by the union or by the employees. Labor representatives constitute between 34% to 45% of the committees. The Committees provide the workforce, the company, as well as the occupational safety and health professionals a means of communication that is both reasonable and equal.

Occupational Safety and Health Incidents Reporting

In the event of an occupational disaster or accident in the YFY mills, an emergency response procedure will be initiated; the employee must immediately notify the unit supervisor and safety personnel, and provide aid according to the injury handling procedure. The in-plant nursing staff will judge the severity of the injury and administer first aid, with the primary goal of saving the employee.

At the same time, the top supervisors of the mill will appoint professionals from various departments to form an accident investigation team to find out the cause of the accident and implement improvement measures to prevent the incident from happening again. Finally, the investigation report will be reported to the Occupational Hazard Statistics System and checked by the Occupational Safety and Health Management Platform.

Occupational Safety and Health Incidents Management

YFY sincerely hopes that every employee can work assured that they will go home safely. Therefore, we instituted the ″Health Promotion and Prevention of Unnatural Work Stress and Related Diseases Policy″ and the ″Occupational Safety and Health Guidelines″ that all employees must follow when working. These guidelines were passed by labor representatives.

The ″Occupational Safety and Health Guidelines″ clearly sets out rights and responsibilities for employees and contractors with regards to the safety standards, training, health instruction, emergency services and incident reporting. The ″Health Promotion and Prevention of Unnatural Work Stress and Related Diseases Policy″ sets out ways to prevent various occupational hazards and potential points of notes.

GRI 403

Chairman

Chief Strategy Officer

Occupational Safety and Health Management Platform

Overseas

ConsumerProducts Group

Other Buisiness

・China ・Vietnam

・Industrial Paper Mill

・Containerboard Mill

・Hualien Mill ・Taitung Mill

・Jiutang Mill

・BoardTek Electronics Corp.

・Printing Business Group ・UPC Paper

・Shin Foong Specialty and Applied Materials

・Yangmei Mill ・Qingshui Mill

・Ever Growing Agriculture Biotech

Packaging andContainerboard Group

Forest Products andFine Paper Group




An excerpt from the health promotion and management policies are included below:

New hires must undergo physical checkups or turn in reports of previous checkups. Current employees should undergo regular health checkups. For employees working in areas where noise pollution is prevalent, annual special checkups are provided (such as powder-specific health checkups, noise pollution health checkups, ionizing radiation health checkups, etc) to carefully monitor the health status of employees.

Take precautionary measures to prevent diseases that are easily caused by repetitive processes, shift-based, nighttime work, or working for long hours.

To prevent diseases in warm areas, take measures to lower the temperature of the workplace as deemed necessary according to the weather conditions, providing places with lower temperatures for rest.

When employees feel unwell or abnormal, please immediately report to the authorities or other supervisors.

Due to the care of personnel, equipment and regulations, YFY's occupational disease rate (ODR) is zero. In the noise operation area and the dust operation area, there are also notices requiring personnel entering the area to wear protective equipment such as earplugs and masks to ensure their safety.

In 2017, there were 14 cases of injuries, a 36% decrease from last year. The incident at the Xinwu mill where an employee rolled into machines caused the injury severity rate to go up. In order to prevent similar incidents from happening, we immediately conducted a safety training for all employees involved and strengthened the safety and prevention system and gave out more warnings, to remind employees to create a safer working environment.

Occupational Safety and Health Incidents Statistics

2016 2017

Injury frequency

rate(FR)2.42 1.33

Men 1.36 Women 1.20

Injury severity

rate(SR)

138.6 497

Men 590 Women 4

Injury rate(IR) 0.48 0.26

Men 0.27 Women 0.24

Occupational

diseases

rate(ODR)

0 0

Lost day rate(LDR) 27.7 99.6

Men 117.99 Women 0.84

Absent rate(AR) 0.22% 0.27%

Men 0.25% Women 0.38%

Incidences of

death on the job0 0

Frequency Rate(FR) = Frequency of Incapacitation × million / total work hours

Severity Rate(SR) = Lost Days × million / total work hours

Injury Rate (IR)= Total number of incidents of injury × 200,000/ total work hours

