2015 YFY GRI REPORT · :': GRI3&1035 36 2015 YFY Sustainability and Social Responsibility Report 37 ‧ Bleached hardwood pulp ‧ Chemical raw materials - sodium hydroxide, hydrochloric

YFY GRI REPORT

2015 YFY Sustainability and Social Responsibility Report 33

2015 YFYGRI REPORT

YFY GRI REPORT


IndexAbot YFY• Company Profile

• Material Aspects, Reporting Boundaries, and Stakeholder Engagement

• Corporate Governance

Environment• Environmental Aspect: Production Drain

Water and Production Residual Material

• Environmental Aspect : Air Quality Control

• Environment : Water and Raw Materials

• Environmental Aspect: Energy Usage

Society• The Society : Employees

• The Community: Customer Health and Safety

Economic• Economic Aspect: YFY's Market Presence

GRI G4 Index• Report Profile

• GRI G4 List

35

40

43

47

51

52

54

56

58

61

62

63

YFY, Inc. was founded by Mr. Ho Chuan (also known as Ho Hsin-Yi) in 1924 with a business focus in sugar, grain, and fertilizer. After the Second World War, the company redirected its focus to the industrial sector by engaging in the production and trading of paper products in three major categories: 1) cultural paper (reading and writing), 2) industrial packaging, and 3) consumer paper goods. On February 21, 1950, Yuen Foong Yu Paper Mfg. Co., Ltd. was officially established and is considered to be a pioneer in privately-owned paper manufacturers in Taiwan.

In 2012, the company’s Fine Paper and Board Division merged with the Chung Hwa Pulp Corporation, and the company name was officially changed to YFY, Inc. The company has since owned and developed a fully integrated production chain covering upstream (forestry, pulp), midstream (paper manufacturing), and downstream (printing business) operations, which has not only realized vertical integration of forestry, pulp, paper, design, and printing but also has achieved operational synergies.

Headquartered in Taiwan, YFY continues to commit itself to the research and development of resources and recycling technologies to create a model of circular economy and to strive for our goal of “blue skies and clean water in thousands of towns that also enjoy an abundance of wealth."

As a holding company, YFY's primary focus has always been in investments. The company is organized into three business divisions: 1) the Packaging Group (Yuen Foong Yu Packaging Inc), 2) the Consumer Products Group (Yuen Foong Yu Consumer Products Co., Ltd), and 3) the Forest Products and Fine Paper

Group, (Chung Hwa Pulp Corp.). Additionally, the Yuen Foong Yu Operation Management Consultancy Co. Ltd. (also known as the YFY General Administration Division) provides consulting services in finance, legal, accounting, procurement, personnel, information, research and development, strategy integration, public relation, and land development for the various subsidiaries.

In 2015, paper products accounted for the largest proportion (approximately 87%) of YFY's business, and the revenues from the other categories (except for the production and trading of paper products) accounted for about 13 percent. The capital of YFY is NT$ 16.6 billion. The consolidated revenues, including the Forest Products and Fine Paper Group, the Packaging Group, and the Consumer Products Group, were NT$63.5 billion, with the after-tax earnings per share of NT$0.30.

Note: For relevant economic performances, please refer to the 2015 annual consolidated financial report.

A leader in the domestic paper manufacturing sector, the paper products group can be divided into five categories: 1) cultural paper, 2) white cardboard, 3) industrial paper, 4) paper containers, and 5) consumer paper. Additionally, YFY also has expanded into other categories, including science and technology paper, cleaning products, and other essential consumer products. In spite of declining global economic growth, YFY, with its full vertical integration in the paper industry and its technological advantages in other sectors, continues to maintain its product differentiation, enhance its market competitiveness, and strengthen its profitability.

Company Profile

YFY organized into three business divisions

Packaging Group

Consumer Products Group

Forest Products and Fine Paper Group

YFY GRI REPORT


‧ Bleached hardwood pulp

‧ Chemical raw materials - sodium hydroxide, hydrochloric acid, bleach, and sodium chlorite

‧ Printing and writing paper - coated art paper, light-weight coated paper, bit-coated wood-free paper, uncoated wood-free paper,

wood-free printing/writing paper, and drawing paper

‧ Packaging paper and cardboard - white coated board, gray coated board, coated ivory board, coated duplex board with grey back,

coated duplex board with white back, single-side coated board, book cardboard paper, and grease-proof board

‧ Information paper - No carbon required (NCR) paper, thermal paper, copier paper

‧ Processing paper - Aluminum laminating base paper, glassine paper, masking paper, laminating Kraft paper, environmental

laminating coated art paper, single-side coated art paper, grease-proof paper, and vegetable and fruit bag sets

‧ Environmental paper - colored recycled paper

‧ Environmentally certified paper - FSC certified coated art paper, FSC certified uncoated wood-free paper, and FSC certified wood-

free printing/writing paper

‧ Containerboard and cardboard boxes - Kraft cardboard, corrugated cardboard, corrugated paper, and corrugated cardboard boxes

‧ Domestic paper - Toilet paper, facial tissues, paper napkins, paper towels, paper handkerchiefs, and wet wipes

‧ Food packaging container paper - food paper packaging containers for juices, dairy products, lunch boxes, etc.

‧ Cleaning product category - Orange House series cleaning products, including laundry series, domestic series, and personal

hygiene products

‧ RFID - UHF inlay, tags, and tickets

YFY’s current product offerings include:

G4-10 Employee Overview

YFY believes in a meritocracy, in which employee recruitment and selection are open and fair. Employees are predominantly recruited from among the local residents, and both the company and the employees abide by the Act of Gender Equality in Employment.

YFY also recognizes the important role equal opportunity plays in preventing discrimination of employees, clients, suppliers, or various stakeholders because of race, religion, color, nationality, disability, age, gender, sexual orientation, or other factors.

Since the company was established, there has never been any incident of discrimination or sexual harassment of any employee in Taiwan. We have companies in the United States, Mainland China, Vietnam, and other countries, where we adhere to local government labor laws and regulations, so that we are always in compliance with relevant labor policies or management regulations.

In 2015, YFY’s total number of employees was 10,821*, with the majority full-time staff. The average years of service are 8.9 years.

G4-11 Employee Benefits and Labor Relations

AT YFY, all full-time employees are eligible for benefits that exceed the provisions of the Labor Standards Act. In 2015, there were no incidents of labor disputes or losses arising from them. We will continue to uphold our principle of making labor relations even more stable and harmonious for the mutual benefit of the company and our employees.

In addition, YFY respects the right of labor association for all its bases of operation, suppliers, and employees. Currently, there are a total of six internal trade unions. The joint meetings of all mill trade unions are held annually. To maintain smooth and open communication between the employer and the employees, all mill trade union representatives may freely express their appeals to ensure that employee problems, demands, and questions receive the attention of supervisors at all levels and are dealt with properly.

G4-12 Supply Chain Management

YFY has many and varied suppliers and outsourcers. Based on the type of sector and its services, they can be divided into 15 major categories, including fiber raw materials, chemical raw materials, pipes and pipe joint category, paper-making supplies, transmission materials, machine accessories, electrical appliance materials, hardware materials, etc. The key raw materials are fibers and chemicals.

Approximately 92 percent of YFY's suppliers are located in Taiwan. These local suppliers are primarily used for civil engineering, fuels and oil products, and engineering contracting projects. This demonstrates YFY's commitment to supporting local suppliers and reducing the environmental impact arising from the transport of raw materials. As for fiber raw materials, due to factors such as the availability of quality source material and insufficient domestic production, the local suppliers provide approximately 60 percent of the total quantity required. For the remaining categories, the local suppliers account for over 80 percent of the procurement amount.

G4-13 Major Organizational Changes

In October 2015, to strengthen its competitive advantage, the Qingshui mill of Consumer Products Group set up the No. 9 paper machine and No. 2 broiler. The addition of this machine unit increased the annual output of related products by approximately 36,000 tons. With the enhancement of production capacity and excellent product ratios, YFY will have more resources to manage future competition and risks.

