Materiality Analysis & Stakeholder Engagement

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Materiality Analysis & Stakeholder Engagement

Materiality Analysis

GRI 3-1, 3-2, 3-3

Based on the 8 reporting principles of GRI Standards, SYSTEX conducts the process of “Materiality Analysis” and collects the sustainability status to compile sustainability report and disclose its sustainable performance. After analyzing leading companies and industry-related issues, SYSTEX has compiled 20 sustainability topics and conducted a survey determined stakeholder concerns for sustainability topics. The Sustainability Group assessed impacts and probabilities, and made rankings with external experts. Finally, the CSO approved 9 material topics.

2022’s 20 sustainability topics were updated with “Intellectual Property Management” merging with “Innovation and R&D” into “Innovation, R&D and IP. Management,” “Diversity and Equality” and “Non-discrimination” into “Diversity, Equality, and Inclusion.” Human rights are now in GRI general disclosures, evaluating impacts and probabilities, and drawing a human rights risk matrix to minimize impacts. Compared with the previous year’s topics, “Sustainable Products and Services” and “Information Security” were promoted to the top 2 and newly included as the material topics; “Regulatory Compliance” was excluded because internal training and management reduced negative impacts.

At the end of 2022, SYSTEX Group has conducted a materiality analysis.

In 2023, considering that SYSTEX Group has not encountered any major business issues that would lead to drastic changes in the materiality analysis, SYSTEX has changed the materiality analysis frequency from annual to biennially starting from 2023. If any issues affecting operations occur in a year in which an analysis is not conducted, a new materiality analysis will be conducted.

For more details about human rights risk assessment, please refer to “Human Rights Protection“.
For more details about climate risks, please refer to “Climate-Related Risk“.

Process to Determine Material Topics

1. Identify Material Topics

According to AA1000 SES, SYSTEX identifies 7 types of stakeholders. Following GRI standards, SASB – Software & IT Services and integrating the concerns of benchmark enterprises and stakeholders, SYSTEX has summarized 20 Sustainability Topics, which were divided into 3 aspects: economy, environment, and human capital/society.

Sustainability Topics

2. Assess Importance of Stakeholders

SYSTEX sends materiality questionnaires to its executive-level and stakeholder representatives to understand the concerns of stakeholders on each sustainability topic.

Stakeholder Questionnaires

3. Analyze Materiality

The Sustainability Group assessed “positive/negative impact” and “probability” of each sustainability topic, collected 10 economic, 7 environmental, and 7 social questionnaires with a total of 24 questionnaires, and drew the materiality matrix.

Impact Questionnaires

4. Review Disclosures

Consider concerns of stakeholders and external experts, and rank sustainability topics according to the “positive/negative impact” and “probability.” Finally, the CSO approved 9 material topics. The Sustainability Group will then refer to the GRI and list the corresponding indicators for data inventory.

Material Topics

Materiality Matrix and Topics

List of Sustainability Topics

Positive and Negative Impact Matrix

Reference to the “GRI 3: Material Topics 2021”, SYSTEX assessed the positive/negative impacts and possibilities of each topic. Among them, “Social Engagement,” “Sustainable Products and Services” and “Economic Performance” are topics with high positive impact, while “Sustainable Products and Services” and “Talent Development” are topics with high negative impact.

Topics with High Positive Impact

Adhering to the spirit of Tech for Good in “Social Engagement,” SYSTEX uses cores to cultivate 3,000+ world-class software talents for Taiwan.
“Sustainable Products and Services” helps clients realize Net-Zero and reduce costs, thereby increasing E- and G- positive impacts.
“Economic Performance” enables revenue growth, supporting more sustainable budgets, thereby bringing E-, S- and G- positive impacts.

Topics with High Negative Impact

“Sustainable Products and Services”: Due to the intense competition in the sustainable services market, missed market opportunities will have negative economic impacts, so that SYSTEX provides comprehensively sustainable solutions.
“Talent Development”: Neglecting market trends and employee needs leads to negative impacts, so that SYSTEX continuously meets employees’ needs for career development and transparent promotion channels.

