HTC 2022 Task Force on Climate-related Financial

2022 TCFD Report

Publication Date: June, 2023

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Contents ___Preface __________________________________________ 3
Governance ______________________________________ 5
Climate Change Governance Framework ____________________________ 5
Management Responsibilities _____________________________________ 7

Risk Management _________________________________ 8
Risk Management Process ________________________________________ 8
Situational Analysis _____________________________________________ 11

Strategy _________________________________________18
Risks and Opportunities _________________________________________ 18
Coping Strategy _______________________________________________ 21
Financial Quantification - Risk ____________________________________ 41
Financial Quantification – Opportunities ____________________________ 47

HTC ESG website
HTC continues to update the content of the ESG website to provide stakeholders withthe most real-time ESG information, please click the link to enter the HTC ESG website

Metrics and Targets _______________________________ 53

https://www.esg.htc.com

Metric Goal Setting ____________________________________________ 53
HTC Execution status __________________________________________ 63

Assessment Statement ____________________________ 67

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Preface ___According to the Global Risks Report released annually by the World Economic ForumHTC refers to the framework of the "Task Force on Climate-Related Financial Disclosures(hereinafter referred to as WEF) since 2005, the global risk trend has changed from

(TCFD)" guidelines issued by the International Financial Stability Board (FSB), analyzes the

economic risks to environmental risks. Among them, extreme weather and failure of climatetransition and physical risks and opportunities that may be faced in the future, and actively

action have been identified as medium- and long-term focus; and since the Paris

In response to relevant impacts, four core elements are disclosed according to theAgreement (Paris Agreement) set the global temperature rise to be controlled at 1.5°C,

framework of its TCFD: "Governance", "Strategy", "Risk Management", "Indicators andgovernments of various countries have successively announced net zero goals and actively

Objectives", establish a risk framework, and identify major risks and opportunities that may

formulated regulations to strengthen The strength of climate change response. How to

be caused to operations. And put forward its relevant coping strategies, and prepare thiscope with the impact of climate change has become a topic that the world needs to face

TCFD report based on this, to achieve the purpose of communicating with stakeholders.

together. HTC is aware of the impact of climate change on corporate operations, and will
introduce the risk management method recommended by TCFD in 2022 to assess and

The scope disclosed in this report includes HTC Taoyuan headquarters, Taoyuan factory,

manage climate change-related risks and opportunities, strengthen the company's climate

Taipei office building and various operating bases, such as the United States, Canada, thechange governance system and mitigate the threats brought by climate change. To achieve

United Kingdom, Germany, France, India, Australia, China, Japan, Hong Kong, and thethe purpose of sustainable operation of the company.

United Arab Emirates. However, for the physical risk consideration, the inventory is mainly
stored in the factory, so it is limited to the operating base in Taiwan.

When assessing the impact of climate-related risks and opportunities on corporate
operations, HTC leverages our expertise in mobile technology and our unremitting efforts

HTC plans to publish the TCFD report regularly every year, and the period of assessmentin product innovation to weave elements of climate change into our VIVE Reality vision andinformation used in this report is from January 1, 2021 to December 31, 2022. This reportcontinue to serve the corporate world and society to provide a complete solution. Create

has passed the external assessment of SGS-Taiwan and obtained the assessment

richer life experiences by integrating advanced augmentation mobility technology

statement of "TCFD Performance Assessment".

expertise. HTC provides high-quality hardware, software, platforms and services tocustomers in various fields, including education, art, entertainment and healthcare, with
innovative technological strengths that break through spatial distance. In particular, privateand business travel continues to be restricted due to the epidemic and has become thenorm in life. Many industries and organizations have begun to introduce various virtual
reality applications that are not limited by space and distance, making business processes
smoother and increasing consumers' resilience in the face of climate change. . HTC exerts
its corporate influence and actively acts as a leader in net zero emissions. With reference
to the SBTi scientific reduction path, it sets the target and path of corporate net zero
emissions, and cooperates with the establishment of a carbon management platform to
examine possible environmental impacts during the operation process. Integratesustainability-related information so that HTC can gain insight into opportunities whenfacing sustainability-related decisions.

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Governance ___Climate Change Governance Framework
HTC’s climate change governance and management structure is the final decision-making
and review work of the board of directors. It has an ESG committee responsible for the

ESG Office

implementation of issues and resolutions related to climate change management, and the(1) Regularly track information related to the development trend of international

ESG office is responsible for the identification and assessment of climate change risks andclimate change, and enhance the company's colleagues' awareness of global risk

opportunities. . At the beginning of 2022, HTC renamed the original CSR committee to thetrends and climate change

ESG committee. Chairwoman Cher Wang serves as the chairman of the committee, and(2) Responsible for identifying and assessing the risks and opportunities of climate

senior vice president Madeline Chen appointed as the Chief Sustainability Officer. The ESG

change, and regularly coordinating climate change discussion meetings,

Office was established as a full-time operating unit responsible for planning and guiding

convening the risk management team to identify the physical risks, transition risks

the company's "Sustainable Development (ESG)" related implementation operations, andand opportunities of climate change, and proposing corresponding improvement

also regularly reported the trend, impact and implementation performance of related issues

measures and regularly tracking the implementation status and goals, andto the ESG Committee. Responsibilities related to climate change are described as follows:

Board of Directors(1) The board of directors is the highest decision-making unit of HTC's climate change
risk management, responsible for reviewing HTC's overall climate change
management policies and major resolutions, and supervising the effective
operation of the climate change management mechanism(2) Make final decisions on HTC's annual budget, business plans, and major capital

continue to strengthen climate risk and opportunity management.


TCFD Risk Management Group(1)

Composed of designated members of the ESG Committee, responsible for
identifying and assessing the risks and opportunities of climate change, identifying
the physical risks, transition risks and opportunities of climate change, andproposing corresponding improvement countermeasures and regularly reporting
the implementation status and goals

expenditures related to climate change-related risks and opportunities.


Audit Committee(1) Audit the risks and opportunities related to HTC's climate change, and include themin the annual budget, business plan, and major capital expenditure proposals



ESG Committee(1) Report the assessment results and work progress of climate risks andopportunities to the board of directors every year
(2) Responsible for the implementation of climate change management policies andmajor resolutions reviewed by the board of directors, and set up a ESG office as afull-time executive unit under it.
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Risk Management ___Management Responsibilities

Risk Management Process

The ESG Committee led by the Chief Sustainability Officer is responsible for implementing

In order to strengthen corporate governance, promote stable operation and sustainableclimate change management policies and major resolutions reviewed by the board ofdevelopment, HTC has formulated relevant "risk management policies" as the criteria for

directors, integrating resources and progress of climate action across departments, andrisk management according to various types of risks, and has set up a full-time unit to becomprehensively assessing climate change risks and other company risks. Various working

responsible for the company's related risk management and risk measurement executiongroups have been launched under the committee to respond to various ESG issues,

operations. To establish a sound risk management mechanism. The ESG Office isconnect the sustainable development issues of various departments, and continue toresponsible for the company's climate change and ESG-related risk management andpromote corporate social responsibility. It is expected to take into account economic,

coordinating the TCFD risk management team to carry out risk measurement andenvironmental, and social aspects to implement sustainable corporate operations. With a

execution operations. The risk management organizational structure takes the board ofclear organization and division of labor, relevant departments are involved in management

directors as the highest decision-making unit for risk management, and has an ESG

actions through cross-departmental meetings, thereby driving the overall sustainablecommittee under it, which is responsible for reviewing risk management policies anddevelopment and innovation of HTC, and ensuring that relevant policies and measures arereviewing Management report on major risk issues. When identifying risks, HTC conducts

incorporated into the company's daily operations. The TCFD risk management team isqualitative or quantitative management of various risks by analyzing its operating

established by designated members of the ESG Committee to participate in the project.

environment and covering various businesses and operating activities.

