Managing Climate Risks

Engaging climate-related risks and opportunities.

To strengthen our climate resilience sustainably, we identify and respond to climate-related risks as early as possible. Eclat actively measures the risks to lessen the impact on operations and seize opportunities.

We’re identifying risks and opportunities of climate change.

Extreme weather is identified as one of the most significant global risks in the World Economic Forum’s annual Global Risk Report. The following are Eclat’s main strategic points on climate change:

Early identification and response to climate-related risks.
Strengthen climate resilience adjustments.
Minimize operational impacts caused by disasters.
Timely seize potential transformation opportunities arising from extreme weather conditions.

Our environmental sustainability development.

We take climate change seriously at Eclat. That’s why we have a strategy in place to manage climate-related risks overseen by our ESG Executive Committee and Board of Directors. To evaluate risks and opportunities, we use a framework called Task Force on Climate-Related Financial Disclosures (TCFD) and a matrix based on Nationally Determined Contributions (NDCs). Furthermore, our strategy includes evaluating the costs and impact of our efforts to manage climate risks and make better decisions for the company’s future.

How we identify risks and opportunities.

Every December, we convene all relevant units to disclose financial information about climate change.
We provide a form to identify climate-related risks and opportunities in January of the following year. Then we assess the impact and frequency of these risks and opportunities at the same time.
Next, in January, we calculate the risk/opportunity index and create a matrix of major risks and opportunities.
In March, we assess major risks to determine the financial impact and develop strategies to address them.

How we manage risks and seize opportunities.

Also, in March, we set the risk/opportunity index and goals.
We promote education and training for each project.
In April, we track performance and make adjustments as needed.
In May, we establish procedures for responding to risks that recur.

By taking these steps, we can effectively manage climate-related risks and opportunities.

Task Force on Climate-related Financial Disclosure (TCFD)

Identify, respond and reduce climate risks on operations.

Eclat TCFD recommendations framework.

a. Describe the board’s oversight of climate-related risks and opportunities.

The risks regarding climate change have been included in the scope of corporate risk management, and Eclat’s “Risk Management Procedures for Climate Change” have been signed by the Chairman and the ESG Committee will report the corporate risks and corresponding measures to the board of directors every year.

b. Describe management’s role in assessing and managing climate-related risks and opportunities.

The Eclat ESG Committee is the appointed organization that responds to and manages climate change. The board of directors serves as the highest guidance unit. The promotion status of climate change-related issues is reviewed on a quarterly basis and the director of the committee will directly report to the board of directors regarding the implementation results of climate change-related issues every year.

a. Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.

Our existing internal objective management timeline defines the short-term (less than three years), medium-term (3-5 years), and long-term (more than five years) climate risks and opportunities.

b. Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.

We identify major risks and opportunities according to the “Identification Questionnaire for Risks and Opportunities of Climate Change” of the “Risk Management Procedures for Climate Change” and evaluate the potential impacts on operations and finance they will bring to the Company.

c. Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

Eclat takes the scenarios of climate change into consideration and stipulates strategies as well as near, and long-term goals for major risks and opportunities.

a. Describe the organization’s processes for identifying and assessing climate-related risks.

Use the TCFD framework to identify the risks and opportunities of climate, convene respective departments, and relevant factories to discuss and reach a consensus verified by senior management on major climate risks for the year. For more information, please refer to our Major climate-related risks matrix.

b. Describe the organization’s processes for managing climate-related risks.

Conduct in accordance with the risk identification process of Eclat’s Management Procedures for Climate Change.

c. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.

Eclat stipulated corporate risk management measures in 2010, followed by the second revision in 2018. We incorporated climate-related risk management into corporate risk management regulations to identify risks and opportunities and assess financial impacts. We set forth management strategies and propose active measures to lessen the impact of risk.

a. Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.

Reduce the total greenhouse gas emissions, energy, and water consumption per unit of product; reduce the amount of waste burial and incineration. Increase the rate of waste recycling for reuse, increase the ratio of used renewable energy, and minimize climate disasters to prevent suspension of business operations.

b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks.

We inspect the inventory of greenhouse gas data in Scope 1, 2, and 3 according to the ISO 14064-1 Standard every year and accept verification by external institutions.

c. Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

Eclat has stipulated strategies, management approaches, and goals for identified major climate-related risks and opportunities. For more details, please refer to the major risks and opportunities assessments below.

Major climate-related risks matrix

Likelihood of Impact

Magnitude of Impact

k, n		b	a, c, d, e
m, o		f, g
	h
i, p, j		i

Average temperature rise
Increasing demands for disclosure of carbon emissions
More restrictions on the laws and regulations regarding greenhouse gas and the international regulations have been revised.
Replace the existing products and services with low-carbon products
The cost for the transformation of low-carbon technology
Failure to invest in new technologies
Product stigmatization
Requirements and regulation of existing products and services
The rising cost of raw materials
The increase in the severity of extreme weather events such as typhoons and floods
Changes in rainfall patterns and extreme changes in weather patterns
Sea levels rise
Facing litigations
The uncertainty in the risk of market information
Changes in consumer preferences
The focus on stakes and the increase of negative feedbacks

Major climate-related opportunities matrix

Enforceability

Significant opportunities

k, n	e	b, c
i, m	g		a, d
j, l	h	h, q	f
n, o	k, p	i

Adopt a more efficient transportation approach
Use low-carbon energy
Develop and/or increase low-carbon products and services
R&D and products and services innovation
Diversify business activities
Participate in renewable energy projects and implement energy efficiency measures
Recycling and reuse
Reduce water usage and water consumption
Adopt incentive policies
Adopt new technology
Participate in the carbon-trading market
Switch to decentralized energy
Enter new markets
Optimize the use of incentives from the public sector
Acquiring new assets and areas that need to be insured
Develop climate adaptation and insurance risk solutions
Energy substitution/diversification