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Climate Change Governance Strategies
Climate Sustainability GovernanceClimate and Nature-related Risk and Opportunity Management ProcessMaterial Climate-Related Risks and Opportunities
Climate Change and Nature-related Issue Governance Strategy
As a pivotal carrier in the global maritime industry, Yang Ming recognizes the Information regarding the governance structures is provided in the table below:
potential and significant impact of climate change on global trade resilience and the maritime value chain. Since officially signing and supporting the Task Force on Climate-related Financial Disclosures (TCFD) initiative in 2022, Yang Ming has not only integrated climate change mitigation and adaptation actions into its core operating strategy but is also committed to realizing the long-term vision of sustainable shipping and Net Zero Emissions by 2050. Furthermore, Yang Ming continues to monitor global risk trends; according to the 2026 Global Risks Report, biodiversity loss and ecosystem collapse have reached non-negligible levels as long-term risks. Consequently, the Company has adopted the Taskforce on Nature-related Financial Disclosures (TNFD) framework to identify potential risks and opportunities related to ecological issues.
potential and significant impact of climate change on global trade resilience and the maritime value chain. Since officially signing and supporting the Task Force on Climate-related Financial Disclosures (TCFD) initiative in 2022, Yang Ming has not only integrated climate change mitigation and adaptation actions into its core operating strategy but is also committed to realizing the long-term vision of sustainable shipping and Net Zero Emissions by 2050. Furthermore, Yang Ming continues to monitor global risk trends; according to the 2026 Global Risks Report, biodiversity loss and ecosystem collapse have reached non-negligible levels as long-term risks. Consequently, the Company has adopted the Taskforce on Nature-related Financial Disclosures (TNFD) framework to identify potential risks and opportunities related to ecological issues.
Climate Sustainability Governance
Yang Ming's Board of Directors serves as the highest climate governance body, responsible for supervising and deciding on related policies, strategies, and targets, and managing climate-related risks and opportunities and promoting related affairs through the Sustainable Development and Risk Management Committee and Sustainable Operation Strategy Team. After annual Group climate-related risk and opportunity identification is completed, assessment results are reported to the Board of Directors and Sustainable Development and Risk Management Committee. Additionally, the Sustainable Operation Strategy Team's annual climate-related target execution status is reported to the Board of Directors for approval at least once a year to strengthen our response measures to various climate issues and resilience to risks.
Climate and Nature Governance Structure and Segregation of Duties
| Board Level | Yang Ming Board of Directors |
|
At least twice a year |
| Sustainable Development and Sustainable Development and Risk Management Committee |
|
At least twice a year | |
| Management Level | President |
|
At least twice a year |
| Executive Level | Sustainable Operation Strategy Team |
|
At least once a year |
| Risk Control Office |
|
At least once a year |
Climate and Nature-related Risk and Opportunity Management Process
To effectively manage natural and climate risks and opportunities that the Company may face in overall operations, the Sustainable Operation Strategy Team incorporates natural and climate change-related risks into assessment and tracking scope, continuously monitoring risk events that may impact Company operations, while focusing on opportunities that natural capital and climate change may bring to the Company. For identified natural and climate risk issues with substantial material impact, they will be incorporated into assessment and tracking scope, with assessment results provided to management and the Board of Directors for operational decision-making and supervisory reference.
Material Climate-Related Risks and Opportunities
Based on climate and nature-related risk ranking results, 5 material risks and 2 material climate opportunities exceed the significance threshold. Considering stakeholders' concern about physical risks, the highest-ranking physical risk is additionally included, and the potential financial impacts, timing, and scope of impact of related risks and opportunities are identified and used as a reference for determining the Company's future responses to climate and nature-related issues.
