Sustainability Goals and Materiality

With the continuous threat of cyber attacks, information security has become one of the primary risks for global business operations. ESG rating agencies, including the Dow Jones ustainability Index (DJSI), have incorporated information security management as a crucial criterion in their assessments. IT has obviously become a topic that needs to be taken seriously by enterprises. Advantech is a global IoT leader. Information security issues involves a company’s operational stability, product security, privacy and other aspects. Regarding Advantech's brand value, it is extremely important to stakeholders such as employees, customers, and investors.

• Improvement of visibility of information security risks
• Decrease in attack surface
• Improvement of information security governance and risk awareness
• Enhancement of application system resilience

The Company's business continuity is guaranteed. Risks are effectively reduced, such as the theft, improper use, leakage or destruction of information assets caused by human error, hacker attacks or natural disasters. In this way, the interests of shareholders and customers are guaranteed.

The topic of Advantech's information security management has not caused any negative impact on the Company, customers, environment, economy, or society in 2022. During this period, the Company had a total of 1 information security incident (Please refer to Chapter 2 - 2.2 Information security management). Advantech will continue to improve the quality of information security management. Therefore, it avoids negative impact on production or operation activities or related compensation to customers, suppliers, and employees if their personal information is stolen in the future

• Headquarter's ISO 27001 extends the scope of application to the IT room management and backbone network of the headquarter.
• Kunshan, North America and Europe have all passed the ISO27001 certification.
• The availability of ERP, Oracle PLM and MES of factories reached 99.5% during the working hour. The achieved status is as follows: SAP: 99.9%, PLM: 100%, MES: 100%.
• In 2022, the HQ completed the drill of the IT and OT environmental information security red team in the Linkou factory.
• In 2022, the remote backup mechanism was established in Linkou, and all key application systems were included.
• There were no cases of leakage of business information during 2022.
• No unauthorized segment connections during 2022.

• Microsoft's security score reached 60%.
• The deployment of Endpoint Protection (EDR) reached a coverage rate of 80%.
• The deployment of system vulnerability patching tools reached a coverage rate of 90%.
• Annual Information Security Advocacy Course completion rate reached 90%.
• The availability of key application systems reached 99.9%

• Microsoft's security score reached 80%.
• The deployment of Endpoint Security Protection (EDR) reached a coverage rate of 90%.
• The deployment of system vulnerability patching tools reached coverage rate of 98%.
• Annual Information Security Advocacy Course completion rate reached 99%.
• The availability of key application systems reached 99.95%

• Key application systems are used to build remote backup mechanisms
• ISO27001 expands the scope of application to the management of the computer room of the information department of the head office, the backbone network, and information operations in North America and Europe.
• The drill of the information security red team was conducted in the IT and OT environment of the Linkou factory

Semi-annual Cyber Security Review Meeting and information security governance group meetings are held. The annual information security goals and the progress of the implementation of material information security projects are continuously tracked.

Please refer to Chapter 2 - 2.2 Information security management improvement plans.

We are committed to improving the Company's overall product green design standards. Environmentally friendly and high-efficiency products are provided to commit to longterm operation and create a sustainable supply chain. In this way, the responsibility of green product management is fulfilled. Internal standards were gradually raised. It includes the improvement of energy efficiency of products, the adoption of green materials and packaging materials, and the principles of easy disassembly and recycling. Meanwhile, Advantech's overall competitiveness has been enhanced to meet the requirements of international and environmental regulations. We work with suppliers, downstream system integrators and strategic partners to produce low-carbon and environmentally friendly products, which is the goal of green products.

• ECO design principles has been spread to more product lines. From the aspect of products’ energy saving, all aspects of inspection are comprehensively introduced in the new product development process in order to increase the roportion of green product revenue.
• The green design reward and process system has been fully extended.
• Systematic management (Dashboard) is to establish a visual green product board to improve the performance of Advantech's green products

In respect to the global Sustainable Development Goals, Advantech is responding to SDG 9 (Industry Innovation and Infrastructure) and SDG 12 (Responsible Consumption and Production). Starting from raw materials, product design and extending into manufacturing and environmental management, we are gradually setting goals and introducing each item of the standards. We thus are willing to do our best to improve the environment, reduce environmental impact, and produce environmentally friendly products.

In order to improve the Company's overall green design standards and requirements, the Company may need to invest more research and development resources and expenses in the short term. Moreover, R&D design may encounter a high threshold to break through. However, in the medium and long term, investing in green product design and fulfilling corporate responsibility for environmental sustainability will have a positive impact on the overall environment and economy. Advantech's overall sustainable competitiveness can also be enhanced. Also, the expectations of stakeholders and customers are met. In this way, we align ourselves with leading sustainable enterprises and attract outstanding talents to join us.
The decision-making process of material selection and product design is considered in all aspects of green design. The sustainable transformation of internal R&D teams and suppliers is gradually driven to reduce possible environmental pollution and impact. In addition, the increase in the number of product labels that disclose green design to the outside world can enhance Advantech's image and goodwill in corporate sustainability. The impact of environmental protection and energy saving awareness on the Company's operations and sales can also be reduced. The potential loss of losing customers can be reduced by complying with the requirements of international regulations and independently improving the green design of products. In addition, the data of product recyclers are verified and counted through third-party units with plans of life-cycle thinking. Environmental impact and pollution caused by improper handling of product raw materials and waste are therefore avoided.

• 100% of raw materials continue to achieve the compliance with mandatory international regulations and Advantech's standards for regulated substances. A total of 41 models of products complying with energy-saving design have reached the goal set last year.
• The achieved quantity of standard products in the newly opened case is 3 models (silver medal). Mass-produced models have introduced 21 models in the next generation of models, reaching 20% of the target set last year. (Several models among the newly developed models are currently under design and development).

