Table of Contents Innolux 2011 CSR Repor… · the direction and objectives of CMI's CSR and sustainable development. The CSR management representative is President Jyh-Chau Wang

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From the Editor

Chapter 1 Corporate Commitment and

Stakeholder Communication

Message from Chairman and CEO

1.1 Expectations and Commitments

1.2 Stakeholder Identification and

Communication

Chapter 2 Corporate Operation and

Development

2.1 Company overview

2.2 Financial Results

2.3 Corporate Governance

2.3.1 Corporate Organization

2.3.2 Internal Control System

2.3.3 CSR Practices

2.3.4 Supply Chain Management

2.3.5 Customer Satisfaction

Chapter 3 To Earth, with L.O.V.E.

Special Report – Providing for the Future

Special Report – Leading the Push for a Low

Carbon Society

3.1 Green Living

3.2 Green Operations

3.2.1 Climate Change Risks and

Opportunities

3.2.2 Environmental Material Flow

3.2.3 Energy Management

3.2.4 Water Resources Management

3.2.5 Environmental Impact Reduction

3.3 Green Value Chain

3.3.1 Low Carbon Green Product

Management

3.3.2 Low Carbon Green Product

Management Framework

3.3.3 Low Carbon Green Product Design

3.3.4 Low Carbon Value Chain

3.4 Green Environment

3.4.1 Green Promotion

3.4.2 Biodiversity Enhancement

Chapter 4 To People, with S.M.I.L.E.

Special Report – Love Without Barriers

Special Report – Typhoon Morakot Disaster

Relief

4.1 Safety

4.1.1 ESH Organization and Operation

4.2.1 Business Continuity Management

4.1.3 Vendor Management

4.2 Mental & Physical Wellness

4.3 Initiative on Social Care

4.3.1 Charity Service

4.3.2 Education

4.3.3 Culture and Arts

4.3.4 Community Engagement

4.4 Living

4.4.1 Creative Living Workshops

4.4.2 Comprehensive Health Care for

Employees

4.5 Employee –friendly Workplace

4.5.1 Recruitment and Staffing

4.5.2 Compensation and Benefits

4.5.3 Training and Development

4.5.4 Zero Distance Communication

Appendix

Independent Assurance Opinion Statement

GR Index Cross Reference Table (including

index supplementary explanation)

2011Corporate Social Responsibility

Report

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From the EditorThis is the third CSR report published by Chimei Innolux Corporation (CMI) after the merger. The report discloses CMI's CSR efforts and accomplishments in the economy, environment, a n d s o c i e t y d u r i n g 2 0 1 1 a s w e l l a s o u r commitment to sustainable development and the fulfillment of corporate social responsibility.

ScopeThis report discloses CMI's CSR activities and performance data in corporate governance, environmental protection, and social engagement in 2011. Disclosure of important events covers the period up to April, 2012. The scope of this report is primarily our production sites in Taiwan and China. All figures are from certified financial reports (and expressed in New Taiwan Dollars). Environmental, health, and safety performances are expressed in terms of accepted international indicators.

Plants covered in the reportTaiwan

Fab Tainan Fab Jhunan

ChinaFab

Longhua

Fab

Nanhai

Fab

Shanghai

Fab

Ningbo

Fab

Nanjing

Compilation GuidelinesIn accordance with the requirements of the Global Reporting Initiative Guideline 2011 – G3.1 (GRI), this report provides full disclosure on issues of interest to shareholders. The relevant chapters include "Corporate Commitment and Stakeholder Communicat ion", "Company Operat ion and Development", "To Earth, with L.O.V.E.", and "To People, with S.M.I.L.E.". The structure of this report does not differ significantly from that of the report 2010. The scope of the report has, however, been expanded by the addition of the Fab Touch Control at Southern Taiwan Science Park, Taiwan.

Report VerificationThis report has been verified by the third-party verification unit DNV Business Assurance Taiwan (DNV BA TWN) as conforming to the spirit of GRI/G3.1 A+ and AA1000AS (Account Ability 1000 Assurance Standard), ensuring a high level of transparency and reliability. The Independent Assurance Opinion Statement is appended to the end of the report.

Publishing PeriodThe CSR Report is published annually by CMI and the reports are available on the CMI official website (www.chimei-innolux.com).

Current release: Published in Aug, 2012Next release: To be published in July, 2013 Previous release: July, 2011CHIMEI INNOLUX 2011 Corporate Social

Responsibility

Report

Publishing Organization: Chimei Innolux Corporation

Publisher : Hsing-Chien Tuan

Editorial Team : CMI CSR Work Group

Contact : Public Relations Office

Address : No. 160 Kesyue Rd. Jhunan Science Park,

Miaoli County, Taiwan 35053 (R.O.C)

Telephone : +886 37 586 000

Website : www.chimei-innolux.com

Copyright : All rights reserved. The approval and written

authorization of the author is required before

reuse.

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Chapter 1 Corporate Commitment and Stakeholder Communication


Message from Chairman and CEO

1.2 Stakeholder Identification and Communication


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CMI established a dedicated CSR department to plan and administer the direction and objectives of CMI's CSR and sustainable development. The CSR management representative is President Jyh-Chau Wang. Regular management review meetings are convened with the top executives from each business unit and divisions like Human Resources, Legal Affairs, Environment Safety and Health, and Green Product Management in attendance. During the meetings, issues such as labor, ethics, environmental protection, health and safety, green products, community engagement, and charity service are discussed. CSR-related performance and progress are reviewed to ensure the continuous drive of CMI in the field.

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Message from Chairman and CEOear 2011 marked the second year after the merger to become CMI. I am very grateful for the hard work and contributions made by CMI employees as well as the support of our customers, shareholders/investors, suppliers, NGOs, communities, and the media. As a key player in the global optoelectronics supply chain, it is our duty and obligation to establish CMI’s corporate values in three key aspects: economy, environment, and society.

On the "economic" front, in 2011 CMI went through the Euro debt crisis as well as an unprecedented six consecutive quarters of decline since 2010 Q3. Under "Project 968", all units practiced rigorous cost control and concentrated their resources on producing the most competitive products, creating a virtuous circle for the company. The development of new markets is crucial to our long-term development strategy. CMI therefore works with strategic partners to make effective use of our existing capacity and develop new markets. In the development of new products, CMI initiates new TV panel sizes such as 39" and 50" based on LEDs, 3D, and green & energy-saving materials to become the best partner for customers in new projects. In new technologies, we continue to invest in the advancement of IPS, wide-angle viewing, and Oxide TFT. As for the issue of the syndicated loans that shareholders had expressed concern about, CMI signed a loan repayment agreement with the bank syndicate on April 5, 2012. It is an indicator of faith by the financial sector in CMI's past achievements in the TFT-LCD industry and our prospectus. It is our greatest goal to create value for the key industry in Taiwan, shareholders, customers and employees.

On the "Environment" front, climate change risk mitigation is at the forefront. Dynamic Water/Energy Conservation Platforms have been set up across Taiwan and China fabs to enhance the effectiveness of various energy-saving policies. Annual greenhouse gas inventory is performed to find room for reduction. Through the participation in Carbon Disclosure Project, CMI makes a comprehensive review of carbon management strategy and identifies low carbon business opportunities. CMI took part in the early GHG reduction project of Taiwan EPA and was awarded the most carbon credits among Taiwan. For green products, we have defined a blueprint for short, medium and long-term carbon management and collaboration with suppliers to set up a low carbon value chain so as to lead the push for low carbon society. In 2012, a "Low Carbon Management Committee" will be initiated to further manage the climate change risk and continue to innovate and realize the goal of "To Earth, with L.O.V.E.". By balancing the developments in living, operations, value chain and environment, we will enhance the green competitiveness of CMI.

On the "Society" front, we remain firmly committed to the principle of looking after our employees by creating a safe, friendly and caring work environment. 　In the field of disability employment, CMI made a new breakthrough by the realization of CSR philosophy, "integrating social responsibility with business strategy" and was endued a significant mission with the award of Special Contribution Award-Outstanding Healthy Workplace, the Golden Wingspan Award and the National Industrial Safety & Health Award. In social contribution, we have volunteers for long-term support of disadvantaged groups in remote areas. Environmental education venues are established with the integration of company resources. We also support the activities of CMI's Innolux Education Foundation and Tree Valley Foundation such as "12-Year Restoration Program for the Huisun Forest ", "Zero-Carbon Classroom Project", "Global Views Monthly Local Environmental Protection Teaching Materials Promotion", and "Community Development Project". These initiatives help multiply our own efforts in social contribution in four aspects, public welfare, education, culture & arts and community engagement.

“Integrating social responsibility and business strategy to realize the sustainability synergy” is our CSR philosophy. This report is a record of our CSR efforts and accomplishments for 2011. We shall continue to further our sustainable development in the economy, environment and society so the ideal of "corporate sharing" can be spread far and wide.

Chairman and CEO


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CSR Vision and PolicyCMI Vision 2050: Green Harmony and Approaching to a Zero Carbon Enterprise

Corporate Social Responsibility PolicyCMI’s corporate social responsibility policy is based on our code of business conduct. We strive to strengthen communication with stakeholders and meet their expectations continuously.

1. Fulfill good corporate governance by carrying out the principle of information disclosure and transparency and implementing the standards of integrity and ethics.2. Fulfill our role in the economy and implement L.O.V.E. value (green living, green operations, green environment and green value chain) to attain environmental sustainability.3. Respect human rights and provide safe and healthy workplace for our employees.4. Engage supplier to implement social and environmental responsibility together.5. Promote sustainable coexistence with the society by respecting and replying community’s needs.

CEO

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Direction of CSR PromotionCorporate Governance, Environmental Protection, Supply Chain SER Management, Employees Care, Community Engagement are the five main aspects of the CMI CSR policy. Other than compliance with EICC, we further pursue the co-existence and harmony between “sustainable environment” and “humane society”.In the environmental dimension, we care the environment by green vision “To Earth, with L.O.V.E.” through green living, green operations, green value chain and green environment to spread corporate influence on the sustainability of the earth.

In the social aspect, “To People, with S.M.I.L.E” is CMI’s humane vision to take care of the employee and the development of community and society by the aspects of safety, mental & physical wellness, initiatives on social care, living and employee-friendly workplace. We also continue to enhance humane harmony and co-prosperity.

Environmental disclosure is contained in Chapter 3 "To Earth, with L.O.V.E.". Social aspect disclosure is contained in Chapter 4 "To People, with S.M.I.L.E.".

CSR Promotion OrganizationCMI established a dedicated CSR department to plan and administer the direction and objectives of CMI's CSR and sustainable development. The CSR management representative is President Jyh-Chau Wang. Regular management review meetings are convened with the top executives from each business unit and divisions like Human Resources, Legal Affairs, Environment Safety and Health, and Green Product Management in attendance. During the meetings, issues such as labor, ethics, environmental protection, health and safety, green products, community engagement, and charity service are discussed. CSR-related performance and progress are reviewed to ensure the continuous drive of CMI in the field.

To Earth, with L.O.V.E.To People, with S.M.I.L.E.


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CSR CommitteeThe CSR Committee was re-activated within the existing structure with the approval of the CSR management representative in 2011. The mission of the CSR Committee is to coordinate all CMI resources, define strategies and targets, conduct management reviews, and actively ensure the implementation of the CSR policy. For 2012, CSR activities will be expanded by the addition of Carbon Management Working Group and Regulatory Compliance & Risk Management Working Group. The new addition, together with the existing Remuneration Committee, Employee Care Committee, Supplier Grievance Investigation Committee, Dynamic Energy and Water Conservation Platform, Energy Saving and Carbon Reduction Technical Committee, Environmental Quality Platform, Safety and Health Committee, Innolux Education Foundation, Tree Valley Foundation, and Innolove Club, will gradually define a comprehensive CSR promotion management system.

Remuneration CommitteeCSR CommitteeRegulatory Compliance and Risk Management Working Group

Carbon Management Working GroupEnvironmental Quality PlatformDynamic Energy and Water Conservation PlatformEnergy Saving and Carbon Reduction Technical Committee

Supplier Grievance Investigation Committee

Innolux Education FoundationTree Valley FoundationInnolove Club

Employee Care CommitteeSafety and Health Committee

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2010

2011 Received the Employment Contribution Award 2011 from the Ministry of Economic Affairs (MOEA) and Council of Labor Affairs (CLA)2011 Received the Golden Wingspan Award from the CLA for the breakthrough of the common failure in disability employment in the industry by employing the most employees with disability among the private companies in Taiwan 2011 Nominated as one of the Top 10 Best Employers in the employment information magazine Career2011 The world's first carbon-neutral 3D LCD TV recognized by the EPA2011 First panel maker to win the Enterprise Green Procurement Performance Award for three consecutive years2011 "Energy Saving and Carbon Reduction Action Mark" from the EPA2011 Named Ningbo Green Factory Model by the Ningbo City Government2011 Received the 5th National Industrial Safety & Health Award from the CLA2011 Named 2010 Excellence in Labor Safety and Health Unit by the CLA (Tree Valley branch)2011 Received the Health 100, Taiwan on the Move "2011 Contribution to Healthy Workplace Award " from the Bureau of Health Promotion, Department of Health2011 Award for meeting the target in the " Health 100, Taiwan on the Move Weight Loss" program of the Bureau of Health Promotion, Department of Health2011 Received distinction award for "2010 Excellence Business Unit in National Workplace Safety and Health Week " from the CLA2011 Received a distinction award in "2010 National Workplace Health and Safety Week Competition"2011 Won the Taiwan Excellence Award from the MOEA Bureau of Foreign Trade (Ultra-thin 13.3" HD notebook display module) 2011 Won the 14th Outstanding Photonic Product Award from the Photonics Industry & Technology Development Association (21.5" projected capacitive touch display module) 2011 Won the Award for International Trade from the MOEA Bureau of Foreign Trade2011 Received silver medal and gold medal award from the CLA TTQS (Taiwan Training Quality System)2011 Named the best paper with new energy-saving panel at the 17th International Display Workshops held in Japan (done)

2010 World’s first desktop LCD monitor and LCD TV product supply chain to receive the “water footprint” verification statement.2010 Received the DNV PAS 2050:2008 product carbon footprint verification certificate with the 18.5” LCD panel.2010 LCD modules 1.36”-4.3” passed the China RoHS voluntary product certification.2010 Won the Taiwan Excellence Award with Taiwan’s first 55” ultra-slim LED TV panel.2010 Won the Taiwan Excellence Award with the world’s first 27” 3D energy-saving touch panel.2010 Won the Outstanding Energy Conservation Award from the Bureau of Energy, Ministry of Economic Affairs, Taiwan (third consecutive year).2010 Received a distinction for waste recycling and reduction from the Environmental Protection Administration of Taiwan (third consecutive year).2010 Won the Energy Saving and Carbon Reduction Action Mark from the Environmental Protection Administration of Taiwan (first LCD panel manufacturer in Taiwan to win this mark).2010 Rated as an outstanding business in green purchase by the Environmental Protection Administration of Taiwan.2010 Received a distinction in the national evaluation during the CLA Workplace Health and Safety Week.2010 Rated as an outstanding business in the CLA Workplace Health Promotion Seed Personnel Training and Workplace Health Care Self Management Certification.2010 Rated as an outstanding business in the CLA National Labor Safety and Health Group Cooperation Organization 20092010 Won the Health Management Award from the Health Promotion Bureau of the Department of Health of Taiwan.2010 Selected in the advanced group for dust and highly toxic substance prevention project in Ningpo City.2010 Won the special prize for occupational injury and safe production advanced units in Nanhai District of Foshan City.2010 Selected as an advanced unit in safe production management in Ningpo City

CSR Honors

2011


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2009 The world’s first LCD panel and first LCD monitor to pass the “product carbon footprint” verification.2009 The first panel manufacturer to win the Environmental Enterprise Award from the ROC Enterprise Environmental Protection Award (third consecutive year).2009 Rated as an outstanding business in voluntary GHG reduction by the Industrial Development Bureau of the Ministry of Economic Affairs, Taiwan (for three consecutive years).2009 Won the Outstanding Energy Conservation Award from the Bureau of Energy, Ministry of Economic Affairs, Taiwan.2009 Received distinction (highest honor) for waste recycling and reduction from the Environmental Protection Administration of Taiwan.2009 One of the first groups of enterprises to receive the carbon emission label certificate.2009 Tree Valley Energy Center: first large sports and recreational center to win the Diamond Green Building Mark.2009 Won the Enterprise Green Procurement Performance Award from the Environmental Protection Administration of Taiwan, the only panel manufacturer to win this award.2009 Won the Silver Award from the Taiwan Corporate Sustainability Report Awards.2009 Won the Green Packaging Design Award from the Environmental Protection Administration of Taiwan.2009 Won the 3rd National Industrial Safety & Health Award (Innolux Display Corporation), symbolizing the highest honor for OSH in Taiwan.2009 Passed the Outstanding Healthy Workplace Accreditation by the National Health Promotion Bureau, Department of Health of Taiwan.2009 Rated as an outstanding business in blood donation by the Ministry of the Interior of Taiwan.

2008 Won the first prize from the 4th CSR Awards in Category of Technology from Global View Magazine.2008 Won the ROC Enterprise Environmental Protection Award.2008 First panel manufacturer to implement the environmental accounting system (Version 2007).2008 Received distinction (highest honor) for waste recycling and reduction from the Environmental Protection Administration of Taiwan.2008 Rated as an outstanding business in voluntary GHG reduction by the Industrial Development Bureau of the Ministry of Economic Affairs, Taiwan.2008 Rated as an outstanding energy saving business by the Bureau of Energy, Ministry of Economic Affairs of Taiwan.2008 Rated as an outstanding water saving business by the Water Resources Administration, Ministry of Economic Affairs of Taiwan.2008 Won the third prize in the National Excellent Firefighting Manager and Venue Review from the National Fire Agency of Taiwan.2008 Won the Outstanding Proof Award for Health Promotion from the National Health Promotion Bureau, Department of Health of Taiwan.2008 Rated as an outstanding business in blood donation by the Ministry of the Interior of Taiwan.

2007 Won the CRS Model Award from Global View Magazine.2007 Won the ROC Enterprise Environmental Protection Award.2007 One of the first groups of enterprises to pass the CLA Friendly Workplace Accreditation.2007 Rated as an outstanding business in voluntary GHG reduction by the Industrial Development Bureau of the Ministry of Economic Affairs, Taiwan.2007 Rated as an outstanding energy saving business by the Bureau of Energy, Ministry of Economic Affairs of Taiwan.2007 Rated as an outstanding water saving business by the Water Resources Administration, Ministry of Economic Affairs of Taiwan.2007 Won the CLA National Excellent Labor Safety and Health Management Business Award.2007 Rated as an outstanding business in the CLA National Labor Safety and Health Group Cooperation Organization 2006.

2006 Received 5 stars from the Excellence of CSR rating by CommonWealth Magazine. 2005 Won the 6th Industrial Sustainable Excellence Award. 2005 Won the Outstanding Achievement Award of the Atmosphere Protection Awards from the Environmental Protection Administration of Taiwan.2005 Selected as the waste disposal demo plant by the Environmental Protection Administration of Taiwan.2004 Won the first prize in the optoelectronics industry in the Most Admired Company in Taiwan Survey conducted by CommonWealth Magazine.

20092008

20072006~

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1.2 Stakeholder Identification and Communication

CMI has established a variety of channels for smooth communications. These include the investor services area, supplier areas, business service/product inquiries, and media contacts on the official website. The channels provide continuous communication and feedback on the needs and expectations of stakeholders. The materiality analysis serves an important reference during the implementation of strategies and goals setting for CSR. CMI's strategic direction and accomplishments are described in the relevant sections of this report.

Materiality Analysis

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Materiality analysis 2011, stakeholders' main concern about 7 issues

Step 1. Define communication targets

1. Enhance employee participation in CSR and corporate commitment2. Be perceived by customers as the top supplier3. Enhance the company's ability to realize its green vision (green living, green operations, green value chain and green environment)4. Strengthen the company's risk management ability5. Enhance supplier’s support and cooperation on CSR promotion6. Strengthen investor’s trust in CMI7. Identify community engagement strategies and enhance community impression against CMI8. Strengthen interaction and communications with the media and NGOs

Step 2. Identify stakeholders

Based on the communication targets described above, we identify the stakeholders to communicate including employees, customers, communities, shareholders, suppliers, government agencies, NGOs and the media.

Step 3. Materiality AnalysisFailure Mode and Effects Analysis (FMEA) are used with “whether stakeholders is interested on the topic”, “degree of concern” and “ level of effect of the topic on the goal attainment of strategic communication” as the three main criteria. Using questionnaire surveys, issues important to stakeholders are identified. The direction of government policy, customer audits, employee responses during labor relations meetings and employee welfare committee meetings, employee complaints, feedback from annual shareholders' meetings and neighborhood residents are assessed and screened based on two factors, "Stakeholder's degree of concern " and "Impact on company operation". Issues of high interest and high impact on operation are disclosed in full in this report. The other issues are briefly summarized in the report for an adequate communication with stakeholders.

The information disclosed in the report is aimed at realizing the following strategic communication targets:


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4 Step 4. Results of identification of stakeholders' concern

Issue Section of the report containing disclosure on strategic direction page

1.Financial performanceMessage from Chairman and CEO 5

2.2 Financial results 18

2.Carbon management Chapter 3 Special Report – Leading the Push for a Low Carbon Society

31

3.Reduce environmental impact 3.2 Green Operations 36

4.Green product management 3.3 Green Value Chain 49

5.Disability Employment Chapter 4 Special Report –Love Without Barriers 63

6.Social contribution 4.3. Initiative on Social Care 79

7.Labor conditions 4.5.1 Recruitment and Staffing 96

Step5. Response to the 7 Key Stakeholder Issues

Stakeholder

Impact on company operation

High

HighLow

Environmental safetySupply chain managementEmployee welfareLabor relationsTalent attraction and retention

Financial performanceCarbon managementReduce environmental impactGreen product managementDisability EmploymentSocial contributionLabor conditions

Environmental policy/management systemStakeholder communicationsInnovation management

Corporate governanceBusiness continuity managementHazardous substancesProduct and service quality

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Stakeholder Key Issues Variety of communication channels

EmployeeEmployee welfareLabor conditionsLabor relations

1. Employee communication hotline2. Internal plant meetings (Labor relations committee, employee welfare committee, management talks, labor safety cadre…)3. Employee questionnaire survey (company catering, event organization, training, etc.)4. Employee suggestions box at Fab.

Customer

Labor conditionsGreen product managementCarbon managementEnvironmental safetyProducts and service quality

1. Dedicated sales and customer service units to respond to customer requirements in a timely manner. 2. Set up customer complaints feedback system with case progress tracked in real-time. 3. On-site customer audits and surveys. 4. Customer satisfaction surveys.

Shareholders and Investors

Financial performanceCorporate governanceLabor relations

1. Annual report2. Quarterly financial reports and business statements3. Annual shareholders' meetings and bilingual institutional investor conferences4. Official investors' hotline and mailbox with dedicated personnel assigned to answer inquiries. 5. Participation in local/foreign investment seminars, investor forums organized by brokers and meeting with institutional investors through overseas roadshow.

Supplier

Supply chain managementHazardous substancesEnvironmental policy/Management system

1. Interactive platform for suppliers and purchasing/logistics. 2. Dedicated purchasing and supplier management units. 3. On-demand meetings between other units and suppliers.

Community

Reduce environmental impactSocial contributionEnvironmental safety

1. Dedicated units and personnel assigned to community relations. 2. Irregularly visit community leaders and residents to boost community relations.

Government

Reduce environmental impactCarbon managementEmployment of the handicapped

1. Active participation in legislative public hearings and policy seminars as well as maintaining a positive relationship with competent agencies. 2. Support the environmental protection initiatives organized by the competent agencies.