Occupational Diseases Rate (ODR)= Total incidences of occupational diseases ×

200,000/ total work hours

Lost Day Rate (LDR)= Days lost due to injuries × 200,000/ total work hours

Absent Rate (AR)= Days absent due to injuries / total work hours × 100%

2017

Type of Incident Incidences % of Total

Caught in

rolling object

428.57%

Men 3 Women 1

Fell 321.43%

Men 3 Women 0

Crushed 214.29%

Men 2 Women 0

Sprains 17.14%

Men 0 Women 1

Caught in

object

17.14%

Men 1 Women 0

Chemical burn 17.14%

Men 1 Women 0

Cuts 17.14%

Men 1 Women 0

Impact 17.14%

Men 1 Women 0

*The above-mentioned occupational safety and health information only includes the Taiwan area and does not include commuting accidents.


53


Occupational Safety and Health Management Employee Care Training and Education Local Community Engagement YFY Product Responsibility

Employees are partners who work hard and change society together with the company, and they are the most important stakeholders for YFY. YFY is responsible for workplace safety and employees’ health through the Occupational Safety and Health Management Platform; the Human Resources department covers all aspects of employee care such as career development, education and training, performance appraisal and promotion, employee satisfaction surveys etc. They also communicate with the employees to explain the company’s goals and business direction.

There are 6 corporate unions in YFY and More than 50% of the employees in Taiwan are union members. The unions regularly hold joint meetings of corporate unions, so that corporate union representatives can directly reflect the demands of employees to senior executives. This is also so that they can communicate any difficulties, needs or problems in their work to the senior executives. In non-unionized areas, labor-management coordination meetings are held regularly. Employees can use the hotline or email to respond to suggestions or to appeal, and the Human Resources department can immediately handle it. YFY cares about the retirement life of employees, so we have a retirement package that is in accordance to the Labor Standards Act and the Enforcement Rules of the Labor Pension Act.

The Labor Standards Act: A monthly labor reimbursement of 2% to 15% of the total monthly salary is transferred to employee bank accounts and supervised by the Labor Pension Fund Supervisory Committee.

The Enforcement Rules of the Labor Pension Act: A monthly pension of not less than 6% of the total monthly salary is paid to the employee account of the labor pension established by the Insurance Bureau. We believe that providing employees with a safe working environment and welfare, so that they can fully develop their own profession, create greater value for themselves and for society.

Employee Care YFY’s Taiwan full-time colleagues enjoy labor and health insurance, group medical insurance, accident insurance and labor pensions, and likewise, the mainland China full-time colleagues enjoy pension insurance, medical insurance, work injury insurance, unemployment insurance and maternity insurance. In addition to complying with the relevant labor regulations of the operating bases, in order to take care of the employees from all angles, YFY also plans various welfare projects through the "YFY Joint Staff Welfare Committee", including:

・New Year and holidays welfare merchandise

・Birthday present

・Wedding present

・Maternity leave and gift

・Complimentary subscription to Preschool Education Monthly

・Complimentary subscription to Preschool Children´s Magazine

・Education scholarship for employees' children

・Reward for active employees with excellent achievements on continuing education at tertiary institutions

・Team building funding support

・Association recreational activity funding support

・Cultural and recreational activity funding support

・Hospital relief fund for the injured

・Retirement provision

・Employee group accident insurance

・Disability funding support

・Bereavement pension for employees and employees' family members

・Employee meal allowance

・Preferential schemes for participation in the activities, courses offered by and purchase of products from Hsin-Yi Foundation and Hsinex International Corp

GRI 401


54



2017 New Hires Totals and Composition

2017 Total Employees Turnover and Composition

2017 Employee Parental Leave Numbers and Rates

Male Femaletotal

30 and under 31-50 years old 51 and over 30 and under 31-50 years old 51 and over

Taiwan employees

284 (3.38%) 236 (2.81%) 18 (0.21%) 50 (0.59%) 54 (0.64%) 1 (0.01%) 643 (7.65%)

Mainland China employees

314 (3.74%) 226 (2.69%) 10 (0.12%) 123 (1.46%) 88 (1.05%) 2 (0.02%) 763 (9.08%)

Total 598 (7.12%) 462 (5.50%) 28 (0.33%) 173 (2.06%) 142 (1.69%) 3 (0.04%) 1406 (16.73%)