• 100% of raw materials continue to achieve the compliance with mandatory international regulations and Advantech's standards for regulated substances.
• The new models of all standard products must meet the specifications of energy-saving design
• The mass-produced IPC system products are strategically introduced into power-saving gold power supply and contributes 8% of revenue
• Overall goals: Eco design new products (four standpoints) achieved silver medals or above reaching 50%.
• The mass-produced IPC system products are introduced into eco design (four standpoints) and contributes 8% of revenue.

• 100% of raw materials achieve the compliance with mandatory international regulations and Advantech's standards.
• The Energy Star/internal energy-saving high standard gold medal for new products of a specific product line reached 20%.
• The mass-produced IPC system products are introduced into powersaving gold power supply and contributes 15% of revenue.
• Overall Goal: Eco design new products (four standpoints) achieved silver medals or above reaching 80%.
• The mass-produced IPC system products are introduced into eco design(four standpoints) and contributes 8% of revenue.

• Examination of Product Development Stages is included in the publicity of all aspects of green design. Source management meets the requirements in the development stage with a view to achieving 2023 green design product revenue accounting for more than 10%.
• Efficient power modules are introduced into the product strategy. Using energy saving and high conversion efficiency to improve from the source. Advantech plans to improve the replacement strategy for power modules in the next three years, which was introduced into mass-produced hotselling products.
• Specific product lines are introduced with Energy Star certification in combination with the energy-saving management software to improve environmental performance isplay / Panel PC / Portable, and software are prioritized to be introduced as the scope, and modules for energy-saving management are developed and designed to be evaluated which can be deployed on Advantech products to improve environmental performance. was conducted in the IT and OT environment of the Linkou factory

• Regular check The ESG team regularly review the progress every two weeks. Also, the direction of execution is adjusted in real time to ensure the compliance with the effectiveness of the strategy.
• External resources support and learning from experience Introducing external resource when necessary, also verified the progress and the target.

Advantech will continue to strengthen product green design and engage the stakeholders. No significantly negative impact was caused by this topic. Therefore, there was no remedial measures.

Advantech invests in product and technology innovation and creates a co-prosperity mechanism with ecological partners in R&D and business. Industry-university cooperation is the source of external innovation. Expanding the talent pools and partnership with R&D community. The results of R&D are promoted to be industrialized and marketized.

We cooperate with leading universities in Taiwan to promote industry-university cooperation and to reduce the gap between studying and application. Enterprise resources are connected in stages to promote the implementation of the industrialization of results in academic researches. We cooperate with global ecosystem partners through online education platforms and open innovation competitions. Internet of things universal education is also jointly promoted.

We cooperate with leading universities in Taiwan to promote industry-university cooperation and to reduce the gap between campus and application. We promote the implementation of the ndustrialization of results in academic researches. We cooperate with partners through online education platforms and open innovation competitions.

• No negative impact.
• "Popularizing and Deepening Internet of Things Education" our vision, and carry out IoT projects activity. The programs were developed to cultivate talents for the IoT and shorten the gap between industry and academia.
• The "Co-Creation" value chain of Advantech working with partners to generate applications and solutions. Advantech's capabilities and resources have a positive impact on industries and stakeholders.
• This topic has a positive impact on the society aspect, stakeholders such as universities and students. Positive impact such as cultivate young talent, and developing the commercial value.The outcomes of IoT education have lasting impact. It includes the popularization of the use of Advantech's IoT online teaching materials and the expansion of the use of national/regional branches. It boosts the link between external ideas and practices of internal industry, establishing the IoT education model, and cultivating the talent.

Popular Education
• 14 special researches and plans was produced. a total of 35 interns were recruited from Taiwan region, and 7 students thereof extended their internship after the summer vacation.
• More than 800 technical certifications have been issued in campus cooperation.
• Indicators of influence: Course content is continuously optimized. The usage rate and continuity of Advantech's Internet of Things online teaching materials have been improved.

Learning & Field
• 6 projects were produced with the collaboration of National Yang Ming Chiao Tung University.
• Indicators of influence: The ratio of industry-university topics to product application and the willingness of students to enter the Internet of Things industry have all been improved.

Open Innovation
• Total 90 topics were produced by 360 students participated from 16 universities around the world.
• Indicators of influence: the penetration rate of cooperation with colleges and universities, and the ratio of obtaining (Advantech) IoT certificates.

Popular Education
• 35 students participated in the Elite100 Internship Program.
• A total of 12 cooperation numbers to participate in ducational projects or university courses of cultivation.
• Indicators of influence: Course content is continuously optimized. The usage rate and continuity of Advantech's Internet of Things online teaching materials have been improved.

Learning & Field
• 3 campus IoT application projects were promoted.
• 7 Industry-University collaboration projects.

Open Innovation
• 26 schools from around the world participated.

Popular Education
• Relevant courses have been established and optimized, and a total of 30 technical professional courses on the Internet of Things will be accumulated by 2025.
• In 2025, there will be 43 cooperation projects or university courses involved in cultivation education. From 2022 to 2025, there has been more than 70 teaching projects.

Learning & Field
• There are about 5 - 8 projects of industry-university research projects per year. From 2022 to 2025, there has been more than 20 projects in total.
• 30 of graduate students on the industry-university interface were trained.
• The Graduate students on the industry-university interface has increased by about 10 people each year. From 2022 to 2025, the cumulative target has been more than 50 people.

Open Innovation
• In 2025, it will reach 11 countries, 40 schools, 180 teams, and 720 participating students. From 2022 to 2025, a total of 2,000+ students has participated.

Popular Education
• AIoT Internet of Things course materials were co-written by cross-school.
• Outstanding team students are recruited to join Advantech through the Advantech Elite100 Internship Program.

