Sustainability Goals and Materiality

As the threat of cyberattacks continues, information and cyber security has become one of the major risks to corporate operations around the world. Advantech recognizes that information and cyber security issues are critical to the company's operational stability, product safety, privacy, and brand value as a global leader in the Internet of Things (IoT). These factors are critical for stakeholders such as employees, customers, and investors.

• Improve information and cyber security visibility
• Decrease in attack surface
• Improvement of information and cyber security governance and risk awareness
• Enhancement of information security resilience

To safeguard the Company's and customers' interests, we are dedicated to upholding information and cyber security, continuously evaluating the efficacy of information and cyber security management, and minimizing the frequency of information and cyber security incidents.

The positive impact of information and cyber security can strengthen the confidence of stakeholders, etc. in corporate risk management and sustainable operations. Advantech established an information and cyber security management organization and adopted the ISO 27001 standard to continuously improve the information and cyber security management system. On the other hand, the negative impacts of information and cyber security breaches on business operations include leak of confidential information, interruption of system services, resulting in damage to reputation, loss of customers, and legal risks to the Company. In terms of security, our company employs a multi-layered defense framework, deploying mechanisms such as firewalls, antivirus software, endpoint protection, privileged account management, and two-factor authentication to continuously assess information and cyber security risks and strengthen security architecture, thereby reducing the likelihood and severity of information and cyber security incidents. Furthermore, our critical systems have completed 8/12/24 3-Tier Snapshot data backups and established off-site backup centers to establish response and handling mechanisms for information and cyber security incidents, thereby mitigating their impact.

• Microsoft security score of 62%
• Endpoint security protection (EDR) deployment coverage reached 83%
• The deployment coverage rate of system vulnerability patching tools exceeded 91%
• The availability of key application systems reached 99.9%

• Web security filtering and zero trust network access are implemented in the headquarters and Taiwan region
• Information and cyber security risk rating up to 80%
• The headquarters and Linkou factory achieve compliance with the new ISO 27001: 2022 standard update

• Introduce web security filtering and zero trust network access in the Asia Pacific region, including the headquarters and offices in Taiwan, China, Japan, Korea, Malaysia, and Singapore.
• Information and cyber security risk rating up to 85%
• China, Europe, and North America achieve compliance with the new ISO 27001: 2022 standard update

• Advantech introduces global web security filtering and zero trust network access
• The information and cyber security risk rating score is higher than the industry standard, and the rating score remains no less than 85%
• Global Factories achieve compliance with the new ISO 27001: 2022 standard update

• Introducing Security Access Service Edge (SASE), a cloud architecture that integrates network security and access control, to enhance the security and performance of Internet use.
• Strengthen the digital asset management mechanism, grasp Advantech's global information and cyber security risks for improvement, and understand the security status of outsourced third-party suppliers.

• Introduce information and cyber security risk rating tools, continuously monitor information and cyber security risk status, and take corresponding improvement measures to gradually improve the information and cyber security risk score.
• Pass the external audit of a third-party certification company, and maintain operations within the scope of implementation in compliance with ISO 27001:2022 standards.

• Employees: Provide mandatory online courses on information and cyber security and complete tests.
• Customers: Respond to customer questionnaires and audits, and provide relevant supporting records as needed.
• Suppliers and contractors: All suppliers are required to fill out the Information Security Management Declaration. Suppliers of major components and system services are required to complete the information security risk self-assessment form and conduct regular information security audits.
• Shareholders and investment institutions: The Company's major action plans and results for improving information and cyber security are disclosed through the Company's annual report and sustainability report.
• Business partners: Respond to partners' inquiries and provide supporting records as necessary.
• Government, public associations, and the media: Respond to inquiries from government units and relevant public associations, and provide supporting records as necessary.

• Advantech has responded to the SDG 9 (Industry, Innovation, and Infrastructure) and SDG 12 (Responsible Consumption and Production) of the global sustainable development goals, gradually setting goals and introducing various standards from raw materials, product design, manufacturing, to environmental management. We are willing to do our best to improve the environment, reduce environmental impact, and produce environmentally friendly products.

• Advantech regards green eco design and sustainability liability of product as important risks and opportunities. The possible impacts include the increasing concern of stakeholders such as customers, and the response to carbon reduction and resource cycle laws and regulations in various countries (e.g. product energy consumption design, use of recycled materials and packaging materials), enterprises will be more regulated, so more R&D resources and expenses will need to be invested in the short term, and there will be barriers in R&D and design that need to be broken through. However, the investment in green eco design product and fulfillment of corporate responsibility for environmental sustainability have a positive impact on the overall environment and economy in the medium to long term. Besides driving sustainable transformation for our internal R&D team and suppliers, it also enhances Advantech's overall sustainability competitiveness.
• Potential negative impacts include: If the low-carbon product requirements of stakeholders such as customers cannot be met, the competitiveness of the product in the market may be reduced, and the carbon reduction plan with the supply chain will be delayed as a result, resulting in the inability between the Company and the supply chain to achieve sustainable development.

• Ensure that 100% of raw materials comply with international environmental protection regulations and Advantech regulated substance standards.
• 37% of the new green eco design products achieved the silver medal (a slight difference from the set target).
• Mass-produced products achieved the silver medal for green eco design products/Advantech energy saving seal; accounting for 10% of annual revenue.
• All standard products new models are 100% compliant with the ErP energy-saving design code.

• Continuously ensure that 100% of raw materials comply with international environmental protection regulations and Advantech regulated substance standards.
• Reaching more than 60% of the silver medals for new green eco design products.
• Mass-produced products achieving the silver medal for green eco design products/Advantech energy saving seal; accounting for 12% of annual revenue.
• All standard products new models are 100% comply with Advantech's internal energy-saving design guidelines.

