Analysis of Material Topics and Engagement with Major Stakeholders

Analysis of Material Topics

Formosa Laboratories primarily follows the GRI guidelines and refers to the SASB standards for sustainable issues. We identify significant topics based on the four principles of inclusivity, materiality, responsiveness, and impact, in accordance with the AA1000 Account Ability Principle (2018). It then ranks them according to the requirements of the GRI Universal Standards 2021 edition and discloses the impact, management strategies, and practical situations of each significant topic. Based on these results, Formosa Laboratories calibrates its sustainable development goals and strategies, enhancing the effectiveness of external communication.

Sustainable Issue Collection	Collect and evaluate highly relevant sustainability issues based on national policy trends, various international standards, evaluations, and initiatives. Gather immediate interaction and feedback on issues that matter to stakeholders through a variety of daily communication channels.
Engagement with 6 Major Stakeholders	Each department regularly holds internal meetings to convey stakeholders' opinions and feedback. Held a kick-off meeting for sustainable development to collect concerns from stakeholders and focus on 16 key issues.
Impact Level Assessment of 16 Concerned Issues	Analyze the impact level of various concerned issues through the "Materiality of Sustainability Issues Assessment Questionnaire". Invite major business managers, supervisors at the associate manager level or above, and business contractors of each department to conduct a more detailed and standardized internal assessment of the seriousness (scale and scope), likelihood of occurrence, and risk of human rights infringement of each issue, and a total of 40 valid questionnaires were collected.
Identification and Examination of Material Topics	After analyzing the results obtained from the "Materiality of Sustainability Issues Assessment Questionnaire", sorted them based on their quantitative values and establish threshold criteria for material topics. Commission external consultants to jointly review and examine the appropriateness of the identified material topics and threshold standards, ensuring that there were no omissions or deficiencies in the material topics that should be prioritized for reporting, in order to ensure their completeness, inclusiveness, macroscopic nature, and alignment with the Company's sustainable development strategy. In 2022, a total of 10 material topics were identified.
Confirmation of 10 material topics	After discussion in the meetings of the Sustainable Development Committee, all 10 material topics were reported to the Board of Directors and confirmed. In this report, we will disclose the impact of each major topic, as well as the corresponding policy commitments, management principles, target indicators, and related performance of the Company.å
Continuous Improvement	Each department sets management policies for material topics and incorporates them into daily work plans and annual operational strategies. Regularly review and evaluate the effectiveness of the management policy, continuously improving the sustainable management strategies.

Engagement with 6 Major Stakeholders

Based on the operational characteristics and industry attributes, the Company evaluates the dependence, responsibility, concern, influence, and diverse perspectives of stakeholders in accordance with the 5 principles of the AA1000 Stakeholder Engagement Standard (SES) 2015 edition. Six key stakeholders have been identified, including

employees,
investors/shareholders,
government agencies,
customers,
suppliers/contractors, and
community/non-profit organizations.

To fully understand the concerns of stakeholders and identify the actual or potential impacts of these issues, the Company actively communicates with various stakeholders through various bilateral and continuous channels in its daily operations. At the same time, the Company collects and responds to the issues they are concerned about.