| No. | Impact Driver | Risk Category | Risk Issue | Risk Description | Occurrence Time | Impact Scope | Potential Financial Impact |
| T1 | Climate Change | Policy and Legal - Increased greenhouse gas emission pricing | Impact of cap-and-trade implementation by advanced economies | Affected by cap-and-trade implementation by advanced economies, routes operating in regulated areas may need to purchase certificates to pay related fees. | Short-term | Operating vessels - European routes |
As emission trading system coverage increases and certificate unit prices rise, operating costs will increase if the costs cannot be successfully passed on. |
| T4 | Technology - Lowcarbon technology replacing existing products and services |
Owned vessel emission reduction technology introduction | For Yang Ming's owned operating vessels, the introduction of energy-saving technology measures (such as main engine adjustments, hull modifications, etc.), equipment expenditure may increase. | Short-term | Operating Vessels - Global Routes |
Installing energy-saving equipment or modifying vessels will increase capital expenditure. | |
| T2 | Policy and Legal - Requirements and regulation of existing products and services | Increasingly stringent fuel efficiency and decarbonization regulations | Economic measures taken under IMO's short-term measure (CII) regarding operational energy efficiency ratings and EU's FuelEU Maritime regulations may impact Yang Ming's fuel expenditures. | Short-term | Operating Vessels - Global Routes |
Increased operating costs due to increased alternative fuel usage and fuel price differences. | |
| T5 | Technology - Transition to low-carbon technology | Transition pressure from new energy vessel adoption and existing fleet replacement | In response to the IMO Net-Zero trend, heavy fuel oil (HFO) vessels will be gradually replaced by new energy fuel vessels in the short term; the acquisition cost of new energy vessels is higher than that of traditional HFO vessels. | Medium-term | Operating Vessels - Global Routes |
Operating costs will increase as new low-carbon emission vessels replace HFO vessels (e.g., higher depreciation and fuel costs). | |
| T3 | Policy and Legal - Increased greenhouse gas emission pricing | IMO Greenhouse Gas Fuel Intensity (GFI) mechanism | In response to international organizations'medium-term mitigation measures, vessels above a specific tonnage that fail to meet GFI requirements will need to purchase remedial units based on excess emissions. | Medium-term | Operating Vessels - Global Routes |
If the fuel GHG intensity of Yang Ming's fleet remains at current levels, additional operating expenses may be incurred to purchase credits. | |
| P1 | Acute - Increased severity and frequency of extreme weather events such as typhoons and floods | Extreme weather impacting port operations and schedule stability, increasing operational and liability risk | Strong winds or thick fog caused by temperature differences from typhoons may prevent vessels from entering ports or limit equipment operations. Vessels may need to deviate or call at other ports, increasing fuel consumption and costs. | Short-term | Operating Vessels - Global Routes |
Vessel deviations or increased sailing time will lead to higher fuel consumption. |
| No. | Opportunity Category | Opportunity Issue | Opportunity Description | Occurrence Time | Impact Scope | Potential Financial Impact |
| O2 | Energy Source - Adopting low-carbon energy | Utilization of shore power to reduce at-berth emissions | During port calls, Yang Ming continues to comply with shore power policies, which not only reduces greenhouse gas emissions but also reduces fuel costs while at berth. | Short-term | Operating vessels/ operating ports | Using shore power not only helps comply with relevant policies and reduce fuel costs while at berth, but may also reduce additional certificate expenses at European ports. |
| O1 | Resource Efficiency - Using more efficient transportation methods | Introduction of energy-saving equipment | Improving vessel energy performance through energy-saving equipment and meteorological navigation software reduces fuel use through route optimization, saving fuel costs and reducing emissions. | Short-term | Operating Vessels - Global Routes |
Reducing fuel consumption through energy-saving equipment can reduce operating costs. |
*Occurrence time interval definitions: Short-term (2026), Medium-term (2027-2030), Long-term (2031-2050).
Climate Scenario Analysis
To understand the financial impacts of climate change on the shipping industry, we conduct quantitative analysis research and discussions of different scenarios, performing scenario analysis on our main core business operations including vessel routes, port operations, business operations, and related value chains, further evaluating resilience methods and developing response measures. We reference climate scenarios published by international organizations, including the "Intergovernmental Panel on Climate Change (IPCC)" and "International Energy Agency (IEA)," and additionally consider "International Maritime Organization (IMO)" targets at different time points for assessment to develop response strategies for various risk and opportunity issues.
| Value Chain | Scenario Description | Risk Category | Corresponding Risk／Opportunity Issue | Reference Scenario | Analysis Time Point |
 Operating Vessels |
Scenario１ Compliance with International Maritime Organization policies and targets |
Transition risk | T2/T3 |
|
Short to Medium-term |
| Scenario２ Shipping industry needs to introduce emission reduction technology and operate new energy vessels |
Transition risk | T4／T5／O1／O2 | Short to Medium-term | ||
| Scenario３ Advanced economies carbon certificate price growth |
Transition risk | T1 | Medium-term | ||
| Scenario４ Fleet operational impacts of typhoons/hurricanes/cyclones/thick fog under climate change |
Physical risk | P1 |
|
Short-term |
*Each scenario considers the temperature rise by the end of the 21st century.
