Task Force on Climate Related Financial Disclosures (TCFD)

Core Element	Required Information	Action
Governance	The Sustainability Development Committee is the primary responsible unit, tasked with governing climate-related risks and opportunities.	The Chairman and General Manager serve as the Chairman and Vice Chairman of the Sustainability Development Committee, which is divided into four main functional groups: Corporate Governance, Sustainable Environment, Product Services, and Employee Social Care. They regularly meet with project leaders to discuss and execute various initiatives. The Chairman leads the Sustainability Committee and chairs regular meetings of the project promotion committee to review and confirm the progress of goals. Annual reports are submitted to the Board of Directors.
Strategy	The impact of climate-related risks and opportunities on the organization.	In response to the impact of climate-related risks and opportunities on our company's strategy and financial planning, we utilize climate-related scenario analysis based on TCFD guidelines. This includes both quantitative and qualitative assessments to assess potential climate-related impacts. We are committed to ongoing efforts in mitigation and adaptation actions, alongside internal knowledge education, aiming to internalize these practices into our corporate culture.
Risk Management	Identification, assessment, and management of climate-related risks.	Identifying and assessing climate-related risks and opportunities affecting our company's operations involves two main types of climate risks: transition risks and physical risks. These are further categorized into policy and regulatory, technological, market, and reputational risks, each with considerations for immediacy and long-term implications. Opportunities are categorized into five areas: resource efficiency, energy sources, products and services, markets, and organizational resilience. Drawing insights from TCFD reports relevant to the manufacturing industry, we tailor our approach based on industry trends, business scope, production processes, and operational conditions. Our proactive efforts include initiatives such as energy efficiency, carbon reduction, solar energy generation, and environmentally friendly manufacturing processes.
Guidance and objectives	Assessment and management of indicators and goals related to climate-related risks and opportunities.	Following international and government-set greenhouse gas reduction targets Short-term: Driving ISO 14064-1 (greenhouse gas inventory), ISO 14067 (carbon footprint management), and TCFD Enhancing product carbon reduction designs (such as lightweighting, rPET, rHDPE, bioplastics, flexographic printing), and developing them into core low-carbon products. Increasing revenue share from rPET bottles/preforms, rPET printed labels, and rLDPE shrink films to 3%. Establishing a 1,500 kWp self-use solar power generation system. Continuing to reduce electricity consumption by 1% annually. Mid-term: Initiate green energy procurement in 2025 and aim to use 10% renewable energy by 2030. Long-term: Achieve net-zero carbon emissions by 2050.

Climate-Related Risks and Opportunities

The Sustainability Committee and Sustainability Department conducted multiple internal discussions and surveys to assess climate change risks and opportunities. They identified a total of 29 issues, including 11 transition risks, 4 physical risks, and 14 opportunities. These were evaluated for their likelihood and impact in the short, medium, and long term. Through the identification of risk sources, risk analysis, risk assessment, and risk mitigation strategies, the company aims to enhance resilience to climate change.

Below are the climate change risk and opportunity assessment results for the year 2023:

Transition risks

R01 : Increase greenhouse gas emission pricing
R02 : Water consumption fees
R03 : Enhance emission reporting obligations
R04 : Requirements and regulations for existing products and services
R05 : Facing litigation risks
R06 : Investing in low-carbon products and developing new technologies
R07 : Changes in customer behavior
R08 : Market information uncertainty
R09 : Rising raw material costs
R10 : Shift in consumer preferences - Industry stigmatization
R11 : Increasing concerns and negative feedback from stakeholders

Physical risks

R12 : Increased severity of extreme weather events such as typhoons and floods
R13 : Changes in rainfall (water) patterns and extreme variations in climate models
R14 : Rising average temperatures
R15 : Rising sea levels

Opportunities

O16 : Process innovation and technological development
O17 : Recycling and reuse
O18 : Water conservation
O19 : Using low-carbon energy
O20 : Reducing carbon emissions
O21 : Implementing incentive policies
O22 : Utilizing new technologies and energy-efficient processes
O23 : Expanding low-carbon products and services
O24 : Research and innovation in new products and services
O25 : Diversification of business activities
O26 : Shift in consumer preferences
O27 : Entering emerging markets
O28 : Participating in government energy-saving projects
O29 : Developing energy-saving new technologies

Risks and opportunities of climate change

The Sustainability Committee and relevant departments conduct interviews and assess potential risks and opportunities for company operations related to sustainable development.