（*Including YFY's affiliated companies）

（**The table above only includes employees of YFY Inc., Yuen Foong Yu Packaging Inc., Yuen Foong Yu

Consumer Products Co., Ltd., and Chung Hwa Pulp Corp.）

Male Female Total

Full-time staff 6458 1874 8332

Contracted staff 151 31 182

Dispatched staff 138 36 174

Total 6747 1941 8688**

Percentage 77.66% 22.34% 100%

YFY GRI REPORT


G4-14 Managing Operational Risks G4-15 External Regulations, Policies and Initiatives

YFY has always been meticulous about acquiring prevailing international certifications. This self-discipline is aimed to not only increase the trust of our clients, employees, and suppliers, but to also fulfill our corporate social responsibility to the environment, the economy, and society.

We regularly cooperate with external verification entities, such as the DNV, SGS, BSMI, and Bureau of Energy, Ministry of Economic Affairs, to set up standardization system certifications, such as the ISO14001 Environmental Management System, the ISO50001 Energy Management, the ISO14064 Greenhouse Gas Emission Inventory, the FSC-CoC (Forest Stewardship Council- Chain of Custody), the PEFC-CoC (Program for the Endorsement of Forest Certification), and the Product Carbon Footprint, etc.

Business Units Business Unit Operations/Functions Risks

Forest Products and Fine Paper Group

(Chung Hwa Pulp Corporation)

The operations of cultural paper, specialty paper, cardboard, pulp and chemical products

Operations, Markets

Packaging Group(Yuen Foong Yu Packaging Inc.)

The operations of industrial paper, cardboard boxes, colored boxes and food containers

Operations, Markets

Consumer Products Group(Yuen Foong Yu Consumer

Products Co., Ltd.)The operations of consumer paper and cleaning products Operations, Markets

Engineering Division Engineering, public works, environmental protection, energy Design

Construction & Development Division

Land planning, civil engineering Design

Legal Department

Responsible for matters related to legal risks, important domestic and foreign policy, and change of laws, which may affect the group's financial operation; information and communication with the relevant authority departments to formulate the response measures; enterprise law, contracts, patents, and other intellectual property rights.

Law, Regulations and Policies, Litigation and Non-litigation Incidents.

Auditing & Compliance OfficeOccasional inspection of the enforcement of measures; support of Board of Directors’ determination of the company's overall operational policy, and internal audit and the management of operation process

Measures, Processes

Business Integration CenterPlanning of all business domains, participation in the strategic integration of new businesses, operation analysis of all business units and budget control affairs

Laws, Regulat ions and Policies, Technologies and Changes in the Industries

Center of Corporate FinanceData analysis of all related investment targets, financial management, and capital operation management

Interest rates, Exchange rates, Inflation, Investments, Mergers and Acquisitions, Law and Regulations, Equities.

Corporate Affairs Department Public relations and general administrative affairs Corporate Image

Human Resources DepartmentHuman resources management, development of human resources and organization

Law, Regulations and Policies, Organization

Procurement Department Purchasing, logistics, import and export, and management of fixed assetsExpansion of Mills, Purchasing

Accounting Department Handling accounting mattersLaws, Regulations and Policies

Research & Development CenterResearch and development and technology enhancements of new products and various types of paper products

Research & Development Plans and Expenses

G4-16 Participation in Industry Associations

To maintain communications and dialog with our industry peers and to learn the latest international trends, YFY actively participates in industry-related associations and societies to discuss and provide policy recommendations. YFY has active membership in the following associations:

Taiwan Paper Industry Association Chinese National Federation of Industries (CNFI)

Biotechnology and Pharmaceutical Industries Promotion Association of R.O.C

The Chinese National Association of Industry and Commerce, Taiwan (CNAIC)

Taiwan Mountain Jade Science and Technology Association

The Business Council for Sustainable Development of Taiwan (BCSD-Taiwan)

Chinese International Economic Cooperation Association (CIECA)

Taiwan Institute of Directors

The Third Wednesday Club of R.O.CInstitute for Biotechnology and Medicine Industry (IBMI)

ISO14001EnvironmentaManagement

System ISO50001Energy Management

Product Carbon Footprint

ISO14064Greenhouse Gas Emission

Inventory

FSC-CoC

PEFC-CoC

YFY GRI REPORT


Review

This report will be used as the reference to identify the significant topics and concerns in the next reporting cycle and review the significant analysis on all levels and confirm whether adjustments are required.

Validation

Based on the significance analysis results, set up the report structure and survey, collect relevant information, and disclose the conclusion.

G4-17 Affiliated Companies

In regards to all of the entities included in the consolidated financial statements, please refer to the "The matters of special note -

related information of the affiliated companies" in YFY's 2015 Annual Report.

G4-18~23 Defining Reporting Content

Stakeholders Topics of Concern Communication Channels Frequency of Communications

The Competent Authorities

(Government)

• Regulation/Policy Compliance

• Environmental protection and industrial safety

1. Participation in official events

2. Compliance with laws, regulations and policies

3. Attendance of related seminars and conferences

4. Official documents

5. Response to inquiries of the competent authorities and provide explanations.

6. Participation in the evaluation of information disclosure

On irregular basis

Suppliers

Contractors

• Procurement guidelines

• Supplier CSR specifications and system establishment

1. Signing the "Transactions with ethics and integrity" commitment letter

2. Corporate social responsibility current status surveyOn irregular basis

Shareholders

Investors

• Innovative research and development

• Product quality

• Concept of environmental protection

• Corporate governance

• Financial performance

• Corporate image

• Business performance and profitability status

• The extent of information disclosure

• Remunerations and bonuses

1. Meetings relevant for the investors

2. Financial statements

3. Shareholder meetings and regular legal briefing sessions

4. Information disclosed on company website or the Market Observation Post System (MOPS)

5. Annual reports

6. Responses to telephone or email inquiries

7. Corporate social responsibility current status survey

Shareholders' meeting Annually

Legal briefing sessions Quarterly

Annual report Annually

On irregular basis

Employees

• Corporate governance


• Corporate image

• Business performance and profitability

• Salary and bonuses

• Employees' Welfare Committee

• Internal publications (Foong Garden Monthly)

• Education and training system

• Internal electronic platform

• Emails, telephones

• Corporate social responsibility current status survey

Foong Garden Internal Magazine Bimonthly

On irregular basis

Community

NGOs


• Contributions to the community

• Water resources management

• Environmental protection

1. Industrial area council

2. Environmental Protection Bureau, Fishermen's Association

3. Coordination and communications with factory affairs unit

4. Environmental protection activities


On irregular basis

Media

• Business performance

• Product promotion

• Social responsibility

• Extent of information disclosure

1. Press conferences

2. Advertisings

3. News release

4. Spokesman's line


On irregular basis

Business Partners

Affiliated Companies

• Corporate Governance


• Business performance and profitability status

1. Coordination and communications with the parties involved

2. Emails, telephones


On irregular basis

Prioritization

Invite various internal and external stakeholders to fill out the assessment survey and complete the significant topics and concerns matrix, according to the quantitative analysis results. After the CSR Editorial Team completes the comprehensive evaluation, the CEO will confirm and finalize the conclusions.

Identification

YFY reviews prior operational experiences and domestic and foreign trends, initially sums up three major areas of focus, including the environment, the community and the employees, then concludes with related important topics and concern. The top managers of all departments are invited, according to their specialized fields and the GRI Aspects list, to identify, classify, analyze, and compare the identified topics and concerns. The CSR Editorial Team will then combine and analyze the above-mentioned information and sort out 20 topics and concerns that could have an influence and impact on the company's operation and stakeholders.

Material Aspects, Reporting Boundaries, and Stakeholder Engagement

Stakeholder Engagement

YFY's historical achievements over the past 90 years were only made possible with everyone's input, so we welcome diverse opinions and are open to dialog with all interested parties. The following table lists our various stakeholders, their topics of concerns, types of communication, and frequency of communication.