Learning & Field
• We cooperate with National Yang Ming Chiao Tung University for the Industry Academia Innovation School. There is a model of industry-university cocreation by the original enterprise. Besides, the gap between industry and academia will be bridged through new mechanisms, including the school's sponsorship of Internet of Things innovation projects, industry-university master-doctorate and internship programs, etc.

Open Innovation
• In order to expand the continuation effect after the event, the depth of cooperation between Advantech and the school has been strengthened through mechanisms such as student internship programs, campus ambassadors, and theme extension sponsorships.

• Advantech cooperates with industry-university partners to promote the Internet of Things. The effectiveness of this approach is checked, and the direction and progress of the project are reviewed through the directors.
• Regular meetings for checking the progress and the gap to secure the efficiency.
• The 19th "Global Views Monthly" ESG Corporate Sustainability Award - Excellent Program Education Promotion Model Award.
• Feedback survey from the participants

No negative impact caused to any stakeholder or the environment, economy, or society. Therefore, no remedial measures or communicate with stakeholders are required.

• With the vision of "Enable an Intelligent and Sustainable Planet, Advantech is committed to the sustainable development of the world through IoT solution.
• IoT technology can improve the efficiency of customer resource utilization and production. Both waste and carbon emissions are reduced, thereby promoting sustainable development. IoT software and hardware products and services are developed in scopes such as energy management, transportation and logistics management, smart agriculture, smart factories, telemedicine, education, and operation and maintenance. Advantech will continue to lead the industry and digital transformation, and become a key partner for a sustainable ecosystem.

In key application fields such as factory automation, renewable energy infrastructure, EV batteries and charging pile equipment, and smart medical care, Advantech has assembled product R&D capabilities and local technical teams to meet new opportunities in the industry. Advantech announced the launch of the third global transformation. Sector Driven is the core spirit to plan five pioneer sectors – Embedded Design-in, Ind. System, Ind. Automation, smart medical care, digital marketing e-commerce platform, and six regional markets – North America, China, Europe, emerging markets, Japan, South Korea. Resources are pooled for focused advancement.

The concept of sustainability has been incorporated into the strategic blueprint of new product development and market expansion of business units. A sustainable product and service quantification plan is formulated to expand the organization and performance goals of related product departments (environmental protection and energy, smart medical care). The positive influence brought to the environment and society is further amplified through Advantech products and services.

This topic does not have a significant negative impact. Advantech will actively and continuously communicate with stakeholders to promote products and services that meet sustainable trends.

• 18.5% of revenue from sustainable products and solutions. (Note: The calculation method for 2022 is different from that for 2021)

• 19% of revenue from sustainable products and solutions.

• 20% of revenue from sustainable products and solutions

• Establish a clear blueprint for product development.
• Establish the launch strategy of sustainable products or solutions (market positioning, target customers, price policy, marketing strategy).
• Establish procedures for users’ feedback and measurement of satisfaction.
• Regular feedback for improvement.
• Build the ecosystem and leverage the value and technology for sustainability of Advantech, partners of eco system, and customer.

• Reach 90% of user satisfaction of sustainability solution.
• Regularly review the operating revenue f rom smart energy management solutions, smart factory solutions, smart telemedicine, smart agriculture solutions, smart education solutions, smart transportation and smart logistics, etc.

This topic has temporarily has no significantly negative impact to environment, economy, or society. Therefore, there was no corresponding remedial measures. Advantech will respond to this issue through real-time communication with stakeholders or identification of any negative impact on the environment, society, and economy to take timely countermeasures.

Good customer relationships can enhance Advantech's corporate competitiveness; high-quality partnerships can enhance the creativity of the IoT industry as a whole

Good customer relationships can enhance Advantech's corporate competitiveness; high-quality partnerships can enhance the creativity of the IoT industry as a whole

• Customers are regarded as partners to jointly operate the market based on co-creation mechanism.
• Channel distribution management is improved, global customer relationship management system and technical service platform are optimized, and more diverse online training courses are provided.
• The privacy of customers is ensured to be fully protected, and the rights and interests of customers are also ensured to be not damaged during the pandemic.
• We promise that we focus on the development of the IoT industry and continue to invest in IoT platforms and solutions.

• Social aspects: home care, telemedicine will help aging societies and medical services in developing countries.
• Economic aspect: the improvement of the efficiency and performance of production activities and the application of AI technology can greatly improve the level of industrial production.
• Environmental aspects: equipment monitoring and the deployment of a large number of sensing elements will effectively reduce energy consumption and environmental pollution.

Management of dealership authorization
• The number of newly signed distribution partners accounted for 15%. The number of selected distribution partners accounted for 18%.
• Customized product education and training checklists are designed according to the type of distribution partner. It was tried to be promoted in emerging countries, and nearly 40 distribution partners were successfully invited to participate in this online training program.

Customer Connection Experience
• A total of 76 Advantech Connect forums were held around the world. A total of 299 Video-on-Demand videos were uploaded with 72,771 views and 1,899 times of video shares.
• Advantech satisfies the purchase needs of direct sales customers through eStore and IoTMart. Therefore, the main axis is to optimize customers' shopping experience and shorten manual steps.

Ecosystem partner management
• Entering the field of IoT information security through co-creation.
• Enhancing Edge AI products through co-creation.

Digital Service Upgrade
• The customer relationship management system is gradually becoming cloud-based. In 2022, the cloud platform Salesforce Sales Cloud has been imported to Taiwan and AInterCon regions.
• The introduction of the quotation function of Salesforce CPQ, the CRM in the European region, has been carried out. The combination of CRM and quotation functions is also implemented to reduce the business operation platform and improve the immediacy of customer data synchronization.

