2023 was a challenging year. The global power struggle between the United States and China, wars between Russia and Ukraine and between Israel and Hamas, and North Korea's nuclear threat caused economic turmoil. And while central banks’ monetary tightening helped curb inflation, rapid rate hikes were a challenge for businesses and the global economy. Meanwhile, climate change is a growing threat to economic development and humanity, leading to severe droughts, flooding, and the hottest summer on record in 2023. Extreme weather has become a regular part of our lives and we must accelerate actions to mitigate and adapt to climate change. Nobody is exempt from this responsibility. SinoPac Holdings is committed to using its financial resources to work with stakeholders to create a better life together.

The Company included "Mitigate and Adapt to Climate Change" as one of its three major sustainability commitments and included "Pave the Way for Net Zero Emissions" in the 5-year work plan in 2021. In accordance with that plan, the Board of Directors

• approved the net zero target in March 2022 and pledged to attain net zero in our operations by 2030 and in all of our asset portfolios by 2050.
• established an inter-subsidiary and inter-departmental net-zero task force to manage and facilitate net-zero related work plans. We formed functional groups, led by senior executives or the persons in charge of corresponding functions in SinoPac Holdings and its subsidiaries, tasked with formulating 5-year work plans and regular reviews. Through their efforts we set our Science-based target (SBT) and received SBTi validation, and
• formulated a plan to gradually divest from thermal coal and unconventional oil and gas industries. We committed to ending financing for new thermal coal and unconventional oil and gas projects and determined not to renew the existing projects starting from July 1, 2022. The scope of the decarbonization policy was expanded on July 1, 2023, to include investment and financing of thermal coal mining or thermal coal-fired power generation as well as unconventional oil and gas. We already phased out investment and financing of projects and financing of overseas companies in unconventional oil and gas, and we expect to phase out investment and financing of thermal coal projects and financing of overseas companies in thermal coal mining or thermal coal-fired power generation by 2030.

Our actions to date have been considerable, but we realize that sustained action is needed for net zero to become a reality. We will leverage our unique position to lead Taiwan toward net zero through sustainable finance.

Internally, we have been implementing green and carbon reduction measures across our subsidiaries and have already achieved 100% coverage of Scope 1 and Scope 2 GHG emissions inventories. After voluntarily introducing green energy into our operations in 2022, we sourced 10.12% of our internal energy needs from renewable sources in 2023. We have also implemented internal carbon pricing to enhance employees' carbon reduction awareness and change their behaviors to reduce carbon emissions in business operations.

Externally, in addition to phasing out our exposure to coal, we are promoting green operations and providing essential financial support for the energy and industry transformation. We have assisted corporate clients in replacing energy-consuming equipment and have provided intensive financial support for the green energy industry for many years. We are a leader in financing solar PV energy projects and are the only financial institution to receive the Top Solar System Award from the Ministry of Economic Affairs for eight consecutive years. We have expanded our financing business to energy storage, geothermal, and small hydro power in recent years and have developed an innovative green electricity trading trust business. We now play an important role in promoting the free trading of green electricity in Taiwan. Our underwriting business in the green energy and environmental protection industry has been successful: we rank first among our peers in both the number and value of projects. SinoPac Holdings' subsidiaries work together to create a green financial ecosystem, hoping to collaborate with companies to achieve low-carbon and net-zero transformation.

In addition to "Mitigate and Adapt to Climate Change," SinoPac Holdings is committed to "Reducing Inequality" and "Promoting Inclusive Growth" and has achieved significant results. Our commitment to diversity extends to our 7-member Board of Directors, which includes three women, or 42.8%. To help care for the financially disadvantaged and enhance the accessibility of financial services, we provide foreign migrant workers with credit loans and special credit cards to mitigate their difficulties in obtaining financial support and making payments through legal channels. We also continue to strengthen our digital financial innovations, such as DAWHO X DAWHOTOU, to connect financial services to people's lives and make them readily available everywhere. We follow and nurture employees' career development and promote employee health care measures to create a happy, stable environment from which employees can reach their potential and grow with the Company.

I thank the Board of Directors for providing the resources and support necessary for sustainable development. The management team and staff also deserve recognition for turning those resources into tangible results, which have been recognized in several domestic and international rankings and numerous awards, including

• Top 5% in the S&P Sustainability Yearbook for three consecutive years,
• continuous inclusion in the DJSI World Index and Emerging Markets Index,
• a Class AA rating in the MSCI ESG Ratings Evaluation,
• the highest possible rating of C+ for Commercial Banks & Capital Markets in ISS ESG,
• four consecutive Platinum Awards from The Asset magazine, and
• Excellence in CSR Awards - Large Enterprise Group TOP 100 in Taiwan from CommonWealth Magazine.

SinoPac celebrated its 75th anniversary in 2023, a major milestone for the Company. Over the years, we participated in Taiwan's miraculous economic growth and industrial development. With the firm support of our shareholders, customers, employees, and other stakeholders, we created a strong foundation that will sustain our growth and increase our overseas footprint as we navigate the challenges and seize the opportunities in an increasingly complex business environment where sustainability issues permeate. With the assistance of emergent technologies, we will strengthen the sustainability of our financial products and services and help create a better future for Taiwan, the Company, and its stakeholders.