Response to Climate Change
In response to the climate emergency and the potential crisis of energy and resource supply, Ruentex has not only strengthened the adjustment of climate resilience and reduced the operational impact that may be caused by disasters, but also continued its efforts to mitigate greenhouse gas emissions. By identifying the risks and opportunities of climate change, and implementing relevant countermeasures and strategies, we reduce risks and grasp business opportunities to achieve the goal of sustainable business operations. In addition, through scenario setting, we identify physical and transition risks and opportunities in products, customers, and operations, and the impact and influence on the Company’s operating activities to strengthen the Company’s climate change governance.
In response to climate change risks, Ruentex promotes green and low-carbon values through four major aspects: governance, strategy, risk management, and indicators and targets with reference to the “Task Force on Climate-related Financial Disclosures (TCFD)” guidelines, promoting value chain transformation and climate adaptation strategies.
Climate risks include transition risks and physical risks. Transition risks include policy and regulation, technology, market, and reputation, while physical risks include immediate and long-term climate risks. Opportunities are divided into resource efficiency, energy sources, products and services, markets, and organizational resilience. In 2022, various departmental teams at Ruentex used workshops to identify potential risks and opportunities brought about by climate change. They assessed the likelihood and impact of these factors and, based on the analysis results, created a risk and opportunity matrix. Strategic planning was conducted for the top two climate risks and opportunities, and climate change response strategies were established. After discussions and evaluations by the departmental teams.
1. Summary table of climate change risk identification
| Impact Scenario | [Risk impact and aspect] | [Financial impact] | [Response strategy] |
|---|---|---|---|
| Risk 001 Rising costs of raw materials As Ruentex relies on international trade, the disordered production of raw materials and rising prices caused by extreme weather may have an impact on the cost of raw materials, exchange rate fluctuations and inflation. | One of the main raw materials, cotton, is affected by the climate and long-term heavy rainfall, resulting in poor cotton quality or reduced production, and rising raw material prices, which in turn affect the delivery time and price of end products. | Decrease in net income and increase in operating costs | Introduce more suppliers for selection, diversify risks without excessive concentration in the same area, and stabilize material conditions and delivery |
| Risk 002 Increased severity of extreme weather events such as typhoons and floods Due to the changes and severity of extreme weather, the frequency of severe weather such as typhoons and floods has increased, resulting in floods and power outages, which may lead to business interruption, injury to personnel, and reduce revenue and increase costs. |
|
|
|
2. Overview of climate change opportunity identification
| Impact scenario | [Risk impact and aspect] | [Financial impact] | [Response strategy] |
|---|---|---|---|
| Opportunity 001 Develop and/or increase low-carbon products and services Following the international trend of carbon reduction, customers have higher carbon reduction requirements for suppliers. To ensure competitiveness, we need to attract customers with the concept of sustainability, enhance competitiveness, and develop new customer groups. |
| Increase in revenue and access to investee opportunities |
|
| Opportunity 002 Shifting consumer preferences Consumers’ awareness of environmental protection is on the rise, and more and more consumers are inclined to buy sustainable fashion brands/products that are friendly to the environment and low-carbon products. | Newly developed products use low-carbon emission or zero-carbon emission yarns (which are the main controllable factor for carbon reduction in fabrics). In the promotion of brand clients, carbon reduction ratio is added to improve brand clients’ awareness of carbon emission control | Increase in revenue and access to investee opportunities | The raw materials of products are environmentally friendly and organic cotton fabrics; and product packaging materials containing recycled materials/environmentally friendly products are used |