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Please refer to Chapter 2 "Climate Strategies" and Chapter 4 "Scenario Analyses for Physical and Transition Risks" of the "2022 TCFD Report" for more details.

Climate change has significant impacts on corporate and social environments. In order to monitor specific impacts of climate change and respond to climate issues, the Risk Management Division creates climate risk and opportunity assessment tables each year and references climate laws and reports released by domestic and foreign institutes. The risk management units of all subsidiaries are responsible for identifying climate-related risks and opportunities. Management procedures for identifying climate risks and opportunities encompass four steps: compilation of a list of climate risks and opportunities, identification of risks/opportunities at the subsidiary level, identification of risks/opportunities at the group level, proposing mitigation or adaptation measures, and disclosure and communication with the public, which enable us to identify how climate risks and opportunities impact our businesses, strategies, and finances over the short, medium, and long term.

Management Procedures for Climate-related Risks and Opportunities

Identification of Climate-related Risks and Opportunities

In the process of identifying climate risks and opportunities, SinoPac Holdings comprehensively considers "time of occurrence," "likelihood," and "impact." The scores identified for each dimension are multiplied and weighted in accordance with net values for each subsidiary to obtain overall identification results for the Group, which serves as a basis for ranking the materiality of risks and opportunities. The Company assessed different parts of the entire value chain (suppliers, own operations, and investment and financing businesses) for potential operational and financial impacts, possible times of occurrence, and connections with risks in the financial industry (such as credit risks, market risks, and operational risks) for the top three risks and opportunities to serve as a reference for formulating mitigation and adaption strategies as well as risk management.

Identified Climate Risks

Material climate risks, potential financial impacts, and response measures for 2022 are shown in the table below.

Identified Climate Opportunities

Material climate opportunities, potential strategies, and management responses for 2022 are shown in the table below.

Scenario Analyses for Physical and Transition Risks

With identified climate risks, SinoPac Holdings proposes three scenario analyses for physical risks: "heavy rainfall and flooding", "droughts", and "rising sea levels", with "heavy rainfall and flooding" and "droughts" being acute physical risks, and "rising sea levels" being a chronic physical risk. Scenario analyses for three transition risks were conducted: Possible additional "carbon costs" (such as carbon credits, carbon taxes, and carbon fees); "energy transitions" from compulsory installed capacity quotas under government low-carbon transition goals (Nationally Determined Contribution, NDC); and net zero emissions target from own operations by 2030.

SinoPac Holdings conducted respective analyses on different value chain sections (suppliers, own operations, investment and financing businesses) to evaluate potential financial impacts under different climate scenarios and time scales.

Overview of Physical Risk and Scenario Analysis Results

Physical Risk – Mitigation and Adaptation Measures

Overview of Transition Risk and Scenario Analysis Results

Transition Risk - Mitigation and Adaptation Measures