Risk Management
Risk Management Approach
Our Risk Management Policy
To ensure industrial safety and environmental protection, we have established our Risk Management Policy, aiming to gain a comprehensive understanding of evolving trends in the business environment and enhance risk awareness across the Company, so as to ensure sustainable operations. Based on the Risk Management Policy, we have adopted the following strategies:
- Establish a risk management system across the group
- Strengthen all employees’ risk awareness through education and training
- Discerning evolving trends in the business environment
- Comply with international product safety regulations and standards
- Ensure industrial safety and environmental protection
Implementation and Performance in 2022
2022 Target
2022 Performance
ESG Risk Rating Score ≤30
Each department has submitted and implemented response/preventive measures within their respective scope of responsibility. Our ESG risk rating has been reduced to 26.4
Supply Chain Management:
On-time Delivery (OTD) Rate ≧85%
Share of Mid/High-Risk Suppliers (%) ≦3%
On-time Delivery (OTD) Rate ≧85%
Share of Mid/High-Risk Suppliers (%) ≦3%
Supply Chain Management:
On-time Delivery (OTD) Rate: 85%
Share of Mid/High-Risk Suppliers: 3%
On-time Delivery (OTD) Rate: 85%
Share of Mid/High-Risk Suppliers: 3%
Information Security Management: Monthly Availability Rate of Critical Information Systems and Network Services ≧99.5%
Information Security Management: Monthly Availability Rate of Critical Information Systems and Network Services for the year was 99.9%
No. of Mid/High-level Risks Addressed in Key Operational Activities: 6
No. of Mid/High-level Risks Addressed in Key Operational Activities: 7
Human Resource Management: Employee Turnover Rate ≦1.5%
Human Resource Management: Employee Turnover Rate for the year was 1.2%
In addition, Ｗe has also implemented the following measures to mitigate operational risks:
- We have established a “Prevention of Insider Trading Management Operating Procedure” to safeguard the interests of investors and protect the company’s rights.
- We assess the integrity records of counterparties and include integrity clauses in the contracts we sign. In case of any involvement in dishonest behavior, the company reserves the right to terminate or annul the contractual terms at any time.
2023
Risk Management Goals
ESG Risk Rating
≦
0
Supply Chain Management
≧
0
%
On-time Delivery Rate
Supply Chain Management
≦
0
%
Share of Mid/High-Risk Suppliers
Number of Mid/High-level Risks Addressed in Key Operational Activities
0
Information Security Management
≧
0
%
Monthly Availability Rate of Critical Information Systems and Network Services
Human Resource Management
≦
0
%
Employee Turnover Rate
Risk Identification and Management Process
Everlight Chemical formulated its Risk Management Procedures based on ISO 31000:2018 Risk Management — Guidelines, Risk Management Best Practice Principles for TWSE/TPEx Listed Companies and other resources. The first revision draft of the Procedures was presented to and approved by the board on May 11, 2023. As illustrated below, our risk management process includes risk analysis (risk identification, risk assessment and risk evaluation), risk treatment, monitoring and review, and disclosure and reporting.
Risk Categories and Definitions
Everlight Chemical implements the 9-AA-05 Risk Evaluation Procedures. We monitor major changes in the overall business environment (for example, by referencing the BCI Horizon Scan Reports) and select issues for prioritization and formulate response measures. Our plants implement various management systems (ISO 9001, IATF 16949, ISO 14001, ISO 45001, ISO 22301, TIPS, GMP and more) to monitor potential risks and take preventive measures.
To adequately respond to the impacts of risks from the pandemic, climate change and other circumstances, we have made organizational resilience a top priority. We aim to include human resource management, information security management, supply chain management and business continuity management in key operational activities into our assessment, so as to ensure we have a robust risk management mechanism in place for sustainable operations.