NGO

Social contributionDisability EmploymentReduce environmental impactEnvironmental policy/Management system

1. Participation in professional seminars hosted by NGOs to collect external opinions and monitor industry trends for the reference of CSR policy. 2. Collaborate with NGOs on projects such as helping the disadvantaged and promoting environmental awareness.

Media

Social contributionFinancial performanceInnovation management

Publish news release on revenues every month as well as share with the media our business accomplishments and developments. Convene press conferences or issue press releases on appropriate topics when necessary.

Organizations

Taiwan TFT LCD Association

Taiwan Electrical and Electronic Manufacturers' Association

Taiwan Digital Television Industry Alliance

Chinese Society For Quality

The Allied Association For Science Park Industries

Taiwan Corporate Sustainability Forum

The Chinese Institute of Environmental Engineering

Environmental Management Accounting Network-Taiwan

Active participation in external organizationsCMI actively participates in the activities of relevant external organizations. We attend the meetings of relevant industry associations to voice industry opinions and requirements as well as share our experiences in order to do our part for the sound development of the panel industry as a whole.

Stakeholder Communications


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Organizer Event Topic Attendance (approx.)

Water Resources Agency, Ministry of Economic Affairs Water footprint promotion Experience sharing of corporate water footprint

promotion (North, Central, South Taiwan) 360

Bureau of Energy, Ministry of Economic Affairs

National energy-saving demonstration seminar

Sharing of corporate energy management, verification system and energy saving measure; site tour at the facility.

120

Green Trade Project Office, Ministry of Economic Affairs

“Green procurement for international enterprises seminar”, a green trade promotion project of Ministry of Economic Affairs

Current status and future trend of energy saving and carbon reduction promotion in supply chain of ICT industry.

100

Ministry of the Interior Environmental education lesson Introduction of diamond level green building of Tree Valley Recreation Center (2 sessions) 27

Environmental Protection Bureau of Nantou County Environmental education lesson Sharing of environmental awareness 50

Environmental Protection Bureau of Tainan City

Low carbon city & action mark demonstration seminar

Experience sharing of energy saving and carbon reduction activity 40

Economic Development Bureau of Taoyuan County Government

Industrial water saving and water resources management training course at Taoyuan County

Incentive for the promotion of water footprint 100

Southern Science Park Administration

High-tech industry and environmental protection visit

High-tech industry and environmental protection visit 10

Society for Information Display The International Display Manufacturing Conference Green Technology Program 80

Society for Information Display The International Display Manufacturing Conference

The Case Study of Recycling for Waste TFT-LCD Glass 80

Graduate School of Environmental Engineering, National Cheng Kung University

High-tech industry and environmental protection forum

Environmental protection and CSR of the TFT-LCD industry 40

Environmental Engineering Department of Kun Shan University Greenhouse gas management Experience sharing of CMI’s promotion of carbon

footprint and carbon neutrality. 50

Chinese Management Association Sustainable development for a long-lasting business Experience sharing of CMI’s CSR promotion 100

Southern Region Inspection Office of the Council of Labor Affairs Employee/vendor training Prevention of chemical hazards 46

Safety and Health Technology Center

Practice conference on the case of public hazardous materials management and investigation

Sharing of public hazardous materials compliance 88

Hsinchu Science Park Administration

2011 SEMI machine safety standard and inspection practice conference

Experience sharing of machine safety requirement and introduction of CO2 equipment system 100

The Allied Association For Science Park Industries

The Allied Association For Science Park Industries ‘s respondence to nuclear pollution in Japan symposium

Experience sharing of CMI’s radiation safety protection and pollution prevention measures 45

National Cheng Kung University High-tech industry and environmental protection forum Safety management practices in TFT-LCD industry 80

Bureau of Health Promotion, Department of Health, Executive Yuan

2011 Healthy Workplace, Healthy Community Empowerment and the 5th Golden Hygiene Center wrap-up presentation

Sharing of 2011 healthy workplace practice 150

South Health Workplace Promotion Center, Bureau Health Promotion, Department of Health, Executive Yuan

2011 Healthy workplace (LOHAS)-weight management workshop Sharing of organizing workshop at workplace 42

Southern Taiwan Science Park Administration

Industrial safety and environmental protection month-health promotion seminar

Introduction of health promotion of CMI 31

I-Shou University Health management and promotion Sharing of workplace practice 68

Taiwan Environmental and Occupational Medicine Association

On-site practical training: doctor & nurses Building a healthy workplace 81

Taiwan Business Council for Sustainable Development

Members’ meeting of Business Council for Sustainable Development

“1 sport” case study sharing: CMI physique challenging camp 110

Ergonomics Society of TaiwanThe 18th Annual Meeting and Conference of the Ergonomics society of Taiwan

1.Sharing of the practice of ergonomics self-management and expert guidance in the display industry2.Integration of diverse research methods in the ergonomics research in display industry.

50

Department of Industrial Engineering and Industrial Management of National Tsing Hua University, Ergonomics Society of Taiwan

The 2nd East Asian Ergonomics Federation Symposium and Asia Ergonomics Summit

1.Practice of Reducing Ergonomic Hazard on Display Panel Plant-Experience Sharing by NB CMI2.Taiwan High-Tech Industries Hiring Staff with Physical and Mental Difficulties to Work in Clean-room Experience Sharing by CMI Corp.

64

CSR external communication and promotion

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Chapter 2 Corporate Operation and Development




Corporate Organization

Internal Control System

CSR Practices

Supply Chain Management

Customer Satisfaction


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Uphold the spirit of “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”; fulfill the responsibilities of corporate executives; comply with business ethics; practise transparent operations; protect shareholders’ interests; respect stakeholders’ interest; believe in a self-discipline and healthy board of directors is the foundation of corporate management.

Company Vision : Be the most valuable display solution supplierCompany Mission : Be a competitive corporationProfit the shareholdersSatisfy the customersHonor the employeesBroaden human horizon

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Company overviewCMI was originally founded in 2003 as the Innolux Display Corporation. In March, 2010, Innolux was officially merged with Chi Mei Optoelectronics and TPO Displays Corporation to become the Chimei Innolux Corporation. Since the merger, CMI has continued to serve the needs of different customers around the world through our core technical expertise and extensive production capability. We now have plants located all around the world. The main plant sites are located at Jhunan and Tainan in Taiwan, with additional overseas plants in China at Shenzhen, Ningbo, Nanjing and Nanhai. CMI also has offices in Germany, the Netherlands, the U.S., and Japan. A comprehensive global strategy ensures that CMI can respond quickly to customer requirements, save on logistics and manpower costs, as well as practice energy-conservation and carbon reduction.

Major products: Various TFT-LCDs (Thin-film transistor liquid crystal displays)

Type Application

Information Technology (IT) Desktop LCD monitors, notebook PCs and tablet PCs.

LCD TV --

Communications and Consumer Electronics

Mobile phones, digital cameras, camcorders, digital photo frames, car monitors, portable DVD players, handheld game consoles, tablet PCs, and other handheld electronic devices with high mobility

Special application Medical display panels, aircraft dashboards, car navigators and other touch panels.

US

UK

Netherlands

Japan

Singapore

Germany

Production Site Sales Office

TaipeiTaoyuan

Hsinchu

Tainan

Kaohsiung

Nanjing Fab

Ningbo Fab

Shanghai Fab

Nanhai Fab

Longhua Fab

Pingzhen Fab

FabT1FabT2FabT3

Fab AFab BFab CFab D

Tree Valley Branch

STSP Touch Panel Fab

Fab F

Established January, 2003

Company Address No. 160 Kesyue Rd. Jhunan Science Park, Miaoli County, Taiwan 35053 (R.O.C)

Employees Globally approx. 102,551 (by December, 2011)

Capital NT$73.1 Billion (by December, 2011)

Turnover NT$485.403 Billion (by December, 2011)


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Financial performanceCMI's total revenues in 2011 amounted to NT$485,403,114,000, an increase of 2.47% on NT$473,695,780,000 from 2010. The merger of the three companies therefore not only consolidated their production facilities but also helped CMI expand its business and operations. The global economy and pressure on the panel industry, however, proved too difficult to overcome. Demand remained weak for LCD TVs and monitors, traditionally the main sources of demand. Prices for large panels used in the above applications continued to hover around the cash cost as well, leading to net losses of NT$64,439,778,000 for 2011. This was more than triple the net losses of NT$14,835,437,000 in 2010 and meant that cumulative losses now amounted to over half of the paid-in capital. The integration costs of the merger also placed pressure on returns. Nevertheless, synergies from the merger, as well as the management's focus on the core TFT-LCD business, produced a jump in November and December revenues in 2011. CMI became the only panel maker in Taiwan to buck the trend and achieve growth. The increasingly robust foundations will be used to push for an increase in sales and profits in 2012.

Anti-Trust CaseCMI has reached a settlement with American direct buyers in the anti-trust case and the settlement has been approved by the court. A settlement has also been reached with indirect buyers and eight state governments, pending court approval. The fine of NT$41.5 Million levied by the Korean Fair Trade Commission has been paid in full. The anti-trust investigation by the European Union is still in the courts.

Signing of the "Syndicate Repayment Contract" On April 5, 2012, CMI signed the "Syndicate Repayment Contract" with a banking syndicate that included the Bank of Taiwan. An extension has now been granted on all existing loans with debtors. The new debt extension agreement between CMI and the banks represents a show of faith by the financial sector in CMI's past achievements in the TFT-LCD industry and our prospectus.

Striving to Create Positive ValuesCMI will continue to focus our efforts on our strategies and execution in business, finance, technology and sales in future. As the results from our rigorous cost control, successful sales strategies, increased product shipments, and debt extension begin to come in, we will strive to boost the operating performance of CMI in order to create value for the key industries, shareholders, customers, and employees.

Unit: 1000 NTD (loss per share is in NTD)

Item 2010 2011

Operating income 473,695,780 485,403,114

Gross profit (loss) 8,338,094 (43,979,512)

Operating profit (loss) (10,492,493) (63,395,419)

Non-operating profit (loss) (4,402,807) (6,766,369)

Profit or loss for the period (14,835,437) (64,439,778)

Earnings (Loss) Per Share (2.29) (8.81)

Income Tax Expense (Profit) (59,863) (5,722,010)

Capital Expenditure 77,727,927 34,076,368

Employee Compensation 14,024,321 18,036,583

R&D Expenditure 7,158,832 8,682,421

Total Assets at End of Year 671,937,165 621,649,730

Total Capital at End of Year 73,126,748 73,129,708

Market Value at End of Year 294,665,935 89,218,244

19


Sound corporate governance, respect for shareholder rights and integrity, as well as a Board of Directors that believes in integrity form the foundations of corporate governance. At CMI, the board and management team are composed of experienced professional managers. A "Remuneration Committee" has been established as a functional committee under the board of directors, while an audit office assists with auditing all internal affairs. The mission of the office is to assist managers and board members in ensuring the efficiency and effectiveness of operations, the reliability of financial reports and legal compliance.

2.3.1 Corporate Organization

Chairman Ching-siang Liao (廖錦祥) was the top executive at CMI throughout 2011. At the 13th meeting of the 5th Board of Directors held on December 2, 2011, Chairman Liao resigned his chairmanship and role as representative of the Chi Mei Corporation on the Board due to personal health reasons. On March 16, 2012, Mr. Hsing-chien Tuan (段行建) was appointed as the Chairman and CEO of CMI. Chairman Tuan will continue to expand CMI's presence in the panel industry and maximize returns for shareholders.

Corporate Governance Structure

HR Management Center

Quality ManagementCenter

Finance & AccountingCenter

Legal Affairs and Intellectual Property Center

Strategic Procurement Center

Operation Management Center

EHS Group Division

Global Sales Center

Product Technology Center

Production Technology Center

SG/TP/TFT Business Unit

Module Business Unit

Mobile ProductBusiness Unit

Manufacturing Manufacturing

Product Development

Product Development

Sales & Marketing

Material Procurement

Manufacturing

Technology Development

Sales & Marketing

Material Procurement

Shareholders' Meeting

Board of Directors RemuncrationCommittee

Chairman

CEO CSR Committee

Supervisors

Audit Office


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20

Board of Directors and Independent DirectorsCMI directors are elected in accordance with the law. Candidates must come from suitable professional backgrounds and possess technical experience. The Board of Directors has five members and includes two independent directors. Three supervisors are also appointed to provide CMI with impartial, professional advice on operations, technologies and finance. The supervisors share the responsibility for the company's strategy, operation and supervision as well.

CMI rules require the Board to convene at least once per quarter. Through the quarterly board meetings, our supervisors can communicate with the company's financial, legal and internal audit managers in order to learn about CMI's risk controls, exposure to major lawsuits, and internal audit reports on economic, environmental, and CSR issues. Through audits by the Audit Office and accountants, as well as financial report certification, CMI's compliance with laws and regulations governing listed companies, accounting principles as well as target completion rates can be determined as well.

In accordance with the CMI articles of incorporation, remuneration for directors and supervisors are based on their involvement and contribution to company operations as well as industry standards. When the company produces a net profit, after compensating for deficits and losses, setting aside funds for the statutory reserve, payment of special dividends and distribution of employee bonuses, a special bonus for the directors and supervisors may be proposed based on the industry environment and the company's cash requirements. The payment of special bonuses requires the approval of the shareholders' meeting.

Operation of the Remuneration CommitteeTo continue strengthening our corporate governance and bring our practices in line with international standards, a "Remuneration Committee" was established in August 2011. The Remuneration Committee reports to the Board of Directors and is responsible for reviewing the overall remuneration policy and plan at CMI. The Remuneration Committee has three members, with one being an independent director and two being outside experts. All have at least five years of related experience and qualifications to ensure the independence, professionalism and impartiality of the Committee. The "Remuneration Committee Charter" defined by CMI requires the Committee to convene at least twice a year. Two meetings have been convened as of March, 2012, since the Committee was formed. The Remuneration Committee oversees the compensation and other tangible incentives for directors, supervisors, executives over the rank of Vice President (included), as well as the heads of finance, accounting, audits and human resources. The Committee exercises its authority in accordance with its mission and submits proposals to the Board for review.

Board Directors and Supervisors March 31, 2012

Title Name

Chairman Hsing-chien Tuan

Corporate Director Ching-sheng Lin (Representative for Chi Mei Corporation)

Corporate Director Ting-cheng Hsu (Representative for Hyield Venture Capital)

Independent Director

Chi-lin Wei

Independent Director

Ing-da Liu resigned on December 28, 2011. A replacement will be elected in the shareholders' meeting in June, 2012.

Supervisor Guang-fu Song

Supervisor Jung-chun Lin

Supervisor De-cai Huang (Representative from Yicheng Venture Capital)

Members of the Remuneration CommitteeTitle Independent Director External Professor External Professor

Name Chi-lin Wei Wen-cheng Lin Kuan-chun Liu

21

2.3.2 Internal Control System

The CMI Audit Office reports directly to the Board and briefs the Board on audit affairs each quarter. In accordance with the annual audit plan approved by the Board, the Audit Office conducts on-site inspections or written reviews based on risk considerations, assists each unit with their annual internal inspections, and provides timely advice on improvements. The Audit Office helps the Board of Directors and managers ensure that internal controls are being effectively and continuously enforced. This also includes measuring performance and efficiency of company operations, the reliability of financial reports as well as compliance with the relevant laws and regulations.

2.3.3 CSR Practices

Legal Compliance

CMI’s Code of ConductIntegrity is the most important core value of CMI. It consolidates CMI’s leading position in the display panel industry. CMI pursues to acquire trust and respect from its customers, shareholders, employees, suppliers and the society.

CMI respects and upholds democracy and the rule of law. It abides by the related law and the standards which are agreed by the industry. Furthermore, it pursues the higher standards of operational excellence.

It is a universal value to respect for human rights. When facing up to the employees, customers, suppliers around the world, CMI based on the Global Compact implements the principle of fairness and respect for the individual differences.

Deterioration of the living environment is human beings’ common challenges. CMI should use its capacity to reduce the environmental impact of the production process and product to attain the sustainable development of the global environment.

CMI is not satisfied with its own growth and robustness. CMI is willing to facilitate the development of nearby communities with the way of sharing its profits and public achievement.

As the panel and display manufacturing leader, CMI has a decisive influence on the client or supplier side; by clustering the supply chain strength, it has a greater impact on the improvement of the social and the global environment.

CMI concentrates on the company operation, creating profits for shareholders and employees. It then contributes to the improvement of the society and the environment.

Integrity

Compliance

Respect for human rights

Environmentally friendly

Community and social

Be the Influential

Balancing and continual improvement of financial, social and environmental

performance

Code of Conduct for Directors, Supervisors and ManagersThe "CMI Code of Conduct for Directors, Supervisors and Managers" was passed by the Board of Directors in May, 2011. The new code of conduct is based on the "Specimen of Code of Ethics" formulated by the Taiwan Stock Exchange. The code of conduct prohibits conflicts of interest, breach of confidentiality, unfair trading, and corruption among CMI directors, supervisors, and managers. To provide CMI stakeholders with a better understanding of our ethical standards, the code of conduct is published on the TSE Market Observation Post System. A whistleblower system has also been set up through the employee inquiries mailbox, employee hotline, and employee communications box. Whistleblower protection is guaranteed.


Report

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CMI Employee Code of Conduct The "CMI Employee Code of Conduct" is based on the "Specimen of Code of Ethics and Code of Conduct for TWSE and Gre Tai Listed Companies" formulated by TSE as well as the "Electronic Industry Code of Conduct" (EICC). To improve the conduct and professional ethics of all CMI employees, the code of conduct prohibits conflicts of interest, breach of confidentiality, bribery and gifts. The Employee Code of Conduct is a part of the orientation training for new employees. A total of 713 classes were held in the Taiwan and China fabs throughout 2011 and were completed by 132,572 CMI employees.

Additional Business Ethics Training for High-Risk PersonnelCMI's active training and awareness efforts include startup screen advertisements on employee computers, legal affairs and intellectual property bulletins, as well as recruit and in-service training. In 2011, more than 20 "Anti-Trust Act" classes were held for high-risk personnel such as purchasing, sales and managers. Around 1,700 employees took part in these classes to learn about the Anti-Trust Act as well as CMI's new code of conduct. The training will help them avoid breaking the law or the code of conduct. All employees are required to sign the Service Integrity and Anticorruption Agreement. Additional agreements, such as the Anti-Trust Agreement, are also required for personnel with exposure in high regulatory risk.

Business Ethics Law Identification and Risk ManagementLegal compliance management at CMI is based on identifying the applicable laws and risk assessments. The "Business Ethics Law Identification and Risk Assessment" process was completed for Taiwan and China fabs in 2011. Risk items have now been scheduled for improvement in the 2012 management plan.

Internal Audit and "Legal Compliance and Risk Management Working Group"Continuous improvements were systematically achieved through internal EICC audits at the Taiwan and China fabs in 2011 in accordance with the "CMI CSR Internal Audit Procedures". A "Legal Compliance and Risk Management Working Group" was also set up to further consolidate and strengthen legal risk management in the economic, environmental, and social areas. No violations of business ethics or bribery laws occurred in 2011.

Comic version startup screens for promoting the five

dimensions of EICC

Comic version startup screen for promoting "Ethics

Complaint Channels for Suppliers"

23

Supplier SER Risk AssessmentSER assessments were completed for 107 suppliers in 2011, a six-fold increase on 2010. The risk assessment included compliance with minimum wage laws, proportion of underage workers, ESH system certification, fire safety certification, and breaches of social/environmental laws. The results showed that 68% of suppliers were in the low-risk category, 25% were in the medium-risk category, and 7% were in the high-risk category. Based on the results of the risk assessment, 23 medium and high-risk suppliers were selected for further audit, an increase of 50% on 2010.

SER risk assessments were completed for 107 suppliers. The number of suppliers identified as medium and high-risk increases 50% compared to 2010's.

2.3.4 Supply Chain Management

Supply Chain SER ManagementCMI cooperates with suppliers to promote CSR in accordance with the "CMI Supply Chain Social and Environmental Responsibility Management Framework". Suppliers must sign the "CMI SER Agreement" and the SER performance of key suppliers is reviewed through risk assessments, self-assessment questionnaires and audits to help them improve their SER management ability.

CMI Supply Chain SER Management Framework

Supplier SER Risk Assessment Results

Low-riskMedium-riskHigh-risk

Supply Chain SER Managem

ent Fram

ework

SupplierInitiation

Sourcing Qualification Mass Production ContinuousImprovement

Risk Assessment

Self AssessmentQuestionnaire

(Medium/high risk)

Audit

Approved Vendor List (AVL)

Qualification

CorrectiveAction Request (CAR)

CAR Review &Correction Validation

PerformanceScorecard

Non ConformityManagement

SupplierAgreement

(SER Undertaking)

Legal Review

CompetenceAssurance

Awards &Promotion

Systematic Management


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Supplier SER AuditThe audit covers the following areas specified in the CMI "Supplier SER Code of Conduct": ethics, labor management, health and safety, environment and management systems. In 2011, it is confirmed that there were no major risks from use of child labor, use of forced labor, or actions against the right to collective bargaining. In management systems, "Environment" achieved a relatively good performance while "Labor & Human Rights and Ethics Management System" required continuous improvement. In addition to audits and the follow-up of corrective action request in 2011, CMI also communicated with suppliers on the need to gradually strengthen their management of business ethics. Some suppliers have now decided to set up a social responsibility system by introducing SA 8000 and CMI looks forward to seeing further improvement in suppliers' social responsibility performance.

Supplier SER Assessment and Audit

Supply Chain Risk ManagementCMI had several hundred approved suppliers in 2011. After the "Japan Earthquake" on March, 11, 2011, ensuring that the supply chain will not be interrupted by natural or man-made disasters became an important risk management issue.

Risk Prevention

1. Use two or more suppliers for all materials during the product development

phase; also design alternative materials to reduce the impact from interruptions to

the supply chain.

2. Sign inventory agreements with suppliers and ensure that suppliers always have a

safe inventory based on material lead-times.

3. Adopt risk avoidance planning so that supplier selection is based not only on

"price", "quality" and "delivery time" but also supply chain location as well as the

proportion of local materials/equipment.

Post-Disaster

Damage Control

1. After a disaster, immediately confirm the condition of supplier equipment,

factories, personnel, upstream suppliers and transportation facilities, and then

notify relevant departments right away.

2. Activate the business continuity program. If there are any materials that may be

out of stock, convene an emergency allocation meeting to minimize the damage.

No. of Suppliers

Risk Assessment Audit

25

2.3.5 Customer Satisfaction

Enforcing the quality policy and considering the customer service as core value, CMI continuously deploys the quality concept to make internal process improvement plan of product design, manufacture, IT systems, logistic and so on to provide the most competitive service in order to achieve customer satisfaction and to maintain the partnership among the suppliers, customer and CMI for pursuing the benefits for all the three parties.

Supplier LocalizationMost of CMI's production sites are located in Taiwan and China. The proportion of local procurement in 2011 showed that CMI is a strong supporter of local suppliers' economic development and growth. Local procurement generates local jobs, promotes local prosperity, reduces fuel costs while also improves suppliers' quality, environmental awareness and capabilities.

Proportion of front-end procurement ( F r o n t - e n d p r o c e s s r e f e r s t o T F T , C F a n d L C D

production processes but does not include LCM

module process. Production is primarily based in

Taiwan)

Proportion of backend procurement(Back-end process refers to the LCM module

process. Production is primarily based in Taiwan)

Quality Policy

CMI is inspired to continuously improve the product quality, information system and service it delivers to maximize customer satisfaction through teamwork and partnering.

Taiwan Japan

Japan

China

China

United States

United States

Korea

KoreaTaiwan


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Customer Satisfaction SurveyCMI respects the voice of customers and regularly collects the CSS (Customer satisfaction survey) for 3 aspects, quality, technology and service index so as to make improvement after analysis. For Y2011 CSS, although CMI achieved a score of 4.16 (Good) in service, the integrated results showed that we needed to strengthen the quality, technology and overall service to become the truly partner with our customers in long-term.