Ranking Material Topics

Changes in Material Topics

Materiality of sustainability issues were ranked by impact, probability, and stakeholder concerns. 9 with above-average scores were chosen as material topics for the year. 2 material topics, “Sustainable Products and Services” and “Information Security” this year address the urgency for sustainable transition, customer privacy, and trade secret protection. “Regulatory Compliance” did not make the cut due to lower impact but will still be monitored for compliance with economic, social, and environmental requirements.

Material Topics and their Meanings and Impacts on the Value Chain, and related Policies, Strategies and Grievance Mechanisms

SYSTEX Group identifies 9 material topics across “governance, environment and social”, and demonstrates the meanings of these material topics to SYSTEX, management policies, grievance mechanism and direct/indirect impacts on internal stakeholders or external stakeholders along the entire value chain, and then displays the scope of impacts on these stakeholders, identifying the types of impacts that affect them.

●: Direct impact ○: Indirect impact

Material Topics		Meanings and Impacts	Policy and Strategy	Grievance Mechanism	SDGs	Internal			Value Chain
Material Topics		Meanings and Impacts	Policy and Strategy	Grievance Mechanism	SDGs	SYSTEX	Affiliate	Employee	Customer	Original	Supplier
G	Sustainable Products and Services	SYSTEX’s sustainable solutions are beneficial to the economy, environment, and society. To remain competitive in the growing market, SYSTEX works with suppliers on innovative, sustainable solutions optimal for operations and shareholder interests.	SYSTEX aims to be the top sustainable partner for enterprise clients, providing innovative solutions and digitalized management in their sustainable transition.	The President supervises performance quarterly and sets business targets. Each BU optimizes sustainable solutions.	SDG8	●	●	○	●	●	○
	Information Security	As an IT service industry leader, SYSTEX prioritizes information security and safeguards business secrets and customer privacy to prevent negative impacts on stakeholders.	SYSTEX formulates IS-related regulations such as “Information Security Policy”, obtains ISO 27001 and other IS-related verifications, regularly conducts various crisis drills, and strengthens training, to improve information security risk defense capabilities.	The IS Technology Department plans employee IS training, conducts ISO 27001 annually, and performs information security drills regularly.	–	●	●	●	●	●	●
	Economic Performance	The financial performance not only has a direct impact on SYSTEX itself and its shareholders but also increases the ESG budgets for sustainable solutions.	Gather SYSTEX’s tech teams and jointly work with ecosystem partners to offer 5 types of value-added services, aiding clients in building innovative business models and creating exponential growth.	The Board of Directors, as the highest governance body, is responsible for the operation and its executive performance.	SDG8	●	●	●	●	●	●
	Corporate Government	Based on the philosophy of integrity and transparency, SYSTEX formulates its governance mechanism to drive a positive impact.	Ensure the diversity and independence of directors through the “Rules of Election of Directors” and “Corporate Governance Best Practice Principles”.	The Board of Directors, as the highest governance body, is responsible for the operation and its executive performance.	SDG8 SDG16	●	●	○	○	○	○
	Integrity	SYSTEX strives to be a trusted brand with a positive economic impact through strict business ethics and financial transparency.	Implement Integrity management, ask employees to sign the “Ethical Corporate Management Best Practice Principles” and arrange ethical training courses to make integrity spirit take root. Externally, suppliers are also required to sign the “Integrity Pledge and Declaration”.	The Integrity Committee is responsible for prevention measures and supervising their implementation.	SDG8 SDG16	●	●	●	●	●	●
E	Green Operation	The carbon emissions of the SYSTEX headquarters building mainly come from the daily use of energy, water, papers, and other resources, which are managed to reduce negative impacts on the environment.	To achieve the goal of “Net Zero by 2050”, based on 3 environment-related ISO verifications: ISO 14001, ISO 14064-1, ISO 50001.	The OHS and Energy Committee holds meetings regularly to confirm the achievement of targets.	SDG7 SDG12 SDG13	●	●	○	○	○	○
S	Talent Attraction and Retention	Attraction and retention of key talent enhance competitiveness. Completing the talent development and benefit mechanism can increase the positive impacts on employee rights.	Launch a recruitment program to recruit talents with core capabilities. Care for new employees with “New Employee Training Courses,” “Mentor System” and “Dedicated HR Service Assistant.” Implement benefit and welfare mechanisms.	The HR Division reviews the retention of key talents and new-hires regularly, tracks the policy implementation, and investigates the reasons for employee departure.	SDG3 SDG4 SDG8 SDG10 SDG16 SDG17	●	●	●	○	○	○
	Talent Development	Taiwan faces an IT talent shortage, and employees prioritize companies that offer training in the latest technologies. SYSTEX fosters tech talents with comprehensive career development to address the digital transition, mitigating employee turnover impact. SYSTEX designs targeted talent programs for different stages, enhancing digital competitiveness.	Adhering to the vision, SYSTEX offers complete information services and the robust “Employees Training and Development Rules” with performance management and continuous core HR investment. SYSTEX developed software talent programs for different learning stages to build a pool of exceptional prospects.	The HR Division provides training resources and increases the number of employee training hours internally, SYSTEX actively invests in IT education to accumulate world-class IT talents early.		●	●	●	○	○	○
	Employee Health	Work stress and long hours of sitting in the office may harm the employee’s health. Creating a safe workplace and developing health promotion programs can increase the positive impacts on employees.	Employ full-time “health managers”, set up a “health management center” and innovate “Health UP! APP” to help employees manage their health.	The health manager evaluates the employee’s medical report annually and provides consultation.		●	●	●	○	○	○