Climate Change Risk

Physical risk

Transition risk

Aspects	Factor	Financial Impact	Response Strategies
Long-term nature	Changes in rainfall (water) patterns and extreme climate variations	Drought leading to production halts or increased water costs, resulting in higher operating expenses, reduced revenue, and decreased profitability.	Implement water resource management and plan water conservation programs. Promote factory clean production certification and water efficiency certification.
Immediate nature	Increased severity of extreme weather events such as typhoons and floods	Increased frequency of extreme rainfall leading to factory flooding, impacting production and reducing business revenue.	Conduct typhoon/flood disaster prevention drills. Develop emergency response plans, evacuation plans, and improve communication systems. Assess appropriate risk insurance to reduce potential financial losses from extreme weather events.

Aspects	Factors	Financial Impact	Response Strategies
Policy and regulations	Carbon levy Reduction obligations for major carbon emitters Technical requirements and regulations for existing products and services Water consumption fees Electricity supply reliability	Increased compliance costs, operational expenses. Higher energy and water resource prices, increasing operational costs.	Promote upgrading to energy-efficient and carbon-reducing equipment. Establish greenhouse gas inventory and reduction plans. Build solar power generation systems. Evaluate the addition of generators and uninterruptible power systems. Organize annual supplier meetings to enhance ESG communication opportunities. Implement ISO 46001 Water Efficiency Management System and obtain certification. Continuously monitor regulatory developments.
Market	Market information Rising raw material costs Trends change	International fluctuation in raw material prices, increased waste disposal costs. Changes in income portfolio and sources. Customer compliance with international policy changes affecting product sales and increasing operational costs.	Develop secondary suppliers. Conduct annual supplier evaluations. Conduct customer satisfaction surveys to understand customer dynamics. Participate in domestic and international exhibitions annually to stay updated on global market trends. Continuously invest in research and development for new product development to effectively manage raw material and finished product quality.
Reputation	Consumer preferences Industry stigmatization	Growing environmental awareness has led to a decline in consumer willingness to purchase disposable plastic products, impacting revenue.	Implement the 3R principles of Reduce, Reuse, and Recycle in product design to reduce plastic usage at the source. Enhance development of technology applications with rPET resin pellets and promote the use of rPET packaging materials.

Climate Change Opportunity

Resource Efficiency

Resilience

Products and Services

Markets

Factors	Financial Impact	Response Strategies
Process innovation and technological development	Optimizing production processes, sales, and logistics to reduce waste.	The integration of automated warehouse systems with ERP systems complements each other, providing real-time inventory information and production status to users across production, sales, and logistics sectors promptly.
Recycling and reuse	Recycling and reusing to reduce waste disposal costs.	Increase waste recycling rate. Proactively engage with recycling and reprocessing manufacturers to enhance opportunities for waste regeneration.
Reducing water consumption	By improving water efficiency to reduce operational costs.	Promote factory clean production certification and water conservation certification. Increase recycling and reuse rates.

Factors	Financial Impact	Response Strategies
Participation in renewable energy projects and adoption of energy-saving measures	Continuously invest in energy-efficient and renewable energy equipment to enhance the company's sustainability and resilience, thereby reducing the impact of climate and regulatory changes on the company.	Promote energy-saving and carbon reduction measures to reduce environmental impact of production. Implement self-use solar power generation systems to decrease carbon emissions.

Factors	Financial Impact	Response Strategies
The research and innovation of new products and services	Diversified development and innovation of new products, expanding the business product range, and increasing profitability.	Develop lightweight packaging products, eco-friendly snap-on caps, flexographic printing labels, bio-based PET bottles, rPET label bottles, r-HDPE, and bio-based BIO-PE, BIO-PVC, and other circular economy products to reduce plastic raw material consumption.
Diversification of business activities	Establishing an In-House factory connection production model and beverage filling outsourcing services to increase revenue and profitability.	Expand the In-House factory-in-factory connection model: Enhance product consistency and production flexibility to effectively meet customer demands. Emphasize close collaboration with customers to provide more customized solutions. Assist customers in achieving more flexible production schedules and faster product adjustments.

Factors	Financial Impact	Response Strategies
Entering emerging markets	Develop sustainable low-carbon packaging, household packaging, and HPP juice filling services to increase revenue and profitability.	Actively participate in large overseas exhibitions to expand opportunities for customer cooperation and enhance corporate competitiveness. Establish electronic commerce platforms in various regions to expand online sales through E-DM. Increase the presence of offices in Japan and evaluate the establishment of an office in the United States to serve clients in Northeast Asia and the United States. Collaborate with industry peers and cross-industry alliances to broaden cooperative development opportunities.