Climate Risk Management

SDGs:

  • CLEAN WATER AND SANITATION

    6

  • RESPONSIBLE CONSUMPTION AND PRODUCTION

    12

  • CLIMATE ACTION

    13

  • PARTNERSHIPS FOR THE GOALS

    17

In recent years, extreme climate events have continued to have negative impacts on various countries, and climate change has become a challenge confronting the world. At the 2022 UN Climate Change Conference (COP 27), countries were urged to make more ambitious commitments to reducing GHG emissions. The Taiwanese government also passed amendments to the Climate Change Response Act in early 2023, committing to net zero GHG emissions across Taiwan by 2050. Against this backdrop, SKM identified and assessed its climate-related risks and opportunities in 2022. The process and assessment results are described below. SKM has also established its own net-zero greenhouse gas emissions target. Given the nature of its operations, electricity consumption is the company’s primary source of carbon emissions. Using 2015 as the base year, SKM has therefore established phased targets for 2030 to 2050 to reduce greenhouse gas emissions from electricity consumption, as outlined below:
 

Year Reduction Target Key Strategies and Actions
2030
（Short term）		 Reduce carbon emissions from electricity consumption by 20% from the 2015 baseline
✓ Improve the energy efficiency of high-energy-consuming equipment at major operating locations and replace equipment in phases
✓ Strengthen energy management across all stores to improve energy efficiency and management accuracy
2040
（Medium term）		 Reduce carbon emissions from electricity consumption by 35% from the 2015 baseline
✓ Improve the energy efficiency of air-conditioning, lighting, and power equipment across operations
✓ Introduce smart energy monitoring and data analytics to continuously reduce energy waste
2050
（Long term）		 Reduce carbon emissions from electricity consumption by 50% from the 2015 baseline
✓ Establish a low-carbon operating model and integrate energy conservation and carbon reduction into long-term operational and equipment replacement decisions

SKM Climate Risk Matrix

SKM  further classify risks into short-term (<2 years), mid-term (3-10 years), and long-term (>10 years). This year’s climate risk matrix identifies seven physical risks and four transition risks. The short-term and mid-term risks both derive from transition risks such as policy changes and new technologies. Long-term risks are either long-term or extreme physical risks
 

 
  • Note：  The size of each climate risk dot is directly proportional to the product of its "potential impact magnitude" and the "risk timeline."
1

永續相關需求與規範增加 - 耗水費徵收

2

永續相關需求與規範增加 - 再生能源條例與碳足跡

3

溫室氣體排放成本增加 - 碳定價機制

4

新科技投資失敗

5

極端天氣事件增加 -颱風

6

極端天氣事件增加 -暴雨

7

極端天氣事件增加 - 乾旱(2036-2065 年)

8

極端天氣事件增加 - 乾旱(2071-2100 年)

9

平均溫度上升(升溫 1.8 °C)

10

平均溫度上升(升溫 3.4 °C)

11

海平面上升

Risk identification revealed that short-term risks are mainly derived from changes to domestic laws and policies, with transition risks such as GHG and renewable energy regulations having higher levels of impact. Long-term risks are mainly derived from physical risks brought on by climate change, with rising sea levels and rising temperatures having higher levels of impact.

In addition, given the multiple stages of its value chain, SKM also assesses climate-related risks across its upstream, midstream (SKM’s own operations), and downstream activities.
 

SKM's Value Chain
Upstream

Manufacturers, suppliers,counter vendors, general　affairs vendors, service
providers, external warehouse/logistics service providers

Midstream
Downstream

Media, partner organizations,　consumers, society,　recycling/waste disposal　service providers

Details on potential impacts on SKM and affected value chains are listed in the table below for climate risks with higher levels of impact, as indicated above.

 

Risk Type

Climate Risk Event

Impact on SKM

Upstream

SKM

Downstream
Transition Risk Increase in Costs of GHG Emissions - Carbon Pricing Scheme Competent authorities have progressively tightened regulatory control over GHG emissions every year. Potential carbon risks such as overall emission limits, carbon taxes, and carbon trading schemes may directly or indirectly impact the operational costs of businesses. ✓
Transition Risk Increase in Sustainability-related Requirements & Regulations - Renewable Energy Terms & Carbon With regulations such as the Renewable Energy Development Act, product energy performance standards, carbon neutrality, and carbon footprint, the cost for SKM and suppliers to provide products and services may increase. ✓ ✓
Physical Risk Rising Sea Levels Rising sea levels may flood SKM locations and lead to financial losses, such as the devaluation of real estate assets and interruptions to business operations. ✓ ✓ ✓
Physical Risk Rising Temperatures Rising temperatures have an impact on human health and will affect the workforce and reduce the number of productive days, leading to impacts on company operations. SKM may face power outages, power rationing, or increased electricity costs that drive down revenue and drive up operating costs, thereby affecting overall profitability. Energy-intensive suppliers or locations facing power outages, power rationing, or rising electricity costs that drive up the cost of providing products and services may subsequently affect SKM's operating costs. ✓ ✓ ✓
 


Results from Climate Risk Identification


SKM assessed 16 climate-related opportunities across five areas: markets, products and services, resource efficiency, resilience, and energy sources. The results of this year’s materiality assessment are presented in the table below.