YFY GRI REPORT


Asse

ssm

ent o

f Im

pact

of D

ecis

ion-

Mak

ing

on S

take

hold

ers

Size of Impacts on Organizations

The management pr inc ip les for the significant topics and concerns of moderate impacts will be disclosed in the report, and YFY will specifically track the optimization process of the related policies.

Significant topics and concerns (moderate impact) Page Significant topics and concerns

(moderate impact) Page

Labor/Management Relations 56Compliance with related laws

and regulations concerning the environment

50

YFY's economic performances 35 Occupational health and safety 57

Products, services and labeling 60 Training and Education 56

The environmental impacts of products and services 50 The use of materials 53

Compliance with related laws and regulations concerning products and

services60

Significant topics and concerns (high

impact)

GRI-identified material aspects

Impacts on the value chain

Internal ExternalPage

HeadquartersSubsidiaries

and plantsMarketing channels Clients

Community residents Investors Media

Waste water emission and Production

Residual Material

Environmental - effluent and waste 47

Air quality control Environmental - emission 51

Water recycling Environmental - water 52

Energy plan Environmental - energy 54

Customer health and safety

Society - Customer health and safety 58

YFY's market presence Economic - market presence 61

2015 annual material aspects matrix

The Determination of the Boundaries of Material Aspects

YFY Organization Chart

Respecting professional expertise and equality is the cornerstone for any enterprise's growth and development. The organizational structures of all subsidiaries and affiliated companies under the YFY group allow them to operate independently, which enables their employees and other professional to bring out the best of their talents within their own sectors. To share information and

integrate all resources, we have established a reporting mechanism and two-way communication channels. With a sound organizational framework and consistent communication, we have the capacity to create more opportunities and confront any impacts and risks arising from the economy, the environment, and the community.

Economic Environmental Social

Occupational health and safety

Employee education & training

Use of materials

Treatment of effluents and waste

Gas emissions

Use of water

YFY’s market presence

High High

High

High

High

Medium

Low

Medium

Medium

Product & Service Labeling

Compliance with laws and regulations concerning products and services

The impacts of products and services on environment

Customers’ health and safety

E m p l o y m e n t , i n c l u d i n g employee turnovers, welfare, etc.

YFY’s economic performance

Compliance with laws and r e g u l a t i o n s c o n c e r n i n g environment

Use of energyLabor/Management Relations, including whether the minimum notice period concerning significant operational changes is specifically explained in the collective action initiatives, etc.

Compliance with laws and regulations concerning products and services

Compliance with laws and regulations concerning anti-corruption and anti-monopoly

Whether to conduct impact assessment and development program in local communities

Total environmental expenditures and investments

Adopt environmental standards to screen the ratio of suppliers and the impact of supply chain on environment

Corporate Governance

Auditing & Compliance Office

Shareholders

Board of Directors

Chairman

GM & CEO

Remuneration Committee

Audit Committee

Head Office

Center of Corporate FinanceChung Hwa Pulp Corp.

Yuen Foong Yu Packaging Inc.

Yuen Foong Yu Consumer Products Co., Ltd.

Energy Recycling Platform

Water Recycling Platform

Engineering Division

Construction & Development Division

Corporate Affairs Department

Human Resources Department

Business Integration Center

Research & Development Center

Information Technology Department

Procurement Department

Administration Department

Accounting Department Legal Department

Sustainability and Social Responsibility Office

YFY GRI REPORT


YFY regards sustainable growth and development as integral to our corporate mission. We consider the employees, the community, and the environments our three key centers of attention. In addition to the establishment of the Sustainability and Social Responsibility Office in 2013, we created the Energy Recycling Platform and the Water Recycling Platform in 2015 to serve as the Group's internal communication channel.

Sustainability and Social Responsibility Management and Operation

Ronald Allen, Chief Executive of Sustainability, will continue to lead the Sustainability and Social Responsibility Office with the mission to "commit to achieving goals and achievements with respect to YFY's sustainable development and social responsibility,” in addition to the continual implementation of seven core tasks as defined below.

1. Management and Control of Goals and Targets: To make the goals and targets of social responsibility, with respect to the environment, society, and human resources, deeply rooted in YFY's affiliated companies.

2. Sustainable Actions: Manage and guide all mills to achieve their short term, medium term, and long term objectives with respect to energy conservation and emission reduction; lead the strategic topics focusing on climate change; propose response measures; and timely assist in acquiring environmental certifications.

3. Employee Education: Promote employee awareness of environmental protection and Green topics; share the enterprise's goals and vision; and encourage employees to provide their input on the improvement of enterprise sustainability and social responsibility.

4. Community Involvement: Strengthen YFY's Green image; reinforce the relationships between the mills and the neighboring communities; and encourage employees to participate in local activities related to environment protection, culture, and charity, etc.

5. Communication of Corporate Responsibility: Continue to engage with the stakeholders; improve enterprise management; and achieve the transparency of social responsibility.

6. Supply Chain Management: Monitor and manage all production lines related to personnel (including the contractors) to provide the employees a healthy and safe workplace and to establish the minimum standards required for YFY's qualified suppliers, including health and safety, social responsibility and sustainable development, etc.

7. Technological Innovation: Consolidate the segments of research and development, production, market demand, etc.; maximize synergies, taking into account profitability and ensuring both the products and the production process are in compliance with international environmental standards; and coordinate the internal and external R&D results, to facilitate the acquisition of certification and the support from non-governmental organizations (NGO).

Energy Development and Treatment of Production Residual Material

The Energy Recycling Platform was established with the goal to be the "experience sharing platform for energy development and treatment of production residual material.” Preparation for the platform was initiated in 2014 by taking inventory and gathering statistics at all mills and establishing a relevant network of contact points, with Director Tsai Meng-Yuan serving as the senior executive. By 2015, it was in full operation, and quarterly meetings were held for relevant executives to inspect the equipment of the designated mills. During these quarterly meetings, the latest technologies would be presented and relevant practical issues would be discussed to pursue the most ethical and feasible methods for the benefit of the economy, the environment, and the community.

The major tasks of the Resource Recycling Platform are as follows:

1. Energy Review and Inspection: Assist all mills to schedule and set up review and inspection plans, as well as establish the review and inspection policies. Standardize the measurement methods and tools, so the data collected from all mills within the group can be compared and analyzed.

2. Development of Renewable Energy: Actively develop renewable energy, coach all mils to consider their own capacities for the construction of renewable energy equipment, and pursue a variety of possibilities for sustainability.

3. Re-use of Resources: Monitor solid manufacturing process residual material and air quality control. Reference worldwide, cutting-edge technologies, and evaluate opportunities to reuse residual material from various perspectives.

4. Enhance Manufacturing Process Productivity: Initiate from a practical operation aspect. Optimize the performance of the details in manufacturing processes, as well as schedule and establish the maintenance and inspection plans, to not only improve production efficiency and product quality, but to also significantly reduce energy consumption.

5. Education and Training: Build online education and training system and Q&A platform. Ensure that employees fully understand the operation and procedures of equipment and tools. Simultaneously, reduce both the occupational injury and the damage rate of

equipment.

Water Reuse and Treatment of Production Drain Water

The Water Recycling Platform was established in 2015 with the aim to build an "experience sharing platform for water recycling and treatment.” The Chenggong mill executive, Lin Zheng-Guo, led the team to learn about the diverse possibilities for a water circulation system, by inspecting from pipe-to-pipe and from pool-to-pool, as well as referencing new technology and characteristics unique to the local area, with the commitment to seek an environmentally friendly mode to use water.

The major tasks of the Water Recycling Platform are as follows:

1. System Water Conservation Plan:

Plan the water circulation paths and assess the feasibility of water recycling and use from all manufacturing processes.

2. Reclaim Fibers on Water

Discharge Sites:

Take inventory of the quantity and quality of effluents at discharge points of all mills. Plan related recycling program to not only reduce the fiber runoff but to also alleviate the loading on waste water treatment plants.

