Material ESG Topics of the Year

The principle of Double Materiality is employed to identify the internal and external impacts of topics. In addition to the consideration of the impacts of ESG topics on the operations and businesses of CHT, the impacts from the operations and businesses of CHT on the society, environment, and people (human rights) are taken into account as well.

Material ESG Topics in 2023

Impact Type	Sustainability Aspects	Material Topic	Principle of Double Materiality		Cause of the Impact	Target of the Impact	The GRI Topic Aligned
Impact Type	Sustainability Aspects	Material Topic	Impact on the Operations and Businesses of CHT	Impact on the Society, Environment, and People	Cause of the Impact	Target of the Impact	The GRI Topic Aligned
Actual Positive	G	Corporate operation with innovation for value creation	Operational innovation drives the development of new products and services, which helps scale up businesses, increase revenue and profit, and boost market share and competitiveness.	Innovation expands the scope of product and service applications, creates more job opportunities, and promotes local economic development; innovative technologies and solutions can reduce energy consumption and carbon emissions.	Business Activities Products and Services Business Relationships	Shareholders, Employees	Economic Performance
		5G Application and Industry Ecosystem	A large proportion of procurement is locally procured, along with building good local/community relations, to ensure supply integrity as well as financial and economic stability, benefiting the industrial ecosystem development.	Indirectly promote economic development in the region through supply chain procurement, including attracting other investments and increasing job opportunities to promote economic development in the region.	Business Activities Products and Services Business Relationships	All Suppliers	Procurement Practices
		Corporate Governance and Business Ethics	Consider anti-corruption risk as an overall risk of the Company for an effective assessment and management to minimize possible litigation and operational risks arising from corruption.	Establish complete anti-corruption policies and procedures to effectively manage corruption risks in the supply chain, reduce unethical business conducts in the industry, and elevate good social ethos.	Business Activities Business Relationships	Employees, All Suppliers	Anti-corruption
	S	Happy Corporation Creation	A happy corporation can inspire employee engagement and creativity, enhance work efficiency, attract and retain brilliant talents, and strengthen the human capital advantage for a long-term corporate development.	A local happy corporation contributes to social harmony; a positive corporate brand image and reputation help promote social stability and development.	Business Activities Products and Services	Employees	Employment
		Customer Trust	Actively develop sustainable low-carbon products and services, conduct regulatory checks in terms of health and safety, and carry out communication and training for internal units to ensure the legal compliance and conformity of products, services, and marketing in order to protect the corporate reputation.	A complete health and safety assessment mechanism for products and services is in place (including the electromagnetic radiation testing service); products and services have been fully assessed and labeled to protect the consumer rights of the broader society.	Business Activities	Customers	Customer Health and Safety
		Cybersecurity and Privacy Protection	Establish well-rounded cybersecurity management systems and mechanisms, and conduct regular audits and exercises, to ensure that customer privacy is secure and free from violation, elevating the corporate reputation.	Provide high-quality cybersecurity services and technical support, effectively expand and communicate correct cybersecurity concepts and technical services, and assist industries and the general populace to effectively manage and control cybersecurity risks.	Business Activities Products and Services Business Relationships	Customers	Customer Privacy
Potential Positive	S	Protection of Employees’ Human Rights	Human rights protection strengthens employees' sense of trust and loyalty towards the Company, enhances the reputation of the Company for business ethics among external stakeholders, and attracts more brilliant talents to the Company.	The emphasis on labor rights can improve labor-management relations, reduce protests such as strikes and demonstrations by the employees of the Company, and thereby contribute to social stability.	Business Activities Products and Services	Employees	Freedom of Association and Collective Bargaining
Actual Negative	E	Carbon Emission Reduction and Climate Adaptation Action	High carbon fees (taxes) are levied in accordance with regulations due to the failure to effectively reduce carbon emissions, resulting in a rise in both direct and indirect operational costs, which may also reduce the resiliency and adaptability in transition for climate response.	The inability to effectively promote climate transition actions, coupled with the failure to reduce carbon emissions, not only prevents the achievement of net-zero emission targets but also impacts the low-carbon development of the ICT industry, weakens the industry competitiveness, and negatively affects climate change.	Business Activities Products and Services Business Relationships	Group Companies, All Suppliers	Emissions
	S	Diverse and inclusive workplace	The rising average age of the organization and excessive homogeneity, failure to incorporate representatives of diverse groups, and inability to think outside the box hinder innovation and development, which impede the development of emerging industries and services.	The lack of diversified employment mechanism renders inability to provide ample job opportunities for diverse talents, obstacles for young talents to enter the job market, and impacts on the innovation, creativity, and entrepreneurship in the ICT industry, affecting the overall economic development of the industry.	Business Activities Products and Services Business Relationships	Employees	Diversity and Equal Opportunity
	G	Corporate Governance and Business Ethics	The influences from corruption and bribery issues may potentially lead to unfair business processes and decreased efficiency as well as legal penalties and fines, damage to the corporate reputation, and impact on stock prices and investor confidence.	Corruption and bribery practices will undermine public trust in the Company, raise social concerns about fairness and justice, lead to unfair distribution and abuse of public resources, and affect economic development.	Business Activities Business Relationships	Employees, All Suppliers	Anti-corruption
Potential Negative	E	Net-zero Transition and Green Energy Economy	Achieving net-zero emissions and transitioning to a green energy economy demands significant financial investment, which may be influenced by fluctuations in market demand and changes in government policies and regulations, potentially increasing corporate costs and impacting profitability.	Communities reliant on the traditional energy industries may experience income disruptions due to the transition, while the land use for green energy development may lead to loss of agricultural land, impacting the livelihoods and lives of local farmers.	Business Activities	Group Companies, All Suppliers	Energy
	E	Sustainable Supply Chain Management	Plan and institute the complete supplier sustainability management plan to assess and identify the environmental and sustainability risks of suppliers on a regular basis, improve their competencies, and reduce the risk of violation of the laws by the Company via a well-rounded ESG assessment and audit mechanism.	A complete sustainable supply chain management plan to regularly assess the ESG risks of suppliers and work with suppliers with excellent ESG performance to effectively reduce the environmental impacts from suppliers' operations and drive the improvement of ESG competencies in the industry.	Stakeholders Defined Topic	Significant Suppliers	Supplier Environmental Assessment
	S	Cybersecurity and Privacy Protection	Personal data breach or misuse may result in fines or penalties, damage to brand image, and loss of customer trust, while compliance with personal data protection laws and regulations necessitates significant investment of time and resources.	Personal data breach or misuse undermines public trust in the telecommunications industry, threatens privacy, and potentially give rise to issues such as identity theft and financial fraud.	Stakeholders Defined Topic	Customers	Customer Privacy

