Sustainable Issues

AOT pays attention to global climate action-related trends and follows the government’s net-zero transformation goals. We adopted The Climate-related Financial Disclosure (TCFD) framework in 2024 to integrate climate change risks into our risk management governance. We included climate change risk in ESG material topics and aligned it with business strategy. We analyze policies, market and technology changes, and reputation and physical risks to develop adaptation and mitigation strategies. We also disclose climate-related financial information to showcase our resilience and responsibility while enhancing stakeholder communication.

The implementation of climate-related information

Frame Item Action Plan
Governance Disclose the governance of organization’s climate-related risks and opportunities:
1. Describe the Board of Director’s oversight of climate-related risks and opportunities.
2. Describe management’s role in assessing and managing climate-related risks and opportunities.
The highest responsible unit for the Company’s climate-related risk oversight and governance is the Board of Directors, which approves risk management policies and related regulations. The Audit Committee is responsible for supervising and ensuring the implementation of risk management and reporting climate risk management results to the Board of Directors.
The risk management team is composed of the heads of each responsible unit and is responsible for the planning of climate risk identification, measurement and control. The Corporate Governance Officer plans, leads and supervises the risk team’s climate risk identification, measurement, control and monitoring, and reports to the Audit Committee.
Climate risk management is discussed and evaluated by the risk management team, and climate change-related resolutions are reported to senior management by the Corporate Governance Director on implementation performance and necessary improvement suggestions. In the fourth quarter of each year, the Company reports the implementation results of the current year and the work plan for the next year to the Audit Committee and the Board of Directors, and makes revisions based on the opinions of the Audit Committee and the Board of Directors to include issues related to climate change risks and their management objectives.
Risk Factor Promoting items Status of implementation
Strategy Disclose actual and potential climate-related impacts on an organization’s business, strategy and financial planning
1. Describe the short-, medium- and long-term climate-related risks and opportunities identified by the organization.
2. Describe the impact of climate-related risks and opportunities on the organization’s business, strategy, and financial planning.
3. Describe the resilience of the organization’s strategy, taking into account different climate-related scenarios (including 2˚C or more severe scenarios).
1. In response to the impact of climate-related risks and opportunities on the Company’s strategies and planning, the Company refers to the TCFD’s climate-related scenario analysis and uses quantitative and qualitative analysis to take corresponding measures. The major climate risks faced by the Company are divided into physical risks and transition risks. Physical risks include rising electricity prices and raw material costs, power shortage risks, changes in rainfall (water) patterns and extreme changes in climate patterns. Transformation risks mainly come from the requirements of various countries’ laws, customers and investors for greenhouse gas reduction and product energy saving and carbon reduction standards.
2. Short-term risks and opportunities: Changes in rainfall (water) patterns and extreme changes in climate patterns, rising raw material costs, and increased costs for carbon inventory and carbon emissions disclosure. However, if carbon emissions disclosure is complete and responded to in advance, it can increase customer trust. Mid-term risks and opportunities: risks of power shortage and rising electricity prices, compliance requirements for carbon emissions disclosure, increased costs for carbon emissions calculation, etc. However, developing low-carbon products can improve product competitiveness. Long-term risks and opportunities: Carbon emission costs such as carbon taxes will increase cost, and the value chain including low-carbon supply chain, low-carbon R&D, production, transportation and distribution must be adjusted accordingly. However, if it can be executed more efficiently, the company’s competitiveness can be increased.
3. The Company refers to the scenarios of SSP1 2.6 and SSP5 8.5, and the risk management team discusses the definition of short, medium and long term intervals, setting “1-3 years” as the short term, “3-5 years” as the medium term, and “6-10 years” as the long term which are used to assess climate risk and opportunity. Climate risk types include transition risks and physical risks, which are further divided into policies and regulations, technology, market, reputation, and immediate and long-term. Opportunities are divided into five categories: resource efficiency, energy sources, products and services, markets, and organizational resilience.
The physical risk is simulated based on the SSP5 8.5 scenario, which is a scenario of high greenhouse gas emissions. The greater the possibility of physical risk, the higher the risk.
