TCFD
To corresponding with global warming, extreme climate, environmental protection and energy saving initiatives, and to increase awareness of safety, health and conservation, TTY has identified risks and opportunities brought by climate change and has planned physical response strategies, including water resource management and development, disaster response and adaptation, and city and value chain cooperation reinforcement.
The possible major impacts TTY will face in the future include energy, environment, safety and health issues and external restrictions due to regulations, while low carbon energy, power and carbon footprint issues will constitute important items requiring extreme attention of the company. To respond to these important impacts, in addition to organizational adjustment and group corresponding strategies, TTY will also reinforce strategic cooperation with domestic and foreign peers in the same industry, the green energy industry, suppliers, and academic and research circles. It is expected to reduce operational risk and create more favorable operation conditions.
In addition to cooperating with national policies and the GHG reduction plan, TTY will further establish an energy-saving and carbon reduction team, plan for the promotion of energy savings and carbon reduction, evaluate low-carbon, high-efficacy actions and replace low-efficiency equipment to reduce pollution generated by operational processes.
TCFD Core Elements
Governance
  • The Risk Management Center is the responsible unit for climate change management, and the CEO is the convener of the Risk Management Center responsible for decisions, evaluation and monitoring climate change related matters.
  • The center reports the progress of the climate change response plan to the Sustainable Development Committee and the Board of Directors in accordance with the climate governance material principles established by the Risk Management Center annually.
  • In addition, it manages climate change related training to enhance climate change awareness at governance level.
Strategy
  • TTY is committed to fulfilling low carbon green processes and promoting the green supply chain. It is expected to lead the environmental transformation in the biotechnological pharmaceutical industry and achieve GHG gas reduction goals.
Risk Management
  • The Risk Management Center convenes sessions to identify risks and opportunities related to climate change, and establishes management plans for major risks and opportunities to trace progress and results and achieve environmental goals.
Metrics and Targets
  • Short-term Goal:
    - 2% of power conserved as a result of the implementation of an energy-saving plan. The plan was made in 2023 and is focused on improving energy consuming equipment.
    - Introduced ISO 14064-1 GHG inventory standards and complete certification in 2024.
    - Continue to carry out risk management and response measures for potential risks due to climate change, and implement risk identification and assessment operations in 2024.
  • Mid-term Goal:
    - Gradually increase carbon emission reduction targets.
  • Long-term Goal:
    - 8% or more carbon reduction by 2030 compared to base year 2022.
Matrix and List of Climate-related Risk and Opportunities
Climate Risks Items ①Renewable energy and carbon reduction regulations and requirements
②Cost of the low-carbon transformation
③Rise of operating cost
④Climate abnormalities (typhoon)
⑤Climate abnormalities (flood)
⑥Climate abnormalities (rise of sea level)
⑦Climate abnormalities (rise of average yearly temperature)
⑧Cost to build corporate resilience
⑨Cost to develop low-carbon technology and services
Climate Opportunities Items ①Better energy efficiency
②Better energy efficiency
 
 
High     ②③⑦⑧
Medium ①④
Low  
Impact Level/
Chance of Occurence
Very Unlikely
(Low)
Likely
(Medium)
Very Likely
(High)
 
