CHENG LOONG

Enhancing Climate Risk Governance and Advancing Low carbon Smart Paper Transformation

CLC aligned with international frameworks to mitigate climate change impacts on operations and finances and strengthen organizational climate resilience. In 2021, CLC became the first paper company in Taiwan to pass the TCFD audit and receive the highest rating, establishing a comprehensive climate risk and opportunity identification process and conducting ongoing TCFD reassessments based on major climate policy developments.

In 2024, CLC became one of the first global Early Adopters of the Taskforce on Nature related Financial Disclosures (TNFD), strengthening its focus on nature-related issues. CLC also implemented Internal Carbon Pricing (ICP), launched the IFRS Sustainability Disclosure Standards implementation plan, and completed the greenhouse gas inventory for consolidated subsidiaries.

By 2025, CLC will expand ISO 14064-1 GHG inventory assurance to all consolidated subsidiaries and initiate an NTD 7.7 billion sustainability-linked syndicated loan to accelerate Low-carbon Smart Paper transformation, advancing toward the 2050 carbon neutrality vision.

Advancing International Standards for Climate Resilience and Information Transparency
 

The circular economy is a practical approach to achieving low-carbon net zero. CLC treats climate change risks as opportunities, focusing on S.M.A.R.T. Low-carbon Intelligent Paper and establishing circular economy sites domestically and internationally. CLC invests in recovered paper recycling, prioritizes Paper-based Solutions (PBS) as Nature-Based Solutions, and advances climate governance to enhance operational resilience.

 Since 2005, CLC has implemented emission reduction management on production lines after obtaining the world's 1st ISO 14064-1 GHG inventory certificate. In 2008, CLC obtained Taiwan's 1st international VCS carbon credit certificate, and in 2010, Taiwan's 1st carbon footprint label for household paper products. In 2023, CLC formed a Carbon Reduction team with the industry chain and completed Taiwan's 1st product carbon footprint inventory for industrial paper. In 2024, CLC launched a climate questionnaire survey for key Tier 1 domestic and international suppliers to enhance supply chain carbon data management and accelerate zero carbon transition opportunities.

CLC adopted international frameworks to reduce climate-related operational and financial impacts and achieved the Corporate Governance 3.0 goals ahead of schedule. In 2021, CLC became the 1st pulp and paper company in Taiwan to pass the TCFD audit and receive the highest rating. In 2022, CLC initiated greenhouse gas inventories for subsidiaries. Vietnam Binh Duong Paper Mill obtained the 1st ISO 14064-1 GHG inventory certificate in the local pulp and paper industry, with subsequent expansion to other overseas plants. By 2024, all 37 consolidated subsidiaries completed ISO 14064-1 GHG inventories, with key plants completing third-party assurance. CLC will continue to expand third-party assurance for consolidated subsidiaries' greenhouse gas inventories, targeting full completion by 2026.

From Climate to Nature: Shaping Forward-looking Sustainable Low-carbon Strategies

By completing the CDP Climate Change Questionnaire since 2022, CLC has disclosed climate information and enhanced sustainability resilience. In the 2023~2024 Year evaluation, it reached Management Level and, in 2024, was included in the Supplier Engagement Assessment (SEA) A List. The company continues to strengthen carbon management, promote low-carbon development, and implement climate adaptation strategies to accelerate the global sustainability transition. In the same year, CLC became the first TNFD Early Adopters in Taiwan's paper industry. Under the TNFD frameworks, the company assessed the dependence and impact of its business activities on natural resources and, together with industry, government, and academia, launched research projects on nature and biodiversity at its sites, establishing a foundation for localized natural science research.

Advancing the Low-carbon Smart Paper transformation, CLC leverages digitalization to expand green production and sales, while integrating product, energy, and water circularity with agricultural and forestry cycles to enhance the regeneration of plant fibers, bioactive materials, and biofuels, thereby establishing the 3R PLUS circular economy blueprint. Digital carbon management has been implemented, with four scientific carbon-reduction pathways defined: improving energy efficiency, developing renewable energy, advancing circular low-carbon fuels, and innovating carbon-negative technologies. CLC participates in national carbon reduction programs, including the Tayuan Paper Mill's involvement in the Industrial Development Administration's Industrial Low-carbon Transition Program. Through academic collaboration, it integrates R&D and cross-industry expertise to research negative emission technologies such as carbon fixation and carbon sequestration, and promotes natural carbon sink development to address climate change.

