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Climate Change Governance Strategies
Climate Change Governance Strategies
According to the Global Risks Report released by the World Economic Forum (WEF) in 2023, "climate change mitigation and adaptation failures" and "natural disasters and extreme weather events" are significant long-term risks. The threats to come are becoming more and more obvious. Governments around the world have realized the importance of GHG management to the future development of mankind. In 2023, the International Maritime Organization (IMO) made public its commitment to achieve net-zero emissions by or around 2050 and announced that it is inevitable that the shipping industry will need to be more proactive in the management of climate issues.
As one of the key roles in the global shipping industry, Yang Ming has long been committed to the management and promotion of climate change issues by upholding corporate responsibility. This chapter is based on the Financial Stability Board (FSB)'s Task Force on Climate-Related Financial Disclosure (TCFD) framework and focuses on the four major aspects of overnance, strategy, risk management, and indicators and goals. The ompany continues to identify potential climate risks and opportunities hrough internal cross-departmental discussions and professional onsulting services, and further conducts measurement indicator and goal anagement to ensure the implementation of action plans.
Climate Sustainability Governance
The Risk Control Office and the Sustainable Operation Strategy Team are in charge of managing the Company's climate change issues. The President serves as the convener and reports the progress to the Risk Management Committee and the Board of Directors on a regular basis. The Board of Directors is the highest body in charge of climate risk management, and is responsible for supervising and determining related policies, strategies and goals. The Sustainable Operation Strategy Team and the Risk Control Office will report the assessment results to the Board of Directors and the Risk Management Committee after the identification of the Group's climate-related risks and opportunities is completed, and report on the achievement of climate-related goals at quarterly board meetings.
Climate Change Governance Organization Structure and Segregation of Duties
| Board of Directors |
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| Risk Management Committee |
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| Sustainable Operation Strategy Team Corporate Governance and Integrity Division |
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| Risk Control Office |
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Identification and Management of Climate Risks and Opportunities
Procedures for the Identification fo Climate Change Risks and Opportunities
In order to effectively manage the climate-related risks and opportunities that the Company may face in the overall operation, the Risk Control Office and Sustainable Operation Strategy Team have included climate change-related risks in the scope of assessment and tracking, and will continue to pay attention to climate risks that may have an impact on the Company's operating locations, business activities, upstream and downstream supply chains, and customers, as well as the opportunities related to climate change that may bring benefits to the Company. A TCFD project has been introduced continuously this year to establish a comprehensive assessment mechanism. The estimation of financial impacts that follow and management costs has been adopted to make timely adjustments to relevant management mechanisms. Meanwhile, related response strategies have been proposed as well. Through the process of identifying climate risks and opportunities, the Company will continue to understand the challenges associated with climate change and make constant adjustments to the Company's plans and actions.
In consideration of the global trend of net-zero emissions by 2050 and the goals of the Paris Agreement, the Company sets a scenario of limiting global warming to 1.5°C and to 2°C with reference to the Nationally Determined Contribution (NDC) of the Republic of China to assess transition risks. For physical risk assessment scenarios, the Company refers to the Sixth Assessment Report (AR6) published by the United Nations Intergovernmental Panel on Climate Change (IPCC) and selects a very high emissions scenario (SSP5-8.5) and an intermediate emissions scenario (SSP2-4.5) as the basis for discussing physical risks. Corresponding countermeasures are also formulated based on these scenarios as a reference for the Company's operational planning.
Climate Scenario Description
| Scenario Selected | Expected Temperature Rise by End of the Century | Scenario Description | |
| Transition Risk | Net Zero Emissions by 2050 Scenario (NZE) | ～ 1.5° C | Assess the goal achievement of the 1.5°C goal and other sustainable development goals related to energy based on the NZE scenario released by IEA in 2021. |
| The Republic of China's NDC scenario | 2° C | Taiwan aims to achieve a 50% reduction in BAU (business as usual) GHG emissions by 2030 through the reduction efforts of relevant domestic segments nationwide. | |
| Physical Risk | Intermediate emissions scenario (SSP2-4.5) | 2.7° C | CO2 emissions remaining around current levels until the middle of the century. |
| Intermediate emissions scenario (SSP2-4.5) | >4° C | A high emissions scenario with nearly no climate policies where CO2 emissions roughly double from the current level in 2015 by 2050. | |
Climate-related Risk and Opportunity Identification Results
The Company organized the "TCFD Climate Risk and Opportunity Workshop" with relevant departments to rate climate issues by materiality in terms of the "probability of occurrence" and the "level of impact," with international trends and the current status of corporate operations taken into account, to measure the risk value of each climate issue according to its materiality and prepare a climate materiality matrix. Finally, the Company ranked the issues by materiality, assessed domestic and international trends in laws and regulations and the issues disclosed by benchmark peers, and identified 2 transition risks, 1 physical risk, and 3 opportunities for disclosure this year. Subsequently, the departments related to each climate issue inventoried and developed management actions for the 3 major risks and 3 major opportunities to determine the Company's future climate change-related countermeasures.
Strategies for Addressing Climate-related Issues
Through the identification of risks and opportunities related to climate change, this year, 2 transition risks, 1 physical risk, and 3 opportunities that may affect the operations of Yang Ming were identified. To effectively manage these risks and opportunities, the divisions in the Sustainable Operation Strategy Team and relevant departments assess the impact aspect and financial impact of the corresponding items, and formulate risk mitigation strategies or opportunity implementation strategies.
Climate-related Management Goals
Climate Change Risk Metrics
Net-zero emissions by 2050 (long-term)
In addition to improving financial performance, the Company supports government policies and IMO's initiatives by aiming for net-zero emissions by 2050. The Company reduces the overall carbon intensity of the Company's operations through energy-efficient designs and new eco-friendly high-tech ships. Furthermore, the Company has created a net-zero pathway according to the Company's operations. For relevant carbon reduction pathways and strategies, please refer to 3.1 Environmental Management Policy.
Sustained reduction in annual carbon intensity (short-term)
New vessels have joined the operation of Yang Ming since 2020. Compared with traditional vessels, the new buildings are combined with advanced propeller design and energy saving Sea Sword Bow design to minimize form resistance, thereby improving propulsion efficiency, reducing fuel consumption, and achieving the goal of lowering carbon emissions. At the same time, the Company reinforces intelligent information architecture technology to collect big navigation data and transmit it to the cloud, where software analysis can be used to monitor and predict the health of the hull structure in real time to ensure the safety of ship navigation. For the target carbon intensity set by IMO for each year and the carbon intensity in the baseline year 2008, please refer to 3.3 Greenhouse Gas and Emissions Management.
Climate Change Opportunity Metrics
Increasing the utilization rate of renewable energy (short-and medium-term)
The Company expects to use biofuel for 8 vessels on a trial basis and adopt biofuels as needed in 2024. The Company hopes that the utilization rate of renewable energy will reach more than 5% by 2030.
Paying attention to the development of laws/regulations and markets (long-term)
Yang Ming keeps an eye on the development of environmental regulations and market conditions every year. The Company has joined the Silk Alliance, the Getting to Zero Coalition, and the Society for Gas as a Marine Fuel (SGMF) to exchange opinions on technical feasibility. The Company also works with different parties in the shipping industry in developing and formulating ship decarbonization strategies, reinforcing climate change governance, and promoting low-carbon transformation.