Our Focuses｜Climate Change Management｜Climate Risk Management

Climate Change Management

Winbond embraces the vision of being an "Be a hidden champion in providing sustainable semiconductors to enrich human life". In response to international guidelines and domestic policies geared towards green sustainability, Winbond has implemented the Task Force on Climate-related Financial Disclosures (TCFD) framework for the third year to assess the potential climate change risks and opportunities as the basis for promoting climate mitigation and adaptation actions, enhancing the company's operational resilience.

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SDGs

Publish the first independent TCFD report in 2023

Establish twelve Climate-Related Management Metrics

Climate Governance

Climate Risk Management

Scenario Analysis

Mitigation and Adaptation Measures

Metrics and Targets

Climate Risk Management

Risk Management Framework

Winbond established the Risk Management Committee, under the Board of Directors to implement risk management, formulating a sound set of internal regulations and operating procedures through the Committee’s subdivisions or responsible units in accordance with their scope of operations.

For details, please refer to Risk Management under Corporate Governance.

Procedures for Identifying Climate Change Risks and Opportunities

In 2024, Winbond convened 19 department-level units and over 30 members to establish the TCFD project team. The team members were grouped according to the nature of their business, and each group discussed climate change issues relevant to their business. They used Winbond's internally developed TCFD platform to identify climate risks and opportunities, generate matrixes. the team identified 3 major climate risks and 6 minor climate risks, as well as 3 major climate opportunities and 3 minor climate opportunities from 36 climate risks (including transition risks such as policy and regulations, technology, market, and reputation, and physical risks such as acute and chronic) and 19 climate opportunities (including resource efficiency, energy sources, products/services, markets, and resilience).

Climate Risk and Opportunity Matrix

Impacts of Major Climate Change and Responses

Major Climate Risks

(－) represents a negative impact, (＋) represents a positive impact

Cimate Risk	Time of Occurrence	Value Chain	Potential Financial or Operational Impacts	Response
Low-carbon technology transformation	Short-term	Upstream or supply chain Company operations	Capital expenditure for new equipment (-) R&D cost increase (－) Reduction in carbon emissions leading to a decrease in carbon tax/fee expenditures (＋)	Implemented ISO 50001 Energy Management System, conducted energy audits, and continuously improved optimization. Executed energy-saving projects for production machinery and facilities infrastructure, including adding variable frequency drives to machine pumps, installing local scrubbers for exhaust treatment, and improving energy efficiency of the Make-up Air Handling Unit (MAU) water washing system. Used renewable energy to reduce greenhouse gas emissions. Continued discussions with outsourcing partners to develop low-carbon materials and optimize packaging processes. Actively collected market transaction information to avoid procurement cost increases due to information asymmetry.
Carbon tax / Carbon fee	Short-term	Upstream or supply chain Company operations Downstream or end users	Increase in indirect costs (－) Suppliers pass on their carbon tax/fee expenditures, leading to increased procurement costs(－) Limited capacity expansion(－)	Set the 2030 RE50 green electricity target to achieve the 2050 net-zero emission target Formulate a voluntary emission reduction plan to reduce greenhouse gas usage through process improvement, including accelerating the replacement of energy-saving components and installing exhaust gas treatment equipment at the machine end Establish on-site solar photovoltaic systems and purchase renewable energy power to increase the utilization rate of renewable energy Establish a carbon accounting system to achieve transparent management of carbon inventory and carbon footprint Establish internal voluntary carbon credit investment standards and continue to pay attention to the development of carbon credit offset systems Develop negotiation strategies to avoid unreasonable cost shifting by suppliers Manage suppliers with annual emissions greater than 25,000 tons, regularly collect and understand their reduction behaviors, and positively drive them to reduce carbon emissions through regular sustainability evaluations of suppliers
International conventions or agreements	Short-term	Company Operations	Increase in indirect costs arising from the signing of the agreement ( - ) Increase in capital expenditure arising from the signing of the agreement ( - ) Reduce in carbon emissions leading to a decrease in carbon tax / carbon fee expenditure ( + )	Set the 2030 RE50 green electricity target to achieve the 2050 net-zero emission target Formulate a voluntary emission reduction plan to reduce greenhouse gas usage through process improvement, including accelerating the replacement of energy-saving components and installing exhaust gas treatment equipment at the machine end Establish on-site solar photovoltaic systems and purchase renewable energy power to increase the utilization rate of renewable energy
Tropical cyclones	Short-term	Upstream or supply chain Company operations Downstream or end users	Impact on production and revenue ( - ) Automated production lines continued to operate, legally paid overtime, leading to increased labor costs ( - ) Impact on supplier deliveries and Winbond production ( - ) Increase in natural disaster insurance premiums ( - )	Adopted automated production to reduce manual operation requirements Utilized digital tools to enhance remote work efficiency Promoted relevant countermeasures to suppliers, such as strengthening fab infrastructure and drainage facilities, and conducting daily drills Established a 24-hour emergency response team and continuously monitored disaster situations at suppliers' locations.
Due to the implementation of the aforementioned measures, the estimated management costs for 2024 are as follows:
The budget for ESG-related equipment replacement is approximately NT$ 120,000,000.				Subsidy for low-carbon raw material suppliers is NT$ 1,250,000 per year.
Maintenance cost for on-site solar photovoltaic systems is approximately NT$ 700,000 per year.				Increased electricity cost for using green electricity compared to using gray electricity is approximately NT$ 87,000,000 per year.
Other associated costs encompass personnel training expenses related to sustainability topics, human resource costs for supplier engagement, and personnel costs for digital resources and event execution, among others.				Verification cost for low-carbon materials and processes is NT$ 1,500,000 per year.
Note: The primary climate risks identified in 2024 were all transition risks. Considering the completeness of the climate risk assessment, the "tropical cyclones," which had the highest impact and likelihood among the physical risks in 2024, was included in the assessment.

