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Climate Governance

Coping Measures in Response to Climate Change

Winbond Electronics is committed to coming up with measures against climate change risk. In order to understand the impact of climate change on the environment and our business operations, Winbond Electronics has adopted the Task Force on Climate-Related Financial Disclosures’ (TCFD) framework and established a set of Operating Guidelines on the Evaluation of Climate Change Risks and Opportunities. Each year, based on both domestic and foreign research reports and the latest market outlook observations, we identify and disclose the  financial impacts of climate-related risks and opportunities (both quantitative and qualitative), providing comments on the situation as
well as proposing a management strategy in order to continue improving the Company’s operational capabilities. Additionally, we have established an internal ESH and Risk Management Committee chaired by the President, with representatives of the head of each relevant unit serving as committee members. A meeting shall be convened each quarter, where goals and progress towards these goals shall be reviewed, critiqued, and updated.

The greenhouse effect has led to climate change and impacted both the environment and business operations. From a legal risks perspectives, governments from around the world have been deliberating on introducing a carbon or energy tax. Along with the global year
on year increases to prices of raw materials and energy needed for manufacturing, all of these factors would lead to a rise in manufacturing costs. In terms of environmental concerns, climate change would also bring about more extreme climate events such as storms, flooding, and even droughts. In recent years, as rainfall becomes increasingly heavy during the rainy season and increasingly sparse during the dry season, this had led to adverse impacts on the allocation and usage of water resources, which can potentially affect the Company’s business operation and manufacturing capacity. There are also other concerns, such as consumers becoming increasingly aware of climate change issues and requesting companies to disclose information on their climate impact.

Therefore, Winbond Electronics continues to work towards optimizing resource management and reducing carbon emissions. Apart from developing and designing all of our products with high efficiency and low power consumption in mind, we have also devoted our efforts to directly reducing our own carbon emissions. By promoting various carbon reduction plans, increasing our energy usage efficiency, and implementing important ESG indicators, we are steadily making progress towards sustainable development.

 TCFD Climate Change Management Framework

Climate change highlighted the fragility of the society and the importance of business resilience.Winbond has established a business continuity management (BCM) system to identify potential risks in business operations, develop systematic response mechanisms, and implement regular trainings and drills. The system will facilitate quicker response and faster recovery from the impact.

As dealing with climate change is a responsibility we need to participate, Winbond adopted the TCFD (Task Force on Climate-related Financial Disclosures) framework in 2021 to evaluate the risks and opportunities associated with climate change. The result will form the basis of our climate action and help to improve our operation resilience.

Governance In order to achieve our corporate social responsibilities, the Company’s Corporate Social Responsibility (CSR) Implementation Committee is responsible for issues related to overall corporate governance, environmental protection, climate change, and labor. The Committee convenes an Environmental, Social, and Governance (ESG) meeting each quarter, reporting to senior management on the performance of the management system, and providing recommendations for any necessary improvements. The President shall report on the results of that year’s implementation at the Board of Director’s Meeting in the fourth quarter of year. The work plan for the next year will be revised after listening to the opinions of the board of directors. The Board of Directors is Winbond Electronic’s highest management unit. The Risk Management Committee is established under the Board of Directors, and based on the progress of future Committee work, their responsibilities shall eventually expand to cover issues and management goals related to climate change risks.
Strategy

a. Winbond Electronics classifies climate-related risks and opportunities into short-, mid- and longterm categories based on their time periods and evaluates each risk and opportunity based on these categories. A period of 0-2 years is classified as short-term, while medium and long-term refers to a period of 2-10 years.

b. Climate risks can be divided into two main categories transition risks and physical risks. Each category can be further divided into political and legislative risk, technology risk, market risk, and reputational risk, as well as into immediate and long-term risks. Opportunities are classified into five major categories: resource efficiency opportunities, energy source opportunities, product and services opportunities, market opportunities, and organizational resilience opportunities.

