TSMC Annual Report > 2016 > Corporate Social Responsibility > Environmental, Safety and Health (ESH) Management

Environmental, Safety and Health (ESH) Management

TSMC believes its environmental, safety and health practices must not only meet legal requirements, but should also measure up to or exceed recognized international best practices. TSMC’s ESH policies aim to reach the goals of “zero incident” and “sustainable development,” and to make TSMC a world-class company in environmental, safety and health management. The Company’s strategies for reaching these goals are to comply with regulations, promote safety and health, strengthen recycling and pollution prevention, manage ESH risks, instill an ESH culture, establish a green supply chain, and fulfill its related corporate social responsibilities.

All TSMC manufacturing facilities have received ISO 14001:2004 certification for environmental management systems and OHSAS 18001:2007 certification for occupational safety and health management systems and transferred environmental management system certificate to ISO 14001:2015 in 2016. All fabs in Taiwan have also been TOSHMS (Taiwan Occupational Safety and Health Management System) certified since 2009.

TSMC strives for continuous improvement and actively seeks to enhance climate-change management, pollution prevention and control, power and resource conservation, waste reduction and recycling, safety and health management, fire and explosion prevention as well as to minimize the impact of earthquake damage, so as to reduce overall environmental, safety and health risks.

In 2006, in order to meet regulatory and customer needs for the management of hazardous materials, TSMC began to adopt the IECQ QC 080000 Hazardous Substance Process Management (HSPM) System. All TSMC manufacturing facilities have been QC 080000 certified since 2007. By practicing QC 080000, TSMC ensures that its products comply with regulatory and customer requirements, including the European Union’s “Restriction of Hazardous Substances (RoHS) Directive,” the EU’s “Registration, Evaluation, Authorization and Restriction of Chemicals (REACH),” the “Montreal Protocol on Substances that Deplete the Ozone Layer” (the halogen free in electronic products initiative), and Perfluorooctane Sulfonates (PFOS) restriction standards.

Since 2011, TSMC has adopted the ISO 50001 Energy Management System for the continuous improvement of energy conservation. TSMC’s Fab 12 Phase 4 data center is Taiwan’s first facility to earn the ISO 50001 certification for a high-density computing data center. As of 2016, TSMC has three fabs – Fab 12 Phase 4/5/6, Fab 14 Phase 3/4 and Fab 15 – that earned ISO 50001 certifications. Other TSMC fabs also implement energy management measures consistent with ISO 50001.

TSMC regularly communicates with suppliers and contractors regarding environmental, safety and health issues and encourages them to improve their ESH performance. In line with this policy, TSMC uses priority work management and self-management to govern work performed by contractors. TSMC requires contractors performing level-one high-risk operations to complete certification for technicians and to establish their own OHSAS 18001 safety and health management system. This promotion of self-management is aimed at increasing the sense of responsibility of TSMC’s contractors, with the goal of promoting safety awareness and technical improvement for all contractors in the industry.

TSMC collaborates with suppliers to improve the sustainability of the Company’s supply chain regarding ESH-related issues, such as environmental protection, safety and hygiene code compliance, daily management, fire protection, and conflict mineral management. TSMC not only performs ESH audits at its suppliers’ manufacturing sites but also proactively assists them with improving ESH performance.

Besides the requirement of ESH code compliance, energy/water saving and carbon management of TSMC’s supply chain are essential to the Company’s green supply chain ideals. Since 2009, TSMC has required suppliers to establish carbon inventory procedures. In 2015, TSMC calculated its carbon footprint and water footprint, which were certified by a third party for ISO 14067 and ISO 14046, respectively. TSMC not only provides such information to customers but also continue to promote carbon reduction and water conservation at TSMC and in the supply chain from a life-cycle point of view.

TSMC also monitors potential climate-change related risks in the supply chain, investigates the supply chain’s carbon emissions, electricity usage and water usage, and encourages suppliers to implement measures to save energy, reduce carbon emissions, conserve water and reduce waste. The ESH management programs of TSMC suppliers are tied to a sustainability index that includes three components: the Green Index, the Social Index and the Risk Index. The Green Index includes environmental management systems, regulatory compliance, hazardous substance management, conflict mineral investigation, greenhouse gas inventory and other green activities. The Social Index includes labor and ethical conduct. Both the Green and Social indices are consistent with the Electronic Industry Citizenship Coalition (EICC) Code of Conduct. The Risk Index includes safety and health management, fire prevention, natural disaster mitigation, IT interruption recovery, transportation reliability, supply chain management and business continuity planning. This sustainability index is applied to TSMC’s critical suppliers.