CMI won two silver awards in the 24th QCC activities of C.S.D.

Deployment of Quality Month and CIPIn addition to CIP (Continuous Improvement Plan) and project audits, CMI conducts on-site audit for specific quality topic every two months to review the process operation and enhance quality concept among all employees. For CIP activities, CMI won two silver awards with the projects of “Cost down of Seal” and “SPC improvement of M1 CD Loss & Taper” in the 24th QCC activities of C.S.D (Corporate Synergy Development) in 2011.

2011 Result of Customer Satisfaction Survey

Comprehensive Index Quality Index Technology Index Service Index

5.0

4.0

3.0

2.0

1.0

0.0

• Scoring Method: Score based on the ranking among CMI and other LCD suppliers• 5: Excellent, 4: Good, 3: Satisfactory, 2: Unsatisfactory, 1: Very Poor• The above questionnaire includes customers of TV, Notebook and Monitor

27

Chapter 3 To Earth, with L.O.V.E.

Special Report – Providing for the Future

Special Report – Leading the Push for a Low Carbon Society

3.1 Green Living

Red-Meat-Free Mondays, 26-Degree Energy Saving Campaign and Smart Lighting, Reduce Carbon Footprint by Powering Off After Work, Green Map, Volunteer for tree planting and mountain cleanup activities


Climate Change Risks and Opportunities, Environmental Material Flow, Energy Management, Water Resources ManagementEnvironmental Impact Reduction


Low Carbon Green Product Management, Low Carbon Green Product Management Framework, Low Carbon Green Product Design, Low Carbon Value Chain


Green Promotion, Biodiversity Enhancement


Report

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In the environmental dimension, the ideal of "To Earth, with L.O.V.E." and an Earth-centric perspective has been adopted in support of a sustainable Earth. CMI is actively working to realize green living, green operations, a green supply chain, and green environment. From green living for employees to green operations, we are exerting all of our corporate influence to promote environmental sustainability issues.

29Volunteering for the "Tainan County Bureau of Environmental Protection Autumn Beach Clean-

Up" at Shuangchun Beach in Tainan

Coastal environmental education and beach clean-up milestones

Special Report

Providing for the FutureTaiwan has around 1600km of coastline, but the beautiful beaches are gradually being polluted by rubbish. To restore the beaches to their pristine state, fulfill CMI's commitment to protect the ocean, and promote coastal environmental education, employees and their families are encouraged to volunteer for beach clean-ups every year. Between 2009 and 2012, 4,300 employees and their families braved the hot sun and took part in 7 beach clean-up efforts. Beach clean-ups have now become an important annual family event for employees that care about the ocean environment! Together with their families, CMI employees filled bag after bag with rubbish by the sweat of their brows. Each bag was also filled with their sincerity and passion. Through their efforts, they showed their families (especially their children) the importance of looking after the land. Even more importantly, it helped preserve a precious asset for the next generation. This epitomized the spirit of environmental education at CMI.

September

September Volunteered for the "International Beach Clean Up Day in Taiwan" along the northern levee of the Black-faced Spoonbill Conservation Area in Cigu, Tainan, Tainan, no. of volunteers:43

Volunteered for the "Tainan County Bureau of Environmental Protection Autumn Beach Clean-Up" at Shuangchun beach in Tainan, no. of volunteers:500

April

September

Volunteered for "Clean Coast" event – south bank of the Yanshui River Mouth, no. of volunteers:120

Volunteered for "Heart of the Beach" – Shuangchun beach clean-up at Beimen, Tainan, no. of volunteers:50

April

June

September

Organized the "CMI Loves the Planet – Beach Clean Up Let's Go!" event at the Lung Fung Fishing Port in Jhunan and the Golden Beach in Tainan, no. of volunteers:2000

Organized the "CMI Loves the Planet – Beach Clean Up Let's Go!" event at the Lung Fung Fishing Port in Jhunan and the Golden Beach in Tainan, no. of volunteers:2000

Volunteered for the "International Beach Clean Up Day Taiwan" at Yuguang Bridge in Anping, Tainan, no. of volunteers:20


Report

30

2009『清親海岸、美麗再現』~鹽水溪

出海口淨灘心情留言一!

2011 "International Beach Clean Up Day" – CMI volunteers head towards Yuguang Bridge in Anping, Tainan

!2011 "CHIMEI Loves the Planet – Beach Clean Up Let's Go!” Grand alliance of the north and south at the Lung Fung Fishing Port in Jhunan.

2011 Ningbo fab employees prepare to start the "CHIMEI Yangshashan" beach clean up

2009 "Clean Coast" event – Clean-up volunteers dropped a line about the event at the Yanshui River Mouth

Aglimpse of activities

31

Leading the Push for a Low Carbon SocietyCMI has long promoted a low carbon society and low-carbon green products. We have also backed our words with action. In response to climate change, CMI has developed a blueprint for short, medium, and long-term carbon management. From carbon disclosure, product carbon footprints, to carbon neutrality, we are working to realize low carbon ideals. We have also continued to refine our efforts in every area such as green materials, green operations, product design, low carbon supply chain, and logistics. A list of our efforts from previous years is provided below:

Initiatives on Low Carbon Society Promotion

2011 The world's first 3D "carbon neutral" LCD TV recognized by the EPA

2011 First panel maker to win the Enterprise Green Procurement Performance Award for three consecutive years

2010First panel maker to receive the "Outstanding Energy Conservation Enterprise Award"; also won the "Outstanding Energy Conservation Award" for three consecutive years

2010 First panel maker to receive the "Energy Conservation and Carbon Reduction Action Mark"

2010 Fulfilled the reduction targets in the "Whole Fluoride PFCs Emission Reduction Cooperation Memorandum"

2010First panel maker to receive the “EPA Outstanding Management of Waste and Resource Recovery Award " for three consecutive years

2009 First "Carbon Footprint" verification for LCD panel and LCD monitor

2009 Among the first group of enterprises in Taiwan to receive the TEEMA carbon footprint label certification

2009First panel maker to receive the "Annual Enterprises Environmental Protection Award"; also received the "Enterprises Environmental Protection Award" for three consecutive years

2009 Recognized as "Outstanding Enterprise in Voluntary Industry GHG Reduction" for three consecutive years

2009The first "Diamond Green Building Mark" awarded for a large sports & recreation center (CMI Tree Valley Recreation Center)

2007As the chairman of the TTLA industrial safety and environmental protection committee, CMI supported the "Whole Fluoride PFCs Emission Reduction Cooperation Memorandum" of the EPA and committed itself to meeting the reduction targets.

CMI Carbon Management Blueprint

Product carbon footprint and carbon neutrality: CMI embraced carbon disclosure in 2007 and began the product carbon footprint inventory in 2009. CMI became the first to complete PAS 2050 "Carbon Footprint" verification for an LCD panel and LCD monitor. TEEMA also included CMI in its first group of enterprises to receive the carbon footprint label. Apart from completing carbon footprint verifications for 18.5" and 42" LCD panels in 2010, CMI also collaborated with our customers to complete carbon footprint verifications of 19" LCD monitors and 42" LCD TVs. We therefore remain the leader in product carbon footprint verification.

Special Report

Carbon disclosure

GHG inventory

Product Lifecycle inventory in supply chain

Carbon neutrality

GHG emission reduction

Short term goals

Medium term goals

Product carbon footprint

Long term goals


Report

32

CMI and CHIMEI were honored by the EPA for releasing the first "carbon neutral" 3D LCD TV

In 2010, CMI led the way in supporting the "Carbon Neutrality" concept and energy-conservation/carbon reduction efforts of the "Sustainable Energy Policy Guidelines" issued by the EPA. We not only became the first panel maker to receive the "Energy Conservation and Carbon Reduction Action Mark" but also began actively collaborating with the EPA on the "Carbon Neutrality Pilot Project". With the support of the EPA and Foundation of Taiwan Industry Service (FTIS), CMI commenced the carbon neutrality verification of electronic products in accordance with the PAS 2060:2010 "Specification for the Demonstration of Carbon Neutrality" in 2010. The second phase carbon footprint reduction initiative was launched on January 1st, 2011.

Among the first group of enterprises in Taiwan to receive the TEEMA carbon footprint label certification

Carbon neutralization was attained through the purchase of Voluntary Carbon Standard verified carbon credit of Hsikou Hydro Power Project from Chia-Nan Corporation Ltd as offset. In December 2011, the carbon neutrality declaration of the CHIMEI 42" LED-backlit multimedia LCD monitor product was successfully verified.

To date, many entities in Taiwan have claimed to have achieved carbon neutrality in their organization, facilities or activities but there was no actual standard or way to verify their claims. The EPA has therefore begun establishing the supporting measures. In April, 2011, CMI was invited to serve as one of the seven consulting experts/units on "Supporting measures for the promotion of carbon neutrality" by the EPA. The EPA hoped that CMI's experiences and recommendations on the execution of carbon neutrality would help accelerate the push for a low carbon society and contribute to the creation of a national carbon neutrality scheme. The EPA published the "Carbon Neutrality Implementation and Declaration Guide" in July, 2011, providing units willing to engage in carbon neutrality and carbon reduction improvements with a more comprehensive guide to their implementation.

At CMI, our goal is to realize energy conservation and carbon reduction improvements in living, operations and supply chain. We will gradually reduce our carbon footprint and head toward a zero carbon enterprise! CMI also calls upon the business community to join us in becoming quality green enterprises and for consumers to give their support to green enterprises and products to accelerate the realization of “Taiwan as a low carbon society”.

Figure. CMI Carbon Management History

Low-Carbon Society

ISO 14064 GHG Inventory

Carbon Neutrality Plan (PAS 2060)

Expand NB/TV/MNT/MP product carbon footprint

Product carbon footprint verification (PAS 2050)

Environmental product declaration (EPD)

Eco-Profile (EuP Directive)

33

3.1 Green Living

CMI actively promotes the values of LOHAS and embraces the Green Living concept in employees' living spaces. In support of the "Exercise for a Healthy, Low-carbon and LOHAS Life" movement promoted by the Taiwan Business Council for Sustainable Development, CMI has instituted "Red-meat-free Monday", "Reduce Carbon Footprint by Powering off After Work" and "26-Degree Energy Saving Campaign" within the company to encourage employees to save energy and reduce carbon emissions. CMI also volunteers for external beach clean-up and tree planting activities to build up employee consensus, support for environmental protection, and promote environmental education.

!

"Red-meat-free Monday" poster for the fabs

"Red-Meat-Free Monday" is HereResearch indicates that producing 1kg of beef results in 36.4kg of CO2. Meat eaters therefore generate 1,500kg of carbon dioxide each year from their diet. Each person that refrains from eating meat for one day will then reduce CO2 emissions by 7kg. On January 10, 2011, the Taiwan fabs introduced "Red-meat-free Monday". Combined with fresh, pesticide-free, organic vegetables from organic farms, CMI employees can therefore enjoy health, reduce carbon emissions, and embrace green living through what they eat. By the end of December, 2011, the initiative has helped reduce carbon emissions by 208,606kg.

26-Degree Energy Saving Campaign and Smart LightingCMI mobilized all employees to introduce energy-saving to office areas. By "26-Degree Energy Saving Campaign" and "Smart Lighting", al l thermostats and regional air -conditioning systems were registered and set to 26℃ (special areas were recorded in a separate register). Air-conditioning rules were also set for office areas including turning-off the air-conditioning conduits at night, intermittent operation during daytime, startup screen advertisements and regular inspections. The names of departments and managers of nonconformance office will be bulletined. These small changes produced great energy saving and helped Taiwan fabs reduce energy costs by approximately NT$1,717,019 a year.

First stage of " 26-Degree Energy Saving Campaign" advertisements

"You can make a small difference each day. Every little decision you make in life can make slogans something more than empty words"

– Jane Goodall


Report

34

!Completed improvements:

!

Green IT –Energy efficiency enhancement of server roomIn 2011 the Innolux Education Foundation provided NT$2 Million in research funding towards MIS server room upgrades:(1) The heat and cooling conduits of the Fab T1 server room at JNSP were upgraded to reduce the demand for air-conditioning and improve cooling efficiency; (2) External air was pumped into the Fab T1 server room at JNSP to reduce the need for air-conditioning; (3) The heat and cooling conduits of the Fab 7 server room at STSP were upgraded to reduce the demand for air-conditioning and improve cooling efficiency. The above measures reduced electricity costs by approximately NT$1 Million a year, the equivalent of 287,000 kg in CO2 emissions.

Before improvement: After improvement:

Green IT – Reduce Carbon Footprint by Powering Off After Work2011 statistics found that a high proportion of computers in Taiwan fabs were not turned off at night. The "Reduce Carbon Footprint by Powering off after Work" program was launched to encourage employees to save energy by turning off their machines. Together with regular reports on the nonconformity in each fab, gradual improvements were made. Completion of phase 1: Turning off 900 computers for 13 hours after work reduced electricity costs by approximately $320,000 a year, the equivalent of 95,000kg in CO2 emissions.

35

!Green Map at Fab T1, JNSP

Volunteering for the "One Tree per Person, Yes, I can do it" event in support of the 2011 International Year of Forests

Jiufengshan Clean-up in Ningbo, ChinaIn April, 2011, the Ningbo fab, the Ningbo Free Trade Zone Environmental Protection Bureau, and the Jiufengshan Administration Bureau in China organized the Jiufengshan clean-up in support of Earth Day. Over 200 employees took part in the mountain clean-up to promote environmental education, build up rapport with the local community and help the natural environment

CMI taking part in the Jiufengshan cleanup in Ningbo, 2011

Green Map on Campus: Creating a New Venue for Environmental EducationThe green map is not like any other factory map. Through inter-department cooperation including facility management and general administrat ion, environmental p ioneers across the company together brainstormed and made the wind-powered LED street lights, solar panels, Regenerative Thermal Oxidizer (RTO) & Thermal Oxidizer (TO), rainwater recycling plant, flower beds, solar street lights, recreation center, garden paths and old trees onto a lively green map. The green map helped employees learn more about their living environment and become environmentally-friendly citizens. Energy-saving facilities and monitoring projects were also set up with schools and research units to make the site a venue for environmental education to help students learn more about environmental protection and energy-saving facilities.

Partnership with United Nations International Year of Forests—Tree planting activity in TaiwanCMI launched the 12 -year Huisun Forest Reforestation Project at the National Chung Hsing University in 2008. The project included the bui lding of a debris f low monitoring center and the planting of 6,000 tree saplings. Once the forest matures, it will reduce CO2 emissions by 4.26 million kilograms, equivalent to the amount of CO2 absorbed by 11.5 Da-an Forest Park in one year.

In November, 2011, CMI took part in the "One Tree per Person, Yes, I can do it" tree-planting event proposed by the Taiwan Business Council for Sustainable Development in support of the "2011 International Year of Forests" declared by the United Nations. The poor weather failed to dampen the employees' enthusiasm and every person planted a tree to do their part greening the environment and caring for the planet.


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Recognition for Environmental ProtectionCMI strives to realize the values of "energy-saving, carbon reduction, greening and circulation" espoused by CEO Tuan. Significant investments are therefore made in green design, clean production, carbon reduction, energy-saving, as well as pollution prevention and industrial waste reduction. CMI has embraced environmental, safety, and health management systems. All Fabs in Taiwan and China have now achieved ISO 14001 certification. CMI's active efforts in developing and introducing improvements have been recognized with environmental protection awards from the competent agencies.

"Enterprise Green Procurement Performance Award" from the EPA

The JNSP site received the Low-Carbon Enterprise Performance Award, Outstanding Energy Conservation Enterprise Award and Outstanding Water Conservation Enterprise Award

The STSP site received the "Energy Conservation and Carbon Reduction Action Mark"

2011Effect

•GHG emission intensity per unit area decreases 5% compared to 2010’s.

•Electricity consumption per unit area in TFT-LCD manufacturing end increases 5.5% compared to 2010’s.

•Water consumption per unit area in TFT-LCD manufacturing end decreases 8.7% compared to 2010’s.

•Waste to resources average ratio in Taiwan and China sites : 91.5%

•Recycled water rate in Fab 5: more than 90%

37

Winner of the EPA Green Procurement Award for 3 Consecutive Years CMI actively participated in the enterprise and organizational green procurement program promoted by the EPA to exert a positive corporate influence. Priority was given to certified green products or those are made from reused, recyclable, low-pollution, energy-saving or water-saving materials during procurement. CMI's total green procurement in 2011 amounted to NTD 49.5 Million and was presented with a "Green Procurement" certificate of appreciation by the EPA.

Environmental Awards in 2011Award Name Organizer Fab Award Date

Energy Conservation and Carbon Reduction Action Mark

EPA STSP Fab 7 2011.02

Enterprise Green Procurement Performance Award

EPA STSP Site 2011.09

Low-Carbon Enterprise Performance Award

SIPA JNSP T2 2011.12

Energy Conservation Enterprise Performance Award


Water Conservation Enterprise Performance Award


Environment Maintenance Award SIPA JNSP T1, T2 2011.12

Factory Greening Award SIPA JNSP T1, T2, T3 2011.12

Outstanding Environmental Protection Unit

STSP STSP D 2011.10

3.2.1 Climate Change Risks and Opportunities

The greenhouse effect is leading to extreme climate change. CMI is actively managing our climate control risks by participating in the international carbon reduction symposiums of the Taiwan TFT-LCD Industry Association (TTLA). These include the tri-nation environmental technology exchanges of the World LCD Industry Cooperation Committee (WLICC), Energy Star draft proposals, carbon capture technology symposiums, and IDMC Green Technology symposiums. CMI also participates in the legislative efforts of local competent agencies including the preliminary carbon credit exchange project, draft of GHG reduction act, and energy tax act in order to stay up to date on the latest changes.

Climate Change Risk Management CommitteeA "Carbon Management Working Group" has been set up under the CSR Committee to consolidate CMI Fab resources and oversee low-carbon promotion activities. From design, construction (energy-saving buildings/equipment), energy-saving manufacturing, and supply chain management through to overall risk assessment and strategy including laws & regulations, risk identification, carbon management strategy and investment plan, review mechanism, stakeholders, customer feedback and training, the working group helps to refine the CMI carbon management framework and improve our ability to manage climate change risks.

Annual Review of Carbon Risks through Carbon Disclosure ProjectCMI discloses its carbon management strategy and accomplishments each year through the Carbon Disclosure Project (CDP). CDP was launched by major international institutional investors in 2003 and every year thousands of large enterprises are invited to provide disclosure on their climate change risks/opportunities and GHG emission data. In 2011, the number of supporting institutional investors increased to 551 with total assets under management of US$71 Trillion. CMI achieved a solid score in carbon disclosure in 2011 and was ranked 3rd among Taiwan enterprises. CMI will continue to evaluate our carbon risks and promote carbon management initiatives in order to win the approval of more institutional investors.


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3.2.1.1 Greenhouse Gas Reduction Management

GHG Inventory to Identify Reduction Targets and OpportunitiesCMI has now completed the 2011 GHG inventory and international verification process for 2011. Third-party external verification of GHGs completed in May, 2012, in accordance with ISO 14064-1 standards. The inventory has been taken in each of the seven years since 2005 with annual reduction targets set. GHGs are divided into three areas. Scope 1 (Direct GHG emissions) and Scope 2 (Indirect GHG emissions from energy) are inventoried qualitatively and quantitatively while Scope 3 (Other indirect GHG emissions) are only inventoried qualitatively.

1. Taiwan: JNSP Site (T1/T2/T3/Pingzhen) and STSP site (Fab 1 ~ Fab 8, LCDU, TSOC, Touch Control), Tree Valley Recreation Center

2. China: Fab Longhua, Fab Nanjing, Fab Shanghai, Fab Ningbo, Fab Nanhai

Significant Reduction in GHG Emissions IntensityWhile the area of glass fed into the TFT-LCD front-end process increased by 8% between 2010 and 2011, GHG emissions only increased slightly by 3%. GHG emissions per unit area in 2011 also amounted to 0.057 tons of CO2e/m2, a decrease of 5% compared to 2010.

GHG Emissions per Unit Areaton CO2e/m

2

EPA Voluntary Reduction Targets MetC M I a n d T T L A s u p p o r t t h e " P F C s E m i s s i o n Reduction Cooperation Memorandum" proposed by the EPA. CMI had previously realized the target of reduc ing FCs emiss ions to 0 .0335 tons of CO2e per square meter of substrate by 2010. CMI outperformed the target as its emissions amounted to 0.0094 tons of CO2e per square meter in 2010 and a MOU will be signed with the EPA for phase 2 of the voluntary reductions.

Result of 2011 GHG emissions inventory

Scope 2 Scope 1

Indirect GHG emissions from energy 87%3.209 million tons of CO2e (purchased electricity and steam)

FCs emissions0.421 million tons of CO2e (emission from manufacturing process gas like SF6, NF3)

Other non-FCs emissions0.061 million tons of CO2e

Site

Scope

GHG Emissions million tons of CO2e

Total

Taiwan ChinaScope 1

Direct GHG emissionsScope 2

Indirect GHG emissions from energy

Scope 2Indirect GHG

emissions from energy

Scope 1Direct GHG emissions

million tons of CO2e

Direction of manufacturing process emissions reduction in

2012

Manufacturing process gas reduction

SF6&NF3 reductionReplacement of

manufacturing process gas

Replace SF6 with NF3

Manufacturing process gas recycling

Recycle SF6

Installation of removal equipment

Install or replace with burn-type local scrubber

39

Notes:1. *1 : STSP Site (Fab1 ~ Fab8, Touch Control) and JNSP site (Fab T1 ~ T3, Pingzhen)2. *2 : Longhua, Ningbo, Nanhai, Nanjing and Shanghai sites in China. 3. *3 : STSP Site (Fab 1 ~ Fab 8), Taiwan.4. *4 : STSP Site (Fab 1 ~ Fab 8, LCDU, TSOC, Touch Control) and JNSP Site (T1 ~ T3, Pingzhen) in Taiwan; Longhua, Ningbo, Nanhai, Nanjing and Shanghai Fabs in China. 5. *5 : STSP site (Fab 1 ~Fab 8) and JNSP Site (Fab T1 ~ T3). 6. *6 : STSP Site (Fab 1 ~ Fab 8, LCDU, TSOC,) and JNSP Site (T1 ~ T3, Pingzhen) in Taiwan; Longhua, Ningbo, Nanhai, Nanjing and Shanghai sites in China. 7. Energy conversion: Diesel calorific value: 8,400 Kcal/L in Taiwan (Energy Statistics Handbook published by the MOEA Bureau of Energy in 2010); 10,200 Kcal/kg in China (China Energy Statistical Yearbook 2009) Electricity calorific value: 1 kwh = 3,600,000 J8. GHG is the total of Scope 1 (direct GHG emissions) and Scope 2 (indirect GHG emissions from energy). 9. For volatile organic compounds (VOCs), Sulfur oxides (SOx) and Nitrogen oxides (NOx), the measured values were converted into emission intensity (kg/m2) then the total emissions were calculated using the actual panel area. Emission intensity (kg/m ) = Stack emission (kg/hr) * 24 hr/day/panel area (m2/day) Emission (ton/yr) = Emission intensity (jkg/m2) * panel area (m2/yr)/ 1000 kg/ton10. Chemical oxygen demand (COD), biological oxygen demand (BOD) and suspended solids (SS) were all derived from actual measurements11. Sites in environmental material flow were classified according to their use/disposal or non-use/disposal of a substance. 12. Waste-to-Resource Ratio: This is defined as the ratio of total disposal amount to the recycled + reused + physical disposal. Treatment methods are defined by the Directions for Waste Recycling, Cleanup and Disposal.

