Letter from the ESG Committee Chairperson

Letter from the ESG Committee Chairperson

With each and every TSMC employee steadfast at their roles, we believe that beautiful changes can continue to happen.

Each year, TSMC renews its commitment to society and the environment through the ESG committee. We insist on an innovative business model, and in 2019, we helped customers innovate 10,761 products using 272 different process technologies, offering more energy-efficient technology applications to deliver a safer and more convenient world to humanity. This year, we made an even greater breakthrough, and extended our sustainable development goals to 2030. With our core values, we hope to align ourselves with the United Nations' Sustainable Development Goals and work together to overcome future challenges.

We have also committed NT$ 19.66 billion toward environmental protection and successfully implemented 763 innovative programs in energy conservation, water conservation, and waste reduction. Our overseas facilities have once again achieved zero emissions, realizing a green and low-carbon business model. In addition, we continue to evaluate Environmental Profit & Loss (EP&L) enabling us to monetize the environmental impact of manufacturing, and make external costs part of our new mindset for sustainable management. In 2019, TSMC achieved the highest score ever recorded by the Alliance for Water Stewardship (AWS) and became the first semiconductor company to receive platinum certification. In terms of renewable energy, we have established a task force to work closely with the government, accelerate development, and help slow down climate change.

Sustainability is fundamental to TSMC's operations and we are equally committed to the long-term success of our supply chain. In 2019, all tier 1 suppliers completed self-assessments on sustainability, and all high-risk suppliers received on-site audits. We have also continued to require more from our key suppliers, requesting that they work closely with their upstream suppliers to create value in the semiconductor supply chain. What is also worth mentioning is that we are also employing digital technology for supply chain management and expanding our existing management structure. In order to raise the bar for supply chain sustainability, we are creating a "Supply Chain 360" system that can track data, integrate an online learning platform, and offer reporting channels for suppliers.

TSMC issued its first "Diversity and Inclusion at TSMC" in 2019. We hope to build an innovative and inclusive workplace where our colleagues can work safely, make the best use of their talents, and grow together with TSMC. We have also encouraged our employees to deepen their participation in society. Our colleagues have served 17,593 times and devoted 83,797 hours in volunteer service this year. Through the TSMC Foundation and TSMC Charity Foundation, we are advocating for the disadvantaged, filial piety, education in underserved areas, youth, arts & culture, and environmental protection through a diverse range of programs. We hope to light all corners of society by harnessing the power of making 1+1 greater than 2.

TSMC believes that a company exists to bring positive changes to our world. We know that the future is filled with challenges, but we will always stay true the cornerstones of TSMC ‒ Integrity, and Responsible Operations. With each and every TSMC employee steadfast at their roles, we believe that beautiful changes can continue to happen. It is a beautiful virtuous cycle that will continue to energize TSMC's march towards sustainability.

Lora Ho Senior Vice President and ESG Committee Chairperson