Climate Change Risks and Opportunities Management

According to the risk map analysis in 2020, 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 In 2023, TWM has held three inter-departmental TCFD workshops, and the first TCFD report will be published to fully reveal the implementation of climate-related risks and opportunities management through the four directions of Governance, Strategy, Risk Management, Indicators and Targets.

Download: TWM’s First TCFD Report

Climate Change Governance: Board of Directors: annually review and oversee climate risk and opportunity issues facing the Company.; ESG Steering Committee: The Chairman of the Board of Directors is the convener, and five independent directors are members of the Committee. The Committee meets twice a year to oversee all aspects of ESG decision-making, including climate risk and opportunity-related strategies and objectives, and reports to the Board of Directors.; Risk Management Committee: The chairman of the Board of Directors or the designated proxy is the chairman, and the top executive of each risk management area is a member. The Committee meets semi-annually to evaluate and approve mitigation and adjustment plans in accordance with the risk control mechanism, and reports the Company's risks (including climate risks) to the ESG Steering Committee and the Board of Directors as needed.; Environmental Working Group: The Chief Technology Officer is the chairman and the top sustainability officer is the vice chairman. The Working Group meets once every six months and regularly identifies and manages climate change risks and opportunities in accordance with the Company's risk management system, and reports climate risk trends and issues to the Risk Management Committee.; ESG Working Group: The president is the President and the top executive of each business group is a member. The ESG Working Group meets four times a year to conduct research on international climate risk trends and to provide feedback to the Environmental Working Group on the latest climate risk trends.

Strategy: Cross-departmental discussion and identification of significant climate risks and opportunities that have a direct/indirect financial impact on the Company in the short, medium, and long term and input into management practices.; Transformation Scenario Analysis: Evaluate the potential financial impact and input management practices of businesses in three external transformation scenarios (including governmental net-zero path, SSP1-1.9 and SBT net-zero emissions).; Actual Scenario Analysis: Evaluate four climate models (including RCP2.6, RCP4.5, RCP6.0, and RCP8.5) with extreme rainfall under climate change as the hazard level, extreme rainfall-induced flooding, landslides, and mudslides as the vulnerability level, and the location of owned assets and supplier locations as the exposure level for the actual risk value analysis.

Risk Management

Indicators and Targets: In addition to completing the greenhouse gas inventory for the first, second and third categories, TWM has also set short-, medium- and long-term greenhouse gas reduction targets, renewable energy use targets and practices to enhance the resilience to climate change. The relevant targets and adaptation practices are as follows:
Targets

Note 1 TWM has not yet invested in green energy in its short-term plan and is continuing to evaluate options.

Taiwan Mobile identified climate risks in 2022 that had a significant impact on operations or finances are transition risks, such as cap and trade, carbon tax, and renewable energy regulations. TWM also has conducted an in-depth assessment of the potential impact of climate change on intensity, value chain stages, time horizen, and financial impact for the five major climate risks, and carried out management responses. As below table：

