The company referred to the Task Force on Climate-related Financial Disclosures (TCFD) released by the Financial Stability Board (FSB) in 2017, to establish a climate change risk management structure. In alignment with the four TCFD pillars—Governance, Strategy, Risk Management, and Metrics and Targets—GMTC has established a climate-related risk governance structure. These elements are disclosed in this Sustainability Report to provide stakeholders with a clear understanding of GMTC’s actions and preparedness in response to climate-related risks and opportunities.

Board’s Oversight of Climate-related Risks and Opportunities

According to GMTC's Corporate Sustainable Development Best Practice Principles, the Corporate Sustainability Committee is responsible for assessing the current and future risks and opportunities posed by climate change. The Committee proposes corresponding response strategies and reports proposed climate strategies and major action plans to the Board of Directors for review and oversight. These updates are provided at scheduled intervals throughout the year.

Management’s Role in Assessing and Managing Climate-related Risks and Opportunities

At the operational level, GMTC’s Corporate Sustainability Committee coordinates cross functional climate-related discussions and decision-making. The Risk Management Team is tasked with identifying and evaluating the impacts of climate-related risks and opportunities. These findings are reported annually to both the Board of Directors and the Audit Committee.

Based on risk assessment results, the Sustainable Environment Team collaborates with internal units to implement initiatives related to green energy, energy efficiency, and GHG inventory management. Additionally, an Energy Saving and Carbon Reduction Task Force—chaired by the President and composed of Executive Vice Presidents, Vice Presidents, and departmental supervisors—meets regularly to discuss decarbonization strategies.

Topics include process and equipment-related carbon reduction, emissions accounting, and regulatory responses such as the EU Carbon Border Adjustment Mechanism (CBAM) and Taiwan’s emerging carbon pricing.

Climate-related Risks and Opportunities the Organization has Identified over the Short, Medium, and Long Term

GMTC conducts climate-related risk and opportunity assessments in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) framework. The scope of the assessment includes the Company’s operations in Taiwan. The objective is to identify key climate-related issues and proactively address them to minimize potential impacts on operational performance and financial stability. By identifying and categorizing these risks and opportunities, GMTC aims to strengthen its climate resilience and long-term sustainability.

Time horizons for the assessment are defined as follows:

• Short term: within the next 3 years

• Medium term: from 3 to 7 years

• Long term: beyond 7 years.

The identified climate-related risks and opportunities across these time frames are detailed in the following table.

Impact of Climate-related Risks and Opportunities on the Organization's Businesses, Strategy, and Financial Planning

An assessment of the aforementioned high-risk factors has been conducted to identify climate-related risks and opportunities that may pose significant financial impacts, along with GMTC's corresponding response strategies.

In accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), GMTC has adopted at least two climate-related scenarios to identify potential transition risks and physical risks. Scenario-based analysis allows the Company to anticipate and quantify potential financial impacts under different climate pathways.Going forward, GMTC will continue to enhance the granularity and precision of scenario-based assessments, particularly those addressing the material financial implications of both transition and physical risks.

Transition risks are primarily evaluated under a scenario aligned with limiting global warming to 1.5°C, consistent with the IEA Net Zero Emissions by 2050 (NZE 2050) pathway and Taiwan’s government-issued net-zero roadmap. This scenario considers changes in policy, regulation, technology, and market dynamics, with a focus on their projected financial consequences.

Scenario development integrates:

• GMTC's current operational profile and climate objectives

• Relevant domestic regulatory developments (e.g., carbon pricing mechanisms)

• International climate policy trends and technological benchmarks

• Research findings and market forecasts from authoritative institutions.

The financial impact of these efforts will depend on the maturity, cost trajectory, and deployment timeline of these technologies. GMTC will continue to monitor developments and conduct scenario-specific financial impact assessments as additional data becomes available.

To address transition risks, the Company has implemented various energy-saving and carbon reduction measures, such as phasing out heavy fuel oil, replacing outdated equipment, streamlining production processes to reduce waste, maintaining a high usage rate of scrap steel, and investing in renewable energy facilities to lower carbon intensity.

As steel is the foundation of all industries, the Company is also strengthening its R&D capabilities to stay ahead of emerging market trends in steel applications. We have launched new products to meet evolving customer procurement behaviors. It is worth noting that some of these energy-saving projects may lead to increased operating costs.

To address transition risks, GMTC has implemented a range of energy-saving and carbon reduction measures, including:

• Phasing out fuel oil

• Replacing outdated equipment

• Streamlining manufacturing processes to reduce waste

• Maintaining a high proportion of scrap steel in raw material input

• Investing in renewable energy infrastructure to lower carbon intensity

As steel is a critical material in various industries, GMTC also enhances R&D capabilities to anticipate market shifts and customer preferences under the low-carbon transition. The Company continues to launch innovative products that align with evolving procurement behaviors. However, these efforts may lead to increased operating costs, particularly from energy-saving capital projects and renewable energy procurement.

