Climate Change Risks and Opportunities Management

According to the risk map analysis in 2021, climate change risks are part of the Company's material risks. Given their potential material financial impact on business operations, the Company took inventory of and disclosed climate change risks and opportunities according to the TCFD framework, enabling related stakeholders to grasp climate change risks and opportunities and their financial impact more systematically.

*Note"Task Force on Climate-related Financial Disclosures (TCFD)" was officially released in June 2017 by the Financial Stability Board (FSB).
Climate Change Governance
The identification and management of climate change risks and opportunities are handled by the Environmental Management Committee, and the climate risk issue and environmental risk issue are reported to the Risk Management Committee on a regular basis in accordance with the Company's risk management system. Related mitigation and adaptation projects are assessed and approved by the Risk Management Committee.
In addition, the Risk Management Committee reports the Company's risks (including climate risks) to the Board of Directors on a regular basis to allow the Board of Directors to understand and monitor the risks faced by the Company.
Climate Change Risk Management
In 2021, a total of 12 major climate risks were re-examined, four of which belonged to high-risk impacts on operations. The four were: increase in frequency and severity of typhoons/hurricanes, increased in the cost of greenhouse gas emissions, increased sustainability requirements and regulations , and increase in cost to transition to lower carbon emissions technology.

Climate Change Strategy
We evaluate the impact of 12 major climate risk factors on TWM's strategy, operations and financial planning, and a description of relevant response measures. Also, a more in-depth climate scenario analysis was conducted for four potential high climate risks to understand the impact of climate risks on TWM under different scenarios.
TWM selects 3 major risks as risk quantification targets to draw a climate risk path map, as explained below. The impact on TWM is evaluated based on the hypothesis of climate change ( 2℃ Scenario) with the total loss due to typhoons in 2019-2030 estimated to reach up to NT$58 million, while investment in low-carbon technology transition is estimated to be NT$2.05 billion for the same period.
Moreover, TWM is evaluated two different scenarios, when facing the increasing demand and regulations related to sustainability. In NDC Scenario, we will increase the investment not only by purchasing green energy and building power generators, but also the cost of carbon fee. Estimated to require total investment of NT$14.997 billion from 2022 to 2030. In Well-below 2℃ Scenario, we will increase the investment not only by purchasing green energy and building power generators, but also the cost by other carbon reductions. Estimated to require total investment of NT$12.646 billion for the same period.
Climate Risks Climate Change Scenarios Financial Impact Factors Financial Impact
Physical Risk: Increase in frequency and severity of typhoons/hurricanes 2℃ Scenario
  1. Strong winds cause loss of equipment and assets
  2. Flooding leads to loss of equipment and assets
  3. Interruption in operations leads to customer-related compensation costs
  4. Power shortage leads to interruption of operations or increase in operating costs
Total losses due to typhoons from 2019 to 2030 are estimated at up to NT$58 million
Transition Risk: Increase in cost to transition to lower carbon emissions technology 2℃ Scenario The cost required for "energy efficiency improvement” Expected to require total estimated investment of NT$2.05 billion from 2019 to 2030
Transition Risk: Increased sustainability requirements and regulations NDC Scenario
  1. Cost of purchasing green energy
  2. Cost of building power generators
  3. Carbon fee
Estimated to require total investment of NT$14.997 billion from 2022 to 2030
Well-below 2℃ Scenario
  1. Cost of purchasing green energy
  2. Cost of building power generators 3. Input costs caused by other carbon reductions
Estimated to require total investment of NT$12.646 billion from 2022 to 2030
Climate change indicators/goals
TWM manage climate change-related risks and opportunities with five core strategies. In addition to completing Scope 1, 2 and 3 greenhouse gas inventories, and we have set short-, medium- and long-term reduction targets, renewable energy use targets, and improving climate change resilience targets. The relevant goals and adaptation practices are as follows:

Goals

  • Green energy for self-use/green energy procurement/green energy investment (Note1): For details, please refer to the Company’s renewable energy 2021 performance and 2030 targets.
  • Smart energy conservation in equipment rooms and base stations: For details, please refer to the Company's 2021 energy intensity performance and 2030 target. The 2021 energy-saving performance of telecom equipment room & base station.
  • Strengthened financial impact disclosure: One quantified item in 2021; two quantified items in 2019.
Note 1TWM is not planning any green energy investment in the short term, and will continuously conduct evaluation.
For more information, please refer to 2021 ESG Report, CH2.5.3.
Adaptation practices:
  • Base station: A total of 1,366 SMR units with high weatherability (Note 1) are used to prevent the operation interruption caused by drastic temperature change.
  • IDC: Equipped with generator, uninterruptible power supply system and n+1 backup system to avoid service interruption caused by disasters.
  • Mobile base stations: A total of 25 mobile base stations for mobile broadband have been built to prevent the base stations from being disconnected due to disasters.
  • Disaster Relief Mobile Communications Platforms: Set up five fixed mobile communication platforms with more than 72 hours of power backup for disaster prevention and relief operations, and optimize seven existing mobile communication platforms to facilitate emergency communication services in disaster areas.
Note 1Ambient temperature of 0~65 degrees is acceptable
For more information about “TCFD Disclosure” and “Physical Climate Risk Adaptation”, please refer to attachments.