ESG

1. Describe the board’s oversight of climate-related risks and opportunities.
2. Describe the role of management in assessing and managing climate-related risks and opportunities.

The risk management team consists of heads of relevant departments, responsible for the planning of climate risk identification, measurement, and control. The governance supervisor plans, leads, and oversees the risk team’s activities related to climate risk identification, measurement, control, and monitoring, and reports to the Audit Committee.

Climate risk management is discussed and assessed by the risk management team. Resolutions related to climate change are then reported by the governance supervisor to the senior management concerning performance execution and necessary improvement recommendations. In the fourth quarter of each year, results from the current year’s initiatives and the work plan for the coming year are presented to the Audit Committee and the Board of Directors. Feedback from the Audit Committee and Board of Directors is considered for revisions, incorporating climate change-related issues and management objectives.

1. Describe the short, medium, and long-term climate-related risks and opportunities identified by the organization.
2. Describe the impacts of climate-related risks and opportunities on the organization’s business, strategy, and financial planning.
3. Describe the organization’s resilience in strategy, considering different climate-related scenarios (including 2°C or more severe scenarios).

2. Short-Term Risks and Opportunities: Changes in rainfall (water) patterns and extreme variations in climate, rising raw material costs, and increased costs of carbon inventory and emissions disclosure. However, if carbon disclosures are complete and proactive measures are taken, it can enhance customer trust. **Medium-Term Risks and Opportunities**: Risks of power shortages and rising electricity prices, compliance requirements for carbon disclosures, and increased costs of carbon calculations. Yet, developing low-carbon products can enhance product competitiveness. **Long-Term Risks and Opportunities**: Increased carbon costs from carbon taxes, low-carbon supply chains, low-carbon R&D, and adjustments in production and transportation value chains. Efficient execution of these strategies can boost the company’s competitiveness.

3. Company Resilience: The company refers to SSP1 2.6 and SSP5 8.5 scenarios, discussed by the risk management team for defining short, medium, and long-term intervals: “1-3 years” for short-term, “3-5 years” for medium-term, and “6-10 years” for long-term, conducting climate risk and opportunity assessments accordingly. Climate risk types are categorized into transition risks and physical risks, further divided into policy and regulation, technology, market, reputation, and immediate versus long-term. Opportunities include resource efficiency, energy sources, products and services, markets, and organizational resilience, with five main categories. Physical risks are simulated using the SSP5 8.5 scenario; in a high greenhouse gas emission scenario, the likelihood of physical risks increases, elevating risk levels. Transition risks are simulated using the SSP1 2.6 scenario; closer proximity to a 2.0°C scenario aligns with net-zero emissions trends and increases regulatory risks, such as revisions to the greenhouse gas reduction and management law into climate change law, heightening regulatory risks for enterprises. Regarding the financial impact of physical risks, extreme weather events causing shutdowns can lead to production losses, while extreme droughts can increase operational costs due to water resource management. The financial impact of these physical risks, through scenario simulation, is estimated to be limited, not exceeding 0.5% of annual revenue. In transition risks, since the company’s total greenhouse gas emissions in Scope 1 and Scope 2 do not exceed 10,000 tons, the carbon tax trigger threshold will not be reached in the short term. Additionally, with a contract capacity of 2100KW, it does not meet the standards of the Renewable Energy Development Act, so the transition risks will have limited financial impact in the short term. However, the company will continue to monitor regulatory changes to ensure compliance.

1. Describe the organization’s processes for identifying and assessing climate-related risks.
2. Describe the organization’s processes for managing climate-related risks.
3. Describe how the processes of identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management system.

■Climate Risk Control:
After measuring and summarizing the risks, the risk management team considers factors such as climate risk appetite, cost-effectiveness of risk responses, and potential reduction in likelihood and impact when implementing appropriate risk management measures to keep risks within acceptable levels.

■Climate Risk Monitoring and Management:
The chief governance officer plans, leads, and supervises the risk management team’s identification, measurement, control, and monitoring of climate risks, reporting annually to the audit committee and the board of directors on climate risk management information, execution status, follow-up improvement items, response measures, and strategic goals.

■Risk Reporting and Disclosure:
In addition to disclosing relevant information as required by regulatory authorities, the risk management team also shares information related to corporate risk management in the annual report and on the company website to provide reference for external stakeholders.

■Climate Risk Management and Promotion Unit:
The audit committee is responsible for overseeing climate risk management. The risk management team executes the identification, analysis, assessment, and control processes of group operational risks based on the “Risk Management Policy and Procedures.” Climate risks are integrated into the risk management framework, with procedures for risk identification and assessment, after which response guidelines and strategies are formulated and executed by responsible units, reporting results to the board of directors.

1. Disclose the indicators the organization uses to assess climate-related risks and opportunities following its strategy and risk management processes.
2. Disclose Scope 1, Scope 2, and Scope 3 greenhouse gas emissions and related risks (if applicable).
3. Describe the objectives the organization uses in managing climate-related risks and opportunities, along with the performance in implementing those objectives.