• Continuously ensure that 100% of raw materials comply with international environmental protection regulations and Advantech regulated substance standards.
• Reaching more than 80% of the silver medals for new green eco design products.
• Mass-produced products achieving the silver medal for green eco design products/Advantech energy saving seal; accounting for 15% of annual revenue.
• New products of a specific product line (suitable fields) meeting Energy Star requirements/obtaining the internal energy saving gold medal label for up to 20%.

• Advantech's silver medal for green eco design guidelines was introduced to form internal regulations: Advantech has established internal regulations for energy-saving design and green materials (halogen-free requirements) to effectively increase the coverage rate of Advantech's green eco design products.
• Energy Star goal setting: In response to Advantech's industry characteristics and the Energy Star voluntary energy-saving design adjustment goal, we set up suitable products for design.
• Development of energy saving SW Utility: Assist hardware energy-saving through investment in energy-saving software development.
• Re-optimization of green eco design products: Continue to standardize the silver medal for green eco design products into a mandatory requirement for new Advantech models, and actively design and develop Advantech gold medal models compliant with green eco design products.

• Establish a cross-departmental green eco design committee, and the project process management department convenes relevant departments to jointly formulate standards, implement, manage, review, and revise Advantech's green and ecological design guidelines according to international trends.
• Regular internal meetings to review the goal achievement status and action effectiveness: Based on the management guidelines set above, the ESG-environment team will review the goal progress every two weeks and adjust the implementation direction in real time to ensure compliance with the strategy.
• External resource assistance and experience learning: External consultants and lecturers are invited in a timely manner to provide guidance for the establishment of internal processes or the promotion of new policies and regulations, and to verify whether the status and direction of internal promotion are consistent with the goals.

• Advantech discloses information through multiple communication channels, collects and analyzes stakeholders' opinions; at the same time, assesses the impact and risk level of various sustainability issues on the Company's operations, identifies material issues, and gives priority to responding and coping, in order to meet the expectations of stakeholders. In addition, we issue the sustainability report every year and accept verification from external certification agencies. Through continuous internal and external communication, we strengthen the efforts and achievements in green eco design products and sustainable responsibility.

• Adopted the Science-Based Targets (SBT) and committed to achieving SBT by 2030.
• Joined the RE100 initiative and committing to achieve the goal of using 100% renewable energy by 2040.
• Achieving net-zero carbon emission by 2050.

Advantech regards climate change as an important risk and opportunity, and manages it according to two major aspects: "mitigation" and "adaptation." The potential impacts on the company include stakeholders such as customers' low-carbon design requirements for products (including the organization's use of renewable energy). Therefore, we have introduced and committed to the use of renewable energy through green eco design products, continue to invest in green energy, energy-saving products and energysaving solutions, combined with the core business of energy management, promote energy conservation and sustainability, and turn risks into future business opportunities and competitiveness.

No target was set for 2023, but the following achievements were made:

• Commitment to climate change strategy and net zero vision.
• Links to Advantech's internal climate information disclosure according to the TCFD framework.
• The Board of Directors approved the linkage of senior supervisor compensation to ESG and climate change issues and achievements.
• Officially became a RE100 member, publicly committed to reach the RE100 goal until 2040, and actively promoted the use of renewable energy in all RBUs around the world.
• Initiate the GHG inventory and verification programs at significant overseas operation locations.
• Obtained ISO 50001 certification of Taiwan and Kunshan operating bases.
• Obtained the first product carbon footprint ISO 14067 certification.

• Continue to identify climate risks and manage them through mitigation and adaptation.
• Apply the latest IPCC assessment report, readjust climate scenarios, and links to Advantech's internal climate information disclosure according to the TCFD framework.
• Optimize the ESG KPI incentive mechanism, incorporate the KPI mechanism into the consideration of operations management development and risk management, and strengthen the linkage of senior managements compensation to ESG and climate change issues and achievements.
• Activate the power conversion of Fishery and electricity symbiosis power plant in Taiwan and increase the use of renewable energy in the global RBU to 10%.
• Completed the global iEMS to monitor and analyze the electricity consumption of main operating locations around the world.
• Implement the internal carbon pricing (ICP) program and define Advantech's carbon pricing.
• Calculate the representative product’s carbon footprint of each business group and complete the application of Advantech's methodology.

• Mitigate climate risks and expand business opportunities in the low-carbon market.
• Continue to align with international climate change and sustainability commitments.
• Continue to link senior managements compensation to ESG and climate change issues and achievements.
• Continue to increase renewable energy usage in global RBUs, and Advantech Taiwan uses renewable energy to reach 25% of the total electricity consumption.
• Increase the quantification of the GHG inventory and verification ratio at significant overseas operation locations.
• Advantech's GHG emission intensity per unit of revenue decreased by 36% compared to 2019.

• Announce policy and goals on climate change discussed at the annual kick-off meeting.
• Establish KPIs of the linkage of senior managements compensation to ESG and climate change issues.
• Launch Advantech's global renewable energy promotion plan, deployed global RE100 teams, and set targets for individual RBUs.
• Conduct annual GHG inventory and verification (Scopes 1, 2, and 3).
• Promote energy management and product life cycle assessment methodologies through external ISO certification (ISO 50001, ISO 14067).

