Realize a Shared Vision | TECO Corporation

Achieve a shared vision for sustainability.

Derived from TECO’s B2B2S philosophy, this second ESG focus emphasizes collaboration with our customers, consumers, and suppliers to jointly create a sustainable and mutually beneficial value chain.

Material Topics	Supply Chain Management Measures Control of Raw Material Sources Climate Action and Net-Zero Implementation

Uncontrollable or Unexpected Transformation Risks	Increased management complexity, such as inaccurate emissions data, raising compliance risks. External disruptions, including extreme weather, geopolitical conflicts, or pandemics, may lead to supply chain interruptions and operational delays. Failure to ensure low-carbon and sustainable sourcing may be constrained by carbon footprint disclosure, environmental labeling, and import regulations, potentially affecting product quality, increasing returns and complaints, and impacting business partnerships. High-carbon material costs may fluctuate due to international carbon tariffs and geopolitical factors, exerting pressure on procurement and product profitability.

Risk Mitigation	In 2024, we initiated brand reinvention with the vision “To be a global driver of electrification, smart solutions, and green energy,” guided by the “One TECO” strategy, promoting resource sharing and collaboration across the group while fulfilling our customer-centric commitments. Annual customer satisfaction surveys are conducted, with follow-up actions to enhance ESG-aligned customer care and stakeholder communication. We support suppliers in emissions accounting and energy management. We prioritize sourcing low-carbon, deforestation-free, and traceable materials with third-party certifications, gradually promoting alternative materials and circular economy strategies.

2024 Achievements	TECO actively strengthened supply chain carbon management and organizational decarbonization capabilities. In line with the “50% Reduction in 10 Years” target, we implemented the following initiatives from strategic collaboration, system establishment, to training: 01. Supply Chain Carbon Management Achievements Collaborated with National Yunlin University of Science and Technology and 11 key suppliers to participate in the Ministry of Economic Affairs’ “1+N Carbon Management Demonstration Team,” jointly conducting carbon accounting and reduction diagnostics to enhance overall supply chain decarbonization capability. 02. Organizational Carbon Governance and Internal Decarbonization Systems Incorporated carbon footprint verification and reduction results into annual KPIs, linking them to senior management performance and reward systems, fostering a sustainability-driven performance culture. 03. Sustainability Education and Capacity Building Conducted multiple supply chain carbon accounting training courses covering greenhouse gas inventory methods, carbon reduction technologies, and verification processes to strengthen partners’ carbon management expertise. These initiatives have been incorporated into annual KPI management and linked to senior management performance evaluations to reinforce organizational sustainability implementation.

Collaborate with customers and suppliers to expand (or enhance) the sustainability performance of the value chain.

Supplier Code of Conduct

To ensure that suppliers fully implement TECO’s corporate sustainability management philosophy, in addition to performance assessments requiring competitive quality, delivery, and technical capabilities, TECO actively implements multiple sustainability management measures to strengthen supply chain oversight:

Establish dedicated ESG clauses for suppliers
Develop supplier ESG evaluation forms for systematic assessments
Promote localized procurement strategies to reduce carbon footprint and support local economic development
Require suppliers to sign relevant declarations and commitment documents, including: “Prohibited/Restricted Substances Certificate,” “Conflict-Free Metals Declaration,” “Supplier Code of Conduct,” and “Human Rights and Environmental Sustainability Commitment”

These management requirements are explicitly incorporated during supplier onboarding or contract renewal, ensuring continuous compliance throughout the cooperation period. TECO also regularly reviews suppliers’ performance in economic, social, and environmental dimensions to ensure alignment with company sustainability policies, thereby reducing potential sustainability risks and conflicts and achieving responsible and resilient supply chain management.

Supplier Evaluation Procedures

Pre-Transaction Assessment	To ensure compliance with TECO’s quality, environmental, and ESG requirements, suppliers undergo a pre-transaction assessment to verify certifications such as ISO 9001, TS16949, ISO 14001, ISO 45001, and other relevant risk principles. To help suppliers understand ESG trends, energy-saving and carbon reduction methods, and international certifications, TECO organizes ESG workshops (online or in-person) to guide suppliers in obtaining relevant certifications or developing required capabilities.

Contract Signing	Suppliers are required to sign the "Supplier Code of Conduct," including the "Human Rights and Environmental Sustainability Commitment." TECO reserves the right to terminate contracts if suppliers fail to meet these commitments during the contract period, ensuring that suppliers fulfill social responsibilities in their operations and production processes.

On-site Evaluation	For new and existing suppliers, TECO implements the "Supplier Evaluation Procedures" by forming an evaluation team comprising R&D, quality, production, procurement, EHS, and audit personnel from the business unit. The team conducts on-site assessments using TECO’s official scoring criteria across six dimensions: quality management, R&D capability, business management and service systems, production technology, and ESG performance.