Operating Vessel Scenario Analysis
| Scenario１ Compliance with International Maritime Organization Policies and Target | |
| Corresponding Risk Event | T2 Tightening of International Maritime Organization Fuel Efficiency Standards |
| Scenario Assumption Background | According to the "Initial IMO Strategy on Reduction of GHG Emissions from Ships" formulated by the 72nd Marine Environment Protection Committee (MEPC), Yang Ming's operating vessels are committed to reducing carbon emissions per transport unit and tracking vessel ratings via the Carbon Intensity Indicator (CII). Using policy assumptions for the maritime sector from the IEA NZE scenario, the Company evaluates that if the IMO continues to tighten CII indicators, additional costs for biofuels will be required to respond to these changes. |
| Analysis Results |
To meet short- and medium-term IMO carbon intensity targets, the procurement of B24 or B30 biofuels must be expanded, which will increase short-term operating costs. Considering that reduction factors will increase after the medium term, the growth rate of medium-term operating costs is expected to be higher than in the short term. |
| Response Strategy |
|
| Scenario２ Shipping Industry Needs to Implement Mitigation Technologies and Operate New Energy Vessels | |
| Corresponding Risk Event | T4 Implementation of Emission Reduction Technologies for Owned Vessels T5 Operational Uncertainties of Emerging Low-carbon Vessels O2 Reducing Emissions with Onshore Power Facilities O1 Implementation of Energy-saving Equipment |
| Scenario Assumption Background | According to the IMO Fourth GHG Study, in addition to promoting alternative fuels, improving fuel efficiency and adjusting operational modes can also reduce fuel usage for transport services. IEA NZE scenario estimates show that to reach IMO 2030 targets, the energy demand share should reach 10% for biofuels, 8% for low-emission methanol, and 4% for hydrogen fuels, requiring shipping operators to plan for the replacement of traditional Heavy Fuel Oil (HFO) fleets. |
| Analysis Results |
|
| Response Strategy |
|
| Scenario３ Growth of Carbon Certificate Prices in Advanced Economies | |
| Corresponding Risk Event | T1 Impact of cap-and-trade implementation by advanced economies |
| Scenario Assumption Background | The EU Emissions Trading System has incorporated the shipping industry into cap-and-trade scope, requiring vessels entering and leaving EU ports to pay certificate fees to comply with relevant regulations. Starting from 2026, all emissions will be included in EU ETS collection scope. According to Net Zero Emissions (NZE) estimates, carbon certificate prices in advanced economies are expected to be approximately 140 USD/t-CO2e in 2030, potentially reaching 200 USD/t-CO2e in 2050. |
| Analysis Results |
As the EU incorporates 100% of GHG emissions into the scope of collection from 2026, the growth trend of carbon prices in advanced economies is expected to further increase operating expenses for European routes. |
| Response Strategy |
|
| Scenario４ Fleet Operational Impacts of Typhoons/Hurricanes/Cyclones under Climate Change | |
| Corresponding Risk Event | P1 Increased intensity of typhoon/hurricane/cyclone events (port entry/drift) |
| Scenario Assumption Background | Under SSP5-8.5 worst-case scenario, although the number of typhoons affecting Taiwan decreases, the proportion of strong typhoons will double, maximum wind speeds will increase by 4%, potentially approaching Level 17 gusts. For major route affected areas in the Western Pacific, North Atlantic, and North Indian Ocean regions, the expected number of typhoons will decrease, but the proportion of strong typhoons will increase. |
| Analysis Results |
This assessment explores exposure to typhoons, hurricanes, and cyclones across all routes, with Asian routes identified as the primary risk. Port delays caused by typhoons are mainly concentrated in certain ports in Vietnam and China. According to this year's statistics, port closures due to typhoons or strong winds caused vessel delays of 4 to 5 days, resulting in increased additional fuel costs. |
| Response Strategy |
|