Risk Identification and Impact Assessment
Risk Identification and Impact Assessment
Risk Category | Description | Assessment Result | Action Taken |
1. Market Risk | Uncertainty in changes in domestic and international economy, technological development or market demand related to the industry, which may have adverse effects on the Company’s ability to achieve its established goals | Likely to occur | Regular observation |
2. Political Risk | Risks related to geopolitical changes that could result in long-term impact | Less likely to occur | Regular observation |
3. Environmental Risk | Risks related to natural disasters, climate change, infectious disease and other uncontrollable risks | Likely to occur | Enhance emergency response mechanism and risk management |
4. Legal Risk | Risks related to non-compliance with regulations in business operations or external events that may lead to reputational damage or financial loss | Less likely to occur | Regular observation |
5. Financial Risk | Risks related to financial activities that may lead to financial losses to the Company | Likely to occur | Regular monitoring |
6. Operational Risk | Risks related to the Company’s internal control or management that may incur loss of personnel, financial assets, liabilities or profits | Likely to occur | Enhance emergency response mechanism and risk management |
7. Other Risk | Any other types of risks that may cause significant loss to the Company | Less likely to occur | Regular observation |
Based on the above risk analysis and impact assessment, we have developed more detailed management strategies for environmental and operational risks. In terms of environmental risks, for more information about our response to climate-related risks, please refer to the Climate Change Response and Adaptation section of our website. In terms of operational risks, we provide an overview of our management approach in this section.
ESG Risk Assessment
The guiding principle of our Risk Management Policy is “Implementing Risk Management, Ensuring Business Sustainability.” In 2022, we conducted an assessment on ESG-related risks in our business operations by applying the materiality principle and has formulated the following management policies and strategies:
Category
Risk Assessment Focus
Risk Management Policy/Strategy and Implementation in 2022
Environment
(E)
Environmental Protection and Management
I. The guiding principle of our Environmental Policy is “Mitigate Environmental Risks, Towards Ecological Sustainability,” based on which we have taken the following actions:
- Implement the ISO 14001 environmental management system with annual action plans and targets; regularly follow up and review progress of all action plans to ensure we can achieve the targets.
- Continuously improve manufacturing processes and resource efficiency by implementing the 12 Principles of Green Chemistry.
- Reduce industrial waste (water resources, air pollutants and waste), carry out pollution prevention measures, increase recycling rate and reduce overall emissions.
- Align with the government’s annual goal of >1% electricity savings by actively promoting various energy conservation and carbon reduction measures.
- Develop environment protection technology to improve the effectiveness of pollution treatment.
- Continue to develop eco-friendly products and reduce environmental impacts from the use of our products.
- Improve all employees’ environmental awareness and capabilities through education and training.
II. The Company takes the issue of greenhouse gas (GHG) emissions very seriously. We monitor GHG emissions at all of our plants and actively engage in carbon management. We continue to reduce emissions at all plants and subsidiaries by following the ISO 14064-1 standard.
III. We have adopted the TCFD framework to develop our climate risk identification process. We also organize relevant training to enhance employees’ skills and knowledge about the impact of climate change. Per interdepartmental discussions about climate-related risks and opportunities, four risks and two opportunities have been identified.
IV. We continue to promote “Everlight Chemical Green Partner Certification System” and implement green supply chain management and green procurement. We also ask our suppliers to place greater emphasis on corporate social responsibility.
V. We have formulated and implemented annual internal audit plans to evaluate the Company’s compliance with various environmental regulations and ensure all operating processes are compliant.
VI. We continue to monitor and provide disclosures on our compliance with environmental regulations in accordance with the GRI Standards.
Social
(S)
Occupational Safety and Health
- The Company puts great emphasis on occupational safety and health. We have a Safety and Health Policy, “Revere Life and Pursue Zero Incident,” in place and focus on implementing the requirements of our environmental safety and health management system, setting various management indicators and targets to further reduce hazards and EHS risks, protect employees’ physical and mental health, and promote industrial safety.
- Our headquarters, subsidiaries and plants were all certified by the ISO 45001 Occupational Safety and Health Management System standard in 2022.