• Regularly report the management plans and results to the Board of Directors on material climate risk issues through the Sustainable Development Committee (SDC).
• Report to the Board of Directors for KPI execution by senior managements; report the year's sustainability performance and the achievement of goals in the fourth quarter of each year, and distribute incentives in the first quarter of the following year. (Refer to the description of "ESG performance and incentive mechanism" in 2.1.2 corporate governance for details).
• Obtained external certifications such as ISO 14064 GHG inventory, ISO 50001 Energy management, ISO 14067 Product carbon footprint, etc.
• Refer to the climate risk management practices of DJSI, CDP, and benchmark peers, and invite external consultants to provide the latest sustainability trends at the quarterly Corporate Sustainability Development Committee (SDC), proposing improvement plans based on Advantech's actual conditions and risk management.

• Advantech discloses its sustainability report annually to fully explain the climate change strategy and management issues, so that stakeholders can fully understand.
• Advantech's ESG Corporate Sustainability Development Office participates in ESG-themed meetings at investors' request. In these meetings, the office explains how Advantech identifies and addresses climate risks, complies with sustainable regulations in Europe and America, and manages carbon issues. Additionally, they relay investors' future expectations and feedback to the corporate sustainability development committee and relevant personnel to drive operational improvements.
• The ESG Corporate Sustainability Development Office attends ESG conferences at the client's request and discusses Advantech's renewable energy policy, GHG inventory progress, carbon reduction progress, and Advantech's product carbon footprint; the demands are turned into internal driving forces to accelerate internal carbon reduction.

With the vision of popularizing and deepening IoT education, we have implemented various industry-academia projects. Achieve universal IoT education, IoT project-based learning and innovation, IoT career exploration, IoT research, and long-term collaborations to bridge the industry-academia gap and cultivate the next generation of IoT talent and innovation.

Collaborate with the academic community to co-create the value chain and promote the industrialization and marketization of R&D achievements. Create a cross-field talent pool for IoT, bridge the gap between learning and application, and promote a win-win situation between industry and academia.

This issue has a positive impact on society, including stakeholders such as universities, colleges, and students. Positive impact helps the industry to cultivate young talents, promote industrial innovation and R&D, and develop the achievements of industry-academia collaboration with commercial value. IoT education has a long-lasting impact. Advantech's IoT online teaching materials have been popularized, expanded through branch offices in countries/regions, and implemented through industry-academia collaboration. Link external ideas with internal industry practices, establish a model for IoT education, and enhance the availability of IoT talent.
Without active management, the negative impacts to the Company include: 1) a decline in brand influence, and 2) the inability to cultivate talents for the IoT industry. Therefore, Advantech actively promotes IoT education through the following specific strategies:
1. Declining brand influence: As a leading brand in the global IoT industry, Advantech has a social responsibility to promote widespread adoption in the industry. If the brand influence is reduced, Innoworks is expected to connect more colleges and universities for physical promotion, and strengthen the connection with Advantech Elite intern training program.
2. Due to the inability to cultivate talents for the IoT industry, Advantech actively promotes IoT education through the following specific strategies

• 60 students joined the Elite100 internship program.
• Established 10 cooperative courses with universities with a total enrollment of 300 students.
• Up to 10 sets of professional courses of IoT are provided online.

• Supported the development of campus innovative IoT applications up to 3 cases.
• Industry-academia co-creation R&D Topic, with a goal of 8 projects.
• 50% of the annual R&D results can be submitted for papers and intellectual property.
• Establish a new external technology co-creation cooperation topic (Extended TSU).

• 31 schools from 9 countries, 170 teams and 680 students participated

• UCC expansion/Innoworks launched in 12 Region Business Units.
• Co-create at least 3 sets of AIoT Lab teaching cases with RBU partners.
• Over 1,000 students have been trained and certified.

• Industry-academia co-creation R&D themes x 8; continuation themes > 30%.
• Internalize the R&D results into Advantech technology modules and enter the productization process; propose papers and intellectual property rights for 60% of the time.
• Established a total of three Extended TSU technology spindles.

• RBU partners have created a total of 10 AIoT Lab teaching cases.
• Over 5,000 students have been trained and certified.

• Industry-academia research projects about 5-8 cases per year; more than 20 cases from 2022 to 2025.
• The total number of productized processes, derivative IPs, and papers for industry-academia collaborations has reached 30.

• Based on Innoworks, establish with HR the mechanism and practice of introducing interns, and actively promote them in domestic and overseas universities.
• Support regional offices to establish a local UCC operation mechanism with resources such as AIoT Lab, course modules, and Innoworks.

• Establish comprehensive propositions and project management practices, and confirm industry-academia issues through high-level strategic orientation to respond to Advantech's technology development roadmap for the next 2-3 years.
• Actively promote the digital campus application of the platform, and establish digital campus application templates with National Yang Ming Chiao Tung University as the indicator.

• Expand the lasting effect after the event, and strengthen the collaboration between Advantech and the university through mechanisms such as student internship program, campus ambassadors, and outreach sponsorships.
• Advantech industry partners are invited to participate in the Innoworks activities as industry experts, providing students with practical experience and advice from the industry, thereby bridging the industry-academia gap.
• Advantech provides industry resources and practical field data to support students' advanced development.
• Focusing on sustainability issues, we actively respond to the ESG actions and plans advocated by governments, schools, and industries around the world to expand our influence.

• Since IoT education is one of the three main axes of Advantech Cultural and Educational Foundation, Advantech collaborates with industry partners to advance the public good through the widespread adoption of IoT. The organization furnishes financial backing and employs the knowledge of its directors, the majority of whom are senior professors from academic institutions, to assess the efficacy of this methodology and supervise the advancement and trajectory of the initiatives.
• Regularly hold internal and external meetings to review the gap between the research direction and internal needs, and to promote the progress and benefits of thematic development.
• Fill out the feedback form for teachers and students who participated in the project.
• In 2024, we launched the SROI project with external consultants to gain an in-depth understanding of Innoworks' internal influence and produce corresponding management indicators.