Financial Impact of Extreme Weather Events

Financial Impacts of Extreme Weather Events (Physical Risks) Physical risk assessments are based on climate projections using Shared Socioeconomic Pathways (SSPs), as outlined in the IPCC Sixth Assessment Report (AR6). GMTC adopts SSP2-4.5 and SSP5-8.5 as core reference scenarios for physical risk analysis at its Xinying and Liuying plants in Tainan, Taiwan. These are supplemented by earlier RCP8.5 assumptions where applicable.

GMTC assesses the likelihood and severity of the following physical hazards:

Flooding

• Under SSP5-8.5, daily rainfall could increase by 61.8% (Xinying)and 61.1% (Liuying)by 2040.

• NCDR flood maps indicate that neither site lies in high-risk flood zones even under 650mm/24hr scenarios.

• Plants are equipped with storm water management facilities: retention ponds, sandbags, and pumps.

• Impact: Minimal under current land conditions; continued infrastructure monitoring planned.

Drought

• TCCIP projects a 65.1% probability of >79 days without rainfall (minor drought).

• Assumption: 20% industrial water reduction for 3 months(orange alert phase).

• Impact: No production disruption anticipated, but water-use efficiency projects prioritized.

High Temperatures

• 9.6% chance of peak temperatures reaching 36.7–36.8°C(2021–2040).

• Process areas are designed for high-temperature operation.

• Impact: Negligible financial impact; no additional cooling upgrades required.

• Typhoons: y 2031–2065, the frequency of strong typhoons may increase by~105%, though annual total may drop.

• Typhoon-related rainfall may increase by ~20%.

• Impact: Possible employee absence and production delays from storm-related access issues.

• Mitigation: Emergency response plans and workforce scheduling flexibility under review.

Organization’s processes for identifying and assessing climate-related risks

Through the TCFD framework, we analyze policies and regulations, technology, market, corporate reputation, as well as acute and chronic climate risks; discuss the impacts of risks and opportunities on the Company; perform climate-related risk and opportunity identification from time to time to ensure the identification results; and develop response plans based on the results of climate risk and opportunity identification.

Issues under consideration include domestic climate change laws and regulations related to energy management, the implementation schedule of the EU CBAM carbon border adjustment mechanism, domestic net zero technology evolution estimation based on the National Development Council's 2050 net zero emissions roadmap, the IEA's impact on net zero scenarios, technology, market impact, etc., and adoption of shadow prices as internal carbon pricing to estimate future cost impacts. Issues considered include the carbon fee collection under domestic climate change law and the implementation schedule of the EU CBAM carbon border adjustment mechanism. The domestic carbon fee is based on a trial calculation of NT$320 per metric ton of carbon or more, and the CBAM is based on EU ETS transactions. The price is used as the basis for trial calculation. The physical risk refers to IPCC AR6. The estimation data of TCCIP and the National Disaster Prevention Center is used as the basis for preliminary consideration.

Organization’s processes for managing climate-related risks.

The risk management team of the Corporate Sustainability Committee identifies major risks, conducts subjective assessments based on the incidence rate and impact intensity of risk events, discusses and confirms major risks and corresponding countermeasures in the Corporate Sustainability Committee, and reports the assessment results to the Audit Committee and the Board of Directors.

Processes for Identifying, Assessing, and Managing Climate-related Risks are Integrated into the Organization's Overall Risk Management

The risk management team of the Corporate Sustainability Committee continues to track the risks and opportunities related to climate change, and collaborates with the Energy Conservation and Carbon Reduction team and Sustainable Environment Team on the implementation of relevant programs and performance tracking. The responsible units/teams are responsible for the major risks that can be dealt with presently. Projects are planned, improved, and controlled. Medium- and long-term risks are regularly monitored, and timely responses are made. Every year, the Corporate Sustainability Committee submits implementation results and plans to the Board of Directors, while the Risk Management Team submits risk reports to the Audit Committee and the Board of Directors.

In order to reduce the unit carbon emissions of products and environmental impact, GMTC continues to develop methods to reduce energy and resource consumption. The reduction of direct emissions from operating activities (Scope 1) and indirect emissions from energy use (Scope 2) is carried out separately, and we also set goals for electricity saving, water saving, etc. to ensure that greenhouse gas emissions intensity meets expectations.

The implementation includes

1. Scope 1: Eliminate fuel oil, replace outdated equipment, simplify manufacturing processes to reduce waste, maintain high scrap utilization rate, and increase production yield to reduce carbon intensity in the manufacturing stage
2. Scope 2: Comply with regulations, build rooftop solar power installations and use renewable energy
   
   

Greenhouse gas emissions and related risks：Refer to Greenhouse Gas Management

Risk Management Metrics, Targets and Performance

GMTC utilizes shadow pricing to establish an Internal Carbon Pricing (ICP) system to support the evaluation of the cost-effectiveness of investment decisions and the carbon emission costs related to operations. For the current year, considering Taiwan’s carbon fee structure, the internal carbon price is set at NT$300 per metric ton of carbon dioxide equivalent. This approach enables the company to integrate carbon emission costs into both short-term and mid-term decision-making processes and also supports product pricing strategies.

Please refer to GHG Management

Please verify: