Climate Change Mitigation and Adaptation
Climate Change Mitigation Strategy
In light of the increasing global concern regarding climate change, the government's commitment to achieving net zero emissions by 2050, and the rail transportation industry's response to the threat of climate change, THSRC acknowledges the potential impact and difficulties that climate change may pose to sustainable operations. As a result, THSRC has proactively implemented a range of measures to mitigate and adapt to climate change.
In 2023, THSRC implemented a mechanism to evaluate climate-related risks and opportunities based on the Task Force on Climate-Related Financial Disclosures (TCFD) framework's four major recommendations and eleven recommended Disclosure. The objective is to assess the impact of climate change on the Company, implement systematic adaptation measures to mitigate its effects, and improve operational resilience. The TCFD requirements encompass the following four recommendations:
Governance
The Corporate Governance and Nomination Committee of the THSRC Board of Directors has established a Corporate Governance Promotion Committee. This Committee is supervised by the Board of Directors and the Chairman and comprises the President and senior executives of the management department. The Corporate Governance Promotion Committee oversees the corporate governance planning team, sustainable development team, and ethical management team, which remain committed to addressing sustainable development management issues within the Company. Additionally, the Corporate Governance Promotion Committee will report to the members of the Corporate Governance and Nominating Committee and the Board of Directors on the progress and effectiveness of the implementation annually. In 2024, THSRC will adjust the name of "Corporate Governance & Nomination Committee" regarding to its role and responsibility.
The Company has established a “Risk Management Policy”, overseen by the Audit Committee of the Board of Directors, to manage risks across all areas of its operations. This includes an Environmental Management Committee, chaired by the General Manager and comprised of top executives from various divisions, to oversee the implementation and regular review of environmental risks and objectives, and to communicate environmental management practices. To facilitate cross-departmental communication and enhance overall operations, a working group spanning multiple departments or divisions has been established under the Environmental Management Committee to manage environmental management-related business.
As per the risk management framework, the team responsible for promoting and implementing risk management will report annually to the board. The report will review the response and effectiveness of risks related to climate change. For additional information regarding climate governance, please refer to the “Corporate Governance Structure” and THSRC's annual reports, corporate website and the Market Observation Post System (MOPS).
Strategy
In 2023, THSRC conducted a comprehensive assessment of climate change risks and opportunities referring to the TCFD disclosure framework. The latest climate risk assessment was completed by the Company at the end of the 2022. Taking into account the unique characteristics of the railway transport industry and prioritizing internal natural disaster management practices, the assessment identified six major risks from 22 climate-related risks, including two transition risks and four physical risks. The potential impacts of these risks were also evaluated based on our timeline. Please refer to the table below for the results of this evaluation.
Notes:
1. “Typhoon-induced” refers to weather events caused by strong winds (gust velocity > 30m/s) and heavy rainfall from severe typhoons.
2. “Heavy rainfall” refers to short duration heavy rainfall weather events with hourly rainfall > 50mm/h and 24-hour rainfall > 250mm/24h
3. “Extreme high temperature” refers to weather events where the maximum temperature for the day exceeds 37.6 degrees.
Based on the results of the climate risk assessment mentioned before, THSRC has chosen climate risk events that will have a “short-term impact” and has taken an assessment of response measures. Currently, THSRC has established an early warning mechanism for climate disasters and will further enhance the disaster tolerance of track-related infrastructure and the climate resilience of operating system. This will ensure the provision of safe and secure services, allowing passengers to travel safely.
One of the six primary axes of THSRC's sustainability strategy, THSRC's medium to long-term strategic blueprint for the next five years, is to address the impact of extreme climate and mitigate disaster risks. To achieve this, THSRC will actively collaborate with government agencies, academic institutions, and relevant industries to enhance climate adaptability, minimize operational disruptions, and reduce financial losses.