Environmental Protection

Greenhouse Gas (GHG) Emission Reduction

TSMC is an active participant in international environmental regulatory and protection programs. The Company has taken many measures to reduce its emission of GHGs. For example, TSMC endorsed a memorandum of understanding with the Taiwan Semiconductor Industry Association (TSIA), the Taiwan Environmental Protection Administration (EPA), and the World Semiconductor Council (WSC) to establish the corporate PFC emission reduction policy and action plans proactively, whereby the Company committed to reducing PFC emissions to 10% below the average of 1997 and 1999 by 2010, a commitment that it was proud to make and achieve.

TSMC is active in the WSC’s activities to set up a global voluntary PFC emissions reduction goal for the next ten years, and has incorporated past experience to develop best practices. The implementation of best practices has been adopted by the WSC as a major element of the 2020 goal. In 2013, in accordance with the “EPA Early Actions for Carbon Credit of Greenhouse Gases Reduction” regulation, TSMC applied for the recognition of greenhouse reduction from 2005 to 2011 that committed to the WSC and EPA, and received 5.28 million tons of carbon dioxide credits in 2015. Those carbon credits can be used to offset greenhouse gas emissions of new manufacturing facilities regulated by Environmental Impact Assessment (EIA) Act. The mitigation of climate-change risk supports the Company's sustainable operations.

The “Greenhouse Reduction and Management Act” established by Taiwan EPA has been in effect since July 1, 2015. The related sub-regulations will be established and announced soon, and TSMC is preparing to take action. In 2005, TSMC was the semiconductor leading company to complete the GHG inventory program and take a complete inventory of its GHG emissions and to gain ISO 14064 certification. The purpose of the inventory is to serve as a baseline reference for TSMC’s strategy to reduce GHG emissions, to meet domestic regulatory requirements, and to prepare for carbon trading and corporate carbon asset management. All TSMC facilities conduct an annual GHG inventory. The inventory shows that the major direct GHG emissions are perfluorinated compounds (PFCs), which are used in the semiconductor manufacturing process. The primary indirect GHG emission is electricity consumption.

Thermal power generators, the major source of electricity in Taiwan, emit larger amounts of carbon dioxide (CO2) than any other power generators. Because 70% of GHG emission comes from electricity consumption, TSMC emphasizes energy saving and carbon reduction initiatives. TSMC has not only adopted energy-conserving designs in its manufacturing fabs and offices, but has also continuously improved the energy efficiency of its facilities during operation. These efforts simultaneously reduce both carbon dioxide gas emissions and costs.

Since 2015, TSMC has actively participated in the R.O.C. Ministry of Economic Affairs’ voluntary “Green Power Purchasing Program.” In 2016, TSMC purchased 200 million kilowatt hours (kWh) of green power that made up nearly 20% of the Taiwan Power Company’s total green power available for purchase under the program in that year. Since green power is generated with zero carbon emissions, the purchase of 200 million kWh of green power will eliminate over 100 million kilograms of CO2 emissions, equivalent to the carbon absorbed by 10 million trees in one year. TSMC hopes that by supporting Taiwan’s renewable energy efforts, it can continue to pursue sustainability, promote a low-carbon environment, and reduce the impact of global warming.

Air and Water Pollution Control

The Company has installed effective air and water pollution control equipment in each wafer fab to meet regulatory emissions standards. In addition, TSMC maintains backup pollution control systems, including emergency power supplies, to lower the risk of pollutant emission in the event of equipment failure. TSMC centrally monitors the operations of its air and water pollution control equipment around the clock and treats system effectiveness as an important tracking item to ensure the quality of emitted air and discharged water.

To make the most effective use of Taiwan’s limited water resources, all TSMC fabs strive to increase water reclamation rates by adjusting the water usage of manufacturing equipment and improving wastewater reclamation systems. All fabs meet or exceed the process water reclamation rate standard of the Science Park Administration. New fabs are able to reclaim more than 85% of process water, and outperforming most semiconductor fabs around the world. TSMC also makes every effort to reduce non-manufacturing-related water consumption, including water used in air conditioning systems, sanitary facilities, cleaning and landscaping activities and kitchens. TSMC uses an intranet website to collect and measure water recycling volumes company-wide.

Since water resources are inherently local, TSMC shares its water saving experiences with other semiconductor companies through the Association of Science-Based Industrial Park to promote water conservation in order to achieve the Science Park’s goals and ensure a long-term balance of supply and demand.

Waste Management and Recycling

The Company has a designated unit responsible for waste recycling and disposal. To meet the goal of sustainable resource utilization, TSMC’s priorities are: (1) reduce process waste, (2) increase onsite reuse, and (3) increase offsite recycling. The last option consists of treatment or disposal. To achieve raw material reduction, resource recycling and the goal of zero waste, TSMC built an in-house waste sulfuric acid pre-treatment system as electronic grade sulfuric acid can be used as waste water treatment agents after the wafer fabrication process. In order to track waste flow and ensure that all waste is treated or recycled legally and properly, TSMC carefully selects waste disposal and recycling contractors and performs annual audits of certification documents and site operations. TSMC also takes proactive steps to strengthen vendor auditing effectiveness. For example, all waste transportation contractors were asked and agreed to join the “GPS Satellite Fleet” so that all the cleanup transportation routes and abnormal stays for all trucks can be traced. In addition, all waste recycling and treatment vendors have installed closed-circuit TV systems at operating sites to monitor and audit the waste handling. Meanwhile, TSMC also conducts an ongoing survey of recycling product tracking. These actions were taken to ensure lawful and proper waste recycling and treatment, and in 2016 TSMC’s fabs in Taiwan achieved a 95% waste recycling rate, with a landfill rate below 1% for the seventh consecutive year.

Environmental Accounting

The purpose of TSMC’s environmental accounting system is to identify and calculate environmental costs for internal management. At the same time, the Company can also evaluate the savings or economic benefits of environmental protection programs so as to promote cost-effective programs. While environmental expenses are expected to continue growing, environmental accounting can help TSMC manage these costs more effectively. TSMC’s environmental accounting measures various environmental costs, establishes independent environmental account codes, and provides these to all units for use in annual budgeting. The Company’s economic benefit evaluation calculates cost savings for reduction of energy, water or waste and benefits from waste recycling in accordance with its environmental protection programs.

The environmental benefits disclosed in this report include real income from projects such as waste recycling and savings from major environmental projects. In 2016, 184 environmental projects of TSMC fabs were completed and the total benefits, including waste recycling, were more than NT$1,168 million.

2016 Environmental Cost of TSMC Fabs in Taiwan

In thousands of NT$

Classification

Description

Investment

Expense

1. Direct Costs for Reducing Environmental Impact

 (1) Pollution Control

Fees for air pollution control, water pollution control, and
 others

7,987,837

3,621,017

 (2) Resource Conservation

Costs for resource (e.g. water) conservation

1,686,996

-

 (3) Industrial Waste Disposal and Recycling

Costs for waste treatment (including recycling, incineration
 and landfill)

-

1,207,390

2. Indirect Cost for Reducing Environmental
 Impact (Environmental Managerial Cost)

1) Cost of training (2) Environmental management system and certification expenditures (3) Environmental impact measurement and monitoring fees (4) Environmental protection product costs (5) Environmental protection organization fees

94,748

242,518

3. Other Environmental Costs

(1) Costs for decontamination and remediation (2) Environmental damage insurance fees and environmental taxes and expenses (3) Costs related to environmental settlement, compensations, penalties and lawsuits

-

100

Total

9,769,581

5,070,925

2016 Environmental Efficiency of TSMC Fabs in Taiwan

In thousands of NT$

Category

Description

Efficiency

1. Cost Savings of Environmental
 Protection Projects

Energy savings: completed 61 projects

227,000

Water savings: completed 16 projects

18,070

Waste reduction: completed 107 projects

503,000

2. Real Income from Industrial Waste
 Recycling

Recycling of used chemicals, wafers, targets, batteries, lamps, packaging materials, paper cardboard, metals, plastics, and other waste