Management of dealership authorization
• The overall performance of the global distribution channel increased by 3%. The number of selected distribution partners accounts for more than 20% of the total number
• The online training certification program was expanded. In addition to emerging countries and regions, course introduction is also promoted in Japan and Korea, providing local language courses and inviting more distribution partners to join.
• Four global partner summit World Partner Conference (WPC) were held. It is expected to invite nearly 4,000 customers and partners to provide more detailed product content, solutions and application cases to jointly build the vision of the IoT industry model.

Customer Connection Experience
• The goal of customer satisfaction: the operating revenue of sampled customers accounts for more than 60 (%) of the total operating revenue, and the average score of customer satisfaction is above 90 points.

Ecosystem partner management
• Adhering to the direction of the AIoT strategy to continue to expand investment and influence globally.
• Continuing to strengthen product competitiveness through co-creation.

Digital Service Upgrade
• The cloud system of customer relationship management was introduced into the Japan branch and the Korean branch.
• The quotation function of the cloud quotation system Salesforce CPQ was introduced into the Taiwan branch to practice the transparency of Advantech's global price and quotation management.
• The automation system is marketed, and the system platform developed by the local end is transferred to the cloud application.

Management of dealership authorization
• The total number of developed "selected distribution partners" and "industry exclusive distribution partners" accounted for more than 50% of the total number. In total, the compound growth rate of performance in the past two years exceeds 10%.
• The number of global distribution partners exceeded 100 companies to register on the digital course platform and complete exclusive training and certification courses.

Customer Connection Experience
• The goal of customer satisfaction: the operating revenue of sampled customers accounts for more than 60 (%) of the total operating revenue, and the average score of customer satisfaction is above 92 points.

Ecosystem partner management
• WISE-Marketplace is an industrial interconnection ecosystem platform powered by empowerment to manage platforms and industry solutions, and more than 100 active industrial apps from Advantech and its partners.
• The number of global industry application partners exceeded 100 companies to register on the digital course platform and complete exclusive training and certification courses.
• More than 300 Domain Focus S/I companies have been successfully supported, and the market value of 10 listed or quasi-listed Domain Focus SI companies has grown significantly as a result.

Digital Service Upgrade
• The main goal is that the customer relationship management system can cover more than 80% of overseas branches. Meanwhile, Salesforce CRM serves as the main data center to facilitate the optimization of other peripheral systems (cloud quotation system and approval, partnership management, marketing automation, customer service cloud) in the same cloud environment.

• The deployment of the annual business plan: after the goals of revenue and number of customers are set for different regions and different industries, the organization and manpower required to achieve this goal.
• WISE-IoT Partner Conference was held: Global partners are regularly invited to carry out in-depth product and service development roadmap research and discussion for WISE-IOT IoT solutions to clearly define target markets and business opportunities.
• MBR/QBR review of operational effectiveness: the review of the effectiveness of operational results is carried out monthly / quarterly to allow the goals to be implemented concretely.

• Internal BI System: The data is displayed in a timely manner, including the actual performance of global business, the number of existing/new customers, the number of investment invitations of partners and distributors, etc.
• MBR/ QBR: The supervisors of relevant business units regularly review the status of the achievement of the goals, and propose specific action guidelines to ensure the achievement of the goals.

Advantech will continue to collect, pay attention to and respond to suggestions from stakeholders through existing communication channels; This topic has temporarily has no significantly negative impact to stakeholder or the environment, economy, or society. Therefore, there was no remedial measures.

We have established the stable development of friendly relations with supply chain partners under our business philosophy of sustainable corporate development. In addition to taking quality into account, we also hope that by building a sustainable supply chain we will fulfill our corporate social responsibilities together with our partners while working together for environmental protection.

• Suppliers should follow the Advantech’s Supplier Code of Conduct, making them aware of the standards the Company is expected to follow.
• The Company sets short and medium-term key goals and formulates specific practices to effectively promote and implement.
• It regularly identifies high-risk suppliers, requires audits and deadlines for improvement, and reduces to medium and low risks

• Suppliers are required to comply with Advantech's "Supplier Code of Conduct" policy to observe and improve labor rights, safety and health, environmental protection, business ethics and management system performance.

Advantech expects to establish a responsible and transparent supplier management system. We also look forward to driving the sustainable transformation of the supply chain, so we incorporate the assessment of suppliers' ESG sustainable management into procurement decisions. In this way, possible impacts on environmental pollution, occupational safety, and labor rights are reduced, and the positive environmental and economic impacts of the overall supply chain are also enhanced.
In this material issues, the impacted external stakeholders/aspects include: environmental aspects, social aspects, consumers and end users, external employees (such as supply chain). In the view of the social aspect, 100% of Advantech's key suppliers do not use conflict minerals to ensure no negative impact on human rights and labor. In the view of the environmental aspect, Advantech complies with the design principles of green products and produces products that are friendly to consumers and the environment. Therefore, the loss of raw materials, packaging materials, and energy consumption is reduced to improve environmental benefits. In the view of the consumers, consumers are helped to reduce end-use energy consumption. Advantech has implemented a product carbon footprint project in 2022. The first product carbon footprint report is expected to be presented in 2023.

Management of dealership authorization
• The number of newly signed distribution partners accounted for 15%. The number of selected distribution partners accounted for 18%.
• Customized product education and training checklists are designed according to the type of distribution partner. It was tried to be promoted in emerging countries, and nearly 40 distribution partners were successfully invited to participate in this online training program.

Customer Connection Experience
• A total of 76 Advantech Connect forums were held around the world. A total of 299 Video-on-Demand videos were uploaded with 72,771 views and 1,899 times of video shares.
• Advantech satisfies the purchase needs of direct sales customers through eStore and IoTMart. Therefore, the main axis is to optimize customers' shopping experience and shorten manual steps.

Ecosystem partner management
• Entering the field of IoT information security through co-creation.
• Enhancing Edge AI products through co-creation.

