Climate change impacts all economies across the globe and has profound effects on global sustainable development. The Group dedicates to mitigating and adapting to the risks and opportunities arising from climate change. We adopt the TCFD-recommended framework to identify the Group’s climate-related risks and opportunities in developing effective strategy, indicators, and targets for management, as well as publicly disclose our work plans in accordance with the four core elements of TCFD framework: “Governance”, “Strategy”, “Risk Management” and “Metrics and Targets”.

Governance

The Board is responsible for overseeing the management of climate-related risks and opportunities, as part of its oversight of the Group’s material ESG issues and key risks. The Board considers these risks when reviewing our corporate strategy and ensures that an adequate and effective system of internal controls and enterprise risk management (ERM) is in place within the Group.

The Group's ERM Team and ESG Team are responsible for monitoring and managing climate-related risks. They oversee the Group's sustainable transition and develop a Net Zero pathway to mitigate the effects of climate-related risks and explore opportunities. Additionally, they identify, evaluate, and mitigate the significant climate risks that could impede the Group’s climate-related business and strategic objectives. Furthermore, the ERM Team and ESG Team support the Board in managing climate-related risks by identifying climate-related issues and assessing their impact on the Group.

Strategy

The ERM team conducted preliminary analysis to identify both the Group’s physical risks and transition risks. Moreover, the Group has initiated proactive analyses of potential impacts and is preparing for risk management measures.

The Group has taken several measures to manage the identified potential climate risks, such as conducting property damage assessments and upgrading energy management systems. In order to strengthen operational resilience and pursue potential business growth, the Group is actively searching for climate-related opportunities.

Risk Management

The Group emphasises the importance of climate risk assessment and management in improving business resilience. The Group adopts integrated risk management and follows the ERM risk management procedures that incorporate environmental considerations into risk management procedures to help identify, assess, and manage climate-related risks. To enhance our readiness for emerging climate-related risks, we regularly monitor and review our risk management approach.

Metrics and Targets

The Group plans to implement the TCFD framework and adhere to it in the future. The Group intends to conduct climate risk analysis and update its operational strategy and management policies based on further quantitative chronic and physical climate risk analysis.

We are committed to devising action plans to further enhance the disclosure of financial implications associated with climate-related risks and opportunities. The Group has been working integration of climate-related risks into our corporate strategy, governance, and disclosure during FY2024 will provide further performance metrics for our assessment of likelihood and impact within the ERM. The results are expected to strengthen our efforts to prioritise, quantify, and manage climate-related risks and other enterprise risks. The Group has proposed three climate targets to pave the way for a future of low-carbon economies and society:

1. Comply with Nationally Determined Contributions (“NDCs”) or the carbon emission policies of local governments where the Group’s factories locate.
2. The Group’s GHG emissions policies across the value chain are consistent with the goals of the Paris Agreement.
3. The Group aims to achieve the goal of net-zero GHG emissions by 2050.