Investment

Sustainable Development 

Adaptation to Climate Change Risks

GRI 201-1

In the face of increasingly severe climate change globally, the resulting effects and impacts are issues which businesses must take seriously. Besides meeting the environmental requirements of national policies, we also hold meetings to discuss the risks arising from climate change, analyze future strategies in response to such risks though the perspectives of different fields and engage in project-based management to fulfill the spirit of sustainable development.

Given the existing production policy oriented toward low carbon emission adopted in Taiwan, we analyze and control our production capacity and engage in production under the energy-conservation model. Meanwhile, we engage in the analysis and adjustment of big data by product categories to reduce carbon emissions and achieve the objectives of eco-friendliness. Based on the recommendations of the “Task Force on Climate-related Financial Disclosures” (TCFD) issued by the Financial Stability Board (FSB), we assess the impact posed by climate change to us and identify climate-related risks and opportunities to adopt corresponding measures in response to such risks:

Governance body

Regarding the governance of climate change risks, the President is responsible for coordinating and leading the Sustainable Development Organization in controlling related issues. Under the Sustainable Development Organization, several sub-committees have been formed for risk management and issue assessment, in order to reduce the risks and impact caused by climate change to our sustainable management.

Risks and opportunities

The Company actively develops solutions to reduce the impact of climate change on its operations and finances to improve the organization’s climate resilience.

Risk types and opportunities Potential effect
Transition risks

As environmental regulations become increasingly stringent both domestically and internationally, governments, in response to greenhouse gas reduction and carbon neutrality goals, are imposing higher management requirements on enterprises. For example, companies are required to adopt a certain proportion of renewable energy, implement electricity transition measures, and promote packaging reduction as well as product carbon footprint disclosure. If enterprises fail to promptly align with policy-driven transitions, they may face compliance risks, rising operating costs, increased supply chain pressures, and even the loss of market competitiveness. Therefore, proactively addressing transition requirements has become a critical issue for companies in pursuing sustainable operations.

1. Failure to comply with government regulations on carbon emissions and energy use may result in the payment of carbon fees, carbon taxes, or fines.

2. As the government continues to promote renewable energy policies—such as mandatory green electricity quotas and obligations for large electricity users—enterprises will be required to allocate additional resources to install renewable energy facilities or procure green electricity.

3. With consumers placing increasing emphasis on low-carbon and environmentally friendly products, companies that fail to respond with appropriate measures may face risks of reputational damage or a slowdown in sales.

4. International brands and major corporations are gradually requiring supply chain partners to conduct carbon inventories and set emission reduction targets. Enterprises unable to align with net-zero transition requirements risk losing orders or facing the termination of business collaborations.

Physical risks

1. The increasing frequency of extreme weather events, such as typhoons and floods, may result in power outages, unstable electricity supply, logistics disruptions, or damage to facilities in plant sites or supply chain locations, thereby affecting production schedules and business continuity.

2. Climate change-induced uneven rainfall distribution may cause droughts or water restrictions, posing risks to production processes that rely heavily on water resources and potentially leading to operational disruptions or additional costs for water sourcing and treatment.

3. Rising temperatures are expected to increase the demand for energy in air conditioning and process cooling, thereby elevating the electricity burden and carbon emission pressures. Higher temperatures may also cause equipment overheating and reduced efficiency, further impacting production stability and operating costs.

1. Extreme weather events (such as typhoons, heavy rainfall, and floods) may damage machinery, plant facilities, and pose threats to personnel safety, thereby affecting operational stability and workforce allocation, while also incurring additional repair costs.

2. Abnormal weather conditions may disrupt or delay the supply of raw materials, requiring extended storage periods and additional inventory days to mitigate production risks. This could further result in factory scheduling delays and hinder production progress.

3. Rising temperatures and climate instability may increase the frequency and intensity of cooling and air conditioning system usage, leading to higher energy consumption and operating costs. At the same time, enterprises may face reduced raw material supply and heightened price volatility.

Climate Opportunities

1. The Company is actively planning to adopt various renewable energy facilities while simultaneously evaluating the installation of energy storage systems. These measures aim to enhance energy self-sufficiency, reduce reliance on conventional energy sources, and effectively lower carbon emissions.

2. By optimizing production equipment and integrating processes of similar nature, the Company reduces the frequency of cleaning-in-place (CIP) operations, thereby significantly decreasing water consumption and wastewater generation. This not only saves water resource costs but also ensures compliance with increasingly stringent water resource management regulations.

3. The Company continues to advance process and equipment optimization to improve product yield and reduce food waste generated during production. Combined with the adoption of green electricity and the installation of energy storage systems, these efforts demonstrate the Company’s commitment to environmental friendliness and sustainable operations, while also strengthening brand image and stakeholder trust.

