Economic Aspect

Material Topics

Issue Date:2019/05/30
We intend to provide all stakeholders concerning the future of Chunghwa Telecom as well as the telecom industry with a more comprehensive understanding of how Chunghwa Telecom has exerted its industry influence on CSR topics. This purpose has improved the quality of our actions and disclosures.

CHT is an integrated telecom service provider. Except for the use of electricity at business locations, generator rooms, and data centers, our other service processes and mechanisms have no major negative impact on the environment and society. However, with over 20 thousand employees, the capabilities of value chain procurement and supply and business locations all over Taiwan, we understand that our ICT services and products can bring positive transforming and business opportunities to the industry, economic development and people’s life in Taiwan. Therefore, we seize opportunities and endeavor to decrease the potential risks from material CSR topics. 

 

Process for Determining Material Topics

 

Materiality Matrix and Impact

 

 

To ensure that all employees understand the spirit of CSR, we have established a diversity of channels for communications and education about related topics. The initiative is integrated with a performance evaluation that helps to translate the concept of CSR into actions and is practiced in routine operations.

In order to promote senior managers to achieve the company's vision and short-, medium- and long-term strategic goals, and to assess their core competence, strengthen the responsibility, implement the performance-oriented culture, retain and attract high-order key talents, the “High-level Manager Performance Management Measures” was implemented at the end of 2018. These measures set the following categories:"Company Performance" links the company's annual important strategic objectives. Covering items such as material Issues, Code of Conduct, information security, risk management and climate strategy. These categories evaluation results will be directly linked to the senior level manager's variable compensation. 

Subordinate Unit Performance is the KPI performance target of the supervisory unit. These covers items which will also be included in the senior managers ' performance indicator guideline consideration items.

 

Innovative Products and Services

As the traditional core service market of the telecommunications industry becomes increasingly saturated and with the gradual rise in prevalence of OTT, over-the-top (Internet content provider), voice services continue to decline. Concerning the industry value output is expected to further decline, CHT hopes to use innovative ICT product services as an opportunity to undergo transformation, take the lead in integrating cross-domain industries and upstream and downstream industries, and construct a sound ecosystem for development. The emerging businesses include: Internet of Things; IoT, artificial intelligence; AI, augmented reality; AR, MOD, OTT, and other products, which are potential development directions. We believe that IoT and AI will be the driving force for overall revenue growth. In addition, CHT also actively responds to the “DIGI+Plan” promoted by the Executive Yuan, in the hope of extending its industry technology and developing an innovative economy.

Chunghwa Telecom has started a “Rise on, Together 2021” transformation plan that will take operational performance growth as well as medium and long-term basic capabilities into account. 5G planning, pure online banking investment, IoT, big data, AI and Smart Home will be included. The company will also enter the digital service field by mergers and joint ventures to enhance overall capacity. For example, after Chunghwa Telecom has obtained an online banking license as a major shareholder, Hami Pay, Hami Point and online banking will be integrated. We hope to exert leverage on information security, big data and IT construction to provide an overall ICT solution for online banking. Also, the company has independently developed an IoT platform featuring five service functions: information security, big data, cloud, AI, and AR. Additionally, the domestic IoT industrial ecology is linked to expand cooperation.

In terms of digital video convergence, in addition to launching more 4K ultra-high-definition image services through the fiber-optic network to achieve market segmentation, in order to facilitate the convenience of cross-network viewing, MOD+OTT multi-screen services integrating three platforms, namely, fixed-line, data, and mobile networks have been launched.

Achieve IoT revenues reaching NT$15 billion by 2020

The IoT team was set up to gather the industrial community to jointly develop smart buildings/homes, smart transportation, smart energy, etc., and use the open platform as the basis for extensive cooperation with strategic partners.  
(1) Chunghwa Telecom established an IoT platform at the end of 2017, this attracted many Makers and enterprises and the number of IoT devices connected in Taiwan reached 400,000 by the end of 2018. It is estimated that this number will grow exponentially in 2019 and we will continue to construct network equipment to enhance a flourishing IoT industry.
(2) CHT Gas cloud system is a new NB-IoT solution, which is combined with IoT platform and provides remote reading, opening and closing as well as instant alarm. As expected, there will be a boom in demand which may stretch as far as 10 years on from 2021 and the overall business opportunities will be significant. 

Achieve AI related revenues exceeding NT$3 billion by 2020

In response to the " AI Taiwan Plan, " Chunghwa Telecom is actively bridging between Taiwan’s government and industries to promote the popularization of AI among domestic SMEs and build the AI ecosystem. 
CHT has formed an AI team of 350 people engaged in the research and development of 6 AI application services, such as using the IoT platform to provide AI face recognition, face verification, speech synthesis, image monitoring, and the face recognition access systems for image monitoring, customer sentiment analysis systems, and traffic data forecasting and warning systems. We hope that our deep-rooted system integration experience will lead to various industrial upgrades and that we will devote our energy and talents to AI R&D in the future.

