• The Board of Directors is the highest supervisory body responsible for reviewing the Group's annual risk reports and continuously tracking climate change risk management results and performance to ensure the effective implementation of relevant management systems.

• Climate change risks are one of the risks the Company is concerned about. To maintain the Company's normal operations and achieve the goal of sustainable operations, the Risk Management Committee is responsible for reviewing the Company's risk management policies, structures, systems, standards, regulations as well as risk appetite or tolerance and making adjustments according to environmental changes.

• The Corporate Governance and Integrity Division subordinate to the Sustainable Operation Strategy Team is responsible for TCFD recommendations promotion and enhancement. The divisions in the Sustainable Operation Strategy Team develop risk mitigation measures for corresponding items. Education and training on climate change trends and the assessment of climate-related risks and opportunities are conducted regularly every year to enhance employees’ knowledge of global climate change trends and allow departments to identify the risks and opportunities in different climate change scenarios.
• To enhance climate-related risk management, relevant briefing sessions are organized for departments to identify the risks and opportunities related to corporate operations and having a higher level of impact with the experiences and thoughts gained by the departments from executing business activities. The Chairman, President and other senior management officers also participate in the identification of the risks and opportunities to strengthen the management of climate-related risks and opportunities in the future.

• In the annual corporate risk assessment, the climate change risks and opportunities are incorporated in the sources and scope of risk assessment.
• In case of residual risk assessed as "high" or above, the Risk Control Office conducts regular tracking quarterly and demands continuous improvements by departments. The results of the said assessment and tracking are submitted to the Chairman for approval before being presented to the Board of Directors.

1. Carbon fees and carbon taxes：

As of 2024, major carriers have implemented ETS surcharges, and other international carbon pricing systems are becoming increasingly clear. The amount of carbon fees or carbon taxes paid may increase. In addition, due to the impact of international wars, longer voyages are used as a hedging policy to stay away from high-risk areas. This will directly lead to an increase in carbon emissions and a higherthan-expected carbon tax.

2. Tightening environmental regulations：

Enterprises need to gradually replace existing ships and build new ships that use alternative fuels or are equipped with energy-efficient equipment and exhaust scrubber devices. If the Company's existing ships fail to comply with relevant standards, this will increase the pressure on the delivery schedule of new ships, thereby affecting decision-making, damaging the Company's reputation, and leading to related penalties.

3. Impacts on sailing schedules：

To cut carbon emissions, ship speed is reduced, resulting in extended sailing schedules and affecting sailing scheduling and planning.

• Increased operating costs
• Increased capital expenditure
• Increased expenses
• Reduced operating revenue

1. Ship Energy Efficiency Management Plan（SEEMP）：

In early response to IMO's carbon intensity requirements for international shipping, Yang Ming achieved the 2023 carbon intensity target of 39.88 g/TEU*km.

2. Main engine derating and speed reduction：

Since 2023, the Company has derated the main engines of the ships in the existing fleet and reduced their speed for the purpose of reducing fuel consumption and carbon emissions.

3. Replacement of old, energy-consuming ships with new, eco-friendly, and energy-efficient ships：

The Company has purchased new, eco-friendly, and energy-efficient ships to replace those that are old and energy-consuming. The Company has delivered 10 2,800 TEU and 14 11,000 TEU long-term chartered new energy-efficient ships to reduce the overall fuel consumption and carbon emissions of the Company's fleet.

4. Retrofitting of ship-side shore power facilities：

The Company will continue to monitor the progress and regulations of each country for the construction of shore power facilities at ports and plan the retrofitting of ship-side shore power facilities to reduce the fuel consumption and GHG emissions of port calls.

5. Tracking of trends in domestic and foreign regulations：

Relevant units regularly provide, track, and update information on the regulations and rules governing environmental protection and carbon tax and related changes in the EU and other countries for operational units to make timely response.

• Increased operating costs
• Increased capital expenditure

1. Rising fuel oil costs：

The switch from traditional fuel oil to low-carbon fuels may lead to higher operating costs as the prices of low-carbon fuels are higher than those of traditional fuel oil before they become widespread.

2. Technical transformation and maintenance costs：

In the initial stage, low-carbon vessel operators require guidance from external management companies and external assistance in technical operations, and the repair and maintenance expenses paid to repairers and shipyards are higher than those for conventional equipment, which will increase relevant operating costs.

3. Equipment cost of new ships：

In order to comply with international regulations and keep up with the latest technology applications, new ships need to be equipped with low-carbon equipment, resulting in increased construction costs.

4. Loss of existing customers：

To reflect the increase in fuel oil costs and the adoption of new technologies, the selling price of products and services is increased, which may cause the loss of the Company's existing customers.

• Increased operating costs
• Increased capital expenditure
• Increased expenses

1. Strategic procurement of low-carbon products and new ships：

Yang Ming negotiates or contracts with low-carbon product suppliers for long-term contract prices, and procures ships using low-carbon fuels through open bidding processes to reduce expenditure and costs.

2. Discussion at regular meetings：

The use of low-carbon fuels is included in the regular meeting report of the energy saving team to facilitate cross-departmental coordination to jointly reduce operating costs.

