Task Force on Climate Related Financial Disclosures (TCFD)

Core Element	Required Information	Action
Governance	Sustainable Development Committee is directly responsible for governance around of climate related risks and opportunities.	Our sustainable development Committee is led by the President and Chairman and comprises of 4 groups: corporate governance, sustainable environment, product service, and employee social care. The Committee regularly meets with directors in different fields to discuss and implement projects. The Board places great importance on environment protection and climate change issues, and the Chairman leads the Sustainable Development Committee and several project committees to regularly discuss and confirm the progress while reporting to the Board on an annual basis.
Strategy	The actual and potential impacts of climate related risks and opportunities on the Organization's businesses, strategy, and financial planning.	In response to climate-related risks and opportunities affecting the Company's strategy and financial planning, the Company refers to TCFD's climate-related scenario analysis and uses quantitative and qualitative to adapt to the corresponding method.
Risk Management	Processes for identifying, assessing, and managing climate related risks.	The sustainable environment group of the Sustainable Development Committee is responsible for identifying and evaluating risks. Climate type risks include transitional and physical risks, which are further divided into policy and legal, technology, market, reputation, acute, and chronic. Opportunities are divided into resource efficiency, energy source, product/service, markets, and resilience. We actively implement mitigation and adaptation, such as energy saving and carbon reduction, solar power, green production process, and GHG reduction based on the industrial trend, business scope, manufacturing process and operations. The information is then complied and reported it to the Chairman.
Metrics and Targets	The metrics and targets used to assess and manage relevant climate related risks and opportunities.	The Company has built GHG reduction goals based on international and national requirements and implemented measures.

Climate-Related Risks and Opportunities

The Sustainable Development Committee and CDP Disclosure team conducted internal discussions and questionnaires to assess the possible risks that THC may face due to climate change, including 12 transition risks, 4 physical risks, and 20 opportunities. All the teams conducted short, medium, and long-term incidence and impact scenarios on 36 issues. THC can improve its resilience against climate change by identifying, analyzing, assessing, and tackle these issues.

The assessment shows that there are climate-related risks and opportunities in 2022, and only 12 major situations are listed for analysis:

Transition risks

R01 : Increased pricing of GHG emissions
R02 : Enhanced emissions reporting obligations
R08 : Changing customer behavior
R09 : Uncertainty in market signals
R10 : Increased cost of raw materials

Physical risks

R14 : Changes in precipitation patterns and extreme variability in weather patterns

Opportunities

O18 : Use of more efficient production and distribution processes
O19 : Increase recycling Use of recycling
O21 : Reduced water usage and consumption
O22 : Use of lower-emission sources of energy
O29 : Development of new products and services through R&D and innovation
O32 : Access to new markets
O35 : Participation in renewable energy programs and adoption of energy efficiency measures

Climate-Related Risks and Opportunities

The Sustainable Development Committee conducts interviews with relevant departments and assesses potential risks and opportunities for the company's operations.

Climate Change Risk

Physical risk

Transition risk
(Policy and Legal)

Transition risk
(market)

Dimension	Factor	Financial Impact	Coping Strategies
Chronic	Changes in precipitation patterns and extreme variability in weather patterns	Discontinuation of products due to droughts or increased operating costs which reduces revenue and profit from the inflated cost of water.	Conduct water resource management and water conservation plan Promote for the cleaner production certification and water conservation certification Hold drills for typhoon/floods prevention

Dimension	Factor	Financial Impact	Coping Strategies
Policy and Legal	Increased pricing of GHG emissions Enhanced emissions-reporting obligations	INDC and renewable energy policy (renewable energy accounted for 20% by 2025). Expand the scope of carbon emissions	Actively promote energy conservation and carbon reduction measures, such as replacing obsolete equipment, building new energy conservation equipment, frequency converter, and etc. Formulate GHG inventory and reduction plan Build a solar power energy system Assess and conduct GHG emission offset projects Assess building a generator and uninterruptible power supply Determine equipment downtime Conduct equipment downtime timely to mitigate fault Continue paying attention to laws and regulations

Dimension	Factor	Financial Impact	Coping Strategies
Market	Uncertainty in market signals Increased cost of raw materials Changing customer behavior	Increased production costs due to changing input prices (e.g., energy, water) and output requirements (e.g., waste treatment) Abrupt and unexpected shifts in energy costs. Change in source origins, resulting in decreased revenues. Market, legal, policy, and environmental aspects such as government energy policy changes, international situation, and other information will affect product sales and increase operating costs.	Alternate key suppliers Carry out annual evaluations for suppliers every year Have the business units conducts client satisfaction surveys every year to follow consumer behavior. Arrange domestic and foreign exhibitions every year to keep up with the latest market trend. R&D continues to invest in new product development to ensure the company can effectively control raw materials and products.

Climate Change Opportunity

Resource Efficiency

Energy Source

Products and Services

Markets

Factor	Financial Impact	Coping Strategies
Use of more efficient production and distribution processes	Reduce operating costs through optimization of the production, sales, and transportation processes.	To reduce energy consumption and improve efficiency via vertically integrated beverage packaging and OEM strategic alliance and In house PWP coalition production model. Automated storage/retrieval system, automated guided vehicle (AGV), and automated robotic arm.
Use of recycling	Recycling and re-using reduces the cost of cleaning and transporting materials.	Increase waste recycling rates. Actively negotiate with recycling manufacturers to increase opportunities for waste recycling.
Water resource efficiency	Reduce operating costs by improving water efficiency.	Promote for the cleaner production certification and water conservation certification Increase recycling rates.

Factor	Financial Impact	Coping Strategies
Use of lower-emission sources of energy	Invest in lower-emissions energy source, such as solar power to reduce cost of carbon.	Conduct an inventory of energy consumption, identify hot spots for water reduction, energy reduction, waste recycling, and develop related improvement plans and goals. Build a solar power energy system.

Factor	Financial Impact	Coping Strategies
Development of new products and or services through R&D and innovation	Development of new products through R&D and innovation, expanding the scope of business products and increasing profits.	The Company has developed circular economy products, such as lightweight packaging, tethered plastic caps, using flexographic printing for labels, biodegradable PET bottles, and rPET label bottles to reduce the consumption of plastic raw materials and increase recycling and reusing products.

Factor	Financial Impact	Coping Strategies
Access to new markets	Increase revenues and profits	Actively participate in overseas exhibitions to acquire new clients and enhance corporate competitiveness. Build e-commerce platforms in various area to expand online sales through EDM. Set up a Hon Chuan Office in Japan; Evaluate to set up a Hon Chuan Office in the United States to provide services for Northeast Asian and American clients Cooperate with peers/different industries to expand cooperative development.