• Partners
• Universities and research institutions

Advantech has assembled product R&D capabilities and local technical teams to embrace new opportunities in key application domains such as factory automation, renewable energy infrastructure, EV batteries and charging pile equipment, smart healthcare, and smart retailing.

Incorporate the concept of sustainability into the strategic blueprint for new product development and market expansion across business units. Establish quantifiable plans for sustainable products and services, and expand the scope and performance targets of related product departments (such as Environmental and Energy, Smart Healthcare). This will in turn amplify the positive impact on the environment and society through Advantech's products and services.

Sustainable intelligent solutions are being used to improve convenience and efficiency in a variety of industries, including smart factories, intelligent transportation, healthcare, energy management, and smart warehouses. These solutions have a positive economic impact because they streamline processes and boost productivity. The shift toward automation is becoming increasingly important, particularly in the context of a global labor shortage, and it serves as a critical strategy for closing the human resource gap.

Advantech's iEMS series solutions help enterprises save energy, reduce carbon emissions, and make energy transition to make a positive impact on the environment in the global net zero development trend. However, intelligence and AI will indeed replace part of the labor force and bring corresponding social impacts.

In the face of the possible impact on society and employment, Advantech has also long invested in the cultivation of industry talents, such as IoT industry-academic cooperation, IoT industry-academic internship project, and IoT education online certification course. Committed to shortening the gap between learning and application, and bringing more innovative talents in IoT to the world. For the industry-academia education content related to IoT, see 3.3 IoT application promotion and education.

• 41% of revenue comes from the sale of sustainable products or solutions.

• 42% of revenue comes from the sale of sustainable products or solutions.

• 47% of revenue comes from the sale of sustainable products or solutions.

• Establish a clear blueprint for sustainable product R&D and design and improve product integration. With reference to sustainability-related indicators, those with high applicability are included in Advantech's existing eco products and related operating activities specification to gradually enhance sustainability.
• Establish ecosystem partners. By leveraging the value and technological advantages of partners, we can provide users with better value, thereby creating mutual prosperity and sustainability for Advantech, ecosystem partners, customers (enterprises or individuals), and the earth.
• Continue to pay attention to the development of sustainability-related regulations, and incorporate the development of sustainable indicators, certifications, or technologies related to products or solutions in the development direction.

• Regularly review revenues from smart energy management solutions, smart factory solutions, smart telemedicine, smart agriculture solutions, smart education solutions, smart transportation, and smart logistics.
• Each business group has monthly, quarterly, and annual review mechanisms to review strategies, plans, inventory, revenue, gross profit, net profit margin, and other revenue conditions on a regular basis.
• Enter into external awards or competitions. For example, Advantech participated in and exhibited at E-Mobility Taiwan organized by Taiwan External Trade Development Council (TWSE) and was selected as the ESG Achievement logo; USC-365 POS machine won the 2023 Taiwan Excellence Awards (Click here); Performance evaluation via external honors.

In recent years, Advantech has noticed that customers have become increasingly concerned with issues such as energy conservation, carbon reduction, and product carbon footprint. There is also considerable interest in Advantech's social contributions and corporate governance. In response to the above issues, Advantech has various discussions and experiences with customers, and then forwards customers' expectations to the relevant units, including the improvement of product sustainability and the acceleration of product carbon footprint disclosure.

• Considering customers as partners, and operating the market together with customers through a co-creation mechanism.
• Improve channel distribution management, optimize the global customer relationship management system, and technical service platform, while offering more online training courses.
• Ensure that customer privacy is fully protected and ensure that customers' rights and interests are not lost during the pandemic.
• Committed to focus on the development of the IoT industry and continue to invest in IoT platforms and solutions.

• Overall performance of global distribution channels increased by 3%. The number of premium distribution partners accounts for more than 20% of the total.
• The sales performance of the distribution channel decreased by 16%, mainly due to the slowdown of market growth and dealer inventory adjustment amid global policy uncertainties.
• Achieved: The number of dealers with premium distribution partners accounted for 21% of the total.

• Expand the online training certification project. In addition to emerging countries, we also promote the introduction of courses to Japan and South Korea, providing local language courses and invite more partners to join.
• Achieved: In 2023, a total of 13 distribution partners in emerging countries will complete the courses and pass the assessment. The localization courses in Korea have been launched online, the basic courses in Japan have been completed, and the advanced courses have been introduced in stages.

• The Company held 4 World Partner Conferences (WPC), inviting nearly 4,000 customers and partners to provide more detailed product contents, solutions, and application cases, with the vision of jointly building a model in the IoT industry.
• Achieved: More than 4 Advantech global partner conferences were held, attracting more than 6,500 Advantech customers and partners from 60 countries.

• Customer satisfaction goals: Revenue from sampled customers accounted at least 60% of total revenue, and customer satisfaction score was average more than 90 points.
• Achieved: 68,748 pieces of customer feedback were collected on the official website and customer portals, with an average satisfaction rate of 4.03 points and a satisfaction rate of more than 3 points, about 99%.
• Achieved: Revenue from sampled customers accounted for 76.73% of total revenue, and customer satisfaction score was 93.16 points.

