The Chairman is the highest governance level for sustainable development, and assigns the CSO as the leader of the Sustainability Group to supervise ESG implementation and performance.

• SYSTEX established the “Sustainability Group” in 2020, with the highest governance level being the Chairman. In 2021, SYSTEX set the CSO as the leader of the Sustainability Group to supervise and coordinate climate risk assessment, formulate climate-related strategies, goals and measures.

• The “Environment Team” under the “Sustainability Group” is responsible for identifying climate risks and opportunities, planning related strategies and goals, and implementing relevant projects.

• In addition to integrating climate risks and opportunities into risk management, the Board holds a meeting on average every two months to discuss business strategy issues and major events of ESG, risks and opportunities.

Formulate the “Environment and Energy Policy” and aim to achieve “Net Zero by 2050”, to implement climate risk and opportunity identification, climate scenario analysis and plan related strategies and measures.

• The “Environment Team” under the “Sustainability Group” is responsible for identifying climate risks and opportunities, planning related strategies and goals, and implementing relevant projects, so as to address the financial impact of climate-related risks and opportunities.

• Time horizon for climate management: the short-term is within 2 years, the medium-term is 3-5 years, and the long-term is more than 5 years.

Climate-related risk and opportunity matrix

Financial impact and management measures of climate-related major issues

SYSTEX has collected 36 Climate Risk Issues and 22 Climate Opportunity Issues, asking internal stakeholders to conduct assessment based on the degree of impact and probability of occurrence, thus identifying 7 climate risk issues and 7 climate opportunity issues to evaluate those financial impacts and formulate relevant mitigation measures. All identified climate risk issues are transition risks, covering “Market, Reputation, Policy and Legal, Technology”. The identified climate opportunity issues are covering “Products and Services, Markets, and Resilience”.

The management approach of climate-related risk and opportunity issues are listed below:

Climate-related Scenarios

Analyze the financial impact of electricity consumption through 2 climate-related scenarios of “IEA NZE 2050” and “RCP8.5”, and analyze the carbon tax costs in 2025-2050 through 3 scenarios.

• [IEA NZE 2050]
  According to the “2050 Net Zero Emission scenario” of the International Energy Agency, the global warming will be controlled with 1.5°C, and the energy transition will be promoted by replacing fossil fuels with low-emission electricity. It is expected that the carbon price will double in 2050 compared to 2030, and energy intensity will be reduced by 1% per year. Therefore, with an estimated 20% reduction in electricity consumption and a doubling of energy costs, the electricity costs are expected to increase by 60%.
• [RCP8.5]
  According to the RCP8.5 scenario, it is estimated that the global mean temperature will increase by about 1.62°C in 2030, which is expected to increase electricity consumption by 9.7%. Therefore, in the case of a 25% increase in electricity prices in 2030, the electricity costs are expected to increase by 37%. Meanwhile, it is estimated that the global mean temperature will increase by about 2.59°C in 2050, which is expected to increase electricity consumption by 15.5%. Therefore, in the case of a 100% increase in electricity prices in 2030, the electricity costs are expected to increase by 131%.
• [Carbon Tax]
  Referring to the scenario parameters released by NGFS, SYSTEX has selected carbon pricing in 3 different scenarios of “high-, medium- and low-emissions”, with the carbon tax of US$2.63, US$231.86, and US$268.13 per tCO₂ respectively, to estimate the future carbon emission growth and related financial impact. The analysis results show that the low-emissions scenario is expected to increase the cumulative carbon tax cost of NT$464 million, which will cause the greatest financial impact.

The Board of Director is the highest governance level for risk management, and has set up a “Risk Management Committee” under the Board to be responsible for supervise the effective operation of the risk management mechanism.

• • SYSTEX has set up a “Risk Management Committee” in 2022 and formulated risk management policy, relevant regulations, management documents and measures. It is clearly stipulated that the Board of Directors is responsible for approving risk management policy, procedures and management structures, ensuring that the direction of operational strategies is consistent with risk management policies, establishing an appropriate risk management mechanism, and supervising the effective operation of the risk management mechanism.

  • The Risk Management Committee is accountable to the Board. It not only fully implements risk management policy, but also sets up the “Crisis Management Group” to be responsible for promoting risk related affairs, ensuring that the risk management mechanism is implemented in daily operations. The Risk Management Committee reports to the Board at least once a year on risk-related management performance including strategies, targets, and actions. Besides, the Crisis Management Group is responsible for cross-departmental coordination and risk awareness training.

  • The Crisis Management Group is responsible for the identification and assessment of SYSTEX’s overall risks, evaluating the impact of various issues from the perspective of the overall business operation to determine the impact of climate-related risks relative to SYSTEX’ various risks.

  • The Sustainability Group is responsible for identifying climate risks and opportunities, re-evaluating relevant impacts and planning strategies, targets and actions every year. The “Environment Team” under the “Sustainability Group” is responsible for planning and implementing actions and then reporting to the Risk Management Committee on action performance.

4 categories of actions: emission management, energy management, water stewardship, and environment management. SYSTEX sets short-, medium- and long-term goals respectively and corresponding measures and actions.

• Key metrics

• 1. Resource conservation and waste reduction: water conservation, energy conservation and waste reduction
  2. Continuously conduct ISO verifications
  3. Renewable energy consumption

• ISO verifications

• 1. Greenhouse gas emissions
     According to the guidelines of “ISO 14064-1: 2018”, SYSTEX collects and discloses emissions sources covering “Direct GHG Emissions (Category 1)”, “Indirect GHG Emissions from Imported Energy (Category 2)”, and “Other Indirect GHG Emissions (Category 3-6)”, and has been verified by an independent 3-party. The boundary of GHG inventory is the headquarters building.
  2. Environment management system and energy management system
     Implement management system operating procedures in accordance with the management procedures of “organizational risk and opportunity”, “environmental considerations identification”, “legislation identification”, and “energy identification and review”, and then conduct ISO verifications every year.

• Metrics and targets
  Metrics and targets: SYSTEX aims to achieve “Net Zero by 2050” and formulates its carbon reduction paths and the short-, medium-, and long-term goals accordingly, and then promotes various internal management mechanisms to move towards the ultimate goal by 2050. For more details about the SYSTEX “Targets of Net Zero Emissions and Performance”, please refer to “Environmental Sustainability Policy“.
• Conduct climate-related risk and opportunity identification, climate scenario analysis and formulate corresponding strategies and measures. For more details about the SYSTEX “Environment and Energy Management Measures”, please refer to “Environment & Energy Management“.