Climate Governance
ECOVE adheres to the targets set forth by the Science Based Targets initiative (SBTi), in which its parent company, CTCI Group, is an active participant. This initiative aims to limit global warming to within 1.5 ℃ and establishes a scientifically-based carbon reduction pathway. Furthermore, ECOVE aligns with the objectives promoted by the Net Zero Emissions Alliance, committing to achieve net zero emissions at its oce locations by 2030 and at its production sites by 2050.
In response to the impacts of global climate change, ECOVE recognizes that climate change may pose both risks and opportunities for our related businesses. Therefore, starting in 2020, we have implemented the management framework recommended by the Task Force on Climate-related Financial Disclosures (TCFD). This framework encompasses four core elements: governance, strategy, risk management, and metrics and targets. We continuously assess climate change risks related to our operations each year, adapting to the latest international developments to enhance the organization's resilience in addressing climate change. In 2024, we have incorporated the International Sustainability Standards Board's ("ISSB") IFRS S2 on Climaterelated Disclosures, which was published in June 2023. The Company has assessed the relevant standards and simultaneously completed an integrated report in accordance with the recommendations of the TCFD and the Taskforce on Nature-related Financial Disclosures (TNFD). (Publications - ECOVE Environment Corporation).
Climate Governance and High-Level Management
The climate governance mechanism of ECOVE is overseen by the Board of Directors as the highest governing body, and relevant responsibilities are executed through the Sustainability Development Committee and the Risk Management Executive Committee. The "Sustainability Development Committee" of ECOVE is responsible for coordinating corporate social responsibility, environmental protection (including climate-related risks and opportunities), and corporate governance matters. However, regarding the risks faced during operations, the "Risk Management Guidelines" issued in 2017 (which cover "information security risks," "health and safety environmental risks," "operational risks," "quality management risks," and "climate and natural risks") is the legal source to establish the "Risk Management Executive Committee" and formulate the "Risk Management Policy" as the highest guiding principle and management procedure for the Company's risk management. The executive committee is required to report to the Board of Directors at least once a year. Since the "Risk Management Executive Committee" serves as the decision-making body for the Company's risk management, the environmental protection-related risks assessed by the Sustainability Development Committee (including climate-related risks and opportunities) are also integrated into the Company's overall risk management process and are reviewed and updated annually to ensure that the analysis continues to reflect the latest operating conditions and external environmental changes.
Meanwhile, in order to ensure that Board members continue to have climate and environmental stewardship, all members of the Board of Directors of the Company have completed relevant training in accordance with the "Guidelines for Continuing Education for Directors and Supervisors of Exchangelisted and OTC-listed Companies." The training sessions are coordinated by the Group's Secretariat of the Board of Directors in accordance with the needs of the directors' professional functions or external trends. The training content covers corporate governance, business ethics and compliance, risk management, corporate sustainability, information security, and climate-related issues, etc., including courses aligned with IFRS Sustainability Disclosure Standards S1 and S2, aiming to enhance the Board's understanding and supervision capability of emerging issues, as well as the eectiveness of corporate governance.
Climate Performance Incentive System
The remuneration of the Company's directors and managers follows the guidelines and criteria set forth by the Remuneration Committee and the Board of Directors, including the "Guidelines for Director Performance Evaluation and Remuneration System" and the "Guidelines for Manager Performance Evaluation and Remuneration System." The remuneration takes into account industry norms, as well as the Company's performance, individual contributions, and achievements, aiming to provide reasonable compensation. It covers the achievement of various financial targets (accounting for approximately 50% of the total) and non-financial performance indicators (accounting for approximately 50% of the total). The industrial model of ECOVE is highly related to sustainable development, thus the ESG plan achievement rate serves as one of the Company's non-financial performance indicators. Sustainable goals are set on this basis and linked to the performance of each executive (including the Chief Executive Ocer and other senior executives) and departmental KPIs is one of the factors considered for performance bonus distribution. The required achievement indicators cover the rate of renewable energy generation and the rate of environmental protection (including greenhouse gas reduction). The purpose of the established "Climate Performance Reward System" is to connect sustainable goals with each executive (including the Board of Directors and managers) and align them with departmental performance objectives, thereby strengthening the implementation of the Company's environmental management goals. It also enhances vertical management and communication. By requiring departmental performance objectives, employees are encouraged to set personal environmental performance goals, eectively promoting ESG-related work through a two-way channel from the bottom up and top down, enabling the Company to achieve its established environmental objectives.