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Type of risk	No.	Risk level	Explanation of Risk	Location of occurrence	Time horizon	Type of impact	Financial Impact	Management practices	Management costs
Transition	1	Medium-high	Cap & Trade	Organization itself	Short to medium term	Indirect cost increase	SSP1_1.9 2030: The estimated carbon emissions are 283,000 metric tons, and the regulations require an annual total reduction of 4.2%, assuming a 4.2% reduction in 2030, that is, 271,000 metric tons should be achieved; therefore, the payment for excess emissions is NTD 3.56 million 2035: The estimated carbon emissions are 252,000 metric tons, and the regulations require an annual total reduction of 4.2%, assuming a reduction of 21% in 2035 compared to 2030, that is, 223,000 metric tons should be achieved; therefore, the payment for excess emissions is NTD 8.53 million SSP1-2.6 2030: The estimated carbon emissions of the Company are 283,000 metric tons, and the regulations require an annual total reduction of 2.5%, assuming a 2.5% reduction in 2030, that is, 276,000 metric tons should be achieved; therefore, the payment for excess emissions is NTD 2.12 million 2035: The estimated carbon emissions of the Company are 252,000 metric tons, and the regulations require an annual total reduction of 2.5%, assuming a reduction of 12.5% in 2035 compared to 2030, that is, 248,000 metric tons should be achieved; therefore, the payment for excess emissions is NTD 1.31 million SSP2-4.5 2030: The estimated carbon emissions of the Company are 283,000 metric tons, and the regulations require an annual total reduction of 1.23%, assuming a 1.23% reduction in 2030, that is, 279,000 metric tons should be achieved; therefore, the payment for excess emissions is NTD 1.04 million 2035: The estimated carbon emissions of the Company are 227,000 metric tons, and the regulations require an annual total reduction of 1.23%, assuming a reduction of 6.15% in 2035 compared to 2030, that is, 265,000 metric tons should be achieved by TWM; therefore, the payment is not required	Outsourcing of renewable energy	In response to the total emission control, TWM must try to reduce carbon emissions. If the management target for 2030 is set as 20% of the total renewable energy use, which can be converted into 61 million KWh of renewable energy use, and the unit price per KWh is NTD 6, the estimated input cost will increase by about NTD 366 million.
Transition	6	Medium	Carbon tax	Organization itself	Short to medium term	Direct cost increase	For the amount of tax levied on carbon emissions, assuming there are no basic emissions, based on the carbon tax of NTD 300/ton in 2021, and using the IPCC SSP1-1.9 scenario where the temperature rise is maintained at 1.5°C, the estimated financial impact is as follows according to the annual growth rate of carbon tax: Scenario 1: Non-nuclear home 2030: the estimated carbon emissions are 283,000 metric tons, and a carbon tax of NTD 430 million needs to be paid 2035: the estimated carbon emissions are 252,000 metric tons, and a carbon tax of NTD 523 million needs to be paid 2040: the estimated carbon emissions are 214,000 metric tons, and a carbon tax of NTD 565 million needs to be paid Scenario 2: Extended service of nuclear energy 2030: the estimated carbon emissions are 260,000 metric tons, and a carbon tax of NTD 394 million needs to be paid 2035: the estimated carbon emissions are 227,000 metric tons, and a carbon tax of NTD 472 million needs to be paid 2040: the estimated carbon emissions are 189,000 metric tons, and a carbon tax of NTD 499 million needs to be paid Scenario 3: Plan of the Energy Bureau 2030: the estimated carbon emissions are 253,000 metric tons, and a carbon tax of NTD 384 million needs to be paid 2035: the estimated carbon emissions are 211,000 metric tons, and a carbon tax of NTD 438 million needs to be paid 2040: the estimated carbon emissions are 163,000 metric tons, and a carbon tax of NTD 429 million needs to be paid	Green power directly transmitted to TWM	According to the Company's 2040 RE100 path, the estimated management costs (assuming the transfer-supply mode is adopted and the mean price of green electricity is NTD 6 per kWh) are as follows: 2030: outsourced green electricity accounts for 20% of the total electricity consumption, with an estimated investment of NTD 780 million 2035: outsourced green electricity accounts for 60% of the total electricity consumption, with an estimated investment of NTD 2.47 billion 2040: outsourced green electricity accounts for 100% of the total electricity consumption, with an estimated investment of NTD 4.37 billion
Transition	7	Medium-high	Compulsory declaration	Organization itself	Long-term	Direct cost increase	Penalty for failure to declare on time SSP1-1.9 2030: NTD 32 million 2040: NTD 72 million 2050: NTD 112 million SSP1-2.6 2030: NTD 24 million 2040: NTD 54 million 2050: NTD 84 million SSP2-4.5 2030: NTD 16 million 2040: NTD 36 million 2050: NTD 56 million	Internal and external labor costs for checking and declaration	2030: NTD 6.3 million 2040: NTD 14.2 million 2050: NTD 22 million
Transition	9	Medium-high	Product efficiency regulations and standards	Upstream & Organization itself	Short-term	Direct cost increase	SSP1-1.9 2030: NTD 3.06 billion 2040: NTD 8.86 billion 2050: NTD 14.64 billion SSP1-2.6 2030: NTD 320 million 2040: NTD 1.16 billion 2050: NTD 2.24 billion SSP2-4.5 2030: NTD 53.75 million 2040: NTD 120 million 2050: NTD 290 million	Consulting	2030: NTD 15 million 2040: NTD 16.5 million 2050: NTD 18.15 million
Transition	34	High	Renewable energy regulations	Organization itself	Short-term	Rise in energy prices Direct cost increase	Amount of expenditure on outsourcing of renewable energy due to compulsory regulations SSP1-1.9 In line with the government's 2050 net zero policy, it is expected that the use ratio of renewable energy needs to reach 100% in 2050. The total consumption of renewable energy required is about 730 million kWh, and the penalty is calculated based on the payment of electricity fees (NTD 4/kWh), which will increase the electricity cost by about NTD 3 billion. SSP1-2.6 It is expected that by 2030, a certain percentage of renewable energy will be added to the business premises with a single contract capacity >100 kW. Taking 10% as the basis for calculation, an inspection shows that about 30 premises will be affected, with a total contract capacity of 5,373 kW. A total of 537.3 kWp of renewable energy will be installed, and the penalty will be calculated based on the payment of electricity fees, that is, 537.3 kWp2,500 kWh/kWpNTD 4, which is approximately NTD 5 million. SSP2-4.5 It is expected that by 2025, a certain percentage of renewable energy will be added to the business premises with a single contract capacity >800 kW. Taking 10% as the basis for calculation, an inspection shows that a total of 2 premises will be affected: 4,990 kW for cloud IDC and 3,150 kW for optoelectronic machine room. 499 kWp and 315 kWp of renewable energy will be used respectively, and the penalty will be calculated based on the payment of electricity fees, that is, (499+315) kWp2,500 kWh/kWpNTD 4, which is approximately NTD 8 million.	Installation of renewable energy	SSP1_1.9 If RE100 is set as the management target for 2050, which can be converted into about 73 million KWh of renewable energy use, and the unit price per KWh is NTD 6, the electricity cost will increase by about NTD 4.3 billion. SSP1_2.6 If RE10 is set as the management target for 2025, which can be converted into about 122 million KWh of renewable energy use, and the unit price per KWh is NTD 6, the electricity cost will increase by about NTD 700 million. SSP2_4.5 If RE20 is set as the management target for 2030, which can be converted into about 60 million KWh of renewable energy use, and the unit price per KWh is NTD 6, the electricity cost will increase by about NTD 36 million.

