Overview

Analysis of Material Topics

Stakeholder Communication and Response

Materiality analysis process

In addition to ongoing routine communications with stakeholders, CHS follows GRI 3: Material Topics to establish a structured materiality analysis process. The implementation status for 2024 is as follows:

【Phase 1】Collection and Review

Sustainability issues across the ESG dimensions were consolidated based on international standards and frameworks, including GRI, SDGs, SASB, and TCFD, as well as material topics of relevance to the global steel industry and the Company’s core business indicators. There were no major changes to the list of sustainability topics in 2024 compared with the previous year.

Consolidation of
19
sustainability issues
【Phase 2】Prioritization and Differentiation

Using electronic questionnaires, feedback was gathered on each sustainability issue from stakeholders (288 valid responses) and members of the Sustainability Development Committee (18 valid responses). The level of concern, potential impact, and likelihood of occurrence were assessed to identify material topics.

Collection of
306
internal and external
questionnaires
【Phase 3】 Confirmation of Material Topics

Based on the questionnaire results, a materiality matrix was developed. The Sustainability Development Committee reviewed and confirmed the material topics, their alignment with specific GRI Standards, and their relevance to CHS's value chain.

Confirmation of
7
material topics

Materiality Matrix

Material topics High Concern and Impact Issues
1limate Change Adaptation and Carbon Management
2Energy Management
4Air Pollutant Management
6Occupational health and safety
8Human Rights Policy
14Financial Performance
16Information Security
 3Water Resources Management
5Waste and Hazardous Materials Management
7Labor/Management Relations
9Employee Benefits and Remuneration
10Talent Recruitment and Retention
11Career Development and Education Training
12Community Engagement and Social Welfare
1313Corporate Governance
15Code of Ethics
17Product Quality and Technology Research and Development
18Customer service management
19Supply Chain Management

Scope and Impact Boundaries of Material Topics

In 2024, through the materiality analysis process, 7 material topics were identified from a total of 19 sustainability issues. Corresponding to the GRI standards, six of these themes align with the GRI topic standards (as shown in the table below), and impact boundaries and assessments within the value chain were mapped accordingly.


● Actual impact; ○ Potential impact; Blank = No impact (for upstream and downstream use)

Aspects Material topics GRI Topic Standards Impact Boundaries in the Value Chain Corresponding Chapter
Upstream CHS Downstream
Raw Material Procurement Manufacturing Production Product Sales
Governance Financial Performance 201 Economic Performance   ●○   Appendix 1
Information Security - ○ ○ ○ 2.3.6
Environmental ＊Climate Change Adaptation and Carbon Management 305 Emissions   ●○   Appendix 1
＊Energy Management 302 Energy   ●○  
＊Air Pollutant Management 305 Emissions   ●  
Social ＊Occupational health and safety 403 Occupational Health and Safety   ○   Appendix 1
＊Human Rights Policy 401 Employment
405 Diversity and Equal Opportunity
406 Non-discrimination
408 Child Labor
409 Forced or Compulsory Labor
411 Rights of Indigenous Peoples 		  ○  


  1. Upstream Boundaries encompass suppliers of raw materials, equipment, etc., procured by CHS. The core of the value chain comprises CHS's own manufacturing of steel products, involving employees and contractors. Downstream includes customers and local community residents.
  2. The explanation of the differences from the major topics of 2023 is as follows (marked with ＊ if the same as last year):
Serial Number 2023 Material Topics 2024 Material Topics Explanation of Differences
1 Operational and Financial Performance Financial Performance Revision of Major Topics Title
2 - Information Security Following the materiality analysis based on stakeholder and Sustainability Development Committee member survey responses, the identified topics were confirmed as material.
3 Labor/Management Relations - Following the materiality analysis based on stakeholder and Sustainability Development Committee member survey responses, the identified topics were not confirmed as material.

Material Topics Impact Assessment

The impact items for each material topic were evaluated by each team under the Sustainability Development Committee and submitted to the Committee for review and approval. Each material topic is associated with actual or potential opportunities and risks related to the economy, environment, and people (including human rights). Corresponding response measures were established to capture opportunities and mitigate risks.

