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Evaluation process
In accordance with GRI 3: Material Topics 2021 and applying the concept of "Double Materiality" introduced by the European Union's Corporate Sustainability Report Directive (CSRD) and European Sustainability Reporting Standards (ESRS), the Company simultaneously assesses both "the impact of sustainability topics on the Company's operations" and "the Company's impacts on the external economy, environment, and society." It also evaluates the severity and likelihood of sustainability-related impacts and focuses on 11 material topics as the objectives of its sustainable operations and the basis of this report. The Executive Secretary of the Sustainability Committee determines the corresponding international standards for each material topic, reviews the management policies and targets for those topics, and collects annual data to ensure that all important sustainability information is fully disclosed in this report, thereby comprehensively responding to stakeholder concerns. After the annual Sustainability Report is completed, the Chair of the Sustainability Committee reviews the report content and final draft again to ensure that the disclosed information does not contain inappropriate or misleading statements.
Every two years, based on the impacts arising from the Company's operating activities, industry characteristics, and value chain, Sunon identifies current key sustainability issues through stakeholder engagement and consultation with expert advisors, with final decisions made by the Chair of the Sustainability Committee. The results of the material topic identification are then reported to the Board of Directors. The detailed assessment process is as follows:
Step1
Collection of Material Topics
| The Company referred to international sustainability standards such as GRI, SASB, and the SDGs, and reviewed its business items, business model, types of products or services, industry characteristics, and workforce types to analyze all industry attributes relevant to the Company. |
27 potential sustainability topics |
Step2
Assessment of Stakeholder Impacts
| The Company assessed the extent to which its sustainability actions affect stakeholders. A total of 309 responses were collected, including 133 from employees, 8 from shareholders/investors, 32 from customers, 103 from suppliers, 6 from community residents and groups, 16 from contractors, 3 from public sector and non-profit organizations, 3 from electronics industry peers, and 5 from others. |
309 stakeholder impact assessment questionnaires |
Step3
Assessment of Positive and Negative Impacts
|
Questionnaires were used to assess the positive and negative impacts that the Company has on the economy, environment, and society (including human rights). (1) Assessment of impact severity: evaluated from three dimensions―degree of impact, scope of impact, and reversibility of negative impacts (2) Assessment of likelihood: evaluated based on the probability of occurrence of the impact |
53 impact assessment questionnaires |
Step4
Assessment of Operational Impacts
| Senior executives used questionnaires to assess the operational impacts of sustainability topics on the Company, measuring impacts across five dimensions: revenue, cost, customer satisfaction, employee cohesion, and corporate reputation. The above results were then consolidated to develop and analyze a double materiality matrix. |
38 impact assessment questionnaires |
Step5
Determination of Material Topics
| Based on analysis and discussion of the questionnaire results and external professional advice, the Sustainability Promotion Task Force approved and identified 11 high-impact topics as material topics. |
11 material topics |
List of Material Topics
The Company regularly reviews the implementation of material topic policies and target achievement rates each year in order to optimize its internal management approaches and qualitative and quantitative targets. After the next cycle of material topic identification, it also compares differences between the current and previous periods, investigates the reasons for such differences, and reports them in the Sustainability Report. In 2025, six material topics remained the same as in the previous year. The differences are explained as follows:
Note: Degree of impact refers to the extent of the impact event on Sunon and on stakeholders; circle size represents the degree of impact on stakeholders.
| Aspect | Material Topic | 2025 | 2024 |
|---|---|---|---|
| Governance | Economic performance | ● | ● |
| Risk response measures | ● | ● | |
| Supply chain management | ● | ||
| Integrity in business | ●(Note 1) | ||
| Regulatory compliance | ●(Note 1) | ||
| Environment | Climate change | ● | |
| Green product R&D | ● | ||
| GHG management | ● | ● | |
| Waste management | ● | ||
| Energy management | ● | ● | |
| Raw material management | ● | ● | |
| Social | Talent attraction and retention | ● | |
| Product quality and safety | ● | ● |
Note 1: Referred to as "Ethical Standards" in 2024.
Note 2: The material topics "Integrity in Business" and "Regulatory Compliance" identified in 2024 were not included as 2025 material topics, as the Company has already established relevant procedures and internal control measures and will continue to respond through ongoing compliance management.
