Climate Change Risks

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With the threat of global climate change, participants in the financial markets are increasingly demanding information on the impacts of global climate change. Creditors and investors increasingly require consistent, comparable, reliable and complete risk information. Chailease has therefore signed up to become a TCFD supporter and, based on the Recommendations of the Task Force on Climate-Related Financial Disclosures framework, is identifying risks and opportunities that climate change may bring and making preliminary assessments of its potential financial effects and other impact. Relevant assessment results are also reported to the Board of Directors to ensure that those responsible for governance have sufficient awareness of the impact of climate change to reduce risks and strengthen the company's governance in this area.

Chailease Holding uses the annual emerging risk identification process to assess the possibility of risk and losses and degree of impact of climate change on the Company. The ESG team asked 12 units and relevant units to start a workshop on climate change risks. For the list of climate change risk factors, Chailease Holding referred to TCFD disclosure recommendations and related climate change information, and based on the business characteristics of its subsidiaries as well as reports and information issued by relevant domestic and foreign institutions, concluded eight relevant factors with Chailease Holding from a number of climate risk factors. Chailease Holding has identified the relevant impacts on different businesses when climate-related transition risks and physical risks occur, and to identify, rank, and produce a risk matrix.

2020 Climate Change Risk Identification Results

A total of eight significant potential climate change risks were identified this year. Relevant content and management measures are as follow:

2020 Climate Change Opportunity Identification Results

While undertaking climate change risk response, Chailease also assesses the potential opportunities climate change may bring and brings them into its business development strategies. Three significant potential climate change-related opportunities were identified in 2020. Assessment results and discussion of these are as follow:

Analysis of the Potential of Solar Power Plants

In order to implement TCFD’s mission of exposing financial impacts related to climate change, Chailease and external consultants worked with external consultants this year to identify climate change risks. In addition to performing qualitative assessments, we set up scenario analysis to perform more accurate quantitative forecasts. In response to energy transition goals, Chailease has built many solar power plants. These important Company assets are located throughout Taiwan to supply clean energy. In order to prevent these important assets from being impacted by extreme weather, Chailease uses scientific tools to determine the scope of impact in advance to precisely control risks.

According to the United Nations Intergovernmental Panel on Climate Change (IPCC) 5th Assessment Report (Assessment Report 5, AR5), the future climate is defined by “Representative Concentration Pathways” (RCPs) Change scenarios. This year, the RCP 8.5 scenario is being used as the two types of risk scenarios for flat land flooding and slope disasters. According to the map data from the National Science and Technology Center for Disaster Reduction, the risk of flat land flooding and slope disasters consists of five levels. Level 5, the most severe level, was used to assess Chailease’s photoelectric sites. A total of 12 power plants are situated in areas with high risk of flooding or sloped land disasters. Relevant diagrams are shown below.

According to the disaster potential map of the National Science and Technology Center for Disaster Reduction, we have six ground-based solar power plants in Tainan located in areas with level 5 high risk of flooding. Although they fall within risk areas, our plants are along slopes and there is height difference with the ground-based solar modules, so they exceed the displayed flood height. In addition, we have no solar power plants located in the fifth-level area with a high risk of slope disasters.

The total installed capacity of the 12 power plants accounted for 0.62% (of which, power plants on flat flood land accounted for 0.43, while power plants on sloped area accounted for 0.19). Chailease has implemented various measures in advance, from the legality site selection of a power plant, planning and design, to construction inspection, all aspects have been strictly checked to ensure the operational resilience of the overall power generation system and to minimize risks.

All power plant installation locations adjusted the height of solar power modules and equipment to ensure that we selected the safest engineering options so that even in the most severe climatic conditions, the solar power plants will remain safe from floods to meet risk control requirements. The evaluation criteria have all been incorporated into our internal specifications. Plants located on hillsides need to first pass a soil and water conservation assessment and can only be used for building after being reviewed by the competent authority. Before the construction of the plants, it is necessary to carry out on-site surveys and issue engineering opinions. The investment review committee also reviews the information found in the field survey documents and the disaster potential map of the National Science and Technology Center for Disaster Reduction to ensure the operation of plant sites will not be impacted by abnormal weather.