Goals for Material Topics

Material Tops		2023 Goal	2023 Performance	Status	Short-term goal	Mid-term goal	Long-term goal
Material Tops		2023 Goal	2023 Performance	Status	2024	2027	2030
G	Sustainable Products and Services	Sustainable solution: 50 solutions	Sustainable solution: 51 solutions	Achieved	Sustainable solution: 50 solutions	Sustainable solution: 50 solutions	Sustainable solution: 50 solutions
	Information Security	Conduct ISO 27001 annually No data leakage incident	Maintain ISO 27001 annually No data leakage incident	Achieved	Conduct ISO 27001 annually No data leakage incident	Conduct ISO 27001 annually No data leakage incident	Conduct ISO 27001 annually No data leakage incident
	Economic Performance	Positive operating profit	Positive profits and increase by 6.2%	Achieved	Positive operating profit	Positive operating profit	Positive operating profit
	Governance	Corporate Governance Evaluations: 6%-20% No major violations occurred	Corporate Governance Evaluations: 6%-20% No major violations occurred	Achieved	Corporate Governance Evaluations: 6%-20% No major violations occurred	Corporate Governance Evaluations: 6%-20% No major violations occurred	Corporate Governance Evaluations: Top 5% No major violations occurred
	Integrity	Integrity management advocacy indicators > 99% Signed “Vendor Integrity Pledge and Declaration”: 96% Signed “Supplier CSR Code of Conduct”: 80% Responded “Supplier CSR Self-Assessment”: 60% Responded “Suppliers Information Security”: 60%	Integrity management advocacy indicators:99.6% Signed “Vendor Integrity Pledge and Declaration”> 99% Signed “Supplier CSR Code of Conduct”> 99% Responded “Supplier CSR Self-Assessment”: 65.5% Responded “Suppliers Information Security”: 66.1%	Achieved	Integrity management advocacy indicators > 99% Signed “Vendor Integrity Pledge and Declaration”: 96% Signed “Supplier CSR Code of Conduct”: 96% Responded “Supplier CSR Self-Assessment”: 65% Responded “Suppliers Information Security”: 65%	Integrity management advocacy indicators > 99% Signed “Vendor Integrity Pledge and Declaration”: 97% Signed “Supplier CSR Code of Conduct”: 97% Responded “Supplier CSR Self-Assessment”: 67% Responded “Suppliers Information Security”: 67%	Integrity management advocacy indicators > 99% Signed “Vendor Integrity Pledge and Declaration”: 99% Signed “Supplier CSR Code of Conduct”: 99% Responded “Supplier CSR Self-Assessment”: 70% Responded “Suppliers Information Security”: 70%