420,000

Total

1,168,070

Green Building and Green Factory

Since 2006 TSMC has adopted standards from both the Taiwan “Green Building” and the evaluation of the U.S. Green Building Council - Leadership in Energy and Environmental Design (LEED) for new fab and office building designs to achieve better energy and resource efficiency than conventional designs. During this time, TSMC has also continued to upgrade existing office buildings to comply with the LEED standard each year. From 2008 to 2016, 21 of TSMC’s fabs and office buildings have achieved LEED certifications (three platinum-class and 18 gold-class). Meanwhile, TSMC also received three Taiwan Intelligent Building diamond class certifications and 15 Taiwan EEWH (Ecology, Energy Saving, Waste Reduction and Health) diamond class certifications.

TSMC believes that more manufacturing companies should convert their facilities into green factories to improve the environment and lower construction costs. Therefore, the Company freely shares its practical experience with industry, government and academia. As of the end of 2016, 10,245 visitors from 269 different industry, government, academic and general community groups had contacted TSMC to gain an understanding of the Company’s green factory practices. Since 2009, TSMC has led the industry in support of the Taiwan government’s “Green Factory Labeling System,” a system that includes “Clean Production Evaluation” and “Green Factory Evaluation.” TSMC received Taiwan’s first “Green Factory Label” and seven labels in total for Fab 12 Phase 4, Fab 14 Phase 3 and Phase 4, Fab 12 Phase 5 and Phase 6, Fab 15 Phase 1 and Phase 2 and Fab 15 Phase 3 and Phase 4.

Green Products

TSMC collaborates with its upstream material and equipment suppliers, design ecosystem partners and downstream assembly and testing service providers to minimize environmental impact. We reduce the resources and energy consumed for each unit of production and are able to provide more advanced, power efficient and ecologically sound products, such as lower-power-consumption chips for mobile devices, high-efficiency LED driver chips for flat panel display backlighting, indoor/outdoor solid state LED lighting, “Energy Star” certified low standby AC-DC adaptors chips, and high-efficiency DC brushless motor chips, etc. By leveraging TSMC’s superior energy-efficient technologies, these chips support sustainable city infrastructure, greener vehicles, smart girds, and so on. In addition to helping customers design low-power, high-performance products to reduce resource consumption over the product’s life cycle, TSMC’s green manufacturing practices provide additional “Green Value” to customers and other stakeholders.

TSMC-manufactured ICs are used in a broad variety of applications covering various segments of the computer, communications, consumer, industrial and other electronics markets. Through TSMC’s manufacturing technologies, customers’ designs are realized and their products are incorporated into people’s lives. These chips, therefore, make significant contributions to the progress of modern society. TSMC works hard to achieve profitable growth while providing products that add environmental and social value. Listed below are several examples of how TSMC-manufactured products significantly contribute to the environment and society.

Environmental Contribution by TSMC Foundry Services

1. Continue to Drive Technology to Lower Power Consumption and Save Resources

  • TSMC continues to drive the development of advanced semiconductor process technologies to support customer designs that result in the most advanced, energy-saving and environmentally friendly products to improve sustainability. In each new technology generation, circuitry line widths shrink, making transistors smaller and reducing product power consumption.
  • TSMC has quickly ramped up its 28nm and below technologies. Wafer revenue contribution from 28nm and beyond technologies grew significantly from 12% in 2012 to 54% in 2016. TSMC’s objective is to continue R&D efforts in 28nm and beyond technologies and to increase the wafer revenue contribution from 28nm and beyond technologies, helping the Company achieve both profitable growth and energy savings.

TSMC Wafer Revenue Contribution from 28nm and Beyond Technologies

2012

2013

2014

2015

2016

12%

30%

42%

48%

54%

Chip Die Size Cross-Technology Comparison

Die size is shrinking as line width shrinks

55nm

45nm

40nm

28nm

20SoC

16FF+

10nm

7nm

1

0.53

0.48

0.25

0.13

0.12

0.068

0.048

left chart: Chip Die Size Cross-Technology Comparison, right chart: Chip Total Power Consumption Cross-Technology Comparison (image)

2. Provide Customers Leading Power Management IC Process with the Highest Efficiency

  • TSMC’s leading manufacturing technology helps customers design and produce green products. Power management ICs, the key components that regulate and supply power to all other IC components, are the most notable green IC products. TSMC helps customers produce industry-leading power management chips with more stable and efficient power supplies and lower energy consumption.
  • In 2016, TSMC’s HV/Power technologies collectively shipped more than 2.1 million 8-inch equivalent wafers to customers. In total, power management ICs manufactured by TSMC accounted for more than one-third of global computer, communication and consumer systems.

