Responses to Major Climate Risks and Opportunities-Taiwan Paiho ESG

Responses to Major Climate Risks and Opportunities

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Category	Issues	Expected Time of Occurrence	Countermeasures
Transition Risk	Imposition of Carbon Fees	Long-Term	Enhance energy efficiency, such as through facility upgrades, replacement of outdated equipment, or modernization of existing production equipment; adjustment and optimization of process equipment. Strengthen carbon emissions management by progressively expanding the scope of Scope 3 inventory. Actively collaborate with the supply chain and brand customers by annually inviting suppliers to conduct carbon inventories and further promoting low-carbon products.
Transition Risk	Change in Customer Demand	Medium-Term	Taiwan Paiho Limited, Vietnam Paiho Limited, and PT. Paiho Indonesia have progressively installed solar power generation systems, all of which operate under a self-consumption model. As of the end of 2024, the combined total electricity generated by the three sites reached 2,023,881 kWh, currently meeting customer requirements for renewable energy usage. All renewable energy utilized by Paiho is self-generated for self-consumption. From 2023 to date, Taiwan Paiho has obtained a total of 1,112 Taiwan Renewable Energy Certificates (T-REC).
Opportunity	Utilization of Low-Carbon Energy	Short-Term
Physical Risk	Water Shortage	Short-Term	Vietnam Paiho Limited and PT. Paiho Indonesia are equipped with water storage facilities, with a capacity sufficient for approximately 1 to 2 days of use. Taiwan Paiho Limited holds legally approved groundwater rights, which can serve as an alternative water source when needed. Paiho has established a well-defined internal allocation mechanism, enabling flexible adjustment of production processes across different sites.
Physical risk	Unstable Energy Supply (Power Outages / Electricity Rationing)	Short-Term	Paiho continuously promotes energy management and monitoring through the implementation of the ISO 50001 Energy Management System. All production sites are equipped with emergency power generators and solar power generation systems to address short-term power outages and reduce reliance on the conventional power grid. Potential electricity price increases are incorporated into financial forecasts, and Paiho actively evaluates the development of energy-efficient equipment and the procurement of renewable energy.
Opportunity	Increasing the Recycling and Reuse Rate	Short-Term	Engaged qualified suppliers of Solid Recovered Fuel (SRF). Regular evaluations are conducted to identify suitable suppliers for waste recycling in order to increase the proportion of waste recycling. Furthermore, maintains ongoing industry-academic collaboration with National Taipei University of Technology. Converting textile waste into Solid Recovered Fuel (SRF) within the factory to increase the rate of waste reuse.
Opportunity	Opportunities for Low-Carbon Products and Services	Short-Term	Actively promotes various low-carbon materials to suppliers and brand partners. The Company continues to develop eco-friendly yarns annually and obtains RCS certification to increase the use of recycled and regenerated materials. Additionally, surplus yarn inventory is repurposed into nonwoven fabrics to ensure that raw materials are sourced from recycled content. Utilizes 360-degree high-resolution reverse-scanning technology to create 3D virtual samples, which are displayed on the official website for customer reference. This significantly reduces the number of physical samples required. Develops biodegradable injection hook products, manufactures injection hook items using recycled nylon, and produces products using environmentally friendly and recycled yarns, such as PET recycled yarn.
Opportunity	Supply Chain Procurement Resilience	Short-Term	Continually assesses the resilience of Paiho’s operational sites in response to extreme weather events and establishes off-site backup mechanisms.