Transition risk is simulated using the SSP1 2.6 scenario. The closer the temperature is to 2.0°C, the closer it is to net zero emissions and in line with current trends, which will cause regulatory risks, such as the amendment of the Greenhouse Gas Reduction and Management Act to the Climate Change Act. The regulatory risks of enterprises will increase.
Regarding the impact of physical risks on finance, the company suffered losses due to the suspension of production lines caused by extreme weather and wind disasters, as well as water restrictions caused by extreme weather droughts, resulting in increased operating costs due to the company’s water storage and transportation. After scenario simulation, the above-mentioned physical risk losses have limited impact on the company, and are estimated to be no more than 0.5% of revenue each year.
In terms of transition risks, since the company’s current Scope 1 and Scope 2 greenhouse gas emissions combined do not exceed 10,000 tons, it will not meet the carbon tax threshold in the short term. In addition, the 2100KW contract capacity of electricity does not meet the contract capacity standard of the Renewable Energy Development Regulations. Therefore, the transformation risk has limited impact on the company’s finances in the short term. However, the company will continue to pay attention to regulatory changes to comply with regulatory requirements.
Risk Factor Promoting items Status of implementation
Risk Management Uncover how organizations identify, assess and manage climate-related risks
1. Describe the organization’s process for identifying and assessing climate-related risks.
2. Describe the organization’s processes for managing climate-related risks.
3. Describe how the process of identifying, assessing and managing climate-related risks is integrated into the organization’s overall risk management system.
• Climate risk identification
The Company’s risk management team conducts climate risk identification based on historical disasters, policies and regulations, market trends, climate risk factors, and stakeholders’ concerns. The climate risk assessment boundary is mainly based on Taiwanese companies that accounted for more than 95% of revenue in 2023. Based on the information provided by each unit, the possible changes in the company’s operations and physical risks and opportunities caused by climate change factors are discussed.
• Climate risk assessment
The risk management team discusses the identified climate risk types and items in terms of probability of occurrence, timing and impact on operations, and ranks them according to their severity and draws a risk matrix.
• Climate risk control
After measuring and summarizing the risks, the risk management team will consider factors such as climate risk appetite, cost-effectiveness of risk response, possibility and impact reduction, and take corresponding risk management measures to control the risks within a reasonable range.
• Climate risk management and supervision
The Corporate Governance Officer plans, leads and supervises the risk management team in identifying, measuring, controlling and monitoring climate risks, and regularly reports to the Audit Committee and the Board of Directors on climate risk management-related information, implementation status, and follow-up improvement items, response measures and strategic goals.
• Risk reporting and disclosure
In addition to disclosing relevant information in accordance with the regulations of the competent authorities, the risk management team shall also disclose information related to enterprise risk management in the annual report and the company website for reference by external stakeholders.
• Climate Risk Management and Promotion Unit
The Company’s Audit Committee is responsible for overseeing climate risk management. The Risk Management Team implements the management process of identifying, analyzing, evaluating and controlling the Group’s operational risks in accordance with the “Risk Management Policies and Procedures”. Climate risks are integrated into the risk management framework, and risk identification and assessment are carried out according to procedures. After the response policies and strategies are formulated, they are implemented by the responsible units and the implementation results are reported to the board of directors.
Risk Factor Promoting items Status of implementation
Indicators and targets For material information, disclose the indicators and targets used to assess and manage climate-related issues
1. Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management processes.
2. Disclose Scope 1, Scope 2 and Scope 3 (where applicable) GHG emissions and associated risks.
3. Describe the objectives used by the organization to manage climate-related risks and opportunities, and its performance against those objectives.
1. Electricity saving: Reduce electricity intensity per unit of output by 2% compared with the previous year.
2. Reduction of greenhouse gas emissions: The greenhouse gas emission intensity per unit of output is reduced by 2% compared with the previous year.
3. Water saving: Reduce water intensity per unit of output by 1% compared to the previous year.
4. Waste reduction target: Reduce waste intensity per unit output by 1% compared to the previous year.