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Material Aspects Identification

Our Company values the views of our stakeholders. Our stakeholders include shareholders and investors/creditors, government agencies, customers/debtors, current employees, potential employees, media, communities, and suppliers. We employed various channels and stakeholder communication to understand and identify their concerns. Based on Material Topics identified in the 2019 questionnaire, in 2020, we evaluated and made adjustments with reference to the Global Reporting Initiative (GRI) criteria and the internal and external practices of the Company. They were discussed and jointly decided by the person in charge of the Center for the Promotion of CSR and the group leaders. In response to these Material Topics, we disclosed corresponding management policies and specific actions. The evaluation process and the Material Topics identified are as follows:

Procedures for Identifying Material Topics
Step 1: Identification In 2019, the members of the Sustainability Committee selected 19 key sustainability issues based on the GRI criteria, taking into account the development of our industry peers, international trends (UN SDGs, etc.) and industry characteristics, as well as the concerns expressed through the Stakeholder Communication channels.
Step 2: Prioritization The questionnaire was used to identify the level of stakeholder concern and the impact of sustainability issues on the internal and external economic, environmental and social (ESG) aspects of the Company to identify the Material Topics for 2019. The 15 Material Topics for 2020 were further discussed by the Center for the Promotion of CSR with reference to internal and external standards and practices. Note: The new Material Topics for 2020 are “Risk management and internal control," and “Information and transaction security." The Material Topics for 2020 that have been renamed from those in 2019 are as follows: “Responsible investment" was changed to “Sustainable finance," Occupational health and safety"to “Friendly and excellent working environment," “Talent management and development" to “Talent cultivation and development," Labor/management relations" to “Employee attraction and retention," and “Economic performance" to “Corporate governance and integrity management." In addition, “Customer services and privacy" have been merged from “Customer relationship management and customer privacy."
Step 3: Verification After identifying Material Topics, the head of Center for the Promotion of CSR and the group leaders jointly confirm the significance of the topics and further evaluate the boundaries of the Material Topics for consideration inside and outside the organization to ensure that the important ESG information has been fully disclosed in the report.
Step 4: Review After the report is completed, the Center for the Promotion of CSR's functional work groups conduct a final review to examine whether ESG information and performance have been presented inappropriately or inaccurately. The results of the identification of Material Topics and feedback from stakeholders are also used as an important reference for the next annual report.


Yuanta Financial Holdings Material Topics Matrix
Material Topics and Their Impact Boundaries
Degree of impact involvement:⬛ Direct shock, Indirect shock, Shock caused by business relationship
Aspect Material Aspect to Consider with Respect to GRI Standards Related Report Sections Impacted Parties - Value Chain
Yuanta Financial Holdings (Including current employees) Shareholders and investors / creditors Government agencies Potential employees Customers / debtors Media Community Suppliers
Community Engagement Financial Inclusion G4 Sector Disclosure - Financial Services: Local Communities 4.3 Financial Inclusion
Community Engagement Social Welfare NA 7.2 Public Welfare Activities and Group Strategies
7.5 Social Welfare during the Pandemic

Green Operations Sustainable Financial G4 Sector Disclosure - Financial Services: Product Portfolio 4.2 Sustainable Finance
Green Operations Financial Product Innovation and Services NA 4.1 Financial Product Innovation and Services
Customer Care Customer Services and Privacy GRI 418:Customer Privacy 2016 4.4 Service Quality and Customer Relationship Management
Customer Care Information and Transaction Security NA 3.3 Information Security
Environmental Sustainability Energy and Climate Change GRI 302:Energy 2016、
GRI 305:Emission 2016
6.1 Climate Change and Energy Management
Environmental Sustainability Supplier Management GRI 308:Suppliers Environmental Assessment 2016、
GRI 414:Supplier Social Assessment 2016
6.3 Supplier Management
Employee Care Friendly and Excellent Work Environment GRI 403:Occupational Health and Safety 2018 5.3 Occupational Safety and Health Management
Employee Care Talent Cultivation and Development GRI 404:Training and Education 2016 5.2 Talent Cultivation and Development
Employee Care Employee Attraction and Retention GRI 401:Employment 2016 5.1 Employee Attraction and Retention
Employee Human Rights GRI 412:Human Rights Assessment 2016 5.4 Human Rights
Corporate Governance Corporate Governance and Integrity Management GRI 102-16 Values, Principles, Standards and Norm of Behavior 2016、
GRI 102-18 Governance Structure 2016
3.1 Corporate Governance and Integrity Management
Corporate Governance Legal Compliance GRI 206:Anti-competitive Behavior 2016、
GRI 419:Socioeconomic Compliance 2016
3.4 Legal Compliance
5.6 Legal Compliance

Corporate Governance Risk Management and Internal Control GRI 102-11:Precautionary Principle or Approach 2016 3.2 Risk Management
Risk Management and Strategies for Material Topics
Material Topics Risk Assessment Items Risk Management Policies or Strategies
Environment Environmental governance (including climate risk management) and sustainable management issues The United Nations Environment Programme (UNEP) Adaptation Gap Report 2016 warns that by 2030 or 2050, the cost of global climate adaptation will likely increase far more than currently anticipated, requiring businesses to respond in advance. The Company continues to promote the implementation of environmental protection measures, and introduces ISO and other international standards certification. The Task Force on Climate-related Financial Disclosures (TCFD) project has been established to further review and evaluate the financial impact of climate risk on the Company and to continuously strengthen the management of climate risk. And through participation in social welfare activities, the Company is doing its best to care for the community.
Society Digital finance and information security issues Cybersecurity threats and cybercrime attack trends have posed a threat to global finance. According to a new report from the British Financial Conduct Authority (FCA), the number of hacking cases reported by the UK financial sector increased more than five times in 2017, highlighting that the financial sector has become a major target for hackers, potentially resulting in significant financial losses, damage to company reputation and penalties imposed by authorities. The Company has implemented an information management system: it has introduced ISO 27001 Information Security Management System (ISMS) and has been certified by the British Standards Institution (BSI) to strengthen the monitoring and management of information security. By raising employees’ awareness of information security and regularly conducting various protection and backup drills, the Company can improve its ability to respond to information security emergencies.
Strengthening the vertical defense: building a network firewall and introducing Internet blocking control, intrusion detection, spam filtering and malicious email APT to prevent external intrusion. The Company also uses the mail audit system, Internet DLP and mobile endpoint device DLP mechanism to strengthen the control of outgoing mail and data transmission.
Corporate Governance Regulatory compliance and supervision issues The compliance and management of violation of anti-money laundering regulations, leakage or misuse of personal data, theft of customer transaction information that may cause significant financial losses, infringement of customer privacy, significant financial losses, damage to the Company’s reputation, and anti-money laundering and counter-terrorism financing mechanisms established by the competent authorities and their related laws and regulations, including the management mechanisms for identifying, measuring, and monitoring money-laundering and terrorism-financing risks; introducing Personal Information Management System (PIMS) BS10012 and other international standards for personal data protection certification; and strengthening the control of sending external emails.
Economic and financial risks Enhanced potential risk assessment and analysis on increased instability in financial markets due to changes in the global economic environment, increased potential volatility, or increased corporate default rates, which may result in losses on financial asset transactions, increased default rates on credit facilities or financing operations, or may affect the Company’s capital or solvency. The Company has conducted a comprehensive assessment of the impact of its core business on the capital adequacy ratio. The assessment and measurement of potential or expected losses of each type.