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Materiality Analysis

Identify Material Issues, Achieve Sustainable Management

Materiality analysis is an important guideline for compiling a sustainability report, formulating long-term sustainability goals, and communicating with stakeholders. TSMC identified material issues from the three major aspects of sustainable development: Environmental, Social, and Governance, and referred to the World Economic Forum's 'Dynamic Materiality' and the European Union's 'Double Materiality' principle, developed TSMC's materiality analysis process.
Materiality analysis enables the Company to align with international sustainability standards and gain insight into global trends. ESG Committee members will also spearhead annual SDG objectives and strategies across different committees, track performance, and balance stakeholder interests to ensure that ESG strategies are fully integrated into the Company's daily operations, allowing all functions to prioritize dimensions with a greater impact when investing in sustainability programs.
Learn about stakeholder concerns
across different ESG issues
Outline a sustainable
strategy blueprint
Identify positive
and negative impact
Strengthen effective communication
with external parties
Compile and disclose
the Sustainability Report

Materiality Analysis Process

In reference to GRI Sustainability Reporting Standards and the AA 1000 AccountAbility Principle (2018) and in line with the four principles of Inclusivity, Materiality, Responsiveness, and Impact, TSMC developed TSMC Dynamic and Double Materiality (TDDM) as a basis for analysis, leveraging three dimensions - stakeholder concerns in ESG issues, impact on operations and impact on sustainability to reviews sustainability issues and carries out materiality analysis to align sustainable management strategies and long-term goals through five steps: confirm, collect, survey, analyze, and approve.
Materiality Analysis Process
8
Material Issues
7
Impact on Sustainability
6
Impact on Operations
5
Stakeholder Concerns
1
Purpose of Communication
2
Objective of Communication
3
Sustainability Issues
4
Materiality Survey
TSMC has conducted surveys and analyses on employees, shareholders/investors, customers, suppliers/contractors, government/associations, and society to understand their concern across all ESG issues.
Stakeholder Concerns
Issues of Concern

Impact on Sustainability

TSMC has established a Sustainable Impact Strategy Map, assessing the impact of upstream procurement, TSMC operations, and customer use on the economy, the environment, and people (human rights) from the perspective of externalities and transforming them into social benefits (positive) and costs (negative) based on monetary units. In summary, significant impacts derive from nine ESG issues: Innovation Management, Sustainable Supply Chain, Climate and Energy, Water Stewardship, Air Pollution Control, Circular Resources, Talent Attraction and Retention, Occupational Safety and Health, and Social Impact.

TSMC's Material Issues

TSMC has referred to GRI 3: Material Topics 2021 from the GRI Universal Standards 2021 and defined material issues as 'issues of significant concern to major stakeholders that also have a real and significant impact on TSMC operations and require corresponding, quantifiable long-term goals.' Based on these three materiality principles, TSMC defined 14 material issues and formulated corresponding long-term goals for 2030 as part of TSMC's efforts to develop concrete action plans to achieve sustainable management. On February 13th, 2023, the ESG Committee Chairperson reported to the Board of Directors outlining the communication with internal and external stakeholders. The report covers the modes and frequency of communication with each stakeholder, the issues raised by stakeholders, their concerns, and the company's response to them.
Significant Concerns to Stakeholders
Significant Impact to TSMC Operations
Priority of Long-term Goals
High
Impact on Operations
High
Stakeholder Concerns
Low
Product Quality and Safety
Sustainable Supply Chain
Customer Relations
Innovation Management
Climate and Energy
Water Stewardship
Circular Resources
Air Pollution Control
Biodiversity
Social Impact
Occupational Safety and Health
Talent Attraction and Retention
Talent Development
Human Rights
Diversity and Inclusion

Stakeholder Engagement

head
Employees
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Concerned with the continued growth and success of the Company as well as meaningful work, a safe and healthy workplace, competitive compensation and welfare, opportunities to grow, and work-life balance
My children learn about the profoundness of science in the Company's holiday STEAM camp, and they cherish the models made in the course. This camp has made our family's life and work more manageable during the winter and summer vacations. I am very proud of TSMC.
Shou-Hau Tsai
TSMC employee

Management Plan for Material Issues

Innovation Management
TSMC will continue to strengthen R&D capabilities and employ innovative incentive systems internally to help customers, the industry, and academia achieve cross-field innovation.
Product Quality and Safety
TSMC will strengthen the quality culture, develop scientifically-proven innovative testing methods, and share experiences with suppliers to achieve product innovation and consistent shipment quality for customers.
Customer Relations
TSMC will provide world-class, quality, efficient, and professional integrated services so customers can receive a comprehensive user experience. This will allow TSMC to gain customer trust, which is a core value of utmost importance to TSMC.
Sustainable Supply Chain
TSMC will continue to enhance control over sustainability risks, promote a lowcarbon green supply chain, and develop a business model that is responsible to the environment and society.
Climate and Energy
TSMC will increase energy efficiency and work with equipment providers to develop the next generation of energysaving equipment. TSMC will dedicate itself to reducing GHG emissions from fabrication processes and seek to expand the use of renewable energy to strengthen climate resiliency.
Water Stewardship
TSMC will be devoted to diversifying water sources, developing water reclamation technologies, and increasing the recycling of industrial and domestic wastewater to increase the use of reclaimed water.
Circular Resources
TSMC will strive to implement the management principle of 'minimizing waste, maximizing resource recycling, and optimizing vendor management' and collaborate with suppliers to ensure resource sustainability.
Air Pollution Control
TSMC will adopt best available technologies to treat air pollutants generated from TSMC operations and enhance the performance of pollution prevention equipment to ensure that TSMC can coexist and flourish with the environment.
Diversity and Inclusion
TSMC will strive to fulfill diverse career values and create an inclusive workplace to unleash the potential of TSMC employees and inspire passion for work.
Talent Attraction and Retention
TSMC will cultivate professionals for the semiconductor industry and foster a quality, safe, and healthy workplace for employees so that employees can contribute to TSMC to their greatest abilities and grow with the company.
Talent Development
TSMC will motivate life-long learning in employees and ensure employee skillsets remain relevant to strengthen TSMC's future talent pool.
Human Rights
TSMC will support the Universal Declaration of Human Rights issued by the United Nations and human rights recognized globally as well as comply with local regulations to treat employees with dignity and respect.
Occupational Safety and Health
Adhering to a people-oriented safety culture, TSMC is devoted to achieving zero safety incidents and building an optimal healthy workplace to become a world-class benchmark corporation for health and safety.
Social Impact
Adhering to the belief of giving back to the society, TSMC is dedicated to caring for the disadvantaged, cultivating the youth and promoting arts and culture. By doing so, TSMC creates common good with the local community.