Innovation and Supply Chain

ECOVE is Taiwan's first investment holding company with a primary focus on resource cycling as its core business scope. In addition to being committed to technological innovation and actively developing patents, we have established close collaborations with the government, enterprises, and communities over the years. Upholding a corporate culture of being the "most reliable," we provide excellent product and service quality. In addition, we forge positive partnerships with suppliers. While pursuing sustainable operation, we also built a sustainable supply chain that co-exist and co-prosper through cooperation with suppliers.

Development, Integration and Application of New Technologies

In response to the global trend of achieving net-zero carbon emissions, ECOVE has expanded its focus on new technology development to include carbon dioxide reduction, circular reuse (such as flue gas carbon capture to produce hydrogen carbonate), and hydrogen energy applications (such as hydrogen production from waste and electrolysis using surplus/green electricity). Meanwhile, we continue to address the needs of the Group'sEfW, recycling, and solar energy core businesses, pursuing optimal final disposal solutions, increasing the reuse rate of waste resources, enhancing the added value of waste resources, improving energy production efficiency, and implementing diverse application schemes for energy storage systems.
▼ Technological Development Strategy Objectives

In the semiconductor industry, in the aspect of waste isopropanol (IPA) recycle and regeneration, ECOVE Solvent Recycling Corporation aims to achieve the goal of cyclic utilization in semiconductor manufacturing processes. ECOVE Solvent Recycling Corporation has established a pilot plant for high-value regeneration of IPA, taking a new step towards resource cycle. Through advanced technology integration and application, in 2021, ECOVE Solvent Recycling Corporation introduced green technology for membrane separation, increasing the purity of waste IPA to 99.9% and reducing the water content to below 1,000 ppm. The energy-saving efficiency has exceeded 75%, enabling more effective utilization of resources and expanding the scope of recycling. This indirectly reduces the use of traditional fossil fuels and contributes to global net-zero carbon emissions.

In terms of carbon dioxide (CO2) emission reduction, to effectively reduce the CO2 emissions from incineration plant flue gas, carbon capture technology with proven results is the optimal choice. Collaborative efforts are being made to develop carbon capture and utilization technologies, aiming to achieve the goal of achieving net-zero carbon emissions at an earlier stage.

Development of Intelligent Solutions for Management Tools

In response to the global trend of digital transformation in businesses, ECOVE continues to dedicate itself to developing intelligent management, control, and maintenance technologies, as well as adopting more advanced management tools. These include remote control rooms, incident retrieval for repairs, high- temperature cameras for furnace inspections, advanced combustion control systems, robot-assisted boiler slag removal, shockwave cleaning, personnel safety positioning systems, AI-based image recognition for unmanned aerial vehicles monitoring solar panels, smart monitoring systems for solar photovoltaic sites, intelligent semantic search engines, digital avatar-assisted workflow processes, electronic inspections, electronic handovers, factory automation, electronic security guards, electronic fencing, high-pressure water jet robotic arms for solar panel cleaning, AI-based identification for waste feeding hoppers, overheated tube thickness measurement technology, and wireless networks for incineration plants. Important operational information (IOI) of each factory can be accessed anytime and anywhere through mobile devices such as the ECOVE Environment Service Corp. Mobile IOI System and LINE notification platform. This allows real-time monitoring of operational performance, emission monitoring, abnormal equipment conditions, and on-site inspection data, enabling timely control and improving operational management efficiency. Furthermore, it can enhance employee training and educational effectiveness, such as VR-based educational training and guidance using 3D models.

In response to the post-pandemic remote work mode requirements, ECOVE leverages its experience in remote technology during the pandemic as a starting point. By implementing video tools and upgrading intelligent management systems, ECOVE enables remote execution of tasks such as inspections, guidance, and audits. This aims to achieve intelligent management in incineration plants and enhance operational efficiency.In waste management services, ECOVE employs advanced vehicle sensing devices to assist drivers in maintaining alertness and understanding their surroundings. By utilizing driver monitoring systems in 2022, using onboard cameras and sensors powered by artificial intelligence, the state and behavior of drivers can be monitored. This proactive approach to driver and vehicle safety enhances the prevention of catastrophic consequences that may arise from momentary errors, especially during long hours of driving. It contributes to comprehensive intelligent fleet safety management.

R&D RESULTS - PATENTED TECHNOLOGIES

ECOVE promotes innovation and is committed to the development of new technologies. Over the past four years, our investment in research and development (R&D) has been increasing year by year. Through the application of new technologies, we not only enhance management efficiency effectively but also create opportunities for new business ventures.

