Climate Action
 

Response to Climate Change

In recent years, frequent disasters caused by climate change have prompted Formosa Laboratories to proactively respond to climate disasters and prevent related financial losses. the Company will adopt the climate-related financial disclosure recommendations formulated by the Task Force on Climaterelated Financial Disclosures (TCFD), which was established by the Financial Stability Board (FSB) in 2015. The Company will voluntarily disclose its response policies and preventive measures in the face of climate-related risks, appropriately disclose the financial impact caused by these risks, and identify opportunities to ensure profitability and enhance the Company's climate resilience after proper climate adaptation and disaster recovery, in order to cope with subsequent climate disasters.

▼Management of material topic "Response to climate change" at Formosa Laboratories in 2024
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Four Pillars of the TCFD Recommendations

▼Components of climate-related financial disclosures
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Financial Impact of Climate-related Risks and Opportunities

Formosa Laboratories evaluates climate risks and opportunities by analyzing their impact level and likelihood of occurrence. Specifically, impact level is categorized into high, moderate, and low, while likelihood is categorized into unlikely, somewhat likely, and highly likely. This process aims to identify and analyze moderate- and high-risk items and ultimately develop appropriate response measures to address these risks.

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▼Financial Impact of Climate-related risks and corresponding response actions
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▼Financial Impact of Climate-related opportunities and corresponding response actions
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▼ISO 14067:2018 verification statement for Sevelamer Carbonate “F.L.”
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▼Product Environmental Footprint Exemplary Manufacturer Award from the Industrial Development Administration under the Ministry of Economic Affairs
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Net-zero and Low-carbon Transition Vision

Formosa Laboratories has been conducting greenhouse gas inventories since 2021 in line with the government's 2050 net-zero transition policy and global carbon reduction trends. After collecting information on the organization's carbon emissions using the methodology specified in the latest ISO 14064-1:2018 standards in 2022, Formosa Laboratories has gradually developed its sustainable development pathway and established short-, medium-, and long-term targets to address climate risks. This enables us to continuously review energy policies and develop relevant rules and regulations.

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Four Core Elements of TCFD

Core Elements of Climate-Related Financial Disclosures
Core ElementsAction Plans
Governance
  • Formosa Laboratories convenes relevant ESG working group members from the Sustainable Development Committee to regularly discuss the potential impacts of various issues on the organization internally and externally, including identifying and assessing climate change risks and responding to climate impacts. After identifying climate-related impacts, meetings are held with senior executives to discuss climate-related risks and opportunities. Improvement recommendations and measures are proposed to mitigate climate financial risks and identify corresponding climate financial opportunities.
  • The Sustainable Development Committee reports the annual ESG performance to the Board of Directors and the Board confirms the short-term, mid-term, and long-term priorities, including climate change-related issues.
Strategies
  • The Company incorporates the potential impacts of climate change into overall operational considerations, estimates the probability of risk occurrence and the degree of impact, and formulates plans for risk response and mitigation measures. Based on business type, risk strategy, and financial planning status, the Company identifies physical and transitional risks and opportunities, and formulates plans for risk response and mitigation measures, as well as crisis management mechanisms. This includes actively promoting green energy and environmental protection policies, expanding the use of renewable energy, and developing carbon reduction innovation technologies. In so doing, the Company reduces the carbon footprint of its operations and product production and sales. To respond to the environmental impact of global climate change and greenhouse effects, we have put energy-saving and carbon reduction measures into practice, promoted energy-saving management in offices and public areas, implemented waste reduction and green procurement, and purchased products with energy-saving and environmental protection labels. So the target of energy-saving and carbon reduction has been met in compliance with government regulations.
  • Please refer to The Impact of Climate-Related Risks and Opportunities on Finance for the Company's short-term, mid-term, and longterm major risks and opportunities.
Risk Management
  • In order to identify and assess significant impacts or risks related to operations, the Sustainable Development Committee regularly assesses climate change risks to understand specific potential financial impacts as a basis for policy-making and goal-setting, as well as establishing comprehensive climate management procedures, such as identification, assessment, management, recovery, and adaptation. The monitoring is ongoing.
  • The Board of Directors supervises and makes decisions; the Sustainable Development Committee conducts risk identification and confirmation; the Risk Management Team conducts risk assessment and reporting, and guides and coordinates the work of all execution units.
Indicators and Objectives
  • To reduce the risk impact of climate change and achieve carbon reduction and energy saving goals, Formosa Laboratories has set its net zero vision and stage goals, and managed climate change-related risks and opportunities using management strategies or indicators.
    1. The ISO 14064-1 greenhouse gas inventory and 14067 carbon footprint verification standard system have been introduced and passed the third-party verification by 2023.
    2. Specific reduction targets may be set in future assessment plans to moves towards the goal of carbon neutrality.
    3. Please refer to Formosa Laboratories' Vision for Zero Pollution and Stage Goals for more information
  • We have also been promoting the energy saving and carbon reduction initiative, calling on all employees to respond together to various measures to save energy and resources, including the conservation of power and water, waste reduction, and other specific measures. For detailed management methods, please refer to the corresponding sections in Chapter 4 Environmental Protection.

 
 

Impacts of Climate-related Risks and Opportunities on Finance

Formosa Laboratories conducts risk assessment for climate risks and opportunities. The analysis is based on the severity of impact and the likelihood of occurrence, with impact severity classified into three levels: low, medium, and high, and occurrence likelihood classified into three levels: unlikely, possibly, and very likely. High and medium risk projects are identified through the analysis, and appropriate response measures are subsequently developed to enhance resilience in addressing climate change risks and opportunities.

The Matrix Diagram of Climate-related Risks and Opportunities
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Climate Risks

①    Policies and regulatory risks (related to renewable energy regulations)
②    Policies and regulatory risks (related to carbon reduction regulations)
③    Technical risks (development cost of low-carbon technology and services)
④    Reputational risks (reputation damage)
⑤    Immediate physical risks (such as extreme rainfall and other abnormal weather events)
⑥    Long-term entity risks (changes in precipitation patterns)
⑦    Long-term physical risk (average annual temperature rise)

Climate Opportunities

①    Improvement of resource use efficiency
②    Diversifying energy sources to reduce carbon emission
③    Product and service opportunities
④    Market opportunities
⑤    Increase in resilience

Climate Action

The Company reviewed the risks and analyzed the impact of climate change on our financial situation, identifying the following disclosures for the annual adjustment response: Climate-related risks and financial impacts and Climate-related opportunities and financial impacts.


 

Climate-related risks and financial impacts

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Climate-related opportunities and financial impact


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Formosa Laboratories' Vision for Net Zero and milestones for each stage

With the climate change caused by greenhouse gases, extreme weather events threaten the safety of the public's lives and properties, and even affect business operations and sustainable development. In order to achieve harmony and sustainable management goals and deepen the importance of climate change risks in the hearts of our colleagues, the Company has started GHG inventory-related operations since 2021. In 2022, it collected organizational carbon emission-related information using the methodology of the latest standard ISO 14064-1:2018.

After sufficient inventory information is available, the Company will gradually establish a sustainable development path for green management as its short-term, mid-term, and longterm goals in response to climate risks, in order to facilitate internal and external review of energy-saving and carbon reduction policies and the formulation of relevant regulations. The relevant sustainable development path and stage goals are as follows:


 
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