CSR

Global goals

Energy saving and carbon reduction has been a global common goal. After the Kyoto Protocol, the Paris Climate Agreement, which was agreed at the end of 2015, has become a new global greenhouse gas reduction agreement containing legal force. Solar energy has several advantages such as its sustainable cycle and the light source from the sun. After these years of industry value chain’s efforts, the cost of solar power generation continuously declines and therefore, solar power generation in many areas around the world no longer relies on the government subsidies with spontaneous demands, namely, Grid-Parity. In addition, solar demand of many developing and underdeveloped countries has been increasing rapidly. URECO, a leading company in solar industry and a pioneer with semiconductor manufacturing discipline and vast solar device expertise, covering the products and services among solar cells, solar modules and solar systems, constantly adheres to the vision that every family should be able to afford to use solar energy and is committed to providing sustainable and affordable clean energy. After the first decade of URECO’s establishment, we are very close to this target.

Social responsibility

While developing its business, URECO also spares no effort in fulfilling its corporate social responsibility, which is now part of the corporate value. URECO deeply understands that it is important to unreservedly disclose to stakeholders and the public the Company’s efforts and achievements in corporate governance, employee and social engagement, partnership relations and energy saving/environmental protection. The Company also examines whether its development strategies are aligned with its corporate social responsibility and expectations from the society. Since 2014, therefore, URECO has proactively published corporate social responsibility (CSR) reports for four consecutive years. URECO CSR report also awarded Bronze, Silver, and Golden medal in year 2014, 2015, and 2016, respectively. According to TWSE’s evaluation, URECO’s corporate governance has always been maintained at top 50% among total listing companies,

Awards

In 2017, URECO won “Taiwan Excellent PV Award” again from Taiwan’s Bureau of Energy for its high-efficiency cell product and module product for five consecutive years. It is also worth mentioning that NSP won “the 26th Taiwan Excellence” again for its BiFi solar module since 2015. For overseas’ recognition, NSP module not only been certified by TUV Rheinland after passing the latest and severest IEC standards (IEC 61215, and IEC 61730, 2016), it is also named as top performance on DNV’s (PVEL) “PV Module Reliability Scorecard Report 2017” which provides the quality assurance for harsh environment applications, such as anti-typhoon and salt pan. Other than PVEL list, URECO was also named on the Tier 1 module maker list in 2017 Q3 & 2017 Q4 PV Outlook, Bloomberg New Energy Finance. These all showed that the quality and standard of URECO’s cell & module products have met worldwide PV industry’s requirement, giving recognition to the outstanding performance of NSP module in solar electrical energy generation.

In view of prosperous future development and the stable cash inflows from solar system projects, URECO continuously increase solar system investment. Following the completion the investment of USD44 million in forming the solar IPP (“Independent Power Producer”) company, Clean Focus Yield (“CFY”) in 2016, URECO, through CFY, has completed another Greenskies project, a US portfolio of 225 MW commercial and industrial solar projects. With this acquisition, CFY has become the owner and operator of the largest C&I (Commercial and Industrial) portfolio in the United States. CFY will also plan for public listing on the Hong Kong Stock Exchange in the near future. From solar project development side, NSP has completed UK portfolio with 29.5MW and Taiwan’s first Bifacial solar system of 2MW on Workforce Development Agency‘s rooftop of Taiwan Ministry of Labor. URECO will not only enjoy profit from development, construction, and sale for global solar system projects, but also can enlarge sales pipeline for solar cells & solar modules which will continue to bring growth momentum for URECO.

Relations

URECO firmly believes that employees are its most important assets. The Company, therefore, endeavors to build up good management-employee relationships based on mutual trust and respect, aiming to attract and retain talented staff. The Company is also devoted to establishing a pleasant and safe working environment, creating diversified and equal opportunities for all employees, building up a fair compensation system irrespective of gender, developing solid training programs as well as multipath and smooth communication channels. The ultimate purpose is to create a win-win position together with the employees. As a social citizen, URECO also spares no effort in developing deep community relationships. For many years, URECO invites the Children-Are-Us Bakery to sell their products in the plants on a monthly basis. It also works hand in hand with various social welfare groups to host charity events, so as to support the less-advantaged groups through practical action. In 2017, NSP raised more than 50 giant boxes of second-hand products for charity sale and donate the proceeds to social welfare organizations. In future, NSP will continue with its long-term community-care services using all feasible approaches.