ECOVE places great importance on the management of intellectual property rights, and relevant patent operations are conducted according to standard operating procedures. Additionally, an incentive system is established to encourage innovation among employees. Once the patent certificates are issued, they are publicly disclosed on the company's official website and briefly explained during regular management meetings, highlighting the core content and applications. In 2022, ECOVE obtained four patents, including "Carbon Capture and Fly Ash Sodium Salt Recycle Carbonate Utilization System for Incineration Plants," "Gas Boosting System," "Windproof Mechanism for Solar Panels," and "Waste Solvent Purification and Separation System." Notably, the "Waste Solvent Purification and Separation System" invention patent marks ECOVE's first patent obtained in the United States. By the end of 2022, ECOVE had accumulated 44 domestic patents, 11 patents in China, and 1 patent in the United States. The majority of these patented technologies are actively applied in operations. Furthermore, ECOVE also focuses on environmental sustainability and occupational health and safety promotion. Among the research and development achievements, 34 patented technologies effectively enhance the operation of incinerators, waste gas treatment, and recycling efficiency, reducing environmental pollution and providing a competitive edge to enhance operational performance.

Service Quality

ECOVE provides diversified services with professional technology and the spirit of excellence, and looks forward to becoming the best support and partner of customers. We are committed to sustainable business practices and providing excellent customer service. In addition to offering customers diverse and smooth communication channels, we proactively send registered mail questionnaires every six months to the responsible project managers and their supervisors for ongoing projects to gather feedback and understand their opinions. When customers provide relevant suggestions, we have a well- defined process for handling customer suggestions, providing prompt feedback, and requesting the executing units to carefully analyze the root causes of the issues and propose improvement plans and processes to enhance overall customer service quality. In 2022, we received 28 customer suggestions, primarily praising our personnel's performance in project execution. There were also two customer suggestions related to project communication, and we have already informed the project personnel and made improvements accordingly. In 2022, the Company had no customer complaints or incidents of customer privacy infringement.

Surveys of customer satisfaction

To ensure that our service quality meets customer expectations and needs, ECOVE conducts an annual customer satisfaction survey among all ECOVE Environment Service Corp.'s clients. This survey serves as the basis for improving our service quality. The survey covers six main areas, including occupational safety and health, work quality, execution efficiency, communication and coordination, work attitude, and professional expertise. In the survey with a maximum satisfaction rating of 10 points, we received an average score of 9.3 points in the 2022 assessment. In the future, we will continue to improve, with the total average score of 9 as the minimum standard, to provide even better quality and well-rounded service.
▼ Customer satisfaction survey results for the past four year

Sustainable Supply Chain Management

With the vision of "The most reliable provider of industry-leading ‘resource cycling’ services", ECOVE, as Taiwan's largest environmental resource management company, plays an important role in helping supply chain vendors to move towards sustainability by promoting and implementing sustainable supply chain management, so as to cope with future risks and opportunities, and enhance their sustainability.

Overview of supply chain

ECOVE provides services in three main areas: waste management, recycling and reuse, and renewable energy. Our primary focus is on the incineration and related facility maintenance management of waste delivered by government agencies and other clients, with the aim of generating electricity through cogeneration. Our supply chain vendors are primarily classified into three categories: equipment suppliers, engineering contractors, and labor contractors. They provide the necessary equipment, materials, maintenance assistance, improvement project implementation, and manpower support for ECOVE's operational facilities and stations. This includes various equipment parts, consumables (including chemicals and disposable supplies), and service providers for major maintenance, emergency repairs, equipment inspections, and labor workforce. By collaborating with various suppliers and contractors, we ensure stable operation of ECOVE's daily maintenance and successful completion of various project works. The number of manufacturers and the annual procurement amount indicate that, in addition to routine equipment maintenance materials and operational consumables, ECOVE's major procurement expenses are primarily focused on maintenance, updates, and repairs to keep the equipment running smoothly and on project contracts.

Sustainable supply chain development strategy

In accordance with the sustainable development strategy of the supply chain of the Group's parent company, CTCI, ECOVE has invited suppliers to join us in our sustainable development strategy in the four aspects of "zero tolerance for unethical conduct", "full protection of employee rights", "safety first", and "local procurement". We manage vendors' information through the supplier and sub-contractor section of CTCI and also provide a whistleblowing platform, thereby establishing a comprehensive communication mechanism.

