Climate Change

FEDS has been disclosing climate change-related information since 2019, following the framework outlined in the TCFD guidelines. In 2022, we further aligned with the Taiwan Stock Exchange’s regulations, assisting us in more accurately assessing the potential transition and physical risks and opportunities that climate change may pose to our business operations. This enables us to formulate management policies and preventive measures to effectively manage climate change risks and opportunities.

Climate Governance

The climate governance framework of FEDS is overseen by the Board of Directors, which has established a “Greenhouse Gas Inventory and Climate Change Response Task Force.” After identifying climate-related impacts, meetings are held to discuss climate-related risks and opportunities, in order to adapt to and mitigate climate financial risks, while also identifying corresponding climate financial opportunities for implementation and policy promotion.

Since 2022, quarterly reports have been submitted to the Board of Directors on the progress of projects such as greenhouse gas inventory and verification. The Board reviews the content and direction of sustainability work and supervises the management team to make appropriate adjustments.

Strategy

FEDS identifies, evaluates, and manages climate-related risks and opportunities, referencing the high greenhouse gas emissions scenario SSP5-8.5 published in the sixth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC). FEDS assesses potential climate hazards, integrates and manages possible influencing factors, establishes strategies related to climate risks and opportunities, implements response measures, and enhances its climate resilience.

Risk Identification

Collect information on climate issues, and analyze the operational environment.

Evaluation and Confirmation

Inventory and assess relevant risks and opportunities, and evaluate their impact.

Formulating Measures

Identify significant risks and opportunities and develop contingency plans and action strategies.

Tracking and Disclosure

Continuously disclose relevant information, and report to the Board of Directors annually.

Climate Scenario Assessment

With reference to the official TCFD risk list and other relevant information, FEDS evaluates various climate risk  issues by the Climate Change Response Group. Finally, 12 key climate risk andopportunity projects were identified. Based on the SSP5-8.5 climate scenario, the impact of possible climate disasters was evaluated. Public climate models and chart websites such as the Taiwan Climate Change Prediction Information and Adaptation Knowledge Platform (TCCIP) and the 3D Disaster Potential Map were used to analyze possible physical climate disasters and evaluate the potential impact as FEDS faces the most extreme climate.

Physical Scenario

Climate Risk Assessment under SSP5-8.5 Scenario
Rainfall Risks:By 2050, Taiwan’s maximum daily rainfall may reach 116.3-531mm. Under extreme rainfall conditions (500mm/24hrs), surrounding areas could experience 0.5-1.0m flooding, potentially disrupting personnel and cargo transportation.
Temperature Risks:Taiwan faces a potential 1.6°C temperature increase with extended summer periods, leading to higher air conditioning costs, increased infrastructure expenses, and elevated product preservation costs.
Risk Management:Close monitoring of climate information is essential for early prevention and operational continuity.

Energy Transition Scenario

FEDS has conducted scenario analysis in compliance with international and domestic regulations to estimate future electricity cost impacts.
Based on Taiwan Executive Yuan’s October 2024 “Energy Mix and Electricity Pricing Policy” report and Ministry of Economic Affairs Bureau of Energy website’s Energy Statistics Section , Taiwan’s renewable energy ratio is projected to increase from 11.7% in 2024 to 30% by 2030 under national energy transition policy.
Due to higher initial deployment costs of renewable energy infrastructure, Taiwan Power Company’s electricity unit prices may increase, resulting in higher external power procurement costs for FEDS.

Identification and Assessment of Climate-Related Risks and Opportunities

FEDS identified 7 climate risk issues and 5 climate opportunity issues through situational analysis, and ranked them based on the degree of impact and likelihood of occurrence for stakeholders. The impact was divided into 3 levels: low, medium, and high, and the likelihood of occurrence was divided into 3 levels: unlikely, possibly, and very likely to evaluate the impact and influence of risks and opportunities.

Matrix of Climate-Related Risks and Opportunities

List of Climate-Related Risks and Opportunities

Based on comprehensive analysis results, FEDS selected 8 major climate risk and opportunity issues to strengthen the Company’s climate resilience. Appropriate management strategies and response measures are proposed as follows:

Climate-Related Risks and Financial Impacts

Risk and Opportunity Content

Taiwan’s government policies are moving towards achieving net-zero emissions, and carbon reduction outcomes will face higher standard requirements.

