永豐金證券 SinoPac Subsidiaries

Index Sustainability Climate and Environment Governance Climate-related Information

Climate-related Information

Governance Risk management Strategy Metric & Target Carbon Inventory of Scope 3 Financed Emissions Nature-related Risk Strategy and Management

Nature-related Risk Strategy and Management

Governance
Risk management
Strategy
Metric & Target
Carbon Inventory of Scope 3 Financed Emissions
Nature-related Risk Strategy and Management

The nature-related risks identified by SinoPac Securities in 2024 are as follows:

Risk Category	Risk Incident	Potential financial impact	Possible occurrence period	ESG risk score
Transition risk	Increased Costs from Developing Environmentally Friendly New Technologies	Developing new technologies or equipment to mitigate environmental damage may result in increased R&D expenditures and operating costs for the investment targets, impacting their profitability and, in turn, the Company's debt recovery or investment returns.	Long-Term	4
Transition risk	Changes in Consumer Preferences or Rising Prices of Natural Resources or Raw Materials	Consumer concerns about environmental issues may shift the demand for goods or services. Increased raw material prices and operating costs due to natural resource scarcity may lead to decreased demand for investment clients' products and services, resulting in reduced revenue and increased costs to replace existing products/services.	Long-Term	4
Transition risk	Increased Stakeholder Concern for Nature-Related Issues	The Company's operations or investment targets may affect the natural environment; its failure to provide nature-related products; or its failure to actively engage with nature-related issues of concern to stakeholders, resulting in damage to its corporate image and, in turn, impact on its value.	Long-Term	2
Liability Risk	Lawsuits or liability claims may arise from failure to establish a climate/nature governance framework, failure to reduce greenhouse gas emissions, inadequate disclosure of climate/nature-related risks, or failure to adjust operational strategies or credit/investment targets that cause environmental damage or third-party property losses.	Lawsuits filed by various stakeholders regarding issues such as climate change, the natural environment, or biodiversity are increasing. These include organizations that fail to take mitigation or adaptation actions or fail to adequately disclose significant climate/nature-related financial risks. As losses and damages from climate change continue to grow and biodiversity issues intensify, liability risks arising from these lawsuits are likely to increase.	Long-Term	4

The nature-related opportunities identified by SinoPac Securities in 2024 are shown in the following table:

Opportunity Type	Opportunity Event	Potential Impact	Likely Occurrence Period	Response Action
Market	Promoting the Diversification of Nature-Related Financial Products	Governments, investors, and consumers are increasingly focusing on and investing in nature-related issues (including biodiversity and environmental friendliness), creating an emerging market. We will actively develop diversified nature-related financial products and services to increase operating revenue.	Mid-Term	The Customer Relationship Working Group within the Sustainability Promotion Group is responsible for promoting and deepening the development of responsible investment and sustainable financial products/services. We will also expand investments in sustainable financial products, renewable energy, and green industries in accordance with government policies and regulations. We will strengthen collaboration with governments, non-governmental organizations, and environmental organizations to ensure that products meet market demand and regulatory requirements. We will continue to develop and promote nature-related financial products, and strengthen internal training to enhance employee knowledge and expertise in green finance to ensure the successful launch of new products in the market.
Capital Flow and Financing	Providing funding to assist businesses in transformation and promote nature-related or green investments.	For funding needs that can increase positive impacts or mitigate negative impacts on nature, provide relevant investment tools, including bonds and funds, to increase operating income and direct capital to support nature-friendly or green activities and industries.	Medium-Term	Actively promote strategic green energy investment positions (key technologies, renewable energy, circular economy, and low-carbon development, etc.) and underwriting business, strengthen the integration of ESG and other issues in fund utilization, direct capital to support nature-friendly or green activities and industries, and enhance customer acceptance and engagement with green products through marketing. Identify new market opportunities, understand investor and consumer concerns about nature-related issues and their preferences for green financial products and services, and continue to develop green/ESG financial products centered on sustainable development.
Ecosystem Protection, Restoration, and Regeneration	Supporting natural ecological conservation activities such as the protection, regeneration, or restoration of habitats and ecosystems.	Actively participating in ecological conservation activities, through the direct or indirect restoration, conservation, or protection of ecosystems or habitats, improves ecosystems and enhances resilience to natural disasters.	Mid-term	The Company is promoting biodiversity-related projects and supporting the "Return to the Sea Action 2.0" initiative by Weekly Magazine. The Company established the "Return to the Sea Aquarium," held "Ocean Dialogue Journey" lectures, and conducted "Return to the Sea Action 2.0" special online broadcasts. These activities allowed employees, customers, and the public to understand the symbiotic relationship between clownfish and sea anemones and explore marine ecology.