Download: Physical Climate Risk Adaptation

Adaptive Practices: Base Stations: A total of 740 units of highly weatherproof Note 1 power supply systems (SMR) are used to prevent operation interruptions caused by drastic temperature changes.; Cloud Internet Data Center(IDC): Equipped with generators, uninterruptible power supply system, and n+1 redundancy system to avoid service interruption due to disaster.; Mobile Broadband Mobile Service Stations: 25 mobile broadband mobile service stations have been built to avoid the disconnection of cell towers due to disasters.; Mobile Communication Platform for Disaster Relief: Build 17 fixed mobile communication platforms with more than 72 hours of power backup for disaster prevention and relief, and optimize 10 existing mobile communication platforms to facilitate emergency mobile communication services in disaster areas.

Note 1 Acceptable ambient temperature 0~65 degree Celsius.
For More Adaptive Practices Please Refer to TWM’s First TCFD Report

Low-Carbon Products

Type & Description of product(s)	% of total revenues from "climate change" product(s) in FY 2022	Estimated total avoided emissions per year
Low carbon product(s)： TWM provides 6 low-carbon online products or services, including value- added services such as myfone online, MyBook, MyMusic, MyVideo and e-services such as high efficient Data Center, renewable energy powered services.	1.42	261937.57 metric tones
Avoided emissions for third-parties： TWM provides 9 avoiding emission online services, including M+, Direct carrier billing (DCB), MySports APP, TAMedia (e-service), Customer Service APP, E-bill, Fleet Manager, Broadband and Cloud-based AI Energy Management System.	2.57	2,239.06 metric tones