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Sustainability
Sustainability Report
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% power conserved as a result of the implementation of an energy-saving plan. The plan was made in year 2022 regarding the improvement of energy-consuming equipment.
    - Introduced the ISO 14064-1 GHG inventory standards and complete certification in year 2023.
    - Assessment to adopt green energy outsourcing or increase energy-saving facilities by year 2023.
    - Establish climate governance material principles in year 2023.
  • Mid-term Goal:
    - Increase the target of reducing carbon emission gradually.
  • Long-term Goal:
    - 10% or more carbon reduction in year 2025 compared to the 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
 
Impact Level
(High)		     ②③⑦⑧②
Impact Level
(Medium)		 ⑥ ⑤ ①④
Impact Level
(Low)		 ⑨   ①
  Chance of Occurrence
(Very Unlikely)		 Chance of Occurrence
(Likely)		 Chance of Occurrence
(Very Likely)
 
TTY 2022 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 processes to reduce the environmental impact via source controls and terminal prevention equipment reinforcement.
According to data from PTC, if nuclear power is replaced by renewable energy and fuel 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 14 million kWh power outsource of the last 2 years, an annual increase of NTD$16.55 million in power cost is expected.
Technological Risks The economic system has gradually turned to supporting low-carbon, highly efficient technology improvement and innovation, which may affect the competitiveness of the Company and likely increase procurement, production and distribution costs to meet demand and depth as required by customers. Evaluate the comprehensive impact to climate change related policies to make short- to mid-term operational plans. To continue energy-saving measures, including changing fans and motors of cooling towers for the A/C, installing a cooling tower water quality monitor, improving A/C system performance to reducing power use, gradually moving toward green transformation.
1. A total of NTD$32.19 million budget is expected on replacement of assets and equipment for year 2023.
2. To conserve power in factories include changing fans and motors of cooling towers for the A/C, implementing a cooling water quality monitor and improving A/C system, and installing LED lighting from traditional T8 lighting with a total cost of NTD$1.03 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$1.026 billion in year 2022, NTD$10.26 million in inventory costs are expected, an additional 1% each.
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, and 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 Immediate Risks Climate change may cause a typhoon, flood, draught and other extreme climate events, resulting in damage to assets, supply chain disruption and other events with an immediate financial impact. Reinforce water resource management and ensure the safety of plant equipment to maintain uninterrupted operations. In response to draught in Taiwan, TTY has completed a list of water suppliers but costs have increased. With 99,652 degrees of water consumption in year 2022, the cost of water outsourcing is calculated at NTD$80,000/day (25t water tanks for 4 rounds) to cover water shortages.
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.
Long-term Risks Rising temperatures around the world and the gradual shortage of water, electricity and fuel resources may cause discontinued 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 the 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 2022 Climate Change Related Opportunities and Countermeasures
Type of Opportunity Opportunity Explanation Countermeasures and Potential Financial Effects
Resources Use Efficiency Increase energy use efficiency to reduce mid- to long-term operational costs and achieve carbon reduction goals. The use and upgrade of equipment with less energy consumption, water, and power reduction goals, and better efficiency in year 2022 continued at an expense of NTD$1.04 million. Such measures expect to save NTD$400,000/year. The renewal of outdated machines in year 2023 is given a budget of NTD$32.19 million, contributing to a cost reduction of NTD$2.7 million/year.
Duration Improve the ability to adapt to climate change to managing climate change related risks and seizing the 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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