Male Femaletotal

30 and under 31-50 years old 51 and over 30 and under 31-50 years old 51 and over

Taiwan employees

231 (2.75%) 348 (4.14%) 127 (1.51%) 37 (0.44%) 56 (0.67%) 22 (0.26%) 821 (9.77%)

Mainland China employees

519 (6.18%) 493 (5.87%) 22 (0.26%) 151 (1.80%) 156 (1.86%) 7 (0.08%) 1348 (16.04%)

Total 750 (8.92%) 841 (10.01%) 149 (1.77%) 188 (2.24%) 212 (2.52%) 29 (0.35%) 2169 (25.81%)

*The number of employees who have parental leave is the number of employees who can have maternity leave or paternity leave between 2015 and 2017Reinstated Rate = Actual reinstated employees after parental leave / number of employees who shall be reinstated after parental leave*100%. Retention Rate = number of employees who were still on the job 12 months after being reinstated after parental leave / number of employees reinstated after parental leave in the last reporting period*100%

50% 77.8%

Men

Reinstatement rate

Women

Male Female

Number of employees who qualified for parental leave

111 102

Number of local employees who applied for parental leave

2 9

2017 Number of employees reinstated

1 7

2016 Number of Employees who retained after reinstatement

0 4

Reinstatement rate 50% 77.8%

Retention rate - 66.7%

*New Hires refer to who were on board in 2017.*New Hires composition = number of new hires in the cell / number of total employee

*Employees turnover refer to who leave the organization voluntarily or due to dismissal, retirement, or death in service. *Employees turnover composition = number of Employees turnover in the cell / number of total employee


55



Most of YFY´s high-level managers are promoted from within the company. Nurturing human resources and capital can both lead to overall improvements in the company and contribute to the careers of employees. Therefore, YFY highly values educational training and performance appraisal. YFY´s HR department houses experts on educational training and performance appraisal. We arrange various types of training and provide consultation to put the right people at the right positions to allow for the best outcomes.

We break down and define the jobs of each position to discover the core professional competency needed for its operations and use this as the main focus of our performance appraisals. Other than employees who have not been here for at least 3 months, 100% of our employees undergo performance appraisals, without regard to gender, race or nationality. Held every half a year, our performance appraisals are divided into three phases, employee self-evaluation, supervisor meeting, and supervisor evaluation. After the evaluation is completed, customized feedback and suggestions are provided to each employee, for them to reflect on their performance and use as a reference for career planning and educational training.

YFY ’s educat ion and training is based on seven core competencies, with the goal of strengthening team leadership and execution, and improving organizational skills. Under this goal, six training strategy priorities were developed: establishing leadership tiers, optimizing training systems,

Training and Education

strengthening communication, establishing talent pools, setting up talent assessments, and building high execution power organizations. YFY's career management adheres to these key points to carry out targeted training programs such as job rotation and train-the-trainer. Through the education and training program, we will enhance our colleagues' ability and knowledge and cultivate countless professional managers.

GRI 404


56



Local Community Engagement

The term "symbiosis" is derived from biology and it means that different creatures live closely together. This concept is often cited in sociology to illustrate mutual benefit between people. The relationship between YFY and the community is based on mutual benefit and symbiosis. There is a designated person in each mill acting as a communication channel between the surrounding community and YFY who pays regular visits to neighborhood leaders, schools, and district social welfare groups to understand the problems and impacts faced by local communities. Through sincerely listening and communicating face-to-face, we will discuss the most suitable solution together. Through earnest care and long-term investment, we look forward to coexisting with the local community.

In 2015, YFY launched a service project named ″Taitung Academy,″ which would last at least three years.We bought 598 sets of books, with one copy at the YFY Head Office in Taipei and one at the Taiwan Fund for Children and Families Center in Guanshan, Taitung. We invited our employees as volunteer reading partners. Every Wednesday afternoon, 20 YFY volunteers and 20 children from Guanshan, Taitung read and discuss a book over video chat together. Through the children´s books, the children discuss a wide range of issues with the volunteers, including interpersonal relations, emotions, the body, gender, death, the environment, etc. To date, the Academy has logged more than 1,200 hours of reading with children, witnessing their growth, and will continue to help them grow.

