Materiality and Stakeholder Communication

Materiality and Stakeholder Communication

Procedure of Materiality Analysis

CTCI conducts materiality analysis every year to observe the changes in stakeholders' attention to ESG issues, gain insight into the impacts, risks and opportunities of sustainability trends on the Company's operations, confirm and adjust the disclosure, action plans and long-term goals of sustainability issues to meet stakeholders' expectations. In 2023, the procedure and results of materiality analysis were rigorously verified by a third-party organization, SGS Taiwan, using the AA 1000 (Assurance Standards v3) Type 2 verification that provides a high level of assurance.
　
We use a dual materiality framework that combines GRI 3: Material Topics 2021 of GRI Universal Standards 2021 and the European Sustainability Reporting Standards (ESRS) published by the European Sustainability Reporting Directive (CSRD). We also use methodologies developed by organizations such as Value Balancing Alliance (VBA), Harvard Business School's Impact-Weighted Accounts research program, and London Benchmarking Group (LBG) to evaluate economic, environmental, and human rights impacts. This process combines monetary and non-monetary methods to construct an impact-based materiality analysis. It identifies significant issues for CTCI Corporation, determines the boundaries and scopes of sustainability information disclosure, and serves as the basis for setting long-term sustainability goals.
　

Stage 1: Identify Target Audience and Issues for Communication

When determining target audience of the sustainability report, CTCI refers to the five principles of AA1000 Stakeholder Engagement Standards (SES): Dependence, responsibility, attention, influence, and diverse perspectives to identify six types of stakeholders: Shareholders / Investors, Suppliers / Contractors / Partners (co-contractors), Customers, Employees, Media, Community / Government / Experts and Scholars.
　
In response to the dynamic changes in stakeholders' attention to sustainability issues, combined with the United Nations Sustainable Development Goals (SDGs), international trends, and suggestions from internal and external consultants, a total of twenty ESG issues relevant to the operation of CTCI were collected after re-discussion and adjustment. Compared to the ESG issues of last year, CTCI has renamed "Strategy for Emerging Markets" and "Climate Change and Net Zero Impact" to "Market Strategy" and "Climate Strategy and Net Zero Results," respectively. At the same time, "diversity and inclusion" has been newly added, and "Green Purchases" has been merged into " Supply Chain Sustainability Management."
　

Stage 2: Analyze Material Issues

CTCI has grasped the information of "stakeholders’ attention", " the impact of the sustainability issues on CTCI's operations ", and "impacts of sustainable development" for the materiality analysis of the 2023 Sustainability Report:
　
●	Stakeholders' Attention: Based on the principles of interaction, materiality, and influence, CTCI has determined the subjects of the survey to collect representative samples about main stakeholders’ degree of concern over CTCI’s sustainability initiatives. A total of 600 valid questionnaires were recovered, including 7 from shareholders / investors, 189 from suppliers / contractors / partners, 12 from customers, 343 from employees, 8 from the media, and 41 from community / government / experts.
　
●	The impact of sustainability issues on CTCI's operations: To measure the impact of sustainability issues on CTCI's operations, factors such as revenue, customer satisfaction, operational risks, employee engagement, and brand image are considered. Additionally, 26 senior executives jointly determine the importance of each sustainability issue for CTCI's operations.
　
●	Impacts of sustainable development: Regarding the monetary methodology, CTCI conducts Impact Valuation every year, and conducts external monetary assessment on ESG issues to explore the positive or negative impact of material issues. Please refer to the Sustainability Impact section for detailed information. In terms of non-monetary methods, we integrate methodologies from the Value Balancing Alliance (VBA), Harvard Business School's Impact-Weighted Accounts research program, and the London Benchmarking Group (LBG). From the perspectives of economic, environmental, and human (rights) impacts, 25 executives and colleagues identify significant impacts and sustainability issues based on positive and negative, actual and potential, irreversibility, and value chain considerations.
　

Stage 3: Determine Material Issues and Disclosures

Based on the results of the analysis of three materiality questionnaires, the integration of the 2030 goals of the Company, and the sustainability goals linked with compensation, the Board of Directors has confirmed 11 ESG issues as material issues of the Company. At the same time, the impact scope of the material ESG issues in the upstream of the value chain, company operations, and downstream boundaries of the Company was examined one by one. Furthermore, according to the GRI guidelines, 11 material topics were identified (13 GRI topic-specific standards, 2 CTCI-specific standards), which collects and discloses internal information, data and management policies in accordance with the reporting requirements of the reporting guidelines. The material topics identified by CTCI are combined with the semi-annual risk assessment initiated by the risk management office. Through risk identification, analysis, and evaluation, as well as subsequent risk minimization, control, and monitoring, enterprise risk management (ERM) is implemented, with each responsible unit handling this process. For assessment details, please refer to the Risk Management section; for management policies, please refer to the Appendix Management Policy.
　

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Stakeholder communication channels