- Annual fire safety training, drills and occupational safety training are held to equip employees with knowledge and skills for emergency response and safety management.
Product Management
- The Company has established Hazardous Substance Process Management (HSPM) protocols and the Product Safety Assurance System and Management Process to ensure our products are compliant with registration regulations and GHS labeling requirements in various countries. The Company also actively implements measures to fulfill its commitment to Zero Discharge of Hazardous Chemicals (ZDHC) and ensure safe product transportation and use.
- Our Quality Policy is guided by the principle of “Customers Caring with Value Creation.” We continue to operate our quality management system by ISO 9001 and IATF 16949 standards to further improve product quality and customer satisfaction.
Corporate Governance
(Ｇ)
Socioeconomic and Regulatory Compliance
- The Company’s core culture is “Business by Integrity, Management by Love.” Through our corporate governance framework, internal controls and annual training on Business Integrity and Whistleblowing System , we strengthen the awareness of our employees, ensuring that employees and various operations duly comply with relevant laws and regulations. We also utilize the “Regulations Cloud” software to effectively keep up with the latest requirements and updates in laws and regulations.
- The Company has passed ISO 22301 Business Continuity Management System certification.
- We value information security. We have established an Information Security Management Policy and obtained ISO 27001 Information Security Management System certification.
- In 2018, the Company passed the Level A verification by the Taiwan Intellectual Property Management System (TIPS). In addition to implementing various intellectual property management policies, complying with government regulations and respecting the intellectual property of others, the Company also ensures that its own key technologies, patents, trademarks, copyrights, and trade secrets are properly protected.
Strengthen Board Functions
- In 2021, we appointed a Corporate Governance Officer to assist in providing directors with assistance and information needed to fulfill their duties, further enhancing the board’s effectiveness.
- We arrange training on various topics for board directors and inform them of the latest regulatory updates and system or policy developments on an annual basis.
- Self-assessment on the performance of the entire board, individual directors and functional committees is conducted during Q1 each year. Every three years, an external organization is commissioned to conduct a third-party evaluation of the performance. Evaluation results are made available on the Company’s website.
Stakeholder Communication
- In line with the materiality principle, the Company puts great emphasis on stakeholder engagement and communication. We conduct a survey every two years to collect and analyze issues of stakeholder concerns. We publish sustainability reports annually to disclose information on material topics and also provide the latest information on our official website and social media.
- Based on different types of stakeholders, we have set up various communication channels and frequencies to enable active communication. Communication outlets include websites, telephone, email, meetings and visits and so on.
Environment (E)
Risk Assessment Focus
Environmental Protection and Management
Risk Management Policy/Strategy and Implementation in 2022
I. The guiding principle of our Environmental Policy is “Mitigate Environmental Risks, Towards Ecological Sustainability,” based on which we have taken the following actions:
- Implement the ISO 14001 environmental management system with annual action plans and targets; regularly follow up and review progress of all action plans to ensure we can achieve the targets.
- Continuously improve manufacturing processes and resource efficiency by implementing the 12 Principles of Green Chemistry.
- Reduce industrial waste (water resources, air pollutants and waste), carry out pollution prevention measures, increase recycling rate and reduce overall emissions.
- Align with the government’s annual goal of >1% electricity savings by actively promoting various energy conservation and carbon reduction measures.
- Develop environment protection technology to improve the effectiveness of pollution treatment.
- Continue to develop eco-friendly products and reduce environmental impacts from the use of our products.
- Improve all employees’ environmental awareness and capabilities through education and training.
II. The Company takes the issue of greenhouse gas (GHG) emissions very seriously. We monitor GHG emissions at all of our plants and actively engage in carbon management. We continue to reduce emissions at all plants and subsidiaries by following the ISO 14064-1 standard.
III. We have adopted the TCFD framework to develop our climate risk identification process. We also organize relevant training to enhance employees’ skills and knowledge about the impact of climate change. Per interdepartmental discussions about climate-related risks and opportunities, four risks and two opportunities have been identified.