TTY 2023 Climate Change Related Risks Identification and Countermeasures
  Risk Category Risk Impact Countermeasure and Potential Financial Effects
Transformation Risk Policies and Laws The Greenhouse Management Act is about to be stricter. If GHG emission control is launched in the future, carbon prices will increase the operational costs of the Company. To improve energy efficiency, TTY will continuously implement its energy-saving and carbon-reduction plan and install energy-saving facilities. TTY will also continually improve and reinforce processes to reduce the environmental impact via source controls and terminal prevention equipment.
According to data from PTC, if nuclear power is replaced by renewable energy and coal is replaced by gas in the future, power generation costs per degree will increase by 45.45% in year 2025. Taking the average power price of NTD$2.6 per degree in year 2018, power generation costs per degree will increase by NTD$1.182 in year 2025.
Based on the 15 million kWh power outsource over the past 2 years, an annual increase of NTD$17.73 million in power cost is expected.
Technological Risks The economic system is gradually turned to supporting low-carbon, highly-efficiency technology improvement and innovation, which may affect the competitiveness of the Company and likely increase procurement, production and distribution costs to meet the demand and depth required by customers. Evaluate the comprehensive impact to climate change related policies to make short- to mid-term operational plans with the objective to reduce carbon emission during the production process and promote green transformation.
1. The energy-saving measures implemented in 2023 include changing fans and motors of cooling towers for the A/C system, installing a cooling tower water quality monitor system, improving A/C system performance, replacing vacuum cleaners and pipes to reduce power
consumption, and replacing traditional T8 lighting with LED lighting. The total expenditure of the above measures was around NTD$8.98 million in 2023.
2. Continue to implement various energy-saving measures, including renewing the cooling system for the A/C, implementing a cooling water quality monitor system,
and replacing traditional T8 lighting with LED lighting. The estimated expenditure of above measures is around NTD$12.79 million.
Market Risks To correspond with climate change risk and carbon emission control requirements, new business models have gradually been created and enterprises are required to create carbon assets management capabilities to adapt to this trend. The inventory costs of TTY increased to avoid the risks of supply chain disruption due to unstable supply of raw materials. To enhance the ability to assume climate change risk, TTY has created new revenue opportunities and market expansion through the establishment of environmental protection related mechanisms and carbon emission control measures. Meanwhile, inventory costs will increase along with the increase of safe inventory levels. With inventory of about NTD$1.062 billion in 2023, NTD$10.62 million in inventory costs are expected, an additional 1%.
Reputation Risks Climate change might affect the image that customers and social groups have in terms of how committed the Company is to the low-carbon transformation. If the Company produces high carbon emissions or high levels of pollution, it may not win tenders, lose orders, experience a decrease in revenue or even suffer a reputational damage. To develop more environmentally friendly products and services, TTY is not only continuously improves sewage and waste recycling rates, buta manageing environmental sustainability activities to build a green enterprise culture from the inside out, and evaluating its investment in green energy and low carbon logistic development to reduce the carbon footprint of Company products, and enhance its industrial competitiveness in line with market demand.
Physical Risk Accute Risks Climate change may cause a typhoon, flood, draught, or other extreme climate events, resulting in damage to assets, supply chain disruption, and other events with an accute financial impact. Reinforce water resource management and ensure the safety of plant equipment to maintain uninterrupted operations. In response to draughts in Taiwan, TTY has a list of water suppliers but costs have increased. With 116,987 degrees of water consumption in 2023, the cost of water outsourcing calculated at the Lioudu Factory is NTD$160,000/day (25t water tanks for 8 rounds) to cover water shortages. The cost of water outsourcing
calculated at the Chungli Factory is NTD$80,000/day (25t water tanks for 4 rounds) to cover water shortages.
Please refer to Chapter 5 Water Resources Management of 2023 Sustainability Report for more information.
Revenue will also be affected if materials and finished products cannot be delivered on time due to a typhoon and floods. To mitigate the risk, warehouse leases in different locations will be evaluated and rent will be increased by about NTD$20 million.
Chronic Risks Rising temperatures around the world and the gradual shortage of water, electricity and fuel resources may disrupt factory operations, resulting in rising operational costs or penalties due to delivery delays. Evaluate the use of regional energy and resources consumption and arrange off-peak production as needed. Prepare a BCP to actively find new suppliers and create a list of emergency power generators and water suppliers to ensure stable materials and energy resources supplies, and enhance the ability of TTY to respond and adapt to disasters accordingly.
TTY 2023 Climate Change Related Opportunities and Countermeasures
Type of Opportunity Opportunity Explanation Countermeasures and Potential Financial Effects
Resources Use Efficiency Increase energy efficiency to reduce mid- to long-term operational costs and achieve carbon reduction goals. The use and upgrade of equipment with lower energy consumption, water, and power reduction goals, aimed at better efficiency, continued in 2023 at an expense of NTD$8.98 million. Such measures are expected to save NTD$960,000/year. The renewal of outdated machines in 2024 is allocated a budget of NTD$12.79 million, contributing to a cost reduction of NTD$1.41 million/year.
Resilience Improve the ability to adapt to climate change to managing climate change related risks and seizing opportunities. The Risk Management Center convenes all sessions to identify climate change related risks and opportunities, and plans management strategies. The Finance Division establishes climate governance material principles to trace progress and effects, and to reinforce the risk response ability of the Company.

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