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Climate Change Risk and Opportunity Management

Climate Change Risk and Opportunity Assessment

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Climate Change Risk and Opportunity Matrix

Category	Risk	Risk Description	Region	UMC’s Response
Policy and Regulation	Carbon tax/fee for greenhouse gas emission control	Impose carbon tax/fee and rate increase leads to increasing in operation cost	Taiwan, Singapore, China, and Japan	Promote GHG reduction plans, such as F-GHGs reduction and energy saving plan Participate in government plans for voluntary GHG reduction Apply for carbon offset projects for carbon credits Build UMC's own solar power generation facilities Purchase green energy/ green energy certificates Evaluate to introduce carbon negative technology and promote net zero Participate in carbon trade market and purchase carbon credits
	Green energy policy lead to increased investment and operation cost	Regulations require Taiwan to expand the installation of renewable energyor pay monetary as a substitution	Taiwan	Promote energy saving programs Conduct countermeasures such as enlarge self-installation of renewable energy and purchase green energy to meet the requirements of regulation Evaluate to install energy storage facilities
		Electricity price rising	Taiwan, Singapore	Promote energy saving programs
	Uncertainty about infrastructure supply resilience	Power trips or voltage dips may occur when Taipower generator break down combines with unstable renewable energy supplying during the peak consumption periods	Taiwan	Invest in voltage drop resistance equipment, important manufacturing machines with uninterrupted power supplies (UPS) to reduce risk of voltage dropsContinuing to promote the anti-pressure drop capability of the machine
	Impose water surcharge during drought seasons	Taiwan imposes water surcharge	Taiwan	Improve the production efficiency of manufacturing process, reduce water consumption, and increase water recovery rate Introduce diversified water resource such as reclaimed water and desalination to reduce the dependecy of municipal water
Market	Customers require low-carbon strategies to keep pace with trend	Due to customer requirements, the Company must increase purchase of green electricity	Taiwan, Singapore, China, and Japan	Increase the installation of self-build renewable energy and power generation facilities Obtain renewable energy through renewable energy power purchase agreements Purchase of renewable energy certificates
Reputation	Impact on corporate reputation	The company fails to meet policy regulations or targets of international climate change initiatives so that negative ESG news appear The company only negatively responses or unable to reply when shareholders issue ESG related proposal on shareholders meetings	Taiwan, Singapore, China, and Japan	Explain and clarify reports, and take specific actions to comply with policy regulations or international goals related to climate change
Technology	R & D focus adjustment, towards low energy consumption and low carbon emission products	Customer requires for product characteristics with low energy consumption and low carbon emissions, therefore, promotes the necessary adjustment of UMC's R&D priorities and goals	Taiwan, Singapore, China, and Japan	Develop higher-level, lower-energy consumption process technologies Monitor the online amount of R&D wafer, and tend to use a metod with a smaller number of wafers to develop the process . Looking for a faster or streamlined process to manufacture IC

Category	Risk	Risk Description	Region	UMC’s Response
Acute	Extreme weather increases supply chain scheduling resources and cost.	Extreme weather affects transportation and increases the cost of raw material allocation and scheduling fee.	Taiwan, Singapore, China, and Japan	Establish risk detection mechanism, and prevent in advance and post-event managmenet Predominate supplier’s production areas and the location of major transportation nodes Manage production information from suppliers to stay on top of supply and demand information in advance Conduct supplier risk assessment to avoid or reduce placing order in high-risk production areas Establish multiple transport routes and avoid risky routes Establish a second supplier to provide additional backup energy Increase the storage capacity of local manufacturers and internal storage capacity
Acute	Strong typhoon/ extreme rainfall lead to increase frequency of work suspended and voltage dips	Increases in intensity and frequency of typhoons, storms, and natural disasters result in employee inability to work	Taiwan	Build Industry 4.0 to reduce the impact of manpower
Acute		Voltage drop caused by typhoon affects production	Taiwan	Invest in voltage drop resistance equipment, equip important manufacturing machinery with uninterrupted power supplies (UPS) to reduce risk of voltage drops
Chronic	Dought worsen and affects production	The status of water rationing is turned into orange light (over 15% water restriction), daily watetr supplement is reduced and water tankers are needed for response	Taiwan	Expand water recovery and reuse rate to reduce the pressure fo water demand Establish a water contingency plan Installed storage tanks to improve the flexibility of water storage capacity control . Contract water tanker and private water sources to make up for water shortages Develop diversify water resources, enhance reclaimed water usage rate Continue to monitor the government's ability to strengthen cross-regional dispatching of water resources
Chronic	Dought worsen and affects production	Delivery delays from suppliers due to water constraints	Taiwan	Conduct supplier water shortage risk assessment, and ask high risk vendor (such as parts clean) to develop business continuity plan (BCP) Investigate the impact of in-plant demand, supplier capacity and the government water restriction policy. Manufacturers provide water storage plans and cooperation models with private water resource providers Adopt new products first to reduce the impact Monitor the status of suppliers, increase safety stock, and establish relationships with second suppliers Develop new water resources continuously to increase supplement flexibility and mitigate risk
Chronic	Increased electricity consumption due to global warming	Rising temperatures increase the load of air conditioning, which increases operating costs	Taiwan, Singapore, China, and Japan	Introduce green-building design Implement energy-saving measures for building shell and air-conditioning systems to reduce internal temperature of building Continuously replace old and newair conditioning ,and promote energy-saving mearsures of air conditioning Grow plants to increase the amount of greenery and reduce urban heat island effect

Type	Climate-related Opportunities	UMC’s Response
Product/ Service	Increased market demand for environmentally friendly products	UMC has continued to develop related technologies according to customer and market demands. For example, 22uLP low power consumption technology has been mass production, which provides better low power consumption and power management, it is estimated that compound annual growth rate (CAGR) will maintain double-digit performance from 2022 to 2026.
Resource Efficiency	Carbon trade and offset projects opportunity	Respond to government policies to reduce greenhouse gas emissions, improve overall equipment and fab operation efficiency. It is expected to gain carbon credit in the future.
Resource Efficiency	Enhance energy efficiency of facilities	Replace old air conditioning facilities with high efficiency ones to enhance energy efficiency.
Operational Resilience	Strengthening hardware protection to improve climate resilience	Raised the factory foundation in Southern Taiwan Science Park by about 2 meters relative to surrounding roads under the scenario of over 500-year return period rainfall to avoid flood risk

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