• Introduced the cloud customer relationship management system to the Japan branch and the Korea branch.
• The marketing automation system has shifted from the system platform developed locally to the application in the cloud.
• Achieved: Japan, Korea, and Brazil offices had implemented Salesforce Sale Cloud by 2023.
• Achieved: The project registration module 2.0 was introduced into the European market in 2023 to synchronize complete CRM data in real time to further break down data silos.
• Improve the Salesforce platform information and cyber security risk score by nearly 20% to effectively prevent phishing, credential stuffing, and account infringement attacks.

• The overall revenue of global distribution channels will continue to expand, and the goal is to achieve a total performance growth of 14%.
• Develop "preferred distribution partners" and "industry exclusive distribution partners", which together account for more than 40% of the overall total.
• Organize more than 5 to 10 sessions of the Sector Focused Partner Conference at home and abroad, with over 100 customers and partners expected to be invited to each session.

• 2024 The satisfaction target collected from the official website and customer portals is 4.05 points or above.
• Over 3,000 views of the A-Connect replay in 2024.

• Integrate the customer relationship management systems of the headquarters and North America to improve business efficiency and achieve consistent management.
• Launched the Salesforce PRM operation plan with designated European partners to provide a brand-new customer experience and advanced partner management mechanisms, including customer e-contract signing with DocuSign, product and marketing information search, project registration and rebate mechanisms. It is expected to cultivate potential business opportunities and improve communication efficiency with key partners to replace email operations. And the rebate mechanism is expected to enrich the data of downstream CRM customers.
• Implemented Salesforce Sales Cloud for the Mexico branch to enhance customer data security and privacy protection.

• Develop "preferred distribution partners" and "industry exclusive distribution partners", which together account for more than 50% of the overall number, and have achieved a compound annual growth rate of more than 10% for two years.
• Expand the online training and certification project. There are more than 100 distribution partners worldwide, with more than 500 employees completing the exclusive training and certification courses.

• The sampled customers' revenue accounts for more than 80% of total receivables, and the average customer satisfaction score is above 93 points.

• WISE-Marketplace is an industrial interconnection ecosystem platform powered by empowerment. It offers business platforms and industry solutions, and over 100 industrial apps for activation by Advantech and partners.
• Registered with more than 100 industry application solution partners on the digital course platform and completed exclusive training and certification courses.
• Supported the success of more than 300 Domain Focus S/I companies, and facilitated 10 listed or to be listed Domain Focus SI companies’ significant growth in market value.
• Domain Focus SI The company's market value has grown significantly.

• With the Salesforce platform as the core hub, we promote cloud-based customer relationship management systems that cover more than 85% of overseas branches and drive the connection of Advantech's five other cloud platforms (quotation cloud, partnership management cloud, marketing automation cloud, e-commerce cloud and data cloud).
• Implemented Salesforce PRM in Europe and provided 70% of our partners with a brand-new customer experience, including customer electronic contract DocuSign signing, product and marketing information search, project registration and rebate mechanism.

• The overall revenue of global distribution channels will continue to expand. The goal is to exceed US$700 million, with a CAGR of more than 10%. We will focus on developing distribution partners and premium distribution partners of industries and targeting areas, both of which contribute more than 50% of the revenue and the volume.

• Revenue from sampled customers accounted at least 85% of total revenue, and customer satisfaction score is average more than 93 points.

• The remote work mode supported by the Salesforce cloud platform not only enhances work flexibility and employee satisfaction, but also greatly reduces the carbon footprint of employee commuting and office energy consumption. It is expected to reduce carbon emissions by 30%.
• Implementing Salesforce's digital supply chain solution is expected to achieve at least 20% efficiency improvement in aspects such as order processing time, inventory management efficiency, and supply chain transparency, which can not only reduce operating costs but also improve customer satisfaction by 10%.

• Advantech's distribution channel management involves setting up product licensing, technical training, and marketing activities based on the differentiated development of distributor types, as well as sales performance evaluation, market development, talent development, technical training, strategies, and management systems.
• 1. Ensure that dealers provide high-quality services.
• 2. Sales performance indicators (annual performance targets, target market KPIs)
• 3. Marketing and market development (marketing activity plan, development of industry-specific channels)
• 4. Organizational talent development (talent development incentive mechanism, brand service team establishment)
• 5. Technical certification training (product and application courses, quality awareness, and standard operating procedures)
• 6. Direction of strategic development (annual business plan, hierarchical price management, inventory stocking mechanism)
• 7. Management system compliance (project reporting, conflict and non-compliance management)

• The HQ and North America Salesforce merger project encompasses technological assessments, data migration, system configuration, and user training, and is anticipated to be concluded in May, 2024. It’s to improve the efficiency of cross-regional business collaboration and achieve data sharing and business process integration and standardization.
• Provide European partners with a one-stop product and marketing information search platform, as well as the development of project registration and rebate mechanisms, committed to providing partners with a more convenient and more efficient collaborative experience, thereby enhancing customer satisfaction and sales effectiveness.

• In 2023, the scope of delivery was expanded from previously the top 80% of customers to all customers in China, North America, Europe, and Taiwan. At the same time, we also requested sales to provide a list of cooperative customers.
• In 2024, we will maintain the customer satisfaction survey in China, North America, Europe, and Taiwan, and increase the satisfaction survey in Japan at the same time.

• Implement the Channel BLM, formulate the annual distribution business plan (Channel ABP) together with distribution partners, and provide quantitative and qualitative evaluation indicators (performance, marketing, technical training, internal control, etc. total 18 indicators) every quarter to review implementation effectiveness, provide comprehensive resources and training, promote channel performance growth and partner development, and achieve stable and long-term development of distribution channels.

