Sustainable Governance

• Sustainable Procurement Policy: Reduce adverse environmental impacts, increase the use of renewable and green resources; promote a green low-carbon supply chain, key suppliers conduct greenhouse gas inventories.
• Environmental and Social Practices in Sustainable Procurement Policy: Ensure that raw materials and components comply with international standards, fulfill social responsibility commitments, achieve renewable energy economic benefits, establish green procurement and low-carbon operational development.
• Labor and Human Rights Sustainable Procurement Policy: Ensure that suppliers comply with international labor and human rights standards, protect workers' rights, prohibit child labor and forced labor.

conducts risk assessments for new suppliers by using a preliminary risk assessment form (The content of the form assesses various aspects, including basic operations, performance in the last two years, upstream and downstream relationships, customer segmentation, engineering capability, factory locations, and facilities). Once a supplier contract is established, Gemtek maintains regular monitoring of the supplier's performance and financial health. Particular attention is given to high-risk suppliers to prevent any potential disruptions that could affect the timely delivery of supplies. This ongoing task ensures proactive risk management and smooth supply chain operations. In addition, suppliers are subject to close scrutiny for signs of significant supply chain risks such as material shortages spurred by the COVID-19 pandemic, labor disputes, and changes in the political and economic landscape. Suppliers will be measured for supply chain resilience as part of the supply chain contingency plan, and an appropriate response method will be communicated to prevent potential business disruptions and safeguard the rights and interests of stakeholders.

Consider the following criteria when selecting new suppliers. The evaluation process should be conducted by the relevant company divisions using the supplier risk assessment checklist to assess potential suppliers. Suppliers scoring below 60 will not be considered. For those scoring between 61 and 70, an on-site audit is required. Suppliers scoring above 71 must submit an audit report and sign ESG supporting documents to be recognized as qualified.

As part of the Supplier Management Process, new suppliers are required to sign a procurement contract that includes specific provisions that addresses ethics and integrity. Aside from customer-designated suppliers, the document signing rate was 89% for the year 2023. According to the Integrity Commitment Statement, the company reserves the right to seek compensation from suppliers who cause damage to the company by violating anti-bribery and anti-corruption regulations. Additionally, such suppliers will have their rights to engage in further business transactions and contracts with the company revoked and terminated.

Gemtek Technology has adhered to the fundamental principles of sustainable sourcing in response to the RoHS Directive. Prior to initiating the supplier component registration process on Gemtek’s Green Supply Chain EHS Registration Platform, all raw material suppliers are required to present test results from a third-party testing laboratory and a Supplier Non-use of Hazardous Substances Declaration. Since 2019, Gemtek has added a CSR section to its Green Supply Chain EHS Registration Platform, allowing suppliers to upload the signed Corporate Social Responsibility Agreement and Responsible Business Alliance (RBA) Commitment Letter. The purpose is to facilitate management and statistical analysis through information sharing and to monitor market trends and supplier performances with an aim to foster sustainable relationships and strategies with suppliers.
Based on the ISO 9001 "Supplier Management Procedure," Gemtek Technology's procurement division adheres to the standard requirements for supplier quality and environmental promotion to regulate manufacturers and distributors through the following approaches:

(1) Declaration of Environmental Protection (Hazardous Substance Related)

To demonstrate Gemtek’s strong commitment to environmental sustainability, the company should require suppliers to sign the Declaration of Environmental Protection and relevant agreements to certify that all materials provided meet international safety and environmental standards before officially collaborating with them. The agreements serve as a testament that the supplier guarantees and certifies that the raw materials provided to Gemtek at the time of the transaction meet the following requirements: the latest RoHS Directive announced by the EU, REACH regulations, Gemtek’s control policies for prohibited and restricted substances that are used in electronic and electrical equipment (EEE), and relevant environmental protection regulations. All (100%) of our company's raw material suppliers have signed the agreements.

(2) Supplier CSR Declaration

To show its deep commitment to corporate social responsibility, Gemtek requires suppliers to sign a CSR Declaration, practice corporate social responsibility and take part in the CSR self-assessment. The applied evaluation criteria for supplier selection include working hours, wages, employee benefits, education and training, forced labor, discrimination, freedom of association, occupational health and safety, environmental management, working environment, business integrity, information security, responsible minerals, and risk management. As of 2023, 87% of suppliers have signed the Supplier CSR Declaration.