Achieve the goal of having more than 2.5 million MOD users by 2020

The client volume on the MOD movie platform has exceeded 2 million at the end of 2018. This not only reached the preset goal, but surpassed the Cable TV providers to become the biggest video platform in Taiwan.
We have made a strategic alliance with Netflix, not simply to introduce foreign 4K film and TV content, but also to promote outstanding domestic movie and television production worldwide. This will promote the common goof for MOD, Netflix, Taiwan film and TV content creators and audiences and lead the Taiwan’s film industry to its next milestone

 

Smart and Green Staff Dormitories

By 2023, Chunghwa Telecom will have completed the construction of three staff dormitories, including Yangmei, Wanhua and Sanzhong with a total investment of NT$900 million. The Yangmei dormitory design and construction has utilized the expertise of Chunghwa Telecom Laboratories, Data Communications and Enterprise Business Groups, also Light era Development Co., Ltd. To create a new high quality living environment which is green, smart, healthy, innovative and recycling, this dormitory will implement AI Smart Home, Smart Accommodation, face recognition, IoT sensing, MOD multimedia, an IOC smart management center, BIM and facilities management, home health care, and circular economy. The Yangmei dormitory not only reveals the value of the company, but also integrates energy-saving concepts with ICT communications technology to build a forward-looking smart building with Intelligence Building Label and Green Building Label.

In addition, some rooms will be kept as hostel and will be implemented smart self-service with streamlined management. By the integration of forestage and backstage systems, travelers will enjoy considerate, convenient, safe and comfortable visits with self-check-in/out, linkage access control / security / stop management, start water / electricity / air conditioning / MOD, cloud consulting services for travel, smart storage, automatic sensing of equipment and other functions.

In respond to business expansion and the rapid development of emerging technologies, CHT has focused on future manpower needs in IT, AI, information security and big data. Furthermore, the company is facing the wave of retirement and effects on manpower structure. We estimate that up to 5,000 employees will retire within the next five years. 

Since domestic and foreign companies are engaged in recruiting battles, the attraction and retention of high-quality R&D talent is an important part of business development strategy. CHT hopes to provide better salary and benefits, career development and working environment than the industry on the whole. In recent years, the ratio of house price to income has risen to 15:1 in Taipei. As a response to the housing problem, we have taken the lead in the construction of smart and green staff dormitories. This will attract scientific and technological talent, enhance medium and long-term business capabilities and achieve sustainable development.

By providing smart staff dormitories, Chunghwa Telecom hopes to shape our brand image and recruit outstanding talents. We have exerted our core competencies in both CT and IT integration services to obtain Intelligence Building Label and Green Building Label. Through the integration of ICT technology, we also enhance the efficiency of building management and improve the quality of life for residents.  The buildings are thoughtfully designed from many different aspects: the external environment, the structure, the shape of the outside, the construction method used, the selection of equipment, and operation and management. They also meet the corresponding indicators for entire life cycle, including planning, construction and use. We not only mange energy and environmental impact effectively, but also provide residents a comfortable and convenient living environment. We expect the Yangmei dormitory to become the first to obtain both Intelligence Building Label and Green Building Label.

To allocate current assets properly, we not only improve the existing staff dormitories, but also provide compound accommodation for non-local staff and supervisors, training staff, industry-university cooperation, foreign guests and consultants and others (such as employee working overtime or on standby). Furthermore, the new dormitories have other benefits such as:
(1) Activating assets: The ground floor can be used by a company-related enterprise, or simply let out to obtain rental income and speed up investment recovery.
(2) Gaining addition revenue from hostels: Redesign of the hostels will not only strengthen management, but also increase the scale and it is estimated that annual revenue can be doubled.

Sustainable Environment Development Strategy and Target

For buildings owned by Chunghwa Telecom, we aim to reach the goal of reducing 10 % of carbon emissions by 2023, with 2017 as the base year. For green operations, CHT keeps practicing energy-saving actions, measuring greenhouse gas emission on a regular basis. To manage resources and environmental protection efficiently and thoroughly, we developed EARTH system to save the spending on energy consumption and enhance environmental management efficiency. To improve energy use efficiency, we take following actions: (1) integrate data centers to exploit spaces properly (2) save cooling energy (3) Install solar water heaters and set up LED bulbs (4) replace old vehicles with environment-friendly ones.

Slowing greenhouse gas emissions is the inevitable direction, Taiwan as a part of the global supply chain, also faces the potential risks of climate change and the pressure of energy saving and carbon reduction. The Taiwan Legislative Yuan has adopted the "GHG Emission Reduction and Management Act" in 2015 and sets out the objective of reducing “Greenhouse gas emissions in 2050 by 50% or more compared to 2005." Since the daily network, data centers operation is dependent on a large number of energy support, followed by increased operating costs, CHT's finances will certainly be affected. If we do not immediately respond to the climate change issues and relevant environmental laws and systems, there may be risks of legal penalties and losing the industry leading edge at the same time. Faced with the challenges of stakeholders and damaging the corporate reputation, therefore, we deeply understand the importance of climate change issues.

CHT is well aware of the environmental impacts associated with energy, resources, waste, maintenance, purchasing and other aspects of our operation. We have adopted a “Green Enterprise, Sustainability and Innovation Strategy” with the introduction of 5G initiatives: “Green Energy, Green Procurement, Green Operations, Green Stores, and Green Supply Chain” that aim to address financial success, sustainability and social responsibility. Chunghwa Telecom has set our goal to become a sustainable “Green enterprise,” and thus incorporates environmental issues as part of business operation and management. We hope to play a more proactive role in issues such as energy and climate change. By improving energy efficiency and exploring environmental friendly products and services, we are confident of our potential to inspire a new generation of low-carbon industries.