IV. We continue to promote “Everlight Chemical Green Partner Certification System” and implement green supply chain management and green procurement. We also ask our suppliers to place greater emphasis on corporate social responsibility.
V. We have formulated and implemented annual internal audit plans to evaluate the Company’s compliance with various environmental regulations and ensure all operating processes are compliant.
VI. We continue to monitor and provide disclosures on our compliance with environmental regulations in accordance with the GRI Standards.
Social (S)
Risk Assessment Focus
Occupational Safety and Health
Risk Management Policy/Strategy and Implementation in 2022
- The Company puts great emphasis on occupational safety and health. We have a Safety and Health Policy, “Revere Life and Pursue Zero Incident,” in place and focus on implementing the requirements of our environmental safety and health management system, setting various management indicators and targets to further reduce hazards and EHS risks, protect employees’ physical and mental health, and promote industrial safety.
- Our headquarters, subsidiaries and plants were all certified by the ISO 45001 Occupational Safety and Health Management System standard in 2022.
- Annual fire safety training, drills and occupational safety training are held to equip employees with knowledge and skills for emergency response and safety management.
Social (S)
Risk Assessment Focus
Product Management
Risk Management Policy/Strategy and Implementation in 2022
- The Company has established Hazardous Substance Process Management (HSPM) protocols and the Product Safety Assurance System and Management Process to ensure our products are compliant with registration regulations and GHS labeling requirements in various countries. The Company also actively implements measures to fulfill its commitment to Zero Discharge of Hazardous Chemicals (ZDHC) and ensure safe product transportation and use.
- Our Quality Policy is guided by the principle of “Customers Caring with Value Creation.” We continue to operate our quality management system by ISO 9001 and IATF 16949 standards to further improve product quality and customer satisfaction.
Corporate Governance (G)
Risk Assessment Focus
Socioeconomic and Regulatory Compliance
Risk Management Policy/Strategy and Implementation in 2022
- The Company’s core culture is “Business by Integrity, Management by Love.” Through our corporate governance framework, internal controls and annual training on Business Integrity and Whistleblowing System , we strengthen the awareness of our employees, ensuring that employees and various operations duly comply with relevant laws and regulations. We also utilize the “Regulations Cloud” software to effectively keep up with the latest requirements and updates in laws and regulations.
- The Company has passed ISO 22301 Business Continuity Management System certification.
- We value information security. We have established an Information Security Management Policy and obtained ISO 27001 Information Security Management System certification.
- In 2018, the Company passed the Level A verification by the Taiwan Intellectual Property Management System (TIPS). In addition to implementing various intellectual property management policies, complying with government regulations and respecting the intellectual property of others, the Company also ensures that its own key technologies, patents, trademarks, copyrights, and trade secrets are properly protected.
Corporate Governance (G)
Risk Assessment Focus
Strengthen Board Functions
Risk Management Policy/Strategy and Implementation in 2022
- In 2021, we appointed a Corporate Governance Officer to assist in providing directors with assistance and information needed to fulfill their duties, further enhancing the board’s effectiveness.
- We arrange training on various topics for board directors and inform them of the latest regulatory updates and system or policy developments on an annual basis.
- Self-assessment on the performance of the entire board, individual directors and functional committees is conducted during Q1 each year. Every three years, an external organization is commissioned to conduct a third-party evaluation of the performance. Evaluation results are made available on the Company’s website.
Corporate Governance (G)
Risk Assessment Focus
Stakeholder Communication
Risk Management Policy/Strategy and Implementation in 2022
- In line with the materiality principle, the Company puts great emphasis on stakeholder engagement and communication. We conduct a survey every two years to collect and analyze issues of stakeholder concerns. We publish sustainability reports annually to disclose information on material topics and also provide the latest information on our official website and social media.
- Based on different types of stakeholders, we have set up various communication channels and frequencies to enable active communication. Communication outlets include websites, telephone, email, meetings and visits and so on.