HV/Power Technologies Shipments(Unit: 8-inch equivlent wafer)

2012

2013

2014

2015

2016

>1,000

>1,300

>1,800

>2,000

>2,100K

3. Green Manufacturing that Lowers Energy Consumption

TSMC continues to develop more advanced and efficient technologies to reduce energy/resource consumption and pollution per unit during the manufacturing process as well as power consumption and pollution during product use. In each new technology generation, circuitry line widths shrink, making circuits smaller and lowering the energy and raw materials consumed for per unit in manufacturing. In addition, the Company continuously provides process simplification and new design methodology based on its manufacturing excellence to help customers reduce design and process waste so as to produce more advanced, energy-saving and environmentally-friendly products. To see the total energy savings and benefits realized in 2016 through TSMC’s green manufacturing, please refer to Environmental Accounting in this annual report.

Social Contribution by TSMC Foundry Services

1. Unleash Customers’ Mobile and Wireless Chip Innovations that Enhance Mobility and Convenience

  • The rapid growth of smartphones and tablets in recent years reflects strong demand for mobile devices, which, in turn, offer remarkable convenience. TSMC contributes significant value to these devices, including: (1) new TSMC process technology helps chips achieve faster computing speeds in a smaller die area, leading to smaller form factors for these electronic devices. In addition, TSMC SoC technology integrates more functions into one chip, reducing the total number of chips in electronic devices, again resulting in a smaller system form factor; (2) new TSMC process technology also helps chips consume less energy. People can therefore use mobile devices for a longer period of time; and (3) TSMC helps spread the growth of more convenient wireless connectivity such as 3G/4G and WLAN/Bluetooth, meaning people can communicate more efficiently and “work anytime and anywhere,” significantly improving the mobility of modern society.
  • Mobile computing related products, such as baseband, RF transceivers, application processors (AP), wireless local area networks (WLAN), imaging sensors, near field communication (NFC), Bluetooth, and global positioning systems (GPS) among others, represented xx% of TSMC wafer revenue in 2016.

TSMC Wafer Revenue Contribution from Mobile Computing Related Products

2012

2013

2014

2015

2016

40%

44%

48%

51%

52%

Note:

Mobile computing related products were re-classified in 2014.

2. Unleash Customers’ CIS (CMOS image sensor) and MEMS (micro electro mechanical systems) Innovations that Enhance Human Health and Safety

  • In addition to smartphones, tablets and many other consumer electronic devices, TSMC-manufactured CIS and MEMS chips are widely used in medical treatment and health care applications. By leveraging the Company’s advanced technologies, more and more chips for these applications are introduced to the market, providing major contributions to modern medicine. Customers’ CIS and MEMS products are used in a number of advanced medical treatments as well as in preventative health care applications. Examples include early warning systems to minimize the injury from falls for the elderly, systems to detect physiological changes, car safety systems and other applications that greatly enhance human health and safety.

Safety and Health

Safety and Health Management

TSMC’s safety and health management is built on the framework of the OHSAS 18001 system and adheres to the management principle of “Plan, Do, Check, Act” to prevent accidents, promote employee safety and health and protect Company assets. All TSMC fabs in Taiwan have also received TOSHMS (Taiwan Occupational Safety and Health Management System) certification.

Besides accident prevention, TSMC has established emergency response procedures to protect employees and contractors if a disaster should occur, as well as to prevent and/or reduce the negative impact on society and the environment. TSMC continually communicates with its suppliers to ensure that potential risk in the operation of production equipment is minimized, and rigorously follows safety control procedures when installing production equipment. The Company places stringent controls on high-risk operations and also evaluates the seismic tolerance of its facilities and equipment to reduce the risk of earthquake damage.

