Climate Strategy: Scenario Analysis and Climate Resilience
Transition Risk Scenario Analysis
In response to climate change and domestic and international net-zero trends, countries have successively enacted regulations and policies related to carbon taxes and fees, with the aim of guiding enterprises toward a low-carbon transition through a carbon pricing mechanism. The implementation of carbon fee systems will convert greenhouse gas emissions generated during business operations into actual carbon costs, turning environmental impacts into tangible financial impacts. This may ultimately lead to declines in corporate profitability and stock price performance, potentially causing Uni-President Asset Management’s investment performance to decline.
To understand how the future operating performance of current investment targets may be affected by carbon fee systems and how this may impact Uni-President Asset Management’s investment portfolio, the Company uses the three climate scenario frameworks provided by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), together with the country-specific carbon prices estimated for each climate scenario using the REMIND-MAgPIE 3.3-4.8 model, to conduct scenario analyses of high-climate-risk industries. The Company defines the following five industries as high-climate-risk industries: oil, gas and electricity; plastics; iron and steel; cement; and paper and pulp.
NGFS Climate Scenarios and Carbon Prices
| Category | Transition Rrisk Scenario | Scenario Description and Carbon Price (2026 – 2050) |
|---|---|---|
| Disorderly Ttransition | Delayed Transition  |
|
| Orderly Transition | Net Zero 2050 |
|
| Hot House World | Current Policy |
|
Transition Risk Scenario Analysis and Assessment Process
Results of the Transition Risk Scenario Analysis
The Net Zero 2050 scenario represents a proactive pathway for mitigating the impacts of climate change through carbon pricing policies. Therefore, the aggregate expected loss on investment positions is the highest among the three scenarios, with the positions facing greater carbon price pressure starting in 2030.
Differences in losses across scenarios primarily stem from variations in the aggressiveness of carbon pricing policies and transition pathways. Given the Company’s limited equity investment exposure in high-climate-risk industries, the total expected loss amounts under each climate scenario for 2030 and 2050, as well as the resulting reduction in asset management fee revenue, each account for less than 1% of the Company’s total assets under management and total revenue in 2025.
| Scenario | Delayed Transition | Net Zero 2050 | Current Policy | |||
|---|---|---|---|---|---|---|
| Year | 2030 | 2050 | 2030 | 2050 | 2030 | 2050 |
| Expected total loss as a percentage of Uni- President Asset Management’s total assets under management in 2025 | 0.0004% | 0.1442% | 0.0614% | 0.3201% | 0.0004% | 0.0012% |
| Shortfall in management fees as a percentage of revenue in 2025*Note | 0.0007% | 0.1654% | 0.1029% | 0.2736% | 0.0007% | 0.0028% |
Note: Uni-President Asset Management’s total evenue in 2025 amounted to NT$3,026,617,378
Physical Risk Scenario Analysis
In recent years, the severity and frequency of extreme weather events have continued to rise. Given that climate-related disasters may lead to physical risk impacts such as damage to fixed assets, operational disruptions, and impairment of asset values, Uni-President Asset Management has referenced simulation scenarios based on the Shared Socioeconomic Pathways (SSPs) presented in the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) to conduct a physical risk scenario analysis of flood potential, while reviewing the flood adaptation measures in place at each operational location to gradually enhance operational resilience.
Types of Scenarios Adopted
In recent years, the severity and frequency of extreme weather events have continued to rise. Given that numerous climate-related disasters may lead to physical risk impacts such as damage to fixed assets, operational disruptions, and impairment of asset values, Uni-President Asset Management has referenced the Shared Socio-economic Pathways (SSPs) proposed in the Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC) and adopted the following two types of scenarios for analysis:
| Physical Risk Scenario | Scenario Description | |
|---|---|---|
| Scenario 1 | SSP1-2.6 Low Emissions Scenario | Under a low-emissions scenario, progress toward sustainability is slow, with net-zero emissions achieved after 2050 and warming of approximately 1.8°C by the end of the century. |
| Scenario 2 | SSP5-8.5 Very high High Eemissions Scenario | Under a very high emissions scenario, fossil fuel use continues to grow, with emissions nearly doubling by 2050 and warming of over 4°C by the end of the century. |
Physical Risk Scenario Analysis and Assessment Process
Results of the Physical Risk Scenario Analysis
The results of the scenario analysis indicate that, under the SSP5-8.5 scenario, the flood risk levels for most Uni-President Asset Management locations will increase or remain high from the 2050s to the 2090s. Operational locations in central and southern Taiwan are at particularly high risk. However, considering that the Company’s offices are all located on upper floors, that the asset management industry does not require large equipment rooms, and that there has been no property damage or operational disruption caused by flooding in past years, it is assessed that, should a flood occur, it would only result in a reduction in the value of the Company-owned real estate at the Taipei headquarters, while the remaining leased offices would incur no related losses.
Changes in Physical Risk Levels at Each Operational Location
Financial Impact Results of the Physical Flood Risk Scenario Analysis
| Scenario Operations | SSP1-2.6 | SSP5-8.5 | ||
|---|---|---|---|---|
| 2050s | 2090s | 2050s | 2090s | |
| Potential total loss as a percentage of total assets in 2025 Note | 0.4% | 0.4% | 0.4% | 0.8% |
Note: Uni-President Asset Management’s total assets in 2025 amounted to NT$3,068,852,010.
Climate Resilience and Adaptive Capacity
Investment Position Resilience Assessment
By conducting transition risk scenario analyses for high-climate-risk industries under different climate scenarios, the Company has determined the expected aggregate losses as a percentage of Uni-President Asset Management’s total assets under management and the impact of the management fee income shortfall on the Company’s revenue. These factors are assessed as having no significant impact on the Company’s business risk. The Company will regularly conduct climate scenario analyses to continuously monitor the extent of the impacts arising from transition and physical risks and will dynamically adjust the asset classes and types of investment targets included in the analyses based on its internally defined scope of high-climate-risk industries.
In addition, Uni-President Asset Management has integrated climate factors into its investment process and will conduct carbon inventories of its investment portfolios to comprehensively measure and disclose their carbon emissions. The results will serve as a basis for internal risk management, investment decision-making, and engagement strategy planning. Over the long term, in line with industry trends and the requirements set by the competent authorities, the Company plans to gradually adopt IFRS S2 and regularly conduct climate scenario analyses and climate resilience assessments in accordance with the Standard’s guidance to review and enhance its climate adaptive capacity.
Operational Adaptation Measures and Disaster Response
The results of the scenario analysis indicate that the financial impact of physical flood risks on Uni-President Asset Management is limited. The Company has implemented multiple disaster prevention and adaptation measures at its operational locations, including installing water pumps, floodgates, or raised flooring and maintaining a stock of sandbags. The Company has also obtained insurance coverage for natural disasters. These measures not only reduce the likelihood that heavy rainfall will cause damage to its operational locations but also minimize financial losses.
Uni-President Asset Management has also established the “Emergency Response Procedures,” which include alternative operational arrangements such as off-site backup, working from alternate locations, and working from home. The Company also regularly organizes contingency drills for its employees. Through annual business impact analyses of its core systems, the Company identifies and assesses high-risk factors that could cause operational disruptions, such as power outages caused by climate-related disasters and disruptions to dedicated network lines for external services. It formulates corresponding response measures to ensure that the Company’s systems and business operations can continue to function in the event of natural disasters or major incidents.