Climate-Related Risk Response Strategy and Performance
In accordance with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, we divide climate-related risks into two categories: transition risk and physical risk.
Transition Risk
Source of Risk
Issue
Changes in carbon-related policies and regulations
Carbon tax/pricing policies
Regulation of existing products and services
Reputational Risk
Shifts in consumer preferences
Technology Risk
Substitution of existing products and services with lower emissions options
Market Risk
Changing customer behavior
Increased risks related to raw materials
Physical Risk
Source of Risk
Issue
Acute
Increased severity of extreme weather events such as cyclones and floods
To effectively respond to the above climate-related risks and seize related development opportunities, we have resolved to take the following measures:
1. Implement energy management systems
2. Introduce comprehensive carbon footprint assessment and carbon risk management
3. Develop sustainable products
4. Replace outdated and high-energy-consuming equipment
■ Use low-carbon energy sources
■ Improve energy efficiency
■ Reduce GHG emissions intensity
5. Improve the waste recycling rate
6. Improve the water recovery rate
2. Introduce comprehensive carbon footprint assessment and carbon risk management
3. Develop sustainable products
4. Replace outdated and high-energy-consuming equipment
■ Use low-carbon energy sources
■ Improve energy efficiency
■ Reduce GHG emissions intensity
5. Improve the waste recycling rate
6. Improve the water recovery rate
Towards each of these strategies, we have established corresponding performance indicators to track progress, as outlined below.
Risk
Type
Response Strategy
Performance Indicator
2021 Actual Performance
2022 Actual Performance
Regulation on GHG Emissions
Policy and Legal Risk
Implement energy conservation measures, switch to natural gas / purchased steam, and reduce emissions
GHG Emission Intensity
8.9
7.8
Substitution of Existing Products and Services with Lower Emissions Options
Technology Risk
Accelerate research and development of sustainable products
Percentage of Revenue from Sustainable Products (%)
54.7
56.0
Percentage of Revenue from Sustainable Products (%)
Market Risk
Continuously improve production processes and boost production efficiency
Atom Efficiency (%)
67.1
71.4
Improve energy and resource efficiency
Water Recovery Rate (R2) (%)
86%
92%
Unstable Supply of Water, Electricity and Steam / Typhoons, Floods and Droughts
Environmental Risk
Develop business continuity management (BCM) plans to mitigate impacts from disasters
Total Number of BCM Plans for Mid/High-Level Risks
6
7
Regulation on GHG Emissions
Type
Policy and Legal Risk
Response Strategy
Implement energy conservation measures, switch to natural gas / purchased steam, and reduce emissions
Performance Indicator
GHG Emission Intensity
2021 Actual Performance
8.9
2022 Actual Performance
7.8
Substitution of Existing Products and Services with Lower Emissions Options
Type
Technology Risk
Response Strategy
Accelerate research and development of sustainable products
Performance Indicator
Accelerate research and development of sustainable products
2021 Actual Performance
54.7
2022 Actual Performance
56.0
Increased Cost of Raw Materials
Type
Market Risk
Response Strategy
Continuously improve production processes and boost production efficiency
Performance Indicator
Atom Efficiency (%)
2021 Actual Performance
67.1
2022 Actual Performance
71.4
Response Strategy
Improve energy and resource efficiency
Performance Indicator
Water Recovery Rate (R2) (%)
2021 Actual Performance
86%
2022 Actual Performance
92%
Unstable Supply of Water, Electricity and Steam / Typhoons, Floods and Droughts
Type
Environmental Risk
Response Strategy
Develop business continuity management (BCM) plans to mitigate impacts from disasters
Performance Indicator
Total Number of BCM Plans for Mid/High-Level Risks
2021 Actual Performance
6
2022 Actual Performance
7
In addition, towards acute risk caused by extreme weather events, we have selected the number of flooding incidents at production sites due to heavy rainfall as a performance indicator (Number of flooding incidents in 2022 = 0) and also implemented various preventive measures. We will strive to achieve the goal of 0 flooding incidents in 2023 as well.