3.2.2 Environmental Material Flow

Customer

Production

Raw Material Purchasing

R&DMajor Materials

Glass substrate

Liquid crystal

Steel

Plastics

5273

17,4463,555

Million M2

ton

ton

ton

Developer

Photoresist

Stripper

Al Etchant

16,0005,00016,00013,000

ton

ton

ton

ton

Air Pollution Emission

Effluent

Wastewater

COD

BOD

SS

19.371,100

30400

Million ton

ton

ton

ton

Waste Disposal

Waste-to-Resource Ratio

Panel Output

Million pcs (Annual Report)TFT-LCD 411.09

Total Waste Generation111,8559,442

91.5

ton

ton

Recycling and Reuse

Stripper Recycling Rate

270,000

%

%

M3

Million M3

Energy Consumption

Diesel MJ

MJElectricity 1.76x1010

2.6x108

Water Consumption

Tap Water 26.1 Million M3

Inputs CMI Output

7856

GHG

VOC

SOx

NOx

ODS

156.6

11.80.273

3.691 Million Ton

ton

ton

ton

ton

%

*1

*1

*1

*6

*1*2

*1

*1

*1

*6

*6

*1

*4

*1

*1*2

*4

*4

*5

*1*2

*1

*1

*1

*5

*3

*1

*2

*2

ProductionTransportation

and Sales

Major Process Materials

N-Methyl-2-Pyrrolidone Recycling RateRainwater RecyclingVolumeReclamation System Recycling Rate 55.69

Final Disposal (Landfill & Incineration)


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40

3.2.3 Energy Management Dynamic Platform for Improving EfficiencyThe Taiwan sites established the "Dynamic Energy /Water Conservation Committee" in 2009 while the Chinese Longhua sites also participate in Foxconn Group to establish an "Energy saving and Carbon Reduction Promotion and Operation Committee" to more effectively promote energy saving policies. CMI teamed up with professional consultants and technical teams to develop new energy saving technologies, enhance equipment efficiency, and rationalize energy consumption and supply specifications. The efforts were supplemented by energy saving policy training and a comprehensive incentive scheme to encourage employees to submit energy saving proposals. Annual energy saving and carbon reduction targets were set for each site and energy saving audits were introduced to reduce waste.

In 2011, the dynamic platform not only used trend analysis to rigorously manage energy efficiency but also focused on the promotion and expansion of energy saving projects. Initiatives such as the rationalization of FFU coverage rate and wind speeds in the clean room delivered savings of 9 Million KWH.

Energy Conservation Measures in 2011Site Energy Conservation Measure

Taiwan

Jhunan Site

Addition of inverter to chiller pump

Energy saving for clean room lighting

MAU Coil 1 switched to 12-degree chilled water

STSP Site

CDA system pressure and equipment CDA reduced

Rationalization of humidity specifications and optimization of chiller operations

Horizontal expansion of FFU coverage and wind speed rationalization

China

Fab Longhua

Reduced number of fluorescent lighting in clean room

Regenerative heating of dryers switched to off-peak period at night

CDA pressure reduced for production machinery

Fab Nanjing 1,000 T8 lamps replaced by T5 lamps to reduce power consumption

Energy-intensive mining lamps in the warehouse changed to LED energy-saving lighting to reduce power consumption

Fab Shanghai

Optimized chiller operations

PCW pump changed from 110KW to 3.5KW

Energy-saving compressor

Fab Nanhai Equipment set to hibernate after 4 hours of idle time

Progressive improvements to touch panel hibernation time

Hosting of Industry-Government-University Exchanges on Energy Saving CMI has now been recognized with the "Outstanding Energy saving Enterprise Award" after winning the "Outstanding Energy saving Award" for three consecutive years and is the only panel maker to receive this award. The award was won by Fab 5 in 2008, Fab 7 in 2009 and Fab 6 in 2010. CMI was therefore chosen to host an energy-saving demonstration to share our general air-conditioning/lighting energy saving, rainwater recovery and outstanding energy saving projects with the rest of the industry.

Energy saving demonstration

41

Energy-Saving Achievements by TFT-LCD Manufacturing in 2011The "power consumption per square meter of substrate" at TFT-LCD Fabs in Taiwan increased from 77.6KWH/m2 in 2010 to 81.9KWH/m2 in 2011, an increase of 5.5%. It was due to global financial crisis as well as the commissioning of the 8.5th generation Fab in 2011 and moreover, the production capacity and utilization did not reach the targets. In the future, we will strengthen the energy conservation management scheme and awareness program with the introduction of further energy-saving measures and new technologies.

Solar Power SystemThe Taiwan s ites have introduced solar power systems connected to the grid to convert absorbed light into electrical energy. The systems provide clean energy for internal use while also decreasing the amount of CO2, NOx, SOx and particles produced by conventional power systems. Total power generated in 2011 was 89762.7 KWH so CO2 emissions were reduced by 54.9 ton.

Power consumption per square meter of substrate by TFT-LCD Fabs

!Solar power system at the STSP site

3.2.4 Water Resources Management

In the spirit of sustainable water use, CMI is continuing to evaluate and apply new water conservation technologies that reduce water consumption. All Fabs were built with water-saving production equipment. In addition to source management, monitoring the water consumption of each machine and water-saving improvements, CMI has also set up pure and waste water recycling systems to recover and reuse wastewater from production processes.

CMI made the commitment in 2010 to "Complete single-plant total water recycling system by 2020". STSP Fab 5 was chosen as the pilot plant in 2011 and a joint research project on zero-discharge technology set up with the National Cheng Kung University. Phase 1 of the multi-phase development process focused on improvements to RGB wastewater recovery and recycling technology. The recovery rate exceeded 90% for all production stages in Fab 5 in 2011.

Complete Single-Plant Total Water Recycling System by 2020

!MBR(Membrane Bio-Reactor) system

*The 2010 data for power consumption per square meter of substrate shown in the above graph is different from the figure disclosed last year because the 2010 data was revised after the merger of the three companies in 2011.

KWH/m2 Year

Approaching zero-wastewater discharge technology

RGB wastewater recovery and recycling technology

MBR,ROR wastewater recovery and recycling technology

Regenerated wastewater recovery and recycling technology


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42

Water Conservation Measures at each Fab in 2011Site Water Conservation Measure

Taiwan

JNSP Site

RO concentrated water reflux reuse

Installation of new MBR unit in reclaim system

Addition of organic waste water recovery system for stripper machine

STSP Site

Installation of MBR phase 3 system to increase reclaim water

Installation of MBR reclaim system for wastewater recovery

Rationalization of differences in each machine's input/output

China

Fab Ningbo

Recovery of Fab D condensation, instrumentation discharge and regeneration discharge

Increased the cooling tower concentration ratio at Fab E from 8 to 10

Water pressure adjusted according to water flow to reduce consumption

FabNanjing

Collect water discharge from LCM2 panel laminating machine for flushing toilets to reduce tap water consumption

Installation of water-saving taps at dormitory C4 to regulate and conserve water

FabNanhai

Reuse condensed water of the air compressor

Water-Saving Achievements by TFT-LCD Manufacturing in 2011T F T - L C D F a b s i n Ta i w a n h a v e g r a d u a l l y reduced the "Water consumption per square meter of substrate” through better design and improvements. Water consumption has dropped 8.7% from 0.46 m3/m2 in 2010 to 0.42 m3/m2 in 2011.

Water consumption per square meter of substrate by TFT-LCD Fabs

※The 2010 data for water consumption per square meter of substrate shown in the above graph is different from the figure disclosed last year because the 2010 data was revised after the merger of the three companies in 2011.

Ton/m2

Water Shortage Risk ManagementThe stability of the water supply is a key operational risk item due to the poor water resources conditions and difficulty in water resources development in Taiwan. CMI has a emergency response mechanism in place and upgraded the backup capacity to reduce the impact of water shortages.

Year

Stage 1 Internal water restrictions

Stage 2Inter-Plant Re-allocation

Stage 3 Production Reduction

Introduce water-saving measures when water tank is full (1.5 ~ 2 days)1. Reduce backwashing of all sand filter (incl. air-conditioning) and activated carbon tanks.2. Reduce cooling tower blow down3. Reduce acid/alkaline scrubber blow down4. Stop PCQ blow down5. Increase RO system output6. Reduce UF backwash volume7. Increase RPO system output8. Stop irrigation/watering9. Stop MAU washing etc.

1. Use CMI water quota restriction with response team controlling the allocation of water supplies to each plant2. Activate inter-plant connection scheme3. Coordinate with park administration about water tankers and water purchases.

If water supply to industrial park does not improve, activate BCM mechanism and arrange for reduction in production at selected plants

43

3.2.5 Environmental Impact Reduction

Progress in Source ReductionMachinery optimization and machine-side recovery processes have helped to limit increases in material consumption despite increases in production capacity. Recycling systems for stripper and NMP have also been installed so they can be purified for reuse. The systems not only reduce material consumption but also waste production. The benefits include source reduction, environmental protection and lower costs.

Al etchant consumption per square meter of substrate reduced by 7.4%

Al etchant

Thinner

Year

Year

Year

Thinner consumption per square meter of substrate reduced by 9%

Stripper consumption per square meter of substrate reduced by 6%

Stripper


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First Use of Nitrogen Removal System among the Taiwan Optoelectronics IndustryCMI became the first optoelectronics company in Taiwan to introduce the ammonia removal system by air stripping to effectively reduce the pollution from waste water. The sparging system can effectively and reliably remove 90% of NH4+-N. CMI has filed a utility model patent application for the new system (application currently under review by the Patent Office).

Advantages of the nitrogen removal system1. Reduce total nitrogen concentration in the discharge wastewater and reduce environmental impact. 2. Serve as a backup to biological de-nitrification and ensure the stability of the discharged water quality.

Water Pollution ManagementWastewater from CMI production processes can be divided into fluoride wastewater, organic wastewater and inorganic acidic/alkaline wastewater. These are treated by the fluoride wastewater treatment system, organic wastewater treatment system or the inorganic acid/alkaline wastewater neutralization treatment system respectively. The treated water quality must conform to or surpass the industrial park standards before it is discharged into the industrial park's sewage system. All reactor tanks in the waste water treatment plant are sealed against the external environment and exhaust gases are treated by wet scrubber unit. Reaction tanks are also kept at a slightly negative air pressure. An ozone catalytic odor control system is used for sulfurous substances treatment to prevent the spread of odors from the wastewater treatment plant. To reduce tap water consumption and wastewater treatment loading, organic and inorganic wastewater reclaim systems have been installed. Water contains no chemical compounds is channeled to the inorganic recovery system, filtered, and then recovered by the pure water system. Water contains a low level of organic waste is treated by the organic reclaim system. The treatment units include the biological treatment unit and advanced processing unit (UF → RO → UV +H2O2 or O3+H2O2 → AC → MB etc.) to remove TOC and conductive pollutants. The treated wastewater is then recovered by the pure water system and supplied to the machines for reuse to enhance wastewater reclaim efficiency.

45

Air Pollution ManagementEmissions from CMI production processes can be divided into three types: acidic, alkaline and volatile organics. Acidic and alkaline emissions are treated by wet scrubber while VOCs are treated by rotor concentrators. All CMI emission treatment equipment conforms to the requirements of the "Air Pollution Control and Emission Standards for the Optoelectronic Material and Element Manufacturing Industry" and "Stationary Source of Pollution Air Pollutant Emission Standards". The high-efficiency rotor concentrator system, in particular, uses the rotor concentrator to absorb and concentrate VOCs to a certain level before desorption. Treatment efficiency exceeds regulatory requirements so clean air is emitted into the atmosphere. For special process emissions such as FCs, inflammable and toxic gases, all are channeled into the combustion local scrubbers fitted to the back-end of production machinery and few thermal type local scrubbers in selected areas. The gases undergo special combustion treatment before being neutralized by the central scrubbers to effectively reduce the emissions of pollutants.

Average Waste-to-Resource Ratio of 91.5%CMI spares no effort when it comes to waste reduction and recycling. By using the purchasing process and working with waste disposal companies to develop recovery and reuse technologies, CMI is able to reduce the amount of waste produced. Examples include source reduction (replacing organic solvents with water-based chemicals to reduce the use and disposal of organic solvents), recycling and reusing projects (Waste TMAH recovery, improving stripper recovery efficiency, reuse of Al etchant, EBR reuse) and engineering improvements projects (introduction of organic sludge baking equipment to reduce water content and sludge volume).

Total waste in 2011 amounted to 111,855 metric tons. The average waste-to-resource ratio for Taiwan and China sites was 91.5% while the TFT-LCD Fabs (excluding the LCM module sections) achieved a waste-to-resource ratio of 93.4%. In the future, CMI will continue to promote source-based waste reduction for the production processes as well as the recycling of waste products.

Waste disposal types and proportions, 2011

Physical treatmentIncineration

Landfill

Reuse

Recycle


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46

Continuous increase in packaging recyclingFor upstream suppliers, CMI recycles the packaging and uses the purchasing management to improve the recycling rate. For downstream customers, CMI actively negotiates with customers on the recycling and reuse of trays, hard boxes, P.P. boxes, DSPK boxes and other packaging. We also continue to improve the recycling rate for all kinds of packaging and work with the optoelectronics supply chain to reduce waste.

2011 Packaging Recycling Rate

Packaging Recycling Tray PP Box DSPK Box Hard Box

Recycling Ratio 76.43% 100% 75.7% 79.48%

Recycling and refuse of packing materials at CMI

Customer's factory

CMI factoryStorage and Shipping

DepartmentManufacturing

Department

Recycling of packing materials. Quality inspection prior to warehousing.

Quality inspection prior to use of recycled packing materials in a shipment .

Schematic diagram of recycling processes

Quality screening of recycled materials prior to the loading.

Proactive Management of Significant Environmental Risk IssuesThe EPA has drawn up new discharge standards that regulate the amount of indium, molybdenum, gallium, and TTO. Total nitrogen or NH4+-N content may also be regulated in the future. All of these changes will make a major impact on CMI. We have made substantial discussions with the Allied Association for Science Park Industries, the Hsinchu Science Park Administration, and Environmental Protection Administration on the issue. At the same time, we are conducting related industry-university research and system upgrades such as resin absorption, biological de-nitrification and ammonia removal by air stripping in order to conform to national regulations and policies as well as helping to reduce the impact on the environment.

47

Environmental Protection Expenditure

Environmental Accounting, environmental expense is around 562 million in Taiwan site.CMI has setup an environmental accounting system that is integrated into the CMI requisitioning and accounting system. A separate set of environmental accounts are maintained to manage and identify CMI spending on environmental issues. The accounts also serve to encourage employees to support measures that make source improvements and end treatment benefits. A large number of environmental protection activities and improvements were launched in 2011. Total environmental protection expenditure by Taiwan Fabs in 2011 amounted to $562 Million.

Environmental Accounting Items Description Environmental

Protection Costs

1. Operating Costs

Pollution prevention costs: Air pollution prevention costs, water pollution prevention costs, other pollution prevention costs

562,917,103

Recycling costs: General/hazardous waste recycling/reduction , waste disposal treatment costs, energy conservation c osts

Global environmental protection costs: Greenhouse Effect prevention costs

2. Environmental Management Costs

Environmental training costs, certification fees, environmental deceting and monitoring costs, activity costs, environmental management system costs

3. Environmental Protection R&D Costs

End treatment R&D costs, production process pollution reduction R&D costs, marketing pollution reduction R&D costs

4. Customer and Supplier Relationship Costs

Green purchasing costs, product recycling costs, packing material recycling costs, other customer environmental requirement costs

5. Social Activity Costs Community relations costs, corporate marketing costs, other social activity costs

6. Loss and Compensation Costs Pollution clean-up and restoration costs, pollution compensation and legal costs, other losses and compensation costs

Two cases of violation against environmental regulations in 2011

Incident of wastewater flowing to rainwater pipe owing to Negligence of ConstructionIn March, 2011, the Fab Ningbo in China was fined 30,000 RMB for the incident of "wastewater run-off into rainwater system”. This incident was caused by crush damage to the sewage and rainwater pipes when the road was being tamped down after the construction of the new generator room. The damage to the sewage and rainwater pipes allowed wastewater to flow into the rainwater system. Engineering improvement: The rainwater and wastewater pipes were immediately repaired and a complete inspection of all rainwater and wastewater pipes was undertaken to ensure that all were flowing constantly. Water quality was also checked to make sure they met discharge standards.

The storage of waste organic solvent failed to comply with hazardous waste managementIn December, 2011, the Fab Nanjing in China was fined 60,000 RMB due to 24.1 tonnes of "organic waste solvent in unsheltered storage". The stored liquids had not been properly marked as hazardous substances as required by law either. Improvement: The waste liquid was immediately moved to waste storage area and marked with "hazardous substance labeling". Storage procedures were rigorously enforced and personnel training/management was strengthened.


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$320 Million for Industry-Academia Collaboration on Treatment EquipmentApproximately $320 Million was invested in new air pollution and wastewater treatment equipment or upgrades. CMI also actively worked with the universities to develop the best pollution prevention and waste recycling technologies to effectively reduce the amount of pollution and maintain the environmental quality around our sites. The following table lists only some of the new improvement projects. Energy-saving, water-saving and pollution control improvement projects that are currently in progress are not included.

Industry-Academia Research Project

Project Type Project Name

Air Pollution Improvement

Stack Emission Air Pollutant Monitoring and Minimization Project (Year 2)

Emission Diffusion Modeling Research Program(Year 2)

Wastewater Treatment

TFT-LCD Process Wastewater Nitrogen Pollutant Treatment Technology Development Project (Year 4)

Optoelectronics Industry Wastewater Recycling Project (Year 2)

Indium- Molybdenum-Gallium Wastewater Treatment Optimization

Acute Wastewater and Chronic Biological Toxicity Investigation Projec

Waste Recycling CMI Organic Sludge to Resources Research Project

Installation and Improvement Project of Treatment Equipment (excerpt)

Project Site

Air Pollution Prevention

Modified the acidic emission Scrubber at Fab 4 to a tandem layout STSP Fab D

Addition of cooking smoke purifier to cafeteria Fab Ningbo

Addition of emission system to LCM NB plant Fab Ningbo

Water Pollution Prevention

Installation of air stripping system for wastewater treatment plant STSP Fab E

MBR Phase 3 for wastewater treatment plant STSP Fab E

Introduction of MBR for wastewater treatment plant STSP Fab D

Introduction of wastewater system (including RECLAIM + MBR) STSP Fab C

Refurbishment of wastewater treatment plant Nanhai Fab

49


3.3.1 Low Carbon Green Product Management

Material reduction, energy-saving, toxic-free and recycling for reuse are defined as the core values of low carbon green product design at CMI. The implementation framework is based on encouraging employee participation, creation of smart systems, exploiting the spirit of creativity and continued lean management. The goal is to reduce costs, increase green competitiveness, care about the future of the planet, care about the future of humanity, care about company profits and then fulfill CSR.

CMI Low Carbon Green Product Management Philosophy

3.3.2 Low Carbon Green Product Management Framework

Encouraging employees' green participation and green thinking forms the basis of the framework. The goal is to establish a low carbon corporate culture through lean green management and green innovation. Apart from making "Green Product Management" a part of orientation course, green training is also tailored to employees in different roles and their active engagement is encouraged. The learning and contribution of professional knowledge from different fields help realize lean green management and green product innovation thus enhance green competitiveness.

Adjustment of Green Product Commitment 2010

Product Carbon Footprint (2010 Commitment)Reduction of 35% by 2012. (using FY2009 as a baseline)

Product Energy Consumption (2010 commitment)Reduction of over 40% by 2012. (using FY2009 as a baseline)

The target originally corresponded to the monitor system operations. Due to the change in company organization, the PCM and SA business units in the system division have now been transferred to Foxconn Group. The target is therefore cancelled and the company green product policy adjusted accordingly.

Lean GreenEliminate the seven wastes in lean production;Eliminate the seven wastes in green production;Continue to strengthen lean green management;Improve energy and resource efficiency;Reduce product environmental footprint

Green InnovationDevelop comprehensive environmental footprint data for product lifecycle, encourage employees to identify innovative opportunities for reducing environmental impact, and/or resource utilization in the value chain

Green EngagementEncourage employees to participate and contribute their wisdom on different levels. Teach employees how to think in terms of lifecycles and value chains so they can mine for "gold" in the value chain.

Smart GreenGather and analyze environmental footprint data throughout the product lifecycle. Use informatization and visualization to extract useful information from the massive amounts of varied data to improve product environmental footprint.

Low Carbon Green Product Management Framework

Hum

anity

Earth

CSR

Green Competitiveness

Part

ici

pation Innovation

Toxic-free

MaterialReduction

Energy-Saving

Profit

Cost Reduction

Sm

art Lean


Report

50

CMI launched an aggressive inventory of its "Water Footprint" in July, 2010. Supply chain data was compiled to determine the environmental impact of water resources consumed by products. The information was used in product water footprint risk management, then to prepare against the risk brought by uneven distribution or depletion of water resources around the world due to global warming and climate change. In September, 2010, CMI passed independent verification by Det Norske Veritas (DNV) using the Water Footprint Manual: State of the Art 2009 standards developed by the non-profit international organization Water Footprint Network. A 18.5" LCD monitor panel became the first in the industry to achieve "Water Footprint" verification of its product supply chain. In January, 2011, CMI became the first to achieve "Water Footprint" verification for a 19" desktop LCD monitor and 42" LED TV product.

3.3.3 Low Carbon Green Product Design

Due to the following considerations, CMI has defined the energy-saving, material reduction, and toxic-free as the core design principles for low-carbon green products with the goal of establishing a low carbon value chain. 1. Research data showed that 96% of the materials used in manufacturing consume approximately 20% of the world's energy supply. 2. The ICT industry accounts for 2% of global carbon emissions. 3. Banned/restricted chemical substances prevent products entering the recycling system. This not only makes materials difficult to recycle but also increases their environmental impact.

CMI Water Footprint Verification Framework

Core Principles of Low Carbon Green Product Design at CMI

!

World's First "Water Footprint" Verification for 19" Desktop LCD monitor and 42" LED TV

Low-carbon ProductReduce carbon footprint of

product lifecycle

Material Reduction

Energy Saving

Toxic Free

Redu

cing

pro

duct

foot

prin

t with

eco

-des

ign

Material

Manufacturing

Distribution

Use

Abandonment

Minimizing value chainCO2 emission

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3.3.3.1 Material Saving Design Management

Introduction of Material Flow Cost AccountingMaterial flow analysis is used to inventory the input and output of resources or materials during product activity to make the flow of materials/energy and costs transparent. Trash mining then helps to reduce waste and realize lean green management. The main goals of introducing material flow cost accounting are:

•Resource Dimension: Build a material balance diagram to understand materials flow and look for opportunities to make improvements. •Cost Dimension: Use MFCA analysis to reduce the material, energy, system and waste disposal costs of the product. •Environmental Dimension: Improve resource utilization to reduce input and waste output, reduce GHG emissions, as well as reduce the product carbon and water footprint in order to reduce the environmental impact.

The material flow cost accounting project used the TFT-LCD Fab, molding, cutting and printing factories from the LCM process as the demonstration sites. In 8 months inventory, material balance modeling, positive/negative product analysis and material flow improvements had been done, the project achieved the following results in 2011. The experience will be expanded to other sites in 2012.

•Improved waste recycling rate •Discovered waste with recycling value •Improved material utilization rate •Improved material recycling

Management Concept for CMI Material Flow Cost Accounting

Mc CF-ITO PR MEA PR-R PR-G NF3 PI PR-BMTFT-ITO

QC1 QC5 QC2 QC3 QC4 QC4 QC1 QC6 QC4 QC1

~ Fab 6: Top 10 negative productⅠ

Ⅰ

ⅡⅢ

Ⅳ Ⅳ ⅣⅤ

0%

50%

100%

Quartity Center(QC)

OutputInput

MaterialProduct

Material Loss

MFCAMFCA

Fab6

QC1-Array TF

QC2-Array Photo

QC3-Array EtohQC4-CF Photo

QC5-CF Thin-film

QC6-Cell Process

Input

Material

MFCAboundary

QC1 QC2 QC3

Output

Product

Flow towardfinished product

Flow towardmaterial loss

Material Loss

Waste Flow ControlIndicator: Material Flow DiagramMaterial Flow

Waste Recycling RateIndicator: Material Balance RatioMaterial Balance

Waste CostIndicator: Negative Product CostNegative Product Cost

Waste Reduction ImprovementIndicator: Negative ProductNegative Product


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Material Reduction Design for Product and PackageMaterial design management at CMI focuses on the 3R's (Reduce, Reuse, Recycle) as well as extending product l ifetime and reliability. Based on the carbon footpr int analys is for monitor products between 2009 and 2012 , materials accounted for more than 10% of the carbon footprint. Year 2009 was therefore set as the baseline and a target of 10% reduction in product and packaging materials was set for 2012. Continued green innovation by the design team towards thinner, l ighter and more functional products realized the set target by achieving material reductions of 24.3% in MNT (monitor) products and 31.5% in TV products.