Material topics Financial Performance
Policies and Commitments CHS continues to enhance corporate governance assessment indicators and maintain credit ratings to reduce financing costs, stabilize long-term funding sources, and strengthen industry competitiveness.
Impact Items Description Impact Aspects
◆Actual Opportunity ◇Potential Opportunity
■Actual Risk □Potential Risk 		Impact Level Response Actions
Economic Environmental People
Financial institutions increasingly emphasize ESG performance indicators in their investment and lending decisions. CHS continues to strengthen ESG practices to secure credit lines and reduce interest expenses. ◆ Moderate Commit to a net-zero pathway and continually enhance energy conservation and carbon reduction efforts. Improve ESG performance to secure better financing terms.
Fluctuations in steel and raw material prices, inventory levels, and tight market liquidity conditions increase the company's financial liquidity risk. ■ Moderate Monitor steel and raw material prices and inventory levels to enable responsive adjustments to working capital based on market liquidity conditions.
Failure to promptly respond to domestic and international policy developments and regulatory changes increases operational and financial risks. ■ Moderate Maintain close attention and responsiveness to domestic and international political and economic conditions, major policy developments, and regulatory changes. External consultation with accountants, tax authorities, and professional training is arranged as needed.
2025 Goals Please detail sustainability goals related to Financial Performance.
Material topics Information Security
Policies and Commitments CHS established an Information Security Committee that convenes quarterly to review information security policies and protection measures. The Committee reports overall information security performance to the Board of Directors to ensure effectiveness and appropriateness of implementation.
Impact Items Description Impact Aspects
◆Actual Opportunity ◇Potential Opportunity
■Actual Risk □Potential Risk 		Impact Level Response Actions
Economic Environmental People
Internal employee awareness forms the first line of defense in cybersecurity. Regular cybersecurity training reduces risks from human error. ◆ ◆ Significant
  • Conduct regular cybersecurity awareness training to ensure employees possess fundamental information security knowledge.
  • Simulate cyberattacks (e.g., phishing tests) to reduce cybersecurity risks caused by human error.
If information security is compromised, it may result in the leakage of confidential data or service disruption, significantly impacting business operations and reputation. ■ Severe
  • Implement ISO 27001 to ensure the security and stability of the official website and e-commerce systems, enhance information and communication security management in compliance with cybersecurity standards and regulations.
  • Appoint a Chief Information Security Officer and establish a dedicated information security unit; convene quarterly meetings to review implementation status.
  • Perform regular penetration testing and vulnerability scanning to proactively identify weaknesses and reduce the risk of ransomware attacks.
If CHS's cybersecurity measures are breached, it could lead to information leakage and system outages. □ Severe The Company has established the “Regulations on the Notification and Response of Cyber Security Incidents” to ensure timely damage control and recovery operations.
2025 Goals Please detail sustainability goals related to Information Security.
Material topics Climate Change Adaptation and Carbon Management
Policies and Commitments The steel industry is categorized as a high-energy-intensive sector. With increasing environmental awareness both domestically and internationally, there is growing pressure to address greenhouse gas emissions. In response, CHS not only complies with greenhouse gas reduction regulations but also promotes various emission reduction initiatives to mitigate the industry's impact on greenhouse gases during its development process, fulfilling corporate social responsibility.
Impact Items Description Impact Aspects
◆Actual Opportunity ◇Potential Opportunity
■Actual Risk □Potential Risk 		Impact Level Response Actions
Economic Environmental People
The carbon footprint of the Company's products will gradually decrease as they transition into “low-carbon products” to meet customer demands for decarbonization, thereby enhancing profitability. ◆ ◆ Minor
  • Continuously implement energy-saving technologies and replace outdated energy-intensive equipment, and increase the use of renewable electricity.
  • Continuously develop recycled materials to reduce product carbon content and improve product competitiveness.
  • Conduct annual GHG inventories to monitor actual emissions and reduction performance.
With the launch of Taiwan's domestic carbon trading platform in October 2024, carbon credits obtained by the Company can generate additional profits through market transactions. ◇ Moderate Continuously evaluate the market value of carbon credits and consider selling when market prices are favorable.
Global warming leads to extreme weather events such as typhoons, water shortages, and intense rainfall, which may disrupt operations and increase the Company's operating costs through the need for enhanced preventive measures. ■ ■ Minor The Company assesses climate change risks and opportunities based on the TCFD framework, formulates response measures, regularly tracks progress, quantifies financial impacts, and reports to stakeholders.
Taiwan has started charging carbon fees from 2025, and global carbon taxes are being progressively implemented. These developments will increase the Company's operating costs. □ Moderate
  • Submit a voluntary emissions reduction plan for review and approval by the Ministry of Environment to qualify for preferential carbon fee rates, thereby reducing the impact of carbon fee collection on the Company's operations.
  • Effectively implement the approved reduction measures to mitigate operational impacts.
2025 Goals Please detail sustainability goals related to Climate Change Adaptation and Carbon Management
Material topics Air Pollutant Management
Policies and Commitments CHS's air pollution management not only complies with legal requirements but also involves continuous collection and evaluation of various air pollution reduction plans and technologies, aiming to continually improve environmental air quality.
Impact Items Description Impact Aspects
◆Actual Opportunity ◇Potential Opportunity
■Actual Risk □Potential Risk 		Impact Level Response Actions
Economic Environmental People
