Climate Strategy and Environmental Protection

Management Approach to Climate Governance

In response to the issue of climate change and to support SDG 13 - Climate Action, PharmaEssentia has gradually developed a comprehensive strategy to address climate change and its impacts. In 2022, we formally adopted the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) framework and actively identified and took action to address the challenges and opportunities presented by climate change. We have established Environment Policies as an internal guideline for preventing and responding to environmental impacts, and also created a GHG Management Procedures. Starting with our main production base, the Taichung Plant, we have conducted greenhouse gas inventories and completed third-party verification for the years 2019 to 2021.

TCFD Governance Framework

The Board of Directors is the unit at the highest level of sustainable governance, supervisory management, and decision-making, systematically reviewing the impact and implications of climate change from top to bottom. To actively support Taiwan's commitment to NetZero by 2050.
In 2022, the ECCS and Environmental Friendliness Taskforce are responsible for identifying climate-related risks and opportunities, implementing ,and promoting climate-related plans, and adhere to the regulations for a listed company's sustainable development roadmap and formulates the annual GHG Inventories disclosure schedule for the Taichung Plant. Starting from the second quarter of 2022, the progress of the GHG Inventories project has been included in the company's ESG sustainable execution progress. The ECCS will provide business reports to the Board of Directors every quarter.

TCFD Strategy Planning and Execution

We aim to integrate climate governance into our sustainable management and operational planning. We conduct enterprise risk identification and management in following with the enterprise risk management framework released by the COSO organization and the WBCSD in 2018. With this framework as our foundation, we have explored responses to climate-related issues in-depth through the transition and physical risks and opportunities proposed by the TCFD. Then jointly identified material risks and opportunities based on three dimensions: likelihood, impact degree, and occurrence time. Further analysis of the risks’ potential financial impact on company operations is conducted, an analysis upon which our formulated climate adaptation strategy.
Faced with the actual climate disasters that have occurred in recent years, we have developed multiple response and adaptation measures, include the management of Immediate Physical Disasters, Energy-Saving & Carbon Reduction, Water Resource Efficiency Improvement Management, Adopting Green/Smart Building Designs in new facilities, Stable Supply Chain management, and enhance our organization’s climate resilience.

TCFD Risk Management

In terms of our current sustainable governance organization, the units responsible for handling climate risks includes the Board of Directors, the audit department, the Head of Corporate Governance, the Environmental Friendliness Taskforce of the ECCS, the GHG Inventories Promotional Task Force of the Taichung Plant, and external professional consultants. In 2022, we have been completed the first phase the Task Force on Climate-related Financial Disclosures and identified climate-related risks and opportunities. With the second phase, we will introduce operational processes related to significant climate-related risks and opportunities; evaluate how to integrate potential impacts of climate change into strategy planning, analysis, and risk management.

TCFD Indicator and Target

In addition to establishing a comprehensive governance, strategy, and risk management framework, we have also analyzed energy use and greenhouse gas emissions in the back end. Through management, implementation and tracking, we have continuously reduced both energy intensity and greenhouse gas emissions intensity for three consecutive years,effectively reducing the environmental impact of our operations.

Energy Use and Emissions Analysis

• ISO 14064-1:2018

  As of the end of 2022, Taichung Plant has completed the GHG Inventories for 2019-2021 and obtained certification from third-party organizations. The inventory data for 2022 is also going to be verified externally in Q3 2022.

  

• GHG Emissions Analysis

  For PharmaEssentia, Category 1 - Direct Emissions Sources, including gas boilers, process emissions, diesel generators, fuel for official vehicles and various refrigerants, account for about 13% of emissions. Category 2 - Indirect Emissions from Purchased Electricity account for about 71% of emissions. Others account for about 16% of emissions. With the steady growth of commercial production, the greenhouse gas emissions intensity has been decreasing year by year over the past 3 years, with a reduction of 59% by the end of 2022 compared to the previous year.