Risk Management

a. We have differentiated between the transition and physical risks (8 in total) posed to the Company’s operations due to climate change and the potential opportunities (2 in total) presented by climate change, before having each relevant unit evaluate the relevance of these risks and opportunities to their business operations, as well as their short-, mid-, and long-term vulnerability levels and opportunity potential based on a business relevance, vulnerability (risk response measures/opportunity preparations) level and impact level evaluation table.
b. A value-at-risk is calculated via combining scores for the three factors of consideration provided by each unit. This calculated value-at-risk is then evaluated and used to construct a risk and opportunity matrix.

c. After an evaluation and discussion of the reference value-at-risk, high-risk and high-opportunity factors are selected and combined with key short-, mid- and long-term climate risk indicators. A qualitative or quantitative financial impact evaluation is then carried out based on these values and used to establish a response strategy or define key climate goals.

Metrics and Targets

a. In order to reduce the impact of our business operations on the surrounding environment, Winbond Electronics has invested significant resources into improving our performance on environmental metrics. Through developing methods to conserve energy and reduce carbon emissions, make more efficient use of water resources, prevent pollution, and improving management of hazardous substances (please refer to Chapter Three - Greening the Environment - Committed to Environmental Protection of this report for our results in these areas), we look to pursue our vision of sustainable development.

b. At the moment, renewable energy is mainly produced via solar or wind power, both methods which face issues with unstable and unreliable power supply and thus reliant on energy storage technology.
As an increasing proportion of electricity is being generated via renewable energy, demand for energy storage systems shall also increase. As of January 6, 2020, pursuant to the Ministry of Economic Affairs’ Renewable Energy Development Act, electricity intensive users (those with contracted electricity capacity greater than or equal to 5,000kW) are required to source 10% of their contracted electricity capacity from renewable energy. The Company shall construct an Electrical Energy Storage (EES) system or purchase renewable energy certificates (REC) in order to meet these requirements.

Climate Change Risks

Climate Change Risks Risk Description Scope of Impact Winbond Response Strategy

Increased cost of
energy prices

GHG reduction requirements may impact on the cost of energy use due to higher energy prices and need to improve equipment performance. Market price
  • Promotion of workplace energy conservation and carbon reduction.
  • Continue to undergo ISO 14064-1 GHG inventory verification.
  • Set annual target for electricity savings.

More robust
environmental regulation

Domestic environmental legislation is still being amended and is becoming stricter. Operating cost
  • The responsible units are continuing to monitor and track related regulatory changes so that they can prepare in advance, in order to understand the risks involved and avoid non-compliance.
Amendments to the Renewable Energy Development Act increases the cost of energy use for businesses.
  • Continue to the evaluate the green electricity provisions for large electricity users and installation proportions for renewable energy equipment.
The Greenhouse Gas Reduction and Management Act will impose caps on GHG emissions and a carbon tax. These may increase operating costs by raising the cost of GHG emissions and electricity.
  • The EPA is now building a carbon trading platform that offers carbon credits for businesses that start reducing their carbon emissions early.
  • Set annual targets for GHGH emissions.

Business interrupted by
extreme weather events

Extreme rainfall and drought:Reduction/disruption of production. Business interruption
  • Promote water-recycling technology and watersaving measures as well as devise response plan. Increase competitiveness by improving ability to adapt to climate changes.
Production activities affected by climate disasters such as:flooding, drought, fire, heat, and heavy snow. These events may impact on the delivery time of raw materials.
  • Continue to take part in academic and industry climate change seminars to share and discuss the effects of climate change. Winbond will also continue to engage in energy saving initiatives to reduce the business impact and improve our competitiveness.
  • Increase internal inventory and track supplier delivery schedules to ensure the reliability of the supply chain.

Climate Change Opportunities

Climate Change Opportunities Opportunity Description Scope of Impact Winbond Response Strategy

Development and/or choose of
low carbon emission or
pollution-reducing
ecofriendly products

Choose low carbon emission or pollutionreducing eco-friendly products. Market opportunities
  • Develop low carbon emission / pollution-reducing products with suppliers.

Use of recycling and resource saving purchases

  • Set up mechanism with subcontractors to reuse cassettes (FOSB).
  • The outer cartons used for transporting wafers are recovered for reuse in future supplier shipments.
  • FOSB/Mask Package Box/Parts are washed and reused to save resources.
Operating cost
  • Collaborate with suppliers on recycling projects.
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