The Committee has a ESG Office, which is responsible for continuously tracking andreviewing the progress of various climate change-related programs. Regularly adjust theAfter identifying the risks it may face, HTC will formulate appropriate measurement

climate risk assessment and analysis results in the same industry, and report the above

methods according to different risk types as the basis for risk management. Risk

actions to the board of directors through the Chief Sustainability Officer.

measurement refers to the use of various information to determine the possibility ofoccurrence or non-occurrence of risk events, and to study and judge the impact of the

Climate Change Risk Management Organizational Chart

results on HTC. When conducting risk analysis, consider whether the current internal
control can prevent risk events. Determine the risk level based on the risk analysis results,

Boardof Directors

and provide the necessary information as the basis for risk assessment and risk response.
After assessing and summarizing the risks, all responsible units formulate appropriate

Audit
Committee

response measures to the risks they face and control the risks to an acceptable level. Each
responsible unit monitors the risks of its business and proposes countermeasures, andprovides the risk assessment form to the risk management team of the ESG committee,

ESG
Committee

and the risk management team submits it to the ESG committee after compilation. The
ESG committee measures and monitors the quality of overall risk management, and

ESG
Officeregularly submits risk assessment results and work progress to the board of directors. HTC
formulated the "Climate Change Management Policy" and "Climate Change Risk
Management Procedures", and in 2022, according to the risk assessment mechanism

TCFD Risk
Management Group

recommended by TCFD, started the process of identifying climate change risk
opportunities, completed the risk opportunity identification, and evaluated its financial
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impact, and then Establish response measures and key indicator targets. HTC defines theshort, medium, and long-term time intervals of climate-related risks and opportunities,
setting "2022-2025" as the short-term, "2026-2030" as the medium-term, and "2031-2050"

Climate Change Risk and Opportunity Identification Process
No.

Process

Description
TCFD risk management team lists business-related climate

as the long-term and based on this Carry out climate risk and opportunity assessment, inprinciple, re-identify and assess climate risk opportunities every two years. The types of1change risks and opportunity factors by means of scenario

TCFD workshop

simulation analysis and other methods and with reference toclimate risks include transition risks and physical risks, which are further divided into

internal and external information

policies and regulations, technology, market, reputation, and immediate and long-term.
Opportunities are grouped into categories such as resource efficiency, energy sources,2

products and services, markets, and organizational resilience. Participating units identified
the company's operational transition and physical risks (9 items in total) and potential

3

opportunities (8 items in total) that may be caused by climate change factors throughworkshops, and assessed Risks and Opportunity probability and impact degree, draw risk
and opportunity matrix, and formulate relevant response measures for the top three risks

4

Collect identification

The ESG Office is responsible for compiling the climate change

resultsrisk and opportunity factors related to the business of each unit

TCFD Risk/Opportunity

Calculate the possibility and impact degree of TCFD risk/

Matrixopportunity, and draw the TCFD risk/ opportunity matrix
Authorities and responsible units write major climate risk andDevelopopportunity response strategies, and calculate the cost of

countermeasures

strategy implementationand opportunities with high probability of occurrence and high impact.
5

Evaluation Criteria
Assessment of the likelihood of

Chance likelihood assessments are geared toward6

risk occurrence is oriented

Calculating Financial
ImpactCalculate the financial impact of risks/opportunities andresponse costs by the responsible units

Develop indicators andgoals

The corresponding indicators and targets are recommended by
the responsible units to evaluate the implementation of relevant
response measures

towards

The ESG office regularly (quarterly) tracks the implementation

Risk past experience

Chance past experience

Risk future occurrence time

Opportunity future time point

The risk may occur in the future

Opportunity future possibility

Risk impact assessment is aimed

Opportunity impact assessment is oriented

attowards

Operational impact

Reputation impact

Reputation impact

Financial Impact Scale

Personnel impact

Chance likelihood assessments are geared toward

Advance warning

Chance past experience

7

Policy Implementation

status, and the ESG committee regularly reports to the board of
directors as a reference for performance tracking

Financial Impact Scale

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Situational Analysis
HTC follows the TCFD guidelines and uses climate scenario analysis to effectively identify

IPCC Global Warming Worst Scenario in the Sixth Scientific Assessment Report
SSP5-8.5

and assess the potential impact of climate-related risks on business performance, and1.

formulate robust coping strategies based on the analysis results to strengthen HTC's

It is estimated that the temperature in various parts of Taiwan will continue to rise in
the future.

resilience to climate change.

Types of

Scenarios for HTC

climate-related

to evaluate coping

risks andContextual content

Financial impact

Under the worst scenario of global warming (SSP5-8.5), the average annual temperature
may rise by more than 1.8°C and 3.4°C in the middle and end of the 21st century.
(a) Spatial distribution of estimated annual mean temperature in Taiwan in the future

strategies

opportunities
Transition Risk
Opportunity

Physical Risk

SBTi 1.5°C

When the global warming is controlled

HTC's

Science-Basedwithin 1.5°C, the risks arising from thedesignassesses

20%-

Target and Net-

low-carbon

50%

increasein

Zero Pathway

enterprises

NDC

HTC sets a net-zero path that meets the

Nationallytransformation

faced

by

low-carbon

consolidated operating
income, and 11% increasein operating costs ofDetermined

requirements of SBT, sets reduction

Expectedtargets, and refers to the carbon price ofContribution of

NDC and IEA to calculate the financial

Taiwanimpact of carbon tax on enterprises

IPCC Global

Under the scenario of extremely highIn extreme cases, it may

Warming Scenarios

greenhouse gas emissions (SSP5-8.5),

result in an operatingin 6th Scientificclimate change will lead to intensified

loss

Assessment Reportchanges in future average temperature,

consolidated operating

RCP 8.5 or SSP5

extreme high temperature, annual total

income,8.5

rainfall, annual maximum 1-day rainstorm

loss of less than 3%, andintensity, annual maximum number of

an increase of operatingconsecutive days without rainfall, andexpenses of less than

the

0.1%.

proportionofstrongtyphoons.

consolidated operating
income

of

0.3%

an

of

(b) Estimation of Taiwan's annual average temperature in the future

inventory

Possible operational impact on HTC and
its value chain* Under different scenarios, HTC uses climate risks and opportunities that may have financial impacts on
corporate operations. For details, please refer to 3.3 Financial Quantification - Risk

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2.

In future extreme high temperature events, the number of days with high temperature
above 36°C will increase.


Under the worst scenario (SSP5-8.5), in the middle and end of the 21st century, the3.

It is estimated that the total annual rainfall in Taiwan will increase in the future.


Under the worst scenario (SSP5-8.5), the average annual total rainfall in Taiwan will
increase by about 15% and 31% in the middle and end of the 21st century.

increase rate is about 8.5 days and 48.1 days.
(a) Estimated spatial distribution of Taiwan's high temperature days above 36°C in the(a) Spatial distribution of Taiwan's annual total rainfall estimated in the future

future(b) The number of days with high temperature above 36°C in Taiwan is estimated in(b) The Future Estimation of Total Annual Rainfall in Taiwan

the future

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4.

The intensity of the annual maximum 1-day rainstorm in Taiwan tends to increase.
5.

The annual maximum number of consecutive no-rainfall days in Taiwan tends toUnder the worst scenario (SSP5-8.5), the average annual maximum 1-day rainstorm

increase.

intensity increases by about 20% and 41.3% in the middle and late 21st century.

(a) Spatial distribution of estimated annual maximum 1-day heavy rain intensity in
Taiwan in the future

Under the worst scenario (SSP5-8.5), the average growth rate in the middle and end of
the 21st century is about 5.5%, 12.4%.
1.

The estimated spatial distribution of the annual maximum continuous rainless daysin Taiwan(b) Future Estimation of the Intensity of the annual maximum 1-day rainstorm in
Taiwan2. The Future Estimation of the Maximum Continuous No Rain Days in Taiwann
HTC Corporation 2022 Climate-related Financial Disclosure Report｜16｜

｜17｜Strategy ___Risks and Opportunities
6.

Affecting the number of typhoons in Taiwan and the change rate of typhoon rainfall.

