Novatek is committed to the pursuit of sustainable development and growth for our shareholders, employees and the community to create a reasonable profit and value by adhering to government regulations and laws and its long-term dedication to the integrity and openness. We value the interests of all stakeholders, and have established a transparent, effective and multiple communication channels to respond to the interested parties' expectations, suggestions and demands timely, which are considered as valuable input and reference for the Company's social responsibility and future development plans.

Stakeholders' Issues

Novatek's development achievements so far have depended on bringing together the wisdom and input of stakeholders from all walks of life. Novatek has always placed a high value on the interests and opinions of its stakeholders. We not only maintain close interaction with our stakeholders through various communication channels, but have also set up a Stakeholders' Zone on our official website to provide for immediate expression of our stakeholders’ opinions and suggestions. Each functional department within the Company performs its own duties, and separately manages and responds to the needs of stakeholders. We utilize the following steps:

Identifying Stakeholders

The reason Novatek has been able to achieve the developmental results it has so far, has depended on the input of wisdom from stakeholders from all walks of life. Novatek has always attached importance to its stakeholders' rights and opinions. We not only maintain close interaction with our stakeholders through various communication channels, but have also set up a Stakeholders page on our official website to provide their immediate expression of opinions and suggestions. Each functional department within the Company performs its own duties, and separately manages and responds to the needs of stakeholders.

Stakeholders' refers generally to groups or individuals in an organization that affect or are affected by the organization's goals. Novatek is a listed company, and as such the Company's business development involves many kinds of stakeholders. In order for the contents of this report to be accurately focused and achieve the goal of effective communication, it is necessary to define the Company's main stakeholders. We have done this by using opinions provided by the various functional departments within the Company, which were then summarized, collated, and discussed by members of the Corporate Social Responsibility Committee. In accordance to the five principles of the AA1000 Stakeholder Engagement Standard (SES) (dependency, responsibility, influence, diverse perspectives, tension) Novatek's stakeholders have been identified as belonging to seven main types. These are investors, customers, employees, suppliers, government agencies, academic research institutes and nongovernmental organizations.

Collecting and Screening Sustainability-related Issues

Novatek’s 2018 Corporate Social Responsibility Report inherits the focus on the main topics identified in the previous year’s report and continues to carry out response and management. The methods used to identify these topics are as follows:

Novatek's collection of sustainability issues in economic, environmental and social aspects includes not only the important matters of concern of various stakeholders in the semiconductor industry as collected by the Company’s various functional departments on a daily basis, but also references relevant international sustainability issues, research and norms, including the Global Reporting Initiative (GRI), the Responsible Business Alliance (RBA), the Dow Jones Sustainability Index (DJSI), and so on. After passing the recommendations of the Company’s upper management, 41 Novatek sustainability issues were collated.

Assessment

In order to gain a more direct understanding of our stakeholders' response to Novatek's sustainability issues, we have taken the initiative to use a 'Novatek CSR Questionnaire' to collect information on our stakeholder's level of concern with respect to Novatek's performance in the economic, environmental and social aspects. A total of 63 valid questionnaires were recovered from a variety of stakeholders, and were analyzed to sort the degree of concern about relevant issues.

In addition to understanding the degree of concern of our stakeholders on various sustainability issues, Novatek's executives concerned were also tasked to assess the degree of impact various sustainability issues have on Novatek's business operations.

Verification

In accordance with GRI Standards principles, Novatek has adopted a matrix data analysis approach to carry out judgment on significant aspects of consideration in terms of the degree of stakeholders concern and the degree of impact on the company's business operations. Issues which were high in both 'stakeholders' degree of concern' and the 'degree of impact on the company's business operations' were identified as the main aspects of consideration for priority disclosure, with a total of seven such priority disclosure issues.

In addition, in view of the recent increase of labor awareness, and the fact that talents are the foundation stone of Novatek's development, we have also incorporated such topics as 'Labor Rights Safeguards', 'Health & Safety in the Workplace', 'Industrial Relations', and 'Equal Employment Opportunities' into supplementary disclosure issues, particularly as they are closely related to the staff and are issues our stakeholders have a high degree of concern about.

Apart from continuing to focus on the operation itself, in recent years Novatek has been actively joined in social welfare activities, and this has been very fruitful. In order to provide our stakeholders with a more in-depth understanding of Novatek's role as corporate citizens, our 'Participation in Charitable Activities' and 'Indirect Economic Impacts' are included in the supplementary disclosure issues.

Whether in terms of resource consumption or pollution emissions, the impact of high-tech industries on the environment has aroused a great deal of public concern and discussion in recent years. In order to provide our stakeholders with a better understanding of the impact Novatek's operation may have on the environment, 'Management of Environmental and Energy Resources', 'Energy Conservation and Carbon Reduction Actions' and 'Greenhouse Gas Emissions' have been included in the supplementary disclosure issues. To consolidate the above, 'Compliance with Various Laws & Regulations' has been added. In addition to the seven priority disclosure issues,
this report also details 10 supplementary disclosure issues.

Stakeholder Communication Channels

Through a wide variety of communication channels, the expectations and suggestions of our stakeholders are widely accepted.