E	Green Operation	Electricity consumption per revenue decreased by 5% annually Water consumption per revenue decreased by 1% annually Total waste per revenue decreased by 10% annually GHG Emission per revenue decreased by 1% annually Renewable energy consumption rate: 2% Conduct 3 Environmental-ISO verifications: ISO 14064-1, ISO 14001, ISO 50001	Electricity consumption per revenue decreased by 6.5% annually Water consumption per revenue decreased by 3.4% annually Total waste per revenue decreased by 42.2% annually GHG Emission per revenue increased by 3.8% annually (Ongoing) Renewable energy consumption rate: 2% Maintain 3 Environmental-ISO verifications: ISO 14064-1, ISO 14001, ISO 50001	Achieved	Electricity consumption per revenue decreased by 5% annually Water consumption per revenue decreased by 1% annually Total waste per revenue decreased by 1% annually GHG Emission per revenue decreased by 3% annually Renewable energy consumption rate: 4% Conduct 3 Environmental-ISO verifications: ISO 14064-1, ISO 14001, ISO 50001	Electricity consumption per revenue decreased by 5% annually Water consumption per revenue decreased by 1% annually Total waste per revenue decreased by 1% annually GHG Emission per revenue decreased by 3% annually Renewable energy consumption rate: 14% Conduct 3 Environmental-ISO verifications: ISO 14064-1, ISO 14001, ISO 50001	Electricity consumption per revenue decreased by 5% annually Water consumption per revenue decreased by 1% annually Total waste per revenue decreased by 1% annually GHG Emission per revenue decreased by 3% annually Renewable energy consumption rate: 20% Conduct 3 Environmental-ISO verifications: ISO 14064-1, ISO 14001, ISO 50001
S	Talent Attraction and Retention	Key talents retention rate: 93% New-hire retention rate: 80%	Key talents retention rate: 95.1% New-hire retention rate: 79.3% (Ongoing)	Achieved	Key talents retention rate: 95% New-hire retention rate: 81%	Key talents retention rate: 95% New-hire retention rate: 83%	Key talents retention rate: 95% New-hire retention rate: 85%
	Talent Development	Average training hours > 30 hours YTP junior-high team: 60	Average training hours: 34.3 hours YTP junior-high team: 80	Achieved	Average training hours > 30 hours YTP junior-high team: 60	Average training hours > 30 hours YTP junior-high team: 70	Average training hours > 30 hours YTP Participants > 1,000 persons
	Employee Health	Conduct ISO 45001 annually High-risk cases care rate: 100% Employee health examination rate: 75% (legal age: 100%)	Conduct and maintain ISO 45001 High-risk cases care rate: 100% Employee health examination rate: 83.8% (legal age: 100%)	Achieved	Conduct ISO 45001 annually High-risk cases care rate: 100% Employee health examination rate: 75% (legal age: 100%)	Conduct ISO 45001 annually Health promotion expense > NT$4M Employee health examination rate: 75% (legal age: 100%)	Conduct ISO 45001 annually Health promotion expense > NT$5M Employee health examination rate: 75% (legal age: 100%)

