Sustainable Governance
Board of Directors
TECO’s Board of Directors is the highest governance body, responsible for appointing senior executives and formulating the company’s sustainable development strategy. It also holds ultimate accountability for enterprise risk management and ESG oversight.
The Board has five functional committees: Audit, Corporate Governance and Sustainability, Remuneration, Nomination, and Strategic Committees. The Corporate Governance and Sustainability Committee, comprising at least three directors, oversees ESG performance, corporate governance, and ethical conduct. It reviews and monitors annual plans from the ESG Office, Corporate Governance Center, Compliance and Legal Affairs Office, and Information Security Committee.
Each committee operates under Board-approved charters and regularly reports its activities and resolutions to the Board.
Average Tenure of Current Directors
Independence of the Board
Performance Measurement Indicators for Senior Executives' Compensation
Senior executives are evaluated quarterly based on KPIs, with 60% linked to financial performance (e.g., revenue, profit, ROA, ROIC) and 40% to strategic execution and sustainability KPIs. Sustainability KPIs focus on greenhouse gas emissions, carbon intensity, and green supply chain performance (via GHG inventory). KPI results directly determine variable bonus payouts. Since 2023, an internal carbon price of NT$1,600/ton has been applied to collect carbon fees, influencing business group profitability and executive compensation.
Long-Term Performance Reward Mechanism
The Company’s ESOP Committee allows managerial-level employees and above to allocate part of their monthly salary, matched by the Company, to purchase TECO stock via a trust. The program strengthens the link between compensation and medium- to long-term performance by increasing the weight of sustainability indicators in performance appraisals, enhancing cohesion, and sharing operational results with employees.
Sustainability Information Operations Management Guidelines
To strengthen sustainable governance and ensure reliable disclosures, TECO established the Sustainability Information Operations Guidelines as the internal SOP for collecting, validating, assuring, and disclosing sustainability data. The framework enhances cross-functional collaboration, ensures data accuracy, consistency, and completeness, mitigates misstatement risks, supports regulatory compliance, and enables transparent communication of sustainability performance to stakeholders.
Preparation for IFRS S1 and S2 Disclosures
TECO is preparing to align sustainability disclosures with IFRS S1 and S2. Led by the Finance Department and co-executed by the ESG Office, cross-functional teams are conducting a comprehensive inventory and readiness assessment. External consultants provide diagnostic reviews and technical guidance to ensure completeness, compliance, and transparency, strengthen internal capabilities, and build a robust foundation for consistent, globally aligned reporting.
Business Ethics and Governance of Group Subsidiaries
To enable directors and managers to strictly abide by the code of conduct and ethical principles when engaging in business activities, the "Rules of Ethical Conduct to Directors and Managerial Officers" have been formulated as the standard of conduct for every director to junior employees of the company.
In terms of sustainable governance, the board of directors formulated three basic documents: "Sustainable Development Best Practice Principles", "Ethical Corporate Management Best Practice Principles" and "Corporate Governance Best Practice Principles" to establish the TECO culture and issued "TECO Group Sustainability Policies and Commitments". To implement sustainability policies among TECO Group.
TECO Electric has a "TECO Sustainability Commitment" signed by the CEO and requires all employees to abide by it. For suppliers, it follows the "Supply Chain Business Ethics" and issues a "Human Rights and Environmental Sustainability Commitment" that is required to be signed when signing purchase contracts. For the manufacture subsidiaries that consolidated in the annual report, "TECO Group Sustainability Policies and Commitments" is used as a guide to standardize the ESG policy, ensure the implementation of the group's overall sustainable development policy, and meet the requirements and expectations of stakeholders.
In 2024, the integrity declaration signing rate reached 100%, and anti-corruption training covered all employees. Integrity education was also extended to business partners, reinforcing the Company's comprehensive anti-corruption governance system.
Internal Control and Risk Management
TECO is committed to establishing a comprehensive risk management system. The Board of Directors serves as the highest decision-making body for the Company’s risk management, responsible for approving risk management policies and major risk control frameworks. The Audit Committee and the Corporate Governance and Sustainability Committee assist the Board by reviewing various types of risks, ensuring clear division of responsibilities and specialized oversight across different dimensions of risk control. Overall risk analysis is consolidated and managed by the Head of the Finance and Management Center, who reports directly to the Chairman. In addition, the Audit Department, which reports directly to the Board, monitors and audits the effectiveness of the entire risk management mechanism through internal audit practices to ensure the adequacy of risk controls and proper management of potential risks. Top management is required to report risk management performance indicators to the above-mentioned committees and is evaluated against sustainability KPIs, which directly impact their variable compensation.
The Board of Directors has formulated a “Risk Management Policy and Procedures” to define and regulate operational risks. To integrate sustainability-related risks into the overall risk management framework, TECO regularly updates sustainability topics in line with international sustainability standards and trends, business objectives, benchmarking practices, and key industry issues, while also considering the views of diverse stakeholders. Using a double materiality analysis, the ESG Office identifies and explains the causes, impact areas, assessment methodologies, and corresponding risk management measures for ten material topics. At the same time, the Finance Department provides the Company-wide “Risk Assessment and Analysis Report” to outline climate-related risks and sustainability priorities, monitor the effectiveness of mitigation measures undertaken by responsible units, and disclose progress in the Sustainability Report. The process of materiality identification and sustainability goal setting is conducted annually.
Risk Management Operations
TECO has implemented a comprehensive risk management process, including the assessment of risk impact tolerance (divided into three levels based on impact to assets or revenue: <5%, 5%-10%, >10%) and the Company's ability to control those risks for systematic identification and handling. Through this risk management process, TECO evaluates various major risks the Company faces and incorporates them into the risk management framework.
Risk Management Process
Emerging Risks
Information Security Management
Organizational resilience is reinforced through annual unannounced social engineering drills, with results used to strengthen departmental response and refine risk mitigation strategies.
Participation in Industry Associations and Policy Influence
In 2024, TECO's support to tax-exempt groups such as industry associations and non-profit organizations totaled NT$2,667,314 and made a total donation of NT$5,879,568.