A Devotee of Sustainable Values

Heat Exchanger Business

Fuel Cell Business

New Business Development - Hydrogen Power

New Business Development - Thermal Energy

Kaori has implemented a business integrity policy with the Board of directors' approval and developed its own accounting policies and internal control system to enforce business integrity. Internal auditors have been assigned to audit compliance on a regular basis. Kaori has clearly stated its core values of innovation, quality, responsibility, and honor in external communications and established business integrity policies that all directors, supervisors, senior managers, employees, and the controller must obey when carrying out their duties. The Company has established the “Business Integrity Code of Conduct”, “Business Integrity Procedures and Behavioral Guidelines”, “Ethical Conduct Guidelines”, “Investor Relationship Management Policy”, and “Risk Management Policy” in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”.

Building an Integrity Culture

Kaori upholds “innovation, quality, responsibility, and honor” and recognizes integrity as the core of its corporate culture. By implementing a set of ethical behavior guidelines, the Company enforces values such as fair trade, avoidance of improper gains, protection of business secrets, human rights, and compliance in all aspects of business operations. The Company has implemented rigorous preventive and disciplinary measures to enforce high ethical standards among employees and prevent violations when engaging in business activities. Misconduct reporting channels have also been set up, and any employee that violates the behavioral guidelines will be disciplined according to the Work Rules.

In addition to tracking yearly internal control self-assessments conducted by various departments and making adjustments to policies and laws that affect corporate operations, Kaori also reiterates the importance of corporate governance and ethics to employees from time to time. Employees who commit violation against the law, safety rules/regulations, employment contracts, or commercial ethics will be subject to legal consequences and disciplinary measures. These violations are taken into consideration as part of employees' performance evaluation.

Complete Grievance Systems, Channels, and Investigation Procedures

Employees are required to report, using the following channels, any violations of laws, policies, or contract terms or any attempts to exploit the vested authority for improper gains against the Company's interests：

• Physical Mailbox
  No. 5-2, Jilin North Road, Zhongli District, Taoyuan City 32030 Kaori Heat Treatment Co., Ltd. - Special Assistant's Office
• E-mail：csr@kaori.com.tw

Investigation Procedures

Kaori is well-aware of the challenges that risks may pose to business operations. To minimize the influence of the external environment, managers of various business segments within the Company have identified and defined risks that are relevant to operations, so that they can be properly managed to ensure continuity. By taking risk identification, risk assessment, risk management, and risk response measures, Kaori aims to minimize potential risks and even turn them into opportunities. The PDCA cycle has been incorporated into risk management to facilitate real-time corrections and improvements and thereby protect the interests of the Company, employees, shareholders, customers, and suppliers.

Risk Management Process

Risk Analysis Outcome and Response/Management Strategies For 2022

Kaori did not commit any anti-competitive, anti-trust, or monopolistic practices in 2022, nor did it suffer financial losses due to violations or lawsuits concerning anti-competitive behavior.

Management System

• Corporate governance aspect
  • Functional committees have been assembled to supervise financial performance and internal control within the Company. Furthermore, corporate governance guidelines and Board performance assessments have been implemented to enhance the Board's supervisory role over important decisions, their ability to offer professional opinions, and increase the level of information transparency.
  • Kaori observes TWSE's corporate governance evaluation and corporate governance best practices as guidelines for improving corporate culture and compliance.
• Personnel aspect
  • Development of integrity rules and regular audit
    Ethics and compliance are the foundation of business integrity; at Kaori, we enforce these values through policy implementation, self-evaluation, whistleblowing, and whistleblower protection. The management leads by example and requests every employee to observe laws and internal policies that are relevant to their duties. Compliance is examined through yearly internal control self-assessment; the outcomes are reviewed by the Audit Office. The Audit Office executed audit tasks according to Kaori's audit plan and issued a total of 61 audit reports in 2022 (subsidiaries in China were audited by way of document review due to COVID-19). Kaori has established a set of guidelines that employees must obey when conducting business activities. All employees are required to duly comply with the “Business Integrity Code of Conduct” regardless of their role, rank, or location and to compete for business in an honest, fair, and compliant manner that supports Kaori's corporate culture.
  • Regular education and training
    Kaori provides employees with a variety of training options based on the types of duties assumed to keep them informed about business ethics and compliance requirements. Orientation, classroom courses, internal seminars, and external training are some examples of the training offered.
• Environmental safety and health aspect
  

  Policies and measurements have been implemented to ensure that all business activities, products, and services comply with occupational safety, health, and environmental regulations. Meanwhile, performance of the environmental management system is monitored so that effective corrective and preventive measures can be taken in a timely manner.

Assessment System

Kaori has several effective controls in place to ensure compliance. The Company checks new regulatory amendments on a monthly basis and conducts compliance audits on all plant sites on a yearly basis. Kaori did not commit any violations of safety, health, environmental protection, or fire safety rules in 2022. There were, however, two incidents where the Company had violated or failed to comply with applicable laws, for which it was fined a sum of NT$236,333. Both incidents have been improved upon according to the instructions of the competent authority. Aside from the above, no major compensations or losses were reported in annual internal audits.