Through the implementation of the ISO 14001 Environmental Management System, the Company adheres to a PDCA cycle to regularly confirm legal compliance and identify key environmental aspects for monitoring and measurement, thereby reducing environmental impact. ◆ Minor Track the implementation progress of environmental management programs on a monthly basis for each significant environmental aspect.
As regulatory requirements continue to tighten, the Company must enhance the performance of pollution control equipment to reduce air pollutant emissions, resulting in increased environmental protection expenditures. Failure to upgrade such equipment may affect production output. ■ Moderate Conduct monthly audits of critical operations such as raw material usage, control equipment performance, and operational parameters to ensure compliance with permit requirements issued by competent authorities.
2025 Goals Please detail sustainability goals related to air pollutant management.
Material topics Energy Management
Policies and Commitments CHS complies with government regulations and aims to enhance energy efficiency. It has implemented the ISO 50001 Energy Management System to continually improve energy performance following the PDCA cycle. This initiative aims to reduce environmental impact through effective energy management.
Impact Items Description Impact Aspects
◆Actual Opportunity ◇Potential Opportunity
■Actual Risk □Potential Risk 		Impact Level Response Actions
Economic Environmental People
The Company has established an Energy Management System to continuously implement energy-saving and carbon-reduction measures, enhance energy efficiency, and reduce energy costs. ◆ ◆ Minor Continuously implement energy-saving technologies and replace outdated energy-intensive equipment to improve energy efficiency.
According to the Bureau of Energy, Ministry of Economic Affairs, users consuming over 100,001 kW of electricity are required to achieve an annual electricity savings rate of 1.5% starting from 2025. The Company must continuously invest in energy-saving improvements, which will increase operating costs. Moreover, failure to meet statutory saving targets may result in penalties. ■ Minor
  • For major energy-consuming equipment, prioritize energy efficiency as the primary procurement criterion.
  • Conduct annual energy consumption audits in accordance with the “Energy Planning Procedure” to identify major energy uses that impact energy performance and opportunities for continuous improvement.
If Taiwan increasingly shifts to renewable energy sources in the future, electricity prices are expected to continue rising, leading to increased operational costs for the Company. □ Moderate
2025 Goals Please detail sustainability goals related to energy management.
Material topics Occupational health and safety
Policies and Commitments CHS implements robust occupational health and safety management, aiming to collaborate with colleagues and collaborators to maintain a safe working environment. The goal is to achieve zero incidents of disability, zero accidents, and zero penalties in occupational health and safety (OHS).
Impact Items Description Impact Aspects
◆Actual Opportunity ◇Potential Opportunity
■Actual Risk □Potential Risk 		Impact Level Response Actions
Economic Environmental People
Implement the Health and Safety Management System, and utilize proactive and reactive performance indicators, which enhance safety and health performance, promoting employee well-being, environmental safety, and healthcare. ◆ Moderate
  • The Company implements the ISO 45001 and TOSHMS Occupational Health and Safety Management Systems through a PDCA mechanism, promoting safety protection measures, joint regional defense programs, executive walkthroughs, and inspections of safety equipment to reduce the risk of workplace injuries.
  • Establish performance evaluation and reward systems to encourage dynamic safety observations and audits, fostering the integration of safety management into daily operations by both supervisors and employees, thereby enhancing occupational safety performance and culture.
Achieve the goal of Zero Environmental Incidents ◇ ◇ ◇ Moderate
Occurrence of occupational accidents or occupational diseases. □ □ □ Moderate
  • Continuously promote occupational health and safety activities and educational training to enhance employee safety awareness.
  • Conduct annual operational environment monitoring and implement related improvement measures to reduce the incidence rate of occupational diseases.
2025 Goals Please detail sustainability goals related to occupational health and safety.
Material topics Human Rights Policy
Policies and Commitments CHS adheres strictly to national regulations and supports and abides by the principles and spirit outlined in international human rights conventions such as the United Nations Universal Declaration of Human Rights and the UN Global Compact. We treat current employees and contractors with dignity and respect, and prohibit any form of infringement or violation of human rights.
Impact Items Description Impact Aspects
◆Actual Opportunity ◇Potential Opportunity
■Actual Risk □Potential Risk 		Impact Level Response Actions
Economic Environmental People
Neglecting human rights risks and failing to fulfill corporate responsibility in protecting employee rights may lead to reputational damage. □ ■ Severe
  • Comply with the Labor Standards Act, establish a Human Rights Policy, and implement various management measures through a human rights due diligence mechanism.
  • Utilize systems to assist department supervisors in managing overtime allocation to ensure flexible deployment and timely health monitoring, thereby preventing legal violations and reducing the risk of employee overwork.
Incidents of discrimination or harassment within the Company. □ Severe Establish multiple grievance mechanisms and enhance confidentiality protocols to protect the privacy of individuals involved.
2025 Goals Please detail sustainability goals related to Human Rights Policy.
※Definition of Impact Levels on Opportunities
Highly significant: Benefits generated in assets/revenue/reputation, etc., lasting more than 10 years.
Significant: Benefits generated in assets/revenue/reputation, etc., lasting more than 5 years.
Moderate: Benefits generated in assets/revenue/reputation, etc., lasting more than 3 years.
Minor: Benefits generated in assets/revenue/reputation, etc., lasting more than 1 year.
Not significant: No impact on assets/revenue/reputation, etc.

※Definition of Impact Levels on Risks
Catastrophic: Impact on assets/revenue/reputation, etc., resulting in irreversible consequences.
Critical: Impact on assets/revenue/reputation, etc., requiring external assistance to potentially recover.
Moderate: Impact on assets/revenue/reputation, etc., recoverable solely by the Company, but with recovery time exceeding 1 month.
Minor: Impact on assets/revenue/reputation, etc., recoverable solely by the Company within 1 month.
Not significant: No impact on assets/revenue/reputation, etc.