4. Reinforce Water Treatment Function:

Optimize the existing manufacturing process effluent treatment system. Install monitoring and inspection equipment, and standardize the sampling and inspection standards.

4. Education and Training:

Share water recycling a n d t r e a t m e n t exper ience . D iscuss cases. Visit designated mil ls to promote the exchange of technology and knowledge.

YFY GRI REPORT


Ethics and Integrity

YFY has always held a people-oriented philosophy. In addition to respecting our employees’ professional expertise and providing them with a platform to apply their knowledge, YFY places even greater emphasis on an employee’s ethics and integrity. The Human Resources Department provides relevant training to new hires at the early stage of their employment and to maintain mutual trust in the workplace requires strict employee compliance, as specified in the Employees’ Code of Practice within the Workplace Rules.

Furthermore, to protect the company's commercial secrets and business interests and maintain a competitive advantage, YFY requires employees to sign the integrity, confidentiality and intellectual property agreement, which covers the ownership of intellectual property rights, business obligations, non-compete clause, confidentiality, the specifications for the use of IT software, ethics and integrity, handling of non-compliance, etc. Since the provisions in this agreement are clear and easy to comprehend, the employee can understand and fully comply with them. Consequently, the foundation of mutual trust between YFY and our employees is very stable, and team consensus is easily formed.

Furthermore, the Human Resources Department, as part of its ongoing education and training, constantly emphasizes in its course contents the importance of integrity and workplace ethics.

Performance Assessment

We regularly arrange training courses in compliance with laws and regulations, and department managers evaluate employee performance every six months. During the review, the manager promotes business ethics and provides reward or counseling, based on

how the employee complies with the principles of ethics and integrity while engaging in commercial activities.

Moral Values and Culture of Integrity

YFY's moral values and culture of integrity are deeply rooted in the hearts of our employees, so that they do not compromise themselves improperly at work out of self interest. When new hires join the company, they receive the employee handbook, which expressly specifies that "Employees shall not abuse their entrusted power for their own or others' private gains. Employees shall not accept favors, gifts, rebates, or other unlawful gains by performing or breaching their duties. The incidents of substantiated cases of false reporting with the intention of unlawful gains, engaging in work externally and causing significant conflict of interest with the company, substantiated with concrete facts will result in severe penalty.”

With regards to the company's operation in 2015, no incidents of corruption, anti-competitive behavior, anti-trust, or monopoly practices, etc. were identified at YFY. Our corporate culture, with the emphasis on integrity, not only strengthens our stakeholders' confidence in us, but also potentially enhances our corporate value and contributes favorably to our goal of achieving sustainable development.

Information Disclosure Transparency

YFY follows the regulations of pertinent authorities by making various public announcements, disclosing financial information, technology R&D, industry news, and reporting corporate social responsibility performance on the company website. Investors may also inquire about company-relevant information through the Market Observation Post System. In 2015, we voluntarily provided the Corporate Governance Self-Assessment Report, so that any stakeholder can download and browse it via the link on the company website to obtain a current update on corporate governance.

At our Quarterly Institutional Investors' Conference, we announce and explain the quarterly consolidated financial figures, the company’s operational status, and future prospects. This information is also available on the company website and the Market Observation Post System for the investor’s reference. In addition, we also assign designated personnel to participate each year in various types of investment conferences or to directly visit our foreign investors to obtain their strategic recommendations for the company's operation in one-on-one meetings.

Handling of Solid Production Residual Material (PRM)

YFY believes that all production residual materials are raw material or even products before being thrown away. In order to uphold the concept of "cherish everything", we hope that we can transform the vast majority of solid PRM into resources or energy. Except for actively using Refuse-derived fuel (RDF) and evaluating various recycling systems and renewable energy sources, over half of the solid PRM is reused, and the minority is recycled through outsourcing. YFY not only focuses on reducing the amount of wastes, but regaining the value of resources.

Through the continued implementation of water savings and reduction policy, the reuse and recycling

methods of PRM, compared to 2014, water usage and the total amount of PRM has been reduced by 6.5%

and 10% respectively.

Items Total Amount (tons) Recycling (tons) Applications Recycling Rate

Sludge 162,461 112,608

1.Fuel

2.Fertilizers, raw material for soil amendment

3.Raw material for cement

69%

Slag 155,272 106,607 RDF fuel 69%

Coal ash 113,191 85,245 Concrete 75%

2015 annual data for processing solid production residual material (Taiwan region and Yangzhou mill)

Water resource and the quantity of production residual material over the years (only including the Taiwan area)

Business Group

2013 2014 2015

Water Usage

（m3）

Quantity of PRM（t）

Water Usage

（m3）


Water Usage

（m3）


Forest Products and Fine Paper

Group31,282,607 128,498 30,956,779 117,240 28,867,886 102,349

Packaging Group

9,525,392 162,906 9,046,776 139,165 8,491,133 121,653

Consumer Products Group

667,665 0 738,569 117 722,938 2,876

Company total 41,475,664 291,404 40,742,124 256,522 38,081,957 229,754

Environmental Aspect: Production Drain Water and Production Residual Material

YFY GRI REPORT


Procedures of Discharge for Production Drain Water:

Mixing tankFast mixing

tankSlow mixing

tank

Aerobic biological treatment

Anaerobic biological treatment

Aeration tank 1

Aeration tank 2

Biological filter

Final sedimentation

tankOutfall tank

Remaining sludge storage tank 1

Remaining sludge storage tank 2

Remaining sludge

filter press dehydrator

Anaerobic selector tank

Deep aeration tank

Chemical sedimentation

tank

Sludge bar screen

Discharge of drain water

Outfall

Processing of Wastewater from the Manufacturing Process

Taken from the sky and give back to the earth: cleansing production drain water is always

a main concern to YFY. The total amount of drain water in 2015 was 41,968,097 metric tons,

mainly flowing into sewage treatment plants and releasing into rivers, not into soil or the

sea. Before the drain water is released, it will be subject to a thorough decontamination and

monitoring process, which must adhere to the relevant environmental protection regulations to

ensure that the environmental impact will be minimal.

Forecasted Construction of Pollution Control Equipment (PCE)

In response to the planned expansion of the production line, as well as improving the operational stability of the existing PCE, the

company will focus on the following investment in this area for the next three years, with a planned total investment of NT$429,480,000.

1. Improvement on water biological treatment system

2. Addition of the Fenton fluidized bed 12000 CMD

3. Sludge drying and reduction

4. Reconstruction of the electric bags of the electrostatic precipitators

Environmental Protection Expenditure

In 2015 the company spared no effort in environmental protection while continuously optimizing environmental protection facilities. The total amount invested in the fund for environmental protection was NT$248,628,000, with water treatment accounting for 66.4%, air quality control 32.4% and processing of solid production residual material 1.2%. Expenditures related to environmental conservation is listed below:

1. Water treatment - major capital expenditure:

• Maintenance and purchase of water treatment plant equipment

• Addition of fast and slow mixing tanks, anaerobic treatment system

• Improvement of oxygen control system and biological filter bed

2. Air quality control - major capital expenditur

• Incinerator air preheater replacement works

• Purchase of DeSOx DeNOx equipment

• Replacement of filter bag

3. Solid production residual material processing - major capital expenditure

• Humidification mixer for fly ash

• Establishment of staging area for remaining sludge

• RDF system maintenance equipment

YFY GRI REPORT


Environmental Staff Development Training

In addition to continuously strengthening environmental protection equipment, YFY expects employees to have a love for the Earth. For YFY's associates, environmental planning should not be just a job, but rather a lifestyle choice. We continue to encourage employees to improve their knowledge in environmental protection, and we also instruct them to obtain professional licenses.