Periodic Assessment	TECO establishes a systematic supplier management mechanism in accordance with ISO 9001, IATF 16949, and external audit standards. All suppliers are evaluated and audited every three years, with a standardized "Supplier Self-Assessment Form" serving as the initial review basis. Assessment covers quality, delivery, service, price, as well as sustainability aspects such as environmental protection, social responsibility, and corporate governance (ESG) for a comprehensive evaluation. To strengthen the sustainable supply chain, TECO prioritizes long-term partnerships with suppliers demonstrating excellent ESG performance and compliance with company standards. If a supplier fails to meet key criteria or minimum score requirements during the assessment, a formal "Non-Conformance and Corrective Action Request" is issued, requiring the supplier to submit a detailed corrective action report within 30 days based on actual operations. For critical areas such as environmental management and labor conditions, TECO provides practical improvement recommendations to help suppliers enhance their sustainability management capabilities. Corrective actions are reviewed and tracked by TECO’s "Supplier Evaluation Team" and incorporated into the next assessment. Suppliers failing to improve effectively may face contract termination to ensure the overall supply chain risk is controlled and aligned with corporate sustainability goals.

Hazardous Substance Policy and Material Management

In line with the environmental hazardous substance restrictions and prohibitions stipulated in TECO’s Sustainability Commitment, the company ensures that materials selected during the design phase are free of conflict metals. TECO commits that by 2024, 100% of motors, home appliances, and their raw materials will comply with international regulations and TECO Group’s Restricted/Prohibited Hazardous Substance Management Procedures. Furthermore, TECO has established a hazardous substance management mechanism, clearly requiring all internal employees, suppliers, contractors, and partners to comply.

Should scientific regulations evolve and emerging hazardous substances become subject to control or restriction, TECO will progressively substitute or eliminate raw materials containing these substances, depending on the product characteristics.

International Regulatory Trends	In line with the diversified development of TECO’s products, the company continuously monitors regulations on hazardous substances. Key regulations such as the EU Directive on the Restriction of Hazardous Substances in Electrical and Electronic Equipment (RoHS) and the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) are closely observed, and management procedures are implemented at least one year prior to their enforcement.

TECO Hazardous Substance Management Mechanism	Major production and operation sites comply with the Group’s Restricted/Prohibited Hazardous Substance Management Procedures to ensure consistent execution standards across TECO, subsidiaries, and affiliates. This includes raw materials, components, processed products, and production consumables. TECO manages hazardous substances in accordance with the REACH restricted/prohibited substances list, covering categories such as non-ferrous metals, ferrous metals, plastic packaging, paper packaging, wooden packaging, foam packaging, and process chemicals.

Implementation and Enforcement	When there are significant changes in external regulations or TECO policies, the Group’s Restricted/Prohibited Hazardous Substance Management Procedures are reviewed and revised through cross-business discussions, approximately once a year. Each site establishes specific control procedures, including inspection reports and certificates. In 2024, operations and products did not use any hazardous substances.

Hazardous Substance Disclosure	Electronic products involve complex components and are of high concern to stakeholders. TECO references the REACH regulatory limits for risk assessment of human health and environmental impacts. Electrical and mechanical (E&M) products account for 68% of the revenue of the E&M Systems and Automation Business Group. The E&M Systems and Automation, Smart Energy, Air Conditioning & Smart Living Business Groups, and the Comprehensive Research Institute ensure that raw materials obtained during the design stage meet TECO’s 10 hazardous substance thresholds, demonstrating that TECO products fully comply with regulatory hazardous substance standards.

In terms of sustainability management, TECO has established two ESG objectives: “Labor Rights & Social Responsibility” and “Environmental Protection”. Specific management items that suppliers are required to follow are set for each objective, guiding suppliers to enhance their sustainability management capabilities and strengthen their corporate social responsibility. The detailed implementation is shown in the table below:

ESG Objective	Objective Description	Supply Chain Management Strategy
Labor Rights & Social Responsibility	Ensure all suppliers treat employees in accordance with TECO’s labor rights expectations	Suppliers employing child labor (under 15) are deemed unqualified and will have contracts terminated Check if suppliers are certified under ISO 45001 Occupational Health & Safety Management System Include labor rights and social responsibility as evaluation criteria in supplier assessments “Human Rights & Environmental Sustainability Commitment” must be signed along with procurement contracts

Environmental Protection	Prioritize environmentally-friendly suppliers Guide suppliers to improve environmental performance and energy/carbon reduction	Check if suppliers are certified under ISO 14001 Environmental Management System Include environmental compliance and energy/carbon reduction performance in supplier assessments “Human Rights & Environmental Sustainability Commitment” must be signed along with procurement contracts

Contact Us

ESG office

ESG@teco.com.tw