Hualien Guanghua Elementary School and Hualien mill have a symbiotic coexisting relationship. When Hualien mill was established, many people moved to Guanghua village, so Guanghua Elementary was established to meet the needs. Till today, Hualien mill has maintained a close cooperative relationship with the school. Guanghua Elementary established a “Happy Farm” on campus, using natural fertilizer provided by YFY. Hualien mill colleagues also visited the campus to teach the children how to grow fruits and vegetables, and after a year of hard work they had a happy harvest. The Hualien mill will continue to sponsor Guanghua students for 30 years. Every year, Guanghua Elementary and Kindergarten goes to the Hualien mill to celebrate the New Year and give back to the Hualien Factory.

YFY Taitung Academy Guanghua Elementary School Happy Farm

For more details please see

page 28 of the report

For more details of the project, please see 2016 YFY Corporate Social Responsibility Report, page 41

01 02

GRI 413

http://www.yfy.com/album/tw_csr_reportdownload_dla/595cb4792c37d.pdf

http://www.yfy.com/album/tw_csr_reportdownload_dla/595cb4792c37d.pdf

http://www.yfy.com/album/en_csr_reportdownload_dla/5ba0c8ead15e4.pdf


57



YFY’s first mill was established in Kaohsiung Jiutang. The clear discharge water strictly controlled by Jiutang mill is the main source of water for the old railroad bridge wetlands. The wetland zone is host to more than 120 species of birds and plants in this wetland zone. On October 14th, 2017, YFY invited the Butterfly Symphony Orchestra to perform there, and invited residents of nearby communities, the elderly and the young, to enjoy the international performance. At the same time, the games for environmental education were set up in every corner of the zone, which increased the educational value of the event. A total of 750 people participated in the environmental education game, 250 people had hands-on experience of making paper, and 150 people participated in the wetland ecological tour. While enjoying the gorgeous performance of the symphony, don’t forget to listen to sounds of frogs croaking.

In 2017, YFY participated again in the only major event in Asia with the theme of paper: “Cardboard War Contest” YFY sent all the mills in Taiwan as technical support to teach university students the characteristics, structure and creation techniques of paper. The event attracted more than 20 universities across Taiwan, and more than 500 teachers and students participated in the event. There was also a live broadcast and Facebook broadcast at the event, so the event was very lively. YFY hopes to reach out to the community of different ages through a variety of interesting activities, to deepen the cooperation and understanding between the industry and the academic community. YFY also hopes to inject more vitality into the paper industry, and promote environmental protection. YFY believes that only by changing education can we change the future.

Old Railroad Bridge Education Wetland Zone Concert

Cardboard War Contest


page 29 of this report


page 30 of this report

03 04




58



YFY Product Responsibility

Quality and Safety

YFY highly values product quality and safety. In the mill quality/environment management system, YFY has obtained many international system certif ications, such as: ISO 9001/14001/50001/22000/22716, OHSAS18001; the products produced are tested by third-party institutions. Related testings also include European and American regulations, such as the EU Food Contact Materials Regulations AP (2002), the European Union's Restriction of Hazardous Substances Directive (RoHS), and the Code of Federal Regulations (CFR). The household paper products produced by YFY Consumer Products Co., Ltd. also obtained major related certifications, such as : CNS, HACCP, FSC, and env ironmental label certification; in addition, home/personal cleaning products have also obtained major related certifications, such as: CNS, (USDA) U.S. biomass certification, AMA U.S. low-sensitivity verification, EU certification, etc; to show our commitment to providing customers with a peace of mind with certified quality products.

Customer Satisfaction and Product Labeling

YFY knows that customer needs and satisfaction are the most important keys to company operations. Therefore, YFY Consumer Products Industry uses the product use satisfaction survey to thoroughly understand and track the customer's experience in using the product as an indicator of product

development to benefit customers' expectations. At the same time, each mill also regularly surveys customer satisfaction for existing products to investigate whether the products and services produced meet customer expectations, and provide better services through internal review, tracking and improvement. In addition, in order to more effectively grasp the needs of our customers and provide more efficient services, we established a customer relationship service to work together with mills to achieve greater customer satisfaction.

