Identification of Material Topics

Analysis of Material Topics

FEDS refers to the AA1000 Accountability Principles and Standards, the sustainability reporting standards issued by the Global Reporting Initiative (GRI), global sustainability standards and norms, sustainable development trends at home and abroad, and topics of concern to domestic peers and stakeholders, and uses them as the judging principles of material topics as well as the basis of the report disclosure. The identification results are used as a reference for the direction of sustainable management actions and enhancement of the quality of sustainable decision-making.

Identify topics

Confirm stakeholders • 6 major types of stakeholders

The Corporate Sustainability Committee refers to AA1000 Stakeholder Engagement Standard: based on the principles of dependency, responsibility, influence, diverse perspectives and tension, the Corporate Sustainability Committee confirms the 6 types of stakeholders, including Consumers, Employees, Business Partners, Shareholders (Investors), Government, and Society.

Collect sustainability issues • 22 sustainability issues

With reference to sustainable norms and standards, changes in the industrial environment, and sustainable issues of concern to peers, 22 sustainable issues were collected, which were adjusted to 21 after discussions at group meetings, and a questionnaire survey of stakeholders was conducted. Among the 21 issues, there were 3 completely new issues: climate strategy, biodiversity, and labor rights, and environmental issues have doubled.

Conduct survey • 1,028 questionnaires

Through 1,002 stakeholder questionnaires, the degree of concern of 6 types of stakeholders on 21 sustainable issues was investigated, including: consumers (316), employees (216), Business Partners (205), Shareholders/ Investors (43), Government (30), and Society (162). In addition, the impact level of each issue on the the Company’s operations was evaluated based on the 26 questionnaires for the Corporate Sustainability Committee.

Confirm materiality • 15 material topics

The Executive Office of the Corporate Sustainability Committee consolidated the analysis results of 1,028 questionnaires along with 13 impact level questionnaires from management, and finalized 15 material topics, which were submitted to the Corporate Sustainability Committee for approval. Moreover, for the 5 issues with a total score between 4.2 and 4.3 (scores of severity level and impact level), including corporate governance, climate strategy, sustainable supply chain, social welfare and engagement, green products and services. After reviewing GRI themes and SDGs, FEDS also disclosed relevant management actions and practices in this report.

Review on a regular basis • Corresponding to 21 GRI Standards

The Corporate Sustainability Committee confirms and finalizes the information on the material topics, and continues to pay attention to the positive and negative impacts of material topics and the expectations of stakeholders for FEDS, which will be used as a reference for the appropriateness of material topics for the next year.

Material Topic Matrix

Impact assessment

With reference to the definition of materiality in the 2021 edition of the Sustainability Reporting Standards, FEDS further analyzed the positive and negative impacts of these topics on the economy, the environment and human rights and the possibility of impact through 13 unit supervisor questionnaires for the identified 15 material topics. After a comprehensive analysis, the ranking of the impact level of the 15 material topics and the ranking of the top 5 impact level of each aspect were concluded.

