In today's rapidly changing business context (including environmental degradation, energy and resource shortages, increasingly severe climate change, tightened government regulations, and lack of revolutionary breakthroughs in information technology, etc.), traditional shareholder interest-oriented financial reporting is no longer able to reflect the broad and longer-term consequences of the decisions organizations make to respond to sustainability-related risks and opportunities in the future. The long-term sustainable development of an enterprise is no longer aiming to maximize only shareholder value, but rather to maximize value for all stakeholders. ASE strives to create value for all stakeholders while simultaneously driving shareholder value.
In 2017, we has undertaken an value assessment study using PwC's Total Impact Measurement and Management (TIMM) framework and in collaboration with PwC Taiwan to assess the sustainable value created by ASE operations from four key aspects: economic, tax, social, and environmental. Based upon the monetization framework detailed in the Natural Capital Protocol and the Social Capital Protocol as well as the Integrated Reporting principles, we apply TIMM to assess our operations'impacts on stakeholders in the aforementioned aspects and monetize the impacts thereby facilitate business decision making, performance evaluation, and stakeholder communication. Since the methodologies of TIMM are still under development, the results from the assessment does not reflect nor has any impact on ASE's past, present, or future financial performance.
ASE's sustainable value for stakeholders arise from positive changes in the following aspects:
- Economic aspect: We review and evaluate the effects of key impact drivers on our shareholders, suppliers, and employees and express the effects in monetary units.
- Tax aspect: We assess our contribution to the local government's public finance according to the overall tax paid in our operation activities, which, in turn, represents our contribution to the well-being of local people.
- Social aspect: We measure and value the consequences of business activities on our suppliers, employees, and communities based upon the seven principles of Social Return on Investment.
- Environmental aspect: We follow the Natural Capital Protocol to measure and monetize our environmental impact of business operations.
Through the learnings from the sustainable value assessment, we hope to gradually incorporate integrated thinking into our decision-making process. Conventional financial reporting focus on business financial performance and traditional business decision making has tended to focus on relatively short-term financial outcomes. In contrast, the sustainable value assessment put more emphasis on the interaction between different capitals, such as financial, manufacturing, intellectual, human, natural, and social capitals, as well as how to derive short-, medium- and longterm value by using and affecting the capitals. Embedding integrated thinking in the company culture promotes more holistic, long-term thinking and decision making by the organisation across a comprehensive range of factors material to long-term value creation.
Sustainable Value Assessment Results
We apply TIMM to assess our sustainable value created for stakeholders in the economic, tax, environmental, and social aspects. The 2016 and 2017 TIMM assessment results show that our overall sustainable value in 2017 grew by 9% compared to 2016. Our sustainable contribution to stakeholders in the economic aspect forms the majority (more than 60%) of the overall sustainable value in both years, in particular through our operations' positive impact on the financial satisfaction and livelihood maintenance of stakeholders. Payroll for employees accounts for the highest proportion of the economic sustainable value. We also make a sizeable contribution to support the local government's finance and the well-being of local people via the taxes we paid. Like most manufacturing companies, our operations inevitably have a negative impact on the environment while creating economic value. GHG emissions and water consumption accounted for the largest proportion (over 90%) of the overall environmental impacts. We make other contributions to society, mostly from the value created through supplier partnerships and employee engagement. The further explanations of the assessment results on each aspect are presented in the relevant sections of this report. A document
containing all the assumptions and the calculation values used, together with the detailed TIMM framework and stakeholder influence maps, can be found on our website.
As the noted English economist John Maynard Keynes once said, "It is better to be roughly right than precisely wrong." We are not pursuing a precise number that represents a specific meaning, but rather expecting to use the TIMM assessment results as a reference for setting up key performance indicators for each sustainable management aspect, as the first step towards better sustainable management using total-impact based decision making, thereby creating greater value for stakeholders while using limited resources.