Adhering to HTC's corporate vision and sustainable responsibilities, HTC includes the risks

Under the worst scenario (RCP8.5) in the middle and late 21st century, the number ofrelated to climate change into the scope of assessment and tracking, and continues to pay

typhoons affecting Taiwan will decrease by about 15% and 55%, the proportion of strong

attention to climate risks that will impact HTC's operations, including international

typhoons will increase by about 100% and 50%, and the typhoon rainfall change rate will

regulations and extreme weather conditions, etc., and according to the climate change

increase by about 20% %, 35%.

recommended by TCFD Climate change risk and opportunity assessment framework,
climate change scenario setting and derived risks and opportunities, assess climate changerisks and opportunities faced in the operation process, and further discuss relevant coping
strategies and target targets for high-impact risks and opportunities, as a climate change
specific management measures.
The specific identification process of risks and opportunities related to climate change is
as follows
A. Setting Climate Change

B. Assess the impact ofC. Identify climate risks

Scenarios

the operating

and opportunities

environment
Setting up two climate

Assess the impact andEstablish a risk andchange scenarios

impact of climate change

opportunity matrix to

SSP5-8.5 Warming up toon the operating

identify climate change

6°C

environment andrisks and opportunities

SBTi 1.5°C, NDC 1.5°C

stakeholders

warming

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Three HTC high-risk factors and three high-opportunity factors were identified, and the climate change risk matrix and opportunity matrix are shown in the figure below
Risk Matrix

Physical Risk -Increased severity of extreme weather events such as

Immediatetyphoons and floods

Physical Risk –Long Term
Transition Risk –Policies and Regulations

Opportunity Matrix

Short-Term

Extreme changes in climate patterns

Long-Term

Strengthening emissions reporting obligations

Long-Term

Opportunity –Use more efficient production management and distribution

Resource Efficiency

processes

Opportunity –Products and Services
OpportunityProducts and Services

Short-Term

Develop and increase low-carbon goods and services

Mid-Term

Diversification of business activities

Mid-Term

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Coping Strategy
For each climate change risk and opportunity, HTC considers the impact of products or services, supply chain or value chain, climate adaptation or mitigation activities, new R&D or investment,
and the type of business operation or the location of business operation facilities. Conduct impact assessment, and carry out climate "mitigation" and climate "adaptation" coping strategies forpossible shocks.
Risk Response Strategy
Physical Risk – Immediate

Coping Strategy

Increased severity of extreme weather events such as typhoons and floods
Impact category

Impact content
StrategyTime

Evaluate benefits

Damage to production base equipment, resulting in interruption of
production lines and suspension of services

Power outage of IT facilities such as the information room, resulting inwater level warning system

the failure of the operating system, resulting in interruption ofoperations


Add automatic drainage system equipment and

Remote backup (or partial outsourcing) to support2023-2025

loss of machinery andequipment

production and service

The cloud application software encountered a power outage, resulting

Reduce personal injury andin service interruption, affecting continuous update services andProduct or Service

maintenance

Deterioration of inventory products, resulting in increased costs and2023-2025



Lower costs

2023-2025

Reduce labor costs

warehousing sites, and suppliers located in areas with



Reduced loss costs

Due to the loss of equipment assets in the supply chain, thehigh flood risk or vulnerable to typhoons, and reduce

Improving supply chain

procurement time is prolonged and the products cannot be supplied

the impact of disasters through insurance planning,on scheduledecentralized procurement and other strategies

additional maintenance costssupply (off-site production and supply)

Decreased work efficiency, employee accidents may increase; it may
also

affectthe

manpower

deployment

of

the

manufacturing

department due to the shutdown, resulting in operational disruption
and reduced work efficiency

Supply Chain or
Value ChainEstablish contingency plans for production and

Due to the extended delivery time of products or materials, the deliveryLong-term readiness for equipment needs fromworking from home (WFH)

Add automated process equipment



Carry

out

risk

assessmentsfor

operations,

Require suppliers to have safety stock

Decentralized supply chain regions

Monitor locations of suppliers, storage locations, and2025-2050

resilienceReduce the probability ofsupply chain disconnection

time is delayed, resulting in damage to corporate image and loss oflogistics routes that may be impacted for rapid

trust

response and preparation

Reduce downtime costs due tomaterial breaks

2023-2025


Increased trust

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Physical Risk – Immediate

Coping Strategy

Increased severity of extreme weather events such as typhoons and floods
Impact category

Impact content

StrategyTime

Evaluate benefits

Instantly update the delivery status of raw materials
and provide customers with the latest delivery
progresstransportation costs are rising

Climate adaptation
or mitigation
activities

Transportation carbon emissions are restricted, and logistics andLevy carbon fee or carbon tax, increase operating cost

Increased overhead and production costs to maintain roads anddelivery routes
equipment

resulting in delayed publication schedules


Regularly strengthen and repair the anti-flooding
facilities every year2023-2050

2022-2023

Reduce carbon emissions



Reducedrisk

ofclimateimpacton

designimpacts

Reputational damage due to extended development schedules due toextreme weather requiring temporary or prolonged work from home,

R&D or investment

Find low-carbon transport pipelines and optimize

If the number of occurrences increases, it may be necessary to invest
in additional equipment to support design and development activities



Provide necessary hardware for employees to workfrom home

Schedule two two-week work-from-home sessions
2023-2025

development

timelines

assess

of

cost

and

additional

equipment purchases

per quarterfor working from home, resulting in extended product development

ReducetimeType of business
operation orBusiness operation
facility location

Changes in marketing plan due to delay in delivery due to rain

Flexible adjustments to new product promotion plans,
or matching accessories discounts

Plan for alternate materials to facilitate just-in-time2023-2025



Increase

sales

and

competitivenessrefills on-line

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Physical Risk – Long-Term

Coping Strategy

Changes in rainfall (water) patterns and extreme changes in climate patterns
Impact category

Impact description
Product or ServiceLack of water for people's livelihood caused shutdowns, affecting
production capacity and delaying shipments

Supply Chain or
Value Chain

The factory is short of water and electricity, which affects the daily
operation of production and shipment, resulting in a decline in revenue

Stakeholders are asking companies to be increasingly committed toclimate adaptation or mitigation activities


New R&D orinvestment

Type of business
operation orBusiness operation
facility location

Increased overhead and production costs due to water scarcity
adaptation measures

The risk of uncertainty in the supply chain has increased, resulting indelays in the company's new product development progress andincreased production costs



Unable to meet customer needs and expectations, affecting brandimage and reputation

The extreme high temperature of the production base caused anincrease in electricity consumption and increased production costs

The temperature of the computer room and equipment is too high, andthe probability of thermal hazards for personnel work is greatly
increasedTime

Deduce the business operation plan every year.
Through the business operation plan, familiarize
yourself with contingency measures such as heavy
rainfall, shortage of parts and components caused bylong-term non-rainfall, damage to transportationmeans, and limited manpower

2023-2025

Introduce low-energy manufacturing procedures ortechnologies

Contingency plans for suppliers' production andsupply (off-site production suppliers), increasingalternative materials and decentralizing supply chain
areas



Plan and execute the company's net-zero emission
reduction path and strategyClimate adaptation
or mitigation
activities
Strategy

Integrate carbon reduction actions into corporate
culture and link with employee performance (Green
Seed Collection Project)Find new water vendors and storage locations

Select domestic material suppliers of the same qualityand develop alternative materials

Incorporate work hazards caused by climate change
into safety regulations and conduct hazard
notification

2023-2025

2023-2050

2023-2025

Evaluate benefits

Improve corporate resilienceReduce energy dependence

Reduce dependence on asingle resourceImprove reputation



Targeted reduction of carbon
emissions

Lower costs

ImproveresilienceReduce single resource
dependency

Improved coping capacityImproved coping capacity

2025-2050

2023-2025

operational

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｜27｜Transition Risks - Policies and Regulations

Coping Strategy

Strengthening Emissions Reporting Obligations
Impact category

Impact descriptionStrategy

Develop green products and reduce production carbon emissions,and adopt low-carbon production methods


Improve

hardwarefacilities,

strengthencarbonemission

performance, budget investment may increase operating costs
Product or Service



Utilizethecarbonmanagement

platform

to

let



The collection of carbon tariffs, the payment of carbon taxes under

Improve reputation

Air conditioners, air compressors, lighting and other

Reduce greenhouse gas

2023-2050


Establish a complete inventory of greenhouse gasImplement HTC's net zero carbon path and apply tojoin SBTi

2022-2023

Value Chain

Lower costs

Lower expenses

Reduce transportation andCollect raw material carbon emissions from upstream suppliers,

Negotiate with suppliers to consolidate and promote
unnecessary packaging, and select suppliers withIn order to reduce carbon emissions, the upstream supply chain

2025-2050

carbon reduction plans

replaced equipment and increased the selling price of materials

Require upstream to reduce unnecessary packaging and delivery,
increased costs

Supply Chain and

Improve equipment
performancerequire recyclable and low-energy design capabilities, resulting inemissionsemissions for HTC manufacturing and global locations

the control of regulations, resulting in an increase in selling prices


in line with emissions

with new ones

increasing their willingness to purchase

Evaluate benefits

Emphasize the production and packaging of products

major energy-consuming equipment, replace old ones

consumers

understand the carbon reduction effect of products, thereby

Time



production carbon emissions
Plan shipping routes and use packing space efficiently

Control upstream carbon
emissionsincrease management costs, and then increase manufacturer'smaterial pricesGreenhouse gas emission inventory

Promote life cycle and low-carbon product concepts

Carry out product carbon footprint inventory and product energysaving design to reduce or avoid carbon border tax