To ensure the implementation of carbon reduction actions, CLC has adopted a top-down strategy, integrating GHG emission reduction and energy resource efficiency into operational performance indicators. An annual carbon reduction competition encourages innovation proposals and recognizes achievements. In 2024, the Taiwan Parent Company's GHG emissions decreased by 9.38% compared to the base year, achieving short-term goals ahead of schedule.

Climate Risk and Opportunity Governance

Climate governance at CLC is led by the BoD, with the sustainability committee and risk management committee responsible for managing climate-related risks and opportunities. The Climate Change and Circular Economy Office, under the sustainability committee and led by the President, coordinates climate risk mitigation, adaptation, and Low-carbon Transition actions. This office operates within the company's risk management and business unit management systems, executes risk management decisions, and coordinates cross-departmental risk management. Climate-related risks and opportunities are regularly reported to the BoD to ensure a top-down supervisory mechanism.

 Aligned with the Paris Agreement target of limiting global temperature rise to 1.5℃ by 2100, CLC has, for three consecutive years, been recognized as a top performer in the CommonWealth Magazine Corporate Carbon Reduction Thermometer. In 2022, CommonWealth Magazine launched the Corporate Carbon Reduction Thermometer Platform (TRIPs), applying international standards and model verification to systematically collect and assess the carbon reduction commitments and results of Taiwanese companies against the 1.5℃ target. In 2024, data from 1,200 companies were collected. The June 2025 report determined CLC's carbon reduction temperature at 1.511℃ , ranking the company among 405 companies with high performance.

 Climate Risk and Opportunity Strategy

Through annual third-party verified GHG inventories, CLC assesses Carbon Reduction performance and implements climate change mitigation and adaptation in line with international initiatives.

Focusing on energy management, CLC addresses Scope 1 direct emissions and Scope 2 indirect emissions from electricity use. The company has obtained both wind power and solar photovoltaic renewable energy certificates, implemented AI management, and integrated a digital inspection system to enhance green production efficiency. Notably, CLC was the first paper company in Taiwan to adopt intelligent production and sales.

To accelerate net-zero transformation, CLC has established strategies and response plans for major climate risks and opportunities, ldefining 4scientific carbon-reduction pathways: improving energy efficiency, expanding renewable energy, advancing circular low carbon fuel, and innovating carbon-negative technologies. Through the S.M.A.R.T. Low-carbon Paper Strategy, CLC is building 3R PLUS resource circulation, developing a circular low-carbon biomass material ecosystem, focusing on paper-based Nature Sustainability solutions, and expanding low-carbon product opportunities.

To advance low-carbon transition and conduct financial risk assessments and stress tests, CLC used historical costs from energy saving and carbon reduction projects as the reference for internal carbon pricing. In 2024, Tayuan Paper Mill was designated as the first demonstration site, referencing international carbon pricing trends, global reports, national carbon fee rates, and industry benchmarks to review carbon reduction strategies and systematically assess the overall benefits of its carbon reduction investment portfolio. CLC established a standardized internal carbon pricing assessment framework, extending it to all domestic and overseas sites to evaluate the effectiveness of energy-saving and carbon reduction projects. Each mill or business unit calculates carbon costs in management reports to inform capital investment strategies and major decisions.

In addition, CLC partnered with National Chung Hsing University to establish Asia's 1st Circular Economy Research Institute, advancing circular reuse of agricultural and forestry surplus materials, the 3R PLUS Total-cycle carbon reduction manufacturing chain, and a circular low-carbon biomass resource ecosystem. In 2023, CLC and National Central University conducted a potential assessment and business model study for the Tayuan carbon sequestration pilot site, establishing the nation's 1st Carbon Capture, Utilization, and Storage (CCUS) model for carbon dioxide capture, reuse, and geological storage, supporting progress toward 2050 carbon neutrality goals.