Value Chain Impact

Suppliers, Counter Vendors, Company Operations

Potential Business and Financial Impacts

  • Growing demand for green power purchases, and thus increased operating costs.
  • FEDS may face future carbon tax requirements.

Response Measures

Implementing smart energy-saving tools for more effective electricity conservation

Transition Risk • Development Costs of Low-Carbon Technologies and Services

Risk and Opportunity Content

Department stores primarily rely on electricity as their main energy source, and the development of low-carbon energy and services will inevitably impact company operations

Value Chain Impact

Company Operations

Potential Business and Financial Impacts

  • Growing demand for green power purchases, and thus increased operating costs.
  • FEDS may face future carbon tax requirements.

Response Measures

Implementing smart energy-saving tools for more effective electricity conservation

Physical Risk • Climate Anomalies

Risk and Opportunity Content

Climate disasters causing business interruptions, employee absenteeism, logistics disruptions, or damage to buildings and equipment

Value Chain Impact

Counter Vendors, Company Operations

Potential Business and Financial Impacts

  • Inability of staff and logistics to reach business locations will result in manpower shortages, inadequate product supply, and a decrease in revenue
  • Damage to buildings and equipment resulting in a decrease in customer traffic and an increase in repair costs

Response Measures


Transferring risks through insurance, simulating support for human resource planning, maintaining multiple suppliers, and implementing disaster prevention education

Physical Risk • Changes in Precipitation Patterns and Increase in Annual Average Temperature

Risk and Opportunity Content

High temperatures reduce the public’s willingness to spend outside the home, while changes in precipitation lead to water resource shortages

Value Chain Impact

Company Operations

Potential Business and Financial Impacts

  • The willingness of consumers to visit stores decreases, resulting in a decline in sales revenue
  • Water scarcity leads to an increase in water costs

Response Measures

Adjusting air conditioning capacity and operating hours based on temperature conditions, and establishing an emergency water contingency plan

Climate-Related Opportunities and Financial Impacts

Resource Usage Efficiency

Risk and Opportunity Content

Implement classification, enhance resource utilization efficiency, and attract consumers with sustainability awareness

Value Chain Impact

Suppliers, Company Operations

Potential Business and Financial Impacts

  • Effectively managing waste, enhancing overall environmental quality, and improving customer perception

Response Measures

Establishing resource recycling management indicators, and reducing operational impact on the environment

Sources of Energy

Risk and Opportunity Content

The implementation of energy-saving equipment effectively reduces energy consumption emissions

Value Chain Impact

Suppliers, Company Operations

Potential Business and Financial Impacts

  • Implementing energy-saving technologies for air conditioning to decrease operational energy consumption

Response Measures

Implementing automated management, and enhancing energy utilization efficiency

Market

Risk and Opportunity Content

Low-carbon operations have a positive brand image, leading to improved capital market opportunities

Value Chain Impact

Company Operations

Potential Business and Financial Impacts

  • Reduction of preferential interest rate finance to lower financing cost

Response Measures

Engagement with financial institutions regarding related business: green revolving funds, green deposits

Resilience

Risk and Opportunity Content

Establish crisis management and early warning measures for climate disasters to enhance climate risk management capabilities

Value Chain Impact

Company Operations

Potential Business and Financial Impacts

  • Enhanced resilience to climate disasters, increased trust of specialized manufacturers and customers, and reduced business losses

Response Measures

Ensuring regular maintenance and inspection of all hardware and software equipment to guarantee operational continuity

Indicators and Goals

FEDS has established five key action directions: energy conservation, carbon reduction, green energy, waste reduction, and green procurement. FEDS focuses on through energy management and green energy procurement. The mid-term target is a 30% reduction in carbon emissions by 2030, with the long-term goal of achieving net zero emissions by 2050.

2030

Carbon Reduction Goal

  • 30% reduction in carbon emissions.

Development Goal

  • Continue to obtain the Green Building Label
  • Install solar panels
  • Establish an internal carbon pricing mechanism
2050

Carbon Reduction Goal

  • 100% reduction in carbon emissions