2023-2025of being charged a carbon
border tax

and introduce them into design concepts

Carry out the company's internal energy use control and actively
achieve the goal of reducing greenhouse gas emissions

Establish a sustainable management platform

Increase the temperature of the air conditioner to 28

Reduce or avoid the likelihood

2023-2025

Reduce carbon emissions



Lower costs

Improve corporate resilience

degrees and force the air conditioner to be turned off

Climate adaptation

after get off workor mitigation
activities

Continue to pay attention to government regulations,

Regulations are constantly being updated, causing unnecessaryinternational and industrial trends, and establish

expenditures if not responded to promptly

corresponding internal response and adjustment
mechanisms

2023-2025

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｜29｜Transition Risks - Policies and Regulations

Coping Strategy

Strengthening Emissions Reporting Obligations
Impact category

Impact description

Strategy





Time

Establishment of remote access mechanism and

online collaboration related systems

Increase online R&D, design and development activities
Introduce low-carbon concepts into R&D design, requiring additional

Choose low-carbon or recyclable materials in thedevelopment

investment in manpower

Evaluate benefits

stage

to

increase

theReduce personnel commuting
or traffic risks2025-2050
material

recyclability rate (currently complies with WEEE

Reduceproduct

carbonemissions

regulations)

New R&D orinvestment


Invest in low-carbon energy and actively use more low-carbon energyCarbonemissions

regulation

impacts

revenue,which

affects

related value chainsStakeholders focus on net zero commitments, resulting in increased

2023-2025

Reduce carbon emission risks
and corresponding costs

Set up a carbon reduction research and development
plan and obtain bank credit for green energy

investment institutions and increases credit risk

Participate in the green energy industry and develop

2025-2030

Enhance corporate reputation

2023-2025

Enhance corporate reputation

Reduce carbon emissions

Enhance corporate reputation

technology and green industriesPlan to increase colleagues' attention to ESG in the
training of newcomers in Taiwan, and encourage

spending to meet stakeholder expectations

practical actions to reduce carbon emissions

Type of business
operation orBusiness operation

Reduce carbon emissions from daily operations, increase energy-saving equipment, and green the environment, but the replacement

facility locationof machines may affect the expansion of production lines


Ways

to

improve

video

visitsandproduct

presentations
Plan to increase colleagues' attention to ESG in the

Increased employee commuting and travel carbon emissions andtraining of newcomers in Taiwan, and encourage

higher spending

practical actions to reduce carbon emissions

2025-2050

HTC Corporation 2022 Climate-related Financial Disclosure Report｜30｜

｜31｜

Opportunity Coping Strategies
Opportunity - Resource Efficiency

Coping Strategy

Use more efficient production management and distribution processes
Impact category

Product or Service

Impact description

Establish an overall virtualization platform to improve computing load
capacity

Shorten the time required for production, efficient production
management and distribution process, reduce the cost of carbon
emissions, and reduce the waste of ineffective resources

Strategy









Supply Chain andValue Chain

Climate adaptation
or mitigation
activities

New R&D orinvestment

Based on the supplier's carbon reduction performance, as the basis
for selecting upstream suppliers, and assisting the supply chain toachieve net zero carbon goals
Flexible allocation of material supply, reducing excess material
inventory

Adopt low-carbon transportation and green shipping to reducecarbon footprint

The carbon reduction transformation of manufacturers in the overallvalue chain, the creation of a green supply chain and the developmentof new technologies



Through the internal energy control and management platform,
monitor the implementation of relevant emission reduction activities
and reduce greenhouse gas emissions

Respond to domestic and foreign carbon emission disclosure andcarbon reduction requirements, and adopt new technologies toimprove production management efficiency

Time

Import automation equipment and cloud platform to
reduce manpower demand

Improve factory production process through 5G
private network combined with AI automatic
identification and screening

2025-2050

Procurement department explores the feasibility ofsustainable design, and continuously strengthenscarbon reduction and energy saving in the externaland supply chainPromote supplier sustainability projects and introduce
component 3R design (Reduce, Reuse, Recycle)

Supply chain reduces
preparation timeOptimize the packaging of goods, consolidate
shipments as much as possible, and change the modeof transportation (sea transportation), and conduct
greenhouse gas inventory

2023-2025

deliveryand2023-2025

Evaluate benefits

Improve production efficiency

Reduce resource consumption
and wasteImprove production efficiency

Reduce resource consumption
and wasteReduceproduct
emissions

Reduce inventory rate andincrease production efficiency

Promotereduction

Select manufacturers withcarbon reduction performanceEnergy saving control

Low carbon operation

Energy saving control

carbonmaterial

2023-2025

Build a sustainable management platformThe structure of energy use is shifting towards low
carbonization

Build a carbon management platform to simulate thecarbon emission status of low-carbon products

2023-2025

2023-2025

greenhousegas

HTC Corporation 2022 Climate-related Financial Disclosure Report｜32｜

｜33｜

Opportunity - Resource Efficiency

Coping Strategy

Use more efficient production management and distribution processes
Impact category

Impact description

Type of business
operation orBusiness operation
facility locationIn the product design stage, products with simplified structure andfewer parts are used to improve production efficiency

Invest in low-carbon energy. Global operating bases increase theproportion of renewable energy by purchasing green power
certificates and direct purchases of green power

Stakeholders pay attention to product and service carbon emission
information

StrategyTimeThe direction of RD research and development, withfactory automation production

Product design is simplified and the number of parts
used is reduced

Renewable energy import and purchase of renewableenergy certificatesPromote the design and substantial benefits ofproducts and services related to low-carbon products

Through the sustainable management platform,
provide stakeholders with information concerned

Evaluate benefits

Improve factory productivity

2025-2030



Reducecarbonemissionsgenerated
duringthemanufacturing phase2023-2025

Reduce carbon emissions

Respond to demand for lowcarbon products

Improve brand reputation

2023-2050

HTC Corporation 2022 Climate-related Financial Disclosure Report｜34｜

｜35｜

Opportunity - Products and Services

Coping Strategy

Develop and increase low carbon goods and services
Impact category

Impact descriptionProduct or Service

Supply Chain andValue Chain

Climate adaptation
or mitigation
activities

Reduce the use of paper, printing and packaging, integratesustainable design and product appearance into green design, andgain market recognition

Replacing outdated and energy-consuming equipment to achieve
low-carbon production

Encourage upstream manufacturers to design green, increase thenumber of green design shipments, reduce carbon emissions, andhelp achieve the goal of net zero emissions

Create a green energy supply chain to achieve net zero emissions



Cooperate with the whole value chain to implement R&D andproduction of low-carbon products

New R&D orinvestment

Develop low-carbon products, low-carbon recycled materials (PCR),
and enhance hardware life-cycle

Improve the efficiency of internal energy control, prolong the service
life of products, establish a more stable system, and reduce costs inthe long run
Respond to external requirements, integrate green design principles
into products, reduce environmental impact to meet customers'
requirements for green and low-carbon products, generate revenue
and attract investment willingness
Make technical investment in products and services from theperspective of life cycle, and add the concept of carbon emissions,develop low-energy products, and expand the low-carbon market; if
a carbon tax is introduced in the future, it can reduce costs for thecompanyStrategy

Time

Create an ecological chain of low-carbon products
and services

2023-2025

The product User manual is digitized using QR codeReplacing old central air-conditioning equipment(heating, ventilation and air conditioning, HVAC)

Continuously strengthen the carbon reduction andenergy saving of the manufacturing process with the
supply chainReduceresource
consumption and wasteEffectively reduce energy
consumption and lower
electricity bills



Achieve net zero goal

2023-2025

Reduceresource
consumption and waste

Achieve net zero goalImprove energy efficiency
and reduce production andoperating costs

Increasecompetitivenessproducts

2022-2025

Promote supplier sustainability projects and introduce
3R design Reduce Reuse Recycle

Encourage suppliers to participate in renewableenergy programs

2025-2050

Adopt green buildings, use renewable energy, switch
to energy-saving equipment, and introduce energy
management systems

2023-2030

In the product research and development stage, thatis to formulate ecological design guidelines, including
material research and development and selection,
product design, product development evaluation,
process research and development design andpackaging design, based on the principle of energy
saving and carbon reduction

Evaluate benefits

2022-2050


of

the
HTC

Reduced carbon footprint

HTC Corporation 2022 Climate-related Financial Disclosure Report｜36｜

｜37｜

Opportunity - Products and Services

Coping Strategy

Develop and increase low carbon goods and services
Impact category

Impact description
Type of business
operation orBusiness operation
facility location

