USI | Stakeholder Engagement

Stakeholder Engagement

Identification of Stakeholders and Material Topics

USI has identified major sustainability issues and established a framework for ESG disclosure in compliance with the GRI Standards, AA1000 SES (Stakeholder Engagement Standards) and AA1000 AP (Accountability Principle). The framework is established on the four major principles of Inclusivity, Materiality, Responsiveness, and Impact. Also, this framework is referenced for USI's long-term sustainability goals and strategies, and an integral basis for reviewing our sustainable development strategies.

Phase I. Inclusivity: Identify Stakeholders & Design Sustainability Survey

In 2021, Shareholders/ investors, customers, employees, suppliers/ contractors, government, industry unions/ associations, and communities (including NGOs and the media) were identified as the 7 major stakeholders.

We integrated GRI Standards, Sustainability Accounting Standards Board (SASB) Standards, Task Force on Climate-related Financial Disclosures (TCFD), Sustainable Development Goals (SDGs), Responsible Business Alliance (RBA) Code, Morgan Stanley Capital International (MSCI) ESG Rating, and S&P Global Corporate Sustainability Assessment (CSA) with our operational characteristics and ASEH's requirements and summarized them into 8 governance issues, 5 environmental issues, and 7 social issues, 20 sustainability issues in total.

Phase II. Materiality: Investigate Stakeholder Concerns & Analyze Operational Impact

In 2021, we conducted a Stakeholder Concern Survey, analyzed, and identified material issues for 996 stakeholders.

We invited 84 senior managers and committee members to take the Operational Impact Survey to measure the impact of each sustainability issue on the company’s revenues, risks, customer satisfaction, and employee engagement.

Phase III. Responsiveness: Identify Material Issues & Define Material Topics and Boundaries

The Stakeholder Concern Survey and Operational Impact Survey were analyzed to identify the priorities of governance, environmental, and social issues. The issues were divided into material issues (13 items) and non-material issues (7 items).

We selected 23 topics referring to the GRI Standards that respond to material issues identified, highlighted 2 topics according to the Company's industrial characteristics, and added 4 ASEH required topics. Energy Management and other non-material issues are disclosed annual drive priorities and performance in this report as they are also important in the sustainable development of USI.

Following the principle of comparability, our 2021 ESG Report follows the material issues and coverage of the previous year. The structure of this report is based on material issues identified from stakeholder concerns and operational impact, as well as feedback from experts and scholars, fully disclosing USI's current policy and plans for fulfilling ESG sustainability development.

Phase IV. Impact: Formulate Long-term Goals & Evaluate Impact

USI's five Sustainability Taskforces have formulated management strategies for all major ESG issues. Members of each Taskforce have jointly determined 21 long-term sustainability goals.

In addition to quarterly Executive Team meetings, the Sustainability Taskforces also meet semiannually to review the progress of each goal. At the annual Sustainability Committee meeting, we review our achievements, make rolling adjustments, track sustainability trends, and manage the impact of our sustainability goals. We publicly disclose the direction, progress, and performance of our ESG sustainability objectives in our annual ESG Report.

Analysis Results of Material Issues:

Material

1 Regulatory Compliance
2 Business Ethics
3 Customer Relationship Management
4 Sustainable Supply Chain
5 Innovation Management and Sustainable Manufacturing
6 Cybersecurity Management
7 Data and Privacy
8 Climate Change
9 Air Pollution Prevention
10 Occupational Health and Safety
11 Talent Attraction and Retention
12 Talent Development
13 Human Rights

Non-material

14 Economic Performance
15 Water Resource Management
16 Energy Management
17 Waste and Circular
18 Diversity and Inclusion
19 Social Involvement
20 Work from Home

Stakeholder Communication

In light of issues that highly impact the corporate operations and stakeholders are highly concerned about, to meet their expectations, we have built a good communication platform, adopt relevant corresponding strategies, and maintain and strengthen the relationship between the Company and stakeholders.

