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:
Analysis and Management of Risks and Opportunities Related to Climate Change
Issue: Changes in domestic and international regulations | |
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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 | |
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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 | |
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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 |
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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 | |
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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 |
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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 | |
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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 |
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2020 performance |
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Issue: Response to the government's promotion of green energy policy and development of green bonds | |
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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 |
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