Letter from the ESG Committee Chairperson

Letter from the ESG Committee Chairperson

Looking back on 2022, just as the COVID-19 pandemic showed signs of easing and people could see recovery on the horizon, geopolitical conflict threw the world into disarray amidst systemic risks from crises in energy, food, human rights, and environmental damage. Fortunately, substantive progress was achieved at the 27th Conference of the Parties of the UNFCCC (COP 27) and the 15th UN Biodiversity Conference (COP 15), so that we were able to continue forwards into an inclusive and sustainable future.

Facing a volatile economic environment, TSMC focused on its core competitive advantages of Technology Leadership, Manufacturing Excellence, and Customer Trust. Strong demand from 5G cellular network and high-performance computing applications enabled our total wafer shipments in 2022 to reach 15.3 million 12-inch equivalent wafers, and realize 12,698 product innovations for customers. We also delivered a 13th consecutive year of record revenue, driving sustainable development through profitable growth.

TSMC responded to the call to action at COP 27 by making carbon reduction initiatives our top priority. During the course of 2022, we successfully implemented 823 energy-efficiency, water conservation, and waste reduction innovation projects. A target of Net Zero Emissions by 2050 was also set with annual progress reviews planned to dynamically adjust and set even more ambitious carbon reduction pathways. We also drew up the Carbon Credits Quality Standards for Voluntary Emissions Reductions based on international guidelines and industry benchmarks to ensure that carbon credits are not obtained from sensitive regions. Furthermore, we leveraged our industry leadership to invite suppliers to participate in the CDP Supply Chain Program. The program complements suppliers' existing carbon reduction actions to help us mitigate the global climate crisis together. In light of the close association between Climate Change and Biodiversity, we issued the Biodiversity Statement for the first time in 2022 as a climate citizen of the new era. The statement commits TSMC to achieving Zero Deforestation, No Net Loss of biodiversity, and Net Positive Impact. Achieving Water Positivity was also set as a future strategy to enhance our climate resilience as part of a multi-pronged approach.

In addition to our environmental commitments, TSMC also works tirelessly to build a diverse, equal, and inclusive working environment. The first survey into salient human rights issues was completed in 2022, with the establishment of a trans-organizational human rights working group and due diligence scheduled for 2023. The subsequent promotion of preventive, mitigation and remedial measures as well as related education and training will ensure human rights protection from a stakeholder perspective. We also founded Women@tsmc, an Employee Resource Group (ERG) primarily aimed at women, and a new dedicated ERG was set up for foreign employees to build employee cohesion and promote career development. We also completed the first safety culture investigation, and introduced free health check-ups on contractor sites to build an inclusive workplace.

Upholding the spirit of Leaving No One Behind, TSMC actively works to achieve UN Sustainable Development Goals (SDGs). In addition to continuously expanding the University Collaboration Programs, cultivating semiconductor talents, and helping to meet shortfalls in emergency assistance resources, we also worked to harness the power of employee volunteers for youth and rural empowerment, promotion of the arts, and assisting the disadvantaged through the TSMC Education and Culture Foundation and TSMC Charity Foundation. Using the Business for Societal Impact (B4SI) framework as a reference, we also evaluated the overall benefits of invested resources and identified previously overlooked social needs, so that TSMC can become a force for positive change.

TSMC is the only semiconductor company in the world to be included in the Dow Jones Sustainability Indices for 22 consecutive years. Nevertheless, we don't stop there. With the publication of the annual TSMC Sustainability Report along with the Environmental Profit and Loss (EP&L) Report, TCFD Report, UN SDGs Action Report, and Materiality Analysis Report, we continue to adopt global trends in sustainability management, and transparently share TSMC's sustainability journey and accomplishments with stakeholders. Looking ahead, TSMC will embrace the ESG vision of "Uplift Society" to bring about positive change.

Lora Ho Senior Vice President and ESG Committee Chairperson