Task Force on Climate-related Financial Disclosures
Chunghwa Telecom is the first telecom operator in Taiwan that signed up for the Task Force on Climate-related Financial Disclosures (TCFD) initiative. Since 2020, it has been proactively performing analyses concerning the climate-related risks and opportunities based on the TCFD framework. With that, it pushes for efforts for climate change adaptation and mitigation, reducing risks in corporate operation and create opportunities for the industry.
Chunghwa Telecom became the first telecom operator in the world that passed “the conformity check for the TCFD Recommendations on climate-related financial disclosure” with the highest rating “Level 5: Excellence grade” for four consecutive years.
Chunghwa Telecom TCFD Disclosure
Chunghwa Telecom has conducted the analysis of climate related risks and opportunities based on the framework proposed by TCFD and has preliminary results. The following are the results of Chunghwa Telecom's implementation according to the four core elements of TCFD: "Governance", "Strategy", "Risk Management", and “Metrics and Targets".
Governance
Chunghwa Telecom’s risk management policy, structure and culture are approved by the Board of Directors, and has established the Risk Management Committee, with the President as the convener, reporting to the Board of Directors. In addition, the Sustainable Development Promotion Committee has been established at the Company, under which the Environmental (E) group is responsible for the management of the company-wide climate change mitigation and adaptation strategies and actions.
The group is tasked with the analysis and tracking of risks and opportunities of climate change. The Environmental (E) group and reports results to the Risk Management Committee for the Committee to perform a comprehensive assessment of the risks and implement necessary mitigation measures in line with the risk levels. The Environmental (E) group shall regularly produce the TCFD Assessment report for the reference of the Board of the Directors.
Strategies
To analyze the impacts of climate change on Chunghwa Telecom in the future, Chunghwa Telecom set a baseline scenario and a 1.5°C scenario in accordance with the TCFD framework to identify and analyze the short-, medium-, and long-term climate risks and opportunities in the business scope of the Company, the upstream and the downstream, and the entire life cycle of assets. IEA STEPs (baseline scenario) and IEA NZE (1.5°C scenario) are employed as the climate scenarios for climate mitigation strategies (transition risks). IPCC RCP 8.5 (baseline scenario) and IPCC RCP 2.6 (1.5°C scenario) are employed as the climate scenarios for climate adaptation strategies (physical risks).
| No | Risk | Level | Time |
|---|---|---|---|
| R1 | Policy of Net Zero by 2050 | High |
Short-term Medium-term Long-term |
| R2 | Increased electricity bills due to changes in the energy mix of Taiwan | High | Short-term |
| R3 | Increased costs for GHG emissions (e.g. additional cost of carbon fee due to legal compliance) | Medium | Medium-term |
| R4 | Missed involvement in the low-carbon R&D trend for failure of investment in the low-carbon transformation technologies | Medium | Medium-term |
| R5 | Changes in customer behaviors（e.g. elevated consumer awareness for climate change or shift in product/service demands） | Medium |
Medium-term Long-term |
| R6 | Impact to reputation due to carbon reduction performance of suppliers not as expected | Low |
Medium-term Long-term |
| R7 | Impact to reputation from litigation risks | Low |
Medium-term Long-term |
| R8 | Damage to facility/equipment due to increased severity of typhoon or flood | High |
Short-term Medium-term Long-term |
| R9 | Product supply disruption/delay arising from impacts to supplier operation and production due to extreme weather events | Low |
Short-term Medium-term Long-term |
| R10 | Increased energy consumption due to rising average temperature | Low |
Medium-term Long-term |
| R11 | Asset damage due to submergence of low-lying coastal areas in Taiwan as a result of globally rising sea levels | Low | Long-term |
Note: the short-term is defined as the present to 2025; the medium-term as 2026-2030; and the long-term as 2031-2050.
Risk Management
With reference to the ISO 31000 Risk management – Guidelines, Chunghwa Telecom has established the climate risk operation process at the Company. For the hazard posed by each risk, the following method is employed for hazard level assessment: Risk Hazard = Likelihood × Severity. A risk issue with the risk hazard value higher than 16 is classified as high risk, and the one with a risk hazard value between 14-16 as medium risk, and the one below 14 as low risk.
| Collection | Identification | Assessment | Prioritization |
|---|---|---|---|
| Refer to research reports on climate change at home and abroad as well as analyses of benchmark companies, along with assessment and consideration of the impacts from policies, laws, regulations, technologies, markets, upstream suppliers and downstream customers, and climate disasters. | Combine interview with questionnaire for expert judgement, inviting employees of responsible units to provide their opinions. | Rank risks based on the likelihood of occurrence and the severity of impact. | Calculate the risk value based on the weights of the two abovementioned dimensions. A risk value higher than 16 indicates a high risk, between 14 and 16 a medium risk, and below 14 a low risk. |
In 2023, a total of 11 risk issues were identified. The time horizon, likelihood, and severity from the risks have been identified through discussions with relevant departments within Chunghwa Telecom, along with the hazard levels of the risks analyzed.
After the assessment, 3 high risks, 3 medium risks, and 5 low risks were identified. The high risks include Policy of Net Zero by 2050 (transition risk) increased electricity bills due to changes in the energy mix of Taiwan (transition risk), damage to facility/equipment due to increased severity of typhoon or flood (physical risk)
The Environmental Group conducts risk assessments for climate change risks, formulates necessary mitigation measures, and determines risk levels based on the risk matrix. The Risk Management Committee performs the overall risk assessment and review on the basis of the assessment and analysis results of respective institutions, tracks and monitors, as well as reports to the Board of Directors in a timely fashion.
Metrics & Targets
Pursuant to the metrics formulated based on the two strategies, i.e. climate change mitigation and adaptation, Chunghwa Telecom laid out its targets regarding climate risks and opportunities to manage the risks and opportunities of the Company.
| Risk / Opportunity | Corresponding Material Item | Metric | Target | Performance in 2023 |
|---|---|---|---|---|
| Risk |
|
GHG emissions （Scope 1,2 and 3） |
|
|
| Renewable energy use | RE100 by 2040 | 73.575 million kWh used, accounting for approximately 5.34% | ||
| PUE of IDCs | 1.5 by 2030 | A PUE of 1.626 for IDCs | ||
| Increased electricity bills due to changes in the energy mix of Taiwan | Severity of climate disasters | Deployment of relevant plans in line with the short, medium and long-term climate change adaptation plans | Please see Attachment | |
| Opportunity | Product/Service | Revenues from green products and services | An estimated revenue of NT$53.256 billion cumulatively for the next 3 years | NT$16.798 billion generated as the revenue from the main green products |
Documents
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TCFD Conformity Statement.pdf
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CHT 2023 TCFD Task force Climate-related Financial Disclosures
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TCFD Adaptation Plans for Climate Change in the Short-/Mid-/Long-term of Chunghwa Telecom
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TCFD Climate-Related Scenario, Physical Risk.pdf
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Climate Change Transition Risk - Regulatory Change Risk.pdf