Product labeling is the most direct way of communicating with our consumers. All of YFY´s products, including Mayflower, Delight, Tender, Orange House, FreshSense, and other brands, provide clear and transparent labels. To provide customers with a more complete understanding of our products, we do not provide false information or conceal any information. This allows our customers to use our products with the assurance that they are safe.

Personal Information Management

YFY strictly abides by the relevant provisions of the capital law, with strict organization, management system and control mechanism for the collection, processing or utilization of personal information, to ensure the customer information privacy. YFY Consumer Products Co., Ltd. also established the "Personal Data Protection Executive Group" to develop and improve personal data protection and management measures, and to continue to promote personal data laws to strengthen employees' familiarity with personal data protection laws. So far, no personal data leakage has occurred, and no complaint about the use or mismanagement of personal data has been received.

GRI 416

GRI 417

GRI 418


59Report Profile GRI STANDARDS Index SGS Assurance Statement


Report Profile

Sustainability is a core vision of YFY. In order to demonstrate its renewed commitment to sustainable management and its determination, since 2014, YFY has composed Corporate Social Responsibility Reports annually. This report was developed according to the Core option of the GRI Standards sustainability report guidelines. By adopting an internationally recognized standard, we can focus on disclosing the most important pieces of information, while also meeting the expectations of stakeholders in fully and systematically disclosing the strides YFY have made in achieving sustainable development. This year´s annual report was certified by SGS, earning its AA1000 certification.

Report Boundaries and Scope

The contents of this report indicate YFY´s performance in the areas of economy, quality and service, and social and environmental activities. This includes its main locations of operation in Taiwan and China, including: Yuen Foong Yu Packaging Inc., Yuen Foong Yu Consumer Products Co., Ltd., and Chung Hwa Pulp Corp. Part of the financial performance is drawn from the annual report, and the boundaries are extended to cover all investments and joint ventures included in the consolidated financial statements, as specifically indicated in the report. Additionally, part of the human resources and environmental performance cover data from YFY's mills in China and the explanatory notes follow the relevant statistical data.

The financial performance is derived from the annual report, and its boundary is extended to the investment and transfer investment business of the consolidated financial report. For all entities included in the consolidated financial statements, please refer to the 2017 annual report of YFY Inc. “Special Recorded Matters - Information of Related Industries”.

The locations of operation covered by this report are summarized as follows:

I. Offices: Taipei Head Office

II. Packaging Groups:

a. Taiwan: Taipei Head Office, Xinwu Mill, Chenggong Mill, Taoyuan Mill, Changhua Mill, Pek Crown Mill, Zhunan Mill, Kaohsiung Mill.

b. China: Tianjin Mill, Qingdao Mill, Yangzhou Mill, Kunshan Mill, Nanjing Mill, Suzhou Mill, Shanghai Mill, Jiashing Mill, Fuzhou Mill, Xiamen Mill, Guangzhou Mill, Zhongshan Mill, Dongguan Mill.

III. Consumer Products Groups: a. Taiwan: Taipei Office, YFY Store, LiVEBRiCKS, Yungshungpu, Qingshui Mill, Yangmei Mill. b. China: Beijing Mill, Yangzhou Mill, Kunshan Mill, Dingfung Mill.

III. Consumer Products Groups:

a. Taiwan: Taipei Office, YFY Store, LiVEBRiCKS, Yungshungpu, Qingshui Mill, Yangmei Mill.

b. China: Beijing Mill, Yangzhou Mill, Kunshan Mill, Dingfung Mill.

IV. Forest Products and Fine Paper Groups:

a. Taiwan: Taipei Head Office, Jiutang Mill, Hualien Mill, Taitung Mill.

b. China: Dingfung Mill.

