Hsin Tung Yang has formulated a CSR Team in 2019 in order to enhance the quality of information disclosures on sustainable business development and to build a long-term strategic and integrative environmental, social and governance (ESG) management mechanism. The CSR Team is headed by the President and a deputy convener and dedicated point of contact have also been designated. In addition, supervisors from each relevant business are responsible for topics on "corporate governance", "product and service sustainability", "environmental sustainability", and "employee care and social engagement". The highest-ranking managerial officer in the CSR Team is the President, who would submit key topics and aspects for ESG sustainable developments, and corresponding strategies for the Sustainable Development Goals (SDGs) to the Board of Directors for approval.

In terms of the reporting processes of relevant sustainable development topics, based on our current organizational framework, staff from each business division will first report to the deputy convener, who would coordinate and report such information to the President, and finally, the President would report to the Board. In terms of action plans targeting each ESG topic and decision-making regarding material topics, senior managers and the CSR Team will either collectively handle related matters, or handle them by their functional authority. Decision-making regarding material topics would be the responsibility of the President, who would also report relevant decisions and implementation results to the Board of Directors.

Hsin Tung Yang's CSR Team convened its first meeting in August 2019, and organized an educational training workshop in October in the same year, in which stakeholders and material topics were identified. Preparations for the first CSR Report also began and systematic inventories over ESG promotions were conducted. In the future, we will continue to plan sustainable development strategies and action plans, and to actively promote and fulfill the responsibilities of a corporate citizen by targeting corporate governance, environmental protection, and social engagement.

For more than 50 years, Hsin Tung Yang has persisted in ethical business management and fulfills our core business philosophies while responding to external trends and legal requirements, thereby formulating a corporate culture of integrity.

To ensure ethical business management, we abide by relevant regulations and systems including the Statement of Internal Control approved by the Board of Directors. To implement risk control, the Statement has established the functional authority of each rank, employee work rules, and established an effective accounting system and internal control system.

Based on the aforementioned system, Hsin Tung Yang implements different functional authority by rank and reviews the effective management of the ethical management system through regular management conferences, annual performance reviews, and third-party CPA audit over the financial statements. In addition, personnel from the Audit Office are in charge of drafting and executing the annual internal audit plan and regularly verifies the status of compliance in each system and reports such findings to the Board of Directors. The Board of Directors shall carefully supervise the Company in the capacity of good administrators to prevent unethical conduct, and to review and to continuously improve the effectiveness of such implementations at all times.

Hsin Tung Yang has stipulated work rules that specify occupational ethics, service principles, and performance incentive and disincentive measures(including anticorruption Policies and Procedures). In addition, promotions and reminders of ethical business management are carried out through scheduled departmental meetings that include Board of Directors meetings, management conferences for senior managers, and monthly channel management meetings. To encourage employees' compliance and emulations, positive performances are rewarded, while unethical conduct is inhibited as a warning. In case a violation has been found, employees or contractors can actively report such incident to appropriate supervisors, Audit Office, a senior manager, the President, a Director or a Supervisor. Hsin Tung Yang will incentivize whistleblowers through either recording a merit or by awarding bonuses based on the conditions of the incident. Externally, a dedicated service hotline, website, and mailbox have also been set up to receive whistleblowing incident. A public conference will be held to evaluate the incident by related units, and the result of which will be announced. Hsin Tung Yang has authorized each unit to receive whistleblowing incident and adopts rigorous measures to protect the confidentiality of the whistleblower to prevent any form of inappropriate treatment as a result of the whistleblowing incident. In 2019, no whistleblowing incident related to corruption and violation of integrity conduct or principle of ethical business management was received.