Impact assessment results of material topics

Top 5 in terms of economic,
environmental and human rights impacts

經濟、環境、人權衝擊排序前5名

經濟

環境

人權

Impact description and management

Material topics	Impact description and management
Energy management	FEDS has an “Energy Management Policy” to promote energy-saving projects. With the growth of turnover, it gradually reduces its dependence on energy. In the past 6 years, the electricity consumption per NT$1 of turnover has been reduced by 12%. At the same time, in line with the government’s energy transition policy, the “Green Power Plan” was launched, and solar photovoltaic equipment was installed in Hualien and Taitung. After completion, it is expected to produce 1.14 million kWh of green electricity per year, increasing the use of green energy, and bringing positive impact on economy and environment.
Water and waste management	Green operation is the environmental management goal of FEDS. Garbage, kitchen waste, and waste cooking oil are listed as the focus of waste management in the department stores. All waste disposal is in compliance with environmental protection laws and regulations. At the same time, resource recycling is strengthened to reduce the negative environmental impact of department store operations. In addition, in order to reduce the impact of its own operations on local water resources, FEDS promotes water-saving management and improves water resource performance.
Greenhouse gas management	Through greenhouse gas management, FEDS is able to find out the source of carbon emissions, and then formulate more precise directions and plans for carbon reduction, so as to gradually meet the global 2050 net zero declaration. FEDS has set a goal of reducing carbon emissions by 30% in the next five years. Meanwhile, it has established a climate risk-related assessment and management mechanism to drive the department store’s operations in a sustainable and environmentally friendly direction, which has a positive impact on the economy and the environment.
Business performance and innovation strategy	As the business environment changes, innovation and transformation with the times is an important foundation for the sustainable operation of FEDS. Currently, there are four major operating types in the retail business of FEDS, including department stores, shopping malls, hypermarkets, and high-end supermarkets, which meet the needs of the people in all aspects of life. In 2022, FEDS continued to expand stores, with a consolidated turnover growth of 12% and EPS growth of 59%, which will have a positive impact on the economy. In addition, FEDS has adopted 100% green buildings since its fourth-generation store, which is a pioneer in the development of department stores. It operates in an environmentally friendly and green manner to reduce the negative impact on the environment.
Puct quality and safetyrod	FEDS follows laws and regulations to manage the products it sells. It also binds vendors to abide by government regulations in the counter contract, and formulates internal management regulations for regular inventory and sampling checks to ensure product quality and safety.
Customer service and communication	FEDS has introduced a quality management system to maintain good customer service quality. It has set up multiple communication channels to listen carefully to customers’ suggestions and feedback. In addition, it has established operating regulations such as “On-site Customer Opinion Handling Measures” to ensure that customers’ opinions can be addressed in a timely manner to improve the satisfaction with the company, so as to maintain the long-term trust relationship with customers, form a positive cycle, and indirectly contribute to the economic growth.
Department store safety and services	Starting from sustainability, FEDS aims to create a “safe, convenient, healthy, and environmentally friendly” shopping environment. Through careful planning of department store facilities, traffic flow arrangements, and service design, FEDS provides friendly department store services for pregnant women and the elderly. FEDS also regularly promotes personnel safety education and training to protect shopping safety in the stores and reduce negative impacts on the environment.
Privacy management	FEDS emphasizes the privacy protection of employees and customers. FEDS reviews the use and storage of personal data held by various units within the Company to ensure that all personal data is properly protected and managed to comply with the “Personal Data Protection Act”. Sound privacy management can avoid lawsuits and penalties from competent authorities. FEDS had no personal data leakage incident in 2022, which resulted in a positive impact on the economy and human rights.
Information security management	FEDS has an Information Security Officer, an information security team, and an information center to comprehensively strengthen corporate information security and personal data management in terms of technology, procedures, operations, legal compliance, and risk control, and information security early warning and notification mechanism were established to reduce corporate information security risks. Under the effective implementation of internal information security regulations, FEDS had no violations of information security in 2022, which had a positive impact on human rights.
Labor human rights	FEDS complies with the human rights policy, ensures that management practices, such as salary measures and promotion mechanisms, are not discriminatory or unequal on the basis of race, nationality, and gender. FEDS also continues to encourage the promotion of outstanding women to take up management positions, reducing the difference in the salary ratio between men and women. In terms of supplier management, FEDS requires suppliers to make human rights commitments together with FEDS through the counter contract and the supplier’s Corporate Social Responsibility Commitment Letter. Suppliers who violate human rights laws and regulations will lead to the termination of the business relationship.
Ethical management	FEDS attaches great importance to ethical management. In addition to arranging various ethical management education and training, FEDS requires supervisors to evaluate the ethical behavior of subordinates at any time as the basis for annual performance appraisal. FEDS also formulates various ethical management guidelines as the code of conduct for all employees to follow. Meanwhile, the early warning mechanism is implemented in the annual internal control self-assessment, which requires each unit to evaluate whether its business conduct meets the standards of integrity and ethical value required by the Company in order to mitigate the corruption risk and have a positive impact on all kinds of business activities in the economy.
Risk management	The responsible unit or cross-departmental functional organization conducts comprehensive risk management and response based on the root cause of “systemic risk” and “non-systemic risk” to ensure that all businesses are implemented under a sound risk management system so as to reduce the impact on the economic and social environment.
Occupational safety and health	A safe workplace environment has a positive impact on the economy and human rights. FEDS has promoted employee health promotion plan for four consecutive years to create a healthy workplace environment and promote employee health. Meanwhile, Occupational Safety and Health Committee is set up to promote workplace safety and health projects, and regularly evaluate, review, inspect and improve to reduce the possible negative impact of unsafe workplace.
Legal compliance	FEDS draws up the direction of compliance with corporate laws and regulations from the three aspects of “establishing systems, implementing management, and educating employees”. For the details of operations, processes, products and services in the operation of department stores, we have formulated management measures to strictly abide by government laws and regulations, reduce the risk and responsibility of violating laws and regulations, and avoid unnecessary financial losses and goodwill impairment.
Talent cultivation and retention	FEDS promotes industry-academia cooperation, makes good use of department store industry resources, nurtures talents needed by the industry, and designs a complete talent training blueprint and job rotation mechanism to cultivate talents needed for the Company’s development. FEDS also attracts external talents to join and retain outstanding talents within the organization through a generous and diverse salary and benefit system, allowing the Company to develop stably.