Sustainable supply chain development policy

Engaging Suppliers/Contractors in Social Responsibility
ECOVE believes that the consensus and collaboration of the entire supply chain regarding sustainable development are crucial for the overall industry to move towards sustainability. Therefore, we continuously require suppliers and contractors to fully comply with all relevant local laws and regulations. In line with international initiatives and requirements, we aim for suppliers/contractors to actively participate in and implement social responsibilities. Key aspects emphasized and required include the prohibition of child labor, protection of human rights, non-discrimination, fair treatment, compliance with legal working hours and wages, and environmentally friendly management. For the requirements of labor rights, environmental protection, safety and health risk management, and control in the supply chain, various measures are taken to assist suppliers and contractors to improve and elevate the service quality and management, thereby establishing a solid, reliable, and sustainable partnership through reducing the business risks and operating costs for ECOVE, our suppliers and contractors.
▼ ECOVE's Supply Chain Social Responsibility Policy

Supplier Code of Conduct
ECOVE is actively committed to promoting corporate social responsibility and developing partnerships. We adhere to the principles outlined in the United Nations Global Compact, Universal Declaration of Human Rights, and the UN Framework and Guiding Principles on Business and Human Rights. In line with these standards on human rights, labor practices, environment, and anti-corruption, we have established the "ECOVE Supplier Code of Conduct." It requires suppliers to comply with sustainable standards related to labor and human rights, health and safety, environment, and ethical practices. The code applies to all suppliers, including their subsidiaries, affiliated companies, and contractors, who provide goods or services to ECOVE. It mandates that all their business activities, including those of their subsidiaries, affiliated companies, and contractors, fully comply with the provisions of the code as well as with the applicable laws and regulations in their respective jurisdictions.
▼ ECOVE's Supplier Code of Conduct

Strengthening ethical business conduct
In response to the Group's efforts to strengthen the ethical business management with vendors, during interactions with vendors, such as requesting for quotations, tender meetings, going through ordering procedures, etc. we will express CTCI's and ECOVE's resoluteness in ethics by means of words, written and verbal. Prior to a tender meeting, we will execute Integrity Moment actions, explaining the contents of the Supplier Code of Conduct to vendors, informing the prohibition of private interests, and providing information to the whistleblowing mailbox. The implied covenant of good faith and fair dealing is also added to purchase orders to vendors and engineering commission contracts.
▼ Rules that Suppliers Shall Comply With

In addition to the Company's Supplier Code of Conduct, when offering prices to the Company, vendors shall also comply with and pay attention to the following rules :
ECOVE's Supplier Code of Conduct

Sustainable supply chain management mechanisms

Supplier Social Responsibility Undertaking
To jointly implement corporate social responsibility with suppliers and encourage their compliance with relevant CSR and environmental issues, ECOVE refers to the International Labour Organization (ILO) conventions and the Social Accountability 8000 standard (SA8000). In 2014, ECOVE developed the "Social Responsibility Commitment" and actively invited suppliers and contractors to sign it. The commitment covers aspects such as ethical behavior, human rights protection, and environmental preservation. Both parties pledge not to impede freedom of association for employees, refrain from employing child labor, respect the rights of indigenous peoples, and refrain from engaging in any activities that harm human rights. By the end of 2021, existing suppliers had completed the signing process, achieving 100% compliance with the commitment for new suppliers in 2022. Along with it, all contracts include the clause "The contract may be terminated or rescinded at any time by the Company if Party B has violated its corporate social responsibility policy and has caused a significant negative impact on the environment and society" to reinforce the actual implementation of the undertaking of social responsibility.
Supplier Evaluation, Audit, and Guidance
To assess the risks and competitiveness of the supply chain, ECOVE has established a mechanism for supplier evaluation, audit, and guidance. The evaluation, assessment, and audit of supplier and contractor supply and execution quality are conducted by cross-departmental teams comprising the Procurement Center, General Managers, the Occupational Health and Safety Management Department, and on- site team leaders. These teams evaluate and assess the quality of supply and execution by suppliers and contractors. On top of listing the quality of suppliers and contractors, costs, service standards, environmental protection, OSH, and technologies into the evaluation items to ensure their quality standards and safety and health, we also uphold the spirit of PDCA, requiring suppliers and contractors to rectify their deficiencies and we provide necessary guidance in a timely manner, so that ECOVE's supply chain can maintain the best competitive state and mitigate the risk of operational disruptions. For equipment and material suppliers, a comprehensive evaluation is conducted to assess their commitment to compliance, delivery control, product quality, defect handling, and any disputed matters. This evaluation aims to examine the overall service and quality provided by the suppliers and serves as a basis for incentivizing them and providing improvement recommendations.

As for contractors, the Occupational Health and Safety Management Department conducts periodic audits and provides guidance at various construction sites. In terms of the use of hazardous substances such as chemicals, gas, and fuel, suppliers are required to provide information on the components, safety information, and inspection report. Contractors will also be evaluated upon completion of each contract.

In 2022, in addition to routine evaluations of contractors during annual maintenance periods and evaluations of contracted projects with a procurement amount of over NT$ 2 million since 2018, the evaluation scope was expanded to include suppliers of equipment and materials with a value exceeding NT$300,000. Additionally, newly engaged suppliers were also included in the evaluation process to assess their performance and provide reference for future selection of suppliers.

