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In response to the threat of global climate change, reducing greenhouse gas emissions has become the most important consensus worldwide. The UN Climate Change Conference actively encourages global cooperation in carbon reduction to achieve the goals of the Paris Agreement. The EU has introduced the Carbon Border Adjustment Mechanism (CBAM), requiring suppliers of carbon-intensive products to purchase corresponding CBAM certificates for their products to enter the EU market. In Taiwan, the Climate Change Response Act has officially come into effect, demonstrating the nation's commitment to achieving its 2050 net-zero transition vision.
As a global leader in backlight modules, Radiant Opto-Electronics adopts the Task Force on Climate-related Financial Disclosures (TCFD) framework to conduct regular annual assessments of climate change risks. The Company formulates environmental management policies and energy-saving, carbon-reduction strategies to mitigate greenhouse gas effects and enhance awareness among internal and external stakeholders regarding its environmental management practices and environmental impacts. In addition, considering the Company’s current phase of operational expansion and rapid growth, Radiant Opto-Electronics has aligned its climate change response strategies with the Paris Agreement and referenced the Science Based Targets initiative (SBTi) linear reduction pathway. The Company is actively formulating its “2030 Radiant Opto-Electronics Sustainability Carbon Reduction Target” and has committed to an absolute 25% reduction in greenhouse gas emissions (Scope 1 and Scope 2) by 2030.
Climate Change
Governance
Radiant Opto-Electronics has established a Sustainable Development Committee as the highest governance body for climate issues. It consists of eight members, including five independent directors, chaired by the President and with two senior managers serving as the Vice Chairpersons. The committee convenes at least twice a year and regularly reports ESG strategies and implementation results to the Board of Directors. Report topics include climate change risks, performance results, and work priorities. The Board of Directors is responsible for supervising the impact management procedures and results of the Sustainable Development Committee to ensure the implementation of sustainable development strategies in the Company operations. To strengthen and solidify Radiant Opto-Electronics' commitment to climate governance, two meetings were convened in 2024 to review and advance the Company's climate action practices. The Radiant Opto-Electronics TCFD Task Force is overseen by the Sustainability Development Committee and collaborates with cross-departmental units within the group to discuss the financial risks and opportunities of climate-related issues on operations. Through the use of scientific models across different climate scenarios, the group estimates the impacts of past, present, and future conditions, ultimately producing the company’s annual TCFD climate-related financial disclosure report.
Strategy
In response to the potential impacts of extreme climate events on businesses, Radiant Opto-Electronics Corporation adopts a proactive and pragmatic approach to face these challenges. The company’s TCFD Task Force leads the identification and assessment of climate-related risks and opportunities to understand their potential impact on operations and business activities. This process helps establish effective response measures to mitigate the financial effects of climate risks on the Group, while also enhancing the ability to seize and develop climate-related opportunities.
To evaluate the resilience of its climate strategy, Radiant Opto-Electronics Corporation conducts analysis based on the TCFD-recommended framework, which includes both transition and physical risks, as well as climate-related opportunities. The assessment is performed under the most severe scenario—SSP5-8.5 (The Worst-Case Scenario)—to ensure robust and forward-looking strategic planning.
Risk Management
Radiant Opto-Electronics Corporation conducts annual assessments of the relevance, potential impact, and time horizon of physical risks, transition risks, and climate-related opportunities, based on the TCFD framework. These assessments are used to generate a Climate Risk and Opportunity Evaluation Matrix. The timeframes for assessment are categorized as short-term (1 year), medium-term (2–3 years), and long-term (4–7 years). Each item is evaluated by multiplying its “likelihood of occurrence” score by its “financial impact” score. Items with a composite score exceeding 12 are identified as having “significant impact.”
In 2024, the top three climate-related risks and opportunities identified were:
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Tropical Cyclones (Typhoons)
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Extreme Weather (High Temperature & Electricity Demand)
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Sustainability Disclosures and Corporate Reputation
【Explanation of Climate Scenarios and Financial Risk Quantification】
Radiant Opto-Electronics Corporation assessed physical climate risks at four operational sites: Kaohsiung, Suzhou (Wujiang), Nanjing, and Guangzhou. The analysis leveraged suitable temperature rise scenarios based on IPCC AR5 and AR6 reports (Fifth and Sixth Assessment Reports). For transition risks, the evaluation used the IEA’s World Energy Outlook scenarios—Announced Pledges Scenario (APS) and Net Zero Emissions by 2050 (NZE)—to analyze global carbon pricing trends and renewable energy adoption requirements.
【Climate Risk-Tropical Cyclones (Typhoons)】
Assessment is conducted based on the historical frequency of typhoon-related disasters in each region and flood scenarios at each facility under various warming scenarios. According to WWF's flood scenario analysis, the damage risk caused by typhoon-induced flooding in mainland China and Taiwan is assessed under three different scenarios from the IPCC AR5 report: optimistic, existing, and pessimistic scenarios. The Guangzhou plant is at very high risk of flooding from typhoons, the Kaohsiung plant is at high risk. This risk results in an estimated annual cost of NT$30 to 50 million for the Group, covering personnel expenses, post-disaster recovery at plants, and natural disaster insurance premiums. With an estimated impact equivalent to 0.06% of annual revenue, this risk is categorized as a Level 3 financial impact.
【Climate Risk-Extreme Weather (High Temperature Electricity Usage)】
Using data services from TCCIP and future projections from World Bank Climate Projections, we estimated the temperature changes at our Kaohsiung plant in Taiwan and subsidiary plants in China under AR6 SSP1-2.6 and SSP5-8.5 scenarios. A regression analysis was conducted correlating air conditioning electricity usage with temperature changes. The additional air conditioning costs (NT$) required for each plant in the short, medium, and long term.
Indicators and Goals
The Carbon Management Task Force under Radiant Opto-Electronics’ Sustainable Development Committee is composed of cross-functional teams from across the Group. Through multidisciplinary collaboration, the task force sets climate-related performance indicators, including greenhouse gas emissions, electricity savings, energy conservation projects, water usage, waste management, and renewable energy efficiency. These efforts aim to support the Company’s long-term sustainability goals. The Sustainable Development Committee regularly reviews the progress of these goals to strengthen the management of climate risks and opportunities. For detailed targets and metrics, please refer to the chapters on “Greenhouse Gas,” “Energy Resource Management,” and “Environmental Pollution Prevention and Control.”