• The cases and success stories of B2B customers in collaboration with Salesforce are disclosed on the Salesforce global website. To specifically demonstrate how Advantech uses the Salesforce platform to bring business value and cloud-based experience, and showcase the Company's experience in digital transformation to the world. Making customers, partners, and distribution channels understand Advantech's efficient cloud platform system deployment.

• Based on the questionnaires filled out by customers in each region, customers' dissatisfaction or suggestions are reported back to the responsible sales person in each region. Then Advantech would make corresponding responses.

• Advantech will continue to collect, monitor, and respond to the suggestions of key stakeholders, customers, and partners through existing communication channels. This topic has not yet caused any major negative impact on stakeholders or the environment, economy, or society. Therefore, no remedial measures were taken

• Suppliers are required to abide by Advantech Supplier Code of Conduct, and comply with and improve the performance of labor, safety and health, environmental management, ethics, and management systems.

The impact of the supply chain on the Company may include the effects on Advantech's business brand caused by suppliers, occupational safety and labor rights, and the risk of material discontinuation. Therefore, Advantech hopes to establish a responsible and transparent supplier management system and incorporate supplier ESG management assessment into its procurement decision-making, to promote the sustainable transformation of the supply chain, and enhance the positive impact of the overall supply chain environment and economy.

• 100% of Tier 1 suppliers comply with Advantech's Supplier Code of Conduct
• 100% of PVL suppliers do not use conflict minerals
• Completed 100% improvement for significant suppliers' deficiencies

• 100% of Tier 1 suppliers comply with Advantech's Supplier Code of Conduct
• 100% of PVL suppliers do not use conflict minerals
• Expand the scope of the annual ESG audit to 60% of all suppliers
• Completed 100% improvement for significant suppliers' deficiencies

• 100% of Tier 1 suppliers comply with Advantech's Supplier Code of Conduct
• 100% of PVL suppliers do not use conflict minerals
• Expand the scope of the annual ESG audit
• Completed 100% improvement for significant suppliers' deficiencies

• Request suppliers to sign and follow the "Advantech's Supplier Code of Conduct"
• Conduct supplier Conflict Minerals Due Diligence annually and comply with the OECD third-party mechanism
• Regularly identify high-risk suppliers, and conduct audits and counseling

• Evaluate every year whether the achievement status (KPI) has improved compared to the previous year according to the set management policies and goals as a method of management improvement
• Propose improvement proposals annually with reference to the best practices in supply chain management of DJSI and other benchmarking peers

• Advantech conducts annual evaluations of its suppliers, which include quality, procurement, and ESG sustainability management. Furthermore, the Company holds regular supplier conferences and exchanges to facilitate ongoing communication. Advantech is also actively involved in supplier development and training, providing resources to suppliers to support collaborative development across the supply chain. This collaboration promotes innovation in technology incubation and the use of novel materials. These efforts are detailed in the sustainability report, which provides a comprehensive overview of supply chain issues, allowing stakeholders to fully understand and evaluate the Company's supply chain practices.

Advantech has risk management policies and business continuity plans In place, aiming to perform risk impact assessments in advance, promotion of countermeasures, and define handing processes during risk occurrences in order to reduce their possible impacts and influences when risks occur and to facilitate subsequent correction and management. Advantech strives to provide transparent and sufficient information and communication to potentially affected stakeholders regarding major risk events and countermeasures.

The risks identified in Advantech's risk management process involve economic, environmental, and social issues. If each risk item is not effectively managed and responded to, the possible negative impacts on the Company include affecting the Company's strategy execution and operational performance achievement, impair the Company's goodwill, or increase the Company's operating costs and expenses. Please refer to the individual risk item descriptions for relevant preventive or mitigation actions. On the other hand, through early identification of risk events and effective response, risks can also be transformed into future business opportunities and competitiveness.

• Expand risk management Training course to all overseas employees, with the target completion rate of more than 80% of global employees (excluding direct employees): Actual completion rate: 86%
• Facilitate project discussions and actions formation on at least two high-level risk issues:
• 1. Strengthening risk management mechanism of large-scale DMS projects
• 2. Strengthening of Polish service center in Europe

• Expand risk management training course to all overseas employees, with the target completion rate of more than 80% of global employees (excluding direct employees)
• Facilitate project discussions on at least two major domestic or overseas risk issues
• Pan strategy risk to be included in risk assessment and risk map

• The completion rate of risk management training course exceeded 85% of the global employees (excluding direct employees).
• Facilitate project discussions on at least three major domestic or overseas risk issues
• Reasonable evolution of risk management mechanism or organization benchmarking to leading peers

• Provide advanced risk management training course for domestic and overseas management, completion rate > 70%
• Facilitate project discussions on at least five major domestic and overseas risk issues
• Reasonable evolution of risk management mechanism or organization in comparison with benchmarking peers

• For key action plans for major operational risks, please refer to 2.4 Risk foresight and crisis management

• The management unit builds data dashboards and KPIs for major risks to report and track abnormalities in real time. The Internal Audit team lists risk topics as audit topics for deep dive and follow-up
• Material risk topics are included in the matters to be tracked at the quarterly risk management meeting and reported to the Board of Directors or the Audit Committee.
• The risk management team proposes evolution proposals every year with reference to the best practices of benchmarking peers risk management

Advantech conducts an annual risk survey, targeting mid-to-senior managers, directors, certified public accountants (CPA), and external consultants. The purpose of the survey is not only to identify major risk items, but also to gather opinions on risk management improvement. A risk mailbox was created to encourage and solicit all employees feedback for improving risk management.
Major risks and relevant mitigation actions are fully disclosed through various channels such as the official website, sustainability reports, earnings call, and press releases, so that investors, institutional shareholder and other stakeholders can fully understand.