In the current production units, apart from the five packaging units, where wastewater discharge is lower than the requirements of the Water Pollution Control Act, the other seven production units are noted to be in accordance with the laws and regulations of the Environmental Protection Administration (EPA); these units also have dedicated equipment and staff in charge of water discharge. In addition to the general pollution of control equipment operators, 67 staff members are certified with a special environmental protection qualification. The statistics are given below:

Environment-related Regulatory Compliance

In 2015 YFY remained committed to environmental management, such as water treatment, air quality control, solid production residual material processing and noise control, as well as replacing old pollution control equipment. Due to some production units that are still in the stage of updating to become compliant, there were some citations issued however these were dealt with immediately. The total number of penalties issued by the authorities in 2015 was 16 and a total of NT$3,050,000 was paid in fines. Many of these fines were for a peculiar smell around the mills. YFY has already taken the appropriate measures to rectify the situations and the company will be

more diligent in the future to minimize the impact on the environment.

Product/Service Impact on the Environment

All YFY's products advocate natural and environmentally friendly attributes. Even if a product reaches the end of its life, naturally biodegradable features serve to keep its impact on the environment to a minimum.

The environmental impact for products from each of the business groups is detailed below:

• Packaging Group: 97% of raw materials are sourced from recycled paper and we continue to develop new packaging products by using less amount of materials and therefore more efficient to deliver. When a product's life cycle comes to an end, reducing it to pulp and then recycling will make it into a new commodity.

• Consumer Products Group: paper products are all highly biodegradable and are also water-soluble. Orange House and other cleaning products are collaborating with Ever Growing Agriculture Biotech Co., Ltd. in the development of all-natural, non-toxic cleaning agents to protect the safety of people and the environment.

• Forest Products and Fine Paper Group: the BDIP de-inking system is used to recycle paper pulp. We have also continued to develop and improve the manufacturing process of cultured paper.

Environmental Management

Professional Staff

Dedicated Wastewater And Sewage Treatment

Specialist

Dedicated Air Pollution Control Specialist

Waste Disposal/ Clearance Technician

Advanced Basic Advanced Basic Advanced Basic

Number of Certified People

23 14 15 1 11 3

Business Groups

2013 2014 2015

Scope 1 Scope 2Total

AmountScope 1 Scope 2

Total Amount

Scope 1 Scope 2Total

Amount

Forest Products and Fine Paper

Group705,767 157,886 863,653 694,754 157,483 852,237 665,573 156,823 822,396

Packaging Group

481,117 102,006 583,123 458,827 91,106 549,933 407,620 106,511 513,521

Consumer

Products Group67,987 46,039 114,026 67,215 45,504 112,719 61,201 47,094 108,295

Company Total 1,254,871 305,931 1,560,802 1,220,797 294,092 1,514,889 1,134,394 310,428 1,444,822

The 2015 United Nations Framework Convention on Climate Change (UNFCCC) in Paris passed the “Paris Agreement" which requires all countries in the world to work together in controlling greenhouse gas emissions to slow the rise in global average temperatures. Prior to the signing of this agreement, there were already many countries and companies which begun to focus on the issue of greenhouse gas emissions.

YFY is always vigilant and forward thinking on these issues. When the Kyoto Protocol was enacted in 1997, YFY proactively initiated counter measures against greenhouse gas emissions, established cross-departmental platform inventories, and also developed realistic goals and policies. Apart from having accurate inventories and producing highly efficient reductions, we also hope that, through YFY's pulpwood system

and a variety of carbon credit schemes, we would become carbon neutral. Our goal is to be a sustainable enterprise with zero carbon emissions.

In accordance with the greenhouse gas inventory bulletin and on-site inventorying of the Industrial Development Bureau, Ministry of Economic Affairs (MOEA), the equipment owned by YFY only produces emissions of carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). Hydro fluorocarbons (HFCs), per fluorocarbons (PFCs), sulfur hexafluoride (SF6) and nitrogen trifluoride (NF3) are all zero. As per 2015 inventory, greenhouse gas emissions were at 1,444,882 metric tons of carbon dioxide equivalent (ton-CO2e), a 4% decrease compared to 2014. Details of annual emissions data are in the table below:

Environmental Aspect : Air Quality Control

YFY GRI REPORT


Water Recycling:

Water is the source of life. YFY cherishes water. The total water usage for 2015 was 46,329,465 tons, sourced from rivers, streams, groundwater, tap water etc.

The establishment of a "water recycling platform" aimed specifically at the regulation of water use will create a system of positive reinforcement for the reuse of water, reduce total consumption and increase the rate of recycling. Relevant information for water usage is as follows:

The factories developed a platform guide as well as implemented an over-the-year water-

saving program. The table below details the results of the program in 2015:

Water conservation /recycling program:

Overview for water usage in 2015

Water usage (metric tons)Per unit usage (tons/tons of

paper)Water cycle ratio (multiples)

46,329,465 15.43* 24.43

Water conservation measures Result

Effluent recycled for use in the manufacturing process and rinsing 2,393,555 tons

Water recycled from the manufacturing process 1,360,076 tons

Total 3,753,631 tons

*Using Xinwu mill, Chenggong mill, Jiutang mill, Taitung mill, Qingshui mill, Yangmei mill and Yangzhou mill as examples.

Water Usage

(tons)

2015

Average

December

2015

January

2016

February

2016

Monthly Reduction

(tons)

Yangzhou mill

18,671 19,565 18,943 16,686 2,257

Hualien mill 47,431 46,419 46,310 45,434 876

Taitung mill 9,197 8,639 8,767 7,449 1,318

Chenggong mill

11,016 10,326 10,686 10,119 567

Environment: Raw Material Usage

Being environmentally friendly should start from the source. YFY ensures that all its raw materials are checked at every level and continuously urges suppliers to engage in environmental protection and actively pursues a green procurement plan. In 2015, Jiutang mill was the number one green procurement mill in Kaohsiung.

YFY also uses large quantities of recycled materials. The proportion of recycled paper used as containerboard and packaging is as high as 97%. YFY also offers the BDIP deinking system, which means a greater volume of recycled paper can be processed, thereby increasing the total usage of recycled raw materials. Raw materials are detailed below:

Items Total Weight

Imported raw wood pulp (sheet) (tons/year) 767,533

Domestic raw wood pulp (sheet) (tons/year) 204,929.9

Imported recycled paper (tons/year) 304,489.9

Domestic recycled paper (tons/year) 1,297,756

Kraft paper (tons/year) 133,485.3

Paper (tons/year) 73,601

Environment : Water and Raw Materials

YFY GRI REPORT


Total Energy and Fuel Consumption

Through the cross-departmental "Energy Recycling Platform", we are constantly seeking new bio-fuel and renewable energy possibilities. In addition to traditional fossil fuels, we also use tires, sludge and other raw materials as fuel. Customized boilers, bottom ash and fly ash analysis, fuel heating value and composition analysis are all integral to YFY's cutting-edge energy performance in Taiwan. We are constantly optimizing practices and equipment and YFY continues to re-write the definition of energy and fuel.

Description of the energy-saving actions taken:

Recycled residual material: turning production residual material into recycled resources and reducing fossil

fuel consumption.

Replaced motors with low efficiency: eliminating motors with poor efficiency and thus increasing efficiency and

reducing energy consumption.

Upgraded and improved the electric power factor : improved power grid in the mills, and reduced ineffective

work and saved electricity

Installed permanent magnetic couplings in the windmills: reused the windmill boiler's gear shifting equipment

to increase power, and satisfying the reaction rate and energy-saving requirements at the same time.

Replaced the granulated template for Refuse-derived Fuel (RDF): adjusted the length of the template, whilst

reducing power consumption and equipment wear.

Energy-related Certification

Under strict requirements, YFY has also obtained a number of energy-related certificates and awards, which has become the driving force behind our continued diligence. All of the company's 11 production units have built the ISO14001 environmental management system and are still operating this system effectively. In order to continually improve the effectiveness of environmental protection, the systems are regularly verified by external checked by DNV GL, SGS Taiwan, Bureau of Standards, Metrology & Inspection (BSMI) and the Ministry of Economic Affairs (MOEA), as well as frequently subject to internal and external audits. Certifications related to system effectiveness are stored in all production units.

