Winbond Electronics : 2023 Task Force on Climate-related Financial DisclosuresReport

華 邦 電 子 股 份 有 限 公 司

2023 Task Force on Climate-related Financial Disclosures Report

Table of Contents

Preface Important Milestones in Climate Change Adaptation

1 Climate Governance

1. Climate Organizational Framework
2. Accountability Measures

1. Climate Risk Management
2. 1. Risk Management Framework
   2. Procedures for Identifying Climate Change Risks and Opportunities
   3. Climate Risk and Opportunity Matrix
   4. Impacts of Major Climate Changes and Responses
3. Scenario Analysis
4. 1. Transition Risk Scenario Analysis
   2. Physical Risk Scenario Analysis

4 Mitigation and Adaptation Measures

4.1 Green Products

1. Green and Sustainable Supply Chain
2. Energy and Greenhouse Gas Management
3. Water Resource Management
4. Green Investment and Financing

5 Metrics and Targets

1. Towards Net Zero Emissions
2. Climate-RelatedManagement Metrics

Appendix

Appendix 1 TCFD Indicator Reference Table

Appendix 2 IFRS S2 Climate-related Index on Cross-industry Metric Categories

	Preface	Climate
2023 TCFD Report	Governance

▋Preface Important Milestones in Climate Change Adaptation

Climate Risk	Scenario	Mitigation and	Metrics and	Appendix
Management	Analysis	Adaptation Measures	Targets

2022

1998

• Obtained ISO14001 certification for environmental management system

2000

• Participated in

World

Semiconductor

Council's PFC

Emissions

Reduction

Program

2006

• Implemented ISO 14064 greenhouse gas inventory

2010

• Established CSR policy
• Established EICC Promotion Team
• Verified through (BSI) PAS 2050 Carbon Footprint Standard
• Obtained Carbon Footprint Label from Taiwan Electrical and Electronic Manufacturers' Association
• Set Green Semiconductors as our corporate vision

2011

• Formulated Corporate Social

Responsibility

Procedures

2015

• Established CSR Committee
• Completed first CSR report in 2014

2020

• Registered for EPA's
  TM002 Offset Project

2021

• Wafer products verified through ISO 14067 Product Carbon Footprint
• Implemented ISO 14046 Water footprint assessment
• Implemented TCFD framework
• Received four awards from
  TCSA

• Established ESG Committee
• Implemented ISO 50001 Energy Management System
• Completed ISO 14067 Product Carbon Footprint assessment for IC products
• Joined Taiwan Climate Partnership (TCP)
• Participated in CIX Auctions, obtained voluntary carbon credits from world's largest blue carbon project
• Celebrated Zero Carbon Family Day by adopting blue carbon offsets
• Acquired 15% equity stake in CHIA-HO Green Energy Corporation
• Established Carbon Emissions Information Platform
• Received three awards from TCSA

▲ Participated in Taiwan Carbon ▲ Received six awards from TCSA	▲ Obtained the first T-REC
Solution Exchange (TCX)	3

2023

• Published the first independent TCFD report
• Implemented ISO 46001 Water efficiency management systems
• Obtained the first T-REC through procuring green energy
• Joined Taiwan Carbon Solution Exchange (TCX), obtained international voluntary carbon credit
• Participated in Tree Planting plan of Taiwan Forestry and Nature Conservation Agency
• Participated in TSIA's Net Zero Emissions and Voluntary Reduction initiatives
• Received six awards from TCSA
• Achieved B list (Management Level) in "Climate Change" and "Water Security" in Carbon Disclosure
  Project (CDP)
• Received Taichung City low-carbon sustainable city outstanding contribution Award
• Collaborated with 13 suppliers to apply for the Ministry of Economic Affairs' "Large Lead Small" subsidy program for low-carbon transformation and smart upgrading of manufacturing industry and obtained full funding

	Preface	Climate
	Governance
2023 TCFD Report

Climate Risk	Scenario	Mitigation and	Metrics and	Appendix
Management	Analysis	Adaptation Measures	Targets

1. Climate Governance

• 1.1 Climate Organizational Framework

Winbond has established a well-developed governance framework. The Board of Directors is Winbond's highest governing body, in charge of its operations and decision-making. The Board of Directors is responsible for ensuring the sustainable development of the Company and guaranteeing the rights of the Company's shareholders and other stakeholders.

Winbond's 13th Board of Directors consists of 11 directors, 4 of whom are independent directors and 3 of whom are women. More than two-thirds of the directors do not work as managers or employees of the company. Winbond's Chairman serving concurrently as CEO is to lead the management team to effectively implement the decisions of the Board of Directors. The Board held 10 meetings in 2023 with the attendance rate of 100%, including actual attendance (93%) and proxy attendance (7%).

