Status of Operations and Implementation
■ Status of Operations and Implementation
To effectively manage the risks arising from the operations of SinoPac Holdings and its subsidiaries, the Board of Directors serves as the highest authority for risk oversight. In addition to approving risk management policies and risk appetite or limits, the Board delegates the responsibility of day-to-day risk management to the management team. The risk management division oversees the formulation of the overall risk management policy and standards of the Company and subsidiaries and the establishment and plans of the risk management system. The policies, guidelines, and systems are approved by the Board of Directors and implemented by the Risk Management Division, which conducts regular evaluations on the performance of all subsidiaries in terms of risk management.
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Status of Operations and Implementation：
In 2025：
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- The Climate and Nature Team formulates specific work plans and timetables and keeps promoting the implementation of climate and nature work items, including specifying quantitative climate and nature scenario analysis and financial impacts, establishing corresponding operational strategies, financial plans, and mitigation and adaptation measures for climate resilience, formulating nature-related risk management measures and strategies, formulating metrics and targets, and compiling climate and nature-related financial disclosures report.
- In response to the Financial Supervisory Commission's release of the “Roadmap for Taiwan to align with IFRS Sustainability Disclosure Standards,” the Company has conducted a gap analysis and developed a work plan for implementing IFRS S2 "Climate-related Disclosures". Furthermore, the Company is progressively identifying and assessing the expected financial impacts of climate-related risks and opportunities across current, short-term, and medium- to long-term time horizons.
- Regarding the "2024 Climate and Nature-Related Financial Disclosures Report", the content is continuously improved as follows:
- Strategy: Incorporate climate and nature-related risk/opportunity identification procedures and improve TNFD "identify nature-related risks and opportunities" framework.
- Risk Management: The physical climate scenario analysis for heavy rainfall and flooding and drought has been updated by transitioning from IPCC fifth Assessment Report (AR5) to the IPCC Sixth Assessment Report (AR6), and enhancing the spatial resolution to improve the granularity of risk assessment. In addition, a new scenario analysis has been incorporated to evaluate landslide physical climate risks.
- Nature related financial disclosures: Specify TNFD quantitative water resources dependency and impact scenario analysis and introduce Exploratory Scenarios.
- The Company and its subsidiaries' carbon inventory of Scope 3 financed emissions of investment and lending portfolios with own capital, asset management businesses of SinoPac SITC and facilitated emissions for capital markets was validated by the verification organization BSI in accordance with ISO 14064-3:2019, and a validation report was issued, complying with the regulations of Chapter 6 "Assurance (verification) Descriptions" in "Practical Handbook for Financed Emissions (Scope 3) in Investment and Lending Portfolios of Domestic Banks."
- Compile the report based on TCFD framework with the four pillars including governance, strategy, risk management, and metrics and targets. The climate-related financial disclosures were validated by the verification organization BSI, and achieved the "Level-5+: Excellence Certification" for three consecutive years.
- The Climate and Nature Team formulates specific work plans and timetables and keeps promoting the implementation of climate and nature work items, including specifying quantitative climate and nature scenario analysis and financial impacts, establishing corresponding operational strategies, financial plans, and mitigation and adaptation measures for climate resilience, formulating nature-related risk management measures and strategies, formulating metrics and targets, and compiling climate and nature-related financial disclosures report.
In 2026：
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The Climate and Nature Team formulates specific work plans and timetables and keeps promoting the implementation of climate and nature work items, including 【Climate-related Risks and Opportunities】Identification, Scenario Analysis, and Financial Impacts, 【Climate Strategy Actions】Establishing corresponding operational strategies, financial plans, and mitigation and adaptation measures for climate resilience, 【Formulating nature-related risk management measures and strategies】, 【Policy Framework and Management of Operational Risks】, Formulating climate indicators and targets, Compiling climate and nature-related financial disclosure reports.
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In response to the Financial Supervisory Commission's release of the “Roadmap for Taiwan to align with IFRS Sustainability Disclosure Standards,” the Company has conducted a gap analysis and developed a work plan for implementing IFRS S2 "Climate-related Disclosures". Furthermore, the Company is progressively identifying and assessing the expected financial impacts of climate-related risks and opportunities across current, short-term, and medium- to long-term time horizons.
- Regarding the "2025 Climate and Nature-Related Financial Disclosures Report", the content is continuously improved as follows:
- Governance:
The Company revised the "Guidelines for the Management of Climate and Nature-Related Risks and Opportunities" in accordance with the core requirements of the IFRS S2 Climate-related Disclosures and the latest recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), to enhance alignment with international practices. - Risk Management:
The Company expanded the scope of its climate physical risk scenario analysis to include overseas locations for the first time. The analysis factors included heavy rainfall and floods, droughts, wildfires, and rising sea levels. For heavy rainfall and floods, droughts, landslide disasters, and rising sea levels, the scenarios are based on the IPCC Fifth Assessment Report (AR5) and IPCC Sixth Assessment Report (AR6). These analyses evaluate three scenarios—low warming, medium warming, and high warming scenarios. - Nature related financial disclosures:
In reference to the "Domestic Financial Industry Nature-Related Risk Study Report," the Company refined the methodologies for nature-related physical risk analysis and dependencies and impacts evaluation. In addition, nature-related transition risk scenario analysis was newly introduced.