Note: Double Materiality: When assessing sustainability/ESG topics, we consider both the impact of sustainability/ESG on corporate operations and businesses, as well as the impact (positive or negative impact) of corporate operations on the society, environment, and people.

Integration of Material Issues with the Risk Management Process

The results of material topic identification are included in CHT Enterprise Risk Management (ERM) System each year for the annual assessment of the likelihood value of the inherent risks derived from the material ESG topics, followed by proposal of mitigate action and reassessment of the likelihood values of the residual risks, which remain within the risk appetite of the Company as manageable risks.

Risk Event Identification and Mitigation Actions of Materiality Assessment

Material Topic	Identified Risk Event	Risk Mitigation Actions
Economic Performance	New service market development	Proactively explore the B2B and B2C businesses. Accelerate overseas market development via overseas subsidiaries.
Emission	Sustainability and climate strategies	Increase the supply of renewable energy conversion. Lower the PUE values of IDCs to improve energy efficiency and effectively manage the power saving. Expedite the replacement of old and energy-intensive equipment to boost annual power savings.
Customer Privacy	Information security and privacy protection	The Privacy Policy passes the third-party conformity assessment. Complete the transition to ISO 27001:2022 certification for 7 certificates, with the validity maintained. Obtain CNS 29100 de-identification certification. Complete cybersecurity checks (vulnerability scanning, penetration testing, and red team exercises) and vulnerability patching for the ICT systems.
Anti-corruption	Ethical Corporate Management Best Practice Principles, Code of Ethical Conduct	ISO 37001 Anti-Bribery Management System certification has been obtained in Q4 2024 for Chunghwa Telecom to become the first telecom operator in Taiwan with such certification. Organize various education/training sessions to deepen employees' awareness of, and integration of, integrity into daily operations. As of July 2024, suppliers and business partners have been required to sign integrity clauses and promote the anti-corruption and anti-bribery policies.

Notes:
1. Material topics are identified on the basis of GRI Topic-specific Standards.
2. Employment: With a comprehensive employee welfare system that gains the Company the reputation as a Happy Corporation, there is no relevant risk event included.
3. Freedom of Association and Collective Bargaining: As employees enjoy the freedom of association and collective bargaining, there is no relevant risk event included.
4. Procurement Practices: With an active promotion of local procurement, facilitating local economic development, there is no relevant risk event included.