(3) Conflict Minerals Management
To ensure responsible and sustainable procurement, Gemtek has developed a "Conflict Minerals Policy Statement" and implemented a responsible mineral sourcing management process. We are committed to sourcing minerals in compliance with the OECD’s “Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas” or other globally recognized standards.
We conduct rigorous due diligence on our suppliers to ensure that the smelters and refiners they use comply with global standards for responsible sourcing systems. We strictly prohibit the use of conflict minerals originating from high-risk areas.
Gemtek is committed to ensuring that all our products are free from conflict minerals linked to regions affected by military conflict, human rights violations, and forced labor. We mandate our suppliers to refrain from the use of such minerals and to disclose the origins of metals such as Tin (Sn), Tungsten (W), Tantalum (Ta), Gold (Au), Cobalt (Co), and Mica.
Moreover, we actively communicate this policy to upstream suppliers and their supply chains to ensure transparency and compliance across the entire supply chain.

• Regular Assessments and Supplier Surveys
  Gemtek conducts annual reassessments of the smelters and refiners used in the production of its products in accordance with the Conformant Smelters List published on the Responsible Business Alliance (RBA) official website. Supplier surveys are carried out through the "Gemtek EHS Conflict Minerals Data Management Platform" to ensure that procurement sources comply with our Responsible Mineral Policy.
  
• Use of Standardized Reporting Tools
  Gemtek uses the Conflict Minerals Reporting Template (CMRT) and Extended Minerals Reporting Template (EMRT) provided by the Responsible Minerals Initiative (RMI) to conduct supplier due diligence. Suppliers are required to disclose their mineral sources and sign a "Declaration of No Use of Conflict Minerals." These measures ensure that procurement sources do not originate from conflict-affected or high-risk areas and comply with customer and regulatory requirements.
  
• Conflict Minerals Audit Process 
  As part of the conflict minerals audit process, Gemtek collaborates with suppliers to determine the reasons and necessity for using conflict minerals. If their use is deemed unnecessary, suppliers must discontinue procurement and usage, switching to conflict-free mineral sources that comply with RBA requirements and providing valid documentation as proof. If the use of such minerals is proven necessary, suppliers are required to submit a removal plan or implement improvement measures to ensure their materials meet conflict-free metal standards.
  
  

Gemtek conducted a conflict minerals investigation among suppliers that had transactions with the company in the previous year. A quality assurance specialist at the Taiwan Headquarters was responsible for reviewing the suppliers' conflict minerals reports and researching relevant regulations. For the year 2023, the company performed conflict minerals due diligence investigations with 532 suppliers and successfully completed 466 of them, achieving a 87% completion rate.

(4)Responsible Business Alliance Code of Conduct Compliance Commitment

All suppliers are required to sign the "Responsible Business Alliance Code of Conduct Compliance Commitment" to support the prohibition of child labor, the protection of young workers' rights and interests, and the prevention of forced labor. In 2023, 86% of the "Responsible Business Alliance Code of Conduct Compliance Commitments" were signed.

At each manufacturing plant is strategically planned to be timely and geographically suitable, helping to reduce operational costs and risks, as well as lowering transportation expenses and carbon footprints. This approach enhances the quality and service within the supply chain while ensuring stable material supply, leading to more consistent production operations and the creation of sustainable value. In 2023, local suppliers accounted for 35% of the total procurement amount across all Gemtek Technology plants.

Notes：
1. Taiwan Headquarters: Local suppliers refer to those based in Taiwan.
2. Gemtek Kunshan & Gemtek Changshu: Local suppliers refer to those based in mainland China.

As for the RBA annual audits, in 2023, Gemtek audited a total of 20 suppliers (19 on-site and 1 via document review) and achieved a 100% completion rate. High-risk suppliers were examined for governance, environmental protection, and social responsibility, covering aspects such as child labor, forced labor, health and safety, freedom of association, discrimination, punishment, working hours, wages and compensation, environmental management, business ethics, and supplier management. All audited suppliers met the standards with no major deficiencies for the year 2023. Starting in 2024, on-site RBA audits will also be conducted at the Gemtek Vietnam plant.