• Winbond Organization Chart

	Shareholder's Meeting				▪	Renumeration Committee
							▪	Audit Committee
							▪	ESG Committee
	Board of Directors
							▪	Risk Management Committee
Auditing Department
						▪	Senior Executive Development
	Chairman					Committee
Chairman's Office
	CEO				▪	Employees' Welfare Committee
							▪	Supervisory Committees of Workers'
								Retirement Reserve Funds
	President
					▪	Environmental, Health and Safety
								(ESH) Committee
President's Office							▪	Patent Committee

DRAM Product		Memory IC Manufacturing		Flash Memory IC		Technology R&D
Business Group		Business Group		Business Group		Group

Information Technology Center

Finance Center

Sales Center	Quality & ESH Center	Production Control and Subcontractor
		Management Center

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	Preface	Climate
	Governance
2023 TCFD Report

Climate Risk	Scenario	Mitigation and	Metrics and	Appendix
Management	Analysis	Adaptation Measures	Targets

• Functional Committees Main Duties

To establish a well-developed governance framework, Audit Committee, Renumeration Committee, ESG Committee, Risk Management Committee, and Senior Executive Development Committee have been established under the Board of Directors. Each functional committee is responsible to the Board of Directors and submits proposals to the Board of Directors for resolution.

The ESG Office and its five functional teams focusing on the areas of Environmental Sustainability, Green Product, Human Rights and Social Inclusion, Sustainable Supply Chain, and Corporate Governance were formed under the ESG Committee. Members of the functional teams with the requisite expertise were tapped to form the TCFD project team.

Audit Committee

• Composed of 4 independent directors, the convener is Mr. Allen Hsu.
• In 2023, 8 meetings of the Audit Committee were convened, with the attendance rate of 100%, including actual attendance (88%) and proxy attendance (12%).

Responsibilities

Supervises the fair presentation of the company's financial statements, appointment (dismissal) of the CPA as well as the CPA's independence and performance, assists the Board of Directors in performing supervisory duties such as: Control of compliance with relevant laws and regulations and existing or potential risks by the company.

Renumeration Committee

• Composed of 4 independent directors, the convener is Mr. Stephen T. Tso.
• In 2023, 3 meetings of the Remuneration Committee were convened, with an actual attendance rate of 100%.

Responsibilities

Responsible for setting and reviewing the performance evaluation and remuneration policy, system, standard, and structure as well as individual compensation for Winbond directors and managers. The "Rules for Remuneration of Directors and Performance Assessment of the Board of Directors" and "Guidelines for Managers' Remuneration and Performance Evaluation Management" were also drawn up to maximize the long-term effectiveness of the Board and to ensure a close linkage between the managers' compensation and the company's sustainability performance (economic, environmental, social)

Winbond established the "Rules for Remuneration of Directors

and Performance Assessment of the Board of Directors", which
specifies the basis for directors' remuneration, and submits it to
the Remuneration Committee every year for review to see if
adjustments are required. Both the Audit Committee and the
Remuneration Committee of Winbond is composed of all
independent directors and are independent. Winbond does not
have a remuneration claw-back mechanism. For information on
the remuneration of directors, President and Vice President,
please refer to page 15 ~ page 19 of Winbond's 2023 Annual
Report.	5

ESG Committee

▪ Composed of 4 independent directors,	Established the ESG Office and five task forces, including
the convener is the Chairman, Mr. Arthur	Environmental Sustainability, Green Products, Human Rights
Yu-Cheng Chiao.	and Social Inclusion, Sustainable Supply Chain, and Corporate
▪ In 2023, 2 meetings of ESG Committee	Governance, regularly report to the Board of Directors every
was convened, with the attendance rate	year to ensure the promotion and implementation of relevant
of 90%.	work for corporate sustainability. The committee is led by the
			chairman personally and consists of independent directors. It
			convenes meetings twice a year, where each task force reports
Responsibilities
		on the progress (achievements) of the current year and submits
1) Formulate corporate sustainability policies
	plans for the following year.
and related management guidelines.
2) Develop short-term,medium-term, and
long-term sustainable development

strategies and goals.				▋ESG Committee Organization Chart
3) Review, track, and revise the
implementation status and effectiveness of
the company' s sustainability initiatives.	Board of Directors
4) Regularly report the committee' s execution
results to the Board of Directors each year.
					ESG	Committee	Chairman
					Arthur Yu-Cheng Chiao
		ESG Office
Environmental	Green	Human Rights		and	Sustainable	Corporate
Sustainability	Product			Social Inclusion			Supply Chain	Governancec

The TCFD was coordinated by the Corporate Governance task force, which appointed members of the five functional teams with the requisite expertise to be Task Force members.