ESG Material Topics with Impacts on Operations and Long-term Values

Item	Material Topic 1	Material Topic 2	Material Topic 3
Material Risks or Opportunities	Network Resilience: A Critical Foundation to Support Product/Service Quality and Operational Innovation	Climate Transition & Physical Risks: Carbon Emissions Reduction and Climate Adaptation Actions	Cyber Security: Cybersecurity and Privacy Protection
Impact on Business Values	Chunghwa Telecom is an integrated telecommunications operator, encompassing communication services such as fixed-line, mobile, broadband, and internet services. Its “Sea, Land, Air, and Space” network, built with fiber optics, submarine cables, satellites, and microwave technologies, underpins the resilience of ICT network in Taiwan. To ensure uninterrupted communication on offshore islands, the Company has established a network backup system with submarine cables, microwave technologies, and satellites. Where a network disruption occurs in the offshore islands, the estimated monthly revenue loss could amount to NT$100 million or more, directly impacting the revenue and reputation of the Company. This issue involves enhancements of revenue risk management, disaster response capabilities, and network availability. It is crucial for business continuity and service reliability, thus presenting a high financial correlation.	Telecom facilities (e.g., IDCs and base stations) rely heavily on stable power and environmental conditions, highly susceptible to climate-related policies and physical impacts that result in operational disruptions and increased costs, exhibiting high business sensitivity. The key impact areas include: Taiwan has passed the “Climate Change Response Act", which sets the net-zero emissions target by 2050. In response to the regulatory requirement, CHT has to invest largely in decarbonization transition expenditures, including: green energy procurement, construction of high-efficiency equipment & renewable energy plant construction, directly increased direct costs and capital expenditures, amounting up to NT$2,774 million in 2024. Any damage or shutdown of telecom facilities /base station equipment due to extreme weather events will directly lead to operational disruption, loss of customer trust and corporate reputation, and increased repair costs and potential penalty risks.	CHT, as a critical telecom infrastructure provider, is to safeguard the safety and resiliency of digital environment. Facing ever-complicated cybersecurity threats, CHT is committed to offering ICT services and cybersecurity solutions of world standards.. Aiming to “become the most valuable, secure, reliable, and trustworthy telecom service provider,” CHT constructs a comprehensive cybersecurity defense system that identifies potential threats, implements international standards, and establishes collaborative mechanisms with government and international cybersecurity alliances to better detect/respond to risks, boosting business continuity and customer trust. If geopolitical risks escalate, or the scale of attacks expand, it may lead to operational disruptions and reputational damage. This might cause business loss reaching NT$10 million per day, expose us to a single government fine of up to NT$5 million, impacting directly the revenue and operational risk management.
Types of business impact	Revenue	Cost	Revenue/ Risk
Response Strategies	Resilience Enhancement Strategies 1. Fixed Line Network Taiwan, Penghu, Kinmen, and Matsu communications utilize 7 submarine cables for mutual backup. Upon a total submarine cable outage, microwave links will take over. If those also fail, satellite services will reroute local/mobile voice services. Plan to add Taiwan-Matsu and Taiwan-Penghu-Kinmen submarine cables, to be complete by 2026. Reroute the traffic in Eastern Taiwan to telecom facilities in Taipei and Kaohsiung as backup to reduce failure repair time and rental losses. Establish multi-orbit satellite backup links for telecom facilities in mountains and offshore islands, strengthening disaster response and uninterrupted service for critical circuits. 2. Mobile Network Construct diverse backup routes, enabling rapid switching in case of a primary route failure. Adopt a distributed network architecture (separate data and voice traffic) to minimize impact of single-point failures. Adopt core NFV, improving network management and integration.	To strengthen operational resilience and carbon management and mitigate the impacts, actions are taken as follows: Mitigation Measures: Plan a carbon reduction pathway based on the SBTi, with an early target of net-zero emissions by 2045. Improve energy efficiency, e.g., decrease the PUE value of IDCs, introduce new 5G C-RAN architecture to reduce power consumption. Expand green power procurement and self-built renewable energy sites, join the RE100 and the EV100 initiative. Implement carbon management in the supply chain and strengthen green procurement to enhance supplier climate knowledge and participation. Adaptation Strategies: Establish standardized maintenance and a regular inspection to reduce losses caused by natural disasters. Demanding significant suppliers to complete the CDP questionnaire to evaluate climate resilience and disruption risks. Assess climate risk hotspots and incorporate factors such as sea level rise, storm surge, and strong winds into site selection..	Enhanced cybersecurity resilience: Establish comprehensive cybersecurity risk management mechanisms, boost the resilience of network infrastructures to ensure uninterrupted services. Multi-layered defense mechanism: Implement a multi-layered defensive strategy of network security, endpoint protection, and application security to enhance overall digital resilience. Cybersecurity awareness and professional training: Promote cybersecurity education for all employees to strengthen their security awareness and professional skills, reducing human-induced risks. Development of cybersecurity services: Leverage cybersecurity R&D energy and professional personnel to provide corporate clients with cybersecurity solutions, expanding revenue streams and boost brand image. Improved service stability: Continuously optimize Cybersecurity monitoring and response processes, ensuring the real-time reporting and failure handling efficiency.