  

• Energy Use Analysis

  Our company's energy consumption is mostly composed of two categories: externally purchased electricity and natural gas. Our global market expansion plans continue to unfold, our production volume continues to increase. As a result, our energy intensity has also decreased over the past three years, with a reduction of 62% compared to the previous year as of 2022.
  Our US subsidiary actively planned its operations after obtaining a pharmaceutical license in 2021. We use data collection on resource usage as the basis for energy management, and plan to expand the scope of data collection to align with that of Headquarter in the future.

  

• Air Pollutant Emissions Statistics

  Our company uses boilers in our production processes, primarily fueled by natural gas. The combustion of natural gas in the boilers results in air pollutants, such as nitrogen oxides, sulfur oxides, and particulate matter. However, the concentration of these pollutants in our emissions is below the regulatory limits set by environmental laws, so we do not need to install any pollution control equipment. We are also committed to not using or emitting any substances that are controlled under the Montreal Protocol, which aims to protect the ozone layer, or any persistent organic pollutants (POPs). We comply with regulations set by the Environmental Protection Administration (EPA) by conducting regular inspections and reporting on our fixed air pollution sources. We outsource this inspection to an EPA-approved testing institution, Jichuan Environmental Technology Co., Ltd., which conducts inspections in accordance with the regulations. The results of the inspection show that our air pollutant emissions are below regulatory limits and that we have not violated any environmental regulations. We are dedicated to fulfilling our environmental responsibilities in our production processes.

  

Our company does not consume a large amount of water resources in its operations, and we actively implement water conservation measures. Regarding our Taichung plant, which uses the most water resources, the source of the water intake is all third-party freshwater, and the wastewater is discharged through the third-party Central Taiwan Science Park Taichung Park Wastewater Treatment Plant. The water quality of the discharged water is monitored annually in accordance with the regulations of the Environmental Protection Administration. A third-party testing organization accredited by the Environmental Protection Administration conducts testing every six months to ensure compliance with management standards and discharge standards set by the Central Taiwan Science Park Administration.

Statistical Analysis of Water Resources

Water Conservation Measures and Effectiveness

Water discharge treatment process of Taichung Plant

Protection Biodiversity in Taichung Science Park

To ensure the protection of water resources, PharmaEssentia has applied for a water pollution control permit, and complies with its production operations and reporting requirements. Regular sampling and testing reports are within the standards, with no material environmental impact risks. The goal of preventing and monitoring the quality of wastewater discharge is to manage it in a way that does not harm surrounding flora and fauna. PharmaEssentia is committed to protecting natural resources and implementing various environmentally-friendly measures in the hope of contributing to the preservation of biodiversity.

Management approach on Waste Management

The types of waste generated by our company are mostly general waste produced during operations, as well as waste chemicals generated during production processes. To effectively manage our waste, we have implemented a systematic waste management policy to avoid any legal issues or environmental risks that may arise from improper disposal. At the same time, we actively monitor various environmental regulations to ensure that we stay up to date with the latest trends and changes in the industry. By promoting source reduction, adjusting process design, and improving material utilization, we can effectively address changes in regulations while also achieving environmentally friendly practices. In 2022, three waste removal and disposal manufacturers and four waste temporary storage areas will be audited according to law. And the four deficiencies in the compliance audit conducted by the environmental protection authorities have been improved.

Waste Management Action

Waste Generation and Disposal

As the global layout of PharmaEssentia continues to improve, and production capacity and efficiency continue to increase, the intensity of waste production per unit product has been decreasing for three consecutive years. In 2022, the intensity of waste production decreased by 53.5% compared to 2021.

Hazardous Waste Management Approach

In terms of hazardous waste management, our company is focused on source management and its proper storage and usage. At the same time, we also stipulate written records of usage status to manage the flow of chemical toxicants and prevents toxicant pollution on the environment and human health. In 2022, the environmental protection regulatory authority conducted compliance audits, and no deficiencies were found.

Classification and Control of Toxic Substances

Chemical Hazardous Material Spill Emergency Response Drill