- Governance:
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The Company and its subsidiaries' carbon inventory of Scope 3 financed emissions for investment and lending portfolios, asset management businesses of SinoPac SITC, and facilitated emissions for capital markets was verified by the verification organization BSI in accordance with ISO 14064- 3: 2019, and validation reports and opinions was issued, complying with the regulations set out in Chapter 6 "Assurance (verification) Descriptions" of the "Practical Handbook for Financed Emissions (Scope 3) in Investment and Lending Portfolios of Domestic Banks."
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Compile the report based on TCFD framework with four pillars including governance, strategy, risk management, and metrics and targets. The climate-related financial disclosures were validated by the verification organization BSI, and achieved the "Level 5 Plus: Excellence Certification" for four consecutive years (2022-2025). In 2026, we also completed our first independent verification of nature-related financial disclosures and were awarded the Level 5: Excellence rating under the Nature-related Financial Disclosure Maturity Model.
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■ Credit, Market, Operation, and Liquidity Risk Management
SinoPac Holdings and its subsidiaries have established management and assessment mechanisms for four major types of risks including credit risk, market risk, operational risk, and liquidity risk to effectively identify, assess, monitor, and manage all types of risks. The Company also compiles a summary of the risk exposure of subsidiaries for management and report results to the Board of Directors. In addition to rigorous compliance with credit risk management regulations, the Company is also aware of the potential impact of ESG trends on the finance industry and loan businesses. SinoPac Holdings thus actively responds to international standards, incorporates ESG indicators into the credit analysis and pre-investment analysis and decision making to implement more comprehensive management of hidden risks in loan and investment businesses.
For details, please refer to "2025 Sustainability Report" 2.3.3 Credit, Market, Operation, and Liquidity Risk Management.
■ Emerging Risk Management
SinoPac Holdings established the "Emerging Risk Management Guidelines" and implemented management mechanisms for the identification, measurement, monitoring, reporting, and mitigation measures for emerging risks accordingly. Since 2019, the Company has referenced related reports on emerging risks published by external institutions each year to identify emerging risks. The Company also compiles feedback from subsidiaries, identifies emerging risks at the group level, and establishes mitigation plans to prepare in advance.
SinoPac Holdings compiles the emerging risks submitted by the subsidiaries and considers the possibility of occurrence and the level of impact to identify the emerging risks of the Group. Among them, two major long-term potential risks, namely "Economic downturn" and "State-based armed conflict" have more significant impact on SinoPac Holdings and the Company formulates related mitigation and management measures.
For emerging risk identification procedures, identification results, and mitigation and management measures, please refer to "Emerging Risk Management", or "2025 Sustainability Report" 2.3.5 Emerging Risk Management for more details.
■ Climate Risk Management
SinoPac Holdings continues to focus on responses to and management of climate change risks, and evaluates the climate-related risks and opportunities of the Company in its operations, measures the impact of the risks and opportunities on financial/business plans and strategies, and formulates mitigation and adaptation actions in response to climate change. The Company also enhances climate-related disclosures in accordance with four pillars of the TCFD − governance, strategy, risk management, and metrics and targets. has further enhanced climate-related disclosures by reference to IFRS S2 “Climate-related Disclosures.” The Company is committed not only to improving the energy efficiency of our own operations, but also to channeling capital toward industries and enterprises that contribute positively to the environment. In addition to climate change risks, SinoPac Holdings also focuses on long-term nature-related risks in the long run and has disclosed information in the "Climate and Nature-related Financial Disclosures Report."
Please refer to "Task Force on Climate-Related Financial Disclosures", "2025 Sustainability Report" 2.3.6 Climate Change Risk Management, or "2025 Climate and Nature-Related Financial Disclosures Report" for more details.
■ Nature-related Risk Management
SinoPac Holdings follows the Taskforce on Nature-related Financial Disclosures (TNFD) framework and the LEAP approach (Locate, Evaluate, Assess, and Prepare) to conduct nature-related physical risk analysis, nature-related dependencies and impacts evaluation, nature-related risks and opportunities identification and nature scenario analysis.
Please refer to "Nature-Related Risk and Opportunity", "2025 Sustainability Report" 2.3.7 Natural Risk Identification and Management, or "2025 Climate and Nature-Related Financial Disclosures Report" for more details.