Stakeholder Engagement and Communication Channels

GRI 2-25, 2-29

2023 SYSTES’s communication condition with stakeholders had already been reported to the boards on December 20.

Stakeholder	Meanings of Stakeholder	Topics	Frequency and Channels	Our Responses (2023)
Employee	Employees are the most important partners of SYSTEX and the most important foundation for enterprise sustainability.	Talent attraction and retention Human rights protection Occupational Health and Safety	[Annual] Business meeting, technical meeting [Quarterly] Labor-management meeting [Monthly] Compliance announcement, sales meetings [Irregularly] Internal announcement, communication mailbox, various meetings, training courses	Conduct employee training with a total of 53,109 persons and 140,046 hours; Advocate the “Code of Conduct on Human Rights topics,” totaling 4,279 persons; Conduct human rights courses, totaling 3,155 persons and 4,083 hours Rewarded “2023 Labor Safety Award: Intimate Boss Award-First Prize” by Taipei City Government A total of NT$4,409 thousand in maternity subsidy A total health promotion expenses of NT$16,555 thousand
Customer	SYSTEX focuses on improving quality and creating exponential growth for customers.	Customer privacy Informantion security Customer service	[Irregularly] Personal visits, customers’ supplier audit, tele-contact, dedicated email	Conduct various IS-related drills to ensure no data leakage Conduct 57 on-site audits and 691 sustainability questionnaires Complete 7,818 trainees of “Employee IS advocacy and test” Accumulative 522 information security licenses and certificates from employees
Shareholder / Investor	The investor is the main force for SYSTEX’s steady growth. SYSTEX strives to “create max benefits for investors” and discloses transparent financial information.	Economic performance Anti-corruption	[Annually] AGM, annual report, sustainability report [Quarterly] Board meeting, functional committees meeting, earnings conference, financial reports [Monthly] Performance announcement, MOPS [Irregularly] Material info., communication meetings for investors	Annual/quarterly/monthly pre-announcement of financial statements and related operating results Record-high consolidated revenue and financial IT service market share No.1 Organizes/invited cooperate presentations: 3 online, 1 offline Innovate and offer 51 sustainable solutions Published 37 material inside information in English and Chinese Held 78 meetings with 112 attendees
Upstream Original	SYSTEX works with upstream originals to expand the market.	Customer privacy Informantion security	[Irregularly] Meetings, emails, upstream original conference	Participated in 33 audits, 38 compliance training sessions, and 90 market trend seminars
Supplier	SYSTEX establishes long-term partnerships with them to create greater benefits for customers.	Supplier impact assessment Information security	[Irregularly] Meetings, emails, supplier conferences, or meeting	2,652 suppliers signed the “Vendor Integrity Pledge and Declaration” 1,798 suppliers have signed “Supplier CSR Code of Conduct” 982 suppliers responded to the “Supplier CSR Self-Assessment Questionnaire”, and 991 suppliers responded to the “Supplier IS and Personal Data Protection Questionnaire Held an online supplier networking meeting, totaling 52 suppliers and 105 participants
Government	Comply with the regulations to create jobs and tax revenue sources.	Regulatory compliance Taxation governance	[Annually] Governmental evaluation [Irregularly] Official document, meetings, emails, public info., conference, seminars	No major violations occurred A total tax expense of NT$346M A total investment deduction tax subsidy of NT$18,361.6K
Media / Public	The media is an important channel of communication for stakeholders. Conveying SYSTEX’s brand image to the republic will help to connect more stakeholders.	Social Engagement	[Irregularly] Press releases, media interviews, press conferences	A total of 755 participants of the 8^th YTP A total of 8 Startups were selected for the AGP, arranging over 50 matchmaking meetings and connecting to 5 venture capital organizations to find the company clients Donate NT$1M to support the AAMA AIoT program Accumulative donate NT$3M to support PaGamO

Stakeholder Questionnaire

In order to understand your expectation for the sustainable development of SYSTEX Group, please click the following link to fill in the questionnaire. Thank you.

Stakeholder Questionnaire　

If you have any questions related to the sustainable development of SYSTEX Group, please write an email to csr@systex.com, we will reply to you as soon as possible.

Corporate sustainability