Climate change presents both risks and opportunities for businesses. THSRC is capitalizing on the advantages of low-carbon transportation and plans to enhance the energy efficiency by investing in renewable energy installations at stations and maintenance depots. The Company's goal is to establish a zero-carbon transport value chain. In addition to addressing climate risks, THSRC aims to offer consumers environmentally friendly, fast, and convenient services, thereby promoting sustainability throughout Taiwan. The following table outlines the climate-related opportunities identified in this review:
Risk Management
Process for Identifying and Assessing Climate-Related Risks
THSRC has completed the identification of climate-related risks and opportunities by following the TCFD recommendation and utilizing international railway transport industry practices. This was achieved through cross-departmental interviews and discussions, as well as reviewing and incorporating existing internal natural disaster management and response mechanisms. Qualitative assessment was used to determine the impact of climate change on the Company's operations and financial performance. The results will serve as a foundation for future risk review and decision making, with the aim of enhancing THSRC's climate risk management measures and strengthening its ability to respond to climate change.
Identify, Assess, and Manage Climate-Related Risk Process and Integration of Management Systems
THSRC reviewed and identified the potential risks that could impact the operations and financial performance based on business and operational activities. Key factors considered include the business environment, operations, finance, and hazardous events. Evaluations are conducted to ensure the integrity of corporate risk management and the effectiveness of risk control, as well as to assess major issues related to the internal and external environment, society, and corporate governance. Therefore, set up an operational framework and identify primary risk categories, such as environmental risks (including those related to climate change), information security risks, operational security risks, and financial risks.
THSRC has developed a "Risk Management Policy" that unites multiple committees at various levels to recognize and evaluate potential climate change risks within a risk management framework that encompasses all aspects of the Company's operations. The risk management promotion and implementation team report to the Board of Directors and Audit Committee annually. The team proactively and cost-effectively creates pertinent risk management practices, response methods, and conducts effectiveness reviews to assess, revise, and enhance THSRC's resilience to climate risks through medium- and long-term risk strategies, objectives, and project promotions.
Indicators and Targets
THSRC has committed to echoing global and domestic carbon reduction and net-zero goals, with the aim of formulating performance reduction and quantitative targets for greenhouse gases, water resource management, and energy management. The achievement rate of each indicator is regularly monitored and reviewed, and internal management policies are adjusted on a rolling basis, based on the results of the annual review, to mitigate the impact of climate change through target management. For information on the relevant target achievements and other environmental-related performance in 2023, please refer to the table below:
Notes:
1. The electricity saving rate, water saving rate, and carbon reduction rate calculations for 2023 were based on the previous year's values. In 2021, the performance was compared to the adjusted base values of 2.387 kWh of electricity per passenger served for electricity savings, 0.0164 cubic meters of water consumption per passenger served for water savings, and 46.18g of CO2e per passenger-kilometer for carbon reduction. A "positive" value for the reflected electricity saving rate, water saving rate, and carbon reduction rate represents a decrease, while a "negative" value represents an increase.
2. The scope of setting indicators and targets encompasses the electricity consumption of HSR stations, including the Taoyuan Operation OMC Building, but excluding commercial areas, parking lots, and public areas shared with the Taiwan Railways Administration (TRA) at Nangang, Taipei, and Banqiao stations, as well as depots.
3. The indicator and target setting scope pertains to water consumption at HSR stations, encompassing the Taoyuan OMC Building but excluding commercial areas, parking lots, and water consumption in public areas shared with TRA at Nangang, Taipei, and Banqiao stations, as well as maintenance depots.
4. The indicator and target setting scope encompasses the electricity and gasoline/diesel fuel consumption of THSR trains, as well as that of HSR stations. This includes the electricity consumption in public areas shared with TRA (at Nangang, Taipei, and Banqiao stations) and Taoyuan OMC Building, but excludes commercial areas and parking lots, depots, and THSRC's headquarters office.
5. The emission factor of electricity is refered to the latest announcement from the Ministry of Economic Affairs.
6. The data in this table are self-examined by THSRC, and do not include refrigerant, welding rods, CO2 fire extinguisher and Scope III emissions.
7. Emission factors for gasoline and diesel fuel were corresponding factors from Version 6.0.4 (June 2019) of the Greenhouse Gas Emission Factor Management Table published by the Ministry of Environment.
8. GHG Emission = the amount of Electricity Consumption / Diesel procurement x the emission factor Global warming potential (GWP)；Global Warming Potential (GWP) used in the Greenhouse Gas Inventory is from Intergovernmental Panel on Climate Change (IPCC)'s sixth version assessment report in 2021.