Engagement Situation of the Stakeholder Meeting of Formosa Laboratories

Stakeholder	Meaning to Formosa Laboratories	Method of Engagement / Frequency	Concerned Issues	Communication Performance in 2022
Employees	Employees are the most important asset of Formosa Laboratories and also a key factor in its operational success. Formosa Laboratories prioritizes the protection of employees' rights and interests and adheres to the principle of employing people based on their talents and placing them in appropriate positions. We show absolute respect and care for our employees, attracting excellent talents to join and unleash their potential in order to achieve the goal of sustainable business operations.	Cross-departmental manager meeting / monthly Labor-management meeting / quarterly Occupational Safety and Health Committee / quarterly Employee health examination / annually Annual performance review operation / annually Employee Welfare Committee / irregularly Internal announcement / irregularly Multiple Communication Channels for Employees (Workplace Violence, Sexual Harassment, Job Safety, Physical and Mental Health, Improvement Proposals, Behavior Management, and Labor Relations, etc.) /Irregularly	Economic Performance Talent Attraction and Retention Occupational Safety and Health	Held 12 meetings of the first-level supervisors to discuss major operational management measures of the Company. Held 4 meetings of labor-management. Held 4 meetings of occupational safety and health. Allocated welfare budget and planned for employee bonuses for marriage, funeral, illness, maternity subsidies, birthday and holidays. Carried out general employee health checks and special operation employee health checks. For employees with abnormal indices, conducted interviews with the factory nurse (doctor) and followed up accordingly. At the beginning of the year, conducted annual performance setting, mid-term review or revision, and end-of-term evaluation operations.
Investors/ Shareholders	Investors provide a source of funding for the Company. We transparently disclose operational information to demonstrate the effectiveness of our business operations, enhance investor support, stabilize funds, and create investment value	Company website (shareholder services) / irregularly Material information / irregularly Annual report and financial report / annually and quarterly Shareholders' regular meetings and special meetings / annually, held as needed Institutional investors' conference (including self-organized and invited attendance) / irregularly Contact Information of Spokesperson / instant response and handling	Economic Performance Occupational Safety and Health Information Security Social Participation	Disclosed in real-time stock price (dividend) query, material information, shareholders' meeting information and various activities information. The shareholders' meeting was held on June 23, 2022. Participated in one institutional investors' conference.
Government Agencies	The Company continues to operate steadily in accordance with relevant government regulations. Financial information and annual reports of shareholders' meetings are disclosed on the Market Observation Post System and the company's website in accordance with legal regulations. The Company also complies with various environmental and labor laws and regulations.	Official document, e-mail, conference / irregularly Competent authority policy promotion / irregularly	Occupational Safety and Health Water Stewardship Drug Safety Information Security Waste Management	32 major messages were released throughout the year
Customers	Each customer's recognition and support are the driving force behind the Company's growth. Formosa Laboratories is fully committed to achieving good cooperation and understanding with business partners.	Customer visit / irregularly Certification audit / irregularly Exhibition / irregularly Company website, phone, and Email / irregularly	Economic Performance Innovative Research and Development Drug Safety	Customer visits / 117 times (Due to the pandemic, only domestic customers visited.) Certification audit / official plant inspection 8 cases; customer plant inspection 31 cases (Dut to the pandemic, mostly online) Exhibition / 1 domestic, 4 overseas (due to the pandemic period, the number of overseas exhibitions was reduced) Company website, phone, and e-mail (Periodically check on customers; if there is a need, contact customers by phone or email immediately.)
Suppliers / Contractors	Formosa Laboratories' products rely on suppliers to provide high quality and stable raw materials, and through mutual trust and cooperation, we are able to achieve a sustainable corporate standard.	Supplier visit / irregularly Supplier assessment and certification audit / annually Supplier questionnaire survey / every three years	Economic Performance Supplier Management	Completed on-site audits of 14 raw material suppliers. Two suppliers were unable to complete on-site audits due to COVID-19, so audits were conducted in writing. For more information on supplier and contractor management and auditing, please refer to: 3.2 Supplier Management.
Community/ Non-Profit Organizations	Formosa Laboratories maintains friendly relations with the local community and neighbors, and has long been committed to social welfare and community feedback, fulfilling corporate social responsibilities.	Company Website / irregularly Community activity participation / irregularly Phone and on-site communication / irregularly	Occupational Safety and Health Water Stewardship Social Participation Waste Management	Participated in river adoption and actively engaged in river conservation and maintenance. Sponsored NT$130,000 in total to support local communities and various public welfare activities. For more details on the implementation of public welfare, please refer to Chapter 6: Social Participation.

Identification and Sequence of material topics

This year is the first time that Formosa Laboratories has issued a sustainability report, and it is also the first time that a material topic of reporting has been subjected to identification and analysis. We conducted two project meetings for the preparation of the sustainability report in November 2022, chaired by the Chairman, inviting department heads and business contractors to collect the directions of concern that we usually learn from stakeholders through meetings, phone interviews, opinion mailboxes, or various business interactions and exchanges. Meanwhile, we referred to national policy trends and issues of various international standards and initiatives such as SASB industry guidelines and SDGs, focusing on 16 sustainability issues highly relevant to the Company, covering economic, environmental, and social aspects. We then discussed these issues one by one according to the Company's development strategy, industry status, value chain practices, and expert recommendations, confirming the impact of these concerns on the economy, environment, population, and their human rights.

Through the standardized and quantified internal assessment process of the "Materiality of Sustainability Issues Assessment Questionnaire", the report identifies and prioritizes the top 10 material topics that should be disclosed. These topics include 2 environmental topics, 3 social topics, and 5 economic topics. The Sustainability Development Committee and external advisory experts discussed and reviewed the relevant processes and standards to ensure the appropriateness and confirm that there are no omissions in the material topics. After approval by the Board of Directors, the report compilation process continues to provide stakeholders with information for effective evaluation and decision-making.

Additionally, to ensure effective communication with a wide range of stakeholders through the sustainability report, we have also set up a "stakeholder services" on our official website to provide dedicated contact channels for different stakeholders. If stakeholders have any questions, suggestions, or complaints regarding material topics or other report content, feel free to contact us through this mailbox so as to maintain smooth and good interaction with them through.

According to the survey results, the issues highly related to human rights, from high to low, include "employee diversity and equality,""integrity management,""occupational safety and health,"and"talent attraction and retention." Among them, "employee diversity and equality" and "integrity in business" meet the standards and have minimal negative impact due to compliance with Taiwan laws and regulations, and therefore were not assessed as material topics.

2022 Material Topic List

Analysis of Material Topics and Engagement with Major Stakeholders

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