Climate Governance-Inventec ESG website

Task Force on Climate-related Financial Disclosures (TCFD)

Inventec recognizes the substantial and potential impacts of climate change on itself and its stakeholders. In addition to proactively disclosing climate information in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) guidelines, Inventec joined TCFD Supporters in 2023. The Company conducts self-assessments of its climate change management in the areas of governance, strategy, risk management, and key metrics every year, aiming to achieve effective risk control and make informed development decisions.

Category	Inventec’s Actions
Governance	The Board of Directors is the highest supervisory body for climate governance at Inventec. In 2022, the Board resolved to establish the Sustainability Committee. It is responsible for formulating the Company's climate strategy, assessing risks and opportunities, and coordinating, supervising, and reviewing the implementation of key performance indicators. The Sustainability Committee has established a Sustainable Environment Team, led by executive managers. This team focuses on addressing issues such as climate risk management and environmental sustainability. It integrates resources across the value chain to develop and implement cross-departmental initiatives. The Sustainability Committee reviews these initiatives and reports the results to the Board of Directors at least once a year.
Strategy	Based on the TCFD framework and best practices from leading companies, Inventec identifies climate risks and opportunities across its value chain through cross-departmental discussions and evaluations. The Company sets climate-related performance targets, action plans, and management mechanisms at the “mitigation” and “adaptation” levels. Inventec also regularly discloses its management outcomes every year. The timeline for the low-carbon transition plan, identifying climate risks and opportunities relevant to operations over three distinct periods is short-term (2023-2024), mid-term (2025-2027), and long-term(2028-2030). Inventec calculates the risk values for all material risks and then categorize them into high, medium, and low-risk levels based on the ranking of the risk values. The identified material climate-related risks are subsequently integrated into the operational management mechanisms for control and monitoring across all units within the Group.
Risk Management	Under the Sustainability Committee, the Risk Management Team has been established to incorporate climate issues into the daily risk management mechanism. Utilizing the TCFD framework, the team identifies potential climate-related risks and opportunities under different scenarios. In response to the identified risks and opportunities, the team formulates relevant actions and, after approval, discloses these risks and actions externally and conducts monitoring on a regular basis. Inventec has followed four steps for identifying and managing risks with ongoing monitoring, namely 1) Identify Risks and Opportunities, 2) Assess Value Chain Impact, 3) Determine Materiality, and 4) Manage and Disclose.
Indicators and Targets	Based on the identified risks, Inventec sets up mitigation targets and disclose them to the public. Additionally, Inventec also sets its carbon reduction targets for 2030.

Inventec Climate Risk Matrix

All risks

High-risk

Moderate-risk

Low-risk

Circle size：Likelihood high, moderate and low.

Climate-related risk	Types	Risk Description
Transition Risk	Regulations and policy (inculding leagl risks)	Increased sustainability-related requirements and norms
	Regulations and policy (inculding leagl risks)	Increased cost of greenhouse gas emissions
	Technology	Low-carbon technology transformation cost
	Market	Changes in customer behavior
	Reputation	Increased negative feedback from stakeholders
Physical Risk	Chronic Risk	Rising average temperature
	Acute Risk	Increased extreme weather events - typhoon/rainstorm
		Extreme weather events – extreme low temperature
		Increased extreme weather events - drought
		Increased extreme weather events – high temperature

Adaptation and Mitigation Measures for High-risk Issues

Actively cooperate with customers and voluntarily carry out product carbon footprint related activities within the value chain.
Complete various applications for energy efficiency labels, product carbon labels, etc.
Adopt the SBT Science Based Target Reduction Tool to set goals.
Continuously build and implement disaster emergency response measures and business continuity plans (BCP), and work with supply chain partners to reduce the impact.

Analysis of the Financial Impacts Arising from Major Climate-related Risks

Issues		Value Chain Impact Assessment
Issues		Upstream suppliers	Inventec	Downstream clients
Transition Risks	Changes in customer behavior	Moderate	High	Low
Transition Risks	Transition costs of low-carbon technologies	Low	High	Moderate
Physical Risks	Extreme weather events - heat	Moderate	High	Moderate

Diagrams of Major Climate-related Risks

Changes in customer behavior
Transition costs of low-carbon technologies
Extreme weather events - heat

Case Study：Extreme Weather Event - Heat

Climate scenario analysis steps

Identifying major climate risks

Based on climate risk ranking, likelihood, and management expansion scope, we conducted a quantitative assessment of the potential impact of the three risks in the short-term materiality analysis, "Transition costs of low-carbon technologies, Increase in extreme weather events - heat, Changes in customer behavior". Therefore, we decided to use "Increase in extreme weather events - heat" as a further analysis and evaluation item.

Adopt appropriate Scenario Analysis

Inventec's major production bases in Taiwan, China, Mexico and Czech were included in the assessment.
Simulations were conducted based on extreme high emission (IPCC SSP5-8.5) and very low emission (IPCC SSP1-2.6) climate scenarios from 2023 to 2050.

Quantify the risk impact

Evaluate and analyze the potential impact, level and expected value of extreme high temperature in each factory area.
Calculate the amount of impact in 2040 and 2050 (including future factory expansion plans).

Mitigation and adaptation actions

Formulate response plans and action plans for each factory.
(1) Formulate mitigation measures for predictable scenarios and review them regularly.
(2) Preliminary adaptation assessment before plant expansion plan.

Main production base ^Note1	Risk level	Financial impact ^Note2				Mitigation measures in response
		2040		2050
		SSP1-2.6	SSP5-8.5	SSP1-2.6	SSP5-8.5
Mexico	High	Medium	Medium	Low	Medium	Establish relevant response mechanisms to address high-temperature disasters. Develop production modes suitable for normal high-temperature conditions.
China	High	High	High	High	High	Increase awareness and establish ongoing plans to implement relevant power outage contingency measures, such as setting up solar energy combined with energy storage systems to achieve independent power supply capability.
Taiwan	Medium	Low	Low	Medium	Low	Gradually implement medium to long-term contingency production control plans for extreme high-temperature conditions. Continuously monitor extreme high-temperature fluctuations and adjust contingency levels promptly as needed.

Note1: ICZ is excluded due to lower local temperatures and absence of extreme heat risks in climate scenarios. IET is also excluded because it has minimal production activities, which allows for faster response even in case of extreme heat conditions.
Note2: Financial impact is assessed based on the proportion of 2022 Group revenue.
Note3:Currently evaluated operational sites cover 100% of all existing production plants. Additionally, the assessment for 100% of the new expansion in Mexico has been synchronized to address future climate risks.