Digital Service Upgrade
• The customer relationship management system is gradually becoming cloud-based. In 2022, the cloud platform Salesforce Sales Cloud has been imported to Taiwan and AInterCon regions.
• The introduction of the quotation function of Salesforce CPQ, the CRM in the European region, has been carried out. The combination of CRM and quotation functions is also implemented to reduce the business operation platform and improve the immediacy of customer data synchronization.

Management of dealership authorization
• The overall performance of the global distribution channel increased by 3%. The number of selected distribution partners accounts for more than 20% of the total number
• The online training certification program was expanded. In addition to emerging countries and regions, course introduction is also promoted in Japan and Korea, providing local language courses and inviting more distribution partners to join.
• Four global partner summit World Partner Conference (WPC) were held. It is expected to invite nearly 4,000 customers and partners to provide more detailed product content, solutions and application cases to jointly build the vision of the IoT industry model.

Customer Connection Experience
• The goal of customer satisfaction: the operating revenue of sampled customers accounts for more than 60 (%) of the total operating revenue, and the average score of customer satisfaction is above 90 points.

Ecosystem partner management
• Adhering to the direction of the AIoT strategy to continue to expand investment and influence globally.
• Continuing to strengthen product competitiveness through co-creation.

Digital Service Upgrade
• The cloud system of customer relationship management was introduced into the Japan branch and the Korean branch.
• The quotation function of the cloud quotation system Salesforce CPQ was introduced into the Taiwan branch to practice the transparency of Advantech's global price and quotation management.
• The automation system is marketed, and the system platform developed by the local end is transferred to the cloud application.

Management of dealership authorization
• The total number of developed "selected distribution partners" and "industry exclusive distribution partners" accounted for more than 50% of the total number. In total, the compound growth rate of performance in the past two years exceeds 10%.
• The number of global distribution partners exceeded 100 companies to register on the digital course platform and complete exclusive training and certification courses.

Customer Connection Experience
• The goal of customer satisfaction: the operating revenue of sampled customers accounts for more than 60 (%) of the total operating revenue, and the average score of customer satisfaction is above 92 points.

Ecosystem partner management
• WISE-Marketplace is an industrial interconnection ecosystem platform powered by empowerment to manage platforms and industry solutions, and more than 100 active industrial apps from Advantech and its partners.
• The number of global industry application partners exceeded 100 companies to register on the digital course platform and complete exclusive training and certification courses.
• More than 300 Domain Focus S/I companies have been successfully supported, and the market value of 10 listed or quasi-listed Domain Focus SI companies has grown significantly as a result.

Digital Service Upgrade
• The main goal is that the customer relationship management system can cover more than 80% of overseas branches. Meanwhile, Salesforce CRM serves as the main data center to facilitate the optimization of other peripheral systems (cloud quotation system and approval, partnership management, marketing automation, customer service cloud) in the same cloud environment.

• The deployment of the annual business plan: after the goals of revenue and number of customers are set for different regions and different industries, the organization and manpower required to achieve this goal.
• WISE-IoT Partner Conference was held: Global partners are regularly invited to carry out in-depth product and service development roadmap research and discussion for WISE-IOT IoT solutions to clearly define target markets and business opportunities.
• MBR/QBR review of operational effectiveness: the review of the effectiveness of operational results is carried out monthly / quarterly to allow the goals to be implemented concretely.

• Internal BI System: The data is displayed in a timely manner, including the actual performance of global business, the number of existing/new customers, the number of investment invitations of partners and distributors, etc.
• MBR/ QBR: The supervisors of relevant business units regularly review the status of the achievement of the goals, and propose specific action guidelines to ensure the achievement of the goals.

Advantech will continue to collect, pay attention to and respond to suggestions from stakeholders through existing communication channels; This topic has temporarily has no significantly negative impact to stakeholder or the environment, economy, or society. Therefore, there was no remedial measures.

The purpose of risk management is to protect and enhance corporate value, being able to structure and systematically assess risks that may be faced, making timely and responsive decisions that meet the company's operational goals, and ensuring that goals are achieved while enabling improvement. As a global leader in our industry, Advantech has had a continuous focus and drive for significant strategic and operational risk management.

In recent years, Advantech has re-examined the governance structure of risk management, the composition and operation of the risk management team, and the operation process of risk management. Hence, risk management is ensured in a systematic and structured manner which has been promoted. The Board of Directors is the highest governance unit for risk management, and directly supervises general strategic risks and information security risks. The Sustainable Development Committee and Remuneration Committee also participate in overseeing some strategic risks. The Audit Committee is mainly responsible for supervising the pan-operational risks.
The risk management team is responsible for the risk management process and reviewing as well as tracking the implementation on a quarterly basis. The responsible supervisor is responsible for formulating response measures for risk items and actual implementation. Internal auditors shall closely monitor or in driving all risk management processes. It shall also provide opinions and conduct audits on various risk topics as needed.

Advantech develops risk management policies and operational continuity plans to prepare for possible business interruption risks, or various emerging risks. We also regulate operations when risks occur in order to minimize their potential impact and influence. Then, subsequent correction and management are achieved. In addition, Advantech strives to provide transparent and real-time information delivery and communication to potentially affected stakeholders for various related risks.

Risks identified by Advantech's risk management process involve economic, environmental, and social issues. If there is no effective management and response to each risk item, the possible negative impact on the company includes the impact of the promotion of the company's strategy and operating performance, the impairment of the company's goodwill, or the increase of the company's operating costs and expenses. On the other hand, risks can be transformed into future business opportunities and competitiveness through early identification and effective response to risk items.

• Experts/consultants are arranged to conduct training and communication on evolutionary risk management to directors and key executives.
• Establishment of risk management mailbox: All employees are encouraged to take the initiative to provide suggestions.
• Investigation of risk issues: The scope of investigation has been expanded to global vice president and the level of associate managers, managers and deputy managers on both sides in cross-strait.