Respond to the requirements of stakeholders for low-carbon
products, and promote the promotion of ESG by integrating a fullrange of products and low-carbon production designDiscuss with customers to merge and promote the concept ofsustainable and green consumption, and enhance customers' trust in
HTC productsElectronic internal documents and forms to achieve carbon reduction
goals





Encourage employees to take public transportation and walking
activities, and reduce high-carbon emission activities such as driving
and riding motorcycles
Hold large-scale conferences online through the platform to reducecarbon emissions generated by transportation

Strategy







Time

Strengthen courses and training related to products
and services, so that business executives can clearly
understand the design and practical advantages of
low-carbon products, and then promote them to local
customers

2025-2030

Coordinating with the sports season to organize
activities to encourage public transportation andwalking2023-2025

Continuous innovation/optimization of VIVERSErelated
applications,
meeting/co-development
through online/virtual reality space

2023-2025

Evaluate benefits



Respond to demand for
low-carbon products

Improve brand reputation

Reduce carbon emissions



Reduceenergyconsumption
andenvironmental pollution
caused by transportation

HTC Corporation 2022 Climate-related Financial Disclosure Report｜38｜

｜39｜

Opportunities - Products and Services

Coping Strategy

Diversification of Business Activities
Impact category

Impact description
Product or ServiceSupply Chain andValue Chain

Climate adaptation
or mitigation
activities

New R&D orinvestment

Type of business
operation orBusiness operation
facility location

Strategy

Research and develop low-carbon products and expand the market
with diversified sales and operation methods, and establish
consumers' image of HTC brand as being friendly to the environment
Continue to research and develop products that maintain remotebusiness operations, such as virtual platforms, Mars CamTrack, etc.,
to effectively reduce energy and resource consumption, enhancemarket competitiveness, and expand business scope
Suppliers participate in the development of low-carbon products anddiversified services, which not only benefit low-carbon products, butalso enhance market competitiveness and drive demand for related
products

Use a common platform solution for remote work, affecting all
upstream and downstream manufacturers to use the same platform
to communicate

Simplify the business and manpower of manufacturers to further
reduce greenhouse gas emissions



Actively seek green transportation to reduce carbon emissions due
to increased salesPlan public welfare leave feedback system to encourage employees
to participate in energy-saving and carbon-reduction activities



Join external ESG and green public welfare foundation initiatives tomeet the expectations of stakeholders

Diversify input products and consider whether the overall benefit
meets the economic scale.



Develop a working model for business and manpower optimization



Expansion of commercial applications of related products helps toenter new markets, increase revenue and obtain investment
opportunities

Diversified management methods, increasestimulate consumer product recognition

Strengthen the marketing of green products and overall solutions toincrease revenueCloud solutions to reduce the impact of regional disasters







Time

Products, equipment and traffic management tools
related to business use, using products that focus onenvironmental protection and eco-friendliness andreduce greenhouse gas emissions

2023-2030

Cooperate with government departments to build
VIVERSE Educational Ecological Park, evaluate theproduct market and demand, and meet the changing
needs of the market through continuous improvement2023-2025

Diversify the businesses of cleaning, security, cateringand other manufacturers to optimize and simplify
business content and manpower

2022-2050

Continued development of Vive Sync products toenable remote working solutions

2023-2025

Use zero-carbon cloud services

2023-2025



Choose a carrier that actively invests in land, sea, air,and green energy transportation

Adjust the proportion of sea and air transportation,
reduce air transportation and increase sea
transportation

Public welfare leave feedback system

Evaluate benefits
Promoting symbiosis and coprosperity in the developmentof the park

Increase the competitivenessof HTC products

Increase revenue

Reduce greenhouse gas
emissions

Increase the competitivenessof HTC productsNet-zero carbon footprint ofcloud servicesReduce energy consumption
and environmental pollution
caused by transportation

Respond to demand for lowcarbon products

Improve brand reputation



Increase the competitivenessof HTC products

Reflected in revenue

2022-2050

2022-2050

To
expandmarketcompetitivenessthroughinnovative product design and development

2023-2030

Strengthen the promotion of green product design
and promote MARS and VIVERSE products2022~

brand value, andHTC Corporation 2022 Climate-related Financial Disclosure Report｜40｜

｜41｜

Financial Quantification - Risk
Based on the identified risk/opportunity items, HTC estimates the financial changes that climate change may cause to HTC, and develops various risk response strategies, evaluates andestimates "management costs" and "management benefits", based on each risk/ The short-, medium- and long-term characteristics of opportunities, and the estimated impact of climate changerisks/opportunities on HTC's finances.
Risk 1:

Physical Risk- Immediate: Increased severity of extreme weather events such as typhoons and floods

Financial Impact
AnalysisStatement of Financial Impact

Calculation of Financial Impact (annualized)

In the short-to-medium term (3-8 years), extreme weather events such as typhoons and floods occur,financial data that have an impact on business operations, and conduct risk assessments in the following
aspects:

Since HTC has not had any interruption of operations due to extreme
weather events in the past, the assessment of the relevant financial impact isbased on the most serious situation. suffer:

1. Operation interruption (decrease in revenue): The occurrence of extreme weather events, resulting in
the estimation of the interruption of business operations, and the estimated number of days of potential
extreme weather occurrence based on scenario analysis, multiplied by the annual consolidated revenue

1. Operating loss, approximately 0.3% of consolidated operating income
2. Inventory loss, accounting for less than 3% of consolidated operating
income2. Inventory loss (decrease in assets): Consider Taiwan, the proportion of inventory at high flood risk
(Taoyuan warehouse), and multiply by the number of potential extreme weather occurrences
Actions taken by HTC in response to the above risks, as well as the assessment of executable actions to
mitigate or transfer related climate risks:
1. Increase early warning capabilities (increased costs and expenses): Capital expenditures for setting up
early warning systems and disaster prevention systems

Cost Analysis of
Coping Strategies

2. Increased ability to continue operations (increased costs and expenses): capital expenditures andexpenses for the purchase and use of emergency generators, and the cost of additional equipment for
remote office colleagues
3. Insurance costs (increased costs and fees): the cost of purchasing insurance related to natural disasters

Financial
Impact1

Revenue

0.1%

1
Response
Cost

2

1%

The financial impact of the associated response costs is:
1. Purchase of water level warning system, automatic drainage systemequipment, and emergency notification system; capital expenditure andexpenses for purchasing and using emergency generators; one-time
expenditures such as adding equipment for remote office colleagues,
accounting for less than 0.1% of consolidated operating income
2. Annual insurance expenses account for less than 0.1% of consolidated
operating income

Financial Impact
1. Business interruption
2. Inventory loss

10%2
Response Cost
1. one-time expenditure :Warning and drainage
systems and related
capital equipment for
ongoing operations
2. Insurance fee

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｜43｜

Risk 2: Physical Risk- Long Term: Changes in rainfall (water) patterns and extreme changes in climate patterns

Financial Impact
AnalysisStatement of Financial impact

Calculation of Financial impact (Annualized)

Under the RCP8.5 scenario, the global temperature in 2030 will rise by 0.42-0.77 degrees Celsius
compared to 2010, and according to the Taiwan Energy Bureau, every 1 degree Celsius increase will
increase electricity consumption by 6%, so the estimated electricity consumption will increase in 2030
2.5%-4.6%, fee increase. The number of high temperature days exceeding 36 degrees Celsius has
increased in Taiwan and mainland China, mainly from April to September, and the number of hightemperature holidays has increased, which will increase the annual operating costs of suppliers' factories
and outdoor work in the future

1. According to the industry situation, evaluate the power consumption situationin 2030, and consider the number and severity of high temperature days, andthe possible increase in expenditure will account for less than 0.1% of theconsolidated operating income

1. Increase in electricity consumption (increase in cost and expense): In 2021, the number of electricity
consumption * electricity consumptionl increase by 2.5%-4.6% * electricity price
Actions taken by HTC in response to the above risks, as well as the assessment of executable actions to
mitigate or transfer related climate risks:
1. Increased ability to continue operations (increased costs or expenses)
2. Increase supplier resilience (increased fees)
Cost Analysis of
Coping Strategies

3. Build an energy management system to increase energy efficiency (cost or expense increase)
4. Implementation of climate adaptation strategies (increased cost or expense)
5. Design low-carbon products (increased costs and fees)

Financial Impact
1. increase in electricity consumption

Financial
Impact1

The financial impact of the associated response costs is:1.