Strategies
The Company's risk dimensions are aligned with the TCFD framework, covering physical risks (acute - heavy rain and flooding, water shortages, strong winds; chronic - high temperatures) and transition risks (policy and regulation, market, technology, goodwill). Opportunities are classified into five categories: resource eciency, energy sources, products and services, markets, and resilience. The assessment of the impact on the overall business and operational aspects of ECOVE will be conducted over dierent time frames (short-term: within 3 years, medium-term: 3-5 years, long-term: over 5 years) using two evaluation criteria: incidence rate (already occurred, almost certain, very likely, likely, almost unlikely to occur) and impact level (extremely minor, minor, moderate, significant, extremely significant). A risk and opportunity matrix will be created based on these evaluations. The time intervals are defined based on the Company's decision-making cycles and strategic planning characteristics as follows:
Identification of Significant Climate Risks and Opportunities
ECOVE's climate-related risk issues encompass a total of 14 items (including 11 transition risks and 3 physical risks). After a systematic assessment, 3 significant climate risks were ultimately identified. ECOVE follows the Task Force on Climate-related Financial Disclosures (TCFD) framework to conduct a quantitative analysis of financial risks, assessing their potential impact on operating costs, capital expenditures, and revenue. Based on the characteristics of risks and their likelihood of occurrence, corresponding management measures and adaptation strategies will be formulated to enhance climate resilience and reduce potential financial impacts and operational risks.
After assessment, the impact level of the three major risks is determined to be moderate to minor, and none have caused significant financial impact on the Company. The classification of risk issues is as follows:
1. Significant risk issues: The transition to a low-carbon economy has resulted in increased equipment costs, changes in customer behaviors, and damage to photovoltaic equipment due to strong winds, leading to an inability to generate electricity. There are three issues in total, all of which have already occurred, thus they are categorized as significant risk issues.
2. Moderate risk issues: The establishment of greenhouse gas reduction targets, building efficiency/labeling regulations and standards, the reduction of high-carbon investment demands from customers, damage to photovoltaic equipment due to flooding resulting in an inability to generate electricity, insucient water supply caused by changes in rainfall leading to the need for incineration systems to reduce load, and financial crises are identified. There are six issues in total, all of which are very likely to occur and are anticipated to impose minor impact on the Company, thus they are categorized as moderate risk issues.
3. Non-significant risk issues: The following four issues are considered non-significant: general environmental regulations, loss of waste disposal service market due to green movement requirements, lower-thanexpected transformation to low-carbon technologies, and price increases of raw materials due to carbon fees. These issues have not yet actually occurred, and their anticipated impact on the Company is deemed minor. The probability of occurrence is only possible, and the expected impact on the Company remains minor; therefore, they are classified as non-significant risk issues.
ECOVE's issues on climate-related opportunities encompass six key areas: enhancing the power generation eciency of incineration plants, introducing dry deacidification system to reduce water withdrawal in waste treatment, participating in the carbon trading market, responding to government climate adaptation policies with increased demand for reclamation and desalination plant, addressing net-zero transformation policies with an increase in renewable energy sales, and developing reuse services.
1. Significant opportunities issues: Five issues, namely, enhancing the power generation efficiency of incineration plants, introducing dry deacidification system to reduce water withdrawal in waste treatment, responding to government climate adaptation policies with increased demand for reclaimed water plants and seawater desalination, addressing net-zero transformation policies with an increase in renewable energy sales, and developing reuse services, are significant because they are the Company's established policies, the market demand is high, and the technology has reached maturity.
2. Non-significant opportunities issues: The topic of participating in the carbon trading market is classified as a non-significant issue because it has not yet been incorporated into Company policy, and there remain uncertainties regarding the demand in the carbon trading market and the acceptable market price.
Climate Risk Scenario Analysis
Recognizing that the impacts of climate change vary by geographic location, ECOVE employs a range of professional tools and data sources for scenario simulation and assessment in conducting physical risk analysis. These include the Taiwan Climate Change Projection Information and Adaptation Knowledge Platform (TCCIP), the National Science and Technology Center for Disaster Reduction's 3D Disaster Potential Map, and the Disaster Risk Adaptation (Dr. A) Platform, with spatially downscaled future climate projections for Taiwan's regions serving as the basis for scenario setting. This analysis also references the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report (AR6), adopting the latest warming scenarios and climate projection data. Using the baseline period (1995–2014) as the reference, the analysis focuses on climate changes under the SSP5-8.5 (very high emissions) scenario in 2030 to assess the potential operational impacts of the following key indicators: changes in the annual maximum number of consecutive dry days, used to evaluate potential future water shortage risks; changes in maximum annual single-day rainfall, used to analyze the impact of extreme precipitation on flood risk; and changes in the number of warm days, used to evaluate the duration of high temperatures in operating regions and the potential impact on operations from strong winds associated with typhoon incursions. For transition risks, ECOVE uses the Net Zero Emissions (NZE) scenario―limiting warming to 1.5°C―as the basis for assessing the potential impacts on current and future operations from low-carbon product and service development, shifts in customer consumption behavior, changes in the financial system, related regulatory trends, and the overall low-carbon transition.