For epidemics, TSMC has established company-level prevention committees and procedures for emergency response to outbreaks of infectious diseases.

Working Environment and Employee Safety and Health Protection

TSMC’s ESH policy is focused on establishing a safe working environment, preventing occupational injury and illness, keeping employees healthy, enhancing every employee’s awareness and sense of accountability to ESH, and building an ESH culture. TSMC safety and health management operations apply to:

● Equipment Safety and Health Management

In addition to meeting regulatory requirements and internal standards, as well as mitigating ESH-related risks when building or upgrading facilities, TSMC also maintains procedures governing new equipment and raw materials, safety approvals for bringing new tools online, updating safety rules, seismic protection measures, and other safety measures.

TSMC requires that all new tools meet SEMI-S8 requirements and that appropriate supplementary control measures be taken to reduce ergonomic risk. Moreover, TSMC endeavors to automate 300mm front-opening unified pod (FOUP) transportation to prevent accumulative physical damage caused by repetitive manual handling of 300mm FOUPs. TSMC 300mm fabs have completed automatic transportation control.

● Environmental, Safety and Health Evaluation of New Tools and New Chemical Substances

As a technology leader in the global semiconductor industry, TSMC operates many diversified process tools and introduces new chemicals in the R&D stage. Before using those new tools and new chemicals, they are reviewed carefully by the “New Tools and New Chemical Review Committee.” The purpose is to ensure that new tools are compliant with the semiconductor industry’s safety standards (such as SEMI S2) and that new chemicals’ environmental, safety and health concerns can be well controlled, including engineering controls, application of personal protection equipment, and operational safety training during storage, transportation, usage and disposal.

● General Safety Management, Training and Audit

All TSMC manufacturing facilities hold environmental, safety and health committee meetings on a monthly basis. TSMC adopts multiple preventive measures such as controls on high-risk work, contractor management, chemical safety management, personal protective equipment requirements, and safety audit management. In addition, TSMC maintains detailed disaster response procedures and performs regular drills designed to minimize harm to employees and property, as well as the impact on society and the environment in the event of a disaster.

● Working Environment Hazardous Factors Management

TSMC conducts workplace hazard assessments and interventions to provide a comfortable and safe workplace to employees. TSMC also requires employees to use personal protective equipment (PPE) to prevent hazardous exposures.

TSMC performs semi-annual workplace environment assessments of physical and chemical hazards, including CO2 concentration, illumination, noise, and hazardous chemical substances regulated by local laws. The Company performs exposure assessments and uses hierarchy management control for chemicals with potential health hazards since 2015. If abnormal measurements or events happen or an exposure assessment indicates there is an adverse health effect for employees, ESH professionals immediately conduct onsite observation and interventions to reduce the exposure to acceptable levels.

● Emergency Response

The planning and execution of an effective emergency response should identify high-risk events from risk assessment and be prepared for various scenarios. It should focus on continuous improvement and practice drills covering all potentially severe events. TSMC’s emergency response plans include procedures for rapid-response crisis management and disaster recovery to potential incidents.

All TSMC fabs conduct major annual emergency response exercises and evacuation drills. TSMC’s Tainan site fabs continue their spot drills, which have been recognized as industry best practices. TSMC’s onsite service contractors also have to participate in emergency response planning and exercises to ensure cooperation in handling accidents and to effectively minimize any damage caused by disasters. At least every two years, each fab director invites fab management and support functions to participate in crisis management drills for potentially high-risk events such as earthquake, fire and flood (Tainan site).

In addition to the regular emergency response drills held by engineering and facilities departments each quarter, the Company’s laboratory, canteen, dormitory, and shuttle bus personnel also hold emergency response drills to prepare for events such as earthquakes, chemical leakage, ammonia release, fires and automobile accidents.

● Emerging Infectious Disease Response

TSMC has a dedicated corporate ESH organization to monitor emerging infectious diseases around the world, to assess any potential impact on the workplace, and to provide an appropriate strategic response plan. In previous outbreaks (such as SARS in 2003 and the H1N1 influenza outbreak in 2009), TSMC convened the corporate influenza response committee to develop the Company’s strategies. These strategies include educating employees in prevention and response, publishing guidelines for managers, establishing guidelines for employee sick leave due to flu, and installing alcohol-based hand sanitizers at appropriate locations. The Committee also monitors the status of employee leave due to illness and, at the same time, develops a continuous plan to address manpower shortages and minimize business impact.