• Risk management courses and training are extended to all overseas employees. The target completion rate has exceeded 80% of the global employees (excluding direct employees).
• At least two project discussions of high-level strategic risk issues were facilitated.

• Over 90% of the global employees (excluding direct employees) have completed the education and training of risk management courses.
• The organizational level of risk management is reasonably improved compared with benchmark peers.

• Please refer to the chapter 2.4. Risk Foresight and Crisis Management for the action plan for material operational risks.
• Advantech not only reduces or avoids the possible negative impact of risk items on the Company through various actions, but also explores the opportunities that risk items may bring. The latter includes the development of solar energy, wind power industry, related applications of electric vehicles, and the development of energy management platforms.

Review and tracking of risk management and related issues
• Important risk topics are included in the tracking items of the quarterly risk management meeting and reported to the Board of Directors or the audit committee.
• The management owner builds data dashboards and KPIs for real-time exception reporting and tracking for major risks.
• Risk issues are listed as audit topics by the audit department for discussion and tracking.
• The risk team proposes proposals every year with reference to the best practices of risk management of DJSI and benchmark peers.

Advantech conducts risk surveys every year. The objects of the investigation include directors, accountants, external consultants, etc. In addition to identifying major risk items, the survey also collected opinions on improving risk management. Moreover, a risk mailbox has also been set up to encourage employees to put forward suggestions for improvement. The main risks and related countermeasures are fully disclosed through channels such as the official website, sustainability report, investor conference, press release, and so on to facilitate investors, corporate shareholders and other stakeholders to fully understand.

Advantech has been actively promoting gender equality in the global workplace for a long time to promote diversity and equality. It includes: equal pay, a fair performance appraisal and promotion system, flexible working hours, and family care leave, etc. When hiring, we ensure that gender, race, religion, political affiliation, marital status do not affect the employment conditions, or have differential treatment in terms of salary. Advantech has established a clear recruitment strategy around the world to strengthen the diversity of employees. Also, internal multiple training and talent development channels are used to gradually eliminate the impact of employees' basic differences resulting from physical or psychological conditions. Moreover, the relevant indicators of salaries and rewards between districts, types of work and ranks are regularly reviewed to ensure that a diverse and equal workplace environment is implemented and created.

Advantech is committed to promoting various gender equality measures and supporting policies. The annual Kick-off Meeting and Employee Zone are used to convey information. Besides, Advantech has also set up a mailbox for employees for employees’ feedback.

• Multiple two-way communication channels are set up for information dissemination and real-time listening and responding to the suggestion. The content of serving employees and the harmony of the workplace are promoted and optimized to ensure the rights and interests of employees through suggestions.
• The annual employee satisfaction survey is carried out to understand the employees' voice.
• Higher support is given to our employee for family settlement, giving birth, and parenting (paid family care leave and paid parental leave).
• Improving employee health and well-being.
• Paid volunteer leave.

Paid parental leave, which is superior to that stipulated in the statute, was enacted. Therefore, it needs the support of the company to invest more funds and human resources in the short term. However, this is a necessary measure for sustainable operation for the company's overall workplace environment. While the life of employees is guaranteed, a good employer brand is established to help recruit more outstanding talents to join Advantech.

• ABLE's digital employee care platform has been launched in 2022.
• Eight major topics are set up to take care of the life of employees in an all-round way.
• The employees' health care platforms are connected to facilitate employees to check the health check reports online and track abnormal values.

• Employee Satisfaction Survey: ACL’s response rate will reach 75%, and the area covered by the response will be expanded to RBU (coverage rate has reached 100%).
• Advantech headquarters will establish a paid family care leave system and a paid parental leave system.
• ABLE's healthcare connectivity platform will reach 60% of usage rate.
• More than 1,000 employees will attend health care events/lectures.
• Volunteer hours will reach 500 hours.

• Survey of employee satisfaction: the involvement rate will reach 80%
• Advantech Headquarters’ paid family care leave system and the paid parental leave system will be optimized.
• The Advantech Headquarters’ Childcare Grant option will be offered to evaluate the RBU Childcare Grant option.
• Telemedicine services for employees and their families will be promoted, and the number of people served will be increased to 300 per year.
• The paid volunteer leave established by RBU will increase the number of hours that employees around the world devote to volunteering (already reached 1500 hours).

• In response to the employee satisfaction survey that has been fully implemented this year, the survey field for employee engagement has been deepened, and measures to encourage employees to fill in answers have been used to increase the response rate and engagement.
• Paid family care leave and paid parental leave, which are superior to laws and regulations, have been established and promoted.
• Furthermore, the ABLE health care platform cooperates with iTelemed to digitally present employee health checks and abnormal value tracking. It can help to make an appointment with a resident doctor, see a doctor remotely, and also perform the tracking of workplace health care and the binding of physiological measurement values.
• While Advantech provides paid volunteer leave, it has established four main axes. It encourages employees to participate in volunteer activities with direction and goals.

• The completion progress of each department is regularly tracked. It is also publicized and matched with the company's internal communication channels to improve the response rate of employee satisfaction surveys.
• Statistics on the number of applicants before and after the establishment of paid family care leave and paid parental leave.
• Teaching about the use of the ABLE health care platform was promoted. Due to the combination of resident physicians and remote consultations, the utilization rate can be tracked by the number of people who register through the platform.
• Volunteer activities are systematically managed to ensure the number of volunteer hours and the use and exposure of volunteer leave.

Advantech discloses various policies and systems through multiple communication channels, and understands employees' thoughts through employee satisfaction surveys. Meanwhile, the impact of each system on retention and talent recruitment is evaluated. In addition, a complaint channel for employees has been set up to facilitate response, care, and protection of the rights and interests of Advantech employees.