Targets/Metrics	Target Year: 2026 1. Fixed Network Resilience Improvement Targets Complete new submarine cable installations for Taiwan-Matsu and Taiwan-Penghu-Kinmen by 2026. Continuously expand microwave backup capacity for offshore islands year by year. Shorten emergency repair time for telecom facility failures in Eastern Taiwan (Yilan, Hualien, and Taitung) from 48 hours to 2.5 hours. Establish multi-orbit satellite backup stations in mountains and offshore islands by 2025. 2. Mobile Network Resilience Improvement Targets Enhance the VoLTE equipment backup capacity by 2025. Optimize the SOPs for backup switching and complete drills. Promote a disaster roaming program and establish a cross-network emergency backup mechanism.	Target Year: 2045 100% electrification of engineering and company vehicles by 2030 (EV100). PUE value of IDCs decreased to 1.5 or below by 2030 85% or higher for the response rate from significant suppliers (with a procurement amount ≥ NT$50 million) to CDP questionnaires by 2030 50% or higher for the green procurement proportion by 2035 100% on renewable energy by 2040(RE100 initiative) Net-zero emissions by 2045 (SBTi-validated) Ongoing construction of a supply chain climate risk management and education platform (e.g., Net-Zero Sustainability Academy).	Target Year: 2025 100% vulnerability scanning and patching of the ICT system Enhancement of equipment vulnerability alerts and establishment of joint defense mechanisms 100% of employees completed cybersecurity and privacy protection promotion and professional development Optimization of the real-time response capabilities and incident handling efficiency of the SOC team Established a more precise monitoring and alert notification mechanism for Network Security Services
Progresses in 2024	1. Fixed Network Resilience Improvement: Completed marine and terrestrial route surveys and planning. Expanded the microwave backup transmission capacity for offshore island routes, including Matsu, Kinmen, and Penghu. Strengthened data transmission network resilience in Eastern Taiwan with the transmission circuit construction completed in December 2024. Completed multi-orbit satellite backup establishment for fixed line telecom facilities, enhancing network stability. 2. Mobile Network Resilience Improvement: Completed the inventory of backup mechanisms and regularly conducted core network backup switchover drills. Added off-site backup telecom facilities for the roaming service system to ensure uninterrupted service. Increased MME to maintain network operation in the event of a major fault in any telecom facility. Added an off-site backup database in 2024 to shorten service migration time. Completed study and verification of cross-network roaming technology architecture during disasters in 2024.	The net-zero targets validated by SBTi, the Scope 1&2 carbon emissions in 2024 have been reduced by 20.88% compared to 2020; and the Scope 3 emissions have been decreased by 7.75% from 2021 levels. 72.604 million kWh of renewable energy used accounting for 5.38% of the total. Green power consumed by IDCs accounting for 35.05% and the PUE value dropped to 1.61 Green procurement amounted to NT$37.925 billion, with 55.01% in proportion 84% of significant suppliers completed the CDP questionnaire Adaptation actions executed as scheduled to continuously improve climate resiliency	2 annual vulnerability scans of company systems and websites 100% successfully completed, with penetration testing and red team exercises performed on specific scopes 1,874 pieces of external attack intelligence shared, and 100% device vulnerabilities patching completed 100% of employee cybersecurity and privacy protection training completed, totaling 229,312 hours, with over 1,000 information security certifications obtained accumulatively 100% SOC team’s response capacity building and incident resolution optimization completed 100% of the monitoring and alert notification mechanisms for Network Security Services completed
Remuneration Review Mechanism	Achievement of KPI on network resilience included in the performance appraisal of senior managers. The variable compensation of senior managers directly linked to the appraisal results of network resilience KPIs to strengthen the management's emphasis on and commitment to operational resilience	Compensation and performance mechanisms set by the Compensation Committee with ESG performance integrated The ESG performance of executives closely tied with variable compensation, with the correlation progressively rising from 10% in 2022 to 30% in 2025 year by year ESG indicators covering power consumption, renewable energy use, digital empowerment of SMEs, corporate governance, international sustainability ratings, etc.	KPIs related to cybersecurity as sustainability indicators linked with the variable compensation of senior managers. The variable compensation of senior managers linked with the performance appraisal results of " Cybersecurity and Privacy Protection "

Material Issues of the Year