Stakeholder	Material Issue	Communication Channel	2021 Performance
Stockholder/ Investor	Economic Performance Talent Attraction and Retention Regulatory Compliance Business Ethics	Board meetings Annual general meeting Regular reports (quarterly/ semi-annual/ annual report) Telephone conferences Investor Relations on USI website Shanghai Stock Exchange-SSE E-interaction Receptions, visits, and roadshows Other interim announcements	7 board meetings were held. Held 2 shareholders' meetings to explain our operating performance, investment plan, passed 2021Y employee stock ownership plans and respond to investors' concerns. USI discloses the Company's financial information through regular reports (quarterly/ semi-annual/ annual reports) published on the SSE website and analyzes the Company's business situation and data accordingly. Held a telephone conference each quarter to explain USI's production and management to investors. Participate in brokers' strategy meetings and receive investors during their visits. Participate in Yicai roadshow programs to promote and advertise to investors.
Customer	Business Ethics Occupational Health and Safety Human Rights Water Resource Management	RBA-Online After-sales service system (e-RMA) Customer's satisfaction questionnaire Mail	Report Self-Assessment Questionnaire (SAQ) assessment status and results through the RBA-Online platform. Constant monitoring of RMA status through the system (e-RMA). Carry out satisfaction surveys each quarter through sales associates, and the main customers satisfaction is 84%. USI set up information security committee to implement NIST CSF maturity assessment tool, and continuous improvement cybersecurity management capabilities to enhance assurance for customer. We held the Cybersecurity General Fundamentals Course to boost employee cybersecurity awareness.
Supplier/ Contractor	Occupational Health and Safety Customer Relationship Management Human Rights Sustainable Supply Chain	Quarterly business review Business meetings Supplier evaluation Purchase contracts/ Conducts Training of suppliers On-site audit for suppliers Questionnaire investigation for suppliers Supplier sustainability conferences	Continue to promote green supply chain, ask, and help suppliers to pass quality management system certifications. Control the usage of raw materials to ensure the products and materials correspond to the regulations of USI green products. 34 new suppliers were subject to evaluation and 32 of them were approved and became to USI's Approved Vendor List (AVL). In addition to the compliance with purchase contract, suppliers must sign the Supplier Code of Business Integrity and Supplier's Commitment to Corporate Social Responsibilities. A total of 475 each category contractors join our occupational safety and health education and training. Suppliers are selected each year to carry out on-site inspection for RBA. The number of suppliers were selected was 83. A supplier survey is conducted irregular to comprehend the current situations and trends of suppliers. A total of 419 suppliers were surveyed. We held an online supplier sustainability briefing in Mainland China to promote our policies and philosophy and explained USI's ESG requirements for suppliers and shared future goals. A total of 276 supplier partners attended the online sharing session. We also held 24 Executive Business Review (EBR) meetings with material suppliers and 14 new product and technology presentations.
Employee	Work from Home Occupational Health and Safety Talent Attraction and Retention Talent Development	Employee Welfare Committee/ staff congress Employee Relationship Website President's symposium Industrial relations meetings Training programs Employee engagement survey Newsletter Announcement	Held a workers' conference each quarter to discuss and plan recent activities related to employees and propose employees' opinions. "Employee Relationship Website" is set up in USI's intranet. In addition to providing information regarding employees' welfare and activities, employees can share their opinions in the "suggestions box for employees" on the website. And a total of 702 employee opinions were given back. President's Symposium was held each quarter for the general manager to announce the future trend and expectations of USI to colleagues. Additionally, the president can listen to employees' opinions in the meeting. Total held 116 employee symposiums. Company has been established to irregularly provide employees with various educational training programs to perfect their professional skills. Every employee received 30.7 hours of training on average. The Company adjusts employees’ salaries based on the salary management system for six consecutive years; for outstanding employees, the Company provides a stock subscription plan to reward employees; in 2021, USI will increase salaries by 6% to 16% in Mainland China, 2% to 4% in Nantou and 5% to 13% in Mexico to maintain its competitiveness in the talent market. Share the experience of high-ranking officials through the Company's quarterly journals and WeChat group and understand information such as the latest industrial developments, health education knowledge, employee activities, and so on. Held 111 employee activities and 410 employee health education trainings. In response to COVID-19, we increased the insurance coverage for our employees, and provided them with the necessary supplies to protect themselves. To ensure employees can work remotely, in addition to adapting Microsoft 365, we conducted a telework drill with 63% participation rate in February to smooth out bugs before promoting work from home. About 60 employees applied for long-term telework afterwards.
Government	Occupational Health and Safety Social Involvement Water Resource Management Business Ethics	Official document Governmental agencies briefings/ public hearings/ seminars	Actively participate in briefings/ public hearings/ seminars held by competent authorities.
Industry Union/ Association	Occupational Health and Safety Talent Attraction and Retention Waste and Circular Air Pollution Prevention	Industry conferences Industry Union/ Associations conference forum Member meeting	Actively participate in conferences or forums held by Industry Unions or Associations. We participated in 40 external organizations. Publish operating results and development direction periodically.
Community (NGOs and the Media)	Air Pollution Prevention Waste and Circular Climate Change Human Rights	USI Website/ Email/ Direct line/ Press release Community activities	Draw up environmental protection, occupational safety & health (ESH) Standard Operation Procedure and measures of environment safety communication, consultancy, and participation. Keep friendly relationships with community residents. Actively participate in social activities and establish a good relationship with the local communities we operate in. Held 68 philanthropic social activities.

Universal Scientific Industrial

Sustainability Management

Stakeholder Engagement

Identification of Stakeholders and Material Topics

Stakeholder Communication

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