In addition to the ISO14001 environmental management system, the company has also been subject to the environmental certification system for products and raw materials. YFY, the upstream suppliers, and downstream consumers all work together and are committed to environmental protection. Environmental management certification related to products and raw materials include: FSC-CoC (Forest Stewardship Council - Chain of Custody), PEFC-CoC (Pan European Forest Certification), ISO50001 and Product Carbon Footprint.

Energy Saving Carbon Reduction Action

We always underestimate the cost of natural resources and if we further consider their "formation costs" altogether, we will see the extremely high cost so it is better not to misuse them. YFY has developed its own strict energy plan and in addition to thorough examinations and checks, the company does not use equipment with poor efficiency nor allow any waste of energy.

In 2015 the total annual energy and fuel consumption (including Taiwan region and Yangzhou mill) are as follows:

2015 Awards and Certifications:

Items Total

Fuel

Direct Consumption

Fuel oil (kiloliter/year) 43,434

Natural gas (thousand m3/year) 3,547

Gas (kg/year) 3,410

Coal (ton/year) 765,966

Diesel (liter/year) 1,009,303

Indirect Consumption

Steam (ton/year) 3,733,538

Electric power (kWh/year) 1,059,606,691

Solid Manufacturing Process Excess

Material

Waste tires (ton/year) 33,122

Sludge (ton/year) 129,506

Slag (ton/year) 22,798

Total Electricity Consumption

(thousand kWh)

Total Electricity Savings (thousand

kWh)

Total Electricity

Savings Rate

Total Reduction in Carbon Dioxide Emissions (kg CO2)

2014 1,220,175 16,129.22 1.32% 8,419,455

2015 1,041,846 19,417.32 1.83% 10,135,841

Awards and Certifications Issued/Certified Units Mill(s)

Outstanding Firm, 2015 annual Industry GHG Voluntary reductions

Industrial Development Bureau, Ministry of Economic Affairs

Hualian mill

Consultee, Reduction Assessment and Planning Instruction Quantification

Bureau of Energy, Ministry of Economic Affairs

Hualian mill

ISO50001 Energy Management System DNV GLYangme Mill, Qingshui Mill

ISO14001 Environmental Management System DNV GLYangme Mill, Qingshui Mill

ISO14064 Greenhouse Gas Examination and Checks

DNV GLYangme Mill, Qingshui Mill

*Note: 2013 annual electricity emissions coefficient: 0.522 (kg CO2/degree). Source: Bureau of Energy's 2014 annual electricity emission coefficient bulletin

In 2015 the annual electricity savings rate (i.e. pulp paper business group) are as follows:

Environmental Aspect: Energy Usage

YFY GRI REPORT


YFY is a big family with a wealth of talented people and every employee is an irreplaceable partner. We expect employees to be capable of completing three tasks: 1) take care of people around them, 2) make good decisions and 3) have the courage to request for assistance. Through mutual trust and support, stronger bonds can be established amongst the employees and a united organization has what it takes to create greater value and employees can enjoy the results together.

In order to provide better welfare to the employees, YFY has established "YFY Joint Employees' Welfare Committee". All full-time employees are entitled to join, in addition to, the labor and national health insurance required by the Labor Standards Law.

The employees can also enjoy a variety of benefits, including:

The description of all course types is as follows:

Function-Specific Professional Training: The functional training course formulated according to different duties or levels, etc., as required by the specific position intended.

Management and General Education: A variety of topics formulated according to different levels or attributes, etc. For example: strategic consensus, elite cultivation or goal management, etc.

New Employee Hire Culture Development Program: In addition to the orientation of organization and workplace environment, special subjects covered include Executive Experience Sharing, Five Team Practice Courses and Interpersonal Communication Style.

Continuing Education for Active Employees: Scholarships are provided to encourage employees to pursue degrees.

Occupational Health and Safety

Employees' "safety" and "health" have always been the topics of great importance for YFY, not only that all mills have been gradually certified by OHSAS 18001 Occupational Health and Safety Management System, YFY has also continued to promote YES System (YFY Excellence System) and CBN (Compelling Business Need), and have further set up four safety expectations to clearly express YFY's determination to drive employee safety and to build the vision of enterprise safety culture.

Labor/Management Relations

At YFY, information flow is transparent and two-way communication channels are always open. Employee seminars are regularly held at all entities within the group and executives and employees from all levels participate in the seminars together. The main focuses are promotion of concept, announcement of significant events, implementation of activities, and employee communications. Additionally, information can be delivered through websites, emails and bulletin boards, etc.

The employees' comments, requests and questions can receive attention from executives at all levels and reviewed and respond back in a timely manner. As a result, no incidents of labor disputes were identified at YFY in 2015 and both the related amount of loss and possible future amount of loss are at zero.

Education and Training

In response to the rapidly changing industries and the strategic transformation derived from the vertical integration, YFY has accelerated the integration and distribution of cross-strait resources. YFY has actively invested in large-scale projects, such as the cultivation of organizational elites, the talent development program, the consensus of strategic development among the management level, function creation at all levels, and at the same time, provides diversified learning resources for the employees. Learning programs include, new employee hire corporate culture development program, management level training, function specific professional training and self-development. Additionally, aside from the training funding support for accelerated associates, there are diverse funding support programs available for active employees who take continuing education and to encourage employees to actively invest in the advancement of their capabilities and knowledge.The key areas of YFY's 2015 annual education and training results are described as follows:

• Complimentary subscription to Preschool Children’s magazine

• Education scholarship for employees' children

• Reward for active employees with excellent achievements on continuing education at tertiary institutions

• Team building funding support

• Association recreational activity funding support

• Cultural and recreational activity funding support

• Hospital relief fund for the injured

• Retirement provision

• Employee group accident insurance

• Disability funding support

• Bereavement pension for employees and employees' family members

• Employee meal allowance

• Preferential schemes for participation in the activities, courses offered by and purchase of products from Hsin-Yi Foundation and Hsinex International Corp.

• New Year and holidays welfare merchandise

• Birthday present

• Wedding present

• Maternity leave and gift

• Complimentary subscription to Preschool Education Monthly

Course Type Number of ClassesTotal Number of

ParticipantsTotal Number of Hours Total Expenditures (NT$)

Function-Specific Professional Training 1,188 34,081 78,576 4,882,356

Management and General Education 149 12,357 28,490 2,927,069

New Employee Hire Culture Development Program

370 4,345 22,352 204,035

Continuing Education for Active Employees / 8 / 420,100

While upholding the above-mentioned concept of safety expectations, YFY takes the following proactive measures:

1. Establish dedicated units: Units dedicated to health and safety have been set up at all mills to proactively promote related businesses.

2. Promote safe operations: Reinforce the safety management function of executives at all levels, and gradually build safety values and standards which are consistent among all employees, in order to cohere the consensus to jointly drive safe operations.

3. Standardize operations: Formulate the standard operating procedures and work safety analysis for all operations to ensure all operations are standardized and safe overall.

4. Employee health management: Implement employee physical examinations according to the regulations, and the items of examination should be superior to the items prescribed by the Labor Health Protection Rules.

5. Employee safety training: All employees should receive safety training when newly hired or reassigned, and all units should also occasionally conduct work safety training and promotion courses for all active employees, to enhance all employees' safety awareness.

6. Accident reporting and investigation: All mills should report occupational accidents and disasters to the Division Offices and the Head Office within 24 hours, and launch the investigation for causes and the improvement programs; meanwhile, the case should be made known to all employees to prevent similar incidents from recurring.

7. Work safety review and disaster prevention drills: In addition to conducting all types of disaster prevention drills and holding work safety review meetings on a quarterly basis, the equipment safety inspection are reinforced to actively improve work environment and safety protection facilities.

People are company's core value, and "safety" and "health" must never be compromised.

