Climate Change

In order to systematically respond to climate change risks and possible climate disasters, while preventing related financial losses, with reference to the framework developed by the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB) in 2015, FEDS has disclosed information related to climate change since 2019, helping FEDS to more accurately assess the challenges and opportunities that climate risks may bring to business operations. FEDS will set goals accordingly and take actions to respond to the financial impacts of climate risks and opportunities.

Greenhouse Gas Inventory and Climate Change Response Team

In order to improve the ability to respond to climate change and foster the climate risk awareness among corporate members, FEDS has incorporated climate risk issues into the corporate culture from top to bottom to strengthen corporate resilience. To ensure that the management and employees at all levels are able to truly grasp TCFD information, FEDS held relevant training courses in 2022. Directors and managers completed 4 TCFD training courses with a total of 4 participants and a total of 10 hours; employees completed 6 TCFD training courses with a total of 109 participants and a total of 254 hours for the training.


FEDS has established “Corporate Sustainability Committee” to regularly discuss the potential impacts of various climate change issues on the internal and external aspects of the organization, including identifying and assessing climate change risks and responding to climate impacts. Among them, the “Greenhouse Gas Inventory and Climate Change Response Team” (hereinafter referred to as the Climate Change Response Team) established by the “Corporate Sustainability Committee” is at the core to identify climate-related impacts, discuss climate-related risks and opportunities, and propose corresponding measures. Starting from the second quarter of 2022, the Corporate Sustainability Committee reports to the Board of Directors on the implementation results of relevant sustainability tasks on a quarterly basis. The Board of Directors reviews the content and direction of sustainability initiatives, provides recommendations as required, and supervises the management team to make timely adjustments. A total of three reports were conducted in 2022.


FEDS takes the potential impacts of climate change into the overall operation considerations, estimates the probability of risk occurrence and the level of impact on the department store industry, and formulates a risk response and mitigation plan. FEDS identifies physical and transition risks and opportunities based on business type, risk strategy, and financial planning status. By simulating the potential financial impacts of climate in the future through scenario analysis, FEDS plans forward-looking climate actions, formulates risk response, mitigation plan, and crisis management mechanisms, and promotes various green environmental protection policies to comprehensively reduce the carbon footprint of the Company’s operations and services.

Climate scenario assessment

FEDS assesses the impacts of potential climate disasters based on the RCP 8.5 climate scenario, and then analyzes the possible physical climate disasters based on public climate models and relevant diagram websites such as “Taiwan Climate Change Projection Information and Adaptation Knowledge Platform” and “3D Disaster Potential Map”.
Physical scenario

IPCC RCP climate scenario types and related indicators adopted by FEDS

  • Estimated scenario: RCP 8.5
  • Estimated period: Mid-century (2050)
  • Climate-related data indicators:
    • Variation in rainfall: The variation in the daily maximum rainfall in Taiwan is estimated to be about -4.8% to 41.7%, and the actual rainfall is about 209.6mm to 283.4mm.
    • Variation in temperature: The annual average temperature in Taiwan increases by about 0.9°C to 2.2°C, and the annual average temperature is expected to reach 21°C to 22.3°C.
In terms of rainfall, based on the RCP 8.5 climate scenario assumptions, the maximum daily rainfall in Taiwan will increase up to 283.4mm. According to the definition of rainfall classification set by the Central Weather Bureau on March 1, 2020, The 24-hour cumulative rainfall of more than 200mm is considered torrential rain, which may cause local flooding or deluge. Taking the area where the head office of FEDS is located as an example, after analysis, it is found that there is no flooding in the location of the head office or the surrounding areas under the scenario of 200mm rainfall in 24 hours. However, under the scenario of 350mm rainfall in 24 hours, there may be about 0.5 to 1.0 meters of water accumulation in the surrounding areas, which may cause obstruction to the transportation of people and goods in terms of physical climate risk. It is necessary to pay close attention to climate-related information for early prevention.

In terms of annual average temperature, FEDS’s head office and its branches located in Taiwan may encounter the risk of temperature increase by 2°C under the RCP 8.5 scenario, and the temperature may reach 21°C to 22.3°C, which may result in the increase in air-conditioning electricity expense, the increase in infrastructure costs and the increase in preservation costs for some products.
Energy transition scenario
FEDS conducts a scenario analysis in response to international and domestic regulations to estimate the financial impact of future electricity costs.

With a target to reduce greenhouse gas emissions by 50% for business as usual (BAU) by 2030, if Taiwan’s renewable energy proportion increases from 5.6% in 2019 to the planned 40% in 2030 set by the national energy policy, the electricity unit price of Taiwan Power Company will rise due to the higher cost of renewable energy in Taiwan. Using NT$2.63 per kWh in 2019 as the baseline, the estimated electricity price for 2030 is projected to increase to NT$3.88 per kWh. Consequently, the procurement cost of electricity for FEDS will also increase. As a result, FEDS will continue to implement various energy-saving measures to reduce the impact of electricity consumption.

Identification and assessment of climate-related risks and opportunities

FEDS conducts risk assessments on climate-related risks and opportunities and analyzes and ranks them according to the severity of impact and likelihood of occurrence. The severity of impact is categorized into three levels: low, medium, and high, while the likelihood of occurrence is classified into three levels: unlikely, possible, and very likely. FEDS identifies and analyzes medium and high-risk items, and subsequently formulates appropriate response measures to enhance FEDS’s resilience in dealing with climate change risks and opportunities.