Assessment Procedure of Material Topics
The following describes the impacts of material topics on internal operations as well as on external stakeholders and the value chain, and addresses the corresponding impact management approaches and performance in the relevant chapters.
| Aspect | Material Topic | Type of Impact | Significance to the Organization | Corresponding GRI | Value Chain Impact Boundary and Degree | Corresponding Section (report) | ||
|---|---|---|---|---|---|---|---|---|
| Suppliers | Sunon | Customers | ||||||
| Governance | Economic performance | Positive | Achieving continued growth in revenue and profit, creating long-term value for shareholders, and providing the funding needed for green transition. | GRI 201: Economic Performance | ● | ● | ● | 2.1 About Sunon |
| Negative | Global economic fluctuations or inflationary pressure may lead to slower end-market demand | |||||||
| Risk response measures | Negative | If risk identification fails, the Company may be unable to respond effectively to geopolitical, cybersecurity, or emerging risks. | Custom topic | ○ | ● | ○ | 2.4 Risk Management | |
| Supply chain management | Positive | Promoting supplier ESG audits and green procurement to ensure a low-carbon and resilient supply network amid raw material shortages or regulatory changes. |
|
● | ● | 4.3 Supply Chain Management Policy | ||
| Negative | Environmental violations or human rights breaches by suppliers may trigger joint legal liabilities and supply disruption risks. | |||||||
| Environment | Climate change | Positive | Surging global demand for decarbonization and thermal management drives rigid demand in the green economy and strengthens climate-related market opportunities. | GRI 201: Economic Performance | ● | ● | ● | 5.1 Climate Change Management |
| Negative | Carbon pricing mechanisms, such as carbon fees and CBAM, may increase operating costs; more frequent extreme weather events may also cause physical damage to production sites and logistics nodes. | |||||||
| Green product R&D | Positive | Focusing on high-efficiency and low-power-consumption technologies to reduce product life cycle carbon footprints and support customers in achieving decarbonization goals. | GRI 302: Energy | ○ | ● | ● |
|
|
| GHG management | Positive | Quantitatively managing value chain emissions to directly meet brand customers' requirements for supply chain carbon transparency and gain priority in green supply chain competition. | GRI 305: Emissions | ● | ● | 5.2 GHG Management | ||
| Negative | If supply chain decarbonization progress falls short of expectations, the Company's net zero emissions commitment may be affected. | |||||||
| Waste management | Negative | Improper disposal of process waste may result in severe penalties from environmental authorities and environmental remediation liabilities, negatively affecting operating permits and corporate social reputation. | GRI 306: Waste | ● | 5.5 Waste Management | |||
| Energy management | Positive | Introducing ISO 50001 and increasing the share of renewable electricity use can effectively buffer against rising electricity prices, reduce energy dependency risks, and fulfill the Company's sustainable commitment to low-carbon manufacturing. | GRI 302: Energy | ● | ○ | 5.3 Energy Management | ||
| Negative | Supply stability and price premiums in the renewable electricity market may increase short-term operating expenditures; if energy-saving retrofit efficiency falls short, it may be difficult to support significant carbon reduction targets. | |||||||
| Raw material management | Positive | Optimizing design to reduce material use and adopting recycled or non-toxic materials to lower the risk of resource shortages. | GRI 301: Materials | ● | ● | ○ | ˋ4.2 Raw Material Management | |
| Negative | Sharp fluctuations in global raw material markets, or slow progress in raw material traceability management or alternative material development, may directly affect production scheduling and weaken profitability due to rising costs. | |||||||
| Social | Talent attraction and retention | Positive | Attracting top R&D talent through training systems and an inclusive workplace to sustain core innovation momentum. |
|
● | 6.1 Talent Attraction and Retention | ||
| Negative | If compensation, benefits, or workplace development lack competitiveness, key technical talent may be lost, creating R&D capability gaps. | |||||||
| Product quality and safety | Positive | Rigorous quality control reduces failure rates, builds a market reputation of "zero defects," and helps secure long-term stable contracts. | GRI 416: Customer Health and Safety | ● | ● | 3.4 Product Quality Management | ||
| Negative | Product quality defects or safety incidents may trigger large-scale recalls and significant compensation costs, damaging corporate reputation and customer relationships. | |||||||