Set up emergency contingency plans for water/power rationing; strengthen
the resilience of suppliers and contractors; introduce and implement
energy-saving measures in the energy management system; formulate netzero emission reduction paths and strategies, and other one-time
expenditures, accounting for about 10% of the consolidated operating
income 1%

2. Incorporating low-carbon design concepts or choosing low-carbon
emissions/recyclable materials will increase purchase costs, research anddevelopment costs, and other derivative costs by 4%-15% after evaluation,accounting for about 11% of consolidated operating income. This response
The cost of measures is also identified as the financial impact of risk 3 andthe realization cost of opportunity 2, hereby explain

Designing low-carbon products is one of the main axes of HTC's sustainable development, and it is also an
important strategy for the net-zero path. The implementation of relevant strategies can mitigate climate risks
and realize climate opportunities at the same time. The formulation and implementation of relevant indicators

Revenue

0.1%

1%

1
Response
Cost

10%

can be determined by Refer to 4.1 Indicator Target Setting and 4.2 Implementation.

2
Response Cost
1. one-time expenditure :Emergency contingency plans for water andelectricity cuts, strengthening the resilienceof suppliers/contractors, energy management
systems, and formulating net-zero emission
reduction paths and strategies
2. Design low-carbon products

HTC Corporation 2022 Climate-related Financial Disclosure Report｜44｜

｜45｜

Risk 3: Transition Risk– Policies and Regulations: Strengthening Emissions Reporting Obligations
Calculation of Financial Impact (Annualized)

Statement of Financial Impact
1.

Financial Impact
Analysis

The world is committed to achieving net zero emissions, and domestic and foreign carbon emission
disclosure requirements are becoming more and more clear, and there is an increasing demand for thedisclosure and management of carbon emissions of enterprises themselves and the value chain.
Enterprises urgently need to establish a complete collection of carbon emission information for new
business, including platform and software application service business. Establish and manage carbon
emission data of enterprises and value chains, increase management costs, and financial impact includes:
1. The cost of investing in the low-carbon transition (increased costs and fees)
2. Greenhouse gas emission disclosure and management (cost increase)

Actions taken by HTC in response to the above risks, as well as the assessment of executable actions to
mitigate or transfer related climate risks:
1. Build an energy management system to increase energy efficiency (cost or expense increase)
2. Implementation of climate adaptation strategies (increased cost or expense)
Cost Analysis of
Coping Strategies

3. Build renewable energy (increased cost or fee)
4. Procurement of green electricity (increased costs or fees)
5. Purchasing carbon credits (increased costs or fees)

The financial impact of the associated response costs is:
1.

Introduce an energy management system; formulate a net-zero emission
reduction path and strategy; build renewable energy and other one-time
expenditures, accounting for about 1% of consolidated operating income

2. The cost of purchasing green electricity every year accounts for about 0.5%of the consolidated operating income without considering any adjustments
and buffering impacts
3. Without considering any adjustments and impact mitigation, it is estimatedbased on the current year's greenhouse gas emissions that the annual costof purchasing carbon rights accounts for about 0.2% of the consolidated
operating income

1

2

0.1%

1%

3
Response
Cost

2. The carbon management platform construction cost and annual maintenancecost account for less than 0.2% of the consolidated operating income. Thisfinancial impact is also recognized as the realization cost of Opportunity 3.
Hereby explain

Financial Impact
1. Low Carbon transition costs
2. Carbon Management Platform Fees

Financial
ImpactRevenue

Incorporate low-carbon design concepts or choose low-carbon
emission/recyclable materials. After evaluation, it is necessary to increasepurchase costs, R&D costs, and other derivative expenses by 4%-15%, andincrease the current annual cost, accounting for about 11% of the consolidated
operating income. %, this financial impact is also identified as the response
cost of risk 2 and the realization cost of opportunity 2, hereby explain

2

10%

1
Response Cost
1. one-time expenditure :Energy management systems, formulating
net-zero emission reduction paths andstrategies, Renewable energy construction
2. Green Power Procurement
3. Carbon tax

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｜47｜

Financial Quantification - Opportunity
Opportunity 1:

Diversification of business activities
Statement of Financial Impact

Financial Impact
Analysis

To avoid operational interruptions caused by extreme weather, the company continues to develop products
such as virtual platforms, Mars CamTrack, and remote office to maintain remote business operations,enhance market competitiveness, and expand business scope. The development of related products andthe expansion of commercial applications will help enter new markets, increase revenue, and obtain
investment opportunities. The financial impact includes:
1.

1.

1.

The growth of new commercial applications can increase the consolidated
operating income by 20%-50% after evaluation

Diversification of business applications and expansion of business scope (increased revenue)

HTC's actions to realize the above opportunities, as well as assessing the actions that can be
implemented, include:
Cost Analysis of
Coping Strategies

Calculation of Financial Impact (Annualized)

Empower consumers and expand applications (cost increase)

2. Invest in research and development to expand commercial applications (cost increase)

The financial impact of the associated input costs is:1.

Marketing expenses for promoting the commercial application of thesubject product, assessed at 0%-10% of consolidated operating income

2. 2. Optimizing the development of new business-related applications andincreasing research and development expenses, which is estimated to be
0%-5% of consolidated operating income

Financial Impact
1. New business application

Financial
Impact1

Revenue

5%2
Response
Cost

10%

20%

1
Response Cost
1. Business Application Marketing
2. R&D costs

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｜49｜

Opportunity 2: Develop and increase low-carbon goods and services
Calculation of Financial Impact (Annualized)

Statement of Financial Impact

Financial Impact
Analysis

In response to the trend of carbon reduction, the company invests in the development of low-carbon
businesses, including VIVERSE, VIVE Arts, VIVE Originals and G REIGNS; and integrates green designprinciples into product design to extend product life and reduce environmental impact. The developmentof low-carbon businesses and green products will attract consumers and investors, help increase revenue
and obtain investment opportunities. The financial impact includes:
1.

The percentage of premium that can be charged to customers due to theintroduction of low-carbon design is estimated to be about 1.1%.

Low-carbon products increase product competitiveness (increased revenue)

HTC's actions to realize the above opportunities, as well as assessing the actions that can be
implemented, include:
1.

1.

Value chain negotiation (increased costs and fees)

2. Empower consumers and expand applications (increased costs and fees)
3. Design low-carbon products (increased costs and fees)

The financial impact of the associated input costs is:1.

The value chain is negotiated to reduce relevant carbon emissions, and theevaluation encourages suppliers to participate in renewable energy projects
to increase procurement costs by 0.25%-0.5% and to promote the conceptof sustainable and green consumption to customers and suppliers,
accounting for about 0.2%-0.3% of of consolidated operating income

2. Use low-carbon equipment to reduce carbon emissions in the
manufacturing and operation process, and invest in one-time expenditures,accounting for about 0.2% of consolidated operating income

Cost Analysis of
Coping Strategies

3. 3. Incorporate low-carbon design concepts or choose low-carbon
emission/recyclable materials. After evaluation, it is necessary to increasepurchase costs, R&D costs, and other derivative costs by 4%-15%,
accounting for about 11% of consolidated operating income. This investment
The cost is also identified as the response cost of risk 2 and the financial
impact of risk 3 at the same time, which is hereby explained.

Financial
ImpactFinancial Impact
1. Low carbon design product premium
1

Revenue

0.1%

1%

2
Response
Cost

1

10%

3
Response Cost
1. Value chain negotiation
2. Purchasing low-carbon equipment
3. Design low-carbon products

HTC Corporation 2022 Climate-related Financial Disclosure Report｜50｜

｜51｜

Opportunity 3: Use more efficient production management and distribution processes
Calculation of Financial Impact (Annualized)

Statement of Financial Impact

Financial Impact
Analysis

Carbon emission disclosure and carbon reduction requirements at home and abroad are becoming more
and more clear. The company actively invests in and adopts new technologies to improve production
management efficiency, such as building a "carbon management platform" to manage and analyze
relevant activity data in real time; adopt environmentally friendly transportation with superior performance
to improve energy consumption. efficiency. Using a carbon management platform to manage carbon
emissions and adopt environmentally friendly transportation can reduce costs and reduce response costs
caused by climate impacts.
1.

Increased operational efficiency and reduced costs (cost reduction)

1.

