Climate-Related Financial Disclosures

Sustainability Initiatives

Climate-Related Financial Disclosures (TCFD)

HDRE is actively establishing a comprehensive climate governance framework. Led directly by the Chairperson, the Sustainability Development Office is responsible for identifying climate-related risks and potential opportunities the corporate may encounter. The Board of Directors oversees overall strategy and monitors implementation progress. This governance structure operates in a top-down manner, covering issue identification, strategic planning, resource integration, and ongoing execution tracking and performance assessment. It ensures the corporate remains resilient amid a changing climate environment while advancing its sustainability objectives.
In practice, the preliminary identification of climate risks and opportunities originates from frontline observations across departments. During daily operations, each unit monitors and records potential climate-related events and discusses them with the Sustainability Development Office during annual sustainability interviews. Through cross-functional dialogue and analysis, potential issues are categorized into short-, medium-, and long-term risks and opportunities, forming the foundation for strategic response planning.
To deepen organizational understanding of climate issues, HDRE has adopted the framework of the Task Force on Climate-related Financial Disclosures (TCFD) as its governance reference and initiated cross-departmental climate training and interviews. These efforts not only enhance employees’ foundational knowledge of climate change and the TCFD structure but also embed climate-risk awareness into day-to-day operations across all departments.
Additionally, to strengthen risk quantification and management capabilities, HDRE designed and implemented a dedicated climate questionnaire, applying a matrix analysis based on two key dimensions—likelihood of occurrence and severity of impact. This process allows HDRE to identify significant climate risks and potential opportunities, which are further consolidated into specific climate indicators and strategic targets that guide subsequent decision-making and management.
Through these mechanisms, HDRE is progressively building a governance system capable of responding to climate challenges and capturing sustainability opportunities, demonstrating forward-looking commitment and effective climate action.

Identification Process for TCFD Climate Risks and Opportunities

1.Climate-Related Data Collection

Collect information on physical risks, transition risks, and potential opportunities in alignment with the TCFD framework.
Conduct data gathering with a focus on the renewable energy sector and HDRE’s operating locations, drawing from international reports, Taiwan’s Climate Change Adaptation Platform, online resources, and relevant news sources.

2.Departmental Interviews

Conduct interviews with responsible department heads based on the TCFD framework to understand operational conditions and identify potential climate-related risks and opportunities.
Discuss existing climate-related management practices and objectives with each department head to align them with TCFD metrics and targets.

3.TCFD
Questionnaire

Develop a TCFD risk and opportunity questionnaire based on the results of data collection and departmental interviews, and distribute it to department heads for completion. The questionnaire is used to assess the potential impact and likelihood of climate-related factors affecting each department.

4.Materiality Matrix Analysis

Conduct matrix analysis based on questionnaire responses to identify significant climate-related risks and opportunities. These issues are visualized through a materiality matrix to evaluate their impact severity and likelihood of occurrence, forming the basis for subsequent linkage to management approaches, metrics, and targets.

5.Establishing Metrics and Targets

For the identified significant climate-related risks and opportunities, consolidate existing management practices, metrics, and targets based on insights gathered from prior interviews to develop corresponding climate indicators and forward-looking objectives.

The Four Pillars of the TCFD Framework

The Four Pillars of the TCFD Framework	Key Initiatives	Responsible Unit
Governance	The Sustainability Development Office serves as the core unit driving sustainability initiatives, including climate-related matters. In the 2024 Sustainability Report, climate risks and opportunities were disclosed with reference to the TCFD framework. The Board of Directors receives periodic briefings from the Sustainability Development Office on the execution of key sustainability issues, TCFD climate disclosures, and the greenhouse gas inventory roadmap, and provides guidance based on the reported findings.	Board of Directors Sustainability Development Office
Strategies	1.Identify significant climate-related risks and opportunities through the climate risk and opportunity materiality matrix. 2.Assess potential climate impacts on HDRE through scenario analysis. 3.Complete greenhouse gas inventories for the Taipei and Taichung offices and obtain ISO 14064-1 third-party verification. 4.As of the end of 2024, the Taipei headquarters achieved 76.88% green electricity usage, while the Taichung office achieved 59% green electricity usage in 2024. 5.Establish the Green Procurement Policy as the basis for management and implementation, integrating environmental and social performance into procurement decisions and encouraging upstream and downstream suppliers to adopt similar practices.	Sustainability Development Office All Department
Risk Management	Identify climate risks and opportunities in alignment with the TCFD framework. Issues are first consolidated through interviews and further refined through questionnaire responses to determine significant climate-related risks and opportunities. Integrate existing management practices related to the identified significant climate risks and opportunities across the corporate	Sustainability Development Office All Department
Metrics and Targets	Continue completing Scope 1, Scope 2, and Scope 3 greenhouse gas inventories for all existing office locations in 2025. Include newly established sites in the following year’s inventory boundary according to their actual operational timeline, gradually expanding the coverage to ensure completeness of disclosure and consistency of the management system. Set green electricity usage targets and monitor progress regularly to proactively address climate-related risks. In 2024, the subsidiary Star Aquaculture began implementing a water-management system for its aquaculture operations, enabling real-time monitoring of water consumption. Expand the scope of localization and green procurement to shorten lead times, reduce raw material transportation distances and carbon emissions, and simultaneously increase local employment opportunities to support socioeconomic development.	Sustainability Development Office All Department

