Identification of Stakeholders

Analysis of Materiality

Being able to communicate effectively with stakeholders is the key to developing a sustainable business. It is important to be able to identify stakeholders who are critically connected to the company's operations among the many others. It is equally important to identify and prioritize issues the stakeholders concern. LITE-ON worked with a number of scholars (Hsu et. al., 2013note) to develop the Materiality Analysis Process to identify sustainability issues that stakeholders are most concerned/interested about. Results of this analysis provided us with the foundation to structure our report in a way that facilitates effective communication with different stakeholders. This methodology is based on a study and involves five major steps. The process is conducted in a three-year cycle, accompanied by correlation tests that examine the survey results returned by stakeholders. Note: Chia-Wei Hsu, Wen-Hao Lee & Wei-Chung Chao (2013). Materiality analysis model in sustainability reporting: A case study at LITE-ON Technology Corporation. Journal of Cleaner Production, 57, 142-151.

Step 1: Establishment of communication goals LITE-ON holds the CSR Report as one sustainability management strategy. Therefore, it will set the company’s annual communication goals, in the hopes of achieving the strategic communication goals through disclosure in the CSR Report. Therefore, the internal CSER team members brainstormed to identify 7 communication goals.

• Improvement of LITE-ON's energy saving, CO2 emission reduction, and environmental protection performance and result.
• Improvement of LITE-ON's risk management capability.
• Improvement of customer's recognition and satisfaction with regard to LITE-ON's implementation of CSER/EICC.
• Enhancement of employee's enthusiastic participation in CSR; internalization of DNA as part of LITE-ON's corporate culture.
• Improvement of employee loyalty and identification with the company.
• Enhancement of interaction and communication with the media and investment institutions.
• Enhancement of interaction and communication with nonprofit-making organizations.

Having determined the seven communication goals, LITE-ON then identified the 23 issues that need to be communicated with stakeholders, by taking into consideration both internal and external criteria:

• External criteria: Sustainability Reporting Guidelines published by Global Reporting Initiative (GRI), the Electronic Industry Code of Conduct (EICC), and the Dow Jones Sustainability Indices (DJSI)criteria.
• Internal criteria: Corporate vision, CSER Code of Conduct, previous CSR reports, and employee satisfaction.
• The 23 issues concerned by LITE-ON's stakeholders

Step 2: Identification of stakeholders Based on the communication goals established, LITE-ON has identified nine stakeholders it intends to communicate with. They include employees (unions), the community, customers, government authorities, research institutions, suppliers, non-profit organizations, shareholders, and the media.

Step 3: Compilation of sustainability issues The CSR report is drafted to cover an extensive scope of issues. LLITE-ON has adopted the use of questionnaires to analyze and learn about the issues that stakeholders are most concerned about, in order to establish key tasks in the sustainability campaign and to provide a disclosure basis. The questionnaire was conducted from February 2017 through March 2017. LITE-ON received 2,213 valid responses. The percentage of each stakeholder category to be engaged is shown below.

Step 4: Analyze the materiality of each issue In order to identify the materiality issues concerned by stakeholders, we adopted a risk-oriented materiality analysis model. If the information disclosed in the CSR Report does not meet the stakeholders' requirement, the communication will be defined as invalid. Therefore, for the materiality issues analysis, we adopted Failure Mode & Effect Analysis (FMEA), and identified three major assessment standards from the degree of occurrence, detection and severity, namely, “scope of stakeholders connected with communication issues”, “level of stakeholders' concern about the issues”, and “degree of influence to be produced by the issues on achievement of strategic communication goals”.

Step 5: Review and conclusion Through questionnaires distributed to various stakeholders, LITE-ON was able to gather responses on their concerns toward each issue. These responses were analyzed using the Analytic Network Process (ANP) to determine the weight for each assessment criteria. Lastly, a Risk Priority Number (RPN) was calculated for every issue based on how each criterion is scored and weighed; the RPN is then used to determine the priority of disclosures made in this CSR report. Based on the results of this materiality analysis, LITE-ON was able to identify the 10 issues that stakeholders are most concerned about, herein listed in order of importance: "Hazardous substances," "Environmental performance," "Green product management," "Occupational safety and health," "Carbon management," "Workforce indicators," "Environmental Policy/Management System," "Water resource management," "Innovation Management," and "Corporate citizenship and philanthropy." These are the key topics in LITE-ON's communication with its stakeholders, and areas where the company will focus on improvement.

Methods of Communication with Stakeholders