All work-related injuries are preventable.

Safety is a condition of employment and all employees should receive safety training.

Our contractors and we have consistent safety standards.

The Society : Employees

YFY GRI REPORT


YFY believes in using its products to promote a

culture of healthy living. Therefore, product quality

and safety are of extreme importance to us. Since

1968, we have been providing only products that

protect the health and safety of our consumers to

ensure their peace of mind. In 2015, there were no

incidents of YFY product or service non-compliance

with any required or voluntary health and safety

regulations or codes.

Because of our ongoing concern about customer

health and safety, we have conducted numerous

evaluations and improvements. Orange House and

Mayflower are examples of such efforts.

Orange House

Many synthetic lotions and detergents currently available on the market contain ingredients, which may cause allergies, contain toxic substances or carcinogens, or can produce leftover residues. If these ingredients are absorbed by the human body, both our health and the environment could be seriously compromised.

YFY is committed to offering only “truly natural, truly clean" household cleaning products. We collaborated with Ever Growing Agriculture Biotech Co., Ltd. to conduct a series of research studies on natural cleaning agents. Based on the findings, YFY chose to replace the destructive hot process method in manufacturing cleaning products with the cold press method to retain the most original state of orange oil. The cleaning factor* of YFY's natural high content cleaning agents is at least 3.4 times more powerful than other natural ingredients, thus providing the healthiest and cleanest living environment for households using our products.

Mayflower

"Making your home gentler and cozier" is Mayflower's commitment to its consumers. Mayflower has not only been a classic brand for 40 years, but it also has been a leading Taiwanese household paper products. By diligently responding to consumer feedback, continuously making breakthroughs in product innovation, and insisting on making quality a part of the consumer’s life, it is Mayflower's vision to become the customer’s first choice of a household paper brand.

Mayflower’s goal is to solve the consumer’s daily household problems. In 2015, the company launched the "Premium Soft" tissue line to address three major needs of Taiwanese consumers, with respect to premium tissue papers: soft and delicate, perfect thickness, resilient and difficult to tear.

Mayflower also publishes the Brilliant Quality of Life Journal to exchange information with our customers and respond to their inquiries. We invite them to share their experiences with our products, because we know that Mayflower products are a part of their daily life.

Quality and Safety Guarantee

Clean virgin pulp is used, containing neither fluorescent whitening agents nor colorants.

High temperature sterilization at 400 degrees Celsius, unlikely to cause allergies or irritation.

Soft, solid, and delicate texture, not harmful to the skin.

No added fragrances or alcohol in the wet wipes products. Passed the sterility test.

Quality and Safety Guarantee

Absolutely no toxic chemicals, pesticide residues, heavy metal. All products are SGS-tested and guaranteed safe.

Safety assured by certification of the ISO22000 Food Safety Management standards.

The formula of the full series of products contains absolutely no substances harmful to health, such as fluorescent whitening agents, choline-based bleaching agents, brightening agents, artificial fragrances and colorants.

Transparent information with QR code available for the consumers to trace raw materials, production, and market.

Orange House’s Three Commitments:

Commitments:

N a t u r a l i n g r e d i e n t s

N o t o x i c r e s i d u e s

W a s h a n d c l e a n t h o r o u g h l y

Made from natural ingredients – Food-grade certified orange oil and vegetable formula without artificial fragrances for your peace of mind

Passed the non-toxic residue testing

Exclusive natural D cleaning factor formula to effectively combat stain

0 殘留

* The cleaning factor was tested and compared with tea seeds and baking soda at the YFY Laboratory.

The Community: Customer Health and Safety

YFY GRI REPORT


YFY's vision is "Blue sky and clean water everywhere with an abundance of wealth"; so driving the local economic prosperity is one of the ways in which the organization invests in its employees.

All YFY employees have salaries either greater than or equal

to minimum wage. The company continues to strengthen its highly competitive salary structure, in order to, increase the employees' economic benefits but also improve their job satisfaction. This is also where YFY can express high appreciation for their employees’ dedication.

List of Product Labeling Information:

Compliance with Regulations Concerning Products and Services

To preserve our goodwill, which has been diligently maintained for 90 years, and to retain our commitment to social responsibility, YFY products and services have always been in compliance with the law. In 2015, as always, there were no incidents of non-compliance with required or voluntary regulations voluntary codes concerning any products or services identified.

YFY understands the importance of talent in all regions and makes it a priority to hire and train local talent.

After long-term development and promotions, the percentage of local employees serving at the senior management

level at main locations of operation has reached 86%, and the data is as follows:

Overview of Employee Salaries in 2015*

Note: The local minimum wage is based on the latest update by the local government.

Explanation: 1. "Senior Management Level" refers to positions, which are level 8 and above, and with management responsibilities.2. "Locals" refer to individuals who hold complete citizenship of the country in which the operation is located.3. "Local" refers to the country in which the operation located.4. "Significant Locations of Operation" refer to the mills or offices belonging to YFY, Inc.

Male Employees

Female Employees

Total Number of Employees

Percentage of Employees with Salaries Higher than the Local Minimum Wage

Total Number of Local Employees

6432 1935 8367 98.8%

Total Number of Non-Local Employees

300 9 309 100%

Number of Associates at Senior Management Level

Locals Total number of people Percentage

384 446 86.1%

*This set of data covers only China and Taiwan regions

*This set of data covers only China and Taiwan regions

Customer Service and Satisfaction

YFY is dedicated to the research and development (R&D) of excellent products and high-quality production. We also pay close attention to consumer comments and feedbacks on the use of our products. To provide better service to consumers, YFY’s Consumer Products Group offers two free customer service hotlines, specifically dedicated to the paper product category and the cleaning product category, respectively. The customer service personnel are highly trained on industry knowledge to provide callers with the best advice and service on the use of our products.

Consumers may also send questions via the website or by email. Customer service personnel respond to the consumer inquiries within one business day. Additionally, we have established a dedicated consumer dispute-processing department according to the Fair Trade and Consumer Protection Act, to provide a mechanism to protect a consumer’s rights and interests to which they are entitled. Simultaneously, the consumer dispute-processing mechanism is integrated with a quality feedback system that relays consumer feedback to the R&D and Quality Assurance Departments, ensuring that consumer opinion is heard for product innovation and quality enhancement and to improve consumer satisfaction and product loyalty.

YFY proactively participates in consumer protection forums and seminars organized by domestic consumer protection groups and agencies. We continuously acquire new knowledge and ideas related to consumer protection to improve our products and better serve our customers. We also conduct several consumer protection training courses for our employees to increase their awareness about this topic and help us achieve better consumer satisfaction.

Product and Service Labeling

YFY appreciates the value of our customers and want them to understand the quality of materials and care we put into our products, so they can enjoy them with complete peace of mind. We clearly label each of our products. In 2015, there were no incidents of non-compliance with required or voluntary regulations and codes concerning product labeling.

Items Yes No

The sourcing of components of the

product and suppliers

Product contents and ingredients

Safe use of the product and

precautions

Disposal of the product and

environmental/social impacts

Other

Manufacturing date

Certification mark

Consumer toll-free service hotlines

Quality and safety guarantee

Economic Aspect: YFY's Market Presence

YFY GRI REPORT


G4-28~32

Since the beginning, YFY, Inc., has been upholding the management philosophy of sustainability, and from 2012 onwards, YFY has been

actively composing the Annual Corporate Social Responsibility Report. This report is compiled following the Global Reporting Initiative

(GRI) ‘In accordance’ option – Core. We make the information available in the report well-defined through the adoption of internationally

recognized guidelines and at the same time, meet the expectations of our stakeholders, in order to fully and systematically demonstrate

the results of YFY's efforts in advancing towards sustainable development. This annual report has not been certified by a third-party.