	Preface	Climate	Climate Risk	Scenario
	Governance	Management	Analysis
2023 TCFD Report

Mitigation and	Metrics and	Appendix
Adaptation Measures	Targets

• Composed of all the board members, the convener is the Chairman, Arthur Yu- Cheng Chiao.
• In 2023, 1 meeting were convened with the attendance rate of 100%, including actual attendance (80%) and proxy attendance (20%).

Risk Mangement Committee

Responsibilities

1. Responsible for overseeing the overall risk management of the company, formulating risk management policies, frameworks, and establishing qualitative and quantitative management standards, adjusting as needed based on the company's actual development or objective environmental changes.
2. Execute risk management decisions of the Board of Directors and review the development, establishment, and effectiveness of the company' s overall risk management mechanisms.
3. Set risk appetite and review and manage the company's overall risks.
4. Assist and supervise various units in conducting risk management activities and coordinate cross-unit interactions and communication related to risk management.
5. Adjust risk categories and assumptions based on environmental changes.

Senior Executive Development Committee

• The committee members consist of directors from Winbond/Nuvoton, who serve as mentors, with the committee chair appointed by mutual recommendation among the directors, currently held by independent
• director, Chung-Ming Kuan. The mentees are senior executives from Winbond and Nuvoton, with the list of mentees discussed and adjusted annually by the board.
• Established on: December 22, 2023. The attendance rate of mentees at the inaugural meeting was 100%.

Method of operation

Objectives

目的

1) To enhance the knowledge of the participating mentees beyond their professional field.

2) To broaden the international perspective of the mentees.

3) To allow directors to gain a better understanding of the company's internal operations.

1. Study sessions for all mentee

2. Mentor/mentee mechanism between mentors and mentees

Study sessions for all mentee held once a month in principle, except when the lecturer or students have special circumstances, the timing is adjusted accordingly. The speaker can be a director from Winbond/Nuvoton or an external expert, with the current planned topics as follows:

1. International economic environment
2. Industry trends and strategies
3. SDGs & ESG trends and progress
4. Technology and business innovation
5. Leadership and management
6. History and humanities

1. The first version of mentor-mentee pairing has been established, allowing mentors to observe and guide mentees more closely.
2. The pairing of mentors and mentees is adjusted annually, based on the increase or decrease of mentees or individual needs.

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	Preface	Climate
	Governance
2023 TCFD Report

• 1.2 Accountability Measures
• Reporting to the Board of Directors

Winbond continues to incorporate climate change-related proposals into the decision-making process of the Board of Directors to ensure corporate leadership and sustainability in addressing climate change.

• Professional Excellence of Directors

The 11 directors all have extensive business operations experience. The ages of board members cover different generations, and their professional background covers different industries. All board members possess the ability to perform their duties, supervise, and give constructive feedback and strategies. The directors take classes outside themselves or participate in multi-faceted training courses organized by Winbond. Training hours for director education and training and environmental sustainability related courses (2050 Net Zero , climate change, sustainable finance) were 33 hours, for courses related to corporate business (Global Economics, AI Smart Operation Management, International Situation) were 43.5 hours, and for courses related to compliance were 12 hours. In 2023, the directors obtained a certificate of study with an average of 8.05 hours.

• Competence Development for Managers and Employees regarding Climate Change

Winbond has invested a great deal of time and resources into successfully communicating the risks and impacts of climate change to all of the company's employees. The Company uses a range of channels to actively cultivate the basic awareness of employees in the hope of instilling the concept of carbon reduction. Through a combination of internal and external training courses, slogans on the company intranet, and shared articles, Winbond encourages every employee to pay extra attention to the impact of climate change on both work and life, and to spread the idea to their family members and even implement the eco-friendly practices promoted by the Company at home. Doing so makes it easier for the Company to bring employees onboard when promotion carbon reduction actions to realize the goal of net zero emissions.

Climate Risk	Scenario	Mitigation and	Metrics and	Appendix
Management	Analysis	Adaptation Measures	Targets

Important Climate-Related Proposals and Reports for the 2023 Board of Directors

Report quarterly on the planning of greenhouse gas inventory and timeline (including subsidiary companies)

Approval of increased capital expenditure budget for equipment replacement with energy- efficient equipment

Approval of revised Winbond's Sustainability Development Best Practice Principles

Authorized the procurement of 30MW of offshore wind energy through SUSTAINABLE ENERGY SOLUTION CO.

