Our Focuses｜Climate Change Management｜Scenario Analysis

Scenario Analysis

Transition Risk Scenario Analysis

Transition risk scenario analysis anticipates Winbond’s BAU (Business as Usual) carbon emissions, and compares them with the carbon emissions allowed under various external scenarios to analyze the potential financial impacts that Winbond might experience if no transition initiatives are implemented.

Winbond conducted risk simulations using three scenarios: (1) National Net-Zero Pathway, in Taiwan which mainly assesses domestic regulatory risks, (2) The SSP1-1.9 scenario from the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report, which represents an extremely low-emissions pathway, and (3) an annual reduction rate of 4.2% as required by the Science-Based Targets Net-Zero (SBT-NZ) Standard for carbon emissions.

Climate change issues may have financial implications for Winbond in terms of regulations, technology, the market, and reputation. In particular, the implementation of carbon tax and carbon fee, compliance with regulations for intensive electricity users to use of renewable energy electricity are expected to result in a financial impact of approximately 0.1-2% of revenue in 2030. Without any mitigation actions, the gap between projected carbon emissions and the allowed emissions in different scenarios will widen, and this, combined with increasing carbon tax and carbon fee over time, will lead to an annual escalation in the financial impact on the company. This impact will be particularly significant under stricter carbon reduction targets such as those in the SSP1-1.9 and SBT-NZ scenarios.

Physical Risk Scenario Analysis

Winbond follows the IPCC’s Climate Models to evaluate the risks of flooding, debris flows, and landslides resulting from extreme precipitation. We conduct scenario simulations using data from the Taiwan Climate Change Projection Information and Adaptation Knowledge Platform (TCCIP), National Science and Technology Council (NSTC), National Science and Technology Center for Disaster Reduction (NCDR), and various climate models to avoid biased results.

Risk value = Hazard × Vulnerability × Exposure

 

Risk value

• Risk of flooding, debris flows, and landslides
• Categorized by risk level:

Level	Risk Value
Low Risk	0-12
Moderate Risk	13-25
Moderate Risk	26-50

 

Hazard

• Extreme rainfall: Possibility of cumulative rainfall reaching 650 millimeters within 24 hours
• Four scenarios: RCP 2.6, RCP 4.5, RCP 6.0, RCP 8.5
• Categorized by hazard level:

Level	Return Period
1	1000 Years
2	500 Years
3	100 Years
4	50 Years
5	<50 Years

 

Vulnerability × Exposure

• Flood potential

  Defined based on the criteria set by Water Resources Agency of the Ministry of Economic Affairs and the government's flood relief qualifications

Level	Flood Magnitude Class
0	No potential
1	0.3-0.5 m
2	0.5-1.0 m
3	1.0-2.0 m
4	2.0-3.0 m
5	>3.0 m

• Debris flow potential

  Defined based on the criteria set by Soil and Water Conservation Bureau of the Council of Agriculture, Executive Yuan

Level	Potential Magnitude of Class
0	No potential
1	Continuous Monitoring
2	Low
3	Moderate
4	High

• Landslide potential

  Defined based on the criteria set by Central Geological Survey of the Ministry of Economic Affairs

Level	Potential Magnitude of Class
0	No potential
1	Intersected

The following results show that by the end of the 21^st century, Winbond’s main fabs and offices (including the CTSP Fab, Kaohsiung Fab and Zhubei Building) have a risk level of 0 (low possibility of flooding, debris flows, and landslides) under the four global warming scenarios.