• Increased operating costs
• Increased capital expenditure

1. Damage to ships／containers：

Navigation in severe weather conditions may cause containers to be lost at sea and damaged, vessel securing equipment to be damaged, and cargo damaged, resulting in additional costs.

2. Disruption or hait of port operations：

Extreme weather may cause port closure, delayed schedule, port omission, and blank sailings. The recent lack of rainfall in Panama has led to a significant decrease in the number of ships allowed to pass, resulting in longer waiting times to cross the river. This has increased related toll costs, and prolonged sailing schedules may lead to customer attrition and even affect customer operations.

3. Increased in fuel oil consumption to catch up with sailing schedules：

Extreme weather leads to delays in ships. To ensure that containers arrive on time, additional sailings or speeding up will consume more fuel oil and increase fuel oil costs.

4. Strong winds leading to higher chance of collision：

The intensification of seasonal strong winds and the trend of larger ships have led to a significant increase in the probability of collision while in port.

• Increased operating costs
• Reduced revenue
• Increased expenses

1. Adoption of optimal routing services with precise weather forecast information：

The fleet follows weather routing plans to increase or decrease navigation speed to avoid areas of severe weather or sea conditions. The Company has used the and services provided by Weathernews Inc. to monitor the Company's ships' navigation and fuel consumption and to keep track of improvements in case of performance abnormalities.

2. Enhancement of seafarers' risk awareness：

The Company increases the risk awareness of seafarers by providing case studies as a reference for the fleet.

• Increased expenses

1. Enhancement of energy efficiency：

Regularly cleaning hulls, monitoring main engine torque, and making energy-efficient modifications to propellers and bulbous bows can allow ships to sail under low resistance to effectively improve the energy efficiency.

2. Compliance with the requirements of international organizations and regulations：

The Taiwanese government will start implementing a carbon fee in 2025. The EU's Fit-55 carbon trading platform and FuelEU are also launched to manage the shipping industry. Adopting more efficient transportation methods and improving fuel oil efficiency can help adapt to changes in environmental regulations.

• Reduced operating costs

1. Reduction of ships' fuel consumption：

Adopting management measures, such as regularly cleaning ships and making energy-efficient modifications to propellers and bulbous bows, can reduce sailing resistance and prevent outer panels from marine organisms, cutting fuel oil consumption.

2. Low-carbon fuel/zero-carbon fuel ships：

In addition to new-generation energy-efficient engines and other energy-efficient optimized designs, the Company considers using dual-fuel configurations, such as methanol and liquefied natural gas (LNG) when deploying new ships in order to cope with future regulatory changes and reduce the overall GHG emissions throughout the fleet's life cycle. In 2023, Yang Ming and HD Hyundai Heavy Industries signed a contract for 5 new 15,500 TEU LNG dual fuel container ships, and these ships are expected to be delivered in 2026.

3. Giving priority to energy-efficient ships：

For the acquisition of short-term ships, the Company will consider energy-efficient ships if the spot market conditions permit and route operations will not be affected.

4. Route planning and ship speed optimization：

The Company uses weather routing to plan the optimal shipping route and ship speed according to the arrival time of ships so as to improve ship energy efficiency, reduce carbon emissions, and optimize the Carbon Intensity Indicator (CII) rating.

5. Strengthening personnel education and training：

Education and training on new concepts are provided for seafarers and fleet supervision personnel. Instead of maintaining ship equipment with the minimum safety standards, the Company plans a maintenance cycle from the perspective of energy efficiency.

• Increased capital expenditure
• Increased expenses

1. Highly-eficient on-site terminal operations：

Introducing service generation processes with higher efficiency (such as optimized operating procedures, improved operational efficiency, and timely and adaptive workplace monitoring and process change, etc.) can effectively enhance the service efficiency of yards, reduce unit energy consumption, increase equipment availability, and raise turnover.

2. Enhancing energy efficiency：

Adopting low-carbon and energy-efficient equipment to improve energy efficiency while reducing carbon emissions and potentail carbon costs.

• Reduced operating costs

1. Update of terminal equipment：

Low-carbon emission / electronic stackers and LED lighting equipment are used to replace outdated stackers using diesel fuel and electricity-consuming lighting equipment.

• Increased expenses
• Increased capital expenditure

1. Responding to the needs of stakeholders：

To meet the 2030 / 2050 carbon reduction goals of IMO, it is necessary to budget for a certain percentage of biofuel for the fleet and use LNG / methanol and other low-carbon fuels in new ships to win customer recognition and support.

2. Enhancement of low-carbon image：

As more and more customers set Scope3 reduction targets, carbon emissions from transportation will affect the carrier's environmental performance. By introducing renewable energy, the Conpany can enhance the low-carbon image and attract customers who value environmental protection.

• Increased operating revenue

1. Adoption of dual-fuel ships：

Dual-fuel ships using low-carbon fuels and traditional fuel are used as new ships to promote the energy transformation of ships. The Company has signed a contract for 5 15,500 TEU LNG dual-fuel container ships, and they are expected to be delivered in 2026.

2. Active establishment of low-carbon energy-related networks：

The Company joins low-carbon organizations (such as the Silk Alliance) to share experience and achieve mutually beneficial results. At the same time, the Company also actively develops new energy suppiers to improve the stable use of low-carbon energy.

• Increased capital expenditure