Climate-related Information
TOP- Climate-related Information
Governance
The Board of Directors serves as the highest supervisory unit in charge of approving the risk management policy, supervise and manage SinoPac Securities’ implementation of climate risk-related metrics and targets. The Board of Directors should incorporate climate risk factors into risk appetite, strategies and business plan, and has ultimately responsibility for ensuring the establishment and maintenance of an appropriate and effective climate risk management system.
SinoPac Securities has set up a "Risk Management Committee" under the Chairman, executing the Board of Directors' major decisions on climate risk management policies and related affairs, establishing relevant supervision and reporting mechanisms, and supervising the operation of SinoPac Securities’ climate risk management.
The senior management team should establish policies, management systems and monitoring indicators for climate risk management, and regularly review the effectiveness and implementation. Also, the senior management team should designate relevant responsible units or work team to implement climate-related tasks, establish a management mechanism, and take response measures in different situations, and regularly and irregularly report to the Board of Directors and the Risk Management Committee.
Since 2023, the Risk Management Division of SinoPac Securities will report to the Risk Management Committee and the Board of Directors on climate change risk management implementation every six months to reveal an overview of climate change risks (including various indicators of physical risk and transition risk) and track the implementation of metrics and targets on climate-related risks.
- SinoPac Securities Climate Governance Structure
Risk Management
To establish an integrated risk management framework, in the "Risk Management Policy" approved by the Board of Directors of SinoPac Securities, climate change risk combined with credit risk, market risk, operational risk, liquidity risk, legal risk, strategic risk, reputation risk and emerging risks are incorporated into the overall risk management framework to prudently manage credit, market and operational risks, and liquidity risks.
SinoPac Securities uses the “three lines of defense” internal control framework to specify the duties and management mechanisms for the management of climate change risks on each defense line. The management procedures for the identification of climate risks and opportunities include collecting of a list of climate risks and opportunities, discerning issues of risks/opportunities, creating a climate risk/opportunity matrix, and identifying risks/opportunities. In addition, the mitigation or adaptation measures, disclosure and communication with the public are proposed.
“Three Lines of Defense" Internal Control Framework
| Item | Climate-related Risk Management Measures | Explanation |
|---|---|---|
| The first line of defense | Evaluate and incorporate climate-related risks into business considerations. |
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| The second line of defense | Effectively monitor and control the implementation of climate risk management, and ensure relevant operations comply with laws and regulations. |
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| The third line of defense | Evaluate the effectiveness of climate risk monitoring, and provide improvement suggestions timely. |
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Strategy
SinoPac Securities uses internal questionnaires every year to identify how climate risks and opportunities affect the Company’s business, strategy and finance, and establishes relevant identification processes, measurement, monitoring, reporting and other management mechanisms. Through qualitative or quantitative methods, the relevant response measures or monitoring mechanisms are developed in response to the climate-related risks and opportunities that should be paid attention to.
Cooperating with the physical and transition risk scenario analysis and financial impact quantitative evaluated work of the parent company SinoPac Holdings’ TCFD team, SinoPac Securities conducts climate scenario analysis of physical risks and transition risks on different parts of the overall value chain (the Company’s suppliers, operations, investment and financing business) in different climate scenarios and time scales.
Assessing of physical risks includes "Acute physical risk: Heavy rainfall and floods" assessed by RCP 8.5 scenario, "Chronic physical risk: Rising sea levels" assessed by RCP 2.6, RCP 4.5, and RCP 8.5 scenario, and "Acute physical risk: Drought" assessed by RCP 2.6 and RCP 8.5 scenario. As to assessing of transition risks, relevant scenario analysis and quantitative assessment of financial impact are conducted by using risk factors such as "Payment of the Carbon cost" and "Regulations for the Management of Setting up Renewable Energy Power Generation Equipment of Power Users above a Certain Contract Capacity of the Ministry of Economic Affairs". Furthermore, these risk factors are analyzed and their financial impacts on the Company are quantitatively evaluated, with the responsible unit(s) preparing mitigation or adaptation measures for business, strategy, and financial climate resilience to boost overall climate resilience.
In response to the global trend toward net-zero carbon emissions and Taiwan's ongoing promotion of energy transition and net-zero emission planning, Taiwan enterprises not only face the risk of paying international carbon taxes, but also the pressure to transition to renewable energy and reduce carbon under the requirements of government policies and regulations, with related capital expenditures and needs arising accordingly. In the future, various emerging energy resources and new technologies will present a diversity of solutions, offering a variety of opportunities related to climate change, including investment and financing opportunities. SinoPac Securities follows the carbon reduction goals set by the parent company SinoPac Holdings, and cooperates with various carbon net-zero business plans to help companies reduce carbon emissions.
Metrics and Targets
Faced with the challenges brought about by climate-related risks and opportunities, SinoPac Securities adopts pragmatic approaches by starting to reduce the Company’s carbon emissions, including participating in SinoPac Holdings’ net zero project to set SBT goals, gradually increasing the ratio of green electricity usage, gradually adjusting investment and financing business strategies. The Company will further explore climate-related opportunities and promote the low-carbon transformation of the entire value chain.
According to the action plan and schedule formulated by the parent company SinoPac Holdings’ TCFD team, SinoPac Securities incorporates climate governance, strategy, risk management, and related metrics and targets into short-term, medium-term and long-term key tasks. Additionally, the Company’s Sustainable Development Promotion Team and Risk Management Committee regularly review and track the achievement of various metrics and goals, which will be continuously adjusted based on actual development trends.