• By establishing diverse two-way communication channels, besides disseminating information, the Company also listens to and responds to colleagues' feedback in real-time in order to improve and optimize employee services, maintain harmony in the workplace, as well as protect the rights and well-being of employees.
• Carried out the annual employee satisfaction survey to understand various aspects of the Company and employees’ opinions over the past year.
• Formed the DEI team to promote, implement, and materialize Advantech's DEI development.
• Bolstered support for employees to settle in and start their families.
• Improved employee health and well-being.
• Increase employee volunteer hours.

DEI has become a sustainable development trend for businesses, and many competitors in the market are implementing relevant system reforms. Since Advantech is not among the forerunners in this regard, and the development speed of DEI remains to be improved, failure to engage in proactive actions or adequate management will lead to a negative impact on the Company. Besides lagging behind the market, it is also detrimental to talent recruitment and may result in talent loss.
In addition to the blueprint drawn up by the DEI team to facilitate implementation, the consensus of top-level decision-makers and employees is crucial to the sustainability of DEI and maintaining Advantech's market competitiveness. The formulation of a policy to help employees settle in and start their families requires the Company's support and the infusion of more funds and human resources in the short term. The policy is a necessary measure for Advantech’s sustainable operation and to ensure employees' livelihoods. At the same time, is also fosters a good employer brand that is conducive for recruiting more outstanding talents to join the Company

• Employee satisfaction survey: A 75% response rate was achieved at Advantech headquarters, and the coverage area has been expanded to include Advantech's significant locations of operation (six major regions, achieving a coverage rate of 100%)
  → Completed. an 80% response rate was achieved at Advantech headquarters this year, and the questionnaire coverage rate has reached 100%
• Advantech headquarters maternity leave/competitor paternity leave/market survey
  → Completed and submitted Advantech’s “maternity leave/paternity leave" proposal, which offers better benefits than legal requirements
• Advantech headquarters’ ABLE healthcare connectivity platform has reached 60% utilization rate
  → Completed. Advantech's dual health platforms are operating currently. Besides the corporate employee health management system that has reached 100% coverage at Advantech headquarters, the blood pressure, blood oxygen levels, body temperature, and other metrics of 342 employees are also regularly monitored through the iTeleMed physiological measurement station
• More than 1,000 employees participated in healthcare activities/lectures at Advantech headquarters
  → Completed. In 2023, 2,710 employees participated in health care activities (health checkups), 68 employees took the foot health test, and 238 people partook in weight loss activities, leading to a total weight reduction of 448.5kg; also, 484 people attended the annual health lectures
• Advantech headquarters accumulated a total of 500 volunteer service hours
  → Completed. In 2023, Advantech accumulated more than 1,062 hours of volunteer service, attaining a completion rate of 112%
• Advantech achieved a 100% performance appraisal participation rate globally
  → Completed.

• Employee satisfaction survey: Global completion rate reached 84% with 84% satisfaction rate
• Optimization of the maternity leave and paternity leave systems at Advantech headquarters
• Evaluate and provide a childcare subsidy plan for Advantech headquarters
• Gradually establish paid volunteer leave at Advantech's significant locations of operation (six major regions) and increase the number of volunteer service hours worldwide to 1,500.
• Advantech headquarters’ response to DEI promotion and development: Organize biannual career lectures for women and parenting education sessions, as well as an annual cultural diversity and inclusion activity.
• Up to 3,000 employees from Advantech headquarters participated in sports/health activities
• Advantech achieved a 100% performance appraisal participation rate globally

• Employee satisfaction survey: Achieve 85% global satisfaction rate
• Optimize the paid family care leave and paid parental leave systems at Advantech headquarters
• Advantech headquarters provide a monthly childcare subsidy for children aged 0-3 years
• 100% paid volunteer leave coverage for Advantech's significant locations of operation (six major regions) and achieve 1,800 hours of volunteer service for the Company’s global employees
• Advantech achieved a 100% performance appraisal participation rate globally

• Employee satisfaction survey: Achieve a global completion rate of 85% with 86% satisfaction rate
• Advantech headquarters will provide a monthly childcare subsidy for children aged 0-6 years
• The number of employees with disabilities at Advantech headquarters will be higher than the legal requirement
• Advantech headquarters will launch telemedicine services and health activities for employees and their families and increase participation to 3,500 individuals
• Advantech employees worldwide will contribute 2,000 hours of volunteer service
• Advantech achieved a 100% performance appraisal participation rate globally

• For the employee satisfaction survey, in addition to formulating an implementation plan based on the feedback every year, the Company will continue to monitor and develop an incentive system through its regional human resource business partners (HRBPs) to encourage employees to offer their feedback, in the hope of increasing the response rate and satisfaction rate
• Advantech headquarters will implement and promote maternity leave and paternity leave systems that are better than legal requirements in Q1
• Progressively promote and implement paid volunteer leave at Advantech's significant locations of operation (six major regions), and assist various regions to start volunteer activities in a bid to increase the number of global volunteer service hours to 1,500
• 2024 is Advantech's inaugural Sports and Health Year, and a series of activities to raise employees' health awareness will be organized. The ABLE healthcare platform has joined forces with EHS and iTelemed to facilitate the digital presentation of employee health checkup statistics and monitor abnormal values. Furthermore, it is possible to make an appointment with the on-site physician or receive telemedicine service, as well as conduct workplace health monitoring and linking physiological measurement values
• The effectiveness of Advantech's global performance appraisal is controlled and managed by the human resources information digital management platform, where supervisors, HR, and colleagues are reminded and monitored to achieve 100% participation rate in required assessments