Due to the increase in operating efficiency and cost reduction, it isestimated that the annual reduction in operating costs will account for
approximately 5.5% of consolidated operating income

2. To reduce the impact of carbon tax and carbon fee on operations,according to the greenhouse gas emissions corresponding to production
management and distribution, evaluate the annual reduction of operating
expenses, accounting for less than 0.1% of consolidated operating income

2. Reduce the impact of carbon tax and carbon fee on operations (cost reduction)
HTC's actions to realize the above opportunities, as well as assessing the actions that can be
implemented, include:
1.
Cost Analysis ofInvesting in costs to increase operating efficiency (increased costs or expenses)

2. Use low-carbon transport (increased costs)

Coping Strategies

The financial impact of the associated input costs is:1.

The construction cost and annual maintenance cost of the carbon
management platform account for less than 0.2% of the consolidated
operating income. This response cost is also identified as the financial
impact of risk 3, hereby explain

2. 2. Using low-carbon transportation, assess the cost increase of 200%-300%
for air and sea transportation using low-carbon transportation, accounting
for less than 6% of consolidated operating income

Financial Impact
1. Reduce operating costs
2. Increased efficiency, reduced costs

Financial
Impact1

2

Revenue

0.1%

1
Response
Cost

10%

5%

2
Response Cost
1. Carbon Management Platform
2. Low carbon transportation

HTC Corporation 2022 Climate-related Financial Disclosure Report｜52｜

｜53｜

Metrics and Targets ___Metric Goal Setting
HTC introduced SBT, set up a net-zero path in line with its own operating conditions, and submitted the SBT commitment for review and approval this year, established future reduction goals,
and linked its own core business to construct a clear carbon reduction path from the perspective of overall and specific quantitative management, covering Five major carbon reduction strategies,
integrating multiple aspects towards the 2050 net zero goal. HTC set the SBT net-zero target, and set the scope 1 and 2 reduction targets to reduce by 42% in 2030 compared with the base year
(2021); and reduce by 90% in 2050 compared to the base year.
Completely Risk Management
HTC plans to formulate global warehouse control plans and off-site office management methods through risk assessment of all operating bases, strengthen corporate resilience in the face ofclimate risk scenarios, and set up early warning mechanisms in high-risk bases to increase natural disaster risk coverage rate, in order to minimize the interruption of operations or the loss of plantand equipment caused by the weather.
Project

Metrics

Risk Assessment

The number of risk assessments of operating bases completedTargets

Develop global cargo warehousing locations Begin to develop basic emergency
response / business continuity management plan

By 2025, 100% complete the risk assessment of high flooding of operating bases according
to RCP8.5

Increase the water level warning system of Dongmen River and the installationof manpower support waterproof gates

Number of risk mitigation plans (or asset value) for 100% of operating bases in 2030

The number of days of operational interruption caused by weather is 0 days

Adding automatic drainage system equipment

The loss of plant and equipment caused by climate is 0 yuan

100% natural disaster insurance coverage

Formulate remote office management methods (policies, drills)

Risk Mitigation Plan

Addition of an emergency notification system as a contingency mechanism
Products transfer
Natural Disaster Insurance

Natural disaster insurance fixed assets and inventory coverage ratio (%)

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｜55｜

Energy-saving and Low-carbon Operation Management
For operational equipment and behaviors, HTC integrates the concepts of energy saving, power saving, and low-carbon into daily operations and management. Through green buildings, energysaving solutions, and renewable energy purchases, it can effectively reduce carbon emissions and energy use generated by operating behaviors, and establish a carbon Management platform to
track carbon emissions, so as to achieve effective operational carbon emissions regulation. In addition, HTC has planned to evaluate carbon rights purchase targets, and build a virtual platform toenhance the intensity of supply chain management, hoping to achieve net zero emissions of HTC Target.
On the other hand, in 2023, HTC will set up a working group for the electrification of shuttle vehicles and transportation vehicles, including low-carrying vehicles as one of the low-carbon
management operating guidelines, and plans to encourage colleagues to refer to the Environmental Protection Agency of the Executive Yuan when they are on business trips. The list ofenvironmentally friendly hotels, while taking public transportation more during normal commuting, under the goal of low-carbon operation, at the same time achieve low-carbon commuting for
employees.

Item

Metrics

Targets

Green building

Improvement in energy and water efficiency (%)

Improve electricity and water efficiency by 30% by 2050

In 2023, take inventory of lamps and ice water host models and produce a carbon reduction
assessment report

In 2024, manufacturers negotiate or seek cooperation with manufacturers

Formation of an energy saving working group in 2023



Identify the processes that can be automated or digitized in offices and factories by 2023

In 2024, manufacturers negotiate or seek cooperation with manufacturers

Formation of an energy saving working group in 2023



Identify computer room equipment that can be cloudified in 2023

In 2024, manufacturers negotiate or seek cooperation with manufacturers

Aggregate commodity carbon emission data in 2024

Set a low-carbon commodity definition by 2025



Establish a carbon data collection system and carbon index database in 2023

Connect internal data (domestic & overseas) in 2023



Establish a carbon data tracking and application system in 2023, and establish a carbon data
analysis methodologyBegin to produce carbon data analysis report every year in 2024

Establish a renewable energy working group in 2023 and produce an assessment report on
self-generation of renewable energy.



Search for and compile a list of renewable energy construction manufacturers in 2023.

Whether to carry out energy-saving scheme planning, replaceenergy-saving lamps or chilled water hosts

Energy saving projectIntroduction of energy automation/digital management

Set up an energy-saving/cloud-based computer room

Incorporate suppliers’ energy-saving
measures into procurement criteria

Carbon data management platform

Buy renewable energy

Develop procurement policies and selection criteria

Systematize the carbon inventory process and improve management
qualityCompletion of renewable energy outsourcing

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Item

Metrics

Carbon Credits Screening Mechanism

Complete the cost assessment of carbon credits purchase types andpurchase targets

Low carbon y vehicle

Electrification of the shuttle bus

Low carbon commuting

When staying in an eco-friendly hotel during a business trip, can referto the list of eco-friendly hotels issued by the Environmental
Protection Agency(Taiwan)
Low Carbon Commuting/Transportation

TargetsEstablish a carbon credits working group in 2023

Produce a list of carbon credit purchase types in 2024Produce an assessment report on the purchase of carbon credits in 2025



Establish a working group on the electrification of shuttle vehicles and transit vehicles in 2023



Evaluate cooperative connection vendors in 2024



From 2023, colleagues will stay in eco-friendly hotels when traveling on business. You canrefer to the list of eco-friendly hotels issued by the Environmental Protection Agency(Taiwan)



Encourage colleagues to take more public transportation when commuting from 2023

Extended Product Life Cycle
Whether it is the product itself or product parts, HTC uses the concept of recycling and shared use to design production components that are easy to disassemble and assemble, and is committed
to reducing product waste. life cycle and reduce the use of raw materials.
Item

Extend product life

MetricsIncrease the number of re-sell products by 30% in 2050

Provide refurbished and reassembled productsConduct annual reviews on material supply and demand, market prices and inventory startingfrom 2023

Design products that are easy to disassemble and allow parts to bereused

Increase the number of DIY repair service purchases by 30% by 2050



Increase the number of re-sell products by 30% in 2050

Continuously review material supply and demand, market price and inventory

Count and track the purchase of commodity DIY repair parts in 2025



Increase purchases of DIY repair parts by 10% by 2030



Increase purchases of DIY repair parts by 30% by 2050

Reduce product material waste
Product Cycle Mechanism

Targets

Use of recycled materials such as recycled plastic
Use environmentally friendly materials
Reduce packaging materials
Voluntary Take Back Policy

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Low Carbon Business Model
HTC has planned to carry out low-carbon innovative design, through low-carbon alternative materials and design options, to reduce the carbon footprint of products, and appeal to consumers
to rent instead of buy, develop a new low-carbon business model, and expand new consumer groups. In addition, it cooperates with sustainable advocacy organizations to increase sustainabilityrelated content in VIVERSE and increase users' awareness of sustainability; through virtual reality features, users can experience the impact of climate change and motivate customers to act
sustainably.
VIVERSE will provide a supply chain management platform to solve the difficulties in sustainable management of small and medium-sized enterprises, and assist enterprises and organizations tomanage sustainable and low-carbon related issues, link products/services with sustainable indicators, and expand more diverse business models , and achieve low-carbon operation of the entire
value chain.

Item

Metrics

Low Carbon Innovative
DesignCarry out low-carbon innovative design, reduce product carbon footprint, andcreate new markets

1.