Green energy procurement report

Investment report of Kai-Hong Energy Co., Ltd.

2023 Board of Directors Climate-Related Competency Development Topics

Utilizing policy diverse resource strategy to connect Taiwan local communities to achieve corporate CSR goals

The development and challenges of international new net-zero technologies

(2050 Carbon Neutrality) start from 2027 「Hsinchu Baoshan Native Plant Conservation and Environmental Education Park」plan

The development and implications of International Carbon Border Adjustment Mechanism

2023 Cathay sustainable finance and climate change summit

ESG Sustainable operation

Corporate Culture learning

• Winbond ESG learning platform

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	Preface	Climate
	Governance
2023 TCFD Report

Climate Risk Management

Scenario	Mitigation and	Metrics and	Appendix
Analysis	Adaptation Measures	Targets

2. Climate Risk Management

• 2.1 Risk Management Framework

Winbond belongs to the semiconductor manufacturing industry. Facing natural disasters, accidents, human-made incidents, changes in international political and economic situations, the emergence of new technologies, and changes in policies and regulations may all cause serious impacts on its operations and finances. Therefore, Winbond established a "Risk Management Committee" under the Board of Directors. This committee is one of the functional committees and organizes existing departments or units responsible for risk to enhance the overall risk management organizational structure. It formulates sound internal management regulations and operating procedures for each unit's scope of responsibility and conducts risk management.

In 2023, Winbond revised the "Risk Management Committee Chapter" and formulated the "Risk Management Policy and Procedures" after receiving approval by the Board of Directors. It actively manages the four major types of risks faced by contemporary enterprises: "strategic," "operational," "financial," and "information security." It develops comprehensive plans and processes for pre-assessment, risk avoidance, loss prevention, and crisis management for various operational activities and regularly reports to the management and governance units to ensure that all corporate risk control goals are achieved. The risk management team should pay attention to the development of international and domestic risk management systems and changes in internal and external operating environments, adjust control mechanisms, report to the Risk Management Committee and the Board of Directors for approval, and enhance the effectiveness of risk management implementation. For details on the operation of the Risk Management Committee, please refer to Section 1.1.2 Operations and Main Duties of the Functional Committee.

Board of	The highest governance unit
Director
Approves the risk management mechanism And ensures its effective operation.

• • Strategic Risk
• Political Change

• Technology Change

• Operational Risk

① Operational Planning, Execution, and Crisis

Management

②Product Quality Management

Risk Management

Committee

Risk Management Team

Functional Units and Subsidies

All Members

Members: Chairman (convener) and all independent directors comprehensively review the risk management mechanisms and other matters

Responsible for identifying and evaluating risks, implementing risk control plans, establishing qualitative and quantitative management standards and improving risk control practices, and regularly reporting risk management results to the Risk Management Committee.

The heads of various functional units and subsidiaries of our company are responsible for risk management. They are tasked with identifying, assessing, and monitoring relevant risks within their respective units to ensure the effective implementation of risk control mechanisms and procedures.

The company emphasizes comprehensive risk control for all employees and daily implements layer by layer prevention.

• Industrial Change

• • Climate Change
  • • Financial Risk
• Exchange Rates and Interest Rates

• Financial Operations

• Investments

③Environmental, Health, Safety, and Carbon Rights

Management

④Global Human Resources Management

⑤Intellectual Property Management

⑥Internal Control Management

Sustainable	Ⅳ Information Risk
Operation
① Information Management

• Information Security Protection

Winbond Risk

Management

policy and

procedures

Including but not limited to the following items:

• Risk management objectives ❷ Risk management organizational framework and Responsibilities ❸ Risk management Procedures

Winbond Risk

Management

Objectives

Winbond aims to manage various risks that may impact the achievement of company goals through a comprehensive risk management framework. By integrating risk management into operational activities and daily management processes, Winbond aims to achieve the following objectives:

• Achieve company goals. ❷ Enhance management efficiency. ❸ Provide reliable information. ❹ Allocate resources effectively.

