Risk Management and Response Measures for Climate Change

Climate change is a global issue. As a guardian of the green earth, Evergreen keeps track of issues related to climate change and formulates environmental protection policies. Advanced marine technology is developed for fleet to maximize its load-ability and satisfy energy conservation targets, and dedicate efforts towards environmental protection together with suppliers.

Under the increasing threat of climate change, Evergreen identifies the opportunities and challenges brought about by climate change and extreme weather referring to the Task Force on Climate-related Financial Disclosures (TCFD). Furthermore, in response to severe weather that affect ship safety, such as rough sea conditions, typhoons, sea fog, sea ice and extremely low atmospheric pressure, are included in Evergreen's "risk management" assessment system. To set up disaster prevention plans, monitor the performances of preventive measures, and eventually reduce the risk of climate change, and seize potential opportunities, the relevant budgets are made.

In response to the possible impact of climate change, Evergreen has established the following operating procedures based on the four core elements, namely, governance, strategy, risk management, and indicators and goals:

operating procedures based on the four core elements, namely, governance, strategy, risk management, and indicators and goals
Analysis and Management of Risks and Opportunities Related to Climate Change
Issue: Changes in domestic and international regulations
Responsible units: Business Operations Dept., Marinetech Dept., Shipbuilding Dept., Supply Dept., and Maintenance Dept.
Type of Risk Transition risks
Duration of Impact Short- / Medium- to long-term
Object of Impact Fleet operation and management
Impact strength Low / Medium / High
Negative Impact and Financial Impact Increase in additional equipment installation costs and fuel costs.
Potential opportunities and financial benefits The new environmental protection regulations will lead to an increase in the investment cost of new ships, thereby replacing weaker carriers. For Evergreen Marine, this may reduce competition, and building an eco-friendly fleet can enhance the Company's positive image and increase potential future profits.
Management methods and countermeasures Install SOx scrubbers in the fleet or switch to low-sulfur fuel oil.
2020 performance The entire fleet complied with IMO's 2020 sulfur limit regulations.
Issue: Increased customers' awareness of environmental protection
Responsible units: Service Div., Asia Dept., and Finance Div.
Type of Risk Transition risks
Duration of Impact Short- / Medium- to long-term
Object of Impact Customers
Impact strength Low / Medium / High
Negative Impact and Financial Impact Environmentally-friendly equipment modification increases operating costs.
Potential opportunities and financial benefits Adopting eco-friendly and efficient equipment to reduce energy expenditure and improve the efficiency of both customers and the Company.
Management methods and countermeasures Enhance the innovative functions used by Evergreen Marine's Internet and EDI to reduce carbon emissions during operation.
2020 performance Performance of promotion of cloud bill of lading in Taiwan: The use of the cloud service in 2020 increased by 39% as compared to that in 2019.
Issue: Changes in energy policy and equipment requirements
Responsible units: Shipbuilding Dept., Marinetech Dept., Supply Dept., and Maintenance Dept.
Type of Risk Transition risks
Duration of Impact Medium- to long-term
Object of Impact Company assets, such as engines, generators, and boilers of self-owned ships
Impact strength Medium
Negative Impact and Financial Impact
  • The use of low-sulfur fuel oil is likely to increase the probability of equipment damage and shorten the maintenance cycle for the normal operation of the equipment.
  • Increase in the operating costs.
Potential opportunities and financial benefits Corporate environmental image will be enhanced to attract customers with higher environmental awareness.
Management methods and countermeasures Install eco-friendly SOx scrubbers to meet the requirements of environmental protection regulations as required by law.
2020 performance Ships without modified SOx scrubbers adopted low-sulfur fuel oil in compliance with regulations, and 2,083,816mt of low-sulfur fuel oil was purchased.
Issue: Changes in energy policy and equipment requirements
Responsible units: Shipbuilding Dept., Marinetech Dept., Supply Dept., and Maintenance Dept.
Type of Risk Physical risks
Duration of Impact Short-/Medium- to long-term
Object of Impact Evergreen Marine / Suppliers
Impact strength Medium
Negative Impact and Financial Impact
  • It may cause damage to containers on board and onshore, and lead to an increase in the cost of raw materials, a decrease in production capacity, and interruption of the supply chain.
  • Rising container costs may impact operating costs.
Management methods and countermeasures Extend the service life of containers.
2020 performance The service life of the Group's containers were changed from 10 years to 13 years.
Issue: Increased frequency of extreme weather events
Responsible units: Business Operations Dept., Business Operations Dept., Finance Div., and Logistics Div.
Type of Risk Physical risks
Duration of Impact Short-/Medium- to long-term
Object of Impact Evergreen Marine / Suppliers
Impact strength Medium
Negative Impact and Financial Impact Due to inland snow, floods, hurricanes, and suppliers' changes in transportation routes, the transportation time is lengthened and fuel costs are increased.
Management methods and countermeasures
  • Maintain close contact with all suppliers and ask them to propose a new route for our review, thereby providing customers with real- time information.
  • Set standards for rough sea conditions for cancellation of maritime navigation, select high-risk ships in daily inter-departmental meetings through timely ship position monitoring, and cooperate with Japan's Weather News Information (WNI), adopt weather information and navigation suggestions provided by WNI, as well as work with on- board, on-shore, and WNI personnel to jointly develop and set out countermeasures to monitor the effectiveness of the measures for cancellation of maritime navigation.
2020 performance
  • In 2020, maritime navigation was cancelled in response to a total of 23 typhoons. WNI provided suggestions to 187 ships regarding maritime navigation cancellation, and no damage was suffered caused due to typhoons.
  • The route to avoid sea ice and iceberg was updated daily as a reference for navigation route planning. In 2020, there was damage caused by sea ice.
  • In 2020, no collision occurred due to sea fog.
  • From January 2020 to December 2020, there had been 60 explosive cyclogeneses formed in the North Pacific waters; the Company had provided suggestions to a total of 217 ships to avoid the routes in the area. There had been 56 explosive cyclogeneses formed in the North Atlantic waters; the Company had provided suggestions to a total of 37 ships to avoid navigation to avoid the routes in the area.
  • During this period, Ever Liberal suffered cargo damage near Japan. In response to the current weather situation, WNI has upgraded the route risk assessment system and paid more attention to the risk indicators, such as Synchronous/Parametric rolling in the routes.
Issue: Response to the government's promotion of green energy policy and development of green bonds
Responsible unit: Finance Div.
Type of Risk Market opportunity
Duration of Impact Medium-/Long-term
Object of Impact None
Impact strength None
Negative Impact and Financial Impact Complying with environmental regulations will enhance the Company's environmental image, improve energy efficiency, and reduce energy costs.
Management methods and countermeasures Compare the cumulative execution amount with the account statement every month, confirm that there is no fund paid for the purpose other than the project, track the execution progress, and confirm the flow of the bond payments.
2020 performance
  • The Company issued a green bond of NT$2 billion on June 27, 2018, which was certified by the third-party certification agencies, namely DNV GL and PwC Taiwan.
  • The funds will be used to support the relevant capital expenditures for the purchase and installation of protection equipment for eco-friendly marine fuel. By installing such equipment, we reduced the SOx emissions during ship navigation, thereby reducing air pollution and alleviating the impact on the environment.
  • The Company planned to start the installation in the third quarter of 2018 and will complete the installation in the second quarter of 2021. After the equipment is fully replaced, it is estimated that around 17,927 tons of SOx emissions will be reduced each year. As of the end of 2020, 65.66% of the installation project was completed. The actual cumulative expenditure amounted to NT$1,433,394,000, which was for the purchase of equipment for eco-friendly fuel oil.