Description of each data category:

Boundary description A: Taoyuan mill, Xinwu mill, Yangmei mill, Zhunan mill, Dajia mill, Qingshui mill, Changhua mill, Kaohsiung mill, Jiutang mill, Taidong mill, Hualien mill, Yangzhou Industrial Paper mill, Yangzhou Consumer Goods mill, Dingfeng consumer products mill

Boundary description B: Taoyuan mill, Xinwu mill, Yangmei mill, Zhunan mill, Dajia mill, Qingshui mill, Changhua mill, Kaohsiung mill, Jiutang mill, Taitung mill, Hualien mill, Tianjin mill, Qingdao mill, Yangzhou Gong Paper mill, Yangzhou Consumer Goods mill Kunshan mill, Nanjing mill, Suzhou mill, Shanghai mill, Jiaxing mill, Fuzhou mill, Xiamen mill, Guangzhou mill, Zhongshan mill, Dongguan mill, Beijing mill, Dingfeng Pulp and Paper mill, Dingfeng Consumer Products mill

Appendix GRI 102-45~GRI 102-56


60Report Profile GRI STANDARDS Index SGS Assurance Statement


Reporting Cycle YFY’s previous corporate social responsibility report was publicly released in June of 2017. Unless otherwise stated, all activities and data are from January 1st, 2017 to December 31st, 2017. In the future, YFY will continue to issue annual corporate social responsibility reports, with the next one slated to be released by June of 2019.

Editing of Information

Some of the electricity consumption data in the 2016 YFY Corporate Social Responsibility Report is incorrect data, and the adjustment is as follows: The 2016 YFY total electricity consumption should be 5.11TJ. The power savings should be 45,260 kWh.

YFY will measure and compile data more carefully in the future, in order to release accurate information to stakeholders.

Data Measurement Techniques

The business performance figures in this report are compiled according to the International Financial Reporting Standards (extracted from the annual report), and are represented in New Taiwan Dollar (NTD). Relevant internal departments provide the performance figures regarding the society and quality. The environmental performance figures are provided by all mills, respectively, represented in the internationally recognized indicators and units, to be adopted after review by dedicated environmental units.

Contact Information

Address: No. 51, Sec. 2, Chongqing South Rd. Taipei City 10075, Taiwan Tel: +886-223968020#3353 Email: [email protected]

Sustainability and Social Responsibility Office, Taipei Head Office, YFY Inc.


61


Report Profile GRI STANDARDS Index SGS Assurance Statement

GRI STANDARDS Index

GENERAL DISCLOSURES

Indicators Description Reason for omission

Page

Organizational profile

102-1 Name of the organization - 35

102-2 Activities, brands, products, and services - 35

102-3 Location of headquarters - 35

102-4 Location of operations - 35

102-5 Ownership and legal form - 35

102-6 Markets served - 36

102-7 Scale of the organization - 36

102-8 Information on employees and other workers - 37

102-9 Supply chain - 37

102-10 Significant changes to the organization and its supply chain

-

102-11 Precautionary Principle or approach - 42

102-12 External initiatives - 38

102-13 Membership of associations - 38

Strategy

102-14 Statement from senior decision-maker - 02

Indicators Description Reason for omission

Page

Ethics and integrity

102-16 Values, principles, standards, and norms of

behavior

- 39

Governance

102-18 Governance structure - 42

Stakeholder engagement

102-40 List of stakeholder groups - 41

102-41 Collective bargaining agreements - 53

102-42 Identifying and selecting stakeholders - 40

102-43 Approach to stakeholder engagement - 41

102-44 Key topics and concerns raised - 41

Reporting practice

102-45 Entities included in the consolidated financial

statements

- 35

102-46 Defining report content and topic Boundaries - 46,50

102-47 List of material topics - 40

102-48 Restatements of information - 60

102-49 Changes in reporting - -

102-50 Reporting period - 60

102-51 Date of most recent report - 60

102-52 Reporting cycle - 60

102-53 Contact point for questions regarding the

report

- 60

102-54 Claims of reporting in accordance with the GRI

Standards

- 59

102-55 GRI content index - 59

102-56 External assurance - 66


62



Topic-specific disclosures

Aspect Material topics Indicators Reasons for omission Page

Economic 201 Economic Performance

Management approach disclosures - 35

201-1 Direct economic value generated and distributed - 35

201-2 Financial implications and other risks and opportunities dueto climate change - 45

201-3 Defined benefit plan obligations and other retirement plans - 53

201-4 Financial assistance received from government Information unavailable -

202 Market Presence Management approach disclosures - 37

202-1 Ratios of standard entry level wage by gender compared tolocal minimum wage - 37

202-2 Proportion of senior management hired from thelocal community Information unavailable -

203 Indirect Economic Impacts


203-1 Infrastructure investments and services supported These topics are medium impact topics. We would describe the management approach disclosures.