"Enable an intelligent and sustainable planet" is Advantech's corporate vision. Also, products and technologies, business innovation, and the mechanism of co-creation and co-prosperity with ecological partners are systematically invested in this strategy.

According to the vision defined in 2015 and the "blueprint for the development of AIoT Internet of Things", Advantech regards AIoT as the engine of future industrial growth. Also, we have transformed the Company from a manufacturer of industrial computers into a provider of industrial IoT terminals, cloud solutions, technology suppliers and service providers through various innovative means. Currently, Advantech has an innovation mechanism including three categories and six projects for products,technologies, careers, and academic cooperation.

The process promotion of innovation management is promoted to the level of enterprise development. It is also an important practice in the development of emerging business opportunities. Strategically, we actively communicate with potential external partners for the concept of external strategic cooperation and co-creation. It promotes the diversification of innovative proposals and the flexibility of execution to grasp the opportunities in the development of the AIoT industry.

• The promotion of innovation is an important strategy for the company to strive for excellence and long-term operation. Meanwhile, it is also a display of investment technology and knowledge to increase the competitiveness of research and development and development of new things.
• The AIoT application solution shows how to use more effective and lower cost means to meet the needs of various industrial and commercial scenarios. For example, the improvement of process optimization yield can reduce waste and reduce energy consumption and other positive effects.
• Benchmarking to innovative solutions for application scenarios can directly solve the problems of business operators or users. For example, the Internet of Things system for self-checkout can alleviate the problem of insufficient manpower in the industry. Also, it also helps consumers to complete a more convenient consumption experience.

• Mechanisms such as IMAX-C, A+X, and MCT have been operated for many years. They regularly and systematically conduct proposal dialogues for innovative products and business strategies, and discuss technological innovation in the R&D department as the cornerstone of the innovation mechanism.
• Regarding the innovative development of new business opportunities, there were 28 proposals from Advantech headquarters and branches around the world. 10 of them were voted for potential awards after discussion. Therefore, two new product developments were accordingly launched, a new business unit was successfully established, and two new industry-university cooperation issues were derived.

• The collection, definition and research of innovation topics for internally innovative emerging business opportunities will reach 20-30 proposals. Also, 6 cases of actual products and business plans will be initiated to facilitate at least 2 cases of innovative project results.
• The goal of innovative cooperation between academic research and startups will be 7 to 9 specific plans. At least half of the results will end up in product development or integration.
• The student idea and implementation competition for Internet of Things promotion will be expected to generate 3 research cooperation projects with commercial value. The fruits of the idea will be carried over to a possible commercial product.

• Innovative mechanisms (IMAX-C, EBO, A+X, MCT, UCC, InnoWorks, etc.) will be continuously invested to expand the goals of quality and quantity.
• More ecosystem partners in the industry will be connected to build a robust innovation and co-creation model.

• Based on the existing mechanism and objectives of emerging business opportunity management, a new incubation mechanism (EB Studio) was established. Resources are specifically imported and the incubation of innovative proposals is accelerated.
• Internal manpower and resources were assembled, and innovation management was transferred to the corporate development department directly under the chairman. In this way, both the level of authorization and the height of the innovation strategy are raised.
• Links with external expert advisors are strengthened. For emerging innovation issues, their value and feasibility are effectively analyzed. With the guidance of complete information and expert opinions, resource considerations and promotion plans for implementation are completed.

When the innovative mechanism is promoted, different effectiveness indicators are given according to the attributes of the issues that each mechanism focuses on in order to ensure that the innovative measures and mechanisms can exert their maximum benefits. Each innovation mechanism has a way of defining annual goals (KPIs), conditions for achieving goals, and follow-up actions. After regular follow-up, the connection between new products and new revenue generated on the execution side is ensured.

Innovation strategy and direction are linked with SDC (Sustainability Development Committee) decisions at the level of the board. The evaluation of innovative proposals is introduced by external specialist academics and consultants. Co-creation with start-ups, or school research institutions, or strategic cooperation and investment with ecosystem-related manufacturers are applied to the implementation of the plan. Investment units, strategic units, innovation management, product and R&D units of public institutions are connected horizontally within the Company to jointly invest in innovation and co-creation.

Advantech and its entire management understand that the compliance with international labor standards and protection of labor rights are the basic conditions for a responsible company. Meanwhile, it is also the expectation of stakeholders such as consumers, the public and the government. Advantech is committed to complying with national labor laws and regulations, internationally recognized labor standards, and other applicable international conventions. Working conditions and employee benefits shall be continuously improved in order to establish, implement and maintain a good human rights management system. Also, the scope of this specification is extended to suppliers and contractors.

Advantech's global operations are being gradually promoted to the Responsible Business Alliance (RBA) audit certification. In this way, the company is ensured to have a consistent working structure and follow standards in managing global human rights issues. In 2022, Advantech had no material human rights violations in any of its global operations.

Advantech promises to strictly abide by the labor laws of the local governments where the global bases are located. We also follow the world's major sustainability and human rights standards, such as the Dow Jones Sustainability Index (DJSI) and the Responsible Business Alliance (RBA). In doing so, we ensure that conditions of employment are not influenced by factors unrelated to job ability, such as "race, color, age, religion, national origin, ancestry, marital status, sex, sexual orientation, gender identity, veteran status, or political position" when hiring.

• Through the due diligence of employees' human rights, the risk of Advantech's employees' human rights occurs with low likelihood. However, Advantech still carries out preventive mitigation and management measures to the top three risks (privacy/equal pay for equal job/non-discrimination and diversity inclusion).
• 270 first-tier suppliers have been evaluated, and 2 suppliers have been evaluated as the manufacturers with high human rights risks. Therefore, the above non-compliance situation of the supplier has been effectively improved and the case has been closed.
• 17 contractors were assessed, and all contractors had no risks related to human rights.
• 10 joint ventures were assessed, and all joint ventures had no risks related to human rights.