Risk Item

Risk	Key Initiatives	Risk Iem	Potential Operational and Financial Consequences (Risk Impact Description)
Physical Risks	Immediate Typhoons / Heavy Rainfall	Project Construction Delays	Extreme weather events such as typhoons and heavy rainfall may trigger abnormal operational disruptions. Intense rainfall can cause site flooding or transportation delays, leading to construction delays or rising operating costs.
		Increased Disaster Prevention Costs	To prevent climate-related disasters, the corporate must strengthen equipment resilience—such as improving wind resistance, heat tolerance, and flood-prevention capabilities—which results in additional costs.
		Damage to Operational Equipment	The increasing frequency of extreme weather events—such as typhoons and heavy rainfall—may directly damage operational sites or information equipment. Potential impacts include disruptions to power generation or changes in aquaculture water quality.
		Disruptions in the Supply Chain	Climate-related disasters—such as flooding caused by heavy rainfall or wildfires triggered by drought—may affect raw material suppliers’ ability to operate normally, leading to supply chain disruptions.
	Long-term Long-term Climate Impacts	Increased Operating Costs	Increasing weather volatility reduces the accuracy of existing risk assessment systems, creating greater cost uncertainty and heightening pressure on cost management.
	Long-term Long-term Climate Impacts	Heat Exhaustion	With rising long-term temperatures, the likelihood of heat exhaustion among on-site personnel increases, creating direct health risks and raising the chance of operational disruption at project sites.
Transition Risks	Policies and Regulations	Policy Costs	As governments tighten climate policies to stay on track for their 2050 net-zero goals, carbon-reduction requirements and carbon-pricing measures are becoming more stringent. This trend means corporates will face greater pressure to cut emissions, along with a rising exposure to future carbon-related costs.
	Market Risk	Policy Costs	As customers increasingly favor low-carbon products, HDRE is expected to reduce the carbon footprint across its supply chain. Meeting this market shift will require HDRE to invest in driving supplier transitions and lowering lifecycle emissions.
	Reputational Risk	Responding to Stakeholder Expectations	Stakeholders’ perception of HDRE’s ability to support corporate low-carbon transition and energy-saving efforts may directly influence how shareholders, customers, suppliers, and other stakeholders view HDRE’s image and reputation.

In 2024, a total of six major climate risks were identified:

1.Increased Disaster Prevention and Mitigation Costs	4.Price Competitiveness
2.Responding to Stakeholder Climate-Related Expectations	5.Rising Operating Costs
3.Supply Chain Disruptions	6.Project Construction Delays

Opportunities

Opportunity Category	Resource Efficiency	Products and Services
Resource Efficiency	Low-carbon and Green Production	Using higher-efficiency production equipment reduces electricity and water consumption, as well as waste generation during assembly, leading to lower production costs.
Products and Services	Smart Green Electricity Systems	Providing green electricity consulting, planning, and supply services enables customers to optimize their power scheduling and secure stable renewable electricity, creating additional revenue opportunities for HDRE.
Products and Services	Circular Reuse and Resource Recovery	Decomposing solar panels into recoverable materials and reusing them in new panels or related products supports a more sustainable and circular solar energy system, enhancing customer interest and generating new business opportunities.
Market	Product Development Aligned with Market Preferences	Driven by government policies, demand for green energy management, EV charging infrastructure, and solar technologies continues to rise, expanding market opportunities and potential returns.
Market	Strengthening Investor Appeal	Growing awareness of renewable energy is increasing investor appetite for the sector, strengthening HDRE’s access to capital.
Energy Source	Increasing the Use of Renewable Energy	In addition to supplying renewable energy to customers, HDRE’s use of green electricity across project development and daily operations helps minimize organizational emissions and product carbon footprints, enhancing competitiveness and driving additional revenue opportunities.
Resilience	Building Corporate Resilience	Proactively managing climate risks and opportunities strengthens HDRE’s operational resilience and enhances its ability to capture emerging climate-related opportunities.

In 2024, a total of four major opportunities were identified:

1.Increased Investment Willingness	3.Smart Green Energy Systems
2.Alignment with Market Preferences	4.Building Corporate Resilience

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Sustainability Initiatives