Risk Management
In order to effectively assess climate-related risks and opportunities, ECOVE has incorporated climate and natural risk types into its "Risk Management Guidelines." This approach allows for the systematic management of potential risks faced by various operating companies. Following discussions by the "Risk Management Executive Committee," priority risk issues are identified, and control measures are proposed. The climate change risk management representative (a member of the Sustainable Development Committee), based on the results of ECOVE's identification of climate change risks, compiles and reports to the Risk Management Executive Committee on significant or immediate risk issues. The Risk Management Executive Committee shall compile the risk assessment results to be provided as a reference for the audit unit to draw up the annual audit plan. The audit oce will report the audit results to the Board of Directors to facilitate the board's monitoring of climate-related issues. In accordance with the "Risk Management Regulations", ECOVE systematically identifies climate risks that may be faced during operations. Climate risk consists of two major types, transformational and physical, which are further differentiated into regulations, technology, market, reputation, and immediate and long-term. Opportunities are divided into five categories namely, resource efficiency, energy sources, products and services, market, and resilience. The risk and opportunity matrices are evaluated and drawn based on the two consideration factors of incidence rate and level of impact. After discussion by the Risk Management Committee, the material risks and opportunities which ECOVE may face are determined, and effective actions are adopted to manage risks or harness the possible opportunities so as to strengthen the operational system and competitiveness of the Company and its subsidiaries.
Climate Indicators and Targets
In response to the issue of climate change, ECOVE has initiated greenhouse gas inventory operations starting from 2022 as the base year. Each year, the Company completes the inventory for the previous year covering Scopes 1, 2, and 3, and commissions a third-party organization to conduct external verification to ensure the accuracy and credibility of the data. ECOVE adheres to the greenhouse gas reduction targets set forth by the Science Based Targets initiative (SBTi), in which its parent company, CTCI Group, is an active participant. This initiative aims to limit global warming to within 1.5° C and establishes a scientifically-based carbon reduction pathway. Furthermore, ECOVE aligns with the objectives promoted by the Net Zero Emissions Alliance, committing to achieve net zero emissions at its oce locations by 2030 and at its production sites by 2050.
In addition, ECOVE actively participates in domestic and international climate action initiatives, such as the Carbon Disclosure Project (CDP), to enhance the transparency of climate-related information and strengthen the Company's ability to identify and manage climate risks.
Carbon Reduction Strategy
ECOVE incorporates the life-cycle greenhouse gas emissions reduction benefits of Waste-to-Energy (WTE) into its Scope 1 emissions management strategy, considering the trade-os with direct emissions and integrating these into overall management and project decision-making to formulate short-, medium-, and long-term carbon reduction targets and investment directions.
Short-term carbon reduction strategy (2025–2030): The Company's short-term carbon reduction strategy focuses on systematically improving energy and resource use efficiency. For Scope 1, the primary approach is upgrading equipment to enhance performance and reduce energy consumption, or switching to low-carbon energy sources. In addition, electricity generated from the Company's own solar power facilities is supplied back for internal use to reduce carbon emissions intensity during operations. The Company also conducts greenhouse gas and carbon footprint inventories in accordance with international standards to strengthen the completeness and transparency of emissions data, and has introduced an internal carbon pricing mechanism to incorporate carbon costs into management decisions, guiding each unit to implement carbon reduction actions and laying the foundation for the medium- to long-term net zero transition.
Long-term carbon reduction strategy (2030–2050): Use renewable energy and deploy carbon reduction or carbon removal technologies. If further reductions ultimately become infeasible due to technological constraints, the Company will evaluate the moderate purchase of appropriate carbon credits for osetting, with the use limit set at 10% of baseline-year emissions in principle, ensuring that the net zero target is met on a reduction-first basis.
Promoting Internal Carbon Pricing
To strengthen the linkage between climate action and operational strategy, ECOVE formally implemented an internal carbon pricing system in 2025. The rate is set with reference to international carbon price trends, including the World Bank's State and Trends of Carbon Pricing report, the EU carbon market, and Taiwan's carbon fee, while also considering the national net zero outlook and regulatory trends, and drawing on industry pricing approaches and application strategies. Rates are adjusted according to the nature of different projects. ECOVE's internal carbon pricing rate is consistent with the Group's, set at US$100/tCO2e for management purposes, while certain subsidiaries and projects apply NT$300/tCO2e, covering Scope 1 and Scope 2 of the greenhouse gas inventory. This mechanism incorporates carbon costs as a deduction in the financial objective KPI for gross profit margin achievement rate, and discloses it in management reports, thereby strengthening the integration of carbon costs with operational decision-making and ensuring that the system could deliver management eectiveness and implement carbon reduction measures.
Resource Management
Water Resource Management
Establish water usage targets