Opportunity Type

Opportunity Event

Potential Impact

Likely Occurrence Period

Response Action

Market

Promoting the Diversification of Nature-Related Financial Products

Governments, investors, and consumers are increasingly focusing on and investing in nature-related issues (including biodiversity and environmental friendliness), creating an emerging market. We will actively develop diversified nature-related financial products and services to increase operating revenue.

Mid-Term

The Customer Relationship Working Group within the Sustainability Promotion Group is responsible for promoting and deepening the development of responsible investment and sustainable financial products/services. We will also expand investments in sustainable financial products, renewable energy, and green industries in accordance with government policies and regulations.

We will strengthen collaboration with governments, non-governmental organizations, and environmental organizations to ensure that products meet market demand and regulatory requirements. We will continue to develop and promote nature-related financial products, and strengthen internal training to enhance employee knowledge and expertise in green finance to ensure the successful launch of new products in the market.

Capital Flow and Financing

Providing funding to assist businesses in transformation and promote nature-related or green investments.

For funding needs that can increase positive impacts or mitigate negative impacts on nature, provide relevant investment tools, including bonds and funds, to increase operating income and direct capital to support nature-friendly or green activities and industries.

Medium-Term

Actively promote strategic green energy investment positions (key technologies, renewable energy, circular economy, and low-carbon development, etc.) and underwriting business, strengthen the integration of ESG and other issues in fund utilization, direct capital to support nature-friendly or green activities and industries, and enhance customer acceptance and engagement with green products through marketing.

Identify new market opportunities, understand investor and consumer concerns about nature-related issues and their preferences for green financial products and services, and continue to develop green/ESG financial products centered on sustainable development.

Ecosystem Protection, Restoration, and Regeneration

Supporting natural ecological conservation activities such as the protection, regeneration, or restoration of habitats and ecosystems.

Actively participating in ecological conservation activities, through the direct or indirect restoration, conservation, or protection of ecosystems or habitats, improves ecosystems and enhances resilience to natural disasters.

Mid-term

The Company is promoting biodiversity-related projects and supporting the "Return to the Sea Action 2.0" initiative by Weekly Magazine. The Company established the "Return to the Sea Aquarium," held "Ocean Dialogue Journey" lectures, and conducted "Return to the Sea Action 2.0" special online broadcasts. These activities allowed employees, customers, and the public to understand the symbiotic relationship between clownfish and sea anemones and explore marine ecology.

Biodiversity Impact Analysis:

In the LEAP analysis process, L (Locate) emphasizes whether our operations and value chain impact the natural environment, specific biomes, or ecologically sensitive areas. Therefore, we overlay the longitude and latitude information of our company's operations in Taiwan and the locations of our investment and financing clients' factories with areas designated by important national nature conservation laws and plans as biodiversity hotspots.
Our company collaborated with its parent company, SinoPac Financial Holdings, to conduct a nature-related risk impact assessment. In addition to disclosing exposure amounts for nature-sensitive industries in accordance with the TNFD Financial Industry Guidance, we also referenced the LEAP-FI methodology document and used the Exploring Natural Capital Opportunities, Risks, and Exposure tool (ENCORE) to compile a materiality matrix of industry dependencies and impacts within each subsidiary's investment and financing portfolio. This provided an overall overview of nature-related exposures, further focusing on high-risk and high-hazard industries. We also collected industry information on individual investment and financing targets, identifying ecosystem services and impact drivers critical to the portfolio, and assessing the impact and reliance of these entities on natural capital.
Industry Analysis: SinoPac Financial Holdings, the parent company, compiled the exposure amounts for nature-sensitive industries across its subsidiaries, calculating that sensitive industries account for 22% of its overall investment and financing portfolio. The top five industries with the highest reliance on and impact on nature are, in order: food (including agriculture); metals and mining; oil, gas, and consumer fuels; shipping; and business services and commercial products.