If the evaluation results indicate non-compliance or unsatisfactory performance, the supplier will be coordinated for improvement. If improvement cannot be achieved, the supplier will be reported as a disqualified supplier. Upon review and confirmation by the responsible supervisor, the supplier will be included in the "Disqualified Supplier List" and terminated and suspended. In 2022, there were a total of 115 evaluations conducted, in addition to 141 evaluations for first-time trading suppliers, resulting in a total of 256 evaluations. One labor service supplier received a failing grade in the evaluation, and upon verification of the information, it has been decided to suspend further inquiries and classify the supplier as disqualified.

Contractor Visit and Communication
In 2022, despite the ongoing pandemic, the situation remained relatively stable. Arrangements were made for the crucial pharmaceutical supply to waste incineration plants, and the crisis related to sourcing and storage gradually eased. We aspire to exert a positive influence on the vendors through procurement practices other than via the evaluation of construction results of the contractors by the supervisors of various units. In 2022, visits and interactions were conducted with key equipment and material suppliers/contractors. Through factory inspections during project implementation, 27 evaluations and visits were carried out. Apart from auditing the quality, safety, and regulatory compliance at the suppliers' premises, further guidance was provided to ensure the implementation of corporate social responsibility policies. The evaluation results from these visits to supplier factories can serve as a reference for future procurement and contracting decisions.

In the future, there will be continued efforts to understand the internal operational practices of suppliers/contractors through various interactive opportunities and to verify their quality management. For example, site visit inspections when key equipment is sent out for maintenance, inspection of customized equipment and materials prior to delivery, and on-site operation audit of quality and safety during annual maintenance. Through these on-site inquiries and visits, suggestions are provided, and assistance is offered to facilitate improvement.

The development of new suppliers involves assessing their contracting and management capabilities through actual site visits, understanding their company facilities, manpower, materials, quality, warehouse management, etc., as references for trial orders.

To ensure the control and management of supplier sustainability risks, a plan was made in 2022 to participate in the CTCI's supplier forum event, inviting important engineering or technical service providers to exchange and share experiences in five major aspects: internal supply chain management, occupational health and safety, labor rights and human rights management, environmental protection, and corporate governance. However, due to pandemic control measures by the Group, the event was postponed and will be rescheduled for 2023.

ECOVE encourages suppliers to fulfill their responsibility to protect the environment and aims to collaborate with them in building a fair and just society and a sustainable living environment. For key partners in the ECOVE supply chain, a survey questionnaire on sustainability and net-zero practices aligned with the Group's initiatives was conducted. This helps understand the suppliers' current sustainability practices and net-zero emissions status and assesses the potential for future collaboration. It is hoped that suppliers and ECOVE can grow and improve together. In 2022, a total of 64 questionnaires were sent out to vendors, and as of the deadline, 43 vendors responded. Among them, 81% expressed willingness to collaborate with ECOVE in setting reduction targets to gradually decrease greenhouse gas emissions starting from 2023.
Green Procurement
In 2022, ECOVE Environment Service Corp. undertook the ROT (Renovation, Operation, and Transfer) project for the construction and operation of the Gangshan Waste Incineration Plant in Kaohsiung City, as well as the equipment renewal and functional enhancement project for the Tainan Science Park Resource Recycling Center in Tainan. Similar to the approach taken in 2021 for the Xizhou Incineration Plant and equipment improvement projects, energy-efficient and environmentally friendly equipment, such as frequency converters, transformers, and electrical appliances, were utilized in these two new operation and improvement projects. Additionally, ECOVE Solar Energy Corporation continued its investment in the establishment of a solar power plant, utilizing high-efficiency solar modules and inverters.

ECOVE response to the Environmental Protection Administration's green procurement program. The Keelung Plant and Xizhou Plant were invited to be publicly recognized for their outstanding performance, in recognition of their contribution to environmental protection and their commitment to fulfill corporate social responsibility.

ECOVE recognizes green procurement and green consumption as essential core values in promoting sustainable development within the Company. In response to the policy on green consumption, the concept of the green living circle has been introduced into the Company. This includes implementing green procurement of environmentally friendly products that are "low-pollution, energy-saving, and recyclable," as well as adopting other green services in daily life, such as green office environments and green transportation. In both production and daily life, ECOVE aims to achieve energy efficiency, carbon reduction, and a love for the Earth as sustainable development goals.

Local Procurement
ECOVE implements the local procurement policy in compliance with the parent company's sustainable supply chain development strategy. We believe that local procurement is conducive to local economic development and can minimize the negative impact on the environment by reducing carbon emissions from transportation. Except for special machinery components, ECOVE strives to source locally without affecting the stable operations, safety, and fairness of procurement. We screen local vendors with potential for the re-engineering of worn parts and equipment and provide them the opportunities to win trial orders and improve autonomy. The spare part engineering is mostly contracted to local vendors to reduce carbon emissions and waste and to create local employment and business opportunities.