TSMC believes that employees’ physical and mental health is not only fundamental to maintaining normal business operations but also part of a corporation’s responsibility.

● Employee Physical and Mental Health Enhancement

To protect and promote employee physical and mental health, TSMC fosters collaboration among the onsite industrial safety and environmental protection department, onsite medical personnel of the health center, and physicians of occupational medicine. TSMC strives to reduce cardiovascular disease that might be induced or aggravated by overwork, night work or shift work, and conducts maternal health protection programs as well. TSMC devotes significant resources to mental health awareness and related activities, which not only protect employees from hazards at work but also proactively promote employee health in general. In 2016, through planned personal health management, 45.6% of personnel diagnosed at high risk for cardiovascular disease shifted to low risk. 801 female employees participated in the maternal health program. For five consecutive years TSMC has held a series of physical and mental health activities. 691 employees have joined the weight-loss program, losing a total of 1,942 kilograms collectively. For smoking cessation, 115 employees participated with a success rate of 67% during a three-month period, exceeding the 33% goal set by the health promotion administration. 781 employees completed the sleep quality improvement program, which included one-on-one medical consultation to improve life quality.

Supplier and Contractor Management

● Supplier Management

As a means of enhancing its supply chain management, TSMC is committed to communicating with and encouraging its contractors and suppliers to improve their quality, cost effectiveness, delivery performance and sustainability on environmental protection, safety and health. Through regular communication with senior managers, site audits and experience sharing, TSMC collaborates with major suppliers and contractors to enhance partnership and ensure continual improvement for better performance and increased joint contributions to society. As noted above, contractors performing high-risk activities must lay out clearly defined safety precautions and preventative measures. In addition, contractors working on high-risk engineering projects must establish OHSAS 18001 systems and the workers must successfully complete work skill training.

● Supply Chain Sustainability

TSMC works with its suppliers in several fields of sustainable development, such as greening the supply chain, carbon management for climate change, mitigation of fire risk, ESH management and business continuity plans for natural disasters.

Since becoming a full member of the Electronic Industry Citizenship Coalition (EICC) in 2015, TSMC has completed the adoption of the EICC Code of Conduct across the Company by performing self-assessments at its facilities worldwide and reviewing policies and procedures in the areas of labor, health and safety, environment, ethics, and management systems.

To enhance supply chain sustainability and streamline risk management, TSMC is committed to collaborating with its suppliers to maintain full compliance with Taiwan’s environmental, safety, health and fire regulations, and to establish the necessary management capability as well as continuous enhancement.

TSMC is subject to the U.S. Securities & Exchange Commission (SEC) disclosure rule on conflict minerals released under Rule 13p-1 of the U.S. Securities Exchange Act of 1934. As a recognized global leader in the high-tech supply chain, the Company acknowledges its corporate social responsibility to strive to procure conflict-free minerals in an effort to recognize humanitarian and ethical social principles that protect the dignity of all people. To this end, TSMC has implemented a series of compliance safeguards in accordance with leading industry practices such as adopting the due diligence framework in the OECD’s Model Supply Chain Policy for a Responsible Global Supply Chain of Minerals from Conflict-Affected and High Risk Areas issued in 2011.

TSMC is one of the strongest supporters of the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI), and this will help the Company’s suppliers source conflict-free minerals through their jointly developed Conflict-Free Smelter Program (CFSP). TSMC has asked its suppliers to disclose and make timely updates to information on smelters and mines since 2011. TSMC encourages suppliers to source minerals from facilities or smelters that have received a “conflict-free” designation by a recognized industry group (such as the EICC). TSMC also requires those who have not received such designation to become compliant with CFSP or an equivalent third-party audit program. TSMC requires the use of tantalum, tin, tungsten and gold in its products that are conflict-free.

TSMC will continue to issue the supplier survey annually and require suppliers to improve and expand their disclosure to fulfill regulatory and customer requirements. For further information, please see the Company’s Form SD filed with the U.S. SEC.
(http://www.tsmc.com/english/investorRelations/sec_filings.htm)