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	Preface	Climate
	Governance
2023 TCFD Report

Climate Risk Management

Scenario	Mitigation and	Metrics and	Appendix
Analysis	Adaptation Measures	Targets

Winbond's risk management procedures include at least five elements: risk identification, risk analysis, risk assessment, risk response, and supervision and review mechanism. The specific procedures and methods for each element are as follows:

1. Risk Identification
2. • Each functional unit and subsidiary should identify the risks of the short-,mid-, and long-term objectives and the business operations based on the company's risk management policies and procedures.
   • Various feasible analysis tools and methods (such as process analysis, scenario analysis, questionnaire surveys, PESTLE analysis, etc.) should be used for risk identification. Risks should be analyzed from both topdown and bottom-up perspectives, considering internal and external risk factors, stakeholder concerns, etc., to comprehensively identify potential risk events that may affect the company's goals or cause losses or adverse impacts.
3. Risk Analysis
4. • Each functional unit and subsidiary should analyze the probability and impact of identified risks based on

existing control measures, past experiences, industry cases, etc., and calculate the risk value accordingly.

1. Risk Analysis Measurement Standards
2. • The risk management team should establish appropriate quantitative or qualitative measurement standards based on the company's risk characteristics as the basis for risk analysis.
   • Qualitative measurement standards refer to expressing the probability and impact of risk events through textual descriptions, while quantitative measurement standards refer to expressing the probability and impact of risk events through specific measurable numerical indicators (such as days, percentages, amounts, numbers, etc.).
3. Risk Appetite

risk management team should develop risk appetite (risk tolerance) and report it to the Risk Management Committee and the Board of Directors for determining the company's acceptable risk threshold. Based on the risk appetite, the risk management team should discuss the corresponding risk levels for each risk value and the response methods for each risk level, serving as the basis for subsequent risk assessment and risk response.

1. Risk Assessment
2. • Each functional unit and subsidiary should, based on the results of risk analysis, align with the risk appetite approved by the Risk Management Committee and the Board of Directors. They should then plan and execute subsequent risk response measures according to the risk levels.
   • The relevant results of risk analysis and assessment should be accurately documented and reported to the Risk Management Committee.

1. Risk Response
2. • After assessing business risks, each unit should propose appropriate risk response measures and control operations and report them to the risk management team for review.
3. Supervision and Review
4. • The risk management team should regularly report the implementation results of risk management procedures to the Risk Management Committee as a reference and report major risk events to the Risk Management Committee and the Board of Directors, as necessary.

Risk	Risk	Supervision
Assessment
Identification	and Review

Risk Analysis

Risk Response

Winbond has included climate change risk into the long-term operation and management of the enterprise, and in order to understand its impact on the environment and operations, since 2021, Winbond has adopted the Task Force on Climate-Related Financial Disclosures' (TFCD) framework, and based on the observation on international regulatory trends and market outlook, every year, we regularly identify and disclose the financial impacts of climate-related risks and opportunities (both quantitative and qualitative), providing comments on the situation as well as proposing a management strategy. Winbond will continue to monitor the impact of risks brought by the climate, strengthen the company's operational capabilities, promote various carbon reduction plans, improve energy efficiency, and steadily move towards sustainable development. Please refer to 1.6 Climate Change Management for detailed information.

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	Preface	Climate	Climate Risk
	Governance	Management
2023 TCFD Report

▋ 2.2 Procedures for Identifying Climate Change Risks and Opportunities

Scenario	Mitigation and	Metrics and	Appendix
Analysis	Adaptation Measures	Targets

Continuing the framework and workflow from the previous year's TCFD, Winbond convened 15 department-level units and nearly 30 members to establish the TCFD

project team. Members are divided int teams according to the nature of their job. Each

team discusses climate change issues with relevance to their area of operations, utilizing Winbond TCFD platform to identify and generate the matrixes. The evaluation results have been reported in the ESG Committee meetings.

• TCFD project team meeting

0 1

0 2

0 3

0 4

0 5

0 6

0 7

Form a TCFD project team

Formed by members from over 15 units, including R&D, Sales, Marketing, Fab Facility, Procurement, Environmental Safety and Health, Finance, Legal, and Human Resources

Create climate risk and opportunity lists

Including 35 climate risks and 18 climate opportunities

Define evaluation criteria

Conducted evaluation based on impact degree, possibility of occurrence and time of occurrence

Generate risk matrix and opportunity matrix for each team

Each team identified major short-term,medium-term, and long-term risks and opportunities based on their impacts, possibility of occurrence , while considering their own business relevance

Develop the consolidated risk matrix and opportunity matrix

Aggregated the results from each team to generate the Winbond Climate Risk Matrix and Opportunity Matrix

Evaluate the financial and operation implications of major risks and opportunities

Conducted qualitative and quantitative analysis to assess potential financial impacts resulting from high-impact and high-likelihood risks and opportunities

Discuss response measures

Engaged relevant units to review and develop response measures for major risks and opportunities

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