• Human rights due diligence was held for the first time in 2022, covering employees, suppliers, contractors, and JV (joint venture companies).

• Mitigation of risk in human rights/management measures will be implemented, and Advantech's global operations will remain free of violations of human rights.

• The "Employee Code of Conduct" course to be held with a completion rate of 95%.

• Action plans and remedial actions to mitigate negative impacts: 270 first-tier suppliers have been evaluated, and 2 suppliers have been evaluated as the manufacturers with high human rights risks. Therefore, the above non-compliance situation of the supplier has been effectively improved and the case has been closed.
• Human rights-related education and training: The completion rate of relevant education and training has been continuously improved.
• Actions to manage positive impacts: freedom of association, regular labor-management meetings, communication of labor rights (including salary, attendance and benefits, etc.), listening to colleagues' thoughts, and discussion and resolution of various key issues.
• Human rights due diligence: The first all-round due diligence in 2022 continued to improve the coverage rate, completion rate and questionnaire content of the next one.

• Process for tracking the effectiveness of actions: risk issues are identified through human rights due diligence, and related mitigation and remediation actions are carried out.
• Goals, objects and indicators used to evaluate the process: year-by-year improvement of DJSI score/improvement of mechanism and content/discipline and coverage of human rights due diligence.
• The effectiveness of actions, including the process of moving towards the goals and objectives: Advantech continues to improve the content of human rights, due diligence and scoring, learning through benchmarking, and professional advice from consultants.
• Advantech's human rights risks are proactively disclosed and reduced through regular engagement, and experience is updated in internal regulations

• Labor unions/welfare committees/labor representatives are established in Europe, Asia, Taiwan and mainland China. Representatives should speak out for employee-related issues and hold labor-management meetings to communicate labor rights, listen to colleagues' ideas, and discuss and make resolutions on various key issues.
• In the 2022 Global Employee Satisfaction Survey, colleagues gave higher than average scores in the anti-discrimination and anti-sexual harassment work environment.

Talent is the key dynamic of enterprise growth. Advantech regards employee cultivation and development as an important development project, adhering to the concept of Right People On the Bus. We are committed to creating a working environment which can stimulate the enthusiasm of colleagues, develop the potential of individuals and teams to create a benchmark enterprise for excellence and innovation.

The goal of retaining talents is achieved by the strategic policy of talent development as the main axis, the improvement of the utilization rate of digital platforms, and the institutionalized incentive and development mechanism.

Advantech's Employee Development Manifesto: The core of Advantech's cultivation and development of employees is to make Advantech's people feel that their own value is constantly being improved. Their career development is fully supported. Sufficient resources are obtained for continuous growth, enabling Advantech's people to realize their potential. The annual O&PR (Organization & People Review) and performance evaluation can help supervisors and employees understand the direction of the company's strategic development and personal career planning. Individual employee development needs are understood. Advantech provides comprehensive development content for the employees. Employee development is assisted with resources such as promotions, rotations, and training courses. The training courses cover orientation and training, job function improvement, management ability training, and business ability training.
Advantech encourages the employees to actively explore their potential to create an environment for independent and continuous learning. The physical training program includes LEAP Camp, Elite LEAP Workout, reading club, Global 50 and other physical training and development activities. In addition, Advantech continues to update its allround digital learning platform "Advantech Academy". In order to strive for excellence, the courses on the digital platform are diversified. It includes training courses for various levels of functions, inheritance and sharing of business philosophy, and training for middle and high-level management personnel. Advantech’s staff create exclusive learning lists to be able to study anytime and anywhere according to individual needs.

A sound employee development plan is the key to allowing talents to maintain a competitive advantage in the market, and it shall also have a positive impact on the economy and the population. The annual O&PR (Organization & People Review) helps Advantech's executives and colleagues understand the company's strategic development direction and personal career planning. Individual employee development needs are understood. We then provide a full range of development content. Personal ability and experience accumulation are improved through promotion, rotation, training courses and other resources. The training courses cover the education and training of newcomers, the improvement of job functions, the cultivation of management ability, and the training of business ability. In this way, we hope that colleagues can fully perform their strengths and grow together with Advantech to enhance their competitiveness in the workplace.

*Note:
1. LEAP Workout promotes executives above the manager level with outstanding performance
2. Global Talent retention rate: Global 50 is for high-potential executives above the manager level.

• Mitigation of risk in human rights/management measures will be implemented, and Advantech's global operations will remain free of violations of human rights.

• The "Employee Code of Conduct" course to be held with a completion rate of 95%.

• Action plans and remedial actions to mitigate negative impacts: 270 first-tier suppliers have been evaluated, and 2 suppliers have been evaluated as the manufacturers with high human rights risks. Therefore, the above non-compliance situation of the supplier has been effectively improved and the case has been closed.
• Human rights-related education and training: The completion rate of relevant education and training has been continuously improved.
• Actions to manage positive impacts: freedom of association, regular labor-management meetings, communication of labor rights (including salary, attendance and benefits, etc.), listening to colleagues' thoughts, and discussion and resolution of various key issues.
• Human rights due diligence: The first all-round due diligence in 2022 continued to improve the coverage rate, completion rate and questionnaire content of the next one.

Employees are Advantech's most important assets and the driving force behind the company's sustainable development. Therefore, Advantech attaches great importance to employees' suggestions and feedback for talent development and training. Employees' thoughts and needs are understood through the after-course questionnaires of training courses and annual performance interviews. The performance appraisal system is also used to plan the individual development plan (IDP) of employees. Subsequently, the annual satisfaction survey was used as a quantitative indicator of improvement to evaluate its effectiveness.