Major Climate Opportunities

Climate Opportunity	Time of Occurrence	Value Chain	Potential Financial or Operational Impacts	Response
Changes in customer behavior	Short-term	Upstream or supply chain Company operations	Product portfolio changes that accelerate positive development across entire supply chain Obtaining orders and expanding revenue Increased order stability and reduced revenue fluctuations Improved company reputation	Continuously understood customer requirements and specifications for green products, developed low power consumption and low carbon emission products to meet their needs. Increased the use of renewable energy in line with customer requirements, and continued to discuss with outsourcing partners to develop low carbon materials and processes, launching products manufactured with renewable energy. Established a carbon emission information platform that integrates and manages carbon emission data to facilitate green and low-carbon production. Participated in global sustainability-related evaluations, enhancing the transparency of sustainability practices.
Alternative and diversified resources	Short-term	Upstream or supply chain Company operations	Enhanced supply chain reliability. Reduced production costs.	Conducted comprehensive traceability for key raw materials, achieving 100% of the 14 predetermined goals. Regularly reported information on material supply, costs, and alternative materials, continuously monitoring the development of specific raw materials in their places of origin and distribution worldwide.
Changes in transportation modes	Short-term	Upstream or supply chain Company operations	Reduced indirect costs. Reduced carbon emissions leading to a decrease in carbon tax/ carbon fee expenditures.	Completed localized procurement of five key materials in 2024, achieving a carbon reduction of 7.2 metric tons of CO2 equivalent by reduced transportation distances.
Due to the implementation of the aforementioned measures, the estimated management costs for 2024 are as follows:
Maintenance cost for self-built renewable energy generation devices is approximately NT$ 700,000 per year.				Verification cost for low-carbon materials and processes is NT$ 1,500,000 per year.
Increased electricity cost for using green electricity compared to using gray electricity is approximately NT$ 87,000,000 per year.				New product design and process development costs.
Subsidy amount for low-carbon raw material suppliers is NT$ 1,250,000 per year.				Labor costs for developing suppliers and communicating with them.