Climate Action

ARIZON deeply understands the environmental, economic, social, and health challenges posed by climate change, and recognizes that addressing climate change is crucial for sustainable business operations. Since 2023, the Company has adopted the Task Force on Climate-related Financial Disclosures (TCFD) framework issued by the Financial Stability Board to assess the impact of climate change on the Company, identify climate risks and opportunities, and mitigate and manage the impact of environmental change on the Company.

Governance

The Board of Directors has established a "Sustainability Committee" as a functional committee, chaired by the Chairman and composed of one director and three independent directors. This committee is responsible for overseeing the operation of the "Sustainability Center." The Center has several working groups, all coordinated and driven by senior executives from Yageo. The Sustainability Group leads the assessment of climate risks and opportunities and the formulation of strategies; the Risk Management Group maintains real-time horizontal communication with the Sustainability Group to ensure the Group's understanding and management of climate-related risk issues.

Under the chairman's leadership, senior management of each functional group holds working meetings from time to time to coordinate the work of business group and functional department members, and jointly promote risk assessment and internal management mechanisms for operations and climate issues.

In addition, the Executive Secretary of the Committee shall report to the Sustainable Development Committee and the Board of Directors at least once a year and accept the supervision and guidance of the Board of Directors.

Strategy

To implement a company-wide tracking and monitoring mechanism, the company uses different scenarios for the two risk types—transformation and entity risks—such as RCP 8.5, IEASTEPS, IEAAPS, and IEANZE, to assess the impact on the company's value chain and specific financial shocks.

In accordance with its risk management policies and procedures, the Company conducts risk identification, analysis, measurement, and response procedures for relevant risks and opportunities at least once a year. Starting in 2023, the Company began identifying climate-related risks and opportunities, and implemented risk management based on their probability of occurrence and impact, aiming to control risks within a tolerable range as much as possible. The Company's definition of probability of occurrence is: short-term (within three years, 2024-2026), medium-term (three to five years, 2027-2028), and long-term (more than five years, 2029-2031). To reduce the financial impact of risks and opportunities, the Company will establish risk and management mechanisms and strengthen their connection with financial information, aiming to proactively plan for corresponding contingency capabilities.

Short-, medium-, and long-term risks and opportunities

Risk Management

In response to the aforementioned short-, medium-, and long-term risks and opportunities, the Company has established an identification process and a comprehensive management procedure for risks and opportunities.

Climate Risk and Opportunity Identification Process

15-25 points: Significant risk/opportunity ;  6-14 points: Medium risk/opportunity; 1-5 points: Low risk/opportunity

Transformation risks

Entity risk

AIRZON identifies the potential impact of extreme weather events (typhoons, droughts, and heavy rainfall) on the company's plant facilities, causing damage and logistical difficulties, which could consequently affect the company's operations. Regarding the risks of typhoons and heavy rainfall, Taipei and mainland China are important production bases for Yongdao. Based on the Taiwan Climate Change Projection and Adaptation Knowledge Platform (TCCIP) analysis of the northern region, under the scenarios of the average change rate of the maximum consecutive 5-day rainfall under RCP 6.0 and RCP 8.5, the average change rate of the maximum consecutive 5-day rainfall in northern China under RCP 6.0 is projected to increase by 33% by the end of this century, from the current average of 403 mm to 536 mm; under the RCP 8.5 scenario, it is projected to increase by 36% by the end of this century, from the current average of 403 mm to 548 mm. However, neither plant area is a low-lying area, and according to the International Disaster Prevention and Mitigation Technology Center's 3D Disaster Potential Map, there is no flooding potential in either plant area.

Regarding the drought risk, based on the Taiwan Climate Change Projection and Adaptation Knowledge Platform (TCCIP) analysis of the northern region, under the most severe warming scenario of RCP 8.5 at the end of the century, although the average rate of change of the maximum consecutive days without rainfall in the northern region will increase by 12% by the end of this century, from the current average of 38 days to 42.5 days, according to the World Resources Institute's "Aqueduct Water Risk Atlas," both of our company's plants are located in low-to-medium risk areas, and our company assesses that its significance will not affect the plant's operational processes and production.

Indicators and Targets

Since 2023, our company has established a greenhouse gas inventory standard mechanism in accordance with ISO 14064-1 and the Environmental Protection Administration's Greenhouse Gas Inspection Guidelines, conducting regular annual inventory checks on greenhouse gas emissions from all our plants. In 2025, we committed to joining the Science-Based Emission Reduction Targets Initiative (SBTi), using 2024 as the base year, with targets set for a 63% reduction in total emissions from Category I and II emissions by 2035, and a 66.3% reduction in economic intensity emissions from Category III, Category I goods and services purchased.

Greenhouse gas and other gas emissions:

Unit: metric tons of CO2e

Note 1: Emissions statistics for 2023 and 2024.
Note 2: Greenhouse gas emission intensity = Total emissions (metric tons of CO2e) / million million tons of revenue; revenue is sourced from the consolidated profit and loss statement of the annual report. 
Note 3: The Category III emissions inspection was not carried out in 2023, therefore no relevant data is available for that year.
Note 4: Covers the entire Yongdao Group, including the Taipei Operations Headquarters, Taipei Plant, Yongdao in China, Yongdao in Japan, Yongdao in the United States, and Yongdao in Vietnam.
Note 5: Source: Ministry of Economic Affairs Energy Agency website（https://www.moeaea.gov.tw/）。

The Company has incorporated the progress and achievements of climate-related issues into the annual performance and variable compensation of senior managers, and disclosed relevant governance and implementation results in accordance with the TCFD framework, in order to continuously strengthen the integration of climate issues into operations management and decision-making.

TCFD Disclosure Comparison Table