Matrix of climate-related risks and opportunities

List of climate-related risks and opportunities

After reviewing the risks, FEDS analyzed the impacts of climate change on the Company’s financial condition and made annual adjustment and response actions to address the financial impacts. “Climate-Related Risks and Financial Impacts” and “Climate-Related Opportunities and Financial Impacts” are disclosed as follows:

Climate-Related Risks and Financial Impacts

Risk description
  • The Bureau of Energy requires an annual reduction of 1% in electricity consumption.
  • The Renewable Energy Development Act will lower the threshold for large electricity users and increase the renewable energy obligation capacity.
  • The Financial Supervisory Commission requires annual greenhouse gas inventory and verification, with disclosure in the annual report.
Potential financial impacts
  • Increased renewable energy obligation capacity, increased purchase of green energy certificates, and higher operating costs.
  • Facing the requirements of carbon emission control, it is necessary to purchase carbon credits via carbon trading, leading to increased operating costs.
  • Implementing greenhouse gas inventory and verification activities incurs additional costs for inspection and verification paid to the agencies.
Response actions
  • Energy management tools are introduced, and the energy conservation team will track and control EUI on a weekly basis as an energy management indicator.
  • Allocate budget to purchase green energy certificates; increase sustainable peripheral services (select vendors in sustainable supply chain)
Immediate physical risk • Natural disasters and damages
Risk description
  • Damage to buildings, equipment, and injuries to employees or customers due to weather-related disasters.
Potential financial impacts
  • The business locations cannot operate normally, resulting in a decline in turnover.
Response actions
  • Transfer of risk through insurance.
  • Regularly inspect and strengthen the protection of important facilities and outdoor facilities.
  • Implement disaster prevention training, and strengthen the guidance of escape routes in the department stores.
Long-term physical risk • Extreme Climate
Risk description
  • Resulting in more electricity consumption to meet air conditioning demand.
Potential financial impacts
  • The increase in energy consumption will lead to an increase in electricity bills and carbon costs.
  • Use additional fuel to generate electricity, incurring additional expenses.
Response actions
  • Strengthen the heat insulation efficiency of buildings and important machine rooms, and adjust the start-up time of air conditioners according to the situation.

Climate-Related Opportunities and Financial Impacts

Resource efficiency
Potential financial impacts
  • The operating sites adopt green buildings and water-saving measures to reduce operating costs.
  • Paperless management to reduce paper consumption.
  • Reduce the carbon footprint of procurement and transportation.
Response actions
  • The department stores have obtained the Green Building Label.
  • The department stores use Low-E glass to create natural lighting, and carry out three-dimensional and roof greening.
  • Management app is introduced and equipment inspection and property management are conducted through app.
  • Support green procurement, accounting for 99.79% of total procurement, and require suppliers to provide the Green Mark.
  • Each branch store is required to have at least 1 green logistics partner.
Sources of energy
Potential financial impacts
  • The operating sites adopt renewable energy and related energy-saving equipment, and introduce energy management system.
Response actions
  • Complete green energy plan and build 4 solar-powered electricity generating systems.
Products/services and market
Potential financial impacts
  • Communicate with customers on the concept of green consumption in multiple ways to increase operating income.
  • Access to preferential interest rate finance to lower the financing cost
  • Engage in domestic and foreign initiatives to enhance the Company’s reputation.
Response actions
  • Work with customers to promote green consumption and create green value.
  • Actively discuss with financial institutions for related financing services.
  • Actively engage in domestic and global climate initiatives.
Potential financial impacts
  • In response to the uncertainty of future climate change disasters, it is required to increase customer trust and reduce business losses.
Response actions
  • Promote green sustainable counters and advocate green consumption.
  • Regular maintenance and repair of hardware and software equipment with uninterruptible power supply equipment or backup information operation room in place.
  • Introduction of ISO 27001 Information Security Management System.

Risk management

In order to identify and assess significant impacts or risks related to climate change on its operations, FEDS has established the Climate Change Response Team as a dedicated unit. This team holds regular meetings and conducts questionnaire surveys to evaluate climate change risks, aiming to understand specific potential financial implications. They are also responsible for developing climate risk management actions and goals to mitigate the impacts of climate risks. Furthermore, they establish comprehensive climate management procedures and review climate change response measures on a regular basis.

To ensure that the Board of Directors has a comprehensive understanding of the Company’s climate risks, and to monitor the implementation of risk management and response measures, the Climate Change Response Team reports to the Board of Directors on a quarterly basis regarding greenhouse gas inventories, risk assessments, and relevant response measures.

Indicators and goals

In recent years, mitigating global warming has become a highly critical issue internationally. In pursuit of environmental sustainability goals, FEDS considers “energy saving and carbon reduction” as the top priority. The Company progressively reduces energy intensity, minimizes resource and energy waste, and sets a short-term goal of reducing carbon emissions by 1% per year, medium-term goal of reducing carbon emissions by 30% in 2030, and long-term goal of 100% reduction by 2050.

Carbon reduction goal
  • 1% carbon reduction per year
  • The whole company completes the greenhouse gas inventory verification
Development goal
  • Promote carbon reduction courses to enhance colleagues’ awareness
  • Improve emission hot-spots through greenhouse gas inventory
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
Carbon reduction goal
  • 100% reduction in carbon emissions
Development goal
  • Invest in carbon reduction technologies