Packaging reduction up to 39.2% in 2011The packaging design team designed new lightweight molded pulp with excellent buffering properties. The new structures could be stacked, use less packing materials, increase the number of pieces per carton and make effective use of container space, resulting in reduction in fuel consumption and carbon emissions. Using 2009 as the baseline, material reductions of up to 39.2% were achieved in packaging materials in 2011.

Material Reduction Design for Product and PackageMaterial reduction target: Reduce 10% of product material and packaging material for new products in 2012 (a 3-year target with base year 2009).

Progress in 2011: The average product material reduction rates for monitor and TV are 24.3% and 31.5%. The average packaging material reduction rate achieved 39.2%. Targets achieved.

Product Material Reduction

TV Product MaterialReduction

TV Product MaterialReduction

Monitor Product MaterialReduction

Monitor Product MaterialReduction

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Examples of "Material Reduction Design" in 2011:

Extensive Use of X+C Architecture Integrated design makes simplified circuitry possible and reduces the amount of PCB material required. With this architecture, the connectors, flexible flat cable (FFC), timing control ler IC (TCON) and DC/DC power converter circuit required by the separated architecture of the original X/C Board are no longer necessary.

Extensive use of the single-side driverExtensive use of the single-side driver design in High Frame Rate products reduces the number of Gate IC required while meeting market specifications.

V-cut Backlight Module (BLU)B r i g h t n e s s i n c r e a s e s b y 1 8 0 % , p o w e r c o n s u m p t i o n r e d u c e s b y 5 5 . 5 6 % , a n d thickness reduces by 210 um compare to the original structure.

Introduction of No Back Bezel DesignThe no back bezel design was introduced for notebook products in 2010. The same design was introduced to the BLU of handheld products in 2011. The LGP is now supported by a plastic frame in the back cover and no bezel cover is required in the BLU module.

Enhancement in the Packaging of Open CellS i m p l i f i e d p a c k a g i n g m a t e r i a l s a n d procedure leads to savings in working time. The Hard Box (external carton) improves d u r a b i l i t y f o r r e u s e , g r e a t l y r e d u c e s amount of packaging waste, improves container loading capacity by 188.8% (TV 31.5" Open Cell 5040 pcs → 14560 pcs / 40' HQ) and reduces carbon emissions during transportation.

X+C architectureOriginal architecture with separate X/C

Original Double Driver Design Single Driver Design

Difference in thickness210um

Brightness 100% Brightness 180%

Package Design Comparison


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Low Power MonitorThe less-efficient LDO (Low Dropout Regulator) IC was replaced with more efficient Buck IC (DC/DC Switching Regulator) IC in the power IC. Data IC was also changed to column inversion to achieve a 74% reduction in module power consumption.

Thin BLU and Energy-Saving DesignLight Guide Plate (LGP) has become increasingly thinner. 3mm and 2mm LGPs are now used so less PMMA material is required. LED Light Bar has also evolved from dual edge lit to single edge and corner lit as well. 100% PMMA injection-molded LGP has been used to replace printed LGP technology, reducing the amount of ink and solvents required during production while providing 100% recycling. Injection-molded LGP was introduced for monitor mass production in 2010 and it now accounts for up to 17.0% of all monitorT products.

Energy Saving DesignEnergy saving target: TFT-LCD monitor module--40% & TFT-LCD TV module--50% in 2012 new products (base year 2009).P r o g r e s s i n 2 0 1 1 : T F T - L C D m o n i t o r m o d u l e — 3 3 . 7 % w h i c h i s c l o s e t o

3.3.3.2 Energy Saving Design Management

Energy-saving design management at CMI focuses mainly on introducing low-power components and optimizing energy-saving design to improve the product's energy efficiency and power consumption. Analysis of carbon footprint data for monitor products between 2009 and 2011 showed that utilitzation phase contributed more than 60% of the carbon footprint and was the main source of the product's carbon footprint.

Year 2009 was therefore set as a baseline and a target of 40% and 50% energy savings in TFT-LCD monitor modules and TV modules set for new products developed in 2012. The design team is working to realize the energy-saving targets for new products in 2012 through continued green innovation. The energy-saving performance for TFT-LCD monitor modules was 33.7% and approaches the target of 40%; TFT-LCD TV modules' performance of 50.5% has already met the set target.

Examples of "Energy Saving Design" in 2011:

t a r g e t & T F T - L C D T V module—50.5% which o u t p e r f o r m e d t h e target.

Original Column Inversion Design

Extensive Use of Column Inversion and HAVDD DesignChanging the Data IC design to Column Invers ion and HAVDD great ly reduces power consumption and realizes OP Charge Re-Use, leading to energy-savings.

Extensive Use of Column Inversion and HAVDD Design

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3.3.3.3 Toxic-free Design Management

Expansion of Restricted Substance ControlsCMI has implemented controls for restricted chemicals based on national environmental directives, industry standards and customer requirements. All products, parts and materials are rigorously managed in accordance with the "CMI Restricted Substances Management Standard". Suppliers are also required to follow the same standard as well. Changes in the scope of restricted substance controls after materials have been used may impact their recycling. CMI has therefore voluntarily expanded the restricted substance controls in the "CMI Restricted Substances Management Standard".

Inventory Management of Hazardous Substances and "Conflict Minerals"A complete inventory of hazardous substance usage (VOC, Sb, Bisphenol A) in the supply chain was conducted in 2011. Monitoring was then introduced for parts and materials identified as being at high risk of containing VOCs. Screening of high-risk part suppliers for "conflict minerals" was also carried out to check the usage of rare metals such as Cassiterite, Wolframite, Coltan and Gold produced from the Congo and nearby countries in Africa. Suppliers were also specifically banned from the use of conflict minerals in the "CMI Restricted Substances Management Standard".

Voluntary Expansion of Halogen-Free Module ProductsThe management of restricted substances from suppliers is primarily based on the development of alternative materials and restricted substance minimization. As part of the alternative materials approach, arsenic-free glass was introduced in 2010 and all glass is now arsenic-free as of 2011. For restricted substance management, CMI began voluntarily introducing the halogen-free standard for new module products in 2010 and expanded the requirement to all new products in 2011. All monitor modules are now halogen-free as of February 2011 and all notebook modules became halogen-free in 2011. CMI now plans to aggressively introduce the halogen-free requirement for new TV products in 2012.

Z-inversion SchemeThe original 2-line inversion required up to 384 inversions per frame. The Z-inversion scheme requires only one inversion per frame for different pixel arrangements. The number of Data Output inversions is greatly reduced so energy consumption is lowered by more than 25% as well.

Introduction of LED BLU for Medical Modules LED is to be used instead of CCFL for modules in medical applications. It could retain the h igh br ightness and long l i fet ime whi le improving contrast and response rate. Taking the 21 .3" module as an example, power consumption can be reduced by 50% and thickness by 42%. The new design will be introduced for all medical modules in 2012.

In 2011, all glass is arsenic-free; all notebook and monitor modules are mercury-free and halogen-free.

Quick Response Time

Low Power ConsumptionMercury-free Thin High Power


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Mercury-free ManagementIn mercury-free management, new product development and design began introducing LED to replace CCFL containing mercury in 2010. All notebook modules became mercury-free in 2011 and monitor modules began the switchover in July 2011. All new products were required to be mercury-free by the end of 2011.

International Certification of Green Product Management SystemA cost-saving process was introduced to provide the documentation required for compliance with international hazardous substance directives and customer requirements. The process was integrated with the existing quality control system to ensure that all departments and units within the organization are involved in restricting the use of hazardous substances. The QC080000 management system was firstly introduced in 2008. Apart from annual audits by an independent international certification entity, CMI is also continuing to apply for QC080000 certification for new fabs. Using the management system, CMI lowers the internal and supply chain management risks. This not only helps reduce the environmental impact of products but also ensure that CMI fulfills our commitment to being green and

customer satisfaction.

3.3.4 Low Carbon Value Chain

Supplier GHG Emissions InventorySmall-scale trials of supplier GHG emissions inventory were launched in 2009. GHG emissions and product carbon footprint education for suppliers was commenced in 2010. Suppliers were required to inventory their own GHG emissions. In 2011, the GHG Inventory Management Plan was activated, requiring key suppliers to complete ISO 14064-1 verification or disclose their GHG emissions. A total of 49 suppliers completed third-party verification or public disclosure in phase 1. More suppliers will be included in 2012.

Supply Chain Management Strategy Extended to Emissions AllocationCMI is now expanding our supply chain management strategy to emissions allocations based on past annual inventories and verifications. In accordance with the supply chain disclosure model of the Carbon Disclosure Project, suppliers have been asked to fill out forms about CMI's component emissions. By establishing the supplier GHG emissions baseline in each category, it helps promote a low carbon supply chain to reduce products' carbon footprints so as to build a low carbon value chain.

CMI Supplier GHG Emissions Management Plan

Organizational GHG emissions

Phase 1 Phase2 Phase3 Phase 4

•CMI GHG emissions disclosure

•Supplier GHG emissions disclosure

Allocating emissions to customer Unit emissions

•CMI calculates and allocates customer contributed emissions

•Supplier calculates and allocates CMI contributed emissions

•Calculate the GHG emissions allocated to customer products

•Supplier calculates the GHG emissions allocated to CMI products

Define reduction targets

•Define emissions reduction targets for organization and unit products

•Supplier defines emissions reduction targets for organization and unit products

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Promoting Environmental Care

3.4.1 Green Promotion

"Huisun Forest Farm 12-Year Reforestation" ProjectTo promote reforestation and water resource protection, CMI and the Innolux Education Foundation partnered with the National Chung Hsing University (NCHU) to launch the 12-year Huisun Forest Reforestation Project in 2008. Phase 1 consisted of planting 6,000 trees in the debris flow area of the forest farm's coffee plantation. Once the forest matures, it will absorb 4.26 million tonnes of CO2, the equivalent of what 11.5 Da-an Forest Parks absorbs in one year. In phase 2, CMI will partner with the Department of Soil and Water Conservation of NCHU and Experimental Forest to set up debris flow monitoring station and a disaster education park. Sand barriers will be built as part of the soil & water conservation strategy and debris flow monitoring station set up. A long-term data collection effort on debris flow will also be carried out. The entire process will be recorded and filmed to produce a complete set of teaching materials for soil and water conservation.

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Figure. Forest Story: Documentary on Debris Flow Prevention at Huisun Forest Farm

"Documentary on Debris Flow Prevention at Huisun Forest" - Forest StoryThe documentary produced in partnership with Public Television Service (PTS) provides a visual record of man's interaction with the environment during the reforestation project at the debris flow area in Huisun Forest Farm. The documentary showed the bonds between man and land: The link between Li Ming-yi and coffee after 30 years as the director of the forest farm, Professor Chen Su-chin from the Department of Soil and Water Conservation of NCHU overseeing the debris flow monitoring effort and teaching the general public how to coexist with nature, as well as the touching story of how indigenous employee Chian Chia-yuan looks after every seedling carefully. The documentary was aired in October, 2011, on PTS. A number of 452 copies were provided to the education bureaus in Miaoli County and Tainan City as elementary school environmental education materials. A further 300 copies were provided to the Debris Flow Disaster Prevention Center of the Soil and Water Conservation Bureau for the use of debris flow disaster prevention education materials. The filming of the documentary allowed the communion with nature to influence more lives.

CMI Environmental Protection Art FestivalThe first "CMI Environmental Protection Art Festival" was held to promote the art and culture of environmental protection. A well-known performance group in Taiwan was invited to present a total of 5 performances in Miaoli County, Hsinchu County and Tainan City. The event combined environmental protection with art to deliver its central themes. CMI employees, disadvantaged groups, and children from remote rural communities were invited to view the performances. Employees who purchased the "Tree Planting Voucher" were also eligible to attend the performance of "Human Condition" by the Greenray Theatre. All proceeds from the ticket sales ($591,200) were donated to the reforestation effort at Huisun Forest so the audience could not only enjoy the art performance but also make a contribution to the environment at the same time.

!1st "CMI Environmental Protection Arts Festival"


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"Creative School Green Map" Local Environmental Education Teaching Materials PromotionTo promote the "Environmental Pioneer" teaching project produced by the Global Views Monthly, CMI and the Innoloux Education Foundation decided to encourage teachers and students to incorporate the teaching materials into their everyday life. The "Creative School Green Map" activity inspired students and teachers of their creativity. Some teachers and students drew the maps during computer class with drawing software. Others produced 3D display signs during arts classes. The "Green Wizard ~ LOHAS Road" field trip was organized to encourage teacher-student participation. A total of 169 teachers and students from 4 schools took part and visited the Flyingcow Ranch to observe how the farm saved energy and reduced emissions. They also visited the Haowangjiao Wind Power Station to get a better idea of wind power.

!Teaching demonstration in the Zero Carbon Classroom

Zero Carbon Classroom Opens Its Doors Zero carbon classrooms were established at five elementary schools in Miaoli County (Jiangong, Xinxing, Dashan, Dingpu and Xinying). The "Zero Carbon Classrooms" are equipped with a clean solar power system and smart meter. No fossil fuels are used and no CO2 emissions are produced by the classroom during use. The classrooms are equipped with 3.6Kw of photovoltaic capacity and on average can generate 10.8 kWh a day. The classrooms retain the standard facilities but are fitted with LED lighting and energy-saving equipment. The classrooms are also connected to the grid, allowing them to switch or compare the two power systems. The electrical appliances in the classrooms are fitted with wireless remote-controlled smart meters controlled through a control panel. All information can be wirelessly transmitted and viewed online. In addition to the hardware facilities, the National Taipei University of Education also provides support in the form of teachers, teaching materials and teaching through the "Sustainable School Counseling Program". The complementary hardware and software helps students at the school learn more about environmental education. The classrooms can also be used as an environmental education venue for civil service training on environmental regulations. The school can therefore become a zero carbon or environmental education specialty school.

!Xinying Elementary School's "Green Wizard ~ LOHAS Road" field trip.

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!Environmental Education 100 – Happiness 100 Launch Press Conference

3.4.2 Promoting Biodiversity

A l l C M I f a b s a r e l o c a t e d w i t h i n s c i e n c e o r technology industr ia l parks outs ide of eco-conservation areas. The Tree Valley branch for example is located within the Tree Valley Park and the original development planning took into account how park operations will impact on the local community. CMI not only cooperated with the developers on the EPA environmental impact statement but also took into account of the closing mechanisms of the industrial park under a philosophy of balancing "Production", "Ecology" and "Living". The Tree Valley park covers 247 ha. and only 150 ha. have been allocated to production and industrial use. The rest have been set aside for green space, large park, eco-center and 22-ha. ecological and ornamental flood detention pond.

!The wetland for cultivating aquatic plants in the Tree Valley site provides excellent teaching materials for environmental education

CMI and the Tree Valley Foundation are working together to promote community empowerment. Natural resources are being used to cleanse the environment and create an ecological bastion for the Dazhou Community.

Eco Green Netting: The Secret to the Tree Valley Recreation CenterCMI built the Tree Valley Recreation Center as the first large-scale sports and recreation center in Taiwan with "EEWH Diamond-grade Green Building" rating at a cost of $340 Million. With land area1936m2, the recreation center merges into the natural environment of Tree Valley Park and embodies the values of EEWH (Ecological, Energy-saving, Waster reduction, Health).

Creating an Environmental Education VenueThe Environmental Education Act was officially passed and implemented on June 5th, 2011. CMI plans to use the Tree Valley park as a platform for promoting environmental education and has set up a partnership with the Tree Valley Foundation. South Taiwan Science Park vendors, partners, schools, local residents and environmental NGOs were invited to attend the "Environmental Education 100 – Happiness 100 Launch Press Conference". In total, 120 guests from 23 units took part on the day. The industry, government, university and research partnership will hopefully develop a series of comprehensive eco-education courses and set up an environmental education venue for the general public.


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!The healthy eco-pond has formed rich wetland ecology

!An eco-pond and flood detention pond – an all-in-one green design.

The exterior of the recreation center features eco-green netting. The soft plants help to reduce the temperature of the hard building surface, transforming it into an important node in Tree Valley Park's green loop. The recreation center uses two types of green netting. One is the flat green netting consisting of bushes, native plants attractive to butterflies and aquatic plants. The other is the vertical green netting that covers the wall with climbing plants.

The rear gardens feature a porous eco-wall made from large rocks piled on top of each other. The large rock surfaces are suitable for climbing plants while the gaps provide small animals with hiding places. In this way, a natural ecology can be formed. The outdoor eco-pond is fed from rainwater and gray water (overflow from swimming pool). The water can be aerated for irrigating plants and sprayed for regulating temperature. In the rain season, it also serves as a small flood detention pond. The pond is rich in aquatic plants that help to purify the water. The plants also form a sound eco-system that attracts dragonflies and frogs.

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Chapter 4To People, with S.M.I.L.E.

Special Report-Love Without Barriers

Special Report – Morakot Disaster Relief

4.1 Safety

ESH Organization and Operation, Business Continuity Management, Vendor Management


Wide Variety of Employee Activities, Employee Assistance Programs

4.3. Initiative on Social Care

Charity Service, Education, Culture and Arts, Community Engagement

4.4. Living

Comprehensive Health Care for Employees, Creative Living Workshops


Recruitment and Staffing, Compensation and Benefits, Training and Development, Zero Distance Communication


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“To People, with S.M.I.L.E” is CMI’s humane vision to take care of employee and the development of community and society by the aspects of safety, mental & physical wellness, initiative on social care, living and employee-friendly workplace

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Disability Employment BreakthroughCMI CEO Mr Tuan said, “To fulfill the Corporate Social Responsibility, CMI takes the lead to make a breakthrough in disability employment amid the dilemma between reality and ideality.” Production fabs provide the most job opportunit ies and Human Resources Division is responsible for the recruitment and training. These two divisions co-worked and made a breakthrough of the common failure in disability employment from less than 50% quota fulfillment in May 2010 to surpass the quota by 104% in December 2011. By hiring 264 employees with disabilities, CMI became the leader in disability employment in the private sector in Taiwan. Among the employee with disabilities, 60% of them are working in the clean room which is an amazement and an evidence of the realization of CMI CSR philosophy, “Incorporating social responsibility in our operational strategy to achieve sustainable business synergies.”

Figure Employees with disabilities concentrated on their work

Special Report-Love Without Barriers

“Employee Support Committee” to promote a friendly workplaceWith the initiative from President Jyh-chau Wang, an inter-department "Employee Support Committee" was established to assist employees with disabilities. The experience of the pilot fabrication was gradually applied in other fabrications. Externally, CMI cooperated with the CLA Yongkang Employment Service Center to organize more than ten recruiting sessions for people with disabilities. In 2011, CMI was presented with the "Employment Contribution Award" for the second time and "Golden Wingspan Award" from the Ministry of Economic Affairs and the CLA. We will continue to build a friendly workplace for people with disabilities.

Figure. "Employment Contribution Award" awarded by the MOEA and CLA in 2011

*According to Article 31 of the People with Disabilities Rights Protection Act, “Any given private school, association, or private business agency / organization / institution whose total number of employees is no less than 100 shall employ people with disabilities with capability to work and the number of employees with disabilities shall be no less than 1 percent of the total number of the employees.“A single high-tech company might have thousands of employees. However, many of them did not meet the disability employment quota owing to the restriction in work environment and yield rate. Companies usually made a passive compliance by paying the fine for the quota short.


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Figure. Vibrating watch pagers for safety information

LED Marquee with Real-time Message

Tailor-made supporting facilitiesTo help employees with disabilities work in the clean rooms, special measures were provided starting from the very beginning. For example, sign-language teachers were provided to explain interview rundown and questions. Text messages were sent through cell phone to notify successful applicants and provide reporting-to-work information. For operational safety, employees with disabilities were provided with pink clean-room caps to aid in identification and emergency assistance. Each employee with disabilities was also partnered with a senior ordinary employee. LED signs and vibrating watch pagers were arranged to communicate emergency information. Portable Communication Card were made to help with everyday communication. To support new employees with disabilities, monthly interviews were conducted by the health center to check on their requirements and adaptation to work.

!

xperience sharing to encourage the industry to engage in disability employmentOn March 23, 2011, CMI was visited by a delegation led by the Minister of Labor Affairs. Minister Ju-hsuan Wang said: "CMI has left a strong impression in the way it overcame the constraints of the work environment in high-tech factories, applied for CLA job re-design service assistance through the Yongkang Employment Services Center, and built an obstacle-free work environment for disabled people. The success at CMI will hopefully encourage other corporations to follow their example in creating an obstacle-free work environment and provide people with disabilities with more opportunities."

!

Figure. "Employment Contribution Award" awarded by the MOEA and CLA in 2011

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Set a target for disability employment and go for itApart from providing employment to people with disabilities, CMI also expanded the ways to help disadvantaged groups in employment at the end of 2010. Initially the target of "1.5% for Employment of Disability and Disadvantaged Groups" was set in 2011. However, statistics showed that the percentage of disadvantaged employment, like single-parent, indigenous people and low-income families, was already over 1.5% then.

The target was subsequently modified in 2012 to become "Friendly workplace with over 1.1% disability employment" to offer more opportunities to people with disabilities.

Figure. Visit by Ju-hsuan Wang, the Minister of Labor Affairs.

!Figure. Wen-quan Chen shared his experiences on the introduction of employee with disabilities with local governments


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In March, 2010, I came across the news report on the common failure of companies to meet the disability employment quota. That recal led how we had evaluated related proposals during the building of Fab 8. The project was put on the backburner after the fab’s building was suspended due to the financial crisis and I was re-assigned.

If we could help people with disabilities to adapt to the work environment, will disability employment be feasible in the factory? I realized that introduction of disability employment helped offer opportunities to the needed and enhance corporate image at the same time. SoI began working with Human Resources Division and employment service centers

In Profile: Wen-quan Chen, the Manufacturing Manager, Behind the Introduction of Disability Employment

to recruit people with disabilities. After the first batch of the hearing-impaired employees on board, I found conventional teaching materials were inadequate for them. Since they had already got on board to the manufacturing department, we had to pick things up as we went along. The teaching materials were revised on the fly to help the hearing-impaired employees understand their job.

After several months of work, appropriate safety pre-cautions and job re-designs were introduced. The hearing-impaired employees finally settled down and were assigned to different fabs. By April, 2011, CMI met the employment quota. Then I started sharing my experiences on the introduction of people with disabilities with local governments as well in the hopes of encouraging other large enterprises to do their part in this field.

The Voice of Hanjing, an employee with disabilities from clean room

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Special Report – Morakot Disaster Relief

"Hope Campus Project" --Care and Company to Taoyuan TownshipFor many people, Typhoon Morakot, which devastated southern Taiwan in 2009, might only be a distant memory now. At CMI however, charity has continued to flow uninterruptedly for the past three years. When aid began flowing into the disaster area after the typhoon, CMI (ex Chi Mei Optoelectronics in 2009) immediately together with Chi Mei Group made a donation of NT$100 Million and with Foxconn Group (original Innolux Display Corporation) donated NT$400 Million. We saw the immediate need of disaster relief of the survivors while the education of children in the disaster area would be a very important and time-consuming part of the rebuilding effort. The "Hope Campus Project" was born to serve the need. More than 400 students from the Taoyuan, Xingzhong, Jianshan and Zhangshan elementary schools, as well as Taoyuan Junior High School in Kaohsiung County, were taken care by CMI under the project. In August 2009, firstly we provided initial company to help relieve mental and physical stress and helped restore school operations. In the medium-term, we organized family camps and wrap-up presentations to strengthen family bonds. Long-term support took the form of helping students rediscover their indigenous culture through the school.