Climate

In terms of environmental care, NSP, as the leader of the solar energy industry in Taiwan, not only has to create profit for the Company, but also applies very high standards on the management of water resources, energy and wastes. Incessant R&D efforts have been made in the manufacturing process to reduce the usage of chemicals or polluting energies (In 2017, URECO achieved a total energy saving of 3.7 million kWh in its manufacturing processes). To reduce pollutant emissions from its manufacturing, URECO will give priority consideration to production equipment with pollution control devices in its procurement process. In terms of waste reutilization, URECO also achieved a water recycling rate of more than 85% over the last four years. The recycling rate for packaging materials (plastic pallets, lead wire spools and solar cell cassettes) also exceeded 80%. As a clean-energy producer, NSP has achieved a power generation of 1.007 billion kWh in 2017 through its own solar cells, which cut carbon dioxide emissions by 531,696 ton, an amount equal to 1,367 times the CO2 absorbed by Taipei’s Da-an Forest Park for a year. Each year, NSP also proactively checks and controls the greenhouse gas emission in its plants, and establishes emission reduction targets. Using diversified communication channels, the Company urges its suppliers to incorporate the green energy requirements into their manufacturing processes. Through practical action, URECO demonstrates its deep care to the climate change issues.

Long-term

In order to ensure the long-term development, and to form a highly competitive supply chain, Boards of Neo Solar Power and other two Taiwan solar peers, Gintech Energy and Solartech Energy, have respectively adopted a resolution on October, 2017 to execute a Letter of Intent with the other companies, representing the three companies’ intent to merge into one company. The merger later then approved by each board on January, 2018. The Proposed Merger process will be implemented based on an equal and mutually beneficial principle without designating any of the companies as the acquiring or the acquired party. The combined entity will be renamed United Renewable Energy Co., Ltd. The future plan, operation strategies and competitiveness from short to long term are listed as follows:

• Capacity Organization The current cell capacity of URECO (United Renewable Energy) is 1.6GW and is expected to reach to 5GW after the Merger. To enhance the vertical integration, the module capacity is planned to expand to 3GW in the coming 2 to 3 years and the solar system businesses are targeted to reach 1GW per year in 5 years after the Merger.

• Research Development After the Merger, the three companies will leverage their accumulated technology leadership to form a solar flagship company with the high-end products, such as PERC (Passivated Emitter and Rear Cell) and HJT (HeteroJunction) solar cells capacity, establishing technological thresholds and develop module brands for global markets.

• Financial Organization We always maintain a solid financial structure to react to market fluctuations. After the Merger, the increase of capital size is able to enhance the Company’s fund-raising capability, maintain the operation and investment cashflow, and diversify the operation risks to enable the Company’s continuous growth. On the other hand, integrating the three companies’ strengths in product R&D, manufacturing process technology and factory management to reduce cost as well as increasing operation performance. In addition, the bargain power will increase after the Merger due to the capital expansion. This could also reduce our purchasing cost and operating expenses to enhance profitability.

• Marketing Strategies The Company will cultivate current business relationships with global tier 1 clients after the Merger. In order to expand the market share for our modules, we will develop new clients from emerging markets, leverage the opportunity of Taiwan’s domestic demand increase, expand our module capacity, establish our high-end module brand in both domestic and global markets, and reduce the Anti-dumping and Countervailing duties influence by exporting from our oversea manufacturing sites, to lower the dependence on one single market.

• Solar Projects development With our Company’s high quality solar cells and modules, and the Taiwan government’s accumulated installation target of 20GW by 2025, NSP will continue to expand our domestic and global solar projects development. In the future, integrating the businesses from solar wafers, solar cells, solar modules and solar systems will enable United Renewable Energy to have a complete portfolio in mid-downstream supply chain of solar industry.

• New Venture Group URECO (United Renewable Energy) will have sufficient capacity to foster the peripheral businesses related to solar industry (ex. backsheet, EVA and aluminum frame) and construct a self-sufficient supply chain to reach the target of vertical integration from up to downstream.

Looking forward, the development of Photovoltaic technologies would be an important key for the continuation of life on earth. United Renewable Energy will allow Taiwan’s solar cell industry to get rid of its role as foundries and further urge the green energy industry to root and grow strongly in Taiwan. While keeping its leading role in the industry, we are making incessant efforts in elevating the conversion efficiency and quality of our solar cells and modules, while actively developing the business of downstream solar power system projects. The Company will also incorporate its environmental passion into its core competencies, and align its business strategies with the concept of sustainability development. It is hoped that these initiatives will create a positive influence to the society. We are committed to bringing light and warm to the world, making itself a benchmark company in the global PV industry. United Renewable Energy, a name for sustainable development – “We Make the World Greener”!

Purpose/Organization/Scope

In order to implement CSR, URECO has established a Corporate Social Responsibility Committee (CSR Committee) and a Corporate Social Responsibility Office (CSR Office) in 2014. The CSR Committee is led by URECO’s top management who have experience in the field of economic, environmental and social aspects to monitor and arrange sustainable development targets. The CSR Office is responsible for the promotion and implementation of tasks related to corporate governance, economy, environment and society. There are social, environmental, and economic working groups in the CSR Office. Different internal departments which are in charge of communication with stakeholders such as employees, customers, shareholders, investors, suppliers, communities and governments assigned their representatives to form this working group to understand the different stakeholders’ expectations and requirements to URECO. In addition, the stakeholders’ feedback will be discussed in URECO’s internal cross-functional meetings and resolutions will be submitted for URECO’s Chairman to approve and evaluate the achievement rate of the targets in each Material Aspect.