• To increase the employee satisfaction survey response rate, Advantech will regularly monitor the progress of various departments and utilize the Company's internal communication channels to promote the survey
• Statistics on the number of applications before and after the optimization of maternity leave and paternity leave
• One to two quarterly company-sponsored volunteer activities are planned, and Advantech's significant locations of operation (six major regions) are contacted to kick off local volunteer campaigns to ensure that volunteer hours are logged, volunteer leave is utilized, visibility is increased, and gradually encourage more employees to join the initiative
• Reduce the number of people with hypertension, hyperglycemia, and hyperlipidemia in 2024 by 5% through the implementation of various types of sports, health activities, and competitions

Advantech discloses various policies and systems through diverse communication channels, and gauges employee feedback through employee satisfaction surveys; meanwhile, the Company evaluates the impact of various systems on talent retention and recruitment.
The Company has also set up an employee grievance channel to respond to, take care of, and protect the rights and interests of Advantech employees.

“Advantech employee development statement”
The essence of Advantech's employee cultivation and development is to enhance their sense of self-worth, support their career development, and provide them with sufficient resources for continuous growth, thereby allowing them to unleash their potential. Through the annual Organization & People Review (O&PR) and performance evaluation, Advantech can assist supervisors and employees in integrating the Company's strategic development direction and personal career planning to gain insight into the developmental needs of employees. Advantech provides employees with comprehensive development opportunities through resources such as promotions, rotations, and training courses. The training courses cover diverse topics including new employee hires orientation, job function enhancement, management skill training, and business acumen development.

Advantech encourages employees to vigorously chase their potential and creates an environment conducive to self-motivated continuous learning. Besides physical training programs such as supervisor management training courses, APEX Program, 100 reading club, practical seminars on labor laws, career sharing lectures, and technical forums, Advantech constantly updates its all-round digital learning platform "Advantech Academy," and strives for excellence. The digital platform provides diverse courses, including various professional skill development courses, business philosophy inheritance and sharing, and training for middle and high-level management talents. Create an exclusive learning list to facilitate learning anytime, anywhere.

Advantech helps supervisors and colleagues gain a full understanding of the Company's strategic development direction and personal career development plans. This is to ensure the identification of competency gaps and items awaiting development, thereby offering comprehensive support and assistance. Furthermore, the Company strives to enhance individual capabilities and accumulate experience via resources such as promotions, rotations, and training programs. The training courses cover new employee hires orientation, job function enhancement, management skill training, and business acumen development, hoping that colleagues can give full play to their strengths, grow together with Advantech, and enhance workplace competitiveness. At present, the Company’s employee development has no negative impact on the economy, environment, and people (including their human rights).

If Advantech does not proactively develop and cultivate employees, it will lead to 1) talent drain, 2) declines in both productivity & work quality, 3) talent shortages and increasing recruitment costs, 4) hindered innovation - employees will lack innovative thinking and problem-solving skills, in turn affecting the Company’s competitiveness in the market. Therefore, Advantech employs the following measures to vigorously train and develop key talents:

1. A sound cultivation and development plan is the key to maintaining a competitive advantage in the market. Through the annual Organization & People Review (O&PR), Advantech helps supervisors and colleagues understand the Company's strategic development direction and individual career plans. By identifying personal development needs, Advantech can provide them with comprehensive training and refine employee development plans accordingly.
2. Training courses were gradually developed including new employee hires orientation, job function enhancement, management skill training, and business acumen development, hoping that colleagues can showcase their strengths, grow together with Advantech, and enhance workplace competitiveness.
3. Incentives for internal promotions and career development: Enhance personal ability and accrue experience through resources such as promotions, rotations, and training courses.

Talent cultivation and development are extremely important for the Company because they promote organizational development, reduce costs, increase competitiveness, and shape the Company's corporate image. In light of this, Advantech not only prioritizes talent cultivation and development but also formulated corresponding strategies and plans.

*Note: LEAP Workout promotes outstanding supervisors at the managerial level and above.

• The E-Learning global employee (indirect employee) participation rate reached 85%
• LEAP Workout promotion success rate reached 40%

• The E-Learning global employee (indirect employee) participation rate reached 85%
• LEAP Workout promotion success rate reached 40%

• The E-Learning global employee (indirect employee) participation rate reached 85%
• LEAP Workout promotion success rate reached 40%

To enable talents to maintain a competitive edge, Advantech plans diverse training programs to enhance their capabilities and experience. The training courses cover new employee hires orientation, job function enhancement, management skill training, and business acumen development, hoping that colleagues can give full play to their strengths, grow together with Advantech, and enhance workplace competitiveness. Relevant trainings are listed below:

In addition to internal employee cultivation, recruiting outstanding talents is also one of the drivers of corporate growth. Advantech has created the "Elite" recruitment project inspired by the core concept of "Right People on the Bus", by inviting outstanding talents who are highly compatible with and identify with Advantech’s corporate spirit to join. It is expected that fulltime colleagues recruited through this program will successfully adapt to the Company’s corporate culture, achieve a retention rate of over 80%, and demonstrate better-than-average performance in performance appraisals. Advantech will begin reviewing the program’s effectiveness in 2024.

Employees are Advantech's most important asset and the driving force behind the Company's sustainable development. Consequently, Advantech values employee suggestions and feedback on talent development and training. The company understands employees' ideas and needs through post-class questionnaires in training courses and annual performance interviews, and also uses the performance evaluation system to formulate Individual Development Plans (IDPs). Subsequently, annual satisfaction surveys are used as quantitative indicators to evaluate improvement efforts and assess their effectiveness.