重大性議題 | 裕隆汽車ESG

Analysis of material topics and assessment of impacts

The identification of material sustainability topics were carried out in compliance with the latest GRI Standards (2021). During the identification process, Yulon Motor facilitated a good understanding about topics of stakeholders’ concern via various channels such as the media, the website, the union, relevant meetings, annual reports and internal publications. We also referred to information from media reports, consumer surveys for vehicle purchases, customer satisfaction surveys, social media and benchmark in the global automotive industry using the method of questionnaire analysis. Based on the summary and analysis result, we have listed the key topics in order from an objective point of view, and concluded the top 10 material topics that may pose significant impacts on“ Yulon Motor” and “economy, environment and people” and set them as this year’s goals for sustainability. Meanwhile, based on the materiality of impacts on Yulon Motor, economics, environment and society, we have explicitly disclosed the material topics and in the meantime described our actions for sustainability on other relevant topics.

Procedure	Step	Implementation
Continuous identification and assessment of impacts	Understanding organizational context 1	Identified stakeholders: With reference to the five major principles of the AA1000 Stakeholder Engagement Standard (SES),identified eight major groups of stakeholders: employees, customers, suppliers, shareholders/investors, governmental agencies/associations, external rating agencies, community and media. Summarized topics concerning sustainability: In addition to material topics of stakeholders’ concern and that generally found in the car manufacturing industry throughout daily operations, referred to various international sustainability standards and regulations such as GRI and SASB Standards and concluded with 3 major aspects and 23 topics.
	Identifying actual and potential impacts 2	Confirmed stakeholders’ level of concern on each topic: we analyzed the weights of each group of stakeholders based on the communication frequency, reliability and influence of each group of stakeholders and distributed 21 questionnaires regarding levels of concern on internal and external topics to summarize and assess the degree of attention paid by each group of stakeholders on Yulon Motor’s sustainability topics. Actual and potential impacts: taking the positive and negative impacts of each topic on operations and business relations and the aforementioned stakeholders’ level of concern on these topics into account, we used the method of questionnaire analysis and multiplied the scores by a factor reflecting the degree of effects and the possibility of impacts to calculate the degree of impacts on each topic.
	Assessing the significance of impacts 3	Assessed the threshold of impacts: Based on the material topic assessment result of 2022, we chose the top 3 or 4 topics that individually have a threshold higher than 3.052 on each of the 3 major aspects as the top 10 material topics. We then decided the final reporting method with reference to the opinions of the internal management team and external consultants.
Conclusion about material topics to be reported	Determining the priority of the most significant impacts for reporting 4	Topics confirmed: After the ESG Committee and the Board of Directors confirmed all material topics, aspects and the priority thereof, formulated the management approaches and had relevant information disclosed on the sustainability report. Regular reviews: regularly reviewed the implementation status of existing material topics and carried out mitigation and remedial measures in the event of a negative impact.

Materiality matrix

Movement of material topics

Material topic	Priority	Original priority	Movement
Operational and financial performances	1	1	Unchanged
EV development	2	(This is a newly added topic)
Risk management	3	9
Product quality and reliability	4	4	Unchanged
Climate strategy	5	(This is a newly added topic)
GHG emissions	6	19
Occupational health and safety	7	8
Air pollution	8	14
Recruitment and retention	9	12
Social Relationships	10	23 (formerly: "community welfare and engagement")

Note 1: Since the former material topic“ sustainable development strategy” is extensive in scope, it has been incorporated into various other sustainability topics and no longer listed as a material topic.

Note 2: In response to the trend of international automotive industry and environmental change, the“ EV development” and“ climate strategy” are newly added as material topics; the scope of the original topic“ community welfare and engagement” is extended to investments in society as a whole, so it is renamed “Social Relationships.”

List of material topics and description of impact boundary

Priority	Material topic	Aspect	Description of impact	Corresponding GRI-specific topic	Reporting boundary						Corresponding chapter for management approach
					Within the organization	Outside the organization
					Employees	Customers (end consumers)	Shareholders	Suppliers	Customers (brand owners)	Community
1	Operational and financial performances	G	Financial and operational strategies and profits are crucial to the Company’s overall performance since they will directly affect the economic performance of the Company and consequently our R&D, environmental protection and human resource expenses.	GRI 201-1							Financial Performance
2	EV development	G	Following the rise of the electric vehicles(EV), if Yulon Motor can tap into the EV market as early as possible, it will be able to capture some business opportunities and at the same time lower the costs arising from any probable ban on gasoline cars in the future.	Customized							Leading products and innovative R&D
3	Risk management	G	Proper management and prevention of any potential risks in the future may mitigate losses arising from different crises and build confidence in employees and investors	topics							Risk Management
4	Product quality and reliability	G	Good product quality and reliability will influence the customers’ trust in us and our goodwill as well as the impression of us investors and the general public may have.	Customized topics							Quality Control and Safety Guarantee
5	Climate strategy	E	In conformity with stricter climaterelated laws and regulations nowadays, we shall adopt a grouplevel climate strategy as early as possible to avoid any violation of laws, and at the same time, mitigate any potential impacts arising from climate change on the plant’s operations by establishing applicable measures.	GRI 201-2							Climate Change Management
6	GHG emissions	E	If we fail to reduce GHG emissions with our partners in the value chain, we may face expensive environmental compliance costs and worsen the progression of global climate change.	GRI 305-1 GRI 305-2 GRI 305-3 GRI 305-4 GRI 305-6							Climate Change Management
7	Occupational health and safety	S	If we fail to effectively manage occupational safety at the plant, in addition to the impacts on employees’ health, we will face high medical costs, violation of relevant laws and loss on human resources, which will further affect the work shifts at the plant and inventory level.	GRI 403							Friendly and safe work environment
8	Air pollution	E	Air pollution will directly impact the physical and mental health of internal personnel on shift and of the residents of adjacent communities, so if we can properly control the said impact, we will be able to avoid violations of applicable laws and maintain a more friendly relationship with community	GRI 305-7							Pollution Control Management
9	Recruitment and retention	S	If we can provide more competitive salary and welfare, we will be able to attract more talents of diversity, raise the retention rate and reduce additional costs for recruitment.	GRI 401-1							Diverse talents strategy
10	Social Relationships	S	We have invested in community activities for a long time and enabled a better brand image of Yulon Motor through media reporting. In the meantime, we also support disadvantaged groups in many remote areas.	Customized topics							Social Relationships

Sustainable Management

Materiality Analysis

Analysis of material topics and assessment of impacts

Materiality matrix

Movement of material topics

List of material topics and description of impact boundary