Reporting Boundaries and Scope

The contents of this report indicate YFY’s performance in the areas of economy, quality and service, and social and environmental

activities. This includes the locations of operation in Taiwan, including: Yuen Foong Yu Packaging Inc., Yuen Foong Yu Consumer

Products Co., Ltd., and Chung Hwa Pulp Corp. Part of the financial performance is drawn from the annual report, and the boundaries

are extended to cover all investments and joint ventures included in the consolidated financial statements, as specifically indicated

in the report. Additionally, part of the human resources and environmental performance cover data from YFY's mills in China and the

explanatory notes follow the relevant statistical data.

The locations of operation covered by this report are summarized as follows:

I. Office: Taipei Head OfficeII. Packaging Groups: Xinwu mill, Chenggong mill, Taoyuan mill, Changhua mill, Pek Crown mill, Zhunan mill, Kaohsiung mill.III. Consumer Products Groups: Qingshui mill, Yangmei mill.IV. Forest Products and Fine Paper Groups: Jiutang mill, Hualian mill, Taitung mill.

Reporting Cycle

The most recent YFY Corporate Social Responsibility Report was published in December 2014. Unless otherwise specified, all activities

and data in this report were collected in the period from January 1, 2015 to December 31, 2015. In the future, YFY will regularly publish

the annual Corporate Social Responsibility Report and the next report shall be available in June 2017.

Data Measurement Techniques

The business performance figures in this report are compiled according to the International Financial Reporting Standards

(extracted from the annual report), and are represented in New Taiwan Dollar (NT$). Relevant internal departments provide the

performance figures regarding the society and quality. The environmental performance figures are provided by all mills, respectively,

represented in the internationally recognized indicators and units, to be adopted after review by the dedicated environmental units.

Contact information:

Sustainability and Social Responsibility Office, Taipei Head Office, YFY Inc.

Address: No. 51, Sec. 2, Chongqing South Rd. Taipei City 10075, Taiwan

Tel: 02-23961166

Email: [email protected]

GRI G4 Index

GENERAL STANDARD DISCLOSURES

Aspects Content Page

STRATEGY AND ANALYSIS

G4-1 Provide a statement from the most senior decision-maker of the organization 2

ORGANIZATIONAL PROFILE

G4-3 Report the name of the organization 35

G4-4 Report the primary brands, products, and services 36

G4-5 Report the location of the organization’s headquarters 35

G4-6Report the number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report.

35

G4-7 Report the nature of ownership and legal form. 35

G4-8Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries). 35

G4-9 Report the scale of the organization 35

G4-10 Report the total workforce by region and gender 37

G4-11 Report the percentage of total employees covered by collective bargaining agreements 37

G4-12 Describe the organization’s supply chain 37

G4-13Report any significant changes during the reporting period regarding the organization’s size, structure, ownership, or its supply chain 37

G4-14 Report whether and how the precautionary approach or principle is addressed by the organization 38

G4-15List externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses 39

G4-16List memberships of associations (such as industry associations) and national or international advocacy organizations 39

IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-17a. List all entities included in the organization’s consolidated financial statements or equivalent documentsb. Report whether any entity included in the organization’s consolidated financial statements or equivalent

documents is not covered by the report40

G4-18a. Explain the process for defining the report content and the Aspect Boundaries.b. Explain how the organization has implemented the Reporting Principles for Defining Report Content.

40

G4-19 List all the material Aspects identified in the process for defining report content 42

G4-20

For each material Aspect, report the Aspect Boundary within the organization, as follows:

• Report whether the Aspect is material within the organization

• If the Aspect is not material for all entities within the organization (as described in G4-17), select one of the following two approaches and report either:

• The list of entities or groups of entities included in G4-17 for which the Aspect is not material or

• The list of entities or groups of entities included in G4-17 for which the Aspects is material

• Report any specific limitation regarding the Aspect Boundary within the organization

42

GRI G4 ListReport Profile

YFY GRI REPORT


G4-21

• For each material Aspect, report the Aspect Boundary outside the organization, as follows:

• Report whether the Aspect is material outside of the organization

• If the Aspect is material outside of the organization, identify the entities, groups of entities or elements for which the Aspect is material. In addition, describe the geographical location where the Aspect is material for the entities identified

• Report any specific limitation regarding the Aspect Boundary outside the organization

42

G4-22 Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements. N/A

G4-23 Report significant changes from previous reporting periods in the Scope and Aspect Boundaries N/A

STAKEHOLDER ENGAGEMENT

G4-24 Provide a list of stakeholder groups engaged by the organization. 41

G4-25 Report the basis for identification and selection of stakeholders with whom to engage 41

G4-26Report the organization’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the report preparation process

41

G4-27Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raised each of the key topics and concerns

41

REPORT PROFILE

G4-28 Reporting period (such as fiscal or calendar year) for information provided. 62

G4-29 Date of most recent previous report (if any). 62

G4-30 Reporting cycle (such as annual, biennial). 62

G4-31 Provide the contact point for questions regarding the report or its contents. 62

G4-32

a. Report the ‘in accordance’ option the organization has chosen.

b. Report the GRI Content Index for the chosen option (see tables below).

c. Report the reference to the External Assurance Report, if the report has been externally assured. GRI recommends the use of external assurance but it is not a requirement to be ‘in accordance’ with the Guidelines.

62

G4-33

a. Report the organization’s policy and current practice with regard to seeking external assurance for the report.

N/A

GOVERNANCE

G4-34 Report the governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental and social impacts. 43

ETHICS AND INTEGRITY

G4-56 Describe the organization’s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics. 46

GRI G4 Index

SPECIFIC STANDARD DISCLOSURES

Category Aspect Aspect Content Page

ENVIRONMENTAL

Effluents and Waste

DMA 47

G4-EN22 Total water discharge by quality and destination 48

G4-EN23 Total weight of waste by type and disposal method 47

Emissions

DMA 51

G4-EN15 Direct greenhouse gas (ghg) emissions (scope 1) 51

G4-EN16 Energy indirect greenhouse gas (ghg) emissions (scope 2) 51

G4-EN19 Greenhouse gas (ghg) emissions intensity 54

Water

DMA 52

G4-EN8 Total water withdrawal by source 52

G4-EN10 Percentage and total volume of water recycled and reused 52

Energy

DMA 54

G4-EN3 Energy consumption within the organization 54

G4-EN6 Reduction of energy consumption 54

Products and Services

DMA 50

Compliance

DMA 50

G4-EN29Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

50

Materials

DMA 53

G4-EN1 Materials used by weight or volume 53

G4-EN2 Percentage of materials used that are recycled input materials 53

SOCIAL Customer Health

and Safety

DMA 58

G4-PR1Percentage of significant product and service categories for which health and safety impacts are assessed for improvement

58

G4-PR2

Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes

58

*The reds are the significant topic

b. If not included in the assurance report accompanying the sustainability report, report the scope and basis of any external assurance provided.

c. Report the relationship between the organization and the assurance providers.d. Report whether the highest governance body or senior executives are involved in seeking assurance for the

organization’s sustainability report.

66

GRI G4 Index

SPECIFIC STANDARD DISCLOSURES

Category Aspect Aspect Content Page

SOCIAL Employment

DMA 56

G4-LA2Benefits provided to full-time employees that are not provided to temporary or parttime employees, by significant locations of operation

56

SOCIAL

Occupational Health and Safety

DMA 57

Training and Education

DMA 56

G4-LA10Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

56

Product and Service Labeling

DMA 60

G4-PR3

Type of product and service information required by the organization’s procedures for product and service information and labeling, and percentage of significant product and service categories subject to such information requirements

60

G4-PR4Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

60

Compliance

DMA 60

G4-PR9Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

60

ECONOMIC Market Presence

DMA 61

G4-EC5 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation 61

G4-EC6 Proportion of senior management hired from the local community at significant locations of operation 61

Economic Performance DMA 35

*The reds are the significant topic

Documents

2015 YFY GRI REPORT · :': GRI3&1035 36 2015 YFY Sustainability and Social Responsibility Report 37 ‧ Bleached hardwood pulp ‧ Chemical raw materials - sodium hydroxide, hydrochloric