SKM's Climate Opportunities Ranked by Materiality
Rank Dimension Definition
1 Market Rewards and incentives provided by the public sector
2 Product & Services Changes in consumer preference
3 Resource Use Efficiency Reduction of water use and consumption
4 Resilience Diverse energy alternatives/sources
5 Product & Services Diverse business activities
6 Resource Use Efficiency Recycle & reuse
7 Resilience Participation in renewable energy projects and energy-saving measures
8 Market Entrance into new markets
Rank Dimension Definition
9 Energy Source Low-carbon energy
10 Energy Source Incentive policies
11 Resource Use Efficiency Shifting to more efficient architecture
12 Resource Use Efficiency More efficient shipping methods
13 Product & Services Development or increase of low-carbon products and services
14 Product & Services Development of new products and services through R&D
15 Resource Use Efficiency More efficient production and distribution processes
16 Energy Source New technologies



Risk identification revealed that "Incentives from the Public Sector," "Changes in Consumer Preference," "Reduction in Water Use and Consumption," and "Diverse Energy Alternatives/Sources" are climate opportunities with higher levels of materiality. The opportunities listed and their potential benefits for SKM are detailed in the table below.
 

Dimension
Climate Opportunity Event
Opportunity for SKM
Market
Rewards and incentives provided
by the public sector
By actively engaging in government programs and partnering with green finance institutions, SKM can proactively stay ahead of regulations and access valuable resources to minimize the costs of transitioning. This will also establish SKM as a leading example of sustainable transformation.
Product & Services
Changes in consumer perference
In response to growing awareness of sustainable consumption, SKM can promote sustainable retail, strengthen its competitive advantage, and increase revenue.
Resource Use Efficiency
Reduction of water use and consumption
SKM can advocate water conservation or use water recycling to reduce overall water consumption and water conservation charges
Resilience
Diverse energy alternatives/sources
By strengthening climate resilience across its operations and diversifying its supply chain, SKM can enhance its market valuation while reducing the risk of operational disruptions caused by climate-related supply chain risks




Mitigation & Adaptation

SKM implemented various energy-saving and carbon reduction measures to address the critical climate risks and opportunities identified, such as switching to LED lighting, reducing power consumption for air conditioning, and converting to water-saving taps to mitigate the impact of climate risks on operations. Measures addressing climate-related risks and opportunities are listed in the table below.
 

Risk Type Climate Risk Event Mitigation/Adaptation Measures Targets & 2025 Progress
Transition Risk Increase in Costs of GHG Emissions - Carbon Pricing Scheme Implement the Measures for Auditing Whole-store Indoor Air Conditioning Temperatures, install variable frequency drives (VFDs) on air handling unit motors, and continue replacing existing lighting with LED fixtures to reduce electricity consumption from air conditioning and lower carbon emissions.
✓  2025 Target: Store-wide energy conservation of 1.5%. Actual electricity consumption decreased by 8.6%, equivalent to savings of 21.792 million kWh. (Excluding 1.695 million kWh in electricity savings at the Taichung Zhonggang Store.)
✓  SKM Park: Aligned with SKM’s company-wide target.
Transition Risk Increase in Sustainability-related Requirements & Regulations - Renewable Energy Terms & Carbon Evaluate the feasibility of green energy
✓  Store-wide renewable electricity purchases totaled 279,000 kWh.
✓  SKM Park: Evaluating plans for the installation of solar power systems.
Physical Risk Rising Sea Levels Establish flood and typhoon prevention safety procedures ✓ The 2025 target was to ensure that flooding and typhoons caused no damage or disruption to normal store operations.
Physical Risk Rising Temperatures Dynamically adjust air-conditioning capacity and operating hours based on outdoor temperatures and changes in customer traffic to improve energy efficiency.
✓ 　Maintain an average indoor air-conditioning temperature of at least 26°C, in compliance with the requirements of the Energy Administration, Ministry of Economic Affairs.。
✓ 　Improve air-conditioning energy efficiency by installing variable frequency drives (VFDs) for air-conditioning water systems at six stores in 2025, with estimated annual electricity savings of 612,138 kWh.
Dimension Climate Opportunity Event Action Plans/Roadmap Targets & 2025 Progress
Market Rewards and incentives provided
by the public sector
✓　Support the Ministry of Environment’s carbon emissions assessment initiatives.
✓ 　Promote the government’s green consumption initiatives.
✓ 　Completed carbon emissions assessment and reporting in accordance with government requirements.
✓ 　Introduced 195 groups and brands with sustainability attributes in 2025.
✓ 　Held the first ＂RE:ACTION Green Circular Living Exhibition＂, with guidance from the Resource Circulation Administration, Ministry of Environment, working with one major corporate group and 47 brands to promote the circular economy.
✓ 　Held the first ＂T368 Urban-Rural Products Expo＂, promoting products from small-scale farmers across Taiwan, reducing carbon emissions from transportation, and creating market opportunities for sustainable consumption.
Product & Services Changes in consumer perference
✓ 　Expand the selection of sustainable products and brands.
✓　Organize sustainability-themed exhibitions and events.
Resource Use Efficiency Reduction of water use and consumption
✓ 　Continue to improve A.C. and lighting facilities
✓ 　Use bathroom facilities with Water Efficiency Labels.
 ✓ 　Implemented the Measures for Auditing Whole-store Indoor Air Conditioning Temperatures, continued to improve A.C. and lighting facilities, and switched to LED lighting to conserve energy
Resilience Diverse energy alternatives/sources ✓　Evaluate the feasibility of green energy ✓ 　Plan renewable electricity procurement for selected brands and assess the feasibility of installing solar power systems at SKM Park.