Note: Between 2009 and 2010, the Hope Campus Project was run by the Tree Valley Foundation and volunteers with the sponsorship of Chi Mei Optoelectronics. After 2011, the project was supported by CMI sponsorship and volunteers.


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After the disaster, we ventured deep into Taoyuan Township to learn about the lives of the students and our observations became the elements of the activity we planned…

Giving Taoyuan Teachers a Break – Frontline School ServiceIn August, 2009, the typhoon cut Taoyuan Township's links with the outside world. With the new school term set to start in September, four elementary schools and one junior high school were relocated to the Qishan Campus of the Fortune Institute of Technology in Kaohsiung County. With five schools on one campus, coordinating the curriculum, catering, transportation and accommodation requires labor and resources from all parties. The administrative workload, students, and personal affairs threatened to overwhelm the teachers. Assistance from 40 CMI volunteers and Outward Bound Taiwan was immediately. Discovery-based teaching on a variety of different themes was provided in the afternoon classes on Monday, Tuesday, Thursday and Friday. The children could enjoy their interesting afternoons with volunteers while the teachers could take a break.

!

Figure. Science class provided as part of school service

"A Dollar a Day, Learning for a Year" CampaignThe "A Dollar a Day, Learning for a Year" fundraising campaign was launched on October 8th, 2009. A total of NT$4,646,276 was raised with precedence given to disadvantaged students in the "Hope Campus Project". Financial assistance was given towards school, medical care, health insurance and everyday needs as well as other students from indigenous communities in the disaster area.

!

Figure. " A Dollar a Day, Learning for a Year " poster

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Hope Campus Family CampThe psychological stress brought by making a livelihood after a disaster should not be neglected. Seven "Family Camps" were therefore organized between November 2009 and January 2010. A total of 63 CMI volunteers organized group activities that encouraged positive interactions between parents and their children to strengthen the family bonds. A wide variety of lively activities helped wounded souls to relax after the disaster. The tours to CMI fabs also helped expand the horizons of indigenous students with fewer opportunities for exposure to the technology industry.

Figure. Saying goodbye after the family camp

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"Seeds of Hope Sprouting Project" Preserves Culture through Picture BooksAesthetic education is a very important part of national education. The remoteness of indigenous communities and difficulty in talent attraction meant that they usually do not have full-time art teachers like schools in urban or lowland areas. The "Seeds of Hope Sprouting Project" was born to overcome this deficiency.

In January, 2010, CMI sponsored the Tree Valley Foundation to send professional art & culture teams to the tribes. The teams provided professional-grade art education to help build students' self-confidence and cultural identification. In 2011, the Map of Bunun Secrets was created in partnership with the Xingzhong Elementary School in Taoyuan Township. The picture books provided a record of history that encouraged students to value the nature of multiculturalism and promote local culture.

Figure. Taoyuan Township – Map of Bunun Secrets

!Figure. Taoyuan Beetles performing on stage at the National Concert Hall in Taipei

"Seeds of Hope Beetle Project" Brings Art Team to the TribesIn January, 2010, CMI began sponsoring the "Seeds of Hope Beetle Project". The Tree Valley Foundation and the Earth Art Foundation visited the Taoyuan Township to host the "Beetle Music Theater" art class. The art class focused on cultivating the indigenous people's great singing voice and expressive body language to help children get over the disaster. The children worked very hard to improve their pronunciation, tone, pitch, and body language.

Taoyuan Beetles and the Regensburg Cathedral ChoirAfter a year of hard work, the little angels joined the internationally renowned Regensburg Cathedral Choir on stage at the National Concert Hall in Taipei in May, 2011. The audience was held rapt by the heavenly voices. For the kids, our small contribution made a tremendous difference. We hope this will open a window to the world for the children of Taoyuan Township.


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Partner for Rebuilding –Cayama Tribe in AlishanCayama Tribe is the southernmost indigenous tribal vil lage in Alishan Township. After Typhoon Morakot the external traffic of the village was cut off. Thanks to the Industry Rebuilding Office of the Reconstruction Council, CMI became the first company to visit Cayama Tribe. During the visit, we discovered that they were involved in pesticide-free agriculture but lacked biological pest control techniques. While the villages were removing insect pests from the mustard green by hand, the vegetable was lack of distribution channel. Without necessary equipment, they hoped to harvest as soon as possible. CMI visited the Cayama farms with organic farming consultants to give instructions about biological pest control and borrowed the equipment from Chimei Farm to help harvest. CMI also made an extraordinary procurement of pesticide-free mustard greens without organic certification with high price. This offer helped the local farmer's cooperative to get through the pressing need. Today, CMI continues to support Cayama Tribe to help them "get back on our feet on our own land".

Figure. An in-depth discussion about the development of organic agriculture in Cayama Tribe

Cayama Tribe – From the Nanying SistersThe members of the cooperative had just started rebuilding their lives when CMI decided to purchase their mustard greens. To see their hard work rewarded restored the cooperative's faith. CMI was also the first company to spread the message about the rebuilding of Cayama Tribe. Apart from providing a market stall during the annual festival, CMI was the first organization to support group buys of Cayama agricultural products. We also continued to check on Cayama Tribe’s reconstruction and helped build the foundations for sustainable development. The donation of second-hand computers improved internal management. CMI also arranged for the CSD to provide agricultural assistance. The assistance helped the cooperative build solid foundations in production and on-site management. In 2012, CSD will apply to the COA for an extension of the farming assistance project to continue the enhancement of quality and quantity.

To "Get back on our feet on our land" is the core ideal of the farmer's cooperative. Reconstruction is now proceeding steadily in Cayama Tribe and we can see a future filled with hope and energy. For this, we are not only very grateful to our Father in heaven but also CMI, our god-given partner in the building. They have given the Cayama Tribe grain production & marketing group the courage to keep going!

Figure. Checking on the mustard green harvest in Cayama Tribe prior to the purchase

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4.1 Safety

National Industrial Safety & Health Award—A significant missionCMI was honored to receive the 5th "National Industry Safety & Health Award" from the CLA, the highest industrial safety award in Taiwan. Candidates must have previously received the 5-star award for excellence in worker safety & health and domestic/international occupational safety & health management system certification, or achieved an international reputation for industrial safety. Experience no serious occupational injuries within the last 3 years is also one of the qualifications. CMI's long-time commitment to occupational safety, health management and supporting SHE was recognized by the CLA. The award represents a significant mission and a great honor! We will continue to implement “decent work” policy which goal is a workplace with “equity, humanity, security and dignity”. CMI understands the importance of maintaining and sharing SHE experience. By participating in government-sponsored SHE activities, we keenly shared our management experience and did our best to improve the overall standard of SHE management in Taiwan.

“National Industry Safety & Health Award" from the CLA

!An interview with Vice President Mr. Vincent Hsiao for the honor of “National Industry Safety & Health Award”

Safety and Health Management Awards

Award Name Organizer Fab Award Date

5th National Industry Safety and Health Award CLA Taiwan Sites 2011.10

"2010 National Workplace Health and Safety Week " Excellent Performance Award CLA JNSP Site 2011.01

"2010 Excellence in National Workplace Safety and Health Week Business Unit" Distinction Award CLA JNSP Site 2011.05

2010 Outstanding Labor Safety and Health Promotion Business CLA STSP Fab D 2011.06

STSP Outstanding Labor Safety Promotion Business 2010 STSP Administration STSP Fab 8 2011.07

Special Contribution Award for Sponsoring the Occupational Safety and Environmental Protection Month, 2010

HCSP Administration JNSP Site 2011.10

Health 100 – Taiwan on the Move National Workplace Weight Loss "Distinction Award" Bureau of Health Promotion STSP Site 2011.11

Health 100 – Taiwan on the Move "2011 Outstanding Contribution to Healthy Workplace Award" – 1st Place Bureau of Health Promotion STSP Site 2011.11

Health 100 – Taiwan on the Move for Weight Loss "Target Achieved Award" Bureau of Health Promotion STSP Site 2011.11


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4.1.1 ESH Organization and Operation

The "ESH Group Division" includes the Central ESH Division, the Taiwan ESH Division, the Huanan ESH Department and Huadong ESH Division. The "Central" unit oversees the direction of ESH management, operational integration and individual site performance. Under each regional ESH department, dedicated ESH units are set up at each site tasked with the promotion and management of ESH activities. Fortnightly meetings are held to set up a parallel communication mechanism with the industrial safety cadre of each unit. Each quarter, employee requirements reported by the safety cadre of each unit are compiled and submitted along with ESH management activities through each site's ESH committee. The committee includes the top site manager, other relevant units, and the workers' representative. The workers' representative will also raise ESH issues for discussion. Depending on the type of requirement and its urgency, the sites may also organize regional ESH promotion organizations. The STSP site, for example, has an "ESH Working Group" that meets every two months to review project progress. The Longhua site in China has also set up a "Safe Production Committee" with a similar framework and functions for promoting ESH activities in China sites. The organizational structure allows for effective vertical and horizontal communications within the fab, trans-fab integration of ESH systems, as well as proper vertical communications on ESH management between fabs and the head office.

Through the execution of the above risk and environmental safety & health management activities, all Taiwan and China sites have now acquired OHSAS 18001 certification. The management system ensures compliance with the requirements and rules of OHSAS 18001, ISO 14001 and TOSHMS (Taiwan) in order to prevent occupational diseases and disasters as well as protect the environment.

Occupational Disasters, Prevention and ImprovementAs part of our CSR and respect for all life, CMI applies the same safety standard to employees and contractors. We also strive to reduce the incidence of occupational disasters. Apart from general industrial safety matters required by law, other important measures were also introduced such as the "Industrial Safety Indicator System", "Accident-Free Days System", "Equipment Safety Concepts", "Safety Care System", and "Disciplinary Committee System".

To bring occupational disaster management for employees up to world standards, we have adopted the CLA definitions on on-site injuries for our industrial safety targets by calculating the lost time due to injury per million working hours per year. In addition to loss of work due to disabling injuries, temporarily disabling injuries that cause limited duties are also included in the lost time due to injury calculations. To ensure that employees continue to take industrial safety seriously, regular education on different occupational injuries is organized to encourage disaster prevention and awareness. In 2011, the Taiwan and China sites had a disabling injury frequency rate (F.R.) of 0.49 and disabling injury severity rate (S.R.) of 4.77. There were no occupational deaths.

2011 Occupational Disaster Statistics

Taiwan Sites China Sites Taiwan + ChinaSitesFemale Male All Female Male All

Disabling Injury Frequency Rate (F.R.) 0.14 0.37 0.27 0.23 0.78 0.53 0.49

Disabling Injury Severity Rate (S.R.) 3.90 11.52 8.10 1.26 6.28 4.09 4.77

Disabling Injury Frequency Rate (FR): Number of disabling injuries x 1 Million work hours / Total work hours

Disabling Injury Frequency Rate Chart for 2010 ~ 2011 Disabling Injury Severity Rate Chart for 2010 ~ 2011 FR Annual Trend SR Annual Trend

Year Year

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Safety & Health Training for 130,000 EmployeesCMI believes that "safety & education training is the basis for the promotion and operation of the ESH management system". To this end, CMI had long invested manpower and resources to equip employees with the necessary safety & health knowledge and skills based on the types of hazards at each site. These took the form of courses on use of chemicals, operation of dangerous machinery, damage prevention, equipment safety, firefighting and plant management. Training quality was also monitored to ensure its effectiveness. In 2011, CMI provided safety & health training to around 130,000 employees.

2011 safety and health training statistics

Course Type Sessions Total No. of Employees

Hazard Awareness Training 198 13,453

Site Safety & Health Training 398 114,613

Safety & Health Certification Refresher Training 15 2,748

Safety & Health Certification Training 13 997

Total 624 131,811

Strict Chemical Safety Controls

Chemical safety is crucial to employee health and safety. To ensure proper safety & health management during the evaluation, purchasing, transportation, storage, usage and disposal of chemicals at each site, chemical management plans are drawn up each year based on local and international regulatory requirements. Employees are trained on the potential hazards so they can help prevent any accidents and realize the goal of reducing occupational disasters.

Evaluation and Purchasing

•Packaging or Container Labeling•Provision of MSDS by Supplier•Hazard Identification•System Control

Transportation and Storage

•Training for Cylinder Transport Personnel•Labeling of Storage and Dispensing Areas•Store by Chemical Properties

Use and Control

•Hazard Knowledge Training•MSDS•Safety Cabinet Training•Use of PPE•Hazardous Chemical Management•Exposure Concentration Monitoring

Disposal

•Separate Storage•Internal Recovery and Reuse•Disposal by Qualified Contractor

Figure. CMI chemical management system


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4.1.2 Business Continuity Management

Global competition, capital-intensive plants and limited inventory all mean that any disruption to company operations in an emergency may greatly reduce company value. If key corporate functions, facilities, e-commerce or communications systems cannot be restored in a timely manner, an unexpected outage of these software and hardware facilities may paralyze the company and lead to an exodus of customers. For this reason, CMI continuously strengthens the Business Continuity Plan (BCP) and establishes a Business Continuity Management (BCM) system to improve the disaster response capability. Identified risk items include CMI operations, customers, suppliers, international situation and natural events such as the Japan earthquake on March 11, 2011. Simulated drills are organized for high-risk items. In 2011, the BCM system was expanded to China sites and the necessary personnel is trained to reduce the likelihood and severity of the risks.

Improving Emergency ResponseA number of 1,600 emergency response training classes for 85,000 employees as well as 1,416 simulated drills were completed in 2011. In total 62 persons were sent to take part in external firefighting exercises. All of these emphasized the importance of emergency response to CMI.

CMI has defined emergency response procedures to provide a guide for handling all kinds of emergent situations. Drills are then used to fine-tune the response procedures as well as familiarize personnel with the utilization of emergency equipment and emergency response principles. By improving the overall response capability, disaster damage can be reduced. CMI also keenly participates in joint emergency and toxic chemical response teams organized by the competent authorities to assist allied companies when necessary.

!Figure. Fab 6 and the Tainan City Fire Department taking part in the joint firefighting drill

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Figure. A total plant evacuation drill is held every 6 monthsFigure. Drill simulating response

to a specialty gas leak accident

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4.1.3 Vendor Management

CMI has defined a tiered vendor safety framework in operating procedures. Penalties are quantified by score to identify risk level. A two-phase approach has been adopted to assist with vendor improvements. Competent unit's engineers and vendors are required to undergo training to improve their safety, health and environmental protection practices.

Vendor evaluation frequency is based on its scale, type, ESH significance and the results of past evaluations. The on-site contracting unit must audit their vendors while the ESH unit conducts audits based on the ESH scoring guidelines. The results of the above evaluation and audit are used to calculate the vendor ESH performance. Vendors are rewarded or given counseling as necessary as part of vendor management. Vendor recognition conference is held each year to recognize outstanding vendors during the year.

Figure. Group photos of CMI executives with vendors that received the Best Industrial Safety Award and Best Industrial Safety Partner Award

UTECHZONE Co., Ltd.

Tokyo Security Co., Ltd.

Air Liquide Far Eastern

An-Li-Jie Corporation CO., Ltd.

Jin JAAN SHING Co., Ltd.

Air Products San Fu Co., Ltd.

2011 Best Industrial Safety Award for Vendor

2011 Best Industrial Safety Partner Award for Vendor


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Wide Variety of Employee ActivitiesIn 2011, the Employee Welfare Committee organized the "LOHAS Academy" and "Group Fun Academy" to improve mental and physical wellness. Activities such as "Popular Dance", "Yoga", "Swimming", "Water Activities", "Beauty & Makeup", "Boxercise" and "Student Storyhouse" were also held to provide employees with recreational activities after work or on their days off. The "Aerobics" was particularly popular with employees and we will continue to organize similar activities in the future to meet employee needs.

Recreation Center The "Recreation Center" achieved the highest satisfaction rating with JNSP employees. With more than 1000m2 of activity space, the center not only features professional fitness equipment but also a beautifully-designed interior that puts people at ease. There is also a massage area where employees can relax and unwind.

Tree Valley Recreation Center The Recreation Center is located within the "Tree Valley Campus" of the STSP site. The center is guided by the values of Energy, LOHAS, and Happiness, as well as integration with its surrounding environment. Facilities include a swimming pool, sauna, multi-purpose gym area, jogging area, aerobics classroom, children center and art center. Nearby facilities include the Tree Valley Campus’ round-campus bike track, lake facilities, eco-center and museum. The center provides the full-range of water, sports, fitness, recreation, health and family activities.

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Figure. Employees relaxing and unwinding to get their mind and body in balance

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Wide Variety of ClubsCMI has always respected employees' legally protected right to associate freely. Employees are encouraged to take part in club activities and there are now 28 clubs in the Taiwan sites. Apart from regular gatherings and activities, club members have made great achievements when representing CMI in outside competitions as well. CMI provides subsidies to help employees organize new clubs or represent the company in competitions. Club performances are reviewed annually to provide them with encouragement or advice.

CMI Sports SeasonSince 2010 CMI has organized all kinds of sporting competitions each year. Basketball, softball, badminton, swimming, volleyball, billiards, ten-pin bowling and table tennis are all popular events that attract many entrants among CMI employees.

In 2011, around 1,500 employees from the north and south sites took part in this event. Through this proper recreational activity, the employee welfare committee worked to popularize sports participation, build up team spirit, improve employees' sporting skills, and cultivate an image of health and vitality for CMI.

Employee Assistance ProgramsEmployees are an enterprise's most valuable asset. CMI understands employees may encounter difficulties and problems other than remuneration and promotions at work or in their personal life. CMI actively promotes E m p l o y e e A s s i s t a n c e P r o g r a m s ( E A P s ) o f f e r i n g psychological counseling, medical care, self-development, mental and physical balance, welfare services and special care. The EAPs help employees deal with any mental problems and concerns so they can work healthily.

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Figure. "Employee Assistance Programs" poster


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Album of Employee Activities in China Sites

2011 Dragon Boat Festival Carnival at Fab Ningbo, China

Figure. 3-legged race!

Figure. The party continued as the lights come on

2011 Spring Carnival at Nanjing Fab, China

Figure. Delightful dancing by employees Figure. Audience cheering enthusiastically

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4.3. Initiative on Social Care

CMI set up the CSR division to consolidate company resources and multiply the effectiveness of our social contribution by supporting the Innolux Education FoundationNote 1 and Tree Valley FoundationNote 2 that CMI is associated with. Our social care strategies are as follow: In Charity Service, the emphasis is on volunteering to provide long-term support for remote communities and disadvantaged groups. In Education, CMI focuses on industry-academia collaboration to cultivate optronics talent and actively enhance the Taiwan display industry's global influence. In Culture & Arts, we sponsor related activities to enrich the mind and culture. In Community Engagement, we participate in community activities and strive to contribute in an environmentally friendly manner.

The "Innolux Education Foundation" was founded at the end of 2008 by CMI CEO Dr. Tuan. To fulfill the commitment to social contribution, the Foundation focuses on "Environmental Education" and "Culture Promotion". Well-defined work plans are drawn up and resources carefully monitored to ensure their proper use. The Foundation actively participates in activities related to society, environmental protection and culture.The "Tree Valley Foundation" was established in early 2008. CMI sponsored the Foundation to realize our commitment to making the Tree Valley site open to the public and environmentally sustainable. The Foundation focuses on environmental protection, social education and the conservation of cultural heritage to develop a production site that combines ecological sustainability with living aesthetics so that mankind and the environment can both continue to grow.

!Figure. Joint graduation camp for remote rural elementary schools

4.3.1 Charity Service

An Impossible Dream Come True: Graduation Trip for Remote Elementary SchoolsA "Graduation Trip" allows students' shared memories to end on a high note. For many elementary schools in remote areas however, they simply do not have enough money or students. Graduation trips have therefore become an impossible dream for students in remote areas.

In 2011, the graduation camp for remote rural schools was held for the third year. Students from remote elementary schools in Chiayi, Tainan, Kaohsiung and Pingtung took part in outdoor adventure activities, natural science experiments and ecological education, realizing their dream of a graduation trip. A total of 54 schools took part in the event in 2011, benefiting around 1,500 elementary students. CMI congratulates the young graduates.

*Note 1:

*Note 2:


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Remote Sangu Elementary School Teeball Team Competes OverseasThere were more than 100 people in the teeball team of Sangu Elementary School even though there were just 177 students. This is a remote rural school's way of putting itself in the spotlight! Sangu Elementary School had qualified for the Asia Cup after coming second in Taiwan but this was not enough for them to receive overseas travel assistance. After CMI heard about their plight, a fundraising drive similar to the " A Dollar a Day, Learning for a Year " was held for Sangu Elementary School. Private sponsorships also poured in as well, enabling the Teeball team to travel to Korea and represent Taiwan at the "2nd Asia Elementary School Child Teeball Championship" in April 30, 2011. The young players from Sangu not only experienced a different world but also lived up to the high expectations by bringing the runner's up trophy back to Taiwan!

!Figure. Thank you for letting us take a swing!

School Assistance at STSPThe "STSP School Assistance" campaign is co-organized by the STSP Administration and World Vision. This is the second year that CMI has supported the campaign and the funds raised go towards children's transportation and accommodation costs as well as after-school tuition, character development, career planning and family education projects. The goal of the campaign is to help children balance the development of their character, life skills, family relationships and future prospects. The spirit of charity at CMI raised $94,833 and also set up 31 long-term "Sponsor a Child" agreements to give local and foreign children a chance to change their lives.

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Charity Clinic for Remote Communities in Taitung and HualienRemote areas suffer from a lack of medical resources. The exodus of young people from the indigenous regions of Taitung means that most residents tend to be the old or very young. Transportation and language (can only speak the tribal language) difficulties make it difficult to go to the city for treatment. As there is still much room for improvement in medical care and public health, there is a need for charity clinics. The CMI Health Management Department partnered with the Chimei Hospital Medical Service Club to host a 2-day charity clinic in Taitung that served 157 people.

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Figure. Charity clinic in Taitung and Hualien

Free Nutritious Breakfast for MeiyuanCMI expanded the charity efforts from the lowlands to the mountains and eventually reached Meiyuan, the most remote elementary school in Miaoli County. The school had just 41 students and they all came from the Atayal Tribe.

Principal Xiao-ling Lu at Meiyuan Elementary School said that many of the students lived with their grandparents or were in single-parent families. Economic hardship meant that students in the mountains often come to school without having any breakfast and this leaves them unable to concentrate in class. For some students, the school lunch may be their only meal of the day. This had a major impact on their physical and mental growth. In June, 2011, CMI donated NT$300,000 to provide nutritious breakfasts for all students. The direct assistance for students in remote communities helped lighten the burden on their families.

Santa Claus for Children in Remote Areas

For three straight years, CMI has been brining love to remote rural areas. As Christmas 2011 approached, the CMI Charity Club and the World Peace Association traveled to Nanzhuang with 30 CMI volunteers in the "Chimei Santa Claus Service Station" gift bus for the "Christmas Miracle" thanksgiving banquet. The volunteers presented students from 8 elementary schools in Nanzhuang's indigenous communities as well as over a hundred children that often went hungry within the county with 258 Christmas presents. Every year, CMI volunteers prepare the gifts themselves as Christmas approaches. The volunteers also write encouragements on the presents. The volunteers and Director-General Jian-song Deng (dressed up like Santa Claus) then join the children in playing games and celebrating an early Christmas.