-

203-2 Significant indirect economic impacts -

Environmental 301Materials Management approach disclosures - 46

301-1 Materials used by weight or volume - 47

301-2 Recycled input materials used - 47

301-3 Reclaimed products and their packaging materialsYFY’s major products are paper and pulp. These products would be end-handled in the recycle mills. YFY do not have self-reclaiming products

-

302 Energy Management approach disclosures - 46

302-1 Energy consumption within the organization - 46

302-2 Energy consumption outside of the organization Information unavailable -

302-3 Energy intensity - 46

*Significant Material Topic are in red


63




Environmental 302-4 Reduction of energy consumption - 46

302-5 Reductions in energy requirements of products and services Information unavailable -

303 Water Management approach disclosures - 48

303-1 Interactions with water as a shared resource - 48

303-2 Management of water discharge-related impacts There is no significant impacted source of water. -

303-3 Water withdrawal - 48

305 Emissions Management approach disclosures - 46

305-1 Direct (Scope 1) GHG emissions - 48

305-2 Energy indirect (Scope 2) GHG emissions - 48

305-3 Other indirect (Scope 3) GHG emissions Information unavailable -

305-4 GHG emissions intensity - 48

305-5 Reduction of GHG emissions - 46

305-6 Emissions of ozone-depleting substances (ODS) - 48

305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and othersignificant air emissions - 48

306 Effluents and Waste Management approach disclosures - 46,48

306-1 Water discharge by quality and destination - 49

306-2 Waste by type and disposal method - 47

306-3 Significant spills No relevant malpractice. -



64




Environmental 306-4 Transport of hazardous waste No relevant malpractice. -

306-5 Water bodies affected by water discharges and/or runoff Information unavailable -

308 Supplier Environmental Assessment


308-1 New suppliers that were screened using environmental criteria These topics are medium impact topics. We would describe the management approach disclosures.

-

308-2 Negative environmental impacts in the supply chain andactions taken -

Social 401 Employment Management approach disclosures - 53

401-1 New employee hires and employee turnover - 54

401-2 Benefits provided to full-time employees that are not providedto temporary or part-time employees - 53

401-3 Parental leave - 54

402 Labor/Management Relations


402-1 Minimum notice periods regarding operational changesThese topics are medium impact topics. We would describe the management approach disclosures

-

403 Occupational Health and Safety


403-1 Occupational health and safety management system - 51

403-2 Hazard identification, risk assessment, and incident investigation Information unavailable, planning to disclose next year. 52

403-3 Occupational health services - 52

403-4 Worker participation, consultation, and communication onoccupational health and safety

The relevant topic would be controlled in OSH Committees, not covered in the union communication.

-

404 Training and Education




65




Social 404-1 Average hours of training per year per employeeThese topics are medium impact topics. We would describe the management approach disclosures.

-

404-2 Programs for upgrading employee skills and transitionassistance programs -

404-3 Percentage of employees receiving regular performance andcareer development reviews -

405 Diversity and Equal Opportunity


405-1 Diversity of governance bodies and employees These topics are medium impact topics. We would describe the management approach disclosures.

-

405-2 Ratio of basic salary and remuneration of women to men -

413 Local Communities Management approach disclosures - 56

413-1 Operations with local community engagement, impactassessments, and development programs These topics are medium impact topics. We

would describe the management approach disclosures.

-

413-2 Operations with significant actual and potential negativeimpacts on local communities -

415 Public Policy415-1 Political contributions

YFY is political neutral. We do not contribute to any political party, statesman and relevant organization.

-

416 Customer Health and Safety


416-1 Assessment of the health and safety impacts of productand service categories These topics are medium impact topics. We

would describe the management approach disclosures.

-

416-2 Incidents of non-compliance concerning the health andsafety impacts of products and services -

417 Marketing and Labeling


417-1 Requirements for product and service information and labelingThese topics are medium impact topics. We would describe the management approach disclosures.

-

417-2 Incidents of non-compliance concerning product and serviceinformation and labeling -

417-3 Incidents of non-compliance concerningmarketing communications -

418 Customer Privacy Management approach disclosures - 58

418-1 Substantiated complaints concerning breaches of customerprivacy and losses of customer data No relevant malpractice. -


66



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