New market/
Customer Development

Targets

Formation of a low-carbon materials and design working group in 2023

Feasibility assessment of low-carbonization of materials used in the process in 202



Low carbon material selection and design by 2025

The number of VIVERSE subscription users grows by 10% every yearAssess the feasibility of launching a rental subscription service in 2024

In 2023, a series of products that can calculate the carbon footprint of products will becounted (self-counted), and a list of target products will be producedProduce the target product life cycle assessment report in 2024Complete ISO 14067 for the target product in 2025Complete the target setting report on product carbon footprint reduction by 2026

Cooperate with sustainability advocacy organizations to increasesustainability-related content in VIVERSE and increase users' awareness ofsustainability; and through virtual reality features, users can experience theimpact of climate change and encourage sustainable actions

2. To assist users and SMEs in sustainable growth, VIVERSE provides aplatform to manage the supply chain, and provides specific sustainablesuggestions to solve the difficulties in sustainable management of SMEs
3. Assist enterprises and organizations in managing sustainable and lowcarbon issues
4. Link products/services with sustainable indicators such as SDGs
5. Build a virtual platform to enhance the strength of supply chain
management

Low Carbon Business Model

Formulate and implement
low-carbon productmanagement strategies

Encourage consumers to rent equipment instead of buying

Complete the carbon footprint inventory of each product line, and set the
carbon footprint reduction KPI of the target product

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Supply Chain Management
The countermeasures related to climate change are not limited to HTC itself. HTC has extended the actions and policies of climate change to the entire value chain, including prioritizing thenegotiation of sustainable management with key suppliers; , Water-saving measures and goals are included in procurement standards, etc. In addition to requiring suppliers to take relevant
implementation actions, an assistance plan is also set up for suppliers in difficulties, and through counseling, we will work with suppliers to implement carbon reduction goals. At the same time,
HTC also considers climate risk events such as heat exhaustion and snowstorms that suppliers' employees may face, and requires identification and provision of safety maintenance for its
employees' occupational safety and health.

Item

Metrics

Targets

Supply Chain Negotiation Object
Identification

Identify key suppliers and concentrate resources on priority
negotiating partners



Establish key supplier standards by 2023



Set standards for supplier classification in 2024

Incorporate suppliers’ energy-saving
measures into procurement criteria

Develop procurement policies and selection criteria

Aggregate commodity carbon emission data in 2024

Set a low-carbon commodity definition by 2025

Set up a supply chain assistanceprogram

Suppliers with higher power consumption/carbon emissions are
required to implement data management and set trackablemedium and long-term goals

Types of Assistance Programs to be Assessed in 2024

Establish a working group to implement the plan in 2025

Suppliers are required to set
management goals such as powersaving and water saving, and obtain
third-party verification

Define the scope of management objects and define standard
methods, require suppliers to perform data inventory, and reportback after completion

From 2023 onwards, suppliers are required to provide carbon data that has been verified byinternal and external inspectionsSuppliers are required to add new employees. If they encounter climate risk-related events
such as heat exhaustion and blizzards, the company's countermeasures
Incorporate climate-related risk management questions into supplier self-assessment/audit
questionnaires

Identification of security protection

Assess the occupational safety and health protection actions ofsuppliers' employees

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HTC Execution status
The company implements relevant reduction measures for hot spots in the operation

Completely Risk Management

process, including the continuous use of green energy, the construction of solar panel
With reference to relevant information and laws and regulations, HTC started to formulate

power generation capacity, the installation of heat pump systems, the installation of speciala climate change risk management procedure book as an operational basis for internal risk

charging stations for electric vehicles and the provision of bicycle spaces, and the

management. It is planned to be completed and published in the company's internal

replacement of R22 refrigerants with R410A Refrigerant. In order to reduce electricity

management system before the third quarter of 2023.

consumption, HTC continues to promote various energy performance management,
starting from building lighting, air-conditioning equipment and other energy-saving

Energy-saving and Low-carbon Operation Management

improvement management solutions. In 2022, a total of 164,884.44 degrees of electricity

As the basis for setting TCFD goals and indicators so that it can respond early to reduce

consumption will be saved, equivalent to 593.584GJ, and the total reduction in carbon

the risks and challenges of climate change, the company regularly reviews and manages

emissions Up to 83.926 t-CO2e, saving a total of NT$494,653. HTC has built a solar

scope 1, scope 2, and scope 3 greenhouse gas emissions, and follows the SBTi 1.5°C climate

installation with a capacity of 180kW. Since September 2018, it has completed parallel trial

scenario specification setting Net-zero emission goals and paths, formulate corporate

operation and started wholesale electricity sales. The cumulative total power generation

carbon reduction policies and promote carbon emission reductions in a more systematic

has reached 655,600 kWh, reducing about 333.7 t-CO2e. For more information, pleaseand scientific manner. At the same time, referring to SBTi's carbon reduction proposals, therefer to the HTC Sustainability Report.

carbon reduction practices of peers and domestic and foreign benchmark companies, andconsidering the results of HTC's annual carbon inventory and current related practices, a
blueprint for net zero emission strategies has been developed, and a series of action

Extend Product Life Cycle

recommendations have been developed as a basis for various departments. The reference

In 2022, HTC conducted a product carbon footprint inspection and verification for thefor promotion, and by holding a target meeting, track and review the difference between

virtual reality product - VIVE Flow, to grasp the carbon content of the product, and build

the actual performance of greenhouse gas emission intensity and the target, and formulate

a product carbon footprint inventory mechanism in accordance with ISO 14067. In addition

necessary measures.

to understanding the carbon emissions of future new products , and then analyze thecarbon emissions in each stage of the product life cycle. The HTC design team will consider

t-CO2e

2020

2021

2022

the use of green materials that are easy to recycle and reuse in the early stage of productScope 1372.0549

199.4583

153.6231

design, and the selection of materials is in line with international regulations and customer

Scope 2

9,513.1854

8,124.93

7,559.0649

requirements. In addition to minimizing the carbon emissions of the product, it will also

Scope 3*375.7955

1,729.3762

1,647.4736

avoid the use of raw materials. The process causes environmental damage and affects the

10,261.0358

10,053.7642

9,360.1616

surrounding areas, and actively plans to extend the service life and life cycle of products,-4,551-207-694

avoid using any toxic materials, commit to reducing product energy consumption, increase

-31%

-2%

-7%

Total
Number of increases and decreases
compared to the previous year (t)Increase/decrease compared to theprevious year (%)

the proportion of recyclable materials, and reduce the environmental impact of the
manufacturing process.

* HTC conducts an inventory of projects in three parts of the scope. For detailed figures, please refer to the HTC Sustainability
Report

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Low Carbon Business Model
Based on the concept of green product design, HTC continues to increase the material
recycling ratio of virtual reality products. VIVE Flow does not contain internal control chips,
and can directly use mobile phones as controllers, so it can reduce product carbon footprint
and power consumption. In addition, the interior of the helmet A battery that only provides
power for 5 minutes can be connected to a power bank for normal use, and a 10,000 mAh
power bank can provide up to 5 hours of use. In addition, due to the redesigned appearanceof VIVE Flow, in addition to saving the number of parts, it is easier to assemble to save timeand manpower, which helps to reduce carbon emissions and contribute to the naturalenvironment. HTC usually adopts a waste reduction strategy, and continues to reduce thegeneration of waste from the source through classification and publicity reduction. At thesame time, it prioritizes reuse to increase the efficiency of resource recycling.

Supply Chain Management
HTC has been participating in CDP since 2008. In addition to regularly reporting carbon
risk and carbon management plans, systems and achievements, it also joins CDP supply
chain project members and invites suppliers to participate in carbon disclosure to clearly
understand all suppliers' carbon emissions. In terms of management, HTC will be awarded
a leadership level (A-level) in the CDP Supplier Engagement Rating (SER) in 2022, including"Supply Chain Negotiation" and "Greenhouse Gas Scope 3 Emissions" Key scoring items
such as CDP are all affirmed by the highest grade (A), which uses companies' responses toselected questions on governance, targets, scope 3 emissions and value chain engagementin the CDP climate change questionnaire to assess supplier engagement performance. HTC
also continues to carry out supply chain carbon emission questionnaires, actively exerts
corporate influence, and calls on supply chain partners to jointly conduct further
assessments and actions for climate change.

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Assessment Statement

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Feedback ___If you have any questions about the 2022 HTC Climate-related Financial Disclosure Report,
you are welcome to provide feedback to help us continue to improve.

Contact Us ___HTC Corporation
Contact person

ESG Office
Yunyu Chen +886-3-3753252 ext. 36312

E-mail esg@htc.com
Address: 23 Xinghua Road, Taoyuan District, Taoyuan City 330, Taiwan
ESG website www.esg.htc.com
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