!Figure. Celebrating Christmas with the children while dressed up as Santa Claus

Annual Blood Drive

"Donate Blood to Save Lives"! In 1998, CMI began collaborating with the Tainan Blood Donation Center on blood donation drives and every 4 months, the blood donation bus visits each plant. Year 2011 marked the 13th year of the collaboration and the number of donations increased from the 173 bags in 1998 to 2,588 bags this year (average donation rate of 5.5%). The Ministry of the Interior has presented the "Outstanding Blood Donation Business" award to CMI every year. !

Figure. The enthusiastic response means people must queue to donate blood.


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4.3.2 Education

Taiwan and EU ScholarshipsThe European Union Integrated Higher Education System proposed the European Master of Science in Photonics (EMSP) (Erasmus Mundus). The project aims to integrate the standard for awarding of photonics degrees between European universities. All students that take part in the project will receive a joint degree awarded by EMSP. In Europe, participants included top universities in the field of photonics such as the Schengen University (Belgium), the Brussels Liberty University (Belgium), the University of St. Andrews (UK), the Royal Institute of Technology (Sweden), the Federal Institute of Technology Lausanne (Switzerland), the Technical University of Denmark and the Public Valencia Polytechnic University (Spain) . The National Taiwan University was the first non-European institution to join EMSP. To promote the technical development of the Taiwanese photonics industry as well as cultivate international expertise, CMI supports international projects at the NTU Graduate Institute of Photonics and Optoelectronics (GIPO). Special scholarships have also been set up as well.

1. Taiwanese student to Europe: 2011 CMI EMMP Scholarship (2010 enrollments joined the Erasmus Mundus MSc in Photonics (EMMP)The scholarship is provided by CMI for graduate students enrolling in joint degree programs to cultivate talents in display & imaging technology, encourage outstanding students to expand their horizons and take part in overseas research projects. For the period of their overseas study, CMI provides a scholarship of NT$500,000. Upon graduation they must work at CMI for three years. At the same time, the Innolux Foundation also provides each Taiwanese student with a grant of NT$300,000.

2. EU students to Taiwan: Chimei Excellence Grant (2011 enrollments joined the EMSP)To promote the technical development of the Taiwanese photonics industry and international academic exchange, CMI provided GIPO with 24,000 Euros. The money is to be used as scholarships for attracting EU EMSP students.

Expansion of Industry-Academia ProjectsIn 2011, CMI not only continued to collaborate with the National Taiwan University, National Chiao Tung University and National Cheng Kung University but also expanded its partnership to include National Sun Yat-Sen University, National Dong Hwa University and the Chung Yuan Christian University. A total of 25 faculties took part in more than 40 projects in 2011. The close collaboration and sharing of industry-academia R&D resources set an influential example for the rest of the industry. The closer collaboration on technology and materials research between the industry and universities will help cultivate the talent needed by the industry.

Research Student ScholarshipsTo encourage engineering graduate and Ph.D. students from National Taiwan University, as well as National Chiao Tung University's Hsinchu and Tainan campuses, to engage in TFT-LCD-related research and employment, each graduate student was offered a scholarship of NT$300,000 if they agreed to work at CMI for 2 years after graduation. Each Ph.D. student was offered a scholarship of NT$600,000

if they agreed to work at CMI for 3 to 4 years after graduation.

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!Figure. Finally ready to perform on stage

"Innolux Art & Culture" New Immigrant Theater

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4.3.3 Culture and Arts

Campus Art & Culture Class BOTSchools that are "not in the mountains or in the cities" are often overlooked. In 2011, CMI visited the Tianmei Elementary School in Miaoli County's Nanzhuang Township and proposed the "Rudiments of Music for Children in Remote Areas Cultivation Program" to help the children of Tianmei find a whole new world. The program paid for professional music teachers and teaching materials so third-graders at Tianmei could learn about basic musical theory and recorder playing. The students also attended quality performances to expand their horizons, discover their interests, realize their abilities and build up self-confidence. After two semesters of training, the students became more sensitive to music and many students learned how to concentrate as well.

Figure. The children were held rapt by the performance.

CMI sponsored a road tour by the P ape r W i nd m i l l T he at r e i n Mi a ol i townships. As Miaoli County had the highest proportion of new immigrants, the theatr ica l performances help c u l t i v a t e m u l t i c u l t u r a l i s m . T h e "Innolux Art & Culture New Immigrant Theater" program was in five parts. The plots for "Four Burmese Puppets" and "The Dog and the Sun in Thailand" were based on a multicultural picture book published by the Taipei County Government Education Bureau. Hand puppets, gauze and elastic cloth were used to create all kinds of props. The children were not only help rapt by the performance but also learned about the fun of performing arts. Total 17 performances were held in Miaoli County's 18 townships as part of the road tour. Another 2 sessions were held at the Zhongshan Hall in Toufen Township and the Tree Valley Concert Hall in Tainan. Total attendance was approximately 9,800 people.


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2011 Fun Summer – LOHAS Summer Camp for Children from Remote Rural RegionsThe "2011 Art and Ecology Summer Camp" was held to provide children from remote rural areas and employee's own children with art, cultural and ecological education during the summer break. To encourage the spirit of charity, employees were also asked to pay not only for their own children but also one child from remote rural regions as well. In this way, CMI employees could contribute to bridging the urban-rural divide and teach their children the importance of sharing.

The International Children's Folklore & Folkgames Camp and Wizard of Art Creative Camp attracted a total of 156 students. The incorporation of charity and gratitude combined with ethics education and social care taught children about contentment, satisfaction, and sharing.

!Figure. Summer camp group photo

4.3.4 Community Engagement

Chimei at 2011 Taiwan Lantern Festival in MiaoliThe 2011 Taiwan Lantern Festival was held in Miaoli. CMI sponsored the "Sea of Light" display in the No.3 Hakka Pavilion that combined the traditions and character of Miaoli with art and light. The exterior of the pavilion looked l ike a traditional Hakka earth building but featured lights, projections, sound effects and stories inside. The connection between No.1 and No. 3 pavilions provided the audience with an inner journey of hope and prayer. STSP employees were also invited to travel to Miaoli to view the Taiwan Lantern Festival so more people can experience the beauty of Taiwanese culture. CMI also donated 48pcs of 42" LCD monitors and 2pcs of 55" LCD monitors to the Lantern Festival so it not only conveyed traditional art and culture but also highlighted technology, environmental protection, and the quality of the MIT brand. Once the festival was over, the Miaoli County Government donated the LCD monitors to 43 rural schools so their students could experience the digital world for themselves, bridge the urban-rural divide, and enhance the standard of information education for students.

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Figure. Sea of Light at the Hakka Pavilion

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Empowerment Plan of Peripheral Community at Tree Valley SiteW i t h t h e g o a l t o p r e s e r v e t h e Ta i w a n e s e r u r a l c u l t u r e and strengthen the residents’ coherence, CMI assists the empowerment of peripheral communities including Shenei, Zhongrong, Fenghua and Dazhou. To realize the philosophy of Tree Valley Park, “Minor people, Major tree”, activities are designed to link up the interaction among residents and expand their care from “home” to “hometown”. The facilities of the community empowerment projects are about reduction and greening. Environmental-friendly project is part of the community service to encourage the residents to volunteer for the environment maintenance and assist in community empowerment. In this report, we focus on the eco-community we built in Dazhou which could serve as an environmental education base.

Home for the buffalo, a feature of DazhouSince Feb 2011, together with Tree Valley Foundation, CMI has cooperated with Dazhou to explore the community features for further promotion of rural culture. Dazhou’s neighborhood magistrate Chao-yu Hsu initiated the buffalo project and said, “Dazhou should be the only community in Xinshi District which has buffalo that could serve as a rural feature of this place…” The owner of the last buffalo in the community Chao-zuo Hsu and his brother Yin-he Cheng supported the idea by offering the land to build a home for the buffalo. The building provides a comfortable space for the buffalo retired from farming and a social venue for the residents. Local natural materials are used for the architecture like bamboo as the frame, driftwood as the fence and white grass as the roof. Natural building method is adopted to make the building harmonious with local environment. The next step following the buffalo house is an eco-community to re-initiate the community energy.

Natural building method is adopted and local natural or recycled materials are used to ensure no extra rubbish or environmental burden is generated. Building technicians used their professional skill to make driftwood, white grass, waste bricks, stones and lime a new buffalo home in half year.

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The buffalo's new home matches well with the atmoshpere of local community

Thick soil planting for sustainable fertilityCMI and Tree Valley Foundation in Sep 2011 invited Earth Passengers to Dazhou to demonstrate thick soil planting. This planting method requires only less watering, fertilization and weeding and is pesticides-free. Other advantages include re-use of daily waste, enhancement of water retention capacity, organic matter and unit capacity of the soil, greening of environment, purification of air, decrease in air temperature and reduction in food miles.

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The modest look matches wel l with the surrounding farm view. Round roof relieves the blowing of northwind and soften the scenery.

Front and back yards are designed to allow the buffalo to take a walk. The buffalo could enjoy a leisure retirement life in the new natural home.

Residents gathered to throw the buffalo a housewarming party. Such activity help find the Taiwanese old rural style and the co-existence between human and the universe.

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8 steps for easy thick soil planting

Wash your hands and take a break. All is done.

Punch the base of a big container to allow the drain of excess water. Place a layer of stone at the bottom of the container. (Step 1 could be skipped for directly planting in the soil outdoor)

Cover the stones with a cloth to reduce the soil loss

Put a layer of kitchen waste like fruit peel to fertilize the soil.

Cover the kitchen waste with a layer of corrugated paper (please remove the printing ink especially the green part in advance). Corrugated paper can block the sunshine to prevent the growth of weeds. Rotten paper could also serve as fertilizer.

Pour in good soil to nurture the plant and harvest healthy food.

Cover the soil to lower the evaporation of water. (Hay, rice bran, leaves, weeds, stones, saw dust…etc is good covering material)

Dig a hole in the covered soil and plant. Don’t forget to fill out the hole with soil after planting.

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One Stone

Two Cloth

Three Waste

Four Paper

Five Soil

Six Cover

Seven Plant

Eight Rest


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88生態廁所營造

Bio-toilet to save the fertilityThe stereotype image of toilet is stinky, dirty, dark and humid. Most people repel the thoughts of setting up a toilet beside their house. On Aug 21, 2011, Tree Valley Foundation held a briefing of Dazhou Bio-toilet to explain to the residents of what is a bio-toilet. Peter the expert from Earth Passengers was invited to brief the residents of the design and operation of bio-toilet and its advantages. It was hoped to gain the residents’ support and make Dazhou a sustainable ecological community by mutual efforts.

!

!Figure. Peter who came from America tried his best to explain the idea and advantages of bio-toilet in fluent Chinese

Figure. Overage students held rapt by the lively briefing of Peter.

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!

With the principle of building a ecological community and environmental friendly place, bio-toilet could reduce the environmental impact made by visitors. When the human excrement and urine is mixed with saw dust and bacteria to adjust the humidity and oxygen supply, the microorganism could serve the purpose to volume down and stablize the excrement. Aerobes could stablize and mineralize the excrement without secondary pollution of waste water dispersion. No flushing or dilution is needed. The volume of waste is low so could be handled with ecological engineering. After microorganism treatment, it could serve as manure for reuse.

! !

Figure. Building a bio-toilet


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Solar cooking classA solar cooking class was held on Aug 20, 2011 to promote green energy and environmental education. CMI employees and community residents were invited to join. Making use of the principle of solar refraction, heat is converged to the heat collector (a device which is dark in color and with good heat conductivity). Cooking at around 70℃ for 15 minutes could kill all bacteria. A temperature of 82℃ could make the rice done. Rice, fish, shrimp, egg, pumpkin, yam and green bean are all suitable for solar cooking. With adequate sunlight, the temperature of solar cooking could reach 130℃ which is very suitable for south Taiwan.

!

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Rocket stove classIt is observed that Dazhou residents like to cook the food by traditional brick stove. To enhance the energy efficiency, rocket stove is introduced to the community. Rocket stove was invented by Mr Winnarski in 1980. Aprovecho Research Center then continued the study and promotion. Metal cans are combined to form a chimney-like stove to allow smooth air flow inside for maximization of burning. In this equipment, only small branches could generate great heat. The major components for a rocket stove are 3 iron or tin cans, vermiculite, saw dust and mud.

!Figure. Selection of components for a rocket stove

!The inner can should be higher

!

1.Mark the cutting line on the can (based on the periphery of C).2.Cut the radiance-shape hole on the can3.Combine A&B. Fill the vermiculite into the gap.4.After the filling of vermiculite


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!Cover the rocket stove with iron sheet to keep the heat

!

Small branches generate great heat !

1. Pour into mud and water2. Mix it well3. Saw dust4. Mix the saw dust and mud 5. Seal the gap of A&B with the mixture of mud and saw dust

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4.4 Living

4.4.1 Comprehensive Health Care for Employees

Health promotion activity were held 172 sessions with 44,000 employees participated

CMI set up the "I-Care" system to monitor employee health risks, carry out annual health exams and implement health promotion programs. Disease treatment and follow-up is handled by professional case management. In 2011, a total of 170,000 health exams were completed including boarding exams, annual exams and special exams. The results of health exams are used by nursing personnel to monitor high-risk groups. CMI actively supports health promotion activities. Internal and external resources such as the Bureau of Health Promotion, the CLA Institute of Occupational Safety & Health, the relevant local authorities, as well as university SHE experts are all drawn upon for SHE projects and ergonomic engineering improvements related to safety and health.

172 Sessions of Health Promotion ActivityEye health exercise, quit smoking class, weight loss card, Father's Day Health Card, blood donation drive, occupational disease prevention and cancer screening are among the many health promotion activities underway at each site. A number of 172 sessions of health promotion activity were organized in 2011 and attracted 44,000 participants. The "Physique Challenging Camp" in 2011 in particular saw 2,335 people take part in the "DIY Weight Loss" and "Waist Boot Camp", shaking off a total of 3,301 kg.

The management of CMI Occupational Health Service System

BOHS framework flow chart

Reference: WHO(1978) Alma Ata Declaration

Monitoring and Assessment

Monitoring of labor health

Risk assessment of personal health

Organization of work

In

itiativ

e

Information and imitative

Health educationHealth information

Preventive action

Monitoring of work environment

Risk assessment of work environment

Work environment

Action

Prevention of accident

Emergency response

General health service

Diagnosis of occupational diseases and work related disease

Ev

aluatio

n

General service desk

First aid

Evaluation

Document and record

Orientation training and planning


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Figure. Outstanding Contribution to Healthy Workplace Award

Figure. Healthy Weight Management Competition – Target Completed

2011 Dependents Health ExamIn addition to annual employee health exams we also look after the health of their families. The "Annual Dependents Health Exam Discount Package" offered in conjunction with the STSP Clinic served approximately 110 dependents.

Take part in Health 100 – Taiwan on the MoveIn 2011 CMI entered the Taiwan on the Move campaign organized by the Bureau of Health Promotion. Awards included: Health 100 – Taiwan on the Move National Workplace Weight Loss "Target Completed Award", H e a l t h 1 0 0 – Taiwan on the Move National Workplace Weight Loss "Distinction Award" and Health 100 – Taiwan on the Move "2011 Outstanding Contribution to Healthy Workplace Award" – Champion.

!Figure. Physique Challenging Camp

Figure Quit smoking class achieves good result

Health promotion activities at each site in 2011 (Outline):

Event Name Site Event Name Site

Traditional Chinese Medicine Health Preservation Month JNSP Site Introduction to Metabolic Diseases

Seminar STSP Site

Women Cancer Prevention Month JNSP Site ITO Operator Health Consultation STSP Site

Annual Health Exam JNSP Site Counseling Seed Trainer Course for senior management STSP Site

New Employee Orientation Longhua Site 666 Stretching Exercise Training Ningbo Site

Mental Health Care Longhua Site Pulmonary Tuberculosis Workshop Ningbo Site

Manager Stress Reduction and Crisis Prevention Longhua Site Mother and Baby Health Seminar Ningbo Site

Mental Health Day: "I love myself and be the best personal I can be" group counseling

Shanghai Site Counseling Training Stage 1 Nanjing Site

Stress Management Shanghai Site Foreman Counseling Training Nanjing Site

"Best Distance" for Relationships Shanghai Site Group Counseling – Communication Starts with Listening Nanjing Site

World TB Day – Stop TB and Enjoy Health Nanhai Site Health Knowledge Seminar for Expectant Mothers Nanhai Site

Charity Clinic Nanhai Site "Mental and Physical Relaxation" Trainer Course Nanhai Site

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Assisting Government with Training Labor Health Service PersonnelDue to the new "Labor Health Protection Regulations", the government launched a series of medical personnel training classes. To train medical personnel for providing labor health services however, the government urgently needed the private sector to provide training resources. In 2011, CMI actively supported the organization of three "Practical Training for Medical Personnel Engaged in Labor Health Services" classes. More than 100 people took part and expressed their appreciation and recognition. !

Ergonomic Engineering ImprovementIn 2011, Taiwan sites continued to promote the related projects from 2010. The China sites also launched ergonomic engineering projects for tasks that are physically demanding, involve long periods of standing or have a poor human-machine interface.

Taiwan STSP Site JNSP Site

Projects

1. Evaluate safety of PM operations on CVD machine2. Evaluate human-machine interface improvement for work stations with employees with disabilities 3. Observation of on-site refilling operations4. Improvement project for operational area with high ergonomic risks

1. Cadre training: Ergonomic risk identification and evaluation in operations2. Improvement to ergonomic risks in LCM/PM operations

China Longhua Site Ningbo Site Nanjing Site Nanhai Site

Projects

1. Cadre training: Ergonomic risk identification and evaluation in operations 2. Inventory of jobs that are physically-demanding (Move / pull / push / carry positions)3. Risk identification of physically-demanding positions 4. Improvement project for operational area with high ergonomic risks

External Sharing 1: "Physique Challenging Camp"At the "2011 Members’ Meeting and Sports Awards" of the Taiwan Business Council for Sustainable Development held in June 2011, CMI shared our implementations of "Weight Loss Class", "Aerobics and Nutrition Class" and "Calorie DIY Challenging Camp". The experience was shared with more than 200 industry representatives to encourage everyone to support health promotion activities.

Figure. Nurses from the Health Management Department lead the audience in dancing CMI's own "Health Exercise".

!


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Health StopA "Health Stop" stall was set up at the CMI "Year-End Party" and "Occupational Safety and Environmental Protection Month" events in 2011. A health related challenge activity was organized including basic physical tests (weight, BMI, waist size, body fat, blood pressure, color recognition, CO value), physical capabilities (2D muscle pain, grip strength, 666 stretching exercise awareness and basic fitness test (600 meters / 6 minutes). The activity was intended to look after the health of employees as well as their family and friends!

!Figure. Health Stop in action


Employees are the most important partner and asset for business. CMI strives to create a safe and friendly workplace. By providing employees with competitive compensation, diversified training scheme, and a wide range of employee benefits, as well as a safe and hygienic work environment, CMI ensures that employees can enjoy and concentrate on their work. The high morale results in improved competitiveness.

4.5.1 Recruitment and Staffing

Legal EmploymentAll employees are treated fairly and equally by CMI. Hiring, compensation and promotions are not affected by differences in race, religion, age, and gender. Child labor under the age of 15 is not to be employed by CMI. Employees under the age of 18 may not perform dangerous tasks. In accordance with the Employment Service Act and EICC regulations on non-discrimination, CMI has deleted all references to age, gender and height in our recruitment advertisements and resume forms. The employment contract is signed with the consent of both the employer and employee. Any changes to working conditions must be duly notified in accordance with the law. In 2011, there were no violations of employees' human rights.

Figure. "Smart Energy Saving: Introduction to Energy-saving Bulbs/LED Lights/T5 Tubes"

! !Figure. "Beautify Your Living Space: Installation of Blackout Curtains"

4.4.2 Creative Living Workshops

CMI continued to organize a series of simple and lively seminars on "Beautify Your Living Space: Installation of Blackout Curtains", "Smart Energy Saving: Introduction to Energy-saving Bulbs/LED Lights/T5 Tubes", "Green Living: Greening Starts at Home" and "Easy Eco-Living: Changing Your Home Environment and Style". A total of 118 employees took part in the green energy-saving classes to learn about to embrace a new green way of living comfortably.

The "Health Stop" attracted over 120 people. The tests identified three people at higher risk and they were referred to the NCKU Department of Physiotherapy for health education. The 118 people in the low-risk group were provided with health education by company therapists.

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Respect for Employee RightsBoth the Taiwan and China sites conducted legal/regulatory identification and risk assessment on labor rights in 2011. The assessments focused on the following aspects of the EICC guidelines: freely chosen employment, child labor avoidance, working hours, wages and benefits, humane treatment, non-discrimination and freedom of association. The human rights of workers were identified as a medium to high-risk item. This issue in labor conditions was considered important by our customers in 2011 as well. The 2012 management plan and targets have now been drawn up and the issue will be included in the annual EICC internal audit.

Gender distribution of new employees in Taiwan

Employee OverviewThe number of employees of CMI was 102,551 in 2011. The Taiwan and China s ites together had 100,248 employees. Two main categories of manpower are direct and indirect labor. Most direct labor (73%) were technicians working on the production lines. Indirect labor included employees working in R&D, production equipment, quality assurance, environmental safety & health and professional logistics (27%).

CMI has strengthened the management in working hours and foreign workers:

1. "Working hours": CMI conducted a thorough review of the timing system and strengthened the working hours database. Additional controls were placed on overtime applications to prevent people from working more than 60 hours a week. Benchmarking was established and a "Time Pool" based on local characteristics of each site was set up. Executives can now check the current status in real-time and receive regular reports. Managers were notified that working hours management is an important CMI policy. Regular audits and continuous improvements through the CSR management system will aggressively make it a part of the CMI management culture.

2. "Foreign Worker Management": CMI conducted a complete review on brokers and use of temporary workers to ensure our full compliance with EICC and customer requirements on "Freely Chosen Employment" risk management. We also strengthened our management measures on brokerage and service fees. Regular audits and evaluations are used to improve the management quality of brokers while a procedure/system surpassing EICC and regulatory requirements has now been adopted to protect the labor conditions of foreign workers and bring them in line with international standards.

Other overseas region

China sites

Taiwan sites

Region Distribution of employees

Gender distribution of new employees in China

Male MaleFemale Female


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Manpower Structure in Taiwan

Age distribution of new employees in ChinaAge distribution of new employees in Taiwan

Manpower Structure in China

Gender Distribution in Taiwan Gender Distribution in China

Contract Type

Contract Type Permanent Contract Agency Foreign Worker

Taiwan 90.82% 0.53% 1.37% 7.28%

China 84.01% NA 15.99% NA

Proportion of Local Management

Taiwan Sites Taiwanese Non Taiwanese Proportion of Local Management

No. of Managers 1,858 139 92.52%

China Sites Mainland Chinese Non Mainland Chinese Proportion of Local Management

No. of Managers 1,433 399 78.22%

Male MaleFemale

Female

Indirect labor Indirect

laborDirect labor

Direct labor

99

Turnover Rate CMI is committed to maintaining harmonious labor relations and we conform closely to all relevant labor regulations. In accordance with the spirit of the United Nations Global Compact and the EICC, employees have the right to leave with reasonable notice.

Female Turnover Male Turnover

Turnover in Taiwan 2,335 3,554

Turnover Rate 21.71% 25.35%

Turnover in China 73,065 67,017

Turnover Rate 262% 185%

Parental LeaveCMI offers menstrual leave, miscarriage leave, maternity leave, paternity leave, family leave and unpaid parental leave. These help to promote equality at work and allow employees to find a balance between work and family responsibilities. In 2011, the return to work rate after parental leave for the Taiwan sites in 2011 was 70.8% while the retention rate was 83.1%. The main factor involved is employees' desire to continue looking after their children.