1. Continue to implement energy conservation and carbon reduction programs to reduce energy consumption while enhancing resource recycling and reuse efficiency.

2. Future plant facilities will be designed and constructed in accordance with green building standards, equipped with low-energy, high-efficiency systems to further optimize energy management and strengthen environmental sustainability.

3. Actively invest in the research and development of low-carbon products and services, integrating innovative technologies with low-carbon energy applications to expand market competitiveness and meet consumer demand for sustainable products.

The aforementioned risk categories, including transition risks, physical risks, and climate-related opportunities, cover the following time horizons:

▪Short-term (within 3 years)

▪Medium-term (3-5 years)

▪Long-term (> 5 years)

The Company has assessed the aforementioned risks, and identified the climate-related risks and opportunities that may cause significant financial effects, as well as the response strategies:

R (Risk)/O (Opportunity) Financial effect-/+ Response strategy

Environmental Regulatory Requirements

Domestic and international regulations, as well as government greenhouse gas management requirements, mandate that energy-intensive enterprises adopt a certain proportion of renewable energy, promote packaging reduction, and conduct product carbon footprint assessments.

1. Payment of carbon fees increases operating costs.

2. Rising expenses for the procurement of renewable energy certificates.

3. Regulatory fines increase operating expenses.

1. Strengthening green R&D and innovation.

2. Improve energy efficiency and invest in green energy facilities.

Extreme Weather and Climate Change Related Physical Risks

The frequency and intensity of typhoons and floods are increasing, rainfall patterns are changing, and average temperatures are rising.

1. Plant shutdowns may lead to revenue decline.

2. Damage to machinery and equipment may result in property losses.

3. Increased electricity consumption may raise operating expenses.

1. The location of a new factory is determined by taking into account the risk of natural disasters.

2. Assess natural disaster risks at existing facilities and implement risk mitigation measures.

3. Construct green buildings and utilize renewable energy.

Green Development Opportunities

Develop renewable energy and energy storage systems, enhance water use efficiency, reduce the frequency of cleaning-in-place (CIP) operations, optimize processes to improve product yield, and minimize food waste.

1. Additional expenses are incurred for the installation.

2. Reduced water and electricity costs.

3. Eligibility for energy-saving equipment subsidies.

4. Enhanced brand reputation through diversified products and services.

1. Actively implement chiller replacement projects at plant facilities to improve energy efficiency and reduce energy consumption.

2. Continue to promote lightweight packaging design to reduce material usage, achieve energy conservation and carbon reduction, and minimize environmental impact.

The financial impact of extreme weather events and transitional actions.

Financial effects of extreme climate events:

Flooding caused by typhoons or heavy rainfall may result in temporary shutdowns of operational sites and damage to equipment, leading to short-term shipment disruptions. Droughts and water shortages can also affect normal production line operations. In such cases, the Company may need to reduce water usage, transport water across regions, or transfer inventory from other facilities to maintain supply, thereby increasing operational and transportation costs.

Financial effects of transition actions:

The transition to a low-carbon economy involves challenges arising from broad policy, regulatory, technological, and market changes. Depending on the nature, speed, and focus of these changes, carbon fees and greenhouse gas emission caps, renewable energy regulations, and shifts in consumer preferences may result in increased operating costs or decreased sales volumes during the analysis period.

To address these transition risks, the Company actively implements energy conservation and carbon reduction projects aimed at reducing energy consumption, water use, and waste emissions across operations and the supply chain. The Company also invests in improving energy efficiency, deploying green energy equipment, and enhancing the research and development of green products and innovations to meet consumer demand for sustainable products.

While these initiatives will result in increased capital expenditures and operational costs, they are expected to reduce climate-related risks over the long term and enhance the Company’s overall competitiveness.

Risk management

A Risk Management Task Force is formed by the R&D, QC, Human Resources, Shareholder Services, manufacturing, procurement, financial, audit and industrial safety departments. It is tasked with conducting an overall assessment of climate change risks based on the duties of the departments to enhance our knowledge of the relevant issues and provide decision makers with a basis of reference to formulate strategies in response, such as a comprehensive inventory of the power restoration and storage system and the establishment of emergency response procedures, with the purpose of dealing with unexpected power shortages and mitigating our operating losses. In terms of production, we hold management meetings from time to time and continue to adjust and control our production and sales volumes to facilitate inventory management and reduce inventory costs. Additionally, to improve the quality of raw materials and maintain stable sources of supply, we will seek cooperation from contract farming and secondary suppliers to minimize shortages of materials caused by climate change, hoping to reduce their impact and effect on our operations. At the same time, we conduct energy consumption inventories to reduce and control the consumption of water, energy and resources, and to further recycle and reuse usable resources.

en_USEnglish