Analysis of Parental Leave at Taiwan sites Female Male Total

No. of employees that took parental leave in 2011 334 36 370

No. of employees that returned to work at the end of parental leave in 2011 199 22 221

No. of employees whose parental leave concluded in 2011 (resigned after parental leave + stayed on after parental leave)

281 31 312

Return to Work Rate (%) 70.8%

No. of employees that continued working for at least one year after parental leave concluded in 2011 70 14 84

No. of employees that returned to work in 2010 after the end of parental leave 86 15 101

Retention Rate 83.1%

Working Together in Hard Times to Overcome Negative RumorsIn October, 2011, the media reported that CMI was using the shift roster to shorten working hours or force employees to go on leave. Actually the change in working hours were due to temporary manpower re-assignments on some production lines as well as training programs that led to some employees on shift-work being moved to normal daytime schedules. Employee communication was strengthened to resolve this misunderstanding. Despite the global economic downturn in 2011, CMI continued to offer new job vacancies to create employment opportunities. CMI did not retrench any employees due to economic problems either and continued to strengthen employee abilities through training. CMI appreciates the employees' willingness to stand by the company during the difficult times and continue moving forward together.


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4.5.2 Compensation and Benefits

CMI provides a competitive compensation scheme and a high quality work environment with comprehensive benefits. Regular market surveys and reviews of the compensation policy ensure that our overall standard of compensation remains competitive. Individual compensation is based on objective factors such as each employee's academic background, professional experience and position. The going market rate and minimum wage are also taken into account. There are no considerations given on gender, race, religion, politics or marital status. In Taiwan and China, the ratio between men and women's basic salaries is 1:1.

We also protect the rights and health of female employees by providing health protections, maternity leave and social welfare. Termination due to pregnancy or maternity leave is strictly prohibited. We guarantee that female employees will enjoy maternity leave as required by law and the right to return to their original or equivalent position when they return to work.

Comprehensive Insurance PlanEmployees at Taiwan sites are covered by Labor Insurance and National Health Insurance as required by law. Free group insurance is also provided to employees including life insurance, injury insurance, medical insurance and cancer insurance. Employees may also choose to pay for group insurance packages for themselves and their dependents. Employees on business trips or overseas assignments, as well as their accompanying spouses and children, also receive free overseas business travel insurance paid by CMI. This includes injury insurance, injury treatment insurance and unexpected overseas illness insurance to provide employees with a higher level of comprehensive coverage. In accordance with the "Labor Standards Act" and "Labor Pension Act", CMI has defined the "Retirement and Pension Payment Regulations for Taiwan Employees" to provide employees with comprehensive retirement benefits. In China, in addition to social insurance such as health, retirement, unemployment, occupational injury, childbirth and housing, CMI also provides a special medical insurance fund that helps employees deal with emergency situations.

4.5.3 Training and Development

CMI attaches great importance on employee training and development. We have invested extensively in the design of a rigorous training system to improve the quality of our employees and realize our business goals.

Connection between Annual Training Plan and Personal Learning MapCMI has set up an "Employee Development Time-Space Concept Chart" based on short, medium and long-term development of employees within the organization as well as their performance. The chart serves as the basis for their annual training. Combining strategic organizational requirements with the results of executive interviews ensure that the annual training plan not only meets the needs of organizational development but also matches the employee's own personal development plan.

101

Improving Professionalism through Chimei Learning and Certificate SystemCMI set up the Chimei Learning and Certificate System to integrate business and personnel development. The extensive selection of engineering, quality and management training/self-development courses provides employees with a learning path that matches their work requirements and development. Employees can therefore continue to further refine their expertise. Chimei Learning and Certificate System also provide online learning resources. The personal learning map and training records can be accessed through the system to ensure the steady development of employees' professional skills. Feedback is provided immediately after training so trainers can use them as a reference for improving course quality. We also actively train our employees to serve as instructors in Chimei internal courses, boosting their self-development and communication skills.

Complete Orientation TrainingCMI provides new employees with appropriate training starting from their first day at work. New employees are taught about the CMI culture, vision, mission, rules, CSR philosophy and related policies. In this way, new recruits are familiarized with their environment and build up rapport with CMI. For professional education, complete basic courses on manufacturing, operations and management processes have been developed so new employees can be prepared to get into their work as soon as possible.

Employee Training StatisticsCMI actively organized training courses in 2011 and a total of 186,654 people received 2,170,204 hours of training. The passing on of corporate knowledge, experience and techniques enhanced the overall standard and competitiveness.

ItemManagement Indirect Labor Direct Labor

Female Male Female Male Female Male

Taiwan Sites

No. of Trainees (a) 176 1,376 1,808 5,861 9,015 6,430

No. of Training Hours (b) 34,994.5 380,549.8 101,802.5

Average Training Hours c=b/a 22.55 49.62 6.59

China Sites

No. of Trainees (a) 198 706 5,731 9,917 37,965 52,139

No. of Training Hours (b) 12,191 121,870 1568,476

Average Training Hours c=b/a 13.49 7.79 17.41

! !Figure. "TTQS Taiwan Training Quality System" gold and silver medals

"TTQS Gold Medal and Silver Medal"In March, 2011, CMI applied to the CLA Bureau of Employment and Vocational Training for "TTQS Taiwan Training Quality System" certification to improve our training standards and processes. After undergoing the written review, corporate assistance and interim on-site inspections, CMI was found by the review committee to meet the highest training quality standards of TTQS. In November, 2011, CMI was awarded the TTQS silver medal while the CMI STSP subsidiary was awarded with the gold medal.


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Performance Management and DevelopmentThe goal of performance management and development at CMI is to maximize employee potential, ability and productivity. To ensure that "Performance Management and Development" is practiced by employees in their everyday work, a drive was launched on March 18th, 2010. The three key cycles in performance management are now implemented every year: set targets, mid-term review and final performance evaluation. During this process, managers communicate closely with employees on their work and targets so they can improve their performance and meet organizational goals.

4.5.4 Zero Distance Communication

Employee Complaints and Communications Framework for Taiwan

Real-time Transparent Communications with "CMI E-News"To keep employees up to date with the company's latest developments and vision, the "CMI E-News" has been published on a bi-monthly basis since November, 2011. E-News consists of five main parts: CMI News, Management Interview, Benchmarking, Special Reports and SMILE. Content includes the latest company news, top executives' views on business performance, encouragement for employees, stories on corporate culture and core values, and awards. Strengthening the mechanism for transparent internal communications helps to build up the sense of coherence of employees.

The labor relations meeting and employee welfare committee meeting are convened each quarter during which employer representatives made up by high-level executives meet with labor representatives elected by ordinary employees to engage in a bi-directional communication. Fab departments also use monthly meetings and group talks to collect suggestions and opinions. CMI also organizes "Meet the Management" and "Quarterly Management-Employee Meeting" events to communicate the company's latest developments and future direction to all employees around the world.

In 2011, a total of 47 employee complaints were received. All were resolved through active communication. There were no incidents of discrimination or violations of labor rights at CMI in 2011.

Smooth Channels for CommunicationChimei puts a st r ong emphas is on har monious labor relations through a free and open exchange of opinions. We have also set up a full-spectrum of communication channels to this end including the "Communication Hotline", "Employee Communications Mailbox" as well as the "Suggestion Box" at each fab. The channels ensure that employee problems can be dealt with in a timely manner. Employee opinions can be submitted with their name or anonymously.

Bi-directional Com

munication

Complaints

Meet the Management / Quarterly Management-Employee Meeting quarterly

quarterlyEmployee Welfare Committee Meeting / Labor Relations Meeting

Departmental Meetings/ Monthly Unit Meetings weekly/monthly

Feedback Mechanism: Telephone/Interview/System Approval/Bulletin Board

Communications Hotline #67885

System Platform1. Employee communications mailbox2. Manufacturing unit's system opinion platform

Physical Suggestions Box

Zero-Distance Communications

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!

!

Road relay connected the sites of Greater China to convey the mission of "Insist, Touching, CMI"

!

!

Building Sense of Coherence of Employees – "Insist, Touching, CMI"CMI organized a 6000 km torch run to convey the insistence and touching nature of CMI! Total 1,200 employees were recruited to form a marathon torch relay led by CEO Tuan to connect all of the Greater China sites. The torch team first started from the JNSP site in the north to the STSP site in the south. From there, the determination of CMI Taiwan flew across the Taiwan Strait to reach the Ningbo, Shanghai, Nanjing, Nanhai and Longhua sites in China. Finally, it

returned from the Longhua site in China to the JNSP site in Taiwan. During the 22-day journey, the torch team fulfilled their mission of circumnavigating Greater China in spite of the cold and rain. The feat was a first for CMI and showed the world the realization of "Insist, Touching, CMI"! The marathon route formed an infinity sign (∞) on the map, symbolizing the determination of CMI and belief in a future with endless possibilities.


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!

105

AppendixThis section contains the Independent Assurance Opinion Statement from a third-party verification unit, as well as the

"Global Reporting Initiative GRI G3.1" comparison table. This report conforms to the principles of inclusion, materiality,

and response defined in GRI G3.1 A+ and AA1000 Assurance Standards (2008).


Report

106

107

1.1Statement from the most senior decision-maker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy

● 1.1 Expectations and Commitments 5

1.2 Description of key impacts, risks, and opportunities ●2.1 Company Overview3.2.1.1 Greenhouse Gas Reduction Management

17

2.1 Name of the organization ● 2.1 Company Overview 172.2 Primary brands, products, and/or services ● 2.1 Company Overview 17

2.3 Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures ● 2.1 Company Overview 17

2.4 Location of organization’s headquarters ● 2.1 Company Overview 17

2.5Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report

● 2.1 Company Overview 17

2.6 Nature of ownership and legal form ● 2.1 Company Overview 17

2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries) ● 2.1 Company Overview 17

2.8 Scale of organization ● 2.1 Company Overview 172.9 Significant changes during the reporting period regarding size, structure, or ownership ● 2.1 Company Overview 17

2.10 Awards received in the reporting period ●

1.1 Expectations and Commitments3.2 Green operations3.3 Green Value Chain4.1 Safety

5,36,49,71

3.1 Reporting period (e.g., fiscal/calendar year) for information provided ● From the Editor 23.2 Date of most recent previous report (if any) ● From the Editor 23.3 Reporting cycle (annual, biennial, etc.) ● From the Editor 23.4 Contact point for questions regarding the report or

its contents ● From the Editor 2

3.5 Process for defining report content ●1.2 Stakeholder Identification and Communication 11

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance. ● From the Editor 2

3.7 State any specific limitations on the scope or boundary of the report ● From the Editor 2

3.8Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations

● 2.1 Company Overview 17

3.9Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report

● From the Editor 2

3.10Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods)

● From the Editor 2

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report ● From the Editor 2

3.12 Table identifying the location of the Standard Disclosures in the report ● GRI Cross Reference Table 1073.13 Policy and current practice with regard to seeking external assurance for the report ●

Appendix – Independent Assurance Opinion Statement 105

4.1Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight

○ 2.3.1 Corporate Organization 19

4.2Indicate whether the Chair of the highest governance body is also an executive officer (and, if so, their function within the organization’s management and the reasons for this arrangement)

● 2.3.1Corporate Organization 19

4.3For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members

● 2.3.1 Corporate Organization 19

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body ●

1.2 Stakeholder Identification and Communication2.2 Financial Results

11,18

4.5Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance)

● 2.3.1Corporate Organization 19

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided ●

2.3.1 Corporate Organization2.3.2 Internal Control System 19,21

4.7Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity

○

CMI does not have a specific process in place for determining the "qualifications, and expertise of the members of the highest governance body… in economic, environmental and social areas".

4.8Statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation

●1.1 Expectations and Commitments2.2 Financial Results2.3.3 CSR Practices

17

4.9Board procedures for overseeing the organization’s identification and management of economic, environmental and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct and principles

●Message from Chairman and CEO1.1 Expectations and Commitments2.3.1 Corporate Organization

15,16

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance ○ 2.3.1 Corporate Organization 15

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization ●

4.1.2 Business Continuity Management 15,18

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses ●

Special Report –Leading the Push for a Low Carbon Society3.1 Green Living3.2.1 Climate Change Risks and Opportunities3.2.1.1 Greenhouse Gas Reduction Management

31,33,37,38

4.13Membership in associations, and/or national/international advocacy organizations in which the organization has positions in governance bodies; participates in projects or committees; provides substantive funding beyond routine dues; or views membership as strategic

●1.2 Stakeholder Identification and Communication 11

4.14 List of stakeholder groups engaged by the organization ●1.2 Stakeholder Identification and Communication 11

4.15 Basis for identification and selection of stakeholders with whom to engage ●1.2 Stakeholder Identification and Communication 11

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group ●

1.2 Stakeholder Identification and Communication 11

4.17Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting

●1.2 Stakeholder Identification and Communication 11

GRI G3.1 Cross Reference TableApplicable ●：Fully Disclosed ○：Partially Disclosed NA：Not

Aspect GRI Indicator Description of Indicator Disclosure Responsive Chapter Page Remark

Governance, Commitments, and Engagement

Organizational Profile

Report Parameters

Strategy and Analysis


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EC 1Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments

○

2.2 Financial Results4.3.1 Charity Service4.3.4 Community Engagement4.5.2 Compensation and Benefits

18.79.84.100

EC 2 Financial implications and other risks and opportunities for the organization’s activities due to climate change ●

3.2.1.1 Greenhouse Gas Reduction Management3.2.5 Environmental Impact Reduction

38,43

EC 3 Coverage of the organization’s defined benefit plan obligations ● 4.5.2 Compensation and Benefits 100

EC 4 Significant financial assistance received from government ● -

CMI has received tax credits on past purchases of production equipment and R&D investments. The relevant information is disclosed under the "Income Tax" section of the CMI 2011 Annual Report.

EC 5 Range of ratios of standard entry level wages by gender compared to local minimum wage at significant locations of operation ● 4.5.2 Compensation and Benefits 100

EC 6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation ● 2.3.4 Supply Chain Management 23

EC 7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation ● 4.5.1 Recruitment and Staffing 96

EC 8Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in kind, or pro bono engagement.

●

4.3.1 Charity Service4.3.2 Education4.3.3 Culture and Arts4.3.4 Community Engagement

79,82,83,84

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts ○

CMI has not assessed indirect economic impact.

EN 1 Materials used by weight or volume ●3.2.2 Environmental Material Flow 39

EN 2 Percentage of materials used that are recycled input materials ●3.2.2 Environmental Material Flow 39

EN 3 Direct energy consumption by primary energy source ●3.2.2 Environmental Material Flow 39

EN 4 Indirect energy consumption by primary source ●3.2.2 Environmental Material Flow 39

EN 5 Energy saved due to conservation and efficiency improvements ●

3.2.3Energy Management3.2.5 Environmental Impact Reduction3.3.3 Low Carbon Green Product Design

40,43,50

EN 6Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives

●3.3.3 Low Carbon Green Product Design 50

EN 7 Initiatives to reduce indirect energy consumption and reductions achieved ●

3.2.1.1 Greenhouse Gas Reduction Management 38

EN 8 Total water withdrawal by source ●3.2.2 Environmental Impact Reduction 39

EN 9 Water sources significantly affected by withdrawal of water ●3.2.4 Water Resources Management 41

EN 10 Percentage and total volume of water recycled and reused ●3.2.2 Environmental Impact Reduction 39

EN 11Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

● 3.4.2 Biodiversity Enhancement 59

EN 12Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

● 3.4.2 Biodiversity Enhancement 59

EN 13 Habitats protected or restored ● 3.4.2 Biodiversity Enhancement 59

EN 14 Strategies, current actions, and future plans for managing impacts on biodiversity ● 3.4.2 Biodiversity Enhancement 59

EN 15Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk

NA

All CMI fabs are located with science or technology industrial parks outside of eco-conservation areas so there is no significant impact.

EN 16 Total direct and indirect greenhouse gas emissions by weight ●3.2.1.1 Greenhouse Gas Reduction Management 38

EN 17 Other relevant indirect greenhouse gas emissions by weight ●3.2.1.1 Greenhouse Gas Reduction Management 38

EN 18 Initiatives to reduce greenhouse gas emissions and reductions achieved ●

3.2.1.1 Greenhouse Gas Reduction Management 38

EN 19 Emissions of ozone-depleting substances by weight ●3.2.2 Environmental Impact Reduction 39

EN 20 NO, SO, and other significant air emissions by type and weight ●3.2.2 Environmental Impact Reduction 39

EN 21 Total water discharge by quality and destination ●

3.2.2 Environmental Impact Reduction3.2.4 Water Resources Management3.2.5 Environmental Impact Reduction

39,41,43

EN 22 Total weight of waste by type and disposal method ●

3.2.2 Environmental Impact Reduction3.2.5 Environmental Impact Reduction

39,43

EN 23 Total number and volume of significant spills ●3.2.5 Environmental Impact Reduction 43

EN 24Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported wasteshipped internationally ○

CMI shipped no wastes overseas for disposal in 2011!

EN 25Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff

○

As CMI fabs are all located with science or technology industrial parks, all waste water are treated to park standards before being discharged into the park's sewage system. The impact of discharges on the environment was therefore not assessed.

Economic Performance Indicators


Environmental Performance Indicators

109

EN 26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation ● 3.3 Green Value Chain 49

EN 27 Percentage of products sold and their packaging materials that are reclaimed by category ○

3.2.5 Environmental Impact Reduction 43

EN 28Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations

●3.2.5 Environmental Impact Reduction 43

EN 29Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce

○'Employees' commute assessed to produce no significant environmental impact.

EN 30 Total environmental protection expenditures and investments by type ●

3.2.5 Environmental Impact Reduction 43

LA 1 Total workforce by employment type, employment contract, and region, broken down by gender ● 4.5.1 Recruitment and Staffing 96

LA 2 Total number and rate of new employee hires and employee turnover by age group, gender, and region ● 4.5.1 Recruitment and Staffing 96

LA 3Benefits provided to full-time employees that are not provided to temporary or part time employees, by significant locations of operation

● 4.5.2 Compensation and Benefits 100

LA 4 Percentage of employees covered by collective bargaining agreements ○

CMI has no union. All employees sign an employment contract with CMI defining the mutual rights and responsibilities of the employer and employee.

LA 5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements ●

CMI conforms to all notification requirements. CMI regulations on minimum notice periods are as follow: 1. 10 days notice for those with 3 months ~ 12 months of service. 2. 20 days notice for those with 1 year ~ 3 years of service. 3. 30 days notice for those with over 3 years of service.

LA 6Percentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health and safety programs

●

At each CMI fab, labor representatives account for over 1/3 of the safety & health committee so this conforms to the requirements of the "Regulations Governing Labor Safety & & Health Organization Management and Self-Inspection".

LA 7Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender

● 4.1 Safety 71

LA 8Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases

○4.3.4 Community Engagement4.4.1 Comprehensive Health Care for Employees

84,93

LA 9 Health and safety topics covered in formal agreements with trade unions ○

4.1 Safety4.4.1 Comprehensive Health Care for Employees

71,93CMI has no union. All safety and health-related issues are administered through the safety & health committee.

LA 10 Average hours of training per year per employee by gender, and by employee category ● 4.5.3 Training and Development 100

LA 11Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

● 4.5.3 Training and Development 100

LA 12 Percentage of employees receiving regular performance and career development reviews, by gender ○ 4.5.1 Recruitment and Staffing 96

LA 13Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity

○ 2.2 Corporate Organization4.5.1 Recruitment and Staffing 19,96 All members of the Board of

Directors are male

LA 14 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation ● 4.5.2 Compensation and Benefits 100

LA 15 Return to work and retention rates after parental leave, by gender ● 4.5.1 Recruitment and Staffing 96

HR 1Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening

○ CMI had no significant investment projects in 2011.

HR 2Percentage of significant suppliers, contractors, and other business partners that have undergone human rights screening, and actions taken

○ 2.3.4 Supply Chain Management 23

HR 3Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

● 2.3.3 CSR Practices 21

HR 4 Total number of incidents of discrimination and corrective actions taken ● 4.5.4 Zero Distance Communication 102 There were no incidents of

discrimination at CMI in 2011.

HR 5Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights

○ 2.3.4 Supply Chain Management4.5.2 Compensation and Benefits 23,100


Labor Practices and Decent Work Performance Indicators

Human Rights Performance Indicators


Report

110

HR 6Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor

● 2.3.4 Supply Chain Management4.5.1 Recruitment and Staffing 23,96

HR 7Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor

● 2.3.4 Supply Chain Management4.5.1 Recruitment and Staffing 23,96

HR 8Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations

○In 2011, CMI did not conduct any human rights-related training for security personnel.

HR 9 Total number of incidents of violations involving rights of indigenous people and actions taken ● 4.5.4 Zero Distance Communication 102

HR 10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments ● 2.3.4 Supply Chain Management

4.5.1 Recruitment and Staffing 23,96

HR 11Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms

● 4.5.4 Zero Distance Communication 102

SO 1Percentage of operations with implemented local community engagement, impact assessments, and development programs

○3.1 Green Living4.3.3 Culture and Arts4.3.4 Community Engagement

33,83,84

All CMI fabs are located in industrial zones and environmental impact assessments were carried out in accordance with local laws. In 2011, community engagement activities were organized by the Taiwan fabs as well as Longhua and Ningpo fabs in China

SO 2 Percentage and total number of business units analyzed for risks related to corruption ● 2.3.3 CSR Practices 21

SO 3 Percentage of employees trained in organization’s anti-corruption policies and procedures ○ 2.3.3 CSR Practices 21

SO 4 Actions taken in response to incidents of corruption ● 2.3.3 CSR Practices 21

SO 5 Public policy positions and participation in public policy development and lobbying ● CMI has always remained

politically neutral. We do not engage in any form of political lobbying, take part in the activities of any political party, and make no political contributions.

SO 6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country ●

SO 7 Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes ● 2.2 Financial Results 18

SO 8Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations

●2.3.3 CSR Practices3.2.5 Environmental Impact Reduction

21,43

SO 9 Operations with significant potential or actual negative impacts on local communities ●

1.2 Stakeholder Identification and Communication3.2.5 Environmental Impact Reduction 3.4.2 Biodiversity Enhancement

11,43,59

SO 10Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities

●

1.2 Stakeholder Identification and Communication3.2.5 Environmental Impact Reduction 3.4.2 Biodiversity Enhancement

11,43,59

PR 1Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures

NAAs CMI is not an end-product manufacturer, management is carried out during the design and production stages.

PR 2Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes

●CMI was not involved in any violations of health and safety related laws on products and services in 2011.

PR 3Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements

NAAs CMI is not an end-product manufacturer, management is carried out during the design and production stages.

PR 4Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

●There were no violations of product and service information and labeling laws by CMI in 2011.

PR 5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction ● 2.3.5 Customer Satisfaction 25

PR 6Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship


PR 7Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes


PR 8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data ● -

There were no breaches of customer privacy or losses of customer data by CMI in 2011.

PR 9Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services

● -There were no violations of product and service-related laws by CMI in 2011.


Society Performance Indicators

Product Responsibility Performance Indicators

!

!

Black-winged Stilt

Greater Painted-snipe

!

! ! ! !

Common Moorhen

Chinese bulbulWhite EyeCattle EgretTree Finchs

!

Spotted Munia

Bird ecology around the company

CMI adopted the ideal of "To Earth, with L.O.V.E." in the e n v i r o n m e n t a l d i m e n s i o n . The bird at the right side was captured at Southern Taiwan Science Park.

Chimei Innolux Corporation

Address: No.160, Kesyue Rd., Jhunan Science Park,

Miaoli County 35053, Taiwan (R.O.C.)

Tel: +886 37 586 000

Fax: +886 37 584 622

Website: www.chimei-innolux.com

Stone paper invented in Taiwan was used in the printing of this CSR report. The major ingredient of stone paper is inorganic mineral powder (stone powder) 70~80%, the rest is environmentally-friendly plastic material (for polymerization). The production of stone paper does not involve any tree cutting, water usage, waste water and waste air.

Documents

Table of Contents Innolux 2011 